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Acquisition of Micros and Withdrawal of Cautionary Announcement
ADAPT IT HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Registration number: 1998/017276/06)
Share code: ADI ISIN: ZAE000113163
(“Adapt IT Holdings” or “the Group”)
ACQUISITION OF MICROS AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
The board of directors of Adapt IT Holdings (“the Board”) is pleased to inform shareholders that Adapt IT
Holdings and its wholly-owned subsidiary, Adapt IT Proprietary Limited (“Adapt IT”), have entered into a
Loan, Repurchase, Sale and Subscription Agreement (“Agreement”) on 10 May 2017 (“Signature Date”)
with Brandon James Balsdon, Mark Barend McEnery, Rosme Jean Pienaar and Paul Stephenson,
Shalamuka Capital 3 Proprietary Limited and Corvest 6 Proprietary Limited (collectively referred to as the
“Sellers”), and Micros South Africa Proprietary Limited (“Micros”).
In terms of the Agreement:
- Adapt IT will advance an interest free loan of R60 748 727.09 (“Loan”) to Micros;
- Micros will repurchase all the shares held by those Sellers which are also companies for a maximum
consideration of R58 878 400 (“Repurchase Transactions”), subject to adjustment as detailed below;
- Adapt IT will acquire 100% of the issued share capital in Micros (“Sold Shares”) from those Sellers
which are natural persons for a maximum total purchase consideration of R61 281 600 (“Purchase
Price”), subject to adjustment as detailed below; and
- Shalamuka will apply all of the proceeds realised by it from the Repurchase Transactions towards
subscribing for ordinary shares in Adapt IT Holdings.
The composite transaction will be implemented on the "Closing Date", being the later to occur of the date
on which the last of the Conditions to Closing, as detailed in paragraph 2.4 below, is fulfilled, or, to the
extent permissible, waived (“Closing”), and the 8th business day after the date on which the actual income
from operations of Micros is agreed or finally determined per the Agreement.
The consideration due to the Sellers is subject to adjustment based on the actual income from operations
of Micros relative to the budgeted income from operations of Micros per the Agreement.
2. THE ACQUISITION OF MICROS
2.1 Nature of the Micros business
The Micros group conducts business in the Information Technology (“IT”) sector, inter alia, providing
software, hardware, enterprise systems integration, consulting, support and solutions to its clients,
primarily in the hospitality industry.
2.2 The rationale for the Acquisition of Micros
The Acquisition of Micros, which is a leader in its vertical market, creates an entry into the hospitality
industry, a new vertical for Adapt IT, further diversifying the Group. The Micros group is a good fit
with Adapt IT’s strategy as it provides, implements and supports world class complex niche software
solutions for an industry in which it has deep vertical expertise acquired over 20 years.
2.3 Purchase Price
The total purchase price due to those Sellers which are natural persons is an amount of
R61 281 600, of which:
2.3.1 an amount of R27 877 120 (“Purchase Price (Cash Portion)”), is payable in cash; and
2.3.2 an amount of R33 404 480 (“Purchase Price (Shares Portion)”), will be settled by the
issue of shares in Adapt IT Holdings (“Consideration Shares”).
The number of Consideration Shares to be issued shall be calculated by dividing the
Purchase Price (Shares Portion) by the "Strike Price", being the weighted average traded
price of shares in Adapt IT Holdings for a period of 30 trading days prior to 10 May 2017,
less 10%.
For a period of 12 months from that date of Closing Date, Shalamuka and those Sellers
which are natural persons will not be entitled to deal in the shares held by them in Adapt
IT Holdings. Adapt IT has agreed to provide those sellers which will be settled in respect
of a portion of their proceeds under the composite transaction with shares in Adapt IT
Holdings, with protection on any decrease in the value of the shares in Adapt IT Holdings
on the basis that Adapt IT may become obliged to make a cash top-up payment to the
applicable Sellers to place them in a similar position had they in fact been cash-settled at
the Closing Date in respect of their entire proceeds.
2.4 Conditions to Closing and effective date
Closing is subject to the fulfilment (or, to the extent permissible, the waiver) of the following
conditions by not later than:
2.4.1 20 business days after the Signature Date:
2.4.1.1 an independent expert appointed by the board of directors of Micros (“Micros
Board”) in compliance with the Companies Act, preparing and delivering to the
Micros Board and shareholders of Micros an expert’s report in respect of the
Repurchase Transactions;
2.4.1.2 the shareholders of Micros having provided Adapt IT with written confirmation of
the adoption of the special resolution in compliance with sections 114 and
115(2)(a) as required by section 48(8)(b) of the Companies Act approving the
Share Repurchase;
2.4.1.3 the shareholders of Micros having provided Adapt IT with written confirmation of
the adoption by the shareholders of Micros of the special resolutions approving
the terms under which any financial assistance may be given in terms of the
Agreement in terms of section 44(3)(a)(ii) of the Companies Act;
2.4.1.4 the Micros Board having passed resolutions:
2.4.1.4.1 authorising the Repurchase Transactions and the distribution
thereof in terms of section 48(2)(a) read with section 46, section
48(8)(b), sections 114(1)(e) and 114(4) and section 115 of the
Companies Act (“Distribution”);
2.4.1.4.2 acknowledging that it has applied the solvency and liquidity test as
set out in section 4 of the Companies Act, and reasonably
concluding that Micros will satisfy same immediately after
completing the Distribution;
2.4.1.5 the board of directors of Adapt IT Holdings having passed a resolution approving
the issue of the Consideration Shares, and confirming that the Sold Shares
constitute adequate consideration in terms of section 40 of the Companies Act;
2.4.1.6 to the reasonable satisfaction of Adapt IT, proof of implementation and
completion of all Pre-Closing Transactions as set out in the Agreement (“Pre-
Closing Transactions”) having been delivered to Adapt IT or its attorneys,
including any board and shareholder resolutions and successful solvency and
liquidity testing in terms of section 4 of the Companies Act;
2.4.1.7 the Sellers having procured the release of each member of the Micros Group
that has provided a suretyship, guarantee, indemnity, or other securities to FNB
for the debts and obligations of Micros’ former wholly-owned subsidiary,
Anganna Investments 131 Proprietary Limited (“Anganna”) to FNB in respect of
the Anganna loan agreement;
2.4.1.8 Adapt IT having procured the release of the suretyship, guarantee, indemnity, or
other securities provided by Anganna to FNB for the debts or obligations of any
member of the Micros Group to FNB in respect of the FNB loan agreement;
2.4.1.9 change of control approvals have been received in terms of the FNB loan
agreement and the Anganna loan agreement.
2.4.2 75 business days after the Signature Date:
2.4.2.1 to the extent necessary, the Loan, the Share Repurchase, the Acquisition of
Micros, the subscription of the Subscription Shares by Shalamuka and the Pre-
Closing Transactions having been reported to, and approved by, the Competition
Authorities.
While the legal effective date of the Acquisition of Micros will be the actual Closing Date, the
accounting effective date will be dependent upon the actual Closing Date.
2.5 Adapt IT Group Integration
Subsequent to the Acquisition of Micros, the memoranda of incorporation of the Micros Group will be
reviewed to ensure that they do not prevent Adapt IT from complying with its obligations in terms of
the Listings Requirements of JSE Limited.
3. THE VALUE OF, AND PROFITS ATTRIBUTABLE TO, THE MICROS GROUP
The value of the net assets that are the subject of the Micros Group as at 30 June 2016 was R97 146 063.
The profit after tax attributable to the net assets that are the subject of the acquisition of Micros for the
year-ended 30 June 2016 was R13 311 000. Subsequent to 30 June 2016, the Micros Group acquired
another subsidiary which forms part of the group being acquired. The value of the net assets thereof as at
31 December 2016 was R6 870 380 and the profit after tax attributable to such net assets for the year
ended 31 December 2016 was R3 222 351.
4. CLASSIFICATION OF THE ACQUISITION OF MICROS
The Acquisition of Micros is classified as a Category 2 transaction in terms of the Listings Requirements
of JSE Limited.
5. WITHDRAWAL OF CAUTIONARY
Further to the cautionary announcement dated 2 March 2017 and the subsequent renewal of cautionary
announcement dated 18 April 2017, shareholders are advised that further to this announcement
regarding the Acquisition of Micros, shareholders no longer need to exercise caution when dealing in
Adapt IT’s securities.
10 May 2017
Sponsor
Merchantec Capital
Adapt IT Holdings’ Attorneys
Garlicke and Bousfield Incorporated
Corporate and Legal Advisors to the Sellers
Cliffe Dekker Hofmeyr Incorporated
Date: 10/05/2017 05:20:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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