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SUPER GROUP LIMITED - Acqusition of controlling interests in Lieben and GLS

Release Date: 21/06/2019 15:52
Code(s): SPG     PDF:  
 
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Acqusition of controlling interests in Lieben and GLS

Super Group Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1943/016107/06)
Share code: SPG
ISIN: ZAE000161832
(“Super Group”)

ACQUISITION OF CONTROLLING INTERESTS IN LIEBEN and GLS


  1. Introduction and overview of the Transaction

   Super Group has concluded a subscription agreement with the shareholders
   of LiebenLogistics Proprietary Limited (“Lieben”) and a share purchase
   agreement with the shareholders of GLS Supply Chain Equipment
   Proprietary Limited (“GLS”) in terms of which Super Group Holdings
   Proprietary Limited (“the Purchaser”), a subsidiary of Super Group, will
   acquire a controlling interest in each of Lieben and GLS by way of a
   subscription for shares in Lieben comprising an approximate 65%
   shareholding holding in Lieben (“the Lieben Subscription”) and the
   purchase of shares comprising 51% of the issued shares in GLS from the
   current shareholders of GLS (“the GLS Purchase”) (as more fully
   described below).

   The shareholders of Lieben, who are party to the above subscription
   agreement, are Dalistep Proprietary Limited, Cherry Moss Trade and
   Invest 32 CC, Casadobe Props 99 CC and Harbour Lights 301 CC.

   The sellers in regard to the share purchase agreement are Leonhardt von
   Solms van Niekerk, Motive Mover Trading Proprietary Limited, Christel
   Thiart and the trustees of the Liebenberg Familie Trust, acting in their
   capacity as such.

   The Lieben Subscription and the GLS Purchase are linked transactions in
   that both of them must become unconditional and be implemented for
   either of them to be effective.

  2. Nature of business

    Lieben is a diversified logistics and supply chain management company
    focused on providing transportation services to clients active in an
    assortment of industries including retail, meat, fresh produce and
    other cold-chain goods. In addition, Lieben transports dry goods for
    its extensive client base. Geographically the company operates from
    depots and satellite offices in Cape Town, Port Elizabeth, East London,
    Durban and Johannesburg.

    The Lieben operating fleet includes refrigerated trucks of between
    eight and 18 ton, as well as refrigerated pallet vehicles with the
    capacity to carry loads of between 16 and 30 pallets, in addition to
    other vehicles. The fleet operates locally in specific geographical
    nodes, as well as via an extensive long-haul distribution grid across
    South Africa as a whole.
    Lieben maintains contractual service delivery agreements and executes
    on-demand, point to point specialised transportation services for its
    wide-ranging client base.

    Over a period of more than 23 years Lieben clients have benefited from
    the company’s strategy of continuous investment in its fleet and
    crucial support services such as information technology, as well as its
    skills development and human talent enhancement activities.

    GLS is a leading supplier of returnable packaging solutions and
    outsourced equipment services to optimally manage, store and progress
    products through different supply chain operations. Its diverse client
    base relies on GLS to advise them on how to effectively create and
    manage efficient supply chains through the judicious utilisation and
    management of purposeful equipment and methodologies.

    The cost-saving benefits of the continued investment by GLS in the
    improvement of systems and technology is passed on to clients through
    efficiency enhancements in optimising equipment-use in end-to-end
    supply chain practises.
 
    Some of the key GLS success factors include the company’s ability to
    offer clients traceable, environmentally friendly equipment solutions
    that save cost. Through its extensive network of global leaders in
    supply chain equipment, the company stays in front of the latest trends
    and best-practise improvements.

3. Consideration

     The subscription price payable in regard to the Lieben Subscription
     is an amount of R498 775 800, which amounts to a forward PAT price
     earnings multiple of 8.1 times.

     The purchase price payable in regard to the GLS Purchase is
     R96 285 235 which amounts to a forward PAT price earnings multiple of
     8.1 times if prescribed PAT warranties are achieved by GLS. In the
     event that an incubated business materializes by December 2019 and
     this business achieves warranted two year PAT targets, the purchase
     price payable could increase by R82 875 000, with a maximum potential
     payment of R204 000 000, based on a 6.5 times price earnings
     multiple.

     The forecasts have been prepared by the management of Lieben and GLS
     and are for illustrative purposes only.

     The aforementioned subscription and purchase prices plus costs will
     be settled by Super Group from cash resources.


4. Value of the net assets acquired and profits attributable to those
   assets

4.1. The net asset value of the Lieben Subscription will be a minimum of
     R98 752 531.
  4.2. The forecasted profit after taxation associated with the above assets
       is R94,7million.

  4.3. The net asset value of the GLS Purchase will be a minimum of R21 024
       452.

  4.4. The forecasted profit after taxation associated with the above assets
       is R23,3 million.

  5. Rationale for the Transaction

    Super Group’s strategy over the past seven years has been to make
    selective acquisitions in its core businesses namely Supply Chain,
    Fleet Management and Dealerships in South Africa and internationally.

    The acquisition of the Business is in line with this strategy and
    represents an opportunity for the Group to significantly enhance its
    sphere and operations across the refrigerated and retail sectors in
    South Africa. The business also reinforces the Super Group position in
    both retail and other cold-chain distribution as well as the management
    of returnable packing solutions and systems.


  6. Conditions precedent

    Both transactions remain subject to, amongst others,the following
    conditions precedent:

    1. Approval of the transactions by the Competition Commission and the
       Competition Tribunal;
    2. Other than the agreements referred to in 1 above, conclusion by the
       relevant parties of the related documentation necessary to give
       effect to the transactions; and
    3. The Purchaser notifying Lieben and GLS that it is satisfied with the
       outcome of the due diligence investigations conducted by it in regard
       to Lieben and GLS.

  7. Effective date

    Subject to the conditions precedent being met the effective date of the
    Transactions is expected to be 1 July 2019.

  8. JSE categorisation

    The Transaction is a category 2 transaction in terms of paragraph
    9.5(a) of the JSE Listings Requirements.

Sandton

21 June 2019

Sponsor: Investec Bank Limited

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