Acquisition of 46.8% of Dynamic Intertrade Agri...

3 November 2016

Anglo African Agriculture plc

(“AAAP” or the “Company”)

AAAP acquires 46.8% of specialist food trading and distribution business

Anglo African Agriculture plc (LSE: AAAP), the London Main board listed food manufacturing and distribution company, announces that it has acquired, subject to shareholder approval, a 46.8% shareholding in the growing, South African based, Dynamic Intertrade Agri (Pty) Ltd (“DIA”) (the “Transaction”).

DIA is based in Johannesburg in South Africa and trades directly with primary producers and end users and arranges funding, transport and distribution from farm to factory. The primary agricultural commodities traded are dried produce, with the emphasis being on supplying various protein products to the human and animal feed industries in southern Africa. The company trades and distributes commodities including sugar beans, popcorn, soya oil cake meal, cottonseed oil cake meal, meat and bone meal (carcass meal), blood meal, sun flower seed, soya beans, assorted fertilizers, maize, chillies, paprika, whole pepper and other spices. Commodities are sourced in Malawi, Zambia, Zimbabwe and Mozambique, South America, and imported into South Africa. Products are exported from South Africa to the same regions in Southern Africa.

David Lenigas, the Company’s Chairman, commented:

“This new exciting company acquisition in the food sector completely complements the Company’s existing food manufacturing business and will provide an ideal food acquisition, distribution and trading arm to assist in providing additional raw materials for our growing spices manufacturing factory. We see the real growth potential of DIA in leveraging the board’s experience in global food purchasing and logistics and will be pushing hard to broaden its reach to a more global import and export stage.”

Further Information about DIA and the Transaction

DIA is a well-positioned and profitable business having generated, in the year ended 29 February 2016, a net profit after tax of ZAR 254,000 (£15,000) from an annual turnover of ZAR 26.6 million (£1.59 million), and is expected to benefit significantly from capital and expertise that AAAP will provide.

The acquisition will be for an initial non cash consideration of £100,000 in AAAP shares at a price of 1.3p per AAAP share. These shares will be allotted, but not issued, and will not be capable of being traded until the Company has published a prospectus approved by the UKLA in respect of these shares and other shares allotted recently. There will also be a deferred performance related payment of an additional £50,000 in shares in AAAP provided DIA achieves certain profitability targets for the twelve month period ending February 2017.

Key Deal Terms

The Company has agreed to purchase 46.8% of Dynamic Intertrade Agri (Pty) Ltd from ZRH Nominees (0105) LTD (“ZRH”), a trust established for, among other purposes, the provision of benefits to George Roach, a director of the Company, and his family,  under the following terms:

        a.    The purchase price is £100,000, payable by way of 7,692,308 new ordinary shares in AAAP at a price of 1.3p per share at completion of the Transaction (“Completion”);

        b.    AAAP has also granted ZRH an earn-out payment (“Earn-out Payment”). The Earn-out Payment will amount to £50,000 in AAAP new ordinary shares at the 5-day volume weighted average price preceding the day of announcement of the Earn-out Payment, providing the net profits of DIA for the Financial Year ending 28 February 2017 are in excess of ZAR 1,000,000; and

        c.     A shareholders agreement (“Shareholders Agreement”) shall be concluded with the other shareholders of DIA within 30 days of Completion.

The Transaction is also subject to shareholder approval.
 

Following the Transaction, the Company’s enlarged issued ordinary share capital will comprise 188,483,954 ordinary shares. This figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the Financial Conduct Authority’s Disclosure and Transparency Rules.

 

For further information, please contact:

Anglo African Agriculture plc	[phone]
David Lenigas, Non-Executive Chairman Rob Scott, Non-Executive Director
VSA Capital Limited (Financial Adviser and Broker)	[phone]
Andrew Raca / James Asensio