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Approval of Italtile Merger With Ceramic Industries (“Ceramic”) and Ezee Tile
ITALTILE LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1955/000558/06)
Share code: ITE ISIN: ZAE000099123
(“Italtile” or “the Group”)
APPROVAL OF ITALTILE MERGER WITH CERAMIC INDUSTRIES (“CERAMIC”) AND EZEE TILE
Further to Italtile’s binding offer ("Binding Offer") on 16 July 2016 to Ceramic, to acquire up to a further 74.5%
of Ceramic´s issued share capital ("the Acquisition"), and as advised in the announcement published on SENS
on 22 August 2017, the Competition Tribunal (“the Tribunal”) announced on 21 August 2017 that the
Acquisition has been approved, subject only to one condition. In terms of this condition, Italtile employees
are not to receive or gain access to any information of Ceramic relating to third party customers, including
information regarding the terms and conditions on which Ceramic contracts with its third-party customers.
According to the terms of the Implementation Agreement (“the Agreement”) between Italtile and Ceramic,
the board of directors of Italtile (“the Board”) is required to confirm that it is satisfied to proceed with the
Acquisition in light of the condition imposed by the Tribunal, pertaining to the Ceramic information.
In this regard, the Board has unanimously confirmed that it is satisfied for the Acquisition to be concluded
notwithstanding the condition imposed by the Tribunal. Further, in accordance with the Agreement, the JSE
is required to grant a listing of the Italtile shares to be issued in respect of the Acquisition. Confirmation of
such has been received and accordingly, the effective date of the Acquisition will be Monday, 2 October 2017
(“the effective date”), being the first business day of the month following the month in which all conditions
were approved, as stipulated by the Agreement.
BACKGROUND INFORMATION ON CERAMIC AND EZEE TILE:
- Ceramic is a manufacturer of glazed porcelain floor tiles; ceramic wall and floor tiles; vitreous china
sanitaryware and acrylic baths and shower trays.
- Ceramic’s South African operations comprise five tile factories, one sanitaryware factory and a bath
factory. The tile factories are: Samca Floor Tiles, Samca Wall Tiles, Vitro, Pegasus and Gryphon; the
sanitaryware and bath factories are Betta Sanitaryware and Aquarius Baths respectively.
- Ceramic also owns and operates one tile factory in Australia – Centaurus.
- Ceramic is Italtile’s primary supplier of tiles, sanitaryware and baths. The business also supplies third
party customers including Cashbuild, Massmart and Tiletoria.
- The Italtile Group currently owns 21% of the issued share capital of Ceramic.
- Ezee Tile is a manufacturer of grout, adhesive and related products. The company supplies the Italtile
Group as well as third party customers.
- The Italtile Group currently owns 46% of the issued share capital of Ezee Tile.
RATIONALE FOR THE ACQUISITION
- The Group has confidence in the opportunities for growth in South Africa.
- There are far-reaching benefits for Italtile and Ceramic:
o The long-term success and sustainability of both businesses are inextricably intertwined;
o The creation of depth of management, experience and skill;
o The enhancement of succession planning at a combined group level; and
o There are advantages to be gained from:
- improved efficiencies and reduced costs;
- enhanced allocation of capital; and
- alignment of long term growth strategies.
FINANCIAL DETAILS OF THE ACQUISITION
- Based on Ceramic’s shareholding on the effective date, Italtile will acquire 14 464 769 ordinary shares
of Ceramic for a total consideration of R241.46 per share, totalling
R3 492 663 123, payable by way of total cash payments of R1 746 331 636 over a 17-month period
and the issue of 150 936 170 Italtile shares at R11.57 per Italtile share on the effective date.
- As a result of the Acquisition, Italtile will hold 95.47% of the issued share capital of Ceramic and an
effective 71.54% of the issued share capital of Ezee Tile.
- There has been no material change to the movements in earnings per share and headline earnings
per share post Acquisition from those set out in the pro forma financial information contained in the
Italtile circular dated 23 August 2017.
POST ACQUISITION
The organisational structure of Italtile, Ceramic and Ezee Tile will remain unchanged.
RIGHTS OFFER
- Shareholders are referred to the announcements published on SENS on 26 April 2016 and
20 July 2016 wherein they were advised, inter alia, that Italtile intended to undertake a rights offer
in order to ensure equitable treatment of all shareholders and afford minority shareholders the
opportunity to avoid dilution of their shareholding as a result of the Acquisition.
- In terms of the rights offer, which Italtile intends to undertake subsequent to the effective date, a
total of 22 shares will be offered for every 100 shares held in Italtile at R11.57 per rights offer share.
- The salient dates and times pertaining to the rights offer timetable will be published in due course.
Management anticipates that the rights offer will be completed by mid-November 2017.
Johannesburg
6 September 2017
Sponsor
Merchantec Capital
Legal Advisor to Italtile
Hogan Lovells (SA) Inc.
Corporate and Legal Advisor to Rallen
Rabin & Associates Proprietary Limited
Corporate and Legal Advisor to Ceramic
Howard Pelkowitz
Date: 06/09/2017 09:37:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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