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Detailed terms announcement regarding the disposal of Activo and its subsidiaries
AFROCENTRIC INVESTMENT CORPORATION LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1988/000570/06)
ISIN: ZAE000078416
JSE share code: ACT
("AfroCentric", together with
its subsidiaries, the "AfroCentric Group")
DETAILED TERMS ANNOUNCEMENT REGARDING THE DISPOSAL OF ACTIVO AND ITS SUBSIDIARIES
1. INTRODUCTION
1.1. AfroCentric shareholders ("Shareholders") are hereby advised that on 23 December 2025, ACT Healthcare
Assets Proprietary Limited ("ACT HA" or the "Seller"), a wholly owned subsidiary of AfroCentric, entered
into a sale and purchase agreement ("SPA") with FHC Farmaceutica, S.A. ("FHC Group") and FHC
Proprietary Limited ("FHC" or the "Purchaser") in terms of which ACT HA will dispose of its entire
shareholding in and all claims held by the AfroCentric Group ("Sale Claims") against its wholly-owned
subsidiary Activo Health Proprietary Limited ("Activo") (and indirectly, Activo's wholly owned subsidiaries,
Activo Healthcare Assets Proprietary Limited ("AHA") and Forrester Pharma Proprietary Limited
("Forrester")), (together the "Disposal Assets"), to FHC for the consideration set out in paragraph 4.1
("Disposal Consideration") ("Disposal"). FHC is a wholly owned subsidiary of FHC Group. The obligations
of FHC under the SPA are guaranteed by FHC Group.
1.2. The Disposal will be subject to the fulfilment or waiver of the Conditions (as described in paragraph 4.2).
2. INFORMATION REGARDING ACTIVO AND FHC
2.1. Activo
2.1.1. Activo operates both as a registered pharmaceutical trading entity and as a holding company for
AHA and Forrester. It largely operates within South Africa.
2.1.2. Activo along with its subsidiaries owns the registered marketing rights and dossiers to manufacture
and distribute specific generic medicines across a broad therapeutic range, including chronic
medication, ARVs, ointments and hospital products. Its offering also includes over-the-counter
products, complementary medicines and medical devices.
2.1.3. The value of Activo's consolidated net assets as at 30 June 2025 was R299 million and the profit
attributable thereto for the 6 months ending 30 June 2025 was R9 million. In addition, the
AfroCentric Group has recognised incremental intangible assets (including goodwill) of R492 million
and Sale Claims of R300 million attributable to the Disposal Assets as at 30 June 2025. The
resulting carrying value of the Disposal Assets is approximately R1.1 billion, subject to audit review
as part of the annual reporting process.
2.1.4. The values attributable to the net assets and the profits thereto have been extracted from Activo's
auditor reviewed interim financial statements for the 6 months ending 30 June 2025, which were
prepared in accordance with International Financial Reporting Standards (IFRS) and reported on
by Activo's external auditors.
2.1.5. More information pertaining to Activo is available on AfroCentric's and Activo's respective websites
at https://www.afrocentric.za.com/ and https://activo.co.za/, including AfroCentric's: (i) annual
financial statements, (ii) annual integrated report for the year ended 31 December 2024, and (iii)
unaudited interim results for the 6 months ending 30 June 2025.
2.2. FHC
2.2.1. FHC is a wholly owned subsidiary of FHC Group, a leading Portuguese pharmaceutical group
founded in 1998 and privately held and owned by veterans in the pharmaceutical industry in
Portugal, Joaquim Chaves and Luis Pedro Simoes, each of whom hold 50% of the issued shares
in FHC Group.
2.2.2. FHC Group operates across the full pharmaceutical value chain, from manufacturing to distribution.
It has recognised expertise in the industrial area, distribution in the ambulatory and hospital
markets, exports, R&D in health and information technologies. Through subsidiaries such as
Laboratórios Basi, it maintains a strong manufacturing base.
2.2.3. FHC Group is present in 65 countries on 4 continents, including Africa where it has ambitions to
grow its presence and client offering through organic and inorganic growth opportunities. FHC
Group is committed to advancing access, efficiency, and innovation in healthcare delivery in all
markets it operates in.
3. RATIONALE FOR THE DISPOSAL
3.1. The pharma-cluster has been an important and growing part of the AfroCentric Group over the years,
complementing AfroCentric's wide range of healthcare products and services to both private and public
sectors. After careful consideration, AfroCentric commenced a strategic review process of the group's
operations which led to the decision to dispose of the pharmaceutical manufacturing and marketing division
to a strategic owner with deep expertise in the pharmaceutical market. The rationale for the Disposal is as
follows:
3.1.1. A refined strategy focused on health administration, managed care, and corporate solutions:
The AfroCentric Group will focus on its key areas of strength in health administration, managed
care and corporate solutions that leverages a similar skillset and has significant opportunities for
shared value creation.
3.1.2. Material strengthening of the AfroCentric Group balance sheet: The proceeds from the
Disposal will enable AfroCentric to deleverage its balance sheet to support future growth while
improving operational sustainability by reducing financing costs due to the reduced debt.
3.1.3. Realisation of value from non-core assets: The Disposal provides AfroCentric with a liquidity
event to realise value for assets that are no longer core to the business. Shareholders could further
benefit from improved strategic focus of the remaining AfroCentric Group. The Disposal and
subsequent deleveraging will free-up management capacity to focus on growth in the priority
sectors to drive value for Shareholders.
4. SALIENT TERMS OF THE DISPOSAL
The salient terms and conditions of the Disposal, and other salient information pertaining to the Disposal, are set
out below.
4.1. Disposal Consideration
4.1.1. In terms of the SPA, the Disposal Consideration in respect of the Disposal Assets will comprise the
sum of an upfront payment, a deferred payment and an earnout payment, as described below, all
payable in cash, by the Purchaser to the Seller on the dates as set out below.
4.1.2. The upfront payment shall be an amount equal to R350 million, on a cash free, debt free basis
payable on the Closing Date (as defined below).
4.1.3. The deferred payment will be calculated in accordance with customary adjustments based on
Activo's net debt and working capital amounts as at the Closing Date. The deferred payment will
be payable at the earliest on or about 50 business days after the Closing Date, based on the
management accounts as at the Closing Date. Should the deferred payment have a negative value,
the Seller will pay the associated amount to the Purchaser.
4.1.4. The earnout payment is expected to be up to R250 million and will be based on the future
performance of Activo. The earnout payment will be calculated on the third anniversary of the
Closing Date and will be payable in three equal instalments on or about the third, fourth and fifth
anniversaries of the Closing Date.
4.2. Conditions to the Disposal
4.2.1. Implementation of the Disposal will be subject to the fulfilment or waiver (to the extent permitted as
per paragraphs 4.2.2, 4.2.3 and 4.2.4) of the following conditions precedent by 30 June 2026
(unless extended by the Seller and the Purchaser by agreement in writing) ("Long Stop Date"):
4.2.1.1. the approval of the Disposal by way of an ordinary resolution adopted by more than 50%
of the voting rights exercised by Shareholders present (in person or by proxy) and entitled
to vote on the resolution ("Ordinary Resolution") at the general meeting of Shareholders
convened for purposes of considering and, if deemed fit, passing the resolution to
approve the Disposal, or any postponement or adjournment thereof ("General Meeting"),
as contemplated in terms of paragraph 9.20 of the JSE Limited Listings Requirements
("JSE Listings Requirements");
4.2.1.2. the unconditional approval of the Disposal by the South African competition authorities
in terms of the Competition Act 89 of 1998, or conditional approval of the Disposal on
terms and conditions which each of the Purchaser and Seller confirms in writing to the
other to be acceptable to it acting reasonably;
4.2.1.3. the Seller having delivered to the Purchaser copies of the latest company and product
registration certificates, in respect of Forrester and Activo, to conduct pharmaceutical
operations in South Africa;
4.2.1.4. the Seller obtaining the written consent of Nedbank Limited ("Nedbank"), in accordance
with the provisions of the facilities agreement entered into between various AfroCentric
Group companies as borrowers and Nedbank as inter alia the original lender, to (i)
implement the Disposal, (ii) release the Seller from its obligations as guarantor with
regards to the Disposal Assets and (iii) waiver of any default as a result of the Disposal
Assets ceasing to be subsidiaries of AfroCentric; and
4.2.1.5. the Seller confirming in writing its preferred means for the settlement of the Sale Claims
(and having implemented such preferred means),
(collectively, the "Conditions").
4.2.2. The Condition set out in paragraph 4.2.1.2 is regulatory in nature and is not capable of waiver.
4.2.3. The Conditions set out in paragraphs 4.2.1.1, 4.2.1.4 and 4.2.1.5 are capable of waiver by the
Seller by written notice to the Purchaser at any time before the Long Stop Date.
4.2.4. The Condition set out in paragraph 4.2.1.3 is capable of waiver by the Purchaser by written notice
to the Seller at any time before the Long Stop Date.
4.3. Closing Date of the Disposal
The Closing Date of the Disposal will be the last business day of the month in which all the Conditions have
been fulfilled or waived, or if all the Conditions are fulfilled or waived on a date falling after the 25th day of
the month, then the Closing Date shall be the last business day of the month immediately following the
month in which the Conditions are fulfilled or waived ("Closing Date").
4.4. Other significant terms of the SPA
The SPA contains warranties and indemnities given by the Seller to the Purchaser, and by the Purchaser in
favour of the Seller, which are customary for a transaction of this nature. The indemnities are broadly in
relation to (i) pre-closing tax or contingent liabilities or claims of the Disposal Assets (including in relation to
the working capital adjustment which is part of the purchase price); (ii) compliance liabilities of the Disposal
Assets and (iii) regulatory compliance in relation to the business conducted by the Disposal Assets.
5. APPLICATION OF THE DISPOSAL CONSIDERATION
The majority of the Disposal Consideration will be applied towards deleveraging the AfroCentric Group's balance
sheet resulting in a reduction in interest expense due to the reduced debt. The remaining portion of the Disposal
Consideration will be applied to fund strategic initiatives in the AfroCentric Group.
6. CLASSIFICATION OF THE DISPOSAL
6.1. As the value of the Disposal exceeds the 30% threshold outlined in paragraph 9.5(b) of the
JSE Listings Requirements, the Disposal is categorised as a category 1 transaction as contemplated in
section 9 of the JSE Listings Requirements.
6.2. Accordingly, the Disposal is required to be approved by Shareholders by way of an Ordinary Resolution at
the General Meeting, as contemplated in paragraph 9.20(b) of the JSE Listings Requirements.
6.3. The Disposal is not made to a "related party", as defined in paragraph 10.1(b) of the
JSE Listings Requirements, therefore there are no "related party transaction" implications in terms of
section 10 of the JSE Listings Requirements.
7. CIRCULAR
AfroCentric will issue a circular to Shareholders, as contemplated in paragraph 9.20(b) of the
JSE Listings Requirements, setting out the full terms and conditions of the Disposal, the salient dates and times
for the Disposal and incorporating a notice convening the General Meeting ("Circular"). A further announcement
pertaining to the issue of the Circular and giving notice of the General Meeting will be published on the Stock
Exchange News Service in due course.
Johannesburg
24 December 2025
Financial Advisor and Transaction Sponsor to Legal Advisor to AfroCentric
AfroCentric Webber Wentzel
Rand Merchant Bank (a division of FirstRand Bank
Limited) (a partner firm of Clairfield International)
Date: 24-12-2025 08:30:00
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