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Afrox Concludes Largest Empowerment Transaction Outside of the Mining Sector
JOHANNESBURG, November 17 /PRNewswire/ -- African Oxygen Limited ("Afrox")
(JSE: AFX) today announced that its
subsidiary company, Afrox Healthcare Limited ("AHealth"), will become the
first BEE-owned and controlled private hospital group in South Africa.
This follows Afrox's decision to sell its 69% stake in AHealth to a
consortium of BEE investors, Business Venture Investments Limited
("Bidco"), for R3.1 billion.
Bidco is to be approximately 75% owned by a BEE consortium, with the
balance to be held by Medi-Clinic Corporation Limited ("Medi-Clinic"). The
BEE consortium is to be led by Brimstone Investment Corporation Limited
("Brimstone") and Mvelaphanda Strategic Investments (Proprietary) Limited
("Mvelaphanda"), supported by nationally and regionally based doctor and
empowerment groupings ensuring broad based empowerment.
Commenting on this landmark deal, Afrox CEO Rick Hogben said:
"We are very proud to be a part of this ground breaking deal. We have
realised the benefits of our investment in Healthcare and although they
will continue to provide sound growth, the bulk of the industry
consolidation and acquistional growth has been achieved. The Afrox Board
felt strongly that a deal which provided AHealth with a BEE partner was
vital if it was to remain competitive and be positioned to pursue new
investment in the healthcare sector, both locally and globally.
"We believe that the business has reached the requisite scale and level
of success and sophistication such that operating as an autonomous,
empowered entity will better enable it to pursue its own growth
initiatives, without restriction."
The cash sale consideration is R13.85 per AHealth share, escalated at
an effective rate of 5.60% per annum from 1 October 2003 to the date of the
scheme being implemented. For example, if the scheme operative date is 30
April 2004, the offer consideration, including the escalation, is R14.30.Â
In addition AHealth shareholders on the share register on 23 January 2004,
will be entitled to retain the dividend of R0.40 per share for the year
ended 30 September 2003.
AHealth will be sold as a going concern and all managers and staff will
be kept intact through the transaction.
Commenting on joining forces with Bidco, Mike Flemming, MD of AHealth
said: "I welcome the South African ownership of AHealth and it being solely
focused on healthcare delivery. This ensures an alignment of the Bidco's
strategy with that of AHealth.
"I am excited by the calibre of the empowerment component of Bidco as
it is a critical prerequisite for business success in South Africa."
Over the past two years, Afrox has focused on developing new markets,
extending its global customer base and added to its product and service
offerings to existing and new customers. It has optimised its human
capital, technology, and production facilities to increase its productivity
and global competitiveness, improving its brand awareness and marketing
focus whilst becoming customer and service centred.
"Few synergies exist between the industrial and Healthcare businesses -
as each division has grown, so dysynergies have become evident in areas
such as HR, IM and Finance. With both businesses generating good cash
returns, we decided that a separation would ensure continued growth,"
Hogben added.
"The sale of Afrox Healthcare represents a major step in delivering on
the Group's primary objective of maximising the potential of its Industrial
businesses. We will focus on new innovative ways of growing market share
and creating further operational improvements. We will also consider
earnings enhancing acquisitions, including additional expansion into
Africa," Hogben concluded.
Mr. Chris Fieldgate, Investor Relations, Tel: +27 11 490 0430 e-mail:
chris.fieldgate@afrox.boc.com Linda Burrows, +27 11 490 0554