Acquisition of 100% Of Ladismith Cheese Company Proprietary Limited
Sea Harvest Group Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2008/001066/06)
Share code: SHG ISIN: ZAE000240198
(“Sea Harvest Group” or “the Group”)
ACQUISITION OF 100% OF LADISMITH CHEESE COMPANY PROPRIETARY LIMITED
Sea Harvest Group is pleased to advise shareholders that its wholly-owned subsidiary, Cape
Harvest Food Group Proprietary Limited, has concluded a share purchase agreement to acquire
the entire issued share capital of Ladismith Cheese Company Proprietary Limited
(“Ladismith Cheese”) (“the Acquisition”) for a purchase consideration of R527 million
(“Purchase Consideration”), to be settled in cash.
2. BACKGROUND TO LADISMITH CHEESE
Established in 1999, Ladismith Cheese is a value-adding dairy processing company based in
Ladismith in the Western Cape. Ladismith Cheese’s primary business is the production, distribution,
marketing and sale of cheese, butter and milk powders to the South African retail, wholesale and
food service markets.
Centrally located to various areas of milk supply, Ladismith Cheese produced c.9,000 tons of
cheese and butter and 7,500 tons of dairy and non-dairy powder and generated revenues of R681m
and profit after tax of R57.7m for the financial year to 31 January 2018. Ladismith Cheese employs
approximately 350 people and has facilities in Johannesburg and offices in Cape Town.
The shareholders of Ladismith Cheese ("the Vendors") are the Taylor Family Trust, Van Zylsdamme
Boerdery (Edms) Bpk, the JJ Nel Familietrust, Deyzel & Coetzee CC, the Van der Vyver Trust, JPA
Crafford, the McGown Family Trust, the Muller Family Trust and the Ladismith Kaas Aandele
Aansporingstrust and its beneficiaries.
3. RATIONALE FOR THE ACQUISITION
The Acquisition is a further step in the execution of Sea Harvest Group’s stated investment strategy
(i) organically, through additional volumes and margin enhancement – the Group has
executed against this pillar through the recent investments in the Harvest Mzansi
factory freezer trawler and the implementation of the Marel factory solution at the
Group’s Saldanha operations;
(ii) through acquisitions of high value species in:
i. the South African seafood sector – the Group has executed with the recent
acquisition of Viking Fishing;
ii. the Australian seafood sector – the Group has made some progress with the recent
investment in the Spanish Mackerel fishery in Western Australia;
iii. the aquaculture sector - the Group has executed with the recent acquisition of 51%
of Viking Aquaculture; and
(iii) through acquisitions in complementary sectors of the South African food and
agricultural industry which exhibit strong fundamentals and growth, and where the
Group is able to leverage its core competencies and strengths.
In this regard, the Acquisition represents the acquisition of a profitable branded FMCG food
manufacturer of significant scale in the food and agricultural sector with a long track record, strong
national brand and a proven management team.
The dairy sector is expected to experience continued growing demand for cheese and butter in
response to consumer dietary changes towards natural fat products.
The Acquisition provides Sea Harvest Group with an ideal platform from which to build on in this
sector through the development and acquisition of additional dairy and allied beverage products.
4. PURCHASE CONSIDERATION AND OTHER TERMS
As set out in paragraph 1 above, the Purchase Consideration is an amount R527 million.
The Acquisition has a commercial effective date of 1 February 2018 (the “Effective Date”) and the
Vendors will accordingly also be paid an escalation amount calculated by applying a rate of 9.39%
per annum to R527 million for the period from the Effective Date to the date upon which the
Acquisition is implemented (“the Closing Date”), which will be the first business day of the month
commencing after the date on which the last of the conditions precedent to which the Acquisition is
subject has been fulfilled or waived (as the case may be). The Closing Date is currently expected
to be on or about 1 December 2018.
The Purchase Consideration will be settled in cash on the Closing Date, and will be funded from
available cash and/or facilities.
It is currently the intention that the Group undertakes a vendor consideration placing of up to R300m
worth of Sea Harvest Group shares with Brimstone Investment Corporation Limited (“Placing”), in
order to part-fund the Purchase Consideration. The shares to be issued pursuant to the Placing will
be issued at a price no lower than the lower of (a) a 10% discount to the 30-day VWAP on the day
the Placing is authorised by the directors and (b) a 10% discount to the 3-day VWAP on the date
of the Placing. It is intended that the Placing shares be issued at approximately R14 per share. The
Placing is subject to Sea Harvest Group shareholder approval.
The Acquisition is subject to such other terms and conditions as are considered typical for a
transaction of this nature. These include the provision by the Vendors of appropriate warranties and
indemnities, and an escrow arrangement in terms whereof a portion of the Purchase Consideration
is retained in escrow for a period of time.
As part of the Acquisition, the Vendors and the key executives have provided certain non-compete
Sea Harvest Group will ensure that the provisions of the memorandum of incorporation of
Ladismith Cheese does not frustrate it from compliance with the JSE Limited (“JSE”) Listings
5. CONDITIONS PRECEDENT
The Acquisition is subject to the fulfilment or waiver (as the case may be) of various conditions
precedent, by no later than 30 November 2018 or such later date as may be agreed, including, inter
alia, the following:
- approval of the Acquisition by the applicable competition authorities, either unconditionally or
subject to such conditions as may be acceptable to the relevant party/ies;
- the conclusion of an escrow agreement;
- certain third-party consents, waivers and notifications; and
- no material adverse event occurring between Effective Date and Closing Date.
6. FINANCIAL INFORMATION
The net asset value of Ladismith Cheese as extracted from its audited financial results for the 12
months ended 31 January 2018 prepared in accordance with IFRS for Small and Medium sized
entities was R266,471,860 and Ladismith Cheese’s net profit after tax for the same period was
In terms of the JSE Listings Requirements, the Acquisition is categorised as a Category 2
28 August 2018
Financial Advisor and Sponsor to Sea Harvest Group
The Standard Bank of South Africa Limited
Legal Advisors to Sea Harvest Group
Cliffe Dekker Hofmeyr Incorporated
Financial Advisors to Ladismith Cheese
PricewaterhouseCoopers Corporate Finance Proprietary Limited
Legal Advisors to Ladismith Cheese
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