AVI LIMITED - Disposal Of I&J's 40% Effective Interest In The Simplot Seafood Snacks And Meals Joint Venture

Disposal Of I&J's 40% Effective Interest In The Simplot Seafood Snacks And Meals Joint Venture

AVI Limited
(Incorporated in South Africa)
(Registration number: 1944/017201/06)
ISIN Code: ZAE000049433
("AVI" or "the Group")


DISPOSAL OF I&J HOLDINGS PROPRIETARY LIMITED’S (“I&J”) 40% EFFECTIVE
INTEREST IN THE SIMPLOT SEAFOOD SNACKS AND MEALS JOINT VENTURE
(“SIMPLOT JV”) TO SIMPLOT AUSTRALIA PROPRIETARY LIMITED AND RELATED
ENTITIES (“SIMPLOT AUSTRALIA”)

Shareholders are advised that AVI and I&J have entered into an
agreement in terms of which Simplot Australia will acquire I&J’s 40%
effective interest in the Simplot JV and the rights to certain
intellectual property assets (“IP Assets”) utilised by the JV, for
an   aggregate   cash   consideration   of   AUD62   million   (“the
Transaction”).

The Simplot JV is a leading manufacturer and supplier of seafood,
snacks and meals in the retail and foodservice categories in
Australia and New Zealand.

The Transaction is not a categorised transaction in terms of the
Listings Requirements of the JSE Limited.
The rationale for the Transaction is:

  •   to exit a business arrangement over which AVI has limited
      managerial control and in which its ability to effect
      significant strategic change is restricted; and

  •   to reduce AVI and I&J’s exposure to categories with low growth
      potential and whose future return on capital prospects do not
      meet AVI’s expectations.

Australia and New Zealand remain important markets for I&J which it
will service through an ongoing supply agreement and close working
relationship with Simplot Australia.

The purchase consideration has been converted to R633 million, which
represents a multiple of 17.4× the Simplot JV’s total contribution
to I&J’s 2019 attributable earnings of R36,3 million.

The Transaction will result in a capital gain, after tax, of
approximately R370 million being recognised in AVI’s results for the
six months ended 31 December 2019. This estimate includes the
reclassification of the cumulative foreign currency translation
reserve from equity to profit on disposal, as required by
International Accounting Standard 21.

Further details relating to the Transaction will be communicated at
the Group’s half-year results presentation to be held on or about 
9 March 2020.

Illovo                                   Sponsor
7 November 2019                          The Standard Bank of South
                                         Africa Limited

Date: 07/11/2019 12:22:00
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