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TASTE HOLDINGS LIMITED - Acquisition of Shares and Claims in Aloysius

Release Date: 20/12/2016 14:19
Code(s): TAS     PDF:  
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Acquisition of Shares and Claims in Aloysius

TASTE HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Registration number 2000/002239/06)
Share code: TAS ISIN: ZAE000081162
(“Taste” or “the Company” or “the Group”)


ACQUISITION OF SHARES AND CLAIMS IN ALOYSIUS


1. INTRODUCTION

The board of directors of Taste (“the Board”) wishes to advise shareholders of the acquisition of 60% of
the ordinary shares in issue and 100% of the claims held by Fiamme Pizza Proprietary Limited (“Fiamme
Pizza”) in Aloysius Trading Proprietary Limited (“Aloysius”), by Taste Food Franchising Proprietary
Limited (“TFF”), a wholly-owned subsidiary of Taste. Mr Carlo Gonzaga, the Chief Executive Officer of
Taste is a director and shareholder of Aloysius through his shareholding in Fiamme Pizza. TFF will also
subscribe for a further 200 ordinary shares in Aloysius, resulting in a total shareholding of 80% in Aloysius
(“the Acquisition”).

2. THE ALOYSIUS ACQUISITION

    2.1 Nature of Aloysius

    Aloysius is a company which owns 15 Domino’s Pizza franchise stores in Gauteng, Free State, North
    West, Mpumalanga and Limpopo. Aloysius has been a franchisee of TFF for over ten years, starting
    with two Scooters Pizza outlets in 2006.

    2.2 Purchase consideration and subscription price

    The purchase consideration of R120 for the 120 shares in Aloysius and R6 000 000 for the claims in
    Aloysius, as well as the subscription for 200 Aloysius shares at a subscription price of R200, resulting
    in a total consideration of R6 000 320 (“Purchase Consideration”), shall be settled in cash generated
    from operations.

3. BACKGROUND TO AND RATIONALE FOR THE ACQUISITION

Although Mr Gonzaga was not actively involved in the management of Aloysius, there was a perceived
conflict of interest given Mr Gonzaga’s position as Chief Executive Officer of Taste. This perceived conflict
has been aggravated by the recent strategic direction of TFF to own corporate stores, whereas in the past
the Taste food division did not actively pursue a corporate store ownership strategy. The disposal of Mr
Gonzaga’s shares and claims in Aloysius served to remove the perceived conflict of interest as well as to
increase the number of corporate owned Domino’s Pizza stores. The remaining 20% of shares in Aloysius
will be retained by the existing management who have been franchisees of Taste for ten years. TFF
therefore retains this exceptional base of skills and knowledge in the pizza segment and management is
aligned to the corporate store ownership strategy of the Group.

4. CONDITIONS PRECEDENT AND EFFECTIVE DATE

All suspensive conditions to the Acquisition have been fulfilled.
The effective date of the Acquisition is two business days after the date on which the last of the conditions
to be fulfilled was fulfilled, being 19 December 2016.

5. FINANCIAL INFORMATION PERTAINING TO THE ACQUISITION

The value of the net assets that are the subject of the Acquisition as at 31 May 2016 was negative
R10.25 million. The loss after tax attributable to the net assets that are the subject of the Acquisition for
the year ended 29 February 2016 was R8.02 million and the loss for the three months ended 31 May 2016
was R1.48 million.

6. CLASSIFICATION OF THE ACQUISITION

The Acquisition is considered to be a small related party transaction in terms of paragraph 10.7 of the JSE
Listings Requirements (“Listings Requirements”) and consequently requires a fairness opinion
(“Opinion”) from an independent professional expert acceptable to the JSE (“Independent Expert”) that
the terms of the Acquisition are fair as far as shareholders of Taste are concerned.

In terms of paragraph 10.7(b) of the Listings Requirements, the Company has provided the JSE with
written confirmation from the Independent Expert that the terms of the Acquisition are fair as far as the
shareholders of Taste are concerned. The fairness opinion will lie for inspection at Taste’s registered office
for a period of 28 days from the date of announcement.


Johannesburg
20 December 2016

Sponsor and Independent Expert
Merchantec Capital

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