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Acquisition of the Future Packaging and Machinery Group and Withdrawal of Cautionary
TRANSPACO LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1951/000799/06)
Ordinary share code: TPC
Ordinary share ISIN: ZAE000007480
(“Transpaco” or “the Company”)
THE ACQUISITION OF THE BUSINESS OF THE FUTURE PACKAGING AND MACHINERY
GROUP AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT (“THE ACQUISITION”)
1. Introduction
Transpaco has entered into an agreement to acquire the Sale Shares of the Future
Packaging and Machinery Group comprising Future Packaging and Machinery (Pty) Ltd,
Future Packaging and Machinery Cape (Pty) Ltd and Future Packaging and Machinery
(Kwa-Zulu Natal) (Pty) Ltd ("FPM") from the Sellers who have agreed to sell the Sale
Shares to Transpaco with effect from the Effective Date, 28 February 2018, on certain
terms and subject to certain conditions.
2. Overview of FPM
FPM was established in the early nineties and currently operates as a supplier of industrial
and general packaging products including the outsourcing of packaging services. FPM
offers corrugated board and paper products, plastic flexible materials , general packaging
materials, protective packaging, stationery, labelling & barcoding products, packaging
machinery, coding & marking applications, safety, cleaning & chemicals products and
materials handling components.
FPM markets its products nationally through three major distribution centres,
Johannesburg, Cape Town and Durban and two smaller depots in Bloemfontein and
Nelspruit.
3. Rationale for the Acquisition
FPM has achieved consistent growth in sales and profitability since inception. Transpaco
seeks access to the large customer base that FPM currently services and it’s extensive
product range to add to Transpaco’s existing offering. FPM is an attractive target business
prospect for Transpaco to expand its business. Furthermore, FPM satisfies all the criteria in
Transpaco’s expansion strategy, namely:
- A good track record, being highly profitable and cash generative;
- products and services well known and understood by Transpaco;
- an experienced and self-sufficient management team (senior management having on
average in excess of 30 years’ experience in operating the business);
- strong growth prospects, arising from its established position in South Africa and
opportunities to further expand municipal, industrial, wholesale,retail,agricultural and
export markets;
- an opportunity to grow an existing leg of a Transpaco operation; and
- expand current product offering to existing Transpaco customers.
In addition, the Acquisition has the following attractive features and benefits for Transpaco:
- Impressive distribution facilities operating efficient packaging supply services with
sound standard operating procedures;
- scalable business model which allows for significant growth through sales and
marketing expansion without excessive capex requirements; and
- anticipated earnings enhancement.
4. Purchase consideration
The maximum estimated purchase consideration payable for FPM is R105,0 million
depending on the final values to be determined subsequent to the finalisation of the
audited financial statements as at 28 February 2018. The purchase consideration for FPM
includes a premium of R37,2 million to the book value of the net assets being acquired in
terms of the Transaction.
Transpaco will be financing the Transaction through a combination of existing facilities and
cash resources.
5. Net assets and profits of FPM
The value of the net assets to be acquired as at 28 February 2018 (being the date on
which the transaction is based) is anticipated to be R67,8 million.
For the financial year ending 28 February 2018 FPM is projecting to generate turnover of
R461,0 million and NPAT of R20,0 million.
The above statements are based on management forecasts, prepared on IFRS for
smme’s, which have not been audited by Transpaco’s auditors and is provided for
information only.
6. Conditions precedent
The Acquisition is subject to standard suspensive conditions applicable to a transaction of
this nature including Competition Commission approval.
7. Closing date
The closing date of the Acquisition is estimated to be 1 May 2018.
8. JSE categorisation
The Acquisition is categorised as a category 2 transaction in terms of section 9.5(a) of the
JSE Listings Requirements and accordingly no shareholder approval is required.
9. Withdrawal of cautionary announcement
Shareholders are advised that, as a result of the publication of this announcement, the
cautionary announcement is now withdrawn and caution is no longer required to be
exercised by shareholders when dealing in their shares.
Johannesburg
18 December 2017
Legal advisors to Transpaco
Edward Nathan Sonnenbergs Incorporated
Sponsor to Transpaco
Investec Bank Limited
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