ARB HOLDINGS LIMITED - Acquisition of 100% of Radient Group Proprietary Limited and renewal of cautionary announcement

Release Date: 15/08/2018 07:15
Code(s): ARH
 
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Acquisition of 100% of Radient Group Proprietary Limited and renewal of cautionary announcement

ARB HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration Number: 1986/002975/06)
Share Code: ARH ISIN: AE000109435
("ARB" or "the Company" or "the Group")


ACQUISITION OF 100% OF RADIANT GROUP PROPRIETARY LIMITED AND RENEWAL OF
CAUTIONARY ANNOUNCEMENT

1 INTRODUCTION

Shareholders are referred to the announcement released on SENS on 3 July 2018, and are advised
that ARB and its subsidiary Eurolux (Proprietary) Limited (“Eurolux”) have signed definitive agreements
(the “Agreements”) with South Ocean Holdings Limited (“South Ocean”) and its subsidiary Radiant
Group Proprietary Limited (“Radiant”), in terms of which ARB, through Eurolux, will acquire 100% of the
total issued share capital of Radiant and the properties that Radiant operate out of, from South Ocean
(the “Transaction”).


The Transaction is subject to the fulfilment of a number of suspensive conditions as set out in 4.3 below,
including, amongst others, the approval of the board of directors of the Company and the Competition
Commission to be obtained before a sunset date of 30 November 2018.

2 BACKGROUND TO RADIANT

Radiant is an importer of a range of light fittings, lamps and electrical products for distribution throughout
South Africa and seventeen African countries from its operations in Wynberg (Sandton). The Radiant
brand is well recognised for its wide range of competitively priced products.

3 BACKGROUND AND RATIONALE FOR THE PROPOSED TRANSACTION

The rationale for the Transaction is to gain access to a leading lighting brand and a channel to a market
in which Eurolux has very little current representation. Eurolux will continue to focus on its strength in
the retail business and Radiant will focus on the wholesale, construction and project sectors of the
market.

4 KEY TERMS OF THE PROPOSED TRANSACTION

   4.1 Sale of shares, property and Effective Date

          ARB will acquire through Eurolux, 100% of the total issued share capital in, and shareholders'
          claims against, Radiant (the “Sale Equity”), from South Ocean with effect from the last day of
          the month in which the last of the suspensive conditions is fulfilled or waived, or such other date
    as may be agreed on in writing by the parties (the “Effective Date”) and the properties from the
    relevant date on which transfer is registered.



4.2 The Purchase Consideration

    The purchase price for the Sale Equity is calculated on the Effective Date as follows:
        •   The tangible net asset value of Radiant, to be determined as at the Effective Date
            (“Effective Date TNAV”), less;
        •   A fixed amount of R20 million,
    subject to a maximum purchase amount of R117 million.


    The purchase price for the five properties (being Erven 445 & 446 Wynberg, Erf 539 Wynberg
    and Erven 1111 & 1112 Marlboro) is a fixed amount of R88 million, subject to receipt of a
    structural engineer's report, electrical compliance certificate and an entomologist’s report.


    The Effective Date TNAV will be calculated based on the Statement of Financial Position of
    Radiant as at the Effective Date prepared by the auditors of Radiant and reviewed by the
    auditors of ARB.


    The Purchase Consideration will be settled in cash by Eurolux, with funding from Eurolux's
    shareholders. No third party financing will be required to fund the Transaction.



4.3 Suspensive Conditions

    The implementation of the Transaction is subject to the fulfilment or waiver of certain
    suspensive conditions, which include, but are not limited to:


        •   the completion of a due diligence investigation to the satisfaction of ARB by
            approximately 14 September 2018;
        •   the passing of the necessary resolutions required to approve the Transaction by the
            boards of directors of Eurolux and ARB;
        •   obtaining of all third-party consents to the extent necessary in order to affect the
            implementation of the Transaction, including the written consent of the relevant third
            parties to any material contracts which contain restrictions or a right to terminate on a
            change of control of Radiant that will result from the Transaction;
        •   the release of any security held by any third party funders over any of the assets of
            Radiant and or the properties to be acquired;
        •   the approval of the Transaction by the shareholders of South Ocean at a properly
            constituted shareholders' meeting in terms of the Companies Act and the JSE Listings
            Requirements;
        •   that prior to the Transaction becoming unconditional as to its terms, there is no material
            adverse change to the financial condition, assets, operations or business of Radiant;
            and
        •   the notification to and obtaining of the unconditional approval of the Transaction by the
            Competition Commission or other relevant competition authorities in terms of the
            Competition Act, 1998, or if such approval is conditional, then on such conditions as
            may be acceptable to the Company.


 4.4 Warranties and indemnities
 The Agreements contain warranties and indemnities which are considered normal in respect of
 a transaction of this nature.

5 OTHER SIGNIFICANT TERMS

The parties will agree on the sale or winding up of Icembu Services (Pty) Limited.


6 PROFIT AND NET ASSET VALUE ATTRIBUTABLE TO RADIANT

The tangible net asset value of the business being acquired, together with the properties, for the six
months ended 30 June 2018 as per the unaudited interim financial statements, was R200 771 000. The
revenue and losses after tax attributable to Radiant shareholders for the 6 months ended 30 June 2018
were R137 776 000 and R11 469 000 respectively (2017: R142 355 000 and R10 512 000). These
losses included significant impairments and write-downs of R13 237 000 (2017: R9 801 000).


These condensed unaudited consolidated interim financial statements for the six months ended 30 June
2018 have been prepared in accordance with the framework concepts and the measurement and
recognition requirements of International Financial Reporting Standards (“IFRS”), the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee, Financial Pronouncements issued
by the Financial Reporting Standards Council, the requirements of the SA Companies Act, the JSE
Listings Requirements and the information required by IAS 34 Interim Financial Reporting.

7 CATEGORISATION  OF  THE TRANSACTION  AND RENEWAL OF CAUTIONARY ANNOUNCEMENT

The Transaction is expected to constitute a category 2 acquisition in terms of the Listings Requirements
of the JSE Limited for ARB. The Transaction is therefore not subject to ARB shareholder approval.


In terms of paragraph 9.16 of the JSE Listings Requirements, ARB confirms that the provision of
Radiant’s MOI does not frustrate ARB in any way from compliance with its obligations in terms of the
JSE Listings Requirements.

Given that the Effective Date and the Purchase Consideration is still to be determined as set out above,
shareholders are advised to continue to exercise caution when dealing in the Company’s securities until
a further announcement containing the Effective Date and the final Purchase Consideration is released
on SENS.



Durban
15 August 2018


Sponsor
Grindrod Bank Limited


Legal Advisor to ARB
Webber Wentzel

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