AVI - AVI Limited - Acquisition of Green Cross Manufacturers Proprietary
Limited, Green Cross Retail Holdings Proprietary Limited and Green Cross
Properties Proprietary Limited by Avi
AVI Limited
(Incorporated in South Africa)
(Registration number: 1944/017201/06)
ISIN Code: ZAE000049433
JSE Code: AVI
("AVI" or "the Group")
VOLUNTARY ANNOUNCEMENT
ACQUISITION OF GREEN CROSS MANUFACTURERS PROPRIETARY LIMITED, GREEN CROSS RETAIL
HOLDINGS PROPRIETARY LIMITED AND GREEN CROSS PROPERTIES PROPRIETARY LIMITED
("GREEN CROSS" OR "THE BUSINESS") BY AVI
1.INTRODUCTION
Shareholders are advised that AVI has entered into an agreement in terms of
which it will acquire 100% of the issued share capital and shareholders' loans
of Green Cross ("the Transaction" or "the Acquisition").
The Transaction is not a categorised transaction in terms of the Listings
Requirements of the JSE Limited.
2. RATIONALE
Since the acquisition of A&D Spitz Proprietary Limited ("Spitz") in July 2005,
AVI's premium branded footwear and apparel portfolio has contributed
meaningfully to the Group's growth in profitability. The Transaction represents
a rare opportunity to acquire an established, category leading brand of relevant
scale with a solid record of profitable operations.
Salient to the Transaction are the following:
* The opportunity to acquire South Africa's leading comfort footwear
brand.
* The opportunity to substantially increase the scale and profitability
of Green Cross' operations through increased brand focus, product
innovation, enhanced consumer messaging and greater investment in both
the business' retail and wholesale operations.
* The opportunity for medium term synergistic margin extraction through
utilisation of the AVI and Spitz shared services infrastructures.
* The opportunity to introduce the credit and loyalty programmes offered
at Spitz and Kurt Geiger at Green Cross.
* The retention of key Green Cross executives which will provide AVI
with skills continuity for an appropriate period.
3.INFORMATION ON GREEN CROSS
Green Cross was founded in 1975 and is a vertically integrated manufacturer,
importer and retailer of ladies, men's and children's footwear in South Africa
and surrounding geographies. All of the business' sales are made under the
"Green Cross" brand which is owned by Green Cross in South Africa and several
other jurisdictions. Green Cross has production facilities located in Epping,
Cape Town, and retails its products through a network of 30 retail outlets
situated across South Africa. In addition to Green Cross' retail operations,
wholesale sales are made through a network of third party retailers,
distributors and agents and accounted for approximately 48% of consolidated
turnover in Green Cross' last financial year.
Green Cross' consolidated results for its financial year ending 29 February 2012
were:
R'm
Revenue 300,6
Operating profit 70,0
Operating profit after taxation 50,4
of 28%
4.PARTICULARS OF THE TRANSACTION
i.PURCHASE CONSIDERATION
The purchase consideration payable by AVI will be an initial amount of
R382.5 million plus a contingent earn-out payment up to a maximum amount of
R35 million, payable in March 2013 subject to certain profit hurdles being
achieved in Green Cross' financial year ending 28 February 2013. AVI will
discharge the initial amount of the purchase consideration in a single cash
payment to the vendors. AVI will fund the entire purchase consideration
from existing cash resources.
ii.EFFECTIVE DATE
The transaction's effective date is 1 March 2012.
iii.CONDITIONS PRECEDENT
The transaction is subject to the fulfilment of certain conditions
precedent including the receipt by the parties of the unconditional
approval of the South African Competition Authorities in terms of the
Competition Act no. 89 of 1998, as amended, and the receipt by the parties
of the written consent of certain landlords in respect of the transfer of
certain leases over premises utilised by Green Cross in its retail
operations.
5. CONCLUSION
AVI's board of directors believes that the Transaction is strongly aligned to
the Group's strategy of growing great brands and that the addition of this
leading brand with a solid track record and exciting future growth opportunities
will allow AVI to further capitalise on its expertise in the premium branded
footwear category.
Further details relating to the Transaction will be communicated at the Group's
year-end results presentation to be held during September 2012.
17 May 2012
Illovo, Johannesburg
Sponsor
The Standard Bank of South Africa Limited
Legal advisor to Green Cross
Bernadt Vukic Potash & Getz
Legal advisor to AVI
Tabacks
Date: 17/05/2012 14:12:01 Produced by the JSE SENS Department.
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