25th May 2005 07:01
Hill & Smith Hldgs PLC25 May 2005 Investment in Zinkinvent GmbH ("Zinkinvent") The Board of Hill & Smith Holdings PLC ('Hill & Smith' or the 'Group') announcesthat the Group has entered into agreements to acquire an equity stake inZinkinvent. The Group has agreed to subscribe €25.0m in cash for 33.3 per cent. of theenlarged equity of Zinkinvent and has also agreed to advance to Zinkinvent aninterest-bearing loan of €10.0 million. This investment has been funded out ofnew banking facilities. Zinkinvent is a privately-owned German holding company whose principal asset isan investment of 62.6 per cent. of the issued share capital of Vista N.V. ("Vista"). Zinkinvent will use the €35.0 million investment from Hill & Smithsolely to increase its equity holding stake in Vista from 62.6 per cent to 86.0per cent. Whilst the agreement has been entered into the funds will not be released untilHill & Smith has received satisfactory evidence that Zinkinvent has acquiredfull legal title to the increased equity stake in Vista. Hill & Smith has also entered into an exclusivity agreement with the existingshareholders of Zinkinvent. This agreement, which expires on 31 December 2005,sets out a purchase price for the Group to acquire all the remaining shares inZinkinvent not already owned by Hill & Smith. Vista is a Belgian group with operations in Benelux, France and the UnitedStates in the hot dip galvanising and lighting column markets. Vista has strongmarket shares in Benelux and France and the quality of its operations hasbenefited from the implementation of a coordinated commercial and industrialbrand management strategy. Under German law, Zinkinvent is not currently required to produce consolidatedaccounts. The turnover of Vista, as shown in its audited accounts for the yearended 31 December 2003, was €150.7 million and profit before tax was €9.1million. The net assets of Vista as at 31 December 2003 were €46.1 million. Under the terms of the agreements, Hill and Smith will be entitled to nominatetwo directors to the board of Vista and will also be entitled to appoint anobserver to attend the board and shareholders' meetings of Zinkinvent. The Boardof Hill & Smith intends to nominate David Grove, chief executive of Hill &Smith, to the board of Vista. The Board has been advised that this investment will be equity accounted as anassociate company in the Group's future consolidated accounts. The Boardanticipates that the investment in Zinkinvent will be earnings enhancing in thecurrent year and in subsequent years (see Note). The investment will bring a strong commercial association between Hill & Smithand Vista, with eventual adoption of Vista's brand management strategy by theGroup. Hill & Smith will also benefit directly from Vista's extensive marketintelligence, particularly in areas of new product development. Hill and Smith will, over the coming months, be carrying out further duediligence on Zinkinvent and Vista in order to determine whether or not toproceed with the acquisition of the remaining ordinary share capital ofZinkinvent. The decision as to whether or not to proceed will be at the solediscretion of Hill & Smith and the purchase price remains subject tosatisfactory completion by Hill & Smith of its detailed due diligence programme. In the event that Hill & Smith does not proceed, the shareholders of Zinkinventhave undertaken to purchase at the original subscription price the shares ownedby Hill & Smith, to procure the repayment by Zinkinvent of the €10.0 millionloan and to pay in full, by 31 December 2006, the financing and other incidentalcosts incurred by Hill & Smith in making this investment. David Grove, chief executive of Hill & Smith, said: "I am delighted that Hill &Smith has been able to secure this investment in Zinkinvent. This opens upsignificant new markets and opportunities to the Group and we look forward toworking in partnership with the owners of Zinkinvent in the coming months." Further information: David Grove, Chief ExecutiveHill & Smith Holdings PLCTel: 0121 704 7430 Andrew RacaArden Partners LimitedTel: 0121 423 8941 Edward CarterQuantum PR plcTel: 0121 633 7775 Note: This statement should not be taken to mean that earnings per share inperiods following the investment will necessarily be greater than those for therelevant preceding financial period. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Hill & Smith