ESOR LIMITED - Acquisition of Tuboseal Services Pty Ltd and the Business Assets and Operations from Tuboseal Pty LtdRelease Date: 10/10/2016 13:00:00 Code(s): ESR PDF(s):
Acquisition of Tuboseal Services Pty Ltd and the Business Assets and Operations from Tuboseal Pty Ltd
(Incorporated in the Republic of South Africa)
(Registration number: 1994/000732/06)
JSE code: ESR
ACQUISITION OF TUBOSEAL SERVICES PROPRIETARY LIMITED (“TUBOSEAL SERVICES”) AND
THE BUSINESS ASSETS AND OPERATIONS FROM TUBOSEAL PROPRIETARY LIMITED
Esor hereby advises its shareholders that it has acquired through Esor
Construction (Pty) Ltd, a 100% held subsidiary, and in separate transactions, a
100% interest in Tuboseal Services from Mr Jean-Louis Frey for a consideration
of R15 million, and the business assets and operations of Tuboseal for a
consideration of R18.25 million, (together “Tuboseal Group”) (the
“Transactions”). The binding agreements were entered into on 6 October 2016 with
the effective date of the transaction being 1 September 2016. Esor will also be
responsible for settling the balance of R3 million owing on certain assets
acquired as part of the Transactions.
The consideration will be settled by means of a cash payment of R17,45 million
on 7 October 2016 and the balance on 31 October 2016.
As at 29 February 2016 (the “Last Reporting Date”), the value of net assets
acquired and net profit after tax were as follows:
Net Asset Value Net Profit After Tax
Tuboseal Services R13 435 160 R2 856 167
Tuboseal R6 119 167 R5 707 508
Total R19 554 327 R8 563 675
2. NATURE OF THE BUSINESS OF TUBOSEAL GROUP
Established in 1987, Tuboseal Group has developed into the foremost pipeline
rehabilitation company in Cape Town, South Africa. As a frontrunner in the
pursuit of world class trenchless technologies in local municipalities and
industries, Tuboseal Group has played an instrumental part in ensuring
credibility, acceptance and success of trenchless rehabilitation methods in
The rehabilitation methods offered are all geared towards minimising disruption
to the immediate environment, traffic, the public and commercial activities.
3. RATIONALE FOR THE TRANSACTION
- expands Esor’s existing product offering and provides vertical integration
in the maintenance of infrastructure;
- offers attractive margins that can only be achieved in niche businesses;
- provides a platform for Esor to grow its geographic footprint with a
presence in the Western Cape; and
- provides an opportunity to participate in the expected growth of
infrastructure maintenance contracts and expansion of the products across
4. CONDITIONS PRECEDENT TO THE TRANSACTIONS
All conditions precedent to the Transactions have been fulfilled.
5. CATEGORISATION OF THE TRANSACTION
The Transactions have been categorised as a Category 2 acquisition in terms of
the Listings Requirements of the JSE. It is therefore not subject to the
approval of Esor’s shareholders and accordingly no circular to Esor shareholders
is required. None of the parties are related to Esor.
6. MEMORANDUM OF INCORPORATION
Esor undertakes that the memorandum of incorporation of Tuboseal Services will
conform to Schedule 10 of the JSE Listings Requirements, as required.
10 October 2016
Vunani Corporate Finance
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