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Acquisition of Business of the Wisenet Group
ADAPT IT HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Registration number: 1998/017276/06)
Share code: ADI ISIN: ZAE000113163
(“Adapt IT”)
ACQUISITION OF BUSINESS OF THE WISENET GROUP
1. INTRODUCTION
The board of directors of Adapt IT (“the Board”) is pleased to inform shareholders that Adapt IT, through
its wholly-owned subsidiaries, has entered into Business Purchase Agreements (“Agreements”) to
acquire the businesses of Kura Holdings Proprietary Limited (“Kura”), Wisenet Information Systems
Proprietary Limited (“Wisenet Australia”) and Wise.Net Corporate Trustee Limited (“Wisenet NZ”)
(collectively, “the Wisenet Group”), and the business intellectual property (“IP”) and existing IP rights of
Wakatipu Management Pte Limited (“Wisenet SG”) (“the Acquisition”).
Kura, Wisenet Australia, Wisenet NZ and Wisenet SG are collectively referred to as “the Sellers”.
Kura and Wisenet Australia will be acquired by Adapt IT Australasia Proprietary Limited (“Adapt IT
Australia”), Wisenet NZ will be acquired by Adapt IT Australasia Limited (“Adapt IT NZ”) and Wisenet
SG will be acquired by Adapt IT Solutions Pte Limited (“Adapt IT SG”).
The Acquisition will be implemented on the "Completion Date", being the first business day of the month
immediately following the month in which the last of the Conditions to Completion, as detailed in paragraph
2.5 below, is fulfilled, or, to the extent permissible, waived or such other date as may be agreed by the
parties (“Completion”).
2. THE ACQUISITION OF THE WISENET GROUP BUSINESS
2.1 Nature of the Wisenet Group business
The Wisenet Group was founded in 1997 and has its head office in Melbourne, Australia and
additional regional offices located in Queenstown, New Zealand and Singapore. The group provides
a Software as a Service (“SaaS”) Learning Relationship Management System (Student Lifecycle
Management and Compliance) to Vocational Training institutions called Registered Training
Organisations. It has approximately 11% of the Australian market and similar market share in its
other territories.
The Wisenet Group and Wisenet SG have a geographic footprint in three Asian countries and
employ 22 permanent employees.
2.2 The rationale for the Acquisition
The Acquisition will complement Adapt IT’s Education Division growth strategy and provide Adapt
IT with access to key proprietary software, customers and markets in the Higher Education sector
in Australia. Wisenet is a software-based business that develops its own IP and has an annuity-
based revenue model where SaaS subscriptions account for 90% of the total revenue. Furthermore,
all revenue is earned outside of South Africa in hard currencies.
2.3 Purchase Consideration
The total purchase consideration payable to the Sellers in respect of the Acquisition is as follows:
2.3.1 In respect of the Wisenet Group:
2.3.1.1 SGD$2,877,500 in cash on Completion less any applicable purchase price
adjustments in terms of the Agreements.
2.3.2 In respect of Wisenet SG:
2.3.2.1 SGD$2,338,500 in cash on Completion;
2.3.2.2 an amount, calculated using a predetermined formula based on the earnings
before interest, tax, depreciation and amortisation (“EBITDA”) for the 2019
calendar year, payable in cash five business days after the relevant determination
date of such payment;
2.3.2.3 an amount, calculated using a predetermined formula based on the EBITDA for the
2020 calendar year, payable in cash five business days after the relevant
determination date of such payment;
2.3.2.4 an amount, calculated using a predetermined formula based on the EBITDA for the
2021 calendar year, payable in cash five business days after the relevant
determination date of such payment;
2.3.2.5 an additional amount, calculated using a predetermined formula, in the event that
between Completion and 31 December 2021, Adapt IT or any related body
corporate controlled by Adapt IT is granted admission to the official list of ASX
Limited and its shares (or depository instruments representing those shares) are
granted quotation and are capable of being traded on the market operated by ASX
Limited (“ASX Listing Consideration Payment”); and
2.3.2.6 any applicable adjustments to the purchase consideration in terms of the
Agreements, including any claim or clawback amount under the Agreements.
The maximum permitted purchase consideration pertaining to Wisenet SG as contemplated in
paragraph 2.3.2 above is:
- SGD$17,122,500 if there is no ASX Listing Consideration Payment; or
- SGD$21,122,500 if there is an ASX Listing Consideration Payment.
Summary of price mechanism: The minimum total purchase consideration is SGD$5,216,000 (less
any applicable purchase price adjustments in terms of the Agreements). The ‘earn-out’ formula
determines the final maximum purchase consideration which will be 5 x average EBITDA of the
years ended 31 December 2020 and 2021 (less any applicable purchase price adjustments in terms
of the Agreements). The ASX Listing Consideration Payment was included at the request of the
Sellers and shareholders are advised that the Board does not intend to seek admission for Adapt IT
or any related body corporate controlled by Adapt IT to the official list of ASX Limited, as
contemplated in paragraph 2.3.2.5.
2.4 Sellers
The ultimate beneficial shareholders of Kura, Wisenet Australia, Wisenet NZ and Wisenet SG are
Ben Hamilton and Kim Yelland (as well as their respective family members in respect of Wisenet NZ).
2.5 Conditions to Completion and effective date
Completion is subject to the fulfilment (or, to the extent permissible, the waiver) on or before the
Completion Date of certain conditions precedent, including:
2.5.1 Adapt IT and each related body corporate having received all approvals, consents and
authorisations as required in connection with the transactions contemplated in the
Agreements from the South African Reserve Bank on terms acceptable to Adapt IT;
2.5.2 Adapt IT being satisfied (acting reasonably) with:
2.5.2.1 the forms of release or discharge to be provided by the Sellers at Completion for
all encumbrances over the Wisenet Group assets and Wisenet SG assets being
acquired; and
2.5.2.2 any confirmations relating to any other encumbrance recorded on the ‘register’
as defined in the Personal Property Securities Act 2009 (Cth) or the Personal
Property Securities Act 1999 (NZ) (as the context requires) as potentially applying
to the Wisenet Group assets and Wisenet SG assets being acquired that those
encumbrances do not relate to the Wisenet Group assets and Wisenet SG assets
being acquired.
2.5.3 the employees listed in the Agreements having accepted an offer of employment from the
relevant subsidiaries of Adapt IT and having resigned from their existing position with the
Sellers with effect from Completion;
2.5.4 Adapt IT Australia, Adapt IT NZ and Adapt IT SG having obtained all approvals from any
governmental agency which are necessary or desirable to implement the transactions
contemplated in the Agreements;
2.5.5 the Board having approved that Adapt IT Australia, Adapt IT NZ and Adapt IT SG, as the
case may be, proceed with the transactions contemplated in the Agreements;
2.5.6 no material adverse change, as defined in the Agreements, having occurred prior to
Completion;
2.5.7 the Sellers having caused the landlord of each business property lease to assign the
relevant business property leases to Adapt IT Australia or Adapt IT NZ, as the case may
be (or to enter into a new lease of the relevant premises with Adapt IT Australia or Adapt
IT NZ, as the case may be) at Completion on terms no less favourable to those set out in
the applicable business property lease; and
2.5.8 in respect of the acquisition of Wisenet SG, all conditions precedent to the acquisition of
Kura, Wisenet Australia and Wisenet NZ having been satisfied.
The Agreements contain warranties which are usual for transactions of this nature.
The effective date of the Acquisition will be the Completion Date.
3. FINANCIAL INFORMATION
The value of the net assets that are the subject of the Acquisition as at 30 June 2018 was SGD$455,373.
The revenue attributable to the net assets that are the subject of the Acquisition for the year-ended
30 June 2018 was SGD$4,044,871. The profit after tax attributable to the net assets that are the subject
of the Acquisition for the year-ended 30 June 2018 was SGD$301,408.
The aforementioned unaudited financial information has been derived from audited financial statements in
respect of Wisenet SG and unaudited management accounts in respect of the Wisenet Group. Adapt IT is
satisfied with the quality of such management accounts.
The audited annual financial statements of Wisenet SG were prepared in accordance with Singapore
Financial Reporting Standards. The unaudited annual financial statements of Wisenet Australia were
prepared in accordance with the Australian Accounting Standards Board's Reduced Disclosure
Requirements for non-reporting entities. The unaudited annual financial statements of Wisenet NZ were
prepared in accordance with the Special Purpose Financial Reporting Framework for use by For-Profit
Entities issued by Chartered Accountants Australia and New Zealand.
4. CLASSIFICATION OF THE ACQUISITION
The Acquisition is classified as a Category 2 transaction in terms of the Listings Requirements of JSE
Limited.
9 January 2019
Sponsor
Merchantec Capital
Transaction Advisers
Corrs Chambers Westgarth Attorneys – Legal (Adapt IT Australasia Proprietary Limited)
Garlicke & Bousfield Inc. Attorneys – Legal (Adapt IT Proprietary Limited)
Date: 09/01/2019 02:20:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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