JSE-listed Rolfes has bought out Agricultural Chemicals’ (Agchem’s) minority shareholders for R37.9-million and expects the acquisition to better align its core businesses and strengthen the platform upon which to grow the division and the company.

Rolfes said on Thursday that it had agreed to acquire 20% of the issued shares in Agchem, together with any claims that the seller may have against Agchem, from the Pretorius Family Trust for R25.3-million in cash.

The transaction was subject to obtaining sufficient funding to discharge the purchase consideration and Johan Pretorius resigning as an employee of Agchem and renouncing any further claims against the company.           

Agchem’s net asset value and net after tax profit were R129-million and R16.2-million, respectively, based on the unaudited results of the division’s six months ended December 31, 2014.

Rolfes had also agreed to buy 10% of the issued shares in Agchem and any claims that the seller may have against Agchem from the SP Naude Family Trust for R12.6-million in cash.

In addition, Stefan Naude will be entitled to back pay if certain profit growth hurdles are met over the next two financial years. The back pay would be determined by multiplying the difference between the actual profits achieved over the next two financial years and the hurdle profit rate by 5.5 and then by 10%. The back pay was capped at R10-million and, if Naude remained an employee of Agchem for the two-year period, will be payable before September 30, 2017.

The transaction with the SP Naude Family Trust was subject to obtaining sufficient funding to discharge the purchase consideration, and Naude entering into a two-year extension of employment contract with Agchem, on mutually acceptable terms, with effect from July 1.

Rolfes advised that the net amount payable in terms of the transactions would be settled from bank debt facilities.

Both acquisitions were subject to obtaining the approval of the Takeover Regulation Panel (TRP) and any other regulatory approvals that may be required. The effective date of both transactions was July 1.

The Agchem division specialised in the development and manufacture of high-quality agrochemical products for world markets. It currently produced a range of insecticides, herbicides, fungicides, crop fertilisers, adjuvants, seed treatments, biological treatments, crop fertilisers and agricultural products.

Agchem remained central to Rolfes’s strategy, which was built on the global need for food, agriculture, water, industrial products and infrastructure development in developing countries and markets.

As such, Rolfes was positioning itself to build a substantial industrial group to provide specialised chemicals and related products and solutions to support these needs, primarily in Africa, but also in other specific strategically targeted geographical areas. Additionally, the group explained that it provided value-add through the deployment of intellectual capital and technological innovation in its chosen industries.

Rolfes advised shareholders on May 7 that the company was involved in negotiations on the acquisition of the remaining 30% shareholding in Agchem from minority shareholders, further expansion into specialty chemicals and the disposal of noncore assets.

The board of Rolfes did not believe Introlab, which supplied and distributed soluble fertilisers, and Acacia, a supplier of certain chemical raw materials, to be core to the group’s or Agchem’s strategy and, hence, had taken the decision to dispose of its shareholding in these operations.

As such, Agchem had agreed to dispose of its 50% interest in Introlab’s issued shares and any claims that it may have against Introlab to the Pretorius Family Trust for R12.4-million, which was to be paid to Agchem in cash.

Introlab’s net asset value and net after tax profit were R25.1-million and R2.5-million, respectively, based on its unaudited results for the six months ended December 31, 2014.

Agchem had agreed to sell its 51% interest in the issued shares in Acacia and any claims that it may have against Acacia to the Indicator Trust for R6.3-million. This amount was to be paid to Agchem in cash on or before December 31 and would bear interest at a rate of 9.5% a year from the effective date.

Acacia’s net asset value and net after tax profit were R12.7-million and R1.2-million, respectively, based on its unaudited results for the six months ended December 31, 2014.

Both the Introlab and Acacia transactions would be effective on July 1 and were subject to obtaining the approval of the TRP and any other regulatory approvals required.