Barloworld Limited announces A$321 million recommended cash offer for Wattyl
Limited
Barloworld Limited
ISIN: ZAE000026639
Share code: BAW
(Barloworld)
Barloworld Limited announces A$321 million recommended cash offer for Wattyl
Limited
Barloworld Limited (Barloworld) announced today that it intends to make a
recommended cash offer for all the fully paid ordinary shares in Wattyl Limited
(Wattyl) for A$3.80 per share.  The offer values Wattyl at A$321 million.
The directors of Wattyl have evaluated Barloworlds proposed offer and have
unanimously agreed to recommend that Wattyl shareholders accept the offer in the
absence of a superior proposal. All Wattyl directors intend to accept the
Barloworld offer for their personal shareholdings in the absence of a superior
proposal.
The cash consideration of A$3.80 per share provides substantial value to Wattyl
shareholders and represents:
-    a A$0.55 per share (16.9%) premium to the AEP Financial Investments Pty Ltd
     (AEP) offer of A$3.25 per share;
-    a premium of 51.8% over the one month volume weighted average price of
     Wattyl shares to the close of trading on 5 December 2005 (being the day
     prior to AEPs initial approach to Wattyl); and
-    a consideration that falls well within the valuation range of A$3.59 -
     A$4.21 per share determined by independent expert Ernst & Young Transaction
     Advisory Services Ltd in response to the AEP offer.
Barloworld has operated in Australia since the acquisition of the Taubmans paint
business in 1996. A year later the company expanded its paint interests through
the acquisition of listed company Lanes Limited, which, in addition to its motor
retail operations, owned the Bristol paint brand. Subsequently White Knight
Paints was added to the coatings business.
Tony Phillips, Chief Executive Officer of Barloworld, said the proposed offer
represents full and fair value for Wattyl and he believes it will be attractive
to all shareholders.
The acquisition of Wattyl is part of our strategy of building strong and
competitive businesses in selected regions of the world. The combination of
Wattyl with Barloworlds existing Australian coatings operation will create a
vibrant and sustainable business with the ability to provide the consumer with a
full and competitive spectrum of coatings products, Mr Phillips said.
The merged operation will be able to leverage off its greater scale to invest
more heavily in research and development and brand marketing, as well as
increasing manufacturing and distribution efficiencies.
The inclusion of Wattyls operations within Barloworld will enhance our
presence in Australia and New Zealand consistent with our strategy to expand the
coatings business in the Asia-Pacific region, he said.
Barloworld has held preliminary discussions with the Australian Competition and
Consumer Commission (ACCC). The company understands that the ACCC will
undertake market enquiries over the next number of weeks to address competition
issues. Given the structural and other changes in the Australian coatings market
over the last decade, Barloworld is confident of a successful conclusion to the
transaction and looks forward to assisting the ACCC with its enquiries.
The offer will be made through a wholly-owned subsidiary of Barloworld by way of
an off-market takeover bid under the Australian Corporations Act 2001. The
proposed offer is subject to the conditions set out in Appendix 1, which
include:
-    Barloworld acquiring 90% of Wattyl shares;
-    receipt of all regulatory approvals, including those required under
     competition and foreign investment regulations;
-    no material adverse change occurring in relation to Wattyl, including no
     material decrease in forecast FY2006 earnings;
-    no material acquisitions, divestments or commitments being made or
     announced by Wattyl;
-    no dividends declared or paid in excess of Wattyls reported after-tax
     profits before significant items (and, as normal, any dividend declared or
     paid will be adjusted against the offer price); and
-    the S&P / ASX 200 index not falling below 4,200 points.
Wattyl has entered into a Pre-Bid Deed with Barloworld in relation to
Barloworlds proposed offer. This includes a break fee of $3.2 million payable
to Barloworld in certain circumstances.
PRO FORMA FINANCIAL EFFECTS ON BARLOWORLD SHAREHOLDERS
The unaudited pro forma financial effects have been prepared for illustrative
purposes only, in order to provide information about how the Wattyl acquisition
might have affected the historical financial information presented by
Barloworld.  Due to their nature, the unaudited pro forma financial effects may
not give a true reflection of Barloworlds historical financial position.
The table below sets out the pro forma financial effects of the Wattyl
acquisition on Barloworld shareholders based on the assumptions set out below:
                                Before the       After the
                                Wattyl           Wattyl         Percentage
                                acquisition      acquisition    change
                                (Note 1) (SA     (SA cents per
                                cents per share) share)
Net profit per share (Notes     897              886            (1,3)
2,3)
Diluted net profit per share    877              866            (1,3)
(Notes 2,3)
Headline earnings per share     894              882            (1,3)
(Notes 2,3)
Diluted headline earnings per   874              862            (1,3)
share (Notes 2,3)
Net asset value per share       5790             5790           -
(Notes 4,5)
Net tangible asset value per    4475             4072           (9,0)
share (Notes 4,5)
     Notes:
     1.   The Before the Wattyl acquisition financial information has been
          extracted without adjustment, from the audited results of Barloworld
          for the year ended 30 September 2005.
     2.   The net profit and headline earnings per share calculations have been
          based on the assumption that the Wattyl acquisition was implemented on
          1 October 2004 and that it was effective for the year ended 30
          September 2005.  Profit after taxation attributable to Wattyl
          shareholders in the year ended 30 June 2005 amounted to A$10 million
          (R48.5 million).
     3.   Net profit and headline earnings per share have been adjusted to
          include 100% of the audited attributable profit of Wattyl for the year
          ended 30 June 2005, and the interest paid on borrowings of
          approximately R1.586 billion (assuming a pre-tax interest rate of 6,6%
          per annum).
     4.   The net asset value and net tangible asset value per share
          calculations have been based on the assumption that the Wattyl
          acquisition was implemented on 30 September 2005.  Net asset value per
          share is calculated as Barloworld Limited shareholders equity divided
          by the total number of ordinary Barloworld shares in issue.  The net
          assets of Wattyl totaled A$174 million (R844 million) at 30 June 2005.
     5.   Net asset value per share has been adjusted to include 100% of the net
          assets of Wattyl, the payment of the total consideration amounting to
          approximately R1.586 billion in cash from borrowings and R741 million
          in goodwill arising from the acquisition of Wattyl.  Net tangible
          asset value per share excludes the goodwill of R741 million arising on
          the acquisition of Wattyl and intangible assets held within Wattyls
          accounts of R98 million.
     6.   Wattyl financial results used in the above calculations have been
          translated into Rand at an exchange rate of R4.85/A$.
ANZ Investment Bank is acting as financial adviser and Corrs Chambers Westgarth
as legal adviser to Barloworld in relation to the proposed offer.
For further information contact Mark Drewell, Head of Corporate Communications,
Barloworld Limited on +27 11 445 1155   or e-mail  mdrewell@barloworld.com
For more information on Barloworld visit www.barloworld.com
13 February 2006
Sponsor
JPMorgan Equities Limited
Date: 13/02/2006 08:14:53 AM Produced by the JSE SENS Department