Avusa's proposed acquisition clears hurdles

Johannesburg – Media and entertainment group Avusa [JSE:AVU] said on Monday its proposed acquisition of Universal Print Group (UPG) and Hirt & Carter (H&C) had passed some hurdles including a due diligence investigation and regulatory approval in the two months since announcing the deal.

On June 14, Avusa said it had signed a memorandum of understanding that paved the way for the acquisition of UPG and H&C from UHC Communications for R925m.

Avusa said it has finalised due diligence investigation to the "satisfaction" of the group.

The Competition Commission had approved the transaction, with no conditions attached, the company said.

Avusa, which owns Sunday Times, said the "formal agreement" was in the process of being finalised.

In terns of the proposed deal, the purchase consideration is based on a forward price:earnings multiple of 7.28 times, determined with reference to the warranted combined net profit after tax for UPG and H&C for the year ending June 30, 2011 (the minimum PAT).

Avusa will issue 20.55 million new shares to UHC Communications for R22.50 each. After the deal, UHC Communications will own 16.5% stake in Avusa.

The rest of the deal will be financed by R462.5m in cash.

In a cautionary announcement, Avusa said on Monday the formal agreement had not yet been concluded and the pro forma financial effects of the transaction have not yet been announce.

At 11.09 local time on Monday, shares in Avusa were unchanged at R20.25.