JSE-listed packaged goods company Libstar will dispose of a 70% equity interest in its household and personal care businesses, comprising the Contactim and Chet Chemicals divisions, for R174.6-million.
"The transaction serves to amplify Libstar’s strategic intent to focus and grow its existing food categories, while transitioning its non-food division to a sustainable, transformed standalone business in partnership with the buyers, private equity fund manager PAPE Fund Managers and Kanaka Chemical."
Libstar is a producer and distributor of more than 9 000 products and brands for the consumer packaged goods industry in South Africa and internationally. More than 90% of group revenue is generated from food, which includes dairy and value-added meat products, fresh produce, convenience food, groceries, baking and baking aids, snacks and confectionery.
Further, a put and call option, exercisable by Libstar and the buyers, respectively, between December 31, 2023, and June 30, 2024, will be entered into in relation to Libstar’s remaining 30% interest in the household and personal care businesses.
The price at which the option may be exercised is based on the same valuation that was used to calculate the purchase consideration for the initial 70% equity interest to be acquired by the buyers, less a discount of 20%, being an amount of R42.72-million. The total purchase consideration, including the price payable in terms of the option, is therefore R217.32-million.
Additionally, the transaction envisages a new company being established to acquire the entirety of the household and personal care businesses as going concerns from Libstar, the company says.
The new company intends to fund a portion of the purchase consideration by raising new bank debt of about R50-million. The purchase consideration payable by the buyers for 70% of the equity in the new company will be R124.6-million.
The value of the net assets being disposed of is R312-million and the loss before tax attributable to those net assets is R64-million. The implementation of the transaction is subject to the fulfilment or waiver by no later than June 30, of conditions precedent for the transaction, Libstar says.