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Alviva - acquisition announcement
Shareholders are advised that Alviva has on 13 June 2019, through its subsidiary DCT Holdings (Pty) Ltd. ("DCT"), entered into a sale of shares agreement to acquire 70% of the issued share capital of SynergERP (Pty) Ltd. ("Synerg SA").
Through its subsidiary Alviva International Investments (Pty) Ltd. ("Alviva International"), it also entered into sale of shares agreements to acquire 51% of the issued share capital of Synergy DWC-LLC ("Synerg UAE") and SynergERP Ltd. ("Synerg UK") respectively.
Synerg SA, Synerg UK and Synerg UAE are collectively referred to hereinafter as "the Synerg Group". The acquisition of Synerg SA will be effective from 1 July 2019 ("the Effective Date") and the acquisitions of Synerg UAE and Synerg UK will be effective from the Closing Date (collectively "the Acquisitions").
The Acquisitions will be implemented on the "Closing Date", being the first day of the month following the month in which the last of the conditions precedent to the Acquisitions, as set out below is fulfilled or waived, as the case may be ("Conditions Precedent").
Details of the Acquisitions
In summary, the Synerg SA transaction comprises:
- The purchase price of R90.1 million (subject to adjustment) for a 70% shareholding in Synerg SA, is payable in cash in two instalments.
- Payment 1 is for R63.1 million, representing 70% of the total price payable. This payment is payable on the Closing Date of the transaction, expected to be around 1 July 2019.
- Payment 2 is for R27 million, subject to a price adjustment formula linked to the actual profits achieved by Synerg SA in respect of the financial year ending 31 December 2019. Payment 2 will be made on the completion of the 2019 audited accounts.
- The maximum purchase price payable by DCT in respect of the 70% acquisition of Synerg SA is R108 million.
- On the Effective Date, the Vendors warrant a minimum net asset value of Synerg SA of R11.5 million.
In summary, the Synerg UK and Synerg UAE transactions comprise:
- The purchase prices payable by Alviva International in respect of the acquisition of Synerg UK and Synerg UAE will only be calculated and paid following the completion of the audited accounts of Synerg UK and Synerg UAE for the year ending 30 June 2022 (payment must be made on or before 30 September 2022).
- The purchase prices will be based on a PE of 9.1 in respect of the actual profits achieved by Synerg UK and Synerg UAE respectively, for the financial year ending 30 June 2022.
- The maximum purchase price payable by Alviva International in respect of the acquisition of Synerg UK is GBP2.7 million (R 51.7 million) and Synerg UAE is AED12.8 million (R 52.3 million).
Alviva International also has an option to acquire a further 19% of each of Synerg UK and Synerg UAE on the same pricing formula as above in the following two option periods:
- In the period 1 July 2022 to 30 September 2022, or
- In the period 1 July 2024 to 30 September 2024.
The Acquisitions are also subject to warranties and indemnities normal to transactions of this nature.
Conditions precedent
In addition to the conditions precedent as are normal with a transaction of this nature, including the conduct of a due diligence investigation which has been performed to the satisfaction of Alviva, the following relevant conditions precedent are applicable to the Acquisitions:
- the conclusion of 3-year key employment agreements and 2-year restraint of trade agreements with each of Ashley Bernard Regenass, Duncan Mark Campbell, Jan Eduan van der Westhuizen, Frans Jacobus Du Toit, Gary John Janssens, Brennan Cordell Fritz and Fritz-Jan van der Westhuizen;
- the conclusion of new shareholders' agreements for Synerg SA, Synerg UK and Synerg UAE;
- the adoption of a new MOI for Synerg SA;
- the approval by Sage of the change in shareholder control of the Synerg Group;
- the restructuring of Synerg SA, resulting in Synerg IT and Synerg 300 becoming wholly owned subsidiaries of Synerg SA before the Effective Date;
- the delivery by Alviva to the Vendors of written confirmation that it is satisfied, in its sole discretion, that from the signature date of the agreements until the date of fulfilment of the other conditions precedent there has been no material adverse effect as defined; and
- the approval of the South African Reserve Bank in respect of the Synerg UK and Synergy UAE acquisitions.
These conditions precedent need to be fulfilled by no later than 1 September 2019.
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| Closing price data source: JSE Ltd. All other statistics calculated by ProfileData. |
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