Italtile still keen on buy­ing Ceramic In­dus­tries

The Star Early Edition - - COMPANIES - Sandile Mchunu

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.

PHOTO: SIM­PHIWE MBOKAZI

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.

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