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Acquisition by subsidiary
AFROCENTRIC INVESTMENT CORPORATION LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1988/000570/06)
JSE Code: ACT
ISIN: ZAE000078416
(“AfroCentric” or “the Company”)
ACQUISITION BY ACTIVO HEALTH PROPRIETARY LIMITED (“ACTIVO”) OF EXELTIS SOUTH
AFRICA PROPRIETARY LIMITED (“EXELTIS”) FROM SHELSLEY CHEMICALS PROPRIETARY
LIMITED (“THE SELLER”)
1. INTRODUCTION
AfroCentric shareholders (“Shareholders”) are advised that AfroCentric and its wholly owned
subsidiary, Activo (the “Purchaser”), have entered into a sale of shares and claims agreement
(the “Acquisition Agreement”) to acquire all of the shares in Exeltis South Africa Proprietary
Limited (Registration Number 2013/006996/07) from the Seller at a maximum purchase
consideration of R320 million on the terms and conditions set out below (the “Acquisition”).
2. RATIONALE AND BACKGROUND TO THE ACQUISITION
Exeltis South Africa is the holding company of Forrester Pharma Proprietary Limited
(“Forrester”) and Lamar International Proprietary Limited (“Lamar”) (collectively “Exeltis
Group”), both companies involved in the marketing, selling and distribution of pharmaceutical
products in South Africa, Namibia and Botswana. The two companies own a number of
registered legal rights to manufacture and distribute a specific medicine molecule/brand
(“Dossiers”) and have the right to a substantial pipeline of Dossiers in the process of being
registered with the South African Health Products Regulatory Authority (“SAHPRA”).
The new product pipeline is the lifeline of any pharmaceutical company, which needs to be
constantly developed to ensure it serves the broader base of all healthcare conditions requiring
medication.
The Seller is the beneficial owner of a 50% interest in Exeltis South Africa and has entered
into an agreement with Exeltis Pharmaceuticals Holding S.L., a company registered in Spain,
in terms of which it will acquire the remaining 50% interest in Exeltis on or before 1 August
2021, in order to sell all of the shares in Exeltis South Africa Proprietary Limited to Activo.
The Acquisition is consistent with AfroCentric’s growth objectives in the health sector and will
strengthen Activo’s product offering to the pharmaceutical market.
3. THE ACQUISITION
3.1 Effective date of the Acquisition
The Acquisition will become effective on 1 August 2021 (“the Effective Date”), subject to the
fulfilment of the suspensive conditions detailed in paragraph 3.4 below on or before
25 July 2021, or such later date as Activo may communicate to the Seller in writing;
3.2 The Seller:
The Seller is Shelsley Chemicals Proprietary Limited, a company duly incorporated in South
Africa.
3.3 Purchase Price and Payment
3.3.1 The aggregate purchase consideration payable in terms of the Acquisition Agreement
is the maximum amount of R320 million (“Purchase Price”) to be paid after fulfilment
of the suspensive conditions detailed in paragraph 3.4 below as follows:
3.3.1.1 Advance a loan in an amount of R150 million. On the Effective Date, the
obligation of the Seller to repay the loan to the Purchaser shall be set-off
against the proportionate obligation of the Purchaser to pay the Purchase Price
to the Seller;
3.3.1.2 on the Effective Date - R40 million;
3.3.1.3 on 31 December 2021 - R10 million;
3.3.1.4 on 31 December 2022 - R15 million; and
3.3.1.5 at the Final Payment Date (which will be either 31 December 2022 or
31 December 2023, as elected by the Purchaser) - R105 million.
3.3.2 Downward Purchase Price Adjustments
3.3.2.1 Early settlement: If the Purchaser elects the Final Payment Date to be
31 December 2022, the amount payable by Activo on the Final Payment Date
will be reduced by R20 million.
3.3.2.2 Delayed market launch: If the Estimated Launch Date ("ELD") of a
pharmaceutical product related to a Dossier is delayed from the contractually
agreed ELD thereof, the aggregate of the contractually predetermined amount
for that product shall be deducted from the Purchase Price, provided that the
aggregate adjustment to the Purchase Price shall not exceed R20 million
(R15 million if Activo elects early settlement as per 3.3.2.1 above).
3.3.2.3 Dossier rejection: In the event that the SAHPRA rejects a Dossier for
registration, the contractually predetermined rejection amount of the relevant
Dossier will be deducted from the Purchase Price, provided that the aggregate
adjustment to the Purchase Price shall not exceed R30 million (R20 million if
Activo elects early settlement as per 3.3.2.1 above).
3.3.2.4 Failure to provide consent: If any product licensor, supplier or manufacturer
fails or refuses to provide their consent to the transactions contemplated in the
Acquisition Agreement prior to the Effective Date and/or terminates the existing
agreement as a result of the Acquisition Agreement prior to the Effective Date,
the Purchase Price shall be reduced by the aggregate of the contractually
predetermined rejection amounts of the Dossiers supplied and/or licensed by
such product licensor, supplier or manufacturer.
3.3.2.5 Force Majeure: Any delay resulting from a Force Majeure Event which subsists
beyond a 2-month extension to the relevant ELD of a product shall attract a
downward adjustment to the Purchase Price to the aggregate of the
contractually predetermined amount for that product.
3.3.2.6 Expired stock: The Purchase Price shall be reduced by an amount equal to the
expired stock value pursuant to stock protection letters received for specified
slow moving stock.
3.4 Suspensive conditions
The Acquisition is subject to, inter alia, the following suspensive conditions on or before
25 July 2021:
3.4.1 each member of Exeltis Group delivered written evidence satisfactory to Activo, in its
sole discretion, that -
3.4.1.1 all consents and approvals required to be obtained from all relevant contractual
counterparties necessary for the implementation of the Acquisition Agreement
have in fact been obtained; and
3.4.1.2 each product licensor/manufacturer/supplier has confirmed that it will continue
to perform in accordance with the terms of the existing agreement(s) between
such product licensor/manufacturer/supplier and the relevant member of the
Exeltis Group following the implementation of the Acquisition Agreement;
3.4.2 to the extent necessary, an exemption by the Takeover Regulation Panel of the
transactions contemplated in the Acquisition Agreement from the application of the
provisions of the Takeover Regulations.
3.5 Warranties and indemnities
The Seller has given Activo such warranties and indemnities as are customary in transactions
of this nature. In terms of the Acquisition Agreement, payment of the Purchase Price by Activo
in terms of paragraph 3.3 above is guaranteed by AfroCentric.
4. PROFITS AND NET ASSET VALUE ATTRIBUTABLE TO EXELTIS SOUTH AFRICA
The post-tax profit attributable to the business of Exeltis South Africa and its subsidiaries, as
extracted from the most recent financial results of the Seller for the 12 month period ended 31
December 2019 was R3 773 918. The value of the consolidated net assets attributable to
Exeltis South Africa as at 31 December 2019 was R 44 701 715.
5. CATEGORISATION
The Acquisition constitutes a Category II transaction in terms of the JSE Limited Listings
Requirements and does not require Shareholder approval.
Johannesburg
28 April 2021
Sponsor
Sasfin Capital (a member of the Sasfin Group)
Legal Advisor to Purchaser
Glyn Marais Incorporated
Legal Advisor to Seller
Webber Wentzel
Date: 28-04-2021 01:25:00
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