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Recommendation of the Independent Board not to Accept Offer by Fairfax Africa Investments
PPC Limited
(Incorporated in South Africa)
(Company registration number: 1892/000667/06)
JSE and ZSE Code: PPC
ISIN: ZAE000170049
(“PPC” or the “Company”)
RECOMMENDATION OF THE INDEPENDENT BOARD NOT TO ACCEPT OFFER BY FAIRFAX AFRICA
INVESTMENTS PROPRIETARY LIMITED (“Fairfax”) AND RENEWAL OF CAUTIONARY
Introduction
Shareholders of PPC (“Shareholders”) are referred to the announcements published
on the Stock Exchange News Service (“SENS”) on 25 August 2017, 4 September 2017,
15 September 2017 and 3 October 2017, relating to, amongst other things, the firm
intention letter delivered by Fairfax, on behalf of a subsidiary to be nominated
by Fairfax (“Offeror”), indicating that the Offeror has a firm intention to make
a partial offer to acquire ordinary shares representing a value of R2 billion of
the issued ordinary stated capital of PPC, at an offer price of R5.75 per ordinary
share of PPC (“Partial Offer”). The Partial Offer is conditional upon, amongst
other things, approval by Shareholders of the proposal to give effect to a merger
between PPC and Afrisam Group Proprietary Limited (“Proposed Merger”) and the
recommendation by the independent board of PPC (“Independent Board”) to
Shareholders that they accept the Partial Offer (“Recommendation Condition”).
Recommendation Condition process and outcome
As previously announced to Shareholders, the Independent Board was constituted in
accordance with Regulation 108 of the Companies Regulations, 2011 (“Companies
Regulations”) to consider, amongst other things, the terms and conditions, and
the merits, of the Partial Offer. The Independent Board appointed Investec Bank
Limited as its independent expert ("Independent Expert"), as contemplated in
Regulation 110 of the Companies Regulations, to provide a fair and reasonable
opinion in respect of the Partial Offer, and has been in the process of considering
the Partial Offer, including its conditions, in accordance with its fiduciary
responsibilities and obligations in terms of the Companies Act, 2008 and the
Companies Regulations.
The Independent Board advises Shareholders that, having completed its process of
considering the terms and conditions of the Partial Offer, it has resolved not to
recommend to Shareholders that they accept the Partial Offer. The Independent
Board has reached this resolution taking into account various considerations
including, amongst other things, the views of the Independent Expert, PPC’s own
valuation work, PPC forecasts and recent financial and business performance, the
need for payment of a control premium, feedback from Shareholders and the
Independent Board’s assessment of risks associated with the Partial Offer. The
Independent Expert, having considered two possible outcomes of the Proposed Merger
(such being the Proposed Merger being implemented as opposed to the Proposed
Merger not being implemented) is of the opinion that the Partial Offer, both in
the context of the Proposed Merger as well as on a stand-alone basis, is not fair
and reasonable.
The Independent Board has today advised Fairfax that it will not be recommending
the Partial Offer as required by the Recommendation Condition, and that PPC will
not convene a general meeting of the Shareholders for purposes of approving the
Proposed Merger.
Renewal of cautionary and responsibility statement
Shareholders are also referred to the announcements published on SENS by PPC on
27 October 2017, advising Shareholders that PPC has received a non-binding
expression of interest from LafargeHolcim (“LH”), which contemplates a combination
of certain African assets, a partial cash offer and a special dividend, and on 13
November 2017, advising Shareholders that PPC has received a non-binding
expression of interest from CRH plc (“CRH”), indicating that CRH is considering
submitting an all-cash proposal to acquire a controlling stake in PPC.
Shareholders are advised that PPC is continuing its engagements with CRH and LH
regarding their respective non-binding expressions of interest, in accordance with
the Independent Board processes described in the announcement published on SENS
by PPC on 13 November 2017. Shareholders should note that the engagements with
CRH and LH may or may not lead to the submission of firm intention letters.
In addition, Shareholders are advised that the Takeover Regulation Panel has
granted Fairfax an extension of the date by which it is required to post the
Partial Offer circular until 12 December 2017.
Shareholders are accordingly advised to continue exercising caution when dealing
in securities of the Company until such time as a further announcement is made in
this regard.
The Independent Board accepts responsibility for the information contained in this
announcement to the extent that it relates to PPC, accepts full responsibility
for the accuracy of such and certifies that, to the best of its knowledge and
belief, the information contained in this announcement is true and nothing has
been omitted which is likely to affect the importance of the information.
Sandton
22 November 2017
Investor contacts:
PPC:
Anashrin Pillay
Tel: +27 (0) 11 386 9000
Anashrin.Pillay@ppc.co.za
Joint Financial Advisor and Sponsor to PPC
Merrill Lynch South Africa (Pty) Ltd
Joint Financial Advisor to PPC
Identity Advisory (Pty) Ltd
Independent Advisor to the Board of PPC
The Standard Bank of South Africa Limited
Legal Advisor to PPC
Bowmans
Independent Expert
Investec Bank Limited
Date: 22/11/2017 01:20:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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