Investment company Long4Life (JSE:L4L) announced its acquisition of the entire issued share capital of Rage Distribution Proprietary Limited (Rage) for R3.915 million.
Established in 1996, Rage is a fashion retailer of footwear, apparel and accessories in the adult and children’s markets. Its business model embraces brand ownership, in-house product development and design, strong procurement and state-of-the-art logistics capabilities.
"The acquisition provides a unique opportunity for Long4Life to acquire a market-leading company with an aspirational brand targeted at the mid-to-lower LSM segments. Rage has a strong national footprint with significant potential for further store roll-out and product growth, both in South Africa and in the rest of sub-Saharan Africa. Rage presents an exciting opportunity to build on Long4Life’s existing lifestyle brands platform with additional cross-selling opportunities. The addition of Rage will amplify Long4Life’s retail product offering to include all segments of the LSM market." Long4Life said in a statement.
The purchase consideration is R3 915 million based on Rage achieving revenue of R1 250 million, EBITDA of R360 million and net profit after tax of R263 million for the year ending 30 June 2018 (of which R232 million was earned for the 11-month period ended 31 May 2018) and Long4Life's initial assessment of Rage's performance for the year ending 30 June 2019.
The purchase consideration will be settled through the issue of 270 million Long4Life ordinary shares at a price of R5.50 per share, to the value of R1 485 million. After this share issuance the sellers will hold approximately 22.8% of Long4Life’s entire issued share capital. The balance of R2 430 million will be paid in cash. The cash portion of the purchase consideration will be funded through a combination of Long4Life’s internal cash resources and bank debt of c. R1 500 million.
The acquisition, which has an effective date of 1 July 2018, is subject to certain suspensive conditions, including completion of a due diligence investigation to the satisfaction of Long4Life; approval by the Competition Authorities; service and restraint agreements being entered into between Long4Life and certain members of the Rage management team; and other suspensive conditions that are standard for a transaction of this nature.
Listed on the JSE in April 2017, Long4Life is an investment company that focuses predominantly on lifestyle businesses with attractive growth prospects, led by strong, entrepreneurial-minded management teams.
