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Offer to acquire the entire issued ordinary and B share capital of Distell and further cautionary announcement
DISTELL GROUP HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2016/394974/06)
(Share code: DGH)
(ISIN: ZAE000248811)
(“Distell” or “the Company”)
HEINEKEN INTERNATIONAL B.V.
(Incorporated in the Netherlands)
(Registration number: 33103545)
(“Heineken”)
SUNSIDE ACQUISITIONS PROPRIETARY LIMITED
(Incorporated in South Africa)
(Registration number: 2020/811071/07)
(“Newco”)
OFFER TO ACQUIRE THE ENTIRE ISSUED ORDINARY AND B SHARE CAPITAL OF DISTELL AND
FURTHER CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
1.1 Further to the cautionary announcements released by the Company on the Stock Exchange
News Service (“SENS”) of the JSE Limited (“JSE”), the latest being on 29 September 2021,
ordinary shareholders (“Distell Ordinary Shareholders”) and B shareholders (“Distell B
Shareholders”) of Distell (collectively “Distell Shareholders”) are hereby advised that, on
14 November 2021, Distell entered into an implementation agreement (“Implementation
Agreement”) with Heineken, Newco, a South African subsidiary of Heineken, Namibia Breweries
Limited (“NBL”) and parties associated with NBL in respect of the proposed transaction
(“Transaction”), which comprises:
1.1.1 a scheme of arrangement in terms of section 114 (read with section 115) of the
Companies Act, 71 of 2008 (“Companies Act”) to be proposed by the Distell board
(“Distell Board”) to the Distell Shareholders, as contemplated in paragraph 2 below
(“Scheme”); and
1.1.2 a series of preliminary steps, namely (i) certain intra-group transfers within Distell as
contemplated in paragraph 3.1 and the issuance of the Capevin B Shares as
contemplated and defined in paragraph 3.4 below (“Distell Restructuring”); and (ii) the
acquisition by Newco of various assets as contemplated in paragraph 3.6 below
(“Contribution Transactions”), referred to collectively herein as “Pre-Scheme
Transactions”.
1.2 Distell Shareholders are further referred to the announcement released to the shareholders of
NBL on the Stock Exchange News Service of the Namibian Stock Exchange on 15 November
2021, as well as the circular to NBL shareholders expected to be posted on the same day.
1.3 The Scheme ascribes an aggregate value for the entire Distell business of R180.00 per share
or R40.1 billion in aggregate.
2. SALIENT TERMS AND CONDITIONS OF THE SCHEME
2.1 In terms of the Scheme:
2.1.1 the Capevin Distribution contemplated in paragraph 2.3 will be undertaken; and
2.1.2 Distell Shareholders will receive an offer (“Heineken Offer”):
2.1.2.1 for the Capevin Ordinary Shares which they will receive pursuant to the Capevin
Distribution (“Out-of-Scope Assets Offer”); and
2.1.2.2 for their Distell ordinary shares (“Distell Ordinary Shares”) and Distell B shares
(“Distell B Shares”) (collectively “Distell Shares”) (“In-Scope Assets Offer”).
2.2 The Scheme will be implemented after the Pre Scheme Transactions set out in paragraph 3
below have been implemented. Accordingly, at the time when the Heineken Offer is
implemented:
2.2.1 Distell will (pursuant to the Distell Restructuring and the Capevin Distribution) hold the
In-Scope Assets; and
2.2.2 Capevin will hold the Out-of-Scope Assets.
2.3 In the first instance, and as part of the Scheme, all the Capevin Ordinary Shares will be
distributed by Distell to Distell Ordinary Shareholders (“Capevin Distribution”) pro rata and on
a one for one basis to their holding of Distell Ordinary Shares.
2.4 The offers in paragraph 2.1.2 are inter-conditional and will be made on, inter alia, the following
terms:
2.4.1 In-Scope Assets Offer
2.4.1.1 The In-Scope Assets Offer is an offer by Newco to acquire all the issued Distell
Shares for a consideration of, at the election of each Distell Shareholder, either:
2.4.1.1.1 a cash amount of R165.00 per Distell Ordinary Share (valuing the In-
Scope Assets at R36.8 billion) and R0.00001 per Distell B Share
(“Newco Cash Only Option”); or
2.4.1.1.2 shares in the unlisted Newco and a cash amount of R0.00001 per
Distell B Share (“Newco Share Only Option”), subject to the
shareholding limitation described in paragraph 2.4.1.4, with the
election to participate in a subsequent subscription for further shares
in Newco as detailed in paragraph 2.4.1.5 below; or
2.4.1.1.3 a combination of cash and shares in the unlisted Newco, in a fixed
ratio of Newco shares in respect of 58% of the Distell Ordinary
Shares (or, if such calculated number is not a whole number, same
shall be rounded down to the nearest whole number) and cash in
respect of the remaining Distell Ordinary Shares (namely 42%) held
by the Distell Shareholder and a cash amount of R0.00001 per Distell
B Share (“Newco Fixed Ratio Option”), subject to the shareholding
limitation described in paragraph 2.4.1.4, but without the election to
participate in the subsequent subscription for further shares in
Newco as detailed in paragraph 2.4.1.5 below,
(the Newco Cash Only Option, the Newco Share Only Option and the Newco
Fixed Ratio Option referred to collectively as the “Newco Offer
Consideration”). The Newco Offer Consideration is subject to a deemed cash
election by Distell Shareholders as described in paragraph 2.4.1.2 below (“In-
Scope Assets Offer”).
2.4.1.2 If a Distell Shareholder fails to make a valid election, the Distell Shareholder will
be deemed to have elected the Newco Cash Only Option (i.e. the Newco Cash
Only Option will be the default option).
2.4.1.3 Distell Shareholders should note that any Newco shares received as
consideration for the Newco Share Only Option or the Newco Fixed Ratio Option
will not be listed on the JSE or any other exchange. More detail will be provided
in the circular which will be issued to Distell Shareholders regarding the Scheme
(“Scheme Circular”) and in a prospectus issued by Newco (“Prospectus”) that
will be distributed with the Scheme Circular, as set out in paragraph 16 below.
2.4.1.4 The In-Scope Assets Offer is subject to Heineken holding a minimum of 65% of
the shares in Newco post implementation of the Scheme. It is therefore a term
of the Scheme that if such number of Distell Shareholders elect the Newco
Share Only Option and/or the Newco Fixed Ratio Option as would result in
Heineken’s interest in Newco falling below 65% post implementation of the In-
Scope Assets Offer, if such Distell Shareholders all received the relevant
number of Newco shares, then (i) in the first instance, the number of shares in
Newco delivered to Distell Shareholders who elect the Newco Fixed Ratio
Option will be reduced proportionately to the extent required to ensure that
Heineken maintains a minimum 65% post-Scheme shareholding in Newco,
and (ii) if Heineken’s interest in Newco is still below 65% following the aforesaid
reduction in Newco shares delivered to Distell Shareholders who elect the
Newco Fixed Ratio Option, then, in the second instance, the number of shares
in Newco delivered to Distell Shareholders who elect the Newco Share Only
Option will also be reduced proportionately such that Heineken maintains a
minimum 65% post-Scheme shareholding in Newco. Distell Shareholders who
receive fewer Newco shares as a result of the operation of this term (i.e. they
are scaled back) will be deemed to have elected the Newco Cash Only Option
in respect of the balance of the consideration due to them in terms of the In-
Scope Assets Offer.
2.4.1.5 Distell Shareholders who elect the Newco Share Only Option (“Distell Full
Reinvestment Shareholders”) will be required to further elect whether or not
they wish to subscribe for additional shares in Newco subsequent to
implementation of the Scheme, should Newco require additional capital
(“Newco Capital Raise”) in the circumstances detailed in paragraph 2.4.1.5.1
below. This election will be available only to Distell Full Reinvestment
Shareholders. The Newco Capital Raise will be subject to the following terms
and conditions:
2.4.1.5.1 the issue of shares in Newco pursuant to the Newco Capital Raise will
proceed only if the aggregate amount of cash required to settle the
consideration due to Distell Shareholders who elect (or are deemed to
have elected) the Newco Cash Only Option and who elect the Newco
Fixed Ratio Option (“In-Scope Cash Requirement”) exceeds R13.6
billion. If the In-Scope Cash Requirement exceeds R13.6 billion
(“Excess Amount”), such Excess Amount will be funded post
implementation in the ratio 75% by way of debt or preference share
funding raised by Newco and 25% through the Newco Capital Raise,
subject to the Newco Capital Raise being a maximum of R1.2 billion
(“Maximum Capital Raise Amount”);
2.4.1.5.2 the Newco shares issued to Distell Full Reinvestment Shareholders in
terms of the Newco Capital Raise will be issued at a subscription price
of R165.00 per Newco Share;
2.4.1.5.3 Heineken, as indirect shareholder in Newco, will not participate in the
Newco Capital Raise; and
2.4.1.5.4 Distell Full Reinvestment Shareholders shall be entitled to subscribe
for Newco shares which are in excess of their proportionate holding of
shares in Newco, subsequent to implementation of the Scheme,
subject thereto that the aggregate subscription price payable by all
Distell Full Reinvestment Shareholders shall not exceed the Maximum
Capital Raise Amount. If Distell Full Reinvestment Shareholders elect
to subscribe for additional Newco shares which have an aggregate
subscription price in excess of the Maximum Capital Raise Amount,
the number of Newco shares to be issued to each Distell Full
Reinvestment Shareholder in terms of the Newco Capital Raise will be
reduced proportionately to their holding of shares in Newco
immediately subsequent to implementation of the Scheme so that the
aggregate subscription price payable by all Distell Full Reinvestment
Shareholders is equal to the Maximum Capital Raise Amount.
2.4.2 Out-of-Scope Assets Offer
2.4.2.1 The Out-of-Scope Assets Offer is an offer by Heineken to acquire the Capevin
Ordinary Shares which Distell Shareholders will receive pursuant to the Capevin
Distribution for a consideration of R15.00 per Capevin Ordinary Share
(“Capevin Offer Consideration”), ascribing a value of R3.3 billion to the Out-
of-Scope Assets.
2.4.2.2 Distell Shareholders who reject the Out-of-Scope Assets Offer will receive
delivery of their proportionate allocation of Capevin Ordinary Shares in the
unlisted Capevin pursuant to the Capevin Distribution.
2.4.2.3 Distell Shareholders who accept the Out-of-Scope Assets Offer (or who fail to
make a valid election to reject the Out-of-Scope Assets Offer as contemplated
in paragraph 2.4.2.2) will receive the Capevin Offer Consideration, and the
Capevin Ordinary Shares that would otherwise have been delivered to them
pursuant to the Capevin Distribution will instead be delivered to Heineken.
2.4.2.4 The Out-of-Scope Assets Offer will be subject to a maximum acceptance
threshold, with Heineken acquiring a maximum of 82,242,883 of the Capevin
Ordinary Shares, as set out in paragraph 8.1.10 below.
2.5 The aggregate cash component of the consideration offered pursuant to the Heineken Offer is
R180.00 per Distell Ordinary Share, which represents a premium of:
2.5.1 35% to the volume weighted average traded price (“VWAP”) of R133.55 per Distell
Ordinary Share for the 30-day period ended on 17 May 2021, the day before the date
on which Distell first issued a cautionary announcement relating to the Transaction
(“Pre-cautionary Date”);
2.5.2 53% to the VWAP of R117.46 per Distell Ordinary Share for the 90-day period ended on
the Pre-cautionary Date; and
2.5.3 74% to the VWAP of R103.66 per Distell Ordinary Share for the 180-day period ended
on the Pre-cautionary Date.
3. PRE-SCHEME TRANSACTIONS
3.1 As an initial step, before the Scheme is implemented, the Distell
Restructuring and the Contribution Transactions will be implemented.
3.2 In terms of the Distell Restructuring, Distell will create two separate
businesses, namely:
3.2.1 a cider, ready-to-drink beverages, and spirits and wine business
(“In-Scope Assets”); and
3.2.2 a business consisting of Distell’s remaining assets, including its
Scotch whisky business (“Out-of-Scope Assets”).
3.3 Consequently, the In-Scope Assets will be held by Distell. Distell
Beverages (RF) Proprietary Limited, Distell’s broad-based black economic
empowerment (“B-BBEE”) partner, will hold 15% of the In-Scope Assets
located in South Africa. The Out-of-Scope Assets will be held by Capevin
Holdings Proprietary Limited (“Capevin”), a wholly owned subsidiary of
Distell.
3.4 In addition, as part of the Distell Restructuring and immediately prior to the
Capevin Distribution, in order to ensure that the share capital of Capevin
after implementation of the Scheme mirrors that of Distell prior to the
Scheme, B shares in Capevin (“Capevin B Shares”) will be issued to the
current Distell B Shareholder pro rata and on a one for one basis to its
holding of Distell B Shares. The Capevin B Shares will have substantially
the same terms and conditions as the Distell B Shares except that voting
rights will only attach to the Capevin B Shares when such shares become
indivisibly linked to Capevin ordinary shares (“Capevin Ordinary
Shares”), which will occur automatically when the Distell B Shareholders
receive the Capevin Ordinary Shares in terms of the Capevin Distribution.
3.5 Distell Shareholders will therefore receive one Capevin Ordinary Share for
every Distell Ordinary Share held and one Capevin B Share for every
Distell B Share held. This will ensure that the economic and voting rights
in Capevin after implementation of the Scheme are the same as the
economic and voting rights in Distell prior to the Scheme.
3.6 In terms of the Contribution Transactions:
3.6.1 Heineken will transfer to Newco (a) its 75% shareholding in
Heineken South Africa (RF) (Pty) Ltd (“HSA"), being Heineken’s
South African operating company, (b) its shareholding in
Heineken South African Export Company (Pty) Ltd (“HSAEC”) and
Heineken Brouwerijen B.V will transfer to Newco its shareholding
in HSAEC, resulting in Newco holding 100% of HSAEC, with
HSAEC being a South African company, housing Heineken’s
export business in Botswana, Zambia, Zimbabwe, eSwatini and
Lesotho and which at the time of the Transaction, will also house
Heineken’s distribution business in Tanzania, Uganda, Kenya and
South Sudan and (c) its holding in NBL Investment Holdings (Pty)
Ltd (“NIH”), which holds a 59.37% shareholding in NBL, a
Namibian listed entity; and
3.6.2 Newco will acquire (a) from NBL, its 25% shareholding in HSA,
resulting in Newco holding 100% of HSA, and (b) from Ohlthaver
& List Beverage Company (Pty) Ltd (“O&L”), the remaining shares
in NIH, resulting in Newco holding 100% of NIH.
3.7 The Pre-Scheme Transactions will be conditional on, inter alia, the
Scheme receiving all required shareholder and regulatory approvals.
4. B-BBEE
Distell and Heineken are keenly aware of the importance of economic
transformation in South Africa through B-BBEE. This includes a strong and
proud track record of supporting black-owned enterprises through total
combined procurement during their last financial years amounting to R3.7
billion, of which R2.6 billion was procured from black women-owned
enterprises. In terms of the Transaction, Heineken is committed to ensuring
that Newco’s preferential procurement policies will continue to support and
grow socio-economic transformation and empowerment by promoting and
nurturing the participation of SMME, and particularly black-owned and
black women-owned enterprises in the economy. Furthermore, Heineken
has provided a commitment that Newco’s operations will be at least 15%
empowered from a B-BBEE ownership perspective.
5. INFORMATION ABOUT DISTELL
Distell is a business with deep roots in South Africa and a growing African
and international presence. It is a leading producer and marketer of spirits,
wines, ciders and other ready-to-drink beverages. Distell first listed on the
JSE in 2001 following the merger of Stellenbosch Farmers' Winery and
Distillers Corporation in December 2000. Its shares, under the ticker ‘DGH’,
appears in the Beverages sector of the JSE as a result of its re-listing as
an investment holding company on 1 June 2018, following the restructuring
of its multi-tiered ownership structure. Some of Distell’s top brands include,
Savanna, Hunter’s, Bernini, Esprit, Amarula, 4th Street, Nederburg,
Klipdrift, and Cruz Premium Vodka. Its portfolio of brands resonates with a
broad spectrum of consumers across various consumption occasions.
Distell employs c.4 500 people worldwide. For more details refer to
www.distell.co.za.
6. INFORMATION ABOUT HEINEKEN N.V., HEINEKEN AND HSA
Heineken and HSA respectively are direct and indirect wholly owned
subsidiaries of Heineken N.V. and HSA contains Heineken’s South African
business. Established in 1864, Heineken N.V. is a Dutch multi-national
brewing company with over 300 brands, led by the iconic Heineken® brand
sold in 190 countries. Heineken N.V. employ over 80,000 employees and
operate breweries, malteries, cider plants and other production facilities in
more than 70 countries. Heineken N.V. has a well-balanced geographic
footprint with leadership positions in both developed and developing
markets. Heineken N.V. distinguishes four business regions, each
managed separately, namely in Europe, Americas, Asia Pacific & Africa,
Middle East & Eastern Europe. Heineken N.V. is represented in South
Africa by brands such as Heineken and Amstel. Heineken N.V. shares
trade on the Euronext in Amsterdam. For more details refer to
www.theheinekencompany.com.
7. TRANSACTION RATIONALE
7.1 The aggregate cash component of the Heineken Offer represents a
significant premium to the 30-, 90- and 180-day Pre-cautionary Date
VWAP.
7.2 The Heineken Offer is testament to the value of Distell’s brands, people
and route-to-market and has the potential to unlock significant value for all
Distell Shareholders.
7.3 The Transaction will create a world-class, Southern-African focused,
alcoholic beverages entity with a leading beer and cider portfolio,
combining the complementary brands, talent and skills of Distell, Heineken
and NBL to better serve consumers across the region and having a
significant presence in the adjacent African countries.
7.4 Newco will benefit from strengthened route-to-market and scale that is
expected to unlock significant revenue and cost synergies, which will
improve its ability to grow and compete with the other players in the region.
7.5 The Transaction has the potential to realise significant value for Distell’s B-
BBEE partner and demonstrate the broad-based benefits that could flow
from government’s B-BBEE policies.
8. CONDITIONS TO THE IMPLEMENTATION OF THE SCHEME
8.1 The Scheme is subject to the fulfilment or, where applicable, waiver, of the
inter alia the following suspensive conditions (“Scheme Conditions”):
8.1.1 the independent expert appointed by the independent board of
Distell, constituted for purposes of considering the Scheme as
required by the Companies Regulations, 2011, promulgated under
the Companies Act (“Takeover Regulations”)(“Distell
Independent Board”), provides (i) a "fair and reasonable" opinion
in relation to the Scheme, as required by the Takeover
Regulations, confirming that the Capevin Offer Consideration and
the Newco Offer Consideration, respectively, are fair and
reasonable to Shareholders and (ii) the reports required under
section 114 of the Companies Act;
8.1.2 either:
8.1.2.1 no Distell Shareholder (i) gives notice objecting to all or any
of the Scheme resolutions, as contemplated in section
164(3) of the Companies Act nor (ii) votes against all or any
of the Scheme resolutions at the Distell Scheme meeting to
consider the Transaction (“Scheme Meeting”); or
8.1.2.2 if any Distell Shareholder gives notice objecting to all or any
of the Scheme resolutions, as contemplated in section
164(3) of the Companies Act and then votes against all or
any of the Scheme resolutions at the Scheme Meeting,
Distell Shareholders holding no more than 5% of all the
issued Distell Shares give such notice and vote against all
or any of the Scheme resolutions at the Scheme Meeting;
or
8.1.2.3 if any Distell Shareholder gives notice objecting to all or any
of the Scheme resolutions, as contemplated in section
164(3) of the Companies Act and then votes against all or
any of the Scheme resolutions at the Scheme Meeting in
respect of more than 5% of all of the issued Distell Shares,
such shareholders exercise their appraisal rights, by giving
valid demands in terms of sections 164(5) to 164(8) of the
Companies Act in respect of no more than 5% of all the
issued Distell Shares within the maximum period permitted
by the Companies Act;
8.1.3 each of the Scheme resolutions is approved by the requisite
majority of votes of the Distell Shareholders, as the case may be,
as contemplated in sections 115(2) of the Companies Act and
section 5.85(c) of the JSE Listing Requirements, if required, as
applicable;
8.1.4 to the extent required in terms of the Companies Act, the High
Court of South Africa ("Court") approves the implementation of the
Scheme resolutions;
8.1.5 if any Person who voted against the Scheme resolutions applies
to court for a review of the Scheme in terms of section 115(3)(b)
and section 115(6) of the Companies Act, either:
8.1.5.1 leave to apply to Court for any such review is refused
or
8.1.5.2 if leave is so granted, the Court refuses to set aside the
Scheme resolutions;
8.1.6 all regulatory approvals required to implement the Scheme are
obtained, including:
8.1.6.1 the Takeover Regulations Panel (“TRP”) issuing
compliance certificates to Distell with respect to the
Scheme in terms of section 121(b) of the Companies
Act;
8.1.6.2 the competition authorities granting such approvals as
are required in terms of the Competition Act to
implement the Scheme, either unconditionally, or
subject to conditions acceptable to (i) Distell, acting
reasonably, if the conditions are imposed on and/or will
apply in respect of Capevin (including its subsidiaries
after implementation of the Scheme) and/or any Distell
Shareholder; and (ii) Newco acting reasonably, in any
other case;
8.1.6.3 the Financial Surveillance Department of the South
African Reserve Bank granting such approvals with
respect to the Scheme, and any financing
arrangements relating thereto, as are required in terms
of the South African Exchange Control Regulations
(promulgated in terms of the South African Currency
and Exchanges Act, No. 9 of 1933) to implement the
Scheme, either unconditionally, or subject to conditions
acceptable to the party upon whom the relevant
conditions are imposed and/or will apply, acting
reasonably; and
8.1.6.4 the JSE grants such approvals as are required in terms
of the JSE Listings Requirements with respect to the
Scheme;
8.1.7 all shareholder resolutions required for the Contribution
Transactions are obtained and related requirements are met;
8.1.8 all approvals (whether regulatory or otherwise, but excluding
corporate approvals) required to implement the Pre-Scheme
Transactions are obtained either unconditionally, or subject to
conditions acceptable to (i) Distell, acting reasonably, if the
conditions are imposed on and/or will apply in respect of Capevin
(including its subsidiaries after implementation of the Scheme)
and/or any Distell Shareholder; (ii) Newco and Distell, acting
reasonably, if the conditions are imposed on and/or will apply in
respect of Newco (including its subsidiaries after implementation
of the scheme); and (iii) Newco, acting reasonably, in any other
case;
8.1.9 the Pre-Scheme Transactions are implemented;
8.1.10 Distell Shareholders accept the Out-of-Scope Assets Offer (or fail
to make a valid election to reject the Out-of-Scope Assets Offer) in
respect of not more than 82,242,883 of the Capevin Ordinary
Shares;
8.1.11 Distell Shareholders elect (or are deemed to have elected) to
receive cash, whether pursuant to the Newco Cash Only Option or
the Newco Fixed Ratio Option, in respect of not more than
111,921,569 of the Distell Ordinary Shares;
8.1.12 should the Newco Capital Raise be required to proceed, either
Distell Full Reinvestment Shareholders elect, or an underwriter
agrees, to subscribe for shares in Newco for an aggregate
subscription consideration equal to not less than 25% of the
Excess Amount nor more than the Maximum Capital Raise
Amount;
8.1.13 none of Distell, NBL, NIH, HSA nor HSAEC having made a
distribution to or repurchased any securities from their respective
shareholders for the period commencing on each company’s
respective most recent financial year end (“FYE Date”) and
terminating on the date the Scheme is implemented (“Scheme
Implementation Date”), save as contemplated in the applicable
transaction agreements;
8.1.14 each of Distell, NBL, NIH, HSA and HSAEC having continued the
conduct of their respective businesses in the ordinary course of
business for the period commencing on each company’s
respective FYE Date and terminating on the Scheme
Implementation Date, save as contemplated in the applicable
transaction agreements;
8.1.15 none of Distell, NBL, NIH, HSA nor HSAEC having issued any
securities for the period commencing on each company’s
respective FYE Date and terminating on the Scheme
Implementation Date, save as contemplated in the applicable
transaction agreements; and
8.1.16 no insolvency event having occurred in respect of Distell, HSA,
HSAEC, NIH or NBL.
8.2 The Scheme Conditions set out in this paragraph 7 must be fulfilled or, if
applicable, waived by not later than 13 May 2023 (“Scheme Longstop
Date”), or such later date as contemplated in paragraph 8.3 below. The
Scheme Conditions in 8.1.10, 8.1.11 and 8.1.12 can be waived by
Heineken. The Scheme Conditions in 8.1.1, 8.1.2, 8.1.13, 8.1.14, 8.1.15
and 8.1.16 can be waived by agreement between Heineken, Newco and
Distell, save as contemplated in the applicable transaction agreements,
and the Scheme Conditions in 8.1.6, 8.1.8 and 8.1.9 can, to the extent
possible in law and applicable, be waived by agreement between
Heineken, Newco and Distell. The Scheme Conditions in 8.1.3, 8.1.4, 8.1.5
and 8.1.7 cannot be waived.
8.3 Heineken, Newco and Distell may, by agreement, extend the Scheme
Longstop Date, provided that that they must obtain the prior written consent
of NBL and O&L to extend the Scheme Longstop Date to a date which is
more than 24 (twenty four) months after the date on which the
Implementation Agreement was signed.
9. DECLARATION OF DISTRIBUTIONS AND ISSUING OF SECURITIES BY
DISTELL
As part of the Implementation Agreement, Distell is precluded from
declaring any dividends or making any other distributions to Distell
Shareholders (including the repayment of shareholder loan accounts)
before the Scheme is implemented, nor is it permitted to issue any
securities or options, including Shares, whether to any existing Distell
Shareholders or to any other person, nor to repurchase any Shares from
any existing Distell Shareholders, save as contemplated in the transaction
agreements.
10. EMPLOYEE INCENTIVE SCHEMES
All awards made to participants in either of Distell’s two long-term incentive
schemes, namely the Conditional Share Plan Scheme (“CSP”) and the
Share Appreciation Right Scheme (“SAR Plan”), which have not yet vested
at the time of implementation of the Scheme, will be cash settled by Distell
upon implementation of the Scheme in accordance with the rules
applicable to the CSP and the SAR Plan, respectively, as contemplated in
regulation 87(3) of the Takeover Regulations.
11. TRANSACTION FUNDING, GUARANTEE CONFIRMATION AND
CONFIRMATION OF AUTHORISED NEWCO SHARE CAPITAL
11.1 The cash consideration required by Newco for the Newco Cash Only
Option and the Newco Fixed Ratio Option in relation to the In-Scope Assets
Offer and the Capevin Offer Consideration in relation to the Out-Of-Scope
Assets Offer will be funded by Heineken from a combination of available
cash balances and/or committed credit facilities. The proceeds of the
Newco Capital Raise will be utilised to partially settle the finance raised by
Newco for purposes of the Newco Cash Only Option and the Newco Fixed
Ratio Option.
11.2 Heineken has confirmed that Newco will have sufficient authorised but
unissued share capital available from which to issue Newco shares to
Distell Shareholders who elect the Newco Reinvestment Option and/or the
Newco Fixed Ratio Option in terms of the Scheme.
11.3 In compliance with regulations 111(4) and 111(5) of the Takeover
Regulations, Heineken and Newco have provided the TRP with a written
irrevocable guarantee (in a form approved by the TRP) issued by The
Standard Bank of South Africa Limited, a licensed bank in terms of the
Banks Act 1990, in terms of which the guarantor undertakes to pay the
maximum cash consideration of R19 670 000 000 in relation to the
Scheme, should Heineken and/or Newco fail to do so. Payment under the
written irrevocable confirmation is subject to the Scheme becoming
unconditional and being implemented in accordance with its terms and
conditions.
12. SHARES IN DISTELL HELD BY NEWCO AND/OR HEINEKEN,
PERSONS RELATED TO NEWCO AND/OR HEINEKEN AND/OR
PERSONS ACTING IN CONCERT WITH NEWCO AND/OR HEINEKEN
12.1 Neither Newco nor Heineken (nor any persons related to either of them)
hold any Distell Ordinary Shares or Distell B Shares.
12.2 Neither Newco nor Heineken (nor any persons related to either of them)
has had dealings in Distell Ordinary Shares or Distell B Shares during the
six-month period prior to the date of signature of the Implementation
Agreement.
12.3 None of the directors of Newco nor Heineken have a beneficial interest in
Distell Ordinary Shares or Distell B Shares.
12.4 Neither Newco nor Heineken (nor any persons related to either of them)
hold any option to purchase any Distell Ordinary Shares or Distell B
Shares.
12.5 None of the directors of Newco nor Heineken have had any dealings in
Distell Ordinary Shares or Distell B Shares during the six-month period
prior to the date of signature of the Implementation Agreement.
12.6 Heineken and Newco confirm that they are the ultimate prospective
purchasers of the Distell Shares and the Capevin Shares and that they are
acting alone, and not in concert with, any other person (save for each
other) in respect of the Scheme.
13. IRREVOCABLE UNDERTAKINGS
As at the date of this announcement, Remgro Limited (“Remgro”) has
provided Distell with an irrevocable undertaking to vote in favour of the
special and ordinary resolutions to be proposed at the Scheme Meeting
referred to in paragraph 16 below. Remgro holds 56.37% of the voting
rights in Distell.
14. DISTELL INDEPENDENT BOARD, INDEPENDENT EXPERT AND
INDEPENDENT EXPERT’S REPORT AND FAIR AND REASONABLE OPINION
14.1 In accordance with the provisions of the Companies Act and the Takeover
Regulations, Distell has established the Distell Independent Board for
purposes of assessing the terms of the Scheme (being the Capevin
Distribution and the Heineken Offer), as well as advising Distell
Shareholders thereon. The Distell Independent Board comprises Mr. AC
Parker (as lead independent director), Ms GP Dingaan, Mr GCJ Kruythoff,
Mr CA Otto and Ms CE Sevillano-Barredo.
14.2 The Distell Independent Board has appointed BDO Corporate Finance
Proprietary Limited to act as independent expert, as required in terms of
section 114(2) of the Companies Act and Regulation 110 of the Takeover
Regulations (“Independent Expert”), to provide it with external advice in
relation to the Scheme and to make appropriate recommendations to the
Distell Independent Board in the form of a fair and reasonable opinion
(“Independent Expert’s Report”). The Independent Expert’s Report as
well as the Distell Independent Board’s opinion on the terms of the Scheme
will be detailed in the Scheme Circular referred to in paragraph 16 below.
15. PRO FORMA FINANCIAL EFFECTS
The TRP has granted Distell a dispensation from the obligation to include
the financial effects of the Transaction in this announcement. The pro
forma financial effects of the Transaction will be contained in the
Prospectus and Scheme Circular as set out in paragraph 16 below.
16. DISTRIBUTION OF THE SCHEME CIRCULAR AND PROSPECTUS
16.1 Distell Shareholders are advised that the Scheme Circular, containing the
full details of the terms of the Transaction and incorporating a notice
convening the Scheme Meeting of Distell Shareholders in order to consider
and, if deemed fit, to pass, with or without modification, the ordinary and
special resolutions necessary in order to authorise and implement the
Scheme, is in the process of being prepared and will be distributed to
Distell Shareholders. In this regard, the TRP has granted Distell a
dispensation from the obligation to comply with Regulation 102(2) of the
Takeover Regulations and has afforded Distell until 12 January 2022 to
issue the Scheme Circular, which will be accompanied by the Prospectus
to be issued by Newco.
16.2 The Prospectus in relation to Newco, required as a result of the Newco
Reinvestment Option and the Newco Fixed Ratio Option, will be made
available to Distell Shareholders for the purposes of assessing the Newco
Reinvestment Option and the Newco Fixed Ratio Option. As part of the
information required in terms of the Companies Act, the Prospectus will
provide Distell Shareholders with information on Newco as it will be
constituted after the implementation of the Scheme, including in relation to:
16.2.1 its business, directors, objectives and prospects;
16.2.2 the historical financial information in respect of Distell’s previously
published information, HSA, HSAEC (including the distribution
business in respect of Tanzania, Uganda, Kenya and South
Sudan) and NBL;
16.2.3 the carve-out historical financial information in respect of Capevin,
representing the Out-of-Scope Assets;
16.2.4 pro forma financial information of Newco; and
16.2.5 key terms relating to the incorporation documents of Newco,
including any applicable shareholders agreement.
16.3 The salient dates pertaining to the Heineken Offer will be released on
SENS on the date of distribution of the Scheme Circular and Prospectus.
17. DELISTING
17.1 Pursuant to the implementation of the Transaction, and in terms of
paragraph 1.17(b) of the JSE Listings Requirements, all Distell Ordinary
Shares will be delisted from the Main Board of the JSE following
implementation of the Scheme.
17.2 It should be noted that Distell’s In-Scope Assets will form part of unlisted
Newco and the Out-of-Scope Assets will remain in unlisted Capevin, which
will be a private company.
18. FOREIGN DISTELL SHAREHOLDERS
18.1 The Scheme, including the Capevin Distribution is governed by and will be
implemented in accordance with the laws of South Africa and is subject to
applicable South African laws and regulations, including the exchange
control regulations. These South African laws may be different from the
laws applicable in other jurisdictions. Certain Distell Shareholders who are
resident in foreign jurisdictions (“Foreign Distell Shareholders”) may be
prohibited from accepting the Capevin Ordinary Shares pursuant to the
Capevin Distribution and/or electing the Newco Share Only Option and/or
Newco Fixed Ratio Option in respect of the Newco Offer, and should
consult and obtain advice from a professional advisor in the relevant
jurisdiction without delay.
18.2 No action has been taken by Distell, Heineken or Newco to obtain any
approval, authorization or exemption to permit the distribution of the
Capevin Ordinary Shares, or the transfer of Newco Shares, or the
possession or distribution of the Scheme Circular or Prospectus (or any
other publically available documents relating to the Scheme, the Capevin
Ordinary Shares and/or the Newco Shares), in any jurisdiction other than
South Africa.
18.3 All Distell Shareholders who are resident or whose registered addresses
are in any country other than in the common monetary area will be deemed
to be Foreign Distell Shareholders who cannot receive the Capevin
Ordinary Shares and/or the Newco Shares (“Foreign Excluded Distell
Shareholders”) unless such Distell Shareholders provide Distell’s transfer
secretaries with proof, satisfactory to the Distell Board, that such Foreign
Distell Shareholders are entitled to receive the Capevin Ordinary Shares
and/or the Newco Shares, as applicable. Distell Shareholders’ CSDP or
brokers, as applicable, will be responsible for informing Distell’s transfer
secretaries of any Distell Shares held by a Foreign Distell Shareholder and
the transfer secretaries will be responsible for determining which
certificated Distell Shareholders are Foreign Distell Shareholders.
18.4 Foreign Excluded Distell Shareholders who do not provide proof that they
are entitled to receive Capevin Ordinary Shares and/or Newco Shares will
be deemed to have:
18.4.1 accepted the Out-Of-Scope Assets Offer. In such circumstances,
the Capevin Ordinary Shares of such Foreign Excluded Distell
Shareholders will be disposed of to Heineken for the benefit of the
relevant Foreign Excluded Distell Shareholders, for the Capevin
Offer Consideration. The cash proceeds (post costs and taxes)
from such disposal will be repatriated to the relevant Foreign
Excluded Distell Shareholders; and
18.4.2 elected the Newco Cash Only Option. In such circumstances, the
Distell Shares of such Foreign Excluded Distell Shareholders will
be disposed of to Newco for the benefit of the relevant Foreign
Excluded Distell Shareholders, for the cash consideration
applicable in respect of the Newco Cash Only Option. The cash
proceeds (post costs and taxes) from such disposal will be
repatriated to the relevant Foreign Excluded Distell Shareholders.
19. DISTELL NAMIBIA TRANSACTION
19.1 Distell Shareholders are advised that Distell, Heineken and NBL are in
discussions regarding the possible disposal by Distell of the shares it holds
in three companies which operate in Namibia (“Distell Namibia
Companies”) (“Distell Namibia Transaction”). It is anticipated that the
Distell Namibia Transaction will be subject to various conditions precedent,
including that:
19.1.1 the Scheme receives all required shareholder and regulatory
approvals;
19.1.2 NBL is satisfied with the results of a due diligence investigation
undertaken into the affairs of the Distell Namibia Companies;
19.1.3 NBL’s board of directors approves the agreement regulating the
Distell Namibia Transaction;
19.1.4 the required approval from NBL shareholders for the Distell
Namibia Transaction is obtained; and
19.1.5 an independent expert provides a “fair and reasonable” opinion in
relation to the Distell Namibia Transaction.
19.2 Negotiations regarding the Distell Namibia Transaction are underway. If an
agreement is concluded, the approval of Distell Shareholders and the TRP
will be required for the disposal by Distell of the Distell Namibia Companies
in terms of section 126 of the Companies Act. If applicable, the Distell
Namibia Transaction will be dealt with in, and the required Distell
shareholder approval will be sought in terms of, the Scheme Circular.
19.3 The Distell Namibia Companies distribute in Namibia products
manufactured by Distell in South Africa and operate 4 depots across
Namibia. Their business includes a strong portfolio of brands in Namibia,
primarily in the wines, cider and ready-to-drink and spirits categories.
19.4 Distell Shareholders are alerted to the fact that the value of the Distell
Namibia Companies has been factored into and included in the In-Scope
Assets Offer and the proceeds from this disposal, if it proceeds, will
accordingly accrue to Newco.
20. FURTHER CAUTIONARY ANNOUNCEMENT
Notwithstanding the cautionary announcements released on SENS by the
Distell (the latest being released on 29 September 2021), considering the
fact that the required pro forma financial effects of the Transaction are still
to be announced, Distell Shareholders are advised to continue to exercise
caution when dealing in their Distell Shares until such information is
released.
21. RESPONSIBILITY STATEMENTS
21.1 The Distell Independent Board, individually and collectively, accepts
responsibility for the information contained in this announcement insofar
as it relates to Distell. In addition, the Distell Independent Board confirms
that, to the best of its knowledge and belief, the information contained in
this announcement, as it relates to Distell, is true and correct and, where
appropriate, does not omit anything that is likely to affect the importance of
the information contained herein pertaining to Distell and that all
reasonable enquiries to ascertain such information have been made.
21.2 The Distell Board, individually and collectively, accepts responsibility for the
information contained in this announcement insofar as it relates to Distell.
In addition, the Distell Board confirms that, to the best of its knowledge and
belief, the information contained in this announcement, as it relates to
Distell, is true and correct and, where appropriate, does not omit anything
that is likely to affect the importance of the information contained herein
pertaining to Distell and that all reasonable enquiries to ascertain such
information have been made.
21.3 The board of directors of Newco, individually and collectively, accepts
responsibility for information contained in this announcement insofar
as it relates to Newco. In addition, the board of directors of Newco certifies
that to the best of its knowledge and belief, the information contained in this
announcement as it relates to Newco, is true and correct and, where
appropriate, does not omit anything that is likely to affect the importance of
the information contained herein pertaining to Newco and that all
reasonable enquiries to ascertain such information have been made.
21.4 The board of directors of Heineken, individually and collectively,
accepts responsibility for information contained in this announcement
insofar as it relates to Heineken. In addition, the board of directors of
Heineken certifies that to the best of its knowledge and belief, the
information contained in this announcement as it relates to Heineken, is true
and correct and, where appropriate, does not omit anything that is likely to
affect the importance of the information contained herein pertaining to
Heineken and that all reasonable enquiries to ascertain such information
have been made.
21. INVESTOR CALL
21.1 Distell will be hosting a webcast and call on 15 November 2021 at 09:30
CAT to discuss the Transaction. The audio webcast can be accessed via
the following link:
https://services.themediaframe.com/links/distell10040731.html.
Dial-in details:
• South Africa (Toll Free): 0 800 200 648
• Johannesburg: 011 535 3600
• Other Countries: +27 11 535 3600
• UK: 0 333 300 1418
• USA & Canada: 1 508 924 4326
By order of the board of directors of Distell
Stellenbosch
15 November 2021
Financial Adviser, Investment Bank, Corporate Broker, Sponsor and Transaction
Sponsor to Distell
Rand Merchant Bank, a division of FirstRand Bank Limited
Legal adviser to Distell
ENSafrica
Communications Consultant to Distell
FTI Consulting
Independent Expert
BDO Corporate Finance Proprietary Limited
By order of the board of directors of Heineken
Amsterdam
15 November 2021
Sole Financial Adviser to Heineken
Nomura International plc
Legal adviser to Heineken
Webber Wentzel
Communications Consultant to Heineken
Edelman Smithfield
Guarantor for Heineken and Newco
The Standard Bank of South Africa Limited
Date: 15-11-2021 08:35:00
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