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SHF - Steinhoff International Holdings Limited - Strategic review of Steinhoff

Release Date: 14/03/2011 08:52
Code(s): SHF
Wrap Text

SHF - Steinhoff International Holdings Limited - Strategic review of Steinhoff Africa and proposed transaction with JD Group Limited in respect of combining the Steinhoff Africa retail assets with that of JD Group Limited STEINHOFF INTERNATIONAL HOLDINGS LIMITED Incorporated in the Republic of South Africa Registration Number: 1998/003951/06 Share Code: SHF & ISIN: ZAE000016176 ("Steinhoff") 14 March 2011 STRATEGIC POSITIONING OF STEINHOFF AFRICA`S RETAIL ASSETS WITHIN JD GROUP INTRODUCTION Steinhoff Africa is a diversified business with three clear business clusters comprising: * Unitrans supply chain solutions - a focussed, specialist, integrated logistics, warehouse and distribution management business; * an industrial integrated timber (PG Bison) and raw material business, including Steinhoff`s associate investment in KAP International Holdings Limited; and * Steinhoff Africa retail assets (being the subject matter of this SENS announcement in respect of a Category 2 transaction for Steinhoff, as described in more detail below). Steinhoff Europe and Steinhoff Africa are managed as two separate divisions. Following the acquisition of Conforama, Steinhoff Europe is the second largest integrated household goods retailer in Europe, and is well positioned to continue to grow organically in the fragmented European household goods market. Steinhoff shareholders are advised that the Steinhoff board of directors has concluded a strategic review of its retail interests in Southern Africa focussing on: * Identifying future growth opportunities for its retail interests in Southern Africa; * evaluating the most appropriate platform for the continued growth and roll-out of its existing African retail assets, and * locating an established platform that could support the group`s introduction of a Southern African large scale mass-market retail concept that could leverage off the global Steinhoff International household goods supply-chain and retail knowledge of the group. To this end, agreement has been reached between Steinhoff and JD Group Limited ("the agreement"), in terms of which JD Group Limited ("JD Group") will acquire all the Southern African Retail interests of Steinhoff Africa ("the transaction"), thereby establishing a diversified retail and financial services group. TERMS OF THE TRANSACTION Subject to conditions precedent customary in a transaction of this nature, JD Group will acquire, with effect from 30 June 2011: * Unitrans Automotive ("Unitrans Auto"), a leading motor retailer with an attractive portfolio of top selling volume brands, both new and pre- owned, supplemented by a successful offering of parts and accessories, servicing, insurance, and which also includes the Hertz car rental division; and * Steinbuild, a building material supplier and DIY business comprising the Timbercity and Pennypinchers and Tilehouse retail outlets. In addition and as part of the transaction, a Steinhoff associate will acquire JD Group`s Polish furniture retail business, Abra Spolka Akcyjna ("Abra"). The consideration payable by JD Group will be discharged by the issue to Steinhoff of a net number of approximately 60,7 million fully-paid JD Group shares "(JD consideration shares"), representing approximately 26% of its enlarged issued share capital valuing the overall transaction at more than R3 bn. Steinhoff will retain its JD Group shares as a strategic long-term investment. RATIONALE FOR BECOMING A SIGNIFICANT STRATEGIC SHAREHOLDER IN JD GROUP The existing JD Group comprises a clear diversified retail and financial services entity, that forms the perfect platform through which Steinhoff will grow and expand its own retail exposure in Africa. In addition, the JD Group`s retail businesses are expected to benefit from Steinhoff`s expertise in global household goods retailing, and sourcing. The transaction will combine Steinhoff Africa`s retail assets with that of the JD Group. In this regard, the combined JD Group`s pro-forma revenues are expected to be in excess of R25 billion, an increase of 91% from the R13 billion reported for the year ended 31 August 2010. UNAUDITED PRO-FORMA FINANCIAL EFFECTS OF THE TRANSACTION The pro forma financial effects have been calculated on the basis of the audited results of Steinhoff as at and for the year ended 30 June 2010 and the audited results of JD Group as at and for its year ended 31 August 2010. On the assumption that the transaction had been effective on 1 July 2009, disregarding the difference in financial year ends and the once-off capital profit on the sale of Steinhoff`s South African retail interests, the effects on Steinhoff`s undiluted and diluted headline earnings and earnings per ordinary share would have been immaterial (i.e. less than 3%). On the assumption that the transaction had been effective on 30 June 2010, and based on the statement of financial position of JD Group as at 31 August 2010, its effect on Steinhoff`s net asset value would been an increase of 8% from 1 656.60 cps to 1 788.80 cps, including the effect of the capital profit realised on the sale of Steinhoff`s South African interests. Wynberg, Sandton 14 March 2011 For more information, please contact: Steinhoff International Holdings Limited: Markus Jooste +27 (21) 808 0735 Piet Ferreira +27 (21) 808 0761 Mariza Nel +27 (21) 808 0754 Investment Bank to Steinhoff Investec Bank Limited Company sponsor: PSG Capital (Proprietary) Limited Date: 14/03/2011 08:52:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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