The Competition Tribunalannounced on 21 August 2017 that the Acquisition has been approved, subject only to one condition. In terms of this condition, Italtile employees are not to receive or gain access to any information of Ceramic relating to third party customers, including information regarding the terms and conditions on which Ceramic contracts with its third-party customers.
According to the terms of the Implementation Agreement (“the Agreement”) between Italtile and Ceramic, the board of directors of Italtile (“the Board”) is required to confirm that it is satisfied to proceed with the Acquisition in light of the condition imposed by the Tribunal, pertaining to the Ceramic information.
In this regard, the Board has unanimously confirmed that it is satisfied for the Acquisition to be concluded notwithstanding the condition imposed by the Tribunal. Further, in accordance with the Agreement, the JSE is required to grant a listing of the Italtile shares to be issued in respect of the Acquisition. Confirmation of such has been received and accordingly, the effective date of the Acquisition will be Monday, 2 October 2017 (“the effective date”), being the first business day of the month following the month in which all conditions were approved, as stipulated by the Agreement.
BACKGROUND INFORMATION ON CERAMIC AND EZEE TILE:
- Ceramic is a manufacturer of glazed porcelain floor tiles; ceramic wall and floor tiles; vitreous china sanitaryware and acrylic baths and shower trays.
- Ceramic’s South African operations comprise five tile factories, one sanitaryware factory and a bath factory. The tile factories are: Samca Floor Tiles, Samca Wall Tiles, Vitro, Pegasus and Gryphon; the sanitaryware and bath factories are Betta Sanitaryware and Aquarius Baths respectively.
- Ceramic also owns and operates one tile factory in Australia – Centaurus.
- Ceramic is Italtile’s primary supplier of tiles, sanitaryware and baths. The business also supplies third party customers including Cashbuild, Massmart and Tiletoria.
- The Italtile Group currently owns 21% of the issued share capital of Ceramic.
- Ezee Tile is a manufacturer of grout, adhesive and related products. The company supplies the Italtile Group as well as third party customers.
- The Italtile Group currently owns 46% of the issued share capital of Ezee Tile.
The Group has confidence in the opportunities for growth in South Africa. The long-term success and sustainability of both businesses are inextricably intertwined.
There are advantages to be gained from improved efficiencies and reduced costs; enhanced allocation of capital; and alignment of long term growth strategies.
Based on Ceramic’s shareholding on the effective date, Italtile will acquire 14 464 769 ordinary shares of Ceramic, for a total consideration of R241.46 per share, totalling R3 492 663 123, payable by way of total cash payments of R1 746 331 636 over a 17-month period and the issue of 150 936 170 Italtile shares at R11.57 per Italtile share on the effective date.
As a result of the Acquisition, Italtile will hold 95.47% of the issued share capital of Ceramic and an effective 71.54% of the issued share capital of Ezee Tile.