Note: this release has been provided by Barloworld to the readers of Ghost Mail and does not reflect any opinions of The Finance Ghost.

As a result of the resolutions tabled at today’s EGM not being passed by the requisite majority of Barloworld Ordinary shareholders present and entitled to vote, the Standby Offer has been triggered, as contemplated in section 7 of the Circular in respect of the proposed transaction.

The timeline applicable to the Standby Offer, will be announced on SENS and A2X in the coming days. The procedure for acceptance of the Standby Offer is outlined on page 37 (section 7.5) of the Scheme Circular, available on the Company’s website.

The Standby Offer

The Standby Offer is now open for acceptance by Barloworld shareholders at ZAR 120.00 per share in cash, maintaining the same value as proposed in the scheme of arrangement. The total value unlock of the offer continues to represent a significant premium of 87% to Barloworld’s 30-day VWAP as at 12 April 2024, being the last trading day prior to the first transaction-related cautionary announcement, with the total transaction value remaining at ZAR 23 billion.

The period for which the Standby Offer will remain open for acceptance and the detailed acceptance procedures are set out in the Circular.

Implementation mechanics

The Standby Offer is conditional on its acceptance by Barloworld shareholders holding at least 90% of Barloworld ordinary shares (excluding shares held before the Newco Offer by Newco, ZTHM, Entsha, and their respective related or inter-related persons, persons acting in concert, nominees or subsidiaries).

Shareholders are reminded that Newco has the right to waive this 90% condition at its sole discretion. This means that Newco could elect, at its own discretion, to acquire a lower percentage from shareholders who wish to tender their shares. In such an instance, and should the Standby Offer become unconditional (following the fulfilment of all other conditions precedent that it is subject to), Barloworld would remain listed on the JSE and the shareholders who have not accepted the Standby Offer would remain shareholders in Barloworld.

Process and timelines

• It is anticipated that the Standby Offer announcement (Standby Offer Announcement) will be published in the coming days and will contain a detailed indicative timetable in relation to the Standby Offer.
• Not later than 16:30 South African time on the 45th business day after the Standby Offer Opening Date, Barloworld and Newco will release an announcement on SENS confirming whether the Standby Offer condition as to acceptances (requiring 90% of Barloworld Ordinary shareholders, excluding members of the Consortium, accepting the Standby Offer) is fulfilled or waived, and whether the Standby Offer is terminated or will proceed.
• The Longstop Date for fulfilment of all the conditions precedent to the transaction is 11 September 2025.
• The Longstop Date will be automatically extended by 3 months if any regulatory approval has not been obtained by 11 September 2025.
• The Standby Offer will be open for acceptances by Barloworld ordinary shareholders for a further 10 business days after the fulfilment or waiver of all the conditions precedent to the Standby Offer has been announced (Standby Offer Closing Date).

Path forward

The Standby Offer is now open and a Standby Announcement will be published containing a detailed indicative timetable in relation to the Standby Offer. Detailed information about the procedures to accept the Standby Offer is set out in the Circular. The timing for the implementation of the transaction will depend on acceptance levels of the Standby Offer and receipt of the required regulatory approvals. The business will continue to operate as usual throughout this process.

Response from Barloworld Board regarding Governance

The Barloworld Board has taken note of market commentary, particularly related to the alleged lack of transparency in relation to the process as well as the board’s handling of the conflicts of interest in relation to the Barloworld CEO.

The Barloworld Board wishes to provide further clarity in this regard.

As Barloworld is a “regulated company” as defined in section 117(1)(i) of the South African Companies Act, an offer such as the one brought forward by the Consortium is regulated by chapter 5 of the Companies Act read with chapter 5 of the Companies Regulations, 2011 (the “Takeover Regulations”).

In accordance with section 119 of the Companies Act, the Takeover Regulation Panel (“TRP”) is the primary regulator in respect of transactions of this nature. Given Barloworld’s JSE listing, the JSE also acts as a secondary regulator, enforcing applicable rules set out in the JSE Listings Requirements.

In accordance with section 95 of the Takeover Regulations, all negotiations between the Independent Board and the offeror must be kept strictly confidential and any communication with the market needs to be pre-approved by the regulator as set out in s117 of the Takeover Regulations before publication. Further, if a leak of price sensitive information occurs, or there is a reasonable suspicion of such a leak, the Company must immediately release a cautionary
announcement disclosing that information to shareholders.

From the onset, the Independent Board has abided by the regulations governing this transaction and has accordingly, timeously issued communication to the market.

From the time the Consortium approached the Company with a non-binding indicative offer, the composition of the Consortium and the nature of the Group Chief Executive’s involvement was fully disclosed to the Board and the resultant conflict of interest was declared. The Group Chief Executive was immediately recused from Board discussions related to the proposed transaction. In line with the Board’s statutory and fiduciary duties, the Board sought legal advice and
implemented strict governance measures, based on global transaction precedent and best practice, to ensure a thorough and unbiased evaluation of the offer in the best interests of the company and its shareholders. The Independent Board has duly discharged its duties in this regard.

The Independent Board reiterates that management led buy-out transactions, are not unusual in capital markets. Whilst recognising that such transactions do present an opportunity for conflicts of interest in relation to the management members involved, the Independent Board also recognises that if properly managed, they could result in positive outcomes for shareholders of the Company.

Further, in such instances it is the Independent Board’s responsibility to institute robust governance processes whilst ensuring minimal disruptions to the day to day running of the business. The board has to consider the merits of the transaction including, as per the TRP requirements, obtaining external advice from an independent expert on the fairness and reasonableness of the offer. In this instance, the Independent Board appointed Rothschild. Finally, if appropriate, the board has the duty to not to frustrate the process of bringing a fair and
reasonable offer to shareholders, for shareholders’ consideration.

It should also be noted that it is not market practice, nor a regulatory requirement to place conflicted members of management on long-term gardening leave during a management buy-out process.

The Board continues to engage openly with its key stakeholders on matters of governance. To this end, it has recently concluded its governance roadshows where it has engaged with key shareholders on matters of concern to them.

The Independent Board remains committed to ensuring that the Standby Offer strictly follows the regulatory process and is managed and governed transparently, in the best interest of all stakeholders.

Responsibility Statement

The Independent Board (to the extent that the information relates to Barloworld), individually and collectively, accepts responsibility for the information contained in this statement and certifies, to the best of its knowledge and belief, that the information contained in this announcement is true and that this announcement does not omit anything that is likely to affect the importance of the information included.

Note: in case you missed it right at the top, this release has been provided by Barloworld to the readers of Ghost Mail and does not reflect any opinions of The Finance Ghost.