Advtech and the Calajero Consortium have agreed in principle that the consortium will buy the entire Advtech business for almost R300 million, a far cry from the initial offer of R185 million.
There has been no indication of what will happen to the current management of Advtech or what the structure of the company will be, but a comprehensive agreement has yet to be thrashed out.
The market reacted quickly to the news, with the share rising 31.91% or 15c to 62c in early morning trade on the JSE.
The offer to buy Advtech was made in early January by private investor Jonathan Beare and Calajero Investments, which is controlled by former Brait Investment Bank CE Mark Barnes.
Advtech rejected the initial offer of R185 million, which equated to 50c an Advtech share, as it felt the offer did not represent fair value.
After negotiations yesterday, the parties agreed on a price of R299.315 million, equating to 75c an Advtech share before transaction and related costs.
The deal is subject to various conditions, among them the conclusion of a comprehensive agreement, obtaining the necessary approvals, and the outcome of a due diligence exercise.
The 75c per share price tag is also subject to reduction under certain circumstances, provided that the move would be to a minimum 60c per share.
According to the agreement, Advtech shareholders will have the option to reinvest 35% of the proceeds into ordinary shares in the new vehicle to be created by the consortium to house the business.
The reinvestment option will be struck at a price equivalent to the purchase price plus interest.
"A listing will be sought for the ordinary shares in the new entity and if possible, the reinvestment option," Advtech says.
Since the effective date of the deal has been set at 1 January this year, the agreement allows for a dividend of up to three times dividend cover for the year to 31 December 2000.
The group says a detailed announcement will be made once the agreement is concluded, which it expects shortly.
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