JSE-listed Allied Electronics (Altron) has withdrawn its cautionary as it enters into a share purchase agreement to sell all its shares in Bytes UK to a wholly-owned subsidiary of Bytes Technology Group.

Bytes Technology Group, on behalf of Bytes Technology Holdco, will settle the purchase consideration due to Bytes SA for the disposal through the issue of 220.5-million convertible notes to Bytes SA.

Altron will distribute 91% of the convertible notes it receives from the Holdco, through its various subsidiaries, to ordinary Altron shareholders, with 9% retained to settle dividends tax arising from the distribution.

This formed part of Altron’s strategy to unbundle and list its UK subsidiary Bytes Technology Group separately on the London Stock Exchange, with a secondary listing on the Johannesburg Stock Exchange.

The demerger will enable Bytes UK to operate in a more focused and efficient manner, allow Bytes UK to achieve its strategic goals and unlock value for Altron ordinary shareholders over the long term.

Altron has determined a minimum offer price of £1.89, below which the demerger will not be implemented.

The minimum offer price will result in a minimum market capitalisation of £450-million for Bytes Technology Group at admission, representing 89% of Altron’s current market capitalisation as at close of business on October 30.

As the minimum price has been set by reference to the currently prevailing global macroeconomic and stock market volatility, Altron warned that it should not be taken as a guide to the actual offer price which may be achieved or the Altron board's assessment of the actual value of Bytes UK.

“The Altron board are entitled in their absolute discretion to increase the minimum offer price until the publication of the prospectus, which is expected to be published on December 2,” the company said in a statement.

Based on the minimum offer price Altron will receive a minimum value of about £416-million in proceeds from the disposal.

Post dividends tax, Altron will distribute £379-million to Altron ordinary shareholders in the form of Bytes Technology Group shares and cash.

The demerger remains subject to fulfilment or waiver of certain suspensive conditions by December 31.