JSE-listed Italtile has expressed an interest in acquiring between 15% and 20% in ceramic products supplier Ceramic to support its growth strategy.
Italtile on Monday announced its intention to acquire a strategic stake in the issued share capital of fellow JSE-listed Ceramic for R130 a share in cash.
“To support Italtile’s growth objectives, the board would like to strengthen its relationship with Ceramic as a key supplier to the company, through the acquisition of a strategic shareholding in the company,” Italtile said in a statement.
The proposal was subject to various conditions, including the successful outcome of a due diligence exercise, the support of the Ceramic board, assurance that Ceramic would be able to support Italtile’s growth strategy, the continued involvement of Ceramic’s management in Italtile’s business and the necessary regulatory and legislative approvals.
Further, Ceramic said that it would have a materially reduced free float if Italtile’s offer succeeded.
“Italtile has recognised that under these circumstances Ceramic’s continued listing makes little sense,” the company stated, adding that its listing on the JSE to date had served little purpose.
“Ceramic’s shares are tightly held, minimal capital has been raised from the market and trade in the shares is thin,” it noted.
The company’s independent board members believed that its business would not be affected if Italtile’s conditional offer was implemented and the company delisted.
A further announcement was expected before the end of June.
Ceramic surged 9% on the news to R123.45 a share.