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REMGRO LIMITED - Remgro shareholders are referred to the joint Distell and Heineken announcement

Release Date: 15/11/2021 08:50
Code(s): REM     PDF:  
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Remgro shareholders are referred to the joint Distell and Heineken announcement

Remgro Limited
(Incorporated in the Republic of South Africa)
(Registration number 1968/006415/06)
(ISIN: ZAE000026480)
(Share code: REM)
(“Remgro” or “the Company”)


1.   Introduction

     Remgro shareholders are ref erred to the detailed joint firm intention announcement (the "Firm
     Intention Announcement") by Distell and Heineken, released on the Stock Exchange News
     Service ("SENS") of the securities exchange operated by JSE Limited (the " JSE") today,
     15 November 2021, setting out the terms of a proposed scheme of arrangement in terms of section
     114 of the Companies Act, 2008 between Distell and its shareholders (the "Scheme") and related
     transactions (the "Proposed Transaction").

     The purpose of this voluntary announcement is to disclose the expected effect of the Proposed
     Transaction on Remgro.

2.   Expected effect of the Proposed Transaction on Remgro

     As referred to in more detail in the Firm Intention Announcement :
     • the Proposed Transaction will result in the combination of the Heineken Southern African
       business, including an interest in Namibia Breweries Limited ("NBL"), with the bulk of the Distell
       business (consisting of its cider, other ready-to-drink beverages and spirits and wine business)
       in a new unlisted entity controlled by Heineken and ref erred to as Newco , thereby creating a
       world-class, Southern-African focussed, alcoholic beverages entity with a leading beer and
       cider portfolio, combining the complimentary brands, talent and skills of Distell, Heineken and
       NBL to better serve consumers across the region. The entity will also have a significant
       presence in adjacent African markets;
     • the Proposed Transaction will include a proposed unbundling by Distell, to existing Distell
       shareholders, of the unlisted shares in Distell's subsidiary, Capevin Holdings Proprietary
       Limited ("Capevin"), which holds Distell's remaining assets, including its Scotch whisky
       business (the "Capevin Unbundling"); and
     • the Proposed Transaction will also include –
          o an offer by Newco to Distell shareholders to acquire their Distell shares, for a cash
            consideration of R165 per share and /or unlisted shares in Newco, or a combination
            thereof , as set out in more detail in the Firm Intention Announcement; and
          o an offer by Heineken to Distell shareholders to acquire the Capevin shares that Distell
            shareholders will receive pursuant to the Capevin Unbundling, for a cash consideration
            of R15 per Capevin share.

     Remgro recognises the long-term strategic benefit of combining the relevant Distell and Heineken
     businesses and is supportive of the Proposed Transaction. Accordingly, and as ref erred to in the
     Firm Intention Announcement, Remgro has provided an irrevocable undertaking to vote its Distell
     shares in favour of the Scheme.

     Remgro intends to elect to receive Newco shares for its Distell shares in terms of the Scheme
     consideration and is accordingly expected to be a significant shareholder in Newco.

     Remgro does not intend to accept the cash offer to be made by Heineken for the Capevin shares
     that it will receive pursuant to the Capevin Unbundling. It is therefore expected that Remgro will
     have a controlling shareholding in Capevin which mirrors its current controlling shareholding in
3.   Value of the net assets and profits attributable to the net assets

     As at 30 June 2021 (Distell’s last audited results, which were prepared in terms of International
     Financial Reporting Standards – “IFRS”), the net asset value of Distell (excluding non-controlling
     interests) amounted to R13.1 billion. The earnings and headline earnings of Distell and its
     operations, for the year ended 30 June 2021, were prof its of R1.9 billion and R1.7 billion,

     As at 30 June 2021 (Remgro’s last reported IFRS results), the market value and accounting net
     asset value of Remgro’s holding in Distell amounted to R11.7 billion (representing 11.6% of
     Remgro’s intrinsic net asset value) and R7.6 billion (representing 8.6% of Remgro’s net asset
     value), respectively. The earnings and headline earnings of Remgro, for the year ended
     30 June 2021, attributable to Distell and its operations were prof its of R616 million and
     R538 million, respectively. In terms of IFRS, Remgro accounts for its 31.7% economic interest in
     Distell (representing 31.3% of Distell’s listed issued ordinary shares) as a subsidiary, due to the fact
     that Remgro also holds 124.2 million unlisted, voting only B-shares in Distell, resulting in a voting
     interest of 56.4%.

     On implementation of the Proposed Transaction, Remgro's economic interest in Distell is expected
     to be replaced by economic interests in Newco and Capevin, in line with Remgro's intention, as
     disclosed in paragraph 2 above, to accept shares in Newco as consideration for its Distell shares
     and not to accept the cash offer for its Capevin shares.

4.   Conditions precedent to the Proposed Transaction

     The implementation of the Proposed Transaction is subject to various conditions precedent set out
     in detail in the Firm Intention Announcement and which include:
     • the approval by Distell shareholders of the Scheme and the Capevin Unbundling;
     • the approval by shareholders of NBL of those components of the Proposed Transaction which
       require their approval; and
     • the approval of all other relevant authorities, including the South African Reserve Bank and the
       competition authorities in various jurisdictions .

15 November 2021

Rand Merchant Bank (A division of FirstRand Bank Limited)

Financial Advisor
HSBC Bank plc

Legal Advisor
Cliffe Dekker Hofmeyr Inc.

Date: 15-11-2021 08:50:00
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