Allied Electronics Corporation Limited (Altron) is to make a R4,8-billion offer to acquire the portions of Altech and Bytes that it doesn't currently own.
The board of Altron today make known firm intentions to the boards of Altech and Bytes that it will bid to buy 38.2% of the issued ordinary share capital of Altech, and 42.3% of the issued ordinary share capital of Bytes from the respective minority shareholders in a transaction valued at approximately R 4,8-billion.
The board believes the the proposed acquisition will simplify the corporate and operating structure of the Altron Group; improve the free float and liquidity of the Altron participating preference shares and the Altron ordinary shares on the JSE; and create a single point of entry into the Altron Group while simultaneously increasing Altron's exposure to its core activities.
In addition, it believes the move will help to limit any potential strategic conflicts of interest that presently exist between Altech and Bytes in relation to corporate opportunities while preserving the strong brands and market strength the two groups enjoy.
The group intends to maximise the synergies between Altech and Bytes as the telecoms and IT markets undergo increasing convergence, enabling the Altron Group to offer more effective tailored customer solutions.
The acquisition would also improve operational and cost efficiencies through the reduction of duplicated overheads and leverage off improved Altron Group procurement opportunities and standardised internal control systems; improve service delivery to customers through a more cohesive approach while maintaining the corporate cultures; improve the enlarged Altron Group's financial leverage, financial capability and critical mass; and allow Altron greater control over its cash flows and to gear its operations and allocate its capital more effectively.
Robert Venter, chief executive of Altron, comments: “The acquisitions proposed today are the culmination of a strategic objective to simplify our group structure that was initiated in 2001. From an operational perspective, this structure will allow us to maximise synergies and customer delivery between the converging IT and telecom markets currently served by our Bytes and Altech operations.
"Altron will be focused on two broad segments, namely Power Electronics and Telecoms, Multimedia and IT (TMT), and this new structure will allow more efficient capital allocation providing additional flexibility for both internal and external investment decisions.”
Altron is offering shareholders in Altech and Bytes a 29% premium for their shares, calculated on the respective 30 day volume weighted average price (VWAP) for each Altech and Bytes share, based on each companies’ share price on the day prior to the companies first issuing cautionary announcements relating to this transaction (7 August 2007).
The offers’ purchase price will be settled in the form of Altron participating preference shares unless minority shareholders elect to receive a minimum of 15% of Altron ordinary shares, at a 7% premium to the Altron participating preference shares.
If this election is made the premium reduces to 20% per ordinary share granted.
Historically the two shares have traded at a differential and the offer is reflecting this position.
Altron intends implementing the proposed acquisition by way of a scheme of arrangement in terms of section 311 of the Companies Act.
As 23 October 2007, Nedbank Capital has advised the Altech Board that the Altech offer is fair and reasonable to Altech’s minority shareholders and Rand Merchant Bank has advised the Bytes Board that the Bytes offer is fair to Bytes’ minority shareholders.