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SANTOVA LIMITED - Acquisition of MLG Maritime Cargo Logistics GMBH Germany

Release Date: 10/04/2019 13:00
Code(s): SNV     PDF:  
 
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Acquisition of MLG Maritime Cargo Logistics GMBH  Germany

SANTOVA LIMITED
(“Santova” or “the Company”)
Registration Number: 1998/018118/06
Share code: SNV
ISIN: ZAE000159711

ACQUISITION OF MLG MARITIME CARGO LOGISTICS GMBH (GERMANY)

INTRODUCTION

The Board of Santova is pleased to announce that subject to the condition’s precedent set out
below, Santova has acquired 100% of MLG Maritime Cargo Logistics GmbH (“MCL”) for an
amount of Euro 1,919,040 with effect 1st March 2019.

VENDORS OF MCL

Santova has acquired 100% of the issued share capital of MCL from Overseas Freight Ways
OU, an investment holding company controlled by Frank Heuer. Frank Heuer is the current
managing director and founder of MCL. Frank Heuer will continue to serve as managing
director of the company, post the acquisition. In addition, Frank Heuer will assume the role of
managing director of Santova Logistics (Germany) following the recent retirement of the
current managing director.

DESCRIPTION OF THE BUSINESS

MCL is a company incorporated and registered in Germany which operates as an international
freight forwarding and logistics business, including the operation and management of a
bonded warehouse facility based in the Port of Hamburg, Germany. The business was
founded in 1996.

RATIONALE FOR THE ACQUISTION

Santova’s strategy is to continuously expand its international presence through the
acquisition of well-established logistics businesses along key international trade routes and
in major international trading geographies.

The acquisition of MCL will further enhance the Group’s current capabilities in Germany
and more specifically expands the Group’s presence and service offering in Hamburg.
Hamburg is Germany's largest port and Europe's third-largest container port and acts as
the gateway to northern Europe.

MCL primarily provides seaport forwarding, warehousing and transshipment services and
specialises in the transportation and storage of dangerous and explosive goods.

In addition, MCL will offer the Group access to a 2,000 square meter bonded warehouse
facility in the port of Hamburg that provides storage and other value-add warehouse services.

CONSIDERATION PAYABLE

The purchased price payable for MCL is Euro 1,919,040 and will be settled in the form of cash,
with the first installment of Euro 1,259,040 payable on fulfilment of the conditions precedent
and the balance payable in two installments of Euro 330,000, each year over a period of 24
months subject to the achievement of a profit warranty.
The profit warranty requires MCL to achieve a minimum net profit before tax of Euro 350,000
per annum for the 24-month warranty period, failing which the goodwill component of the
purchase price will be proportionately reduced.

The purchase price will be funded through the Group’s R75 million medium term acquisition
loan facility, which was approved in 2018 by the Group’s primary transactional bankers for
general acquisition purposes.

CONDITIONS PRECEDENT

The completion of the acquisition is subject to the preparation of the effective date accounts
as at 28 February 2019, which is the final remaining material condition precedent.

The following conditions precedent are also incomplete but are in the final stages of
completion:

       * Signature of the agreed Managing Director Service Agreement by Frank Heuer;
       * Negotiation and execution of the new lease governing the Hamburg warehouse to the
         satisfaction of the parties;
       * Declaration by the Seller that no material adverse changes have occurred between
         signature and payment; and
       * Payment of the first installment of the purchase price once all other conditions
         precedent are fulfilled.

VALUE OF THE NET ASSETS AND PROFITS ATTRIBUTABLE TO THE NET ASSETS
BEING ACQUIRED

The final value of the net assets of MCL that are being acquired will be determined as per
effective date accounts as at 28 February 2019 which are currently being prepared and will be
finalised prior to completion. However, the final value of the net assets of MCL are expected
to be an amount of approximately Euro 500,000.

The value of the profits attributable to net assets of MCL that are being acquired are warranted
to be Euro 350,000 before taxation for each of the 2 financial years post effective date.

ARTICLES OF ASSOCIATION OF MCL

Santova has confirmed that the Articles of Association of MCL contain no provisions that would
frustrate Santova in any way from compliance with its obligations in terms of the Listings
Requirements and furthermore do not contain any provisions that will relieve Santova from
compliance with the Listings Requirements.

CATEGORISATION OF THE ACQUISITION

This transaction is a category 2 transaction as defined by the JSE Listings Requirements and
as such does not require specific Shareholder approval.

10 April 2019
Durban
Sponsor and Corporate Advisor
River Group

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