Italtile still keen on buying Ceramic Industries
ITALTILE yesterday told its shareholders it had not given up on its intentions to acquire Ceramic Industries despite the Competition Commission blocking the move last year.
The company said it had submitted a new binding offer to Ceramic to acquire up to a further 73.5 percent of the company’s issued share capital.
It said the purchase consideration would equate to R3.61 billion – 50 percent of which would be settled in cash and the balance by the issue of Italtile shares at R11.57 a share.
The acquisition remains subject to attainment of certain conditions precedent and approval by the competition authorities.
Last year, the commission said in passing its disapproval of the takeover that the merger would close any space for viable alternatives for competitors in the downstream retail market.
Italtile, which already owns a 20 percent stake in Ceramic, has asked the Competition Tribunal to review the decision.
The group said it was hopeful of a positive outcome following hearings that were conducted between July 10 and 14.
It warned, however, that the presentation of final arguments would take place this month and that the entire exercise would conclude within the next two months.
“Italtile remains optimistic of a favourable outcome in terms of obtaining the required approvals from the competition authorities to proceed with the acquisition,” the group said.
Italtile said in its trading update for the year to the end of June that the trading environment in the first half of the year deteriorated alongside constrained spending.
“Under these adverse conditions, consumers further curtailed discretionary spend on home improvements and renovations, while the public and private sectors suspended investment in the new build segment,” the group said.
As a result, the group said it now expected its basic earnings per share to rise marginally between 88.9 cents and 91.1c, compared with 87.8c last year. It said this would represent an increase of between 1.3 and 3.8 percent.
Italtile said headline earnings per share would slow to between 84.5c and 86.3c, reflecting a decrease of between 2.8 and 0.7 percent.
It said its performance for the period reflected this downturn, with notably stronger results reported for the first half compared with the second half.
However, the group said it expected to report an increase in turnover.
“System-wide turnover of R6.21 billion for the period was 4.3 percent higher compared to the prior comparative period of R5.96bn,” the group said.
System-wide turnover is defined as the aggregate of the group’s consolidated turnover as reported (total sales by group-owned entities and corporate stores, excluding sales from owned supply chain businesses to corporate stores) and the turnover of franchisees of the group.
The group said basic earnings included the impact of a R37 million once-off gain realised on the sale of the group’s Australian property holding company in December last year.
Italtile wants to pursue the acquisition of 73.5 percent of Ceramic Industries for R3.61 billion, after it was turned down by the Competition Commission last year.