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AFGRI and Senwes jointly announced the conclusion of a transaction on 31 July 2012 in terms of which the two agricultural services companies will merge their agri-retail businesses and Partrite, the AFGRI wholesale subsidiary, to form a new joint venture in which the parties will hold a 50% interest respectively.

The joint venture will exclude the mechanisation businesses in the form of John Deere agencies. The joint venture will issue shares in exchange for the respective agri-retail businesses to both parties and AFGRI will pay a further cash purchase consideration of R93,7 million to the new company for a portion of the shares to be issued by the company to AFGRI. The transaction is earnings enhancing for both AFGRI and Senwes.

Post the finalisation of the valuation of the businesses, the parties are pleased to announce that the transaction has been approved by the boards of directors of both parties, with the exception of a few suspensive conditions still to be met. It is foreseen that the remaining suspensive conditions will be fulfilled and that the transaction will proceed. “The transaction is subject to approval by the Competition Authorities,” said Francois Strydom, Managing Director of Senwes, going on to add that, “We are looking forward to the outcome of the regulatory process and are very excited about the further positive signals by both boards of directors at the time of approval of the last outstanding terms of the transaction”.

“In the current challenging business environment, where producers and consumers are under severe economic pressure, we do not only foresee value for our businesses, but the advantages of a larger and more sustainable business will also contribute towards relieving the pressure experienced by our client base”, said Chris Venter, Chief Executive Officer of AFGRI.

All other AFGRI and Senwes businesses are excluded from the transaction.