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Proposed disposal of Oro Agri and withdrawal of cautionary
OMNIA HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Registration number 1967/003680/06)
JSE code: OMN
ISIN: ZAE000005153
("Omnia")
PROPOSED DISPOSAL OF ORO AGRI AND WITHDRAWAL OF CAUTIONARY
THE PROPOSED DISPOSAL OF ORO AGRI
In its SENS announcement dated 22 June 2020, Omnia advised that it had received a non-binding
indicative offer for Oro Agri, the international AgriBio business Omnia acquired in 2018. This offer was
received from Rovensa, a European-headquartered business controlled by private equity funds,
Bridgepoint and Partners Group. Through a combination of organic growth and M&A, Rovensa has
established itself as a leading provider of biocontrol, bionutrition and crop protection solutions globally.
Following the completion of a due diligence investigation and transaction negotiations, Omnia and
Rovensa have reached agreement on the terms and conditions on which it is proposed that Omnia will
dispose of the Oro Agri Group by selling shares in Oro Agri International Ltd, Oro Agri SA (Pty) Ltd,
Oro Agri India Pvt Ltd, ORO AGRI Inc. and Oro Agri S. De R.L. to a Rovensa company, European Crops
Products 2 S.A. R.L (“ECP”), (the “Disposal").
The base purchase price ("Price") payable by ECP to Omnia for the Disposal is USD146,900,000. In
addition to the Price, Omnia is entitled to the repayment from Oro Agri of aggregate amounts of
USD3,071,722 and €2,897,348 (together with certain interest accruals thereon) which are owing by Oro
Agri. The Price was calculated with reference to an Oro Agri enterprise value of USD165,100,000, which
was reduced by the value of a 25% minority interest in Oro Agri Brazil and the net debt in Oro Agri.
THE BUSINESS OF ORO AGRI
Oro Agri is involved in the research and development, production, distribution, marketing and sales of a
differentiated range of AgriBio products, many of which are patented. Its product ranges include
biological crop protection products, adjuvants, liquid foliar fertilizers and soil conditioners for all major
crop types.
Oro Agri owns and operates in-house production and R&D facilities in South Africa, Brazil, the United
States and Europe. Oro Agri has a pipeline of new products and has strategic and operational plans for
business development based on new registrations and expanding its sales footprint.
RATIONALE FOR THE DISPOSAL
In the context of its 2019 rights issue, the initial phase of Omnia’s strategy had been to stablise the group.
Having completed the first phase, Omnia has commenced the second phase which is to restructure and
renew Omnia’s underlying businesses.
Omnia’s current core debt is at a level that, while not negatively impacting Omnia’s trading, requires
careful capital allocation to support growth across its businesses.
Omnia has been a relatively passive investor since acquiring Oro Agri in 2018 and in order to enable its
full potential, Omnia would have to invest significant additional capital in Oro Agri and fully integrate it
into Omnia's operations.
Based on the above factors, Rovensa’s non-binding indicative offer for Oro Agri brought Omnia to an
inflection point regarding its investment, requiring an evaluation of the available options of either funding
and fully integrating or disposing of Oro Agri.
In Omnia’s view, the factors that have impacted the negotiations and the Price include that Rovensa has
synergies with Oro Agri that Omnia does not have and has the capacity to fully fund Oro Agri’s growth
plan. In this context, the Price is aligned with Rovensa’s perceived opportunities for Oro Agri and is
attractive to Omnia in that it exceeds Omnia’s internal valuation of Oro Agri.
Omnia has concluded that the risk profile of the Oro Agri business, the attractive Price offered by Rovensa
as well as the benefits to Omnia of a de-risked balance sheet outweigh any potential long-term upside to
Omnia from its investment in Oro Agri.
Oro Agri contributed less than 15% of Omnia’s EBITDA (excluding impairments) in FY20 and is
budgeted to remain at similar levels in FY21 in contrast to the enterprise value placed on Oro Agri by the
purchaser which is approximately 40% of Omnia’s enterprise value and implies an unlock of value for
shareholders.
Oro Agri constitutes only a portion of Omnia’s global presence, contributing approximately 30% of the
international earnings Omnia reported for FY20. The balance of Omnia’s international market and
currency diversification is in its Agriculture International ("Agri International") and BME International
divisions.
Agri International supplies biostimulant, speciality nutrient and fertiliser coating products such as K-
humate™, BacstimTM and FERTICOATTM, for which there is high global demand. This demand is
reflected in increasing exports to India, Europe, Brazil and SADC from Omnia’s Australian operations.
Capital projects under assessment by Agri International include microbial and speciality nutrition product
ranges developed in South Africa and Europe.
Omnia’s BME international business is growing in Africa, Canada and Australia and is anticipated to play
a bigger role in these markets with partnerships in other global mining regions in development. BME’s
technology advantage positions the company well in the global markets, underpinned by its reputation for
outstanding operational safety and customer centricity.
Accordingly, Omnia’s board of directors has resolved to conclude the Disposal and intends in the circular
referred to below to recommend that shareholders approve the Disposal.
Rovensa’s strategy to successfully integrate Oro Agri upon completion of the Disposal is well advanced
and the Disposal may be a first step in a collaborative relationship between Omnia and Rovensa who have
complementary distribution networks and product suites.
APPLICATION OF PROCEEDS
Omnia’s intention is to use the Disposal proceeds to repay existing core term debt which will reduce the
group’s interest expenses as well as its weighted average cost of debt going forward. When repaying debt,
Omnia will also be able to settle existing interest rate hedges where appropriate. After debt repayments,
Omnia is likely to be in a net cash position.
From this strong financial base, Omnia can fund selective, organic expansionary capex and working
capital. Omnia will continue to ensure that it maintains an efficient capital structure whilst remaining
extremely conservative regarding possible inorganic opportunities.
When announcing its results for the financial year ending in March 2021, Omnia will have finalised its
evaluation of its capital requirements and will set out its decisions regarding a return of any surplus cash
to shareholders, which may include a special dividend and/or share buyback. The circular referred to
below will include a shareholder resolution giving Omnia a general authority to repurchase its shares.
SALIENT TERMS AND CONDITIONS OF THE DISPOSAL
The Disposal will have an effective date of 1 April 2020 and is subject to the following conditions
precedent:
- Omnia shareholders adopting an ordinary resolution approving the Disposal by simple majority;
- All necessary third-party consents having been received;
- Applicable merger control clearances having been received from the relevant competition
authorities in respect of the Disposal; and
- The Financial Surveillance Department of the South African Reserve Bank having granted written
approval for the implementation of the Disposal agreement.
The Disposal agreement contains undertakings, warranties and indemnities that are usual for transactions
of this nature.
FINANCIAL INFORMATION
The value of the net assets that are the subject of the transaction as at 31 March 2020 is R1 909 million
and the profits attributable thereto were approximately R50 million. This information has been extracted
from the consolidated accounts of the relevant Omnia subsidiaries.
CATEGORISATION OF THE TRANSACTION
In terms of the JSE Listings Requirements, the Disposal constitutes a category 1 transaction and is subject
to shareholder approval by ordinary resolution in a general meeting. A circular, containing a notice of
general meeting, is in preparation and is expected to be mailed to Omnia shareholders on or about Friday,
13 November 2020, which will result in the general meeting being held on or about Monday, 14 December
2020.
SUPPORT FOR THE DISPOSAL FROM INSTITUTIONAL SHAREHOLDERS
Omnia has received letters from the following shareholders or asset managers, acting not as principal but on
behalf of their clients, confirming their support for the Disposal and intention or undertaking to vote in
favour, or recommend to their clients that they vote in favour, of the resolutions required to approve the
Disposal.
Number of shares currently Percentage holding
Shareholder under management (1)
Kagiso Asset Management 22 085 095 13.2%
Foord Asset Management 20 806 852 12.3%
Prudential Investment Managers 18 717 255 11.2%
Allan Gray Proprietary Limited 18 031 830 10.8%
Old Mutual (various funds) 15 811 873 9.4%
Perpetua Investment Managers 4 770 868 2.8%
Total 100 223 773 59.8%
Notes:
(1) Net of shares held in treasury
WITHDRAWAL OF CAUTIONARY
With the release of this announcement, shareholders are no longer advised to exercise caution when
trading in Omnia securities and the cautionary announcement of 13 October 2020 is withdrawn.
Johannesburg
19 October 2020
Corporate Advisor and Sponsor Legal advisors
Java Capital Webber Wentzel
Date: 19-10-2020 07:05:00
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