RANCHO DOMINGUEZ, Calif., Dec. 2, 2003 (PRIMEZONE) -- UTi Worldwide Inc. (Nasdaq:UTIW) today announced the signing of definitive agreements to acquire South Africa-based International Healthcare Distributors (Pty.) Limited (IHD). The pending transaction will further expand UTi's global contract logistics business and deepen its capabilities in the pharmaceutical distribution arena. Under the agreements, IHD will be acquired by a partnership, which will be 74.9% owned by UTi and 25.1% owned by a South African, broad-based black economic empowerment (BEE) organization. The purchase price will total approximately $40 million in cash, which includes a loan of approximately $17 million from UTi to the partnership.
The transaction, which is expected to be completed in the first calendar quarter of 2004, is subject to various closing conditions, including the approval of the South African Competition Authorities, for which the necessary submission has been filed, triggering the 90-day review process.
IHD, jointly owned by 11 major multi-national pharmaceutical manufacturers, provides logistics and warehousing support and distribution services of pharmaceutical products throughout southern Africa directly to end dispensers such as doctors, clinics, pharmacists and hospitals, as well as wholesalers. Based on the economic terms of the transaction, IHD would have generated in 2002 revenues of approximately $35 million and earnings before interest and tax of approximately $7 million. The transaction is expected to be accretive to UTi.
"IHD has developed a unique distribution model that employs sophisticated supply chain engineering and logistical practices to ensure the integrity of the sensitive products they handle while lowering costs and enhancing profitability for pharmaceutical manufacturers," said Matthys J. (Tiger) Wessels, chairman of the board of UTi and chief executive officer of the Africa region. "This acquisition underscores UTi's commitment to growing our contract logistics business, strengthens UTi's positioning and expertise in the pharmaceutical sector, and provides a valuable distribution platform that we believe can be replicated in other parts of the world."
Graham Somerville, who is UTi's executive leading this transaction, added: "Since its launch in 1993, IHD has grown to become the leading pharmaceutical products distributor in South Africa, supported by its Internet-based technology platform. IHD will continue to be led by its experienced managers who have many years in the pharmaceutical distribution industry."
Closing of the transaction is subject to the signing of long-term service agreements for the ongoing use of IHD by each of IHD's current shareholders, which include Abbott Laboratories South Africa, Aventis Pharma, Bayer, Boehringer Ingelheim Pharmaceuticals, Bristol-Myers Squibb, Eli Lilly South Africa, MSD, Novartis South Africa, Roche Products, Schering and Wyeth South Africa. Eight of the 11 shareholder companies have signed long-term service agreements, and service agreements with the remaining three are pending.
IHD has approximately 450 employees and maintains five distribution centers in South Africa, located in Johannesburg, Cape Town, Port Elizabeth, Durban and Bloemfontein. Each center features climate-controlled, state-of-the-art, leased warehousing facilities to assure proper storage and handling of client inventory.
UTi's partnership with the BEE organization supports South Africa's black economic empowerment initiatives to encourage involvement in local businesses. The BEE partner is a locally owned and led, non-governmental investment company in South Africa working for the benefit and development of economically disadvantaged sectors of South African society.
About UTi Worldwide
UTi Worldwide Inc. is an international, non-asset based supply chain management company providing air and ocean freight forwarding, contract logistics, customs brokerage and other logistics-related services. The company serves a large and diverse base of global and local companies, including customers operating in industries with unique supply chain requirements such as the pharmaceutical, apparel, chemical, automotive and technology industries. The company seeks to use its global network, proprietary information technology systems, relationships with transportation providers and expertise in outsourced logistics services to optimize the operation of its customers' global supply chains.
Safe Harbor Statement
Certain statements in this news release may be deemed to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The company intends that all such statements be subject to the "safe-harbor" provisions contained in those sections. Such statements may include, but are not limited to, integration risks associated with the IHD acquisition, satisfaction of various closing conditions and receipt of all regulatory approvals, including the signing of long-term service agreements by each of IHD's current shareholders and approval of the South African Competition Authorities, the company's discussion of its growth strategy to provide complete outsourcing solutions, and any other statements, which are not historical facts. Many important factors may cause the company's actual results to differ materially from those discussed in any such forward-looking statements, including increased competition; integration risks associated with acquisitions; the effects of changes in foreign exchange rates; changes in the company's effective tax rates; industry consolidation making it more difficult to compete against larger companies; general economic, political and market conditions, including inventory build-up, economic slowdowns and consumer confidence; work stoppages or slowdowns or other material interruptions in transportation services; risks of international operations; the success and effects of new strategies; disruptions caused by conflicts, wars and terrorism; and the other risks and uncertainties described in the company's filings with the Securities and Exchange Commission. Other important factors or risks that could cause results or events to differ from those in these forward-looking statements include: this acquisition might not close on a timely basis or at all, due to the failure to satisfy closing conditions or otherwise; risks associated with having a 25.1% equity holder in IHD; the anticipated benefits of this acquisition may not be realized; IHD may not retain its key employees; taxes and other limitations applicable to distributions from IHD; risks associated with currency fluctuations; risks associated with customer retention; risks that IHD may not be a distribution platform that can be replicated elsewhere; and other risks affecting the pharmaceutical distribution industry. Although UTi believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the results contemplated in forward-looking statements will be realized. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by UTi or any other person that UTi's objectives or plans will be achieved. The historical results achieved by the company are not necessarily indicative of its future prospects. UTi undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.