In a deal reminiscent of the M&C Saatchi Abel and Avatar acquisition, Cape Town based property development company Visual International Holdings has taken steps to acquire a 50.1% stake in Mosegedi & Associates, a low cost housing specialist company. According to Visual, the company will pay a minimum of R13mil and R31mil in two phases. The consideration will be settled through the issue of up to a maximum of 50.1% of the shares in Visual calculated with reference to the commencement of negotiations between the parties in 2016.
According to both companies, this acquisition is intended to create an empowered and diversified property development group. Visual says it has a solid balance sheet and Mosegedi has a solid pipeline of business, the combination of which is expected to unlock value for both entities.
In the first phase of the agreement, Visual will issue 106 000 000 Visual shares at the closing market price on 27 February 2017, being 13 cents per share, to the Mosegedi Shareholders as consideration for the acquisition of 31.2% of Mosegedi, which will result in the Mosegedi Shareholders holding approximately 31.4% in the increased issued share capital of Visual. In the second phase of the agreement, Visual will acquire an additional 18.9% of Mosegedi for a maximum amount of R17 462 700, subject to the achievement by Mosegedi of the profit warranty, to be settled by the issue of up to 116 418 000 shares in Visual at a market price of 15 cents per share. Mosegedi’s performance relative to the profit warranty will determine the final number of shares to be issued to the Mosegedi shareholders in terms of Phase Two.
Visual says Mosegedi shareholders warrant that Mosegedi’s total net pre-tax profit will be a minimum of R55.4 million for the year ending 28 February 2018, which profit warranty has been based on Mosegedi’s various building contracts that are currently in progress and/or new contracts that are expected to be awarded during 2017.
Visual has also announced the appointment of new board members to its company. Messrs Lesedi Matlholwa and Thabo Mokgatlha, directors of Mosegedi, have been appointed as non-executive directors of Visual with effect from 1 March 2017. Lesedi holds an MBA from the University of Potchefstroom, a Bachelor in Accounting Science (Honours) from the University of South Africa and a Bachelor of Commerce from the University of the North West (“UNW”). Lesedi was lecturer at UNW before entering the commercial field, serving in various management roles in auditing and thereafter as Chief Financial Officer at the North West Housing Corporation. Lesedi is currently the Chief Executive Officer of Mosegedi & Associates Proprietary Limited.
Thabo is a Chartered Accountant and holds an Honours BCompt/Certificate in the Theory of Accounting (CTA) postgraduate qualification from the University of South Africa and a BCom (Accounting) degree from UNW. Thabo served his articles at Coopers and Lybrand (now PWC) and spent the last 6 months of his articles as a senior lecturer at UNW following which he was appointed as a senior lecturer on a full time basis while simultaneously working as a consultant. Thabo worked for the Royal Bafokeng Administration between 2002 and 2011 where he held several management positions. Thabo is currently the Chief Executive Officer of Nutritional Holdings Limited, a company listed on the JSE and serves on the boards of several other JSE listed companies.