BK Modi’s Spice Group has acquired Indonesian mobile handset manufacturer and distributor Affinity (Selular Group) for $175 million; Affinity’s mobile handset brand ‘Nexian’ has a 22%-25% market share in Indonesia, and it also distributes handsets through its distribution business Selular, as well as mobile connections from three major operators. According to Gartner estimates, Indonesia is the largest market in South East Asia in terms of handset sales revenue with total sales of about $3.2 billion in 2010. Spice has the right to rename the Affinity Group, and any brand or company that it owns. The acquisition is in line with Spice i2i’s strategy of having businesses targeting ‘Ivory Coast to Indonesia’ (i2i). Remember that as a part of Spice Group’s own restructuring, Spice i2i is the holding company for its International retail business.
As a part of its direct sales business, Affinity has branches, service centers and integrated independent retailers in Indonesia. Spice had acquired Thai handset company NewTel Corporation for $22 million last year.
According to a filing with the Singapore stock exchange that we culled out:
– The Affinity Group generated a gross revenue of $508 million for the 9 month period ended 30th September 2010. Affinity is expected to have generated revenues of more than $680 million for the year ended December 2010.
– As of at 31st December 2010, the consolidated net assets (net worth) of the Affinity Group was at least
– The unaudited consolidated net book value of the Affinity Group rose to $29,535,476 as of 30th September 2010, from being only $3,419,850 as of 31st December 2009.
– For the full year 2009, it reported $2,376,961 of NPAT. For the full year 2010, it reported a NPAT of “not less than US$26,000,000”. Note that NPAT refers to “the Affinity Group’s normalised consolidated net profit after tax attributable to the equity holders of Affinity and would represent the Affinity Group’s consolidated accounting net profit attributable to the equity holders of Affinity delivered”
The Deal Details & Payment Schedules
The Affinity group comprises of the company and its subsidiaries- Selular Global Net, Selular Media Infotama, Metrotech Jaya Komunika Indonesia and Metrotech Makmur Sehjatera. The acquisition is being made through Singapore stock exchange listed Spice Group Company Spice i2i (formerly MediaRing), which will acquire 100% of the issued shares of Affinity Capital Pte Ltd for:
– Deposit and Completion Payment of $100 million; and
– Deferred Payments of up to a maximum of $75 million spread over 3 years.
The deferred payments depend on the company’s NPAT for 2011,2012 and 2013.
(i) If NPAT is less than or equal to $5 million for FY ended 31st December 2011, there shall be no deferred payment, else, Spice will pay an amount equal to the amount by which the NPAT exceeds $5 million upto a maximum of $25 million.
(ii) If NPAT is less than or equal to $5 million for FY ended 31st December 2012, there shall be no deferred payment, else, Spice will pay an amount equal to the amount by which the NPAT exceeds $5 million upto a maximum of $25 million.
(iii) If NPAT is less than or equal to $5 million for FY ended 31st December 2013, there shall be no deferred payment, else, Spice will pay an amount equal to the amount by which the NPAT exceeds $5 million upto a maximum of $25 million.
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