UTR/SHF - Unitrans/ Steinhoff - Disposal and Withd21 Feb 2007
SHF   UTR
 SHF   UTR                                                                       
UTR/SHF - Unitrans/ Steinhoff - Disposal and Withdrawal of Cautionary           
Unitrans Limited                                                                
(Incorporated in the Republic of South Africa)                                  
(Registration Number 1967/003403/06)                                            
Share code: UTR & ISIN:  ZAE000007670                                           
("Unitrans" or "the company")                                                   
Steinhoff International                                                         
(Incorporated in the Republic of South Africa)                                  
(Registration Number 1998/003951/06)                                            
Share code:  SHF & ISIN:  ZAE000016176                                          
("Steinhoff")                                                                   
-    Disposal by Unitrans of its entire business as a going concern to a        
    subsidiary of Steinhoff ("Steinhoff Newco") in exchange for Steinhoff       
    Newco shares;                                                               
-    distribution in specie to Unitrans shareholders of shares in Steinhoff     
Newco and the subsequent exchange of Steinhoff Newco shares for             
    Steinhoff shares; and                                                       
-    withdrawal of cautionary announcement                                      
1. INTRODUCTION                                                                 
1.1.    On 19 February 2007, Steinhoff, through a subsidiary ("Steinhoff        
    Newco"), made an offer to Unitrans to acquire from Unitrans its entire      
    business as a going concern ("the offer"). The acquisition will             
    provide for Unitrans shareholders, other than Steinhoff Africa              
Holdings (Pty) Ltd ("Steinhoff Africa") (collectively "Unitrans             
    minority shareholders") to ultimately obtain Steinhoff shares ("the         
    transaction"). Steinhoff Africa currently owns 60,76% of the issued         
    share capital of Unitrans.                                                  
1.2.    The transaction will have the effect that Unitrans minority             
    shareholders will receive 2 Steinhoff shares for each Unitrans share        
    held on a record date to be determined ("the share exchange").              
1.3.    Steinhoff is a holding company, listed on the JSE Limited ("JSE") and   
is invested predominantly in the household goods and related                
    industries. Steinhoff is a global lifestyle supplier that                   
    manufactures, warehouses and distributes household goods.                   
1.4.    Unitrans is a diversified transport, distribution and logistics group,  
also listed on the JSE and active in freight and passenger transport,       
    warehousing, break bulk services, distribution and logistics services,      
    vehicle retailing, fleet management, vehicle leasing, financing and         
    insurance and car rental ("the Unitrans business").                         
2. THE DISPOSAL, DISTRIBUTION OF NEWCO SHARES AND THE SHARE EXCHANGE            
2.1.    Steinhoff and Unitrans have reached agreement, subject to the           
    conditions precedent set out in paragraph 4 below, in terms of which        
    Unitrans will dispose of the Unitrans business as a going concern to        
Steinhoff Newco, by means of a disposal as contemplated in section 228      
    of the Companies Act, 1973, as amended ("the Companies Act") ("the          
    disposal").                                                                 
2.2.    Based on the current issued share capital of Unitrans, Steinhoff Newco  
will, as purchase consideration for the Unitrans business, issue 89         
    331 988 shares in Steinhoff Newco at an issue price equal to the            
    market value of a Unitrans share as at the effective date, being the        
    second business day after fulfilment of the last of the conditions          
precedent set out in paragraph 4 below.                                     
2.3.    Unitrans will, subject to the fulfilment of the conditions precedent,   
    by way of a distribution in terms of section 90 of the Companies Act,       
    distribute the Steinhoff Newco shares to Unitrans shareholders              
(including Steinhoff Africa) on a record date to be determined ("the        
    record date"), pro rata to their Unitrans shareholdings ("the               
    distribution"). The distribution will consist of both a capital             
    reduction and payment of a dividend in specie.                              
2.4.    In terms of the share exchange, Unitrans minority shareholders will,    
    after the distribution, be obliged to dispose of their Steinhoff Newco      
    shares to Steinhoff in exchange for the issue of Steinhoff shares,          
    credited as fully paid, in the ratio of 2 Steinhoff shares for each         
Steinhoff Newco share exchanged. Due to Steinhoff Africa not                
    participating in the share exchange, only 76 268 060 new Steinhoff          
    shares will be issued ("the Steinhoff consideration shares"), 10 139        
    998 of which Steinhoff shares will be retained as treasury shares           
within the current subsidiary of Unitrans which holds 5 069 999             
    Unitrans treasury shares. The effective purchase consideration payable      
    by Steinhoff for that portion of the Unitrans business not already          
    owned by it thus amounts to R1 665 104 601 on the basis of the volume       
weighted average price ("VWAP") per Steinhoff share of 2 518 cents per      
    share.                                                                      
2.5.    The collective shareholding of Unitrans minority shareholders in        
    Steinhoff after the share exchange will be 5,1%, after including the        
effect of the Homestyle Group plc ("Homestyle") minority scheme of          
    arrangement pursuant to which Homestyle became a wholly-owned               
    subsidiary of Steinhoff with effect from 19 February 2007.                  
2.6.    Each of the components of the transaction, i.e. the disposal,           
distribution and share exchange, form part of an indivisible                
    transaction. Salient dates relating to the distribution and share           
    exchange will be set out in the circular to Unitrans shareholders           
    referred to in paragraph 7 below.                                           
2.7.    After the transaction, Unitrans will own no assets and will not be      
    eligible for a continued listing in terms of the Listing Requirements       
    of the JSE ("the Listing Requirements"). As a consequence, it is            
    intended that the listing of Unitrans on the JSE be terminated and          
that the company be liquidated in due course.                               
3. RATIONALE                                                                    
3.1.    The Unitrans business is faced with limited acquisitive growth          
    prospects in the South African market. The transaction presents to          
Unitrans the possibility of off-shore expansion, utilising the current      
    offshore presence, experience and financing capabilities of Steinhoff.      
3.2.      Other benefits include:                                               
3.2.1.  optimisation of logistics synergies in terms of intra-group             
opportunities which can better be achieved as a single group, e.g. PG       
    Bison, Timbercity, Pennypinchers, Homestyle and Steinhoff Asia              
    Pacific;                                                                    
3.2.2.  Unitrans` motor retail interests fit in with Steinhoff`s strategy and   
complement its existing retail interests;                                   
3.2.3.  critical mass considerations in respect of complementary property       
    portfolios and therefore increased access to finance on more                
    appropriate terms;                                                          
3.2.4.  complementary management skills and business acumen, as well as         
    reciprocal enhancement of management depth and succession; and              
3.2.5.    elimination of duplicated structures and sharing of infrastructure.   
3.3.    Due to its limited free-float and, hence, tradability, Unitrans has     
limited access to equity capital / vendor consideration opportunities       
    to fund growth on appropriate terms, and consequently a separate            
    listing is not justified.                                                   
4. CONDITIONS PRECEDENT                                                         
The disposal, distribution and share exchange are subject to:                   
4.1.    the conclusion of the relevant purchase and sale agreements emanating   
    from the offer;                                                             
4.2     the approval of Unitrans minority shareholders in general meeting       
("the general meeting");                                                    
4.3.    the approval by the JSE and the Securities Regulation Panel of the      
    required circular to Unitrans shareholders;                                 
4.4.    the adoption by Unitrans shareholders of a special resolution, and the  
registration thereof, for the liquidation of Unitrans subsequent to         
    the share exchange occurring;                                               
4.5.      the approval of the Unitrans bond holders to the extent required;     
and                                                                             
4.6.    the JSE granting a listing of the Steinhoff consideration shares to be  
    issued in terms of the share exchange.                                      
5. FINANCIAL EFFECTS                                                            
5.1.      Financial effects of the transaction on Steinhoff                     
Notwithstanding its strategic importance to Steinhoff,  the                 
    transaction will not have a significant effect on Steinhoff`s               
    earnings, headline earnings, net asset value and net asset value (as        
    adjusted for the elimination of goodwill) per share.                        
5.2.      Financial effects of the transaction on a Unitrans shareholder        
    Based on the audited financial statements of Unitrans and Steinhoff         
    for the year ended 30 June 2006 and on the assumption that the share        
    exchange had been in effect on that date, the effects of the                
transaction on a Unitrans minority shareholder holding 100 Unitrans         
    shares would have been as follows:                                          
                                       Before       After                       
                                         (100        (200                       
Unitrans   Steinhoff                       
                                      shares)     shares)       %               
                              Note        (R)         (R)  Change               
Attributable:                                                                   
- market value                   1    4 976,00    5 059,28     1,7              
- earnings                       2      380,80      333,40  (12,4)              
- headline earnings              2      405,50      347,60  (14,3)              
- net asset value                3    2 171,00    1 913,20  (11,9)              
- net asset value adjusted       3    1 878,80    1 517,40  (19,2)              
for the elimination of                                                          
goodwill                                                                        
Notes:                                                                          
1.   The "Before" column represents Unitrans`s VWAP up to 6 February 2007       
    (4 976 cps) attributable to 100 Unitrans shares. The "After" column         
    reflects the pro forma market value attributable to 200 Steinhoff           
    shares arrived at on the basis of Steinhoff`s pro forma "After" HEPS,       
capitalised at its implied price earnings multiple applicable to its        
    VWAP over the same period and its historically reported HEPS (173 cps)      
    for the year ended 30 June 2006.                                            
2.   The "Before" column represents Unitrans`s Earnings and Headline            
Earnings for the year ended 30 June 2006 attributable to 100 Unitrans       
    shares. The "After" column reflects the pro forma Earnings and              
    Headline Earnings of Steinhoff attributable to 200 Steinhoff shares on      
    the assumption that the share exchange was in effect throughout that        
financial year.                                                             
3.   The "Before" column represents the Net Asset Value ("NAV") and Net         
    Asset Value adjusted for the elimination of goodwill ("TANAV")              
    attributable to 100 Unitrans shares as at 30 June 2006 (restated at 31      
December 2006), whereas the "After" column represents the pro forma         
    NAV and TANAV of Steinhoff as at that date, adjusted for the share          
    exchange, attributable to 200 Steinhoff shares, on the assumption that      
    the transaction became effective on 30 June 2006.                           
6. INDEPENDENT ADVICE, RECOMMENDATION AND VOTING                                
6.1.    The transaction constitutes an "affected transaction" in terms of the   
    rules of the Securities Regulation Code on Take-overs and Mergers           
    ("the Code"). In addition, the transaction constitutes a related party      
transaction in terms of Section 10 of the Listing Requirements.             
    Accordingly, the Code and the Listing Requirements require the              
    directors of Unitrans to obtain independent advice on the fairness and      
    reasonableness of the terms of the transaction to Unitrans                  
shareholders.                                                               
6.2.    The Board of Unitrans established a committee of the Board, comprising  
    independent non-executive directors of the Board, to consider a             
    proposal which preceded the offer. The independent committee appointed      
PricewaterhouseCoopers Corporate Finance (Pty) Limited ("PwC") to           
    advise the independent committee whether the terms of the transaction       
    are fair and reasonable to Unitrans shareholders. PwC completed a           
    preliminary valuation of Unitrans and review of Steinhoff as at 6           
February 2007 and has advised the independent committee that the terms      
    of the transaction are fair and reasonable to Unitrans ordinary             
    shareholders as at that date. PwC`s opinion will be formalised and          
    finalised at the last practicable date prior to the publication of the      
circular to Unitrans shareholders referred to in paragraph 7 below and      
    will be based on financial, regulatory, securities market and other         
    conditions prevailing at that time.                                         
6.3.    Based on PwC`s preliminary advice, but subject to receipt of a final    
fair and reasonable opinion from PwC, the independent committee of the      
    board unanimously recommends that Unitrans minority shareholders            
    support the transaction by voting in favour of the Unitrans                 
    shareholder resolutions required to implement the disposal and the          
distribution and the directors of Unitrans, where applicable and to         
    the extent permissible in terms of the Code and the Listing                 
    Requirements, undertake to vote their own Unitrans shares in favour of      
    such resolutions. PwC`s written opinion will be contained in the            
circular referred to in paragraph 7 below.                                  
6.4.    Steinhoff Africa and its associates will not be permitted to vote at    
    the general meeting.                                                        
6.5.    Unitrans minority shareholders currently holding approximately 60% of   
the Unitrans shares that may be voted at the general meeting have           
    indicated that they intend voting in favour of the resolutions to be        
    proposed at the general meeting.                                            
7. CIRCULAR TO UNITRANS SHAREHOLDERS AND GENERAL MEETING                        
A circular setting out the detailed terms of the transaction and convening the  
general meeting to approve such is in the process of being finalised and        
will be posted to Unitrans shareholders within 28 days of this announcement     
or within such longer period as the JSE and the SRP may allow in the            
circumstances.                                                                  
8. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT                                        
Unitrans shareholders are referred to the cautionary announcement by Unitrans   
dated Friday, 24 November 2006 and its renewal on 4 January 2007. The           
cautionary notice is no longer required and is hereby withdrawn.                
Johannesburg                                                                    
21 February 2007                                                                
Corporate adviser and sponsor                                                   
PSG Capital                                                                     
Legal adviser                                                                   
Cliffe Dekker                                                                   
Independent adviser                                                             
PricewaterhouseCoopers                                                          
Corporate Finance (Pty) Ltd                                                     
(Registration number 1970/003711/07)                                            
Date: 21/02/2007 15:23:00 Produced by the JSE SENS Department.