Appleton withdraws from R27.7m Tradek bid

Johannesburg, 18 Apr 2002

Appleton`s unsolicited offer for rival online stockbroker Tradek.com was withdrawn yesterday as the larger firm stated it was dissatisfied with the financial and legal due diligence and unable to retain key staff.

According to the Stock Exchange News Service statement released by Appleton yesterday morning, Tradek shareholders were advised that Appleton is not satisfied with the results of the due diligence investigation undertaken and will not proceed with the offer.

The Appleton offer was prompted by a bid by financial services group PSG to takeover the struggling online stockbroker. Appleton announced its intentions on 19 March and this led to an exchange of words and views between it and the senior Tradek staff.

The Appleton offer to Tradek shareholders was a consideration of 15c per ordinary share, or R27.7 million. Appleton claimed at the time to have irrevocable undertakings of 55% of Tradek shareholders.

Paul Theron, Tradek CEO, who was opposed to the Appleton offer, says: "When it came down to it, it appears Appleton did not fully understand the Tradek business. Our business focuses on private client financial services but institutional and arbitrage trading also contribute significantly to our bottom line and this makes our capital requirements different to those of a pure private client firm."

A Tradek statement issued in response to Appleton`s withdrawal says another factor was a strong feeling that certain Tradek clients and staff members were uncomfortable moving to Appleton and that as a result the business would suffer.

"Certain key Tradek staff members were uncomfortable moving to Appleton. In addition, we received indications from some of our top clients that they would be unlikely to agree to trade under the Appleton banner. The result of this attempted hostile takeover shows how difficult it is to do such a deal in a people- and service-intensive business," Theron says.

As Appleton will no longer pursue the purchase of Tradek, the firm will continue to trade independently and will issue results for the year to end March 2002 by the end of May.

"Although we continue to believe consolidation in this industry is essential, our basics are firmly in place and we are confident about prospects going forward," Theron says.