Bell Equipment Company SA, a wholly owned subsidiary of BEL has reached an agreement in principle to acquire the business of Matriarch Equipment, as a going concern.
Matriarch designs and manufactures a range of material handling products used predominantly in the forestry and sugar industries across local and international territories.
The intellectual property (IP) of the products designed by Matriarch is aligned to the broader strategy of the company to enhance IP ownership and to provide niche product solutions in the forestry and sugar industries.
In terms of the transaction Bell Equipment will take-on the employees of Matriarch and acquire all the assets of Matriarch consisting of:
- The inventory, the value whereof will be finalised at an inventory count to be conducted on or about 31 January 2019;
- The operating assets to the value of c. R1.3 million, which approximates the net book value in Matriarch’s books of account;
- The value of the IP which was determined by valuing the business of Matriarch on a discounted cash flow basis;
Bell Equipment will pay an initial consideration of R3.8 million for the Matriarch IP plus a performance based consideration based (PBC ) on future sales performance of Matriarch products, retrospectively per quarter for five years.
In addition to the five year time limit, the PBC has a monetary cap of R15 million.
Shareholders are advised that if successfully concluded, this transaction may have a material effect on the price at which the company’s securities trade on the JSE.
The inventory value, which is the only remaining element of the purchase consideration that is outstanding, will be finalised as at the effective date considering a final inventory count is required and the final fairness opinion will be issued thereafter.