M&A Activity • Jun 12, 2017
M&A Activity
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NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO OR FROM THE UNITED STATES OF AMERICA, AUSTRALIA, CANADA, JAPAN OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION
12 June 2017
OF
BY
The boards of Elis SA ("Elis") and Berendsen plc ("Berendsen") are pleased to announce that they have reached agreement on the terms of a recommended acquisition by Elis of the entire issued and to be issued share capital of Berendsen (the "Transaction").
Elis believes the combination of Berendsen and Elis offers a compelling opportunity to create a pan-European textile, hygiene and facility services leader. The Combined Group would be geographically diversified and well-positioned in the majority of markets in which it would operate. Elis believes the Combined Group would be well-placed to deliver enhanced strategic and financial value to Berendsen Shareholders and Elis Shareholders and to pursue further growth.
The Berendsen Directors intend unanimously to recommend that Berendsen Shareholders vote in favour of the Transaction.
Under the terms of the Transaction, which will be subject to the Conditions and certain further terms set out in Appendix 1 and to the full terms and conditions to be set out in the Scheme Document, Berendsen Shareholders will receive:
for each Berendsen Share: £5.40 in cash; and
0.403 New Elis Shares.
In addition, under the Transaction, Berendsen Shareholders will be entitled to a dividend of £0.11 per Berendsen Share expected to be declared and paid by Berendsen in respect of the six month period ending 30 June 2017 (the "Interim Dividend"). Further details of the expected record date, payment date and ex-dividend date for the Interim Dividend will be set out in the Scheme Document.
o a premium of approximately 44 per cent. to the Closing Price of a Berendsen Share of £8.64 on 17 May 2017, the last Business Day preceding the announcement by Elis of a possible offer for Berendsen; and
1 Based on the Closing Price of an Elis Share of €20.17 on 6 June 2017 and a £:€ exchange rate of £1 = €1.145 on 6 June 2017.
2 On the basis of a fully diluted share capital for Berendsen of 174,412,423 shares, being the aggregate of 172,627,894 Berendsen Shares currently in issue and 1,784,529 Berendsen options and awards (being the maximum number of Berendsen options which become exercisable or awards that vest on a change of control which must be satisfied using newly issued Berendsen Shares and cannot be satisfied by Berendsen Shares currently held by the Berendsen EBT).
3 Adjusted EBITDA and Adjusted Operating Profit are stated before exceptional costs, goodwill impairment and amortisation of customer contracts and have been extracted from Berendsen's annual report and accounts for the year ended 31 December 2016. The EBITDA multiple is based on Enterprise Value, which is defined as Equity Value on a fully diluted basis plus net debt (adjusted for the payment of the Interim Dividend), tax adjusted net pension deficit and minority interests, in each case as extracted from Berendsen's annual report and accounts for the year ended 31 December 2016.
4 Based on Elis' 20 day volume weighted average share price to 6 June 2017.
Berendsen's issued share capital on 9 June 2017, being the last Business Day before this Announcement.5
5 The irrevocable undertakings for James Drummond and Kevin Quinn also apply to Berendsen Shares that are issued or received on the exercise of any options or the vesting of any awards held by the relevant Berendsen Director. Accordingly, the number of Berendsen Shares the subject of the irrevocable undertakings will change in the event any options or awards held by those Berendsen Directors are exercised or vest.
6 Combined Group 2016 revenue of €3,102 million represents the aggregate of the Adjusted Elis 2016 Revenue (as defined in note 22) and the consolidated revenue of Berendsen (€1,359 million) for the 12 month period ended 31 December 2016 extracted from Berendsen's annual report and accounts for the year ended 31 December 2016 and converted to euro at the average 2016 GBP/EUR rate of 1:1.225. The resulting aggregate revenue is derived from the addition of these components with no further adjustments to conform to Elis' accounting policies or otherwise.
7 Combined Group 2016 EBITDA of €959 million represents the aggregate of the Adjusted Elis 2016 EBITDA (as defined in note 23) and the consolidated EBITDA of Berendsen (€427 million) for the 12 month period ended 31 December 2016 extracted from Berendsen's annual report and accounts for the year ended 31 December 2016 and converted to euro at the average 2016 GBP/EUR rate of 1:1.225. The resulting aggregate EBITDA is derived from the addition of these components with no further adjustments to conform to Elis' accounting policies or otherwise.
Germany, Sweden, Brazil, Denmark, Spain, Portugal, the Netherlands, Switzerland and Norway; and
8 Represents the aggregate of: (a) the consolidated revenue of Elis in Germany (€81 million) for the 12 month period ended 31 December 2016 extracted from Elis' annual reports and accounts for the year ended 31 December 2016; (b) an unaudited adjustment for the full-year 2016 impact of the acquisition of Puschendorf (€37 million) as provided by Elis' management; and (c) the consolidated revenue of Berendsen in Germany (€193 million) for the 12 month period ended 31 December 2016 extracted from Berendsen's annual report and accounts for the year ended 31 December 2016 and converted to euro at the average 2016 GBP/EUR rate of 1:1.225 (the "Adjusted Combined Germany 2016 Revenue"). The resulting aggregate revenue for Germany is derived from the addition of these components with no further adjustments to conform to Elis' accounting policies or otherwise.
9 Adjusted EPS excludes goodwill impairments, amortisation of customer relationships, restructuring, intangible assets, and other exceptional items. The estimated adjusted EPS for 2018 of Elis assumes completion of the Transaction, and accordingly includes Elis' estimate of the Berendsen adjusted net income contribution for 2018 and takes account of the synergies expected to occur in 2018. It is then compared to Elis' estimated adjusted EPS for 2018 assuming no Transaction. The statement that the Transaction is earnings accretive should not be construed as a profit forecast and is therefore not subject to the requirements of Rule 28 of the Code. It should not be interpreted to mean that the earnings per share in 2018 or any other future financial period will necessarily match or be greater than those for any preceding financial period. This statement is the sole responsibility of Elis. The Berendsen estimated 2018 adjusted net income contribution referred to above is Elis' own estimate of such net income which takes into account publicly available information on Berendsen.
10 Adjusted 2016 net debt figure for Elis of €1,611 million ("Adjusted Elis 2016 net debt") represents the aggregate of: (a) the consolidated net debt of Elis (€1,596 million) as of 31 December 2016 extracted from Elis' financial statements for the year ended 31 December 2016; (b) the proceeds from the share capital increase launched by Elis in January 2017 (€325 million); and (c) the consideration paid as part of the acquisition of Lavebras (€340 million) which closed on 23 May 2017.
"I am delighted to have reached agreement on a recommended acquisition to bring together Berendsen and Elis. In a consolidating sector, we believe there is a strong rationale for combining these businesses, with highly complementary geographic footprints, to create a pan-European leader in textile, hygiene and facility services. The combined group would be well-positioned to pursue further growth and we see the potential to create substantial financial value for both Berendsen and Elis shareholders."
Commenting on the Transaction, Iain Ferguson, Chairman of Berendsen said:
"The Berendsen Board believes that the offer from Elis, which represents £12.61 per share11 (including an interim dividend), recognises the quality of our business and the strength of our future prospects. The offer provides shareholders with immediate value for their shares, whilst allowing them to participate in any future growth of the enlarged group. As a result, the Berendsen Board intends to recommend unanimously that Berendsen Shareholders accept this offer from Elis and we wish the combined entity all the very best going forward."
The Transaction will be formally proposed to Berendsen Shareholders for approval at the Court Meeting and the Berendsen General Meeting (which is expected to take place shortly after the Court Meeting). The Court Meeting and the Berendsen General Meeting are required to enable Berendsen Shareholders to consider, and if thought fit, vote in favour of the resolutions to approve the Scheme and its implementation. In order to become effective, the Scheme must be approved by a majority in number of Scheme Shareholders on the register of members of Berendsen at the Voting Record Time, present and voting, whether in person or by proxy,
11 Based on the Closing Price of an Elis Share of €20.17 on 6 June 2017 and a £:€ exchange rate of £1 = €1.145 on 6 June 2017.
The resulting aggregate net debt is derived from the addition of these components with no further adjustments to conform to Elis' accounting policies or otherwise.
Combined Group 2016 net debt of €3,007 million represents the aggregate of: (a) the Adjusted Elis 2016 net debt; (b) the consolidated net debt of Berendsen (€502 million) extracted from Berendsen's annual report and accounts for the year ended 31 December 2016 and converted to euro at the exchange rate of 1:170 on 31 December 2016; (c) the cash component of the Offer (€1,072 million) based on a cash consideration of £5.40 per Berendsen Share multiplied by the aggregate of 172,627,894 Berendsen Shares currently in issue and 1,784,529 Berendsen options and awards (being the maximum number of Berendsen options which become exercisable or awards that vest on a change of control must be satisfied using newly issued Berendsen Shares and cannot be satisfied by Berendsen Shares currently held by the Berendsen EBT) (assuming the issue of new Berendsen Shares to satisfy all such options), and converted to euro at the exchange rate of 1:138 on 9 June 2017; (d) the aggregate amount of the Interim Dividend payable to Berendsen Shareholders of €22 million (based on an Interim Dividend of £0.11 per Berendsen Share and multiplied by 172,627,894 outstanding Berendsen Shares and converted to euro at an exchange rate of 1:138); less the proceeds from the reserved capital increase subscribed by CPPIB of €200 million. The resulting aggregate net debt is derived from the addition of these components with no further adjustments to conform to Elis' accounting policies or otherwise.
representing 75 per cent. or more in nominal value of the Scheme Shares held by those Scheme Shareholders.
This summary should be read in conjunction with, and is subject to, the full text of this Announcement (including the Appendices). The Transaction will be subject to the satisfaction or waiver of the Conditions and certain further terms set out in Part B of Appendix 1 and to the full terms and conditions which will be set out in the Scheme Document. Appendix 2 contains the sources of information and bases of calculation of certain information contained in this Announcement and Appendix 5 contains definitions of certain terms used in this Announcement.
Elis will host a conference call for investors and analysts today at 8:00 a.m. BST / 9:00 a.m. CEST. For regulatory reasons, this conference call may not be accessed by any person in, and any associated materials may not be released, published, or distributed directly or indirectly, in or into or from the United States of America, Australia, Canada, Japan or any other jurisdiction where to do so would constitute a violation of applicable law.
Webcast Link: www.corporate-elis.com
UK Dial-In Number: +44 (0) 20 3427 1918
UK Freephone Number: 0800 279 4977
France Dial-in Number: +33 (0) 1 76 77 22 29
France Freephone Number: 0805 631 580
Confirmation Code: 4742373
| Elis | |
|---|---|
| Nicolas Buron | Tel: +33 (0) 1 75 49 98 30 |
| Brunswick – Public Relations Adviser to Elis |
|
| Jonathan Glass / Tom Burns |
Tel: +44 (0) 20 7404 5959 |
| Thomas Kamm / Aurélia de Lapeyrouse | Tel: +33 (0) 1 53 96 83 83 |
| Lazard & Co., Limited – Financial Adviser to Elis |
|
| William Rucker / William Lawes / Vasco Litchfield / Eugene Schreider |
Tel: +44 (0) 20 7187 2000 |
| Pierre Tattevin / Charles Duhamel | Tel: +33 (0) 1 44 13 01 11 |
| Zaoui & Co Ltd – Financial Adviser to Elis |
|
| Yoel Zaoui / Michael Zaoui / Serge Mouracade | Tel: +44 (0) 20 7290 5580 |
| Deutsche Bank – Financial Adviser and Corporate Broker to Elis |
|
| Neil Collingridge / Chris Raff / Simon Hollingsworth | Tel: +44 (0) 20 7545 8000 |
| Berendsen | |
| Pete Young | Tel: +44 (0) 7825 297 198 |
| Credit Suisse - Financial adviser to Berendsen |
|
| Jonathan Grundy / Joe Hannon / Vasyl Dutchak | Tel: +44 (0) 20 7888 8888 |
| J.P. Morgan Cazenove - Financial adviser and joint corporate broker to Berendsen |
|
| Robert Constant / Dwayne Lysaght / Richard Walsh | Tel: +44 (0) 20 7742 4000 |
| HSBC Bank plc - Financial adviser and joint corporate broker to Berendsen |
|
| Mark Dickenson / Philip Noblet / Keith Welch | Tel: +44 (0) 20 7991 8888 |
| FTI Consulting | |
| Richard Mountain | Tel: +44 (0) 20 3727 1374 |
Berendsen Shareholders should carefully review the French Prospectus (including the French Registration Document, the French Registration Document Update (if applicable) and the French Listing Prospectus, which includes the summary of the French Prospectus set out therein), when approved by the AMF and published. The French Prospectus (including the French Registration Document) will be available free of charge from the AMF's website (www.amf-france.org) and Elis' website (www.corporateelis.com). The French Prospectus will present a detailed description of Elis, its business, strategy, financial condition and results of operations. Berendsen Shareholders' attention is drawn to the risk factors described in Chapter 2 "Risk factors and insurance policy" of the French Registration Document, as will be amended and supplemented by Chapter 2 of the French Registration Document Update (if applicable) and the risk factors section of the French Listing Prospectus. The materialisation of one or more of the risks described in the French Prospectus may have a material adverse effect on Elis' activities, assets, financial position, results or prospects, as well as on the market price of Elis Shares. Any investment decision relating to the New Elis Shares should only be made on the basis of the French Prospectus.
Lazard & Co., Limited ("Lazard"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively as financial adviser to Elis and no one else in connection with the Transaction and will not be responsible to anyone other than Elis for providing the protections afforded to clients of Lazard & Co., Limited nor for providing advice in relation to the Transaction and matters referred to in this Announcement. Neither Lazard & Co., Limited nor any of its affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Lazard & Co., Limited in connection with the Transaction, this Announcement, any statement contained herein or otherwise.
Zaoui & Co Ltd ("Zaoui & Co") is authorised and regulated in the United Kingdom by the Financial Conduct Authority. Zaoui & Co is acting exclusively as financial adviser for Elis and no one else in connection with the matters set out in this Announcement and will not regard any other person as its client in relation to the matters in this Announcement and will not be responsible to anyone other than Elis for providing the protections afforded to clients of Zaoui & Co, nor for providing advice in relation to any matter referred to herein.
Deutsche Bank AG is authorised under German Banking Law (competent authority: European Central Bank) and, in France, by the Autorité de Contrôle Prudentiel et de Résolution. It is subject to supervision by the European Central Bank and by BaFin, Germany's Federal Financial Supervisory Authority, and is subject to limited regulation in France by the AMF. Details about the extent of its authorisation and regulation by BaFin, the Autorité de Contrôle Prudentiel et de Résolution and the AMF are available on request. Deutsche Bank is acting as financial adviser and corporate broker to Elis and no one else in connection with the Transaction or the contents of this Announcement and will not be responsible to anyone other than Elis for providing the protections afforded to clients of Deutsche Bank or for providing advice in relation to the Transaction or any other matters referred to herein.
In accordance with, and to the extent permitted by, the Code, normal UK market practice and Rule 14e-5 under the US Exchange Act, Deutsche Bank AG, London Branch and its affiliates may continue to act as exempt principal traders in Berendsen Shares on the London Stock Exchange and will engage in certain other purchasing activities consistent with their respective normal and usual practice and applicable law, including Rule 14e-5 under the US Exchange Act. To the extent required to be disclosed in accordance with applicable regulatory requirements, information about any such purchases will be disclosed to the Panel by no later than 12 noon on the next "business day", as such term is defined in the Code, and will be available from any Regulatory Information Service, including the regulatory news service on the London Stock Exchange website (www.londonstockexchange.com).
Credit Suisse International ("Credit Suisse"), which is authorised by the PRA and regulated by the FCA and the PRA in the United Kingdom, is acting as financial adviser exclusively for Berendsen and no one else in connection with the matters set out in this announcement and will not be responsible to any person other than Berendsen for providing the protections afforded to clients of Credit Suisse, nor for providing advice in relation to the content of this announcement or any matter referred to herein. Neither Credit Suisse nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Credit Suisse in connection with this announcement, any statement contained herein or otherwise.
J.P. Morgan Limited, which conducts its UK investment banking business as J.P. Morgan Cazenove ("J.P. Morgan Cazenove"), is authorised and regulated by the Financial Conduct Authority in the UK. J.P. Morgan Cazenove is acting exclusively as financial adviser to Berendsen and no one else in connection with the matters set out in this announcement and will not regard any other person as its client in relation to the matters set out in this announcement and will not be responsible to anyone other than Berendsen for providing the protections afforded to clients of J.P. Morgan Cazenove or its affiliates, or for providing advice in relation to the contents of this announcement or any other matter referred to herein.
HSBC Bank plc ("HSBC"), which is authorised by the Prudential Regulation Authority and regulated in the United Kingdom by the FCA and the Prudential Regulation Authority, is acting as financial adviser to Berendsen and for no one else in connection with the contents of this announcement and will not be responsible to anyone other than Berendsen for providing the protections afforded to its clients or for providing advice in relation to the contents of this announcement or any other matters referred to in this announcement.
In accordance with, and to the extent permitted by, the Code, normal UK market practice and Rule 14e-5 under the US Exchange Act, Credit Suisse, J.P. Morgan Limited and HSBC and their respective affiliates may continue to act as exempt principal traders in Berendsen Shares on the London Stock Exchange and will engage in certain other purchasing activities consistent with their respective normal and usual practice and applicable law, including Rule 14e-5 under the US Exchange Act. To the extent required to be disclosed in accordance with applicable regulatory requirements, information about any such purchases will be disclosed to the Panel by no later than 12 noon on the next "business day", as such term is defined in the Code, and will be available from any Regulatory Information Service, including the regulatory news service on the London Stock Exchange website (www.londonstockexchange.com).
This Announcement does not constitute the extension of an offer to acquire, purchase, subscribe for, sell or exchange (or the solicitation of an offer to acquire, purchase, subscribe for, sell or exchange), any securities in any jurisdiction, including the United States of America, Australia, Canada, Japan or any other jurisdiction where to do so would constitute a violation of the laws of such jurisdiction and any such offer (or solicitation) may not be extended in any such jurisdiction. Any securities to be offered have not been and will not be registered under the US Securities Act, or with any securities regulatory authority of any state of the United States and may not be offered or sold in the United States absent registration or an applicable exemption from registration thereunder. There may be no public offering of securities in the United States.
This document has been prepared in accordance with English law and the Code and information disclosed may not be the same as that which would have been prepared in accordance with the laws of jurisdictions outside England.
This Announcement contains certain statements which are, or may be deemed to be, "forward-looking statements" which are prospective in nature. The words "believe", "anticipate", "expect", "intend", "aim", "plan", "predict", "continue", "assume", "positioned", "may", "will", "should", "shall", "risk" and other similar expressions that are predictions of or indicate future events and future trends identify forward-looking statements. These forward-looking statements include all matters that are not current or historical facts. By their nature, forward-looking statements involve risks and uncertainties because such statements relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not indicative of future performance and Elis' or Berendsen's actual results of operations, financial condition and liquidity, and the development of the industry in which Elis or Berendsen operates, may differ materially from those made in or suggested by the forward-looking statements contained in this Announcement. The cautionary statements set out above should be considered in connection with any subsequent written or oral forward-looking statements that Elis, or persons acting on its behalf, may issue.
Certain figures included in this Announcement have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.
Under Rule 8.3(a) of the Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.
This Announcement will be available on Elis' website (www.corporate-elis.com) and Berendsen's website (www.berendsen.com) by no later than 12 noon (London time) on 13 June 2017, but will not be available to persons in the United States, Australia, Canada, Japan or any other jurisdiction where this would violate applicable law. For the avoidance of doubt, the content of such websites is not incorporated into and does not form part of this document.
You may request a hard copy of this Announcement by contacting Berendsen on +44 (0) 20 7259 6663. You may also request that all future documents, announcements and information to be sent to you in relation to the Transaction should be in hard copy form.
Copies of this Announcement and any other document relating to the Transaction or any offering of New Elis Shares may not be mailed, distributed, forwarded or otherwise transmitted or made available in, into or from the United States, Australia, Canada, Japan or any other jurisdiction where this would violate applicable law (including by custodians, nominees and trustees).
The Elis Directors accept responsibility for the information set out in this Announcement, except for that information for which the Berendsen Directors accept responsibility as set out below. To the best of the knowledge and belief of the Elis Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this Announcement for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information.
The Berendsen Directors accept responsibility for the information set out in this Announcement which relates to Berendsen, to the Berendsen Directors, or to their respective close relatives, related trusts and other connected persons and persons acting in concert with Berendsen. To the best of the knowledge and belief of the Berendsen Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this Announcement for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO OR FROM THE UNITED STATES OF AMERICA, AUSTRALIA, CANADA, JAPAN OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION
12 June 2017
OF
BY
The boards of Elis SA ("Elis") and Berendsen plc ("Berendsen") are pleased to announce that they have reached agreement on the terms of a recommended acquisition by Elis of the entire issued and to be issued share capital of Berendsen.
It is intended that the Transaction will be implemented by way of a Court-sanctioned scheme of arrangement of Berendsen under Part 26 of the 2006 Act.
Under the terms of the Transaction, which will be subject to the Conditions and certain further terms set out in Appendix 1 and to the full terms and conditions to be set out in the Scheme Document, Berendsen Shareholders will receive:
for each Berendsen Share: £5.40 in cash; and
0.403 New Elis Shares.
In addition, under the Transaction, Berendsen Shareholders will be entitled to a dividend of £0.11 per Berendsen Share expected to be declared and paid by Berendsen in respect of the six month period ending 30 June 2017 (the "Interim Dividend"). Further details of the expected record date, payment date and ex-dividend date for the Interim Dividend will be set out in the Scheme Document.
The terms of the Transaction as set out above valued each Berendsen Share at £12.5012 (excluding the Interim Dividend) and £12.61 (including the Interim Dividend) at the time of the announcement by Elis and Berendsen of agreement on the key terms of the Transaction on 7 June 2017.
As at 9 June 2017, being the last Business Day before the date of this Announcement, and based on the Closing Price of an Elis Share of €19.90 on 9 June 2017 and a £:€ exchange rate of £1 = €1.138 on 9 June 2017, the terms of the Transaction value each Berendsen Share at £12.45 (excluding the Interim Dividend and imply a total equity value for Berendsen of approximately £2.17 billion on a fully diluted basis13 .
The cash portion of the Transaction represents approximately 63 per cent. of the Closing Price of a Berendsen Share of £8.64 on 17 May 2017, the last Business Day preceding the announcement by Elis of a possible offer for Berendsen.
Berendsen Shareholders would receive New Elis Shares representing approximately 32 per cent. of the enlarged Elis share capital in issue immediately following completion of the Transaction (assuming completion of the CPPIB Cash Placing).
The value of the Transaction represents as at 9 June 2017:
The Transaction values Berendsen as at 9 June 2017 at an implied Enterprise Value / 2016 Adjusted EBITDA multiple of 7.6x and an implied Equity Value / 2016 Adjusted Profit After Tax multiple of 20.1x14 . In addition, the Transaction values Berendsen as at 9 June 2017 at an implied Enterprise Value / 2016 Adjusted Operating Profit multiple of 16.5x.
12 Based on the Closing Price of an Elis Share of €20.17 on 6 June 2017 and a £:€ exchange rate of £1 = €1.145 on 6 June 2017.
13 On the basis of a fully diluted share capital for Berendsen of 174,412,423 shares, being the aggregate of 172,627,894 Berendsen Shares currently in issue and 1,784,529 Berendsen options and awards (being the maximum number of Berendsen options which become exercisable or awards that vest on a change of control which must be satisfied using newly issued Berendsen Shares and cannot be satisfied by Berendsen Shares currently held by the Berendsen EBT).
14 Adjusted EBITDA, Adjusted Profit After Tax and Adjusted Operating Profit are stated before exceptional costs, goodwill impairment and amortisation of customer contracts and have been extracted from Berendsen's annual report and accounts for the year ended 31 December 2016. The EBITDA multiple is based on Enterprise Value, which is defined as Equity Value on a fully diluted basis plus net debt (adjusted for the payment of the Interim Dividend), tax adjusted net pension deficit and minority interests, in each case as extracted from Berendsen's annual report and accounts for the year ended 31 December 2016
Elis believes that a combination of Berendsen and Elis offers a compelling opportunity to create a pan-European textile, hygiene and facility services group, combining Berendsen's competitive position in Northern Europe with Elis' strengths in the rest of Europe and a number of high-growth emerging markets. Together, the Combined Group would have revenues in excess of €3 billion15 and EBITDA of c.€960 million16, with over 440 sites and operations in 28 countries.
Elis believes that the Combined Group would be geographically diversified and well-positioned in the majority of the geographies in which it would operate, including France, the UK, Germany, Sweden, Brazil, Denmark, Spain, Portugal, the Netherlands, Switzerland and Norway.
Elis believes that in Germany, the Transaction would result in a stronger, more balanced footprint with combined revenues of approximately €310 million17, from over 30 industrial sites and an enhanced product offering.
Elis further believes the Combined Group will be well-positioned to deliver enhanced value to both Berendsen and Elis shareholders from a strategic and financial perspective by continuing to pursue Elis' four strategic pillars of: (i) consolidating its positions through organic growth and acquisitions across new and existing services and markets; (ii) developing activities in Latin America; (iii) continuing to improve its operational excellence; and (iv) introducing new products and services at limited marginal cost.
The Elis Board believes that the Combined Group would generate attractive synergies and create additional shareholder value.
15 Combined Group 2016 revenue of €3,102 million represents the aggregate of the Adjusted Elis 2016 Revenue (as defined in note 22) and the consolidated revenue of Berendsen (€1,359 million) for the 12 month period ended 31 December 2016 extracted from Berendsen's annual report and accounts for the year ended 31 December 2016 and converted to euro at the average 2016 GBP/EUR rate of 1:1.225. The resulting aggregate revenue is derived from the addition of these components with no further adjustments to conform to Elis' accounting policies or otherwise.
16 Combined Group 2016 EBITDA of €959 million represents the aggregate of the Adjusted Elis 2016 EBITDA (as defined in note 23) and the consolidated EBITDA of Berendsen (€427 million) for the 12 month period ended 31 December 2016 extracted from Berendsen's annual report and accounts for the year ended 31 December 2016 and converted to euro at the average 2016 GBP/EUR rate of 1:1.225. The resulting aggregate EBITDA is derived from the addition of these components with no further adjustments to conform to Elis' accounting policies or otherwise.
17 Represents the aggregate of: (a) the consolidated revenue of Elis in Germany (€81 million) for the 12 month period ended 31 December 2016 extracted from Elis' annual reports and accounts for the year ended 31 December 2016; (b) an unaudited adjustment for the full-year 2016 impact of the acquisition of Puschendorf (€37 million) as provided by Elis' management; and (c) the consolidated revenue of Berendsen in Germany (€193 million) for the 12 month period ended 31 December 2016 extracted from Berendsen's annual report and accounts for the year ended 31 December 2016 and converted to euro at the average 2016 GBP/EUR rate of 1:1.225 (the "Adjusted Combined Germany 2016 Revenue"). The resulting aggregate revenue for Germany is derived from the addition of these components with no further adjustments to conform to Elis' accounting policies or otherwise.
Further details of the composition of these synergies are set out in the Elis Quantified Financial Benefits Statement in Part A of Appendix 3 to this Announcement.
The Elis Board expects the Combined Group to generate recurring run-rate pre-tax operating and capital expenditure synergies (together, "Cost Synergies") of at least €40 million per annum by the end of the third year following completion. This is comprised of €35 million per annum of operating expenditure EBITDA synergies, and €5 million per annum of capital expenditure synergies.
These synergies are expected to arise as a direct result of the Transaction and could not be achieved independently of the Transaction.
It is expected that the realisation of the Cost Synergies will require estimated one-off cash costs of approximately €40 million, incurred materially in the first two years after completion. The phasing will be assessed further and refined as part of the detailed integration planning in due course. Aside from the one-off costs referred to above, the Elis Board does not expect any material dis-synergies to arise as a direct result of the Transaction.
The Elis Quantified Financial Benefits Statement has been reported on under Rule 28.1 of the Code by Deloitte LLP, Elis' reporting accountants, and by Lazard and Zaoui, Elis' financial advisers, as set out in Part B and Part C of Appendix 3 to this Announcement.
The Elis Board is confident of realising significant further value via the delivery of incremental revenue synergies and growth that have not been quantified for reporting under the Code. The Elis Board believes such further value could be generated, for example, by:
CPPIB, which currently holds approximately 5 per cent. of the Elis Shares in issue, has agreed to subscribe for 10,131,713 new Elis Shares to be issued to it through a reserved capital increase (the "CPPIB Shares") at a price of €19.7418 per Elis Share (the "CPPIB Cash Placing"). The total proceeds of
18 Based on Elis' 20 day volume weighted average share price to 6 June 2017.
the CPPIB Cash Placing would be €200 million. CPPIB is a leading global institutional investor that manages the funds of the Canada Pension Plan. At 31 March 2017, the CPP Fund totalled CAD\$316.7 billion. The funds raised by the CPPIB Cash Placing will not be used to fund the cash portion of the Consideration but will be used to repay borrowing incurred by Elis to finance the Consideration and to help Elis meet its 2018 leverage target of ~3x (consistent with its current level) if the Transaction is completed. The CPPIB Cash Placing is conditional on, amongst other matters, the Scheme being approved by Berendsen Shareholders and sanctioned by the Court and approval of the Elis Shareholder Resolutions. While Elis is firmly committed to the CPPIB Cash Placing, the Transaction is not conditional upon the CPPIB Cash Placing becoming unconditional or being completed.
Following the CPPIB Cash Placing and completion of the Transaction, Eurazeo will remain the largest shareholder, CPPIB will become the second largest shareholder and Predica will remain a significant shareholder, in each case in the Combined Group, with shareholdings of approximately 10.7 per cent., 7.7 per cent. and 6.3 per cent. respectively of the number of Elis Shares in issue immediately following completion of the Transaction.
Elis intends to retain a strong and robust balance sheet with a target leverage of ~3x (consistent with its current levels) by the end of 2018. Elis' pro forma leverage (as at 31 December 2016) taking into account the impact of the Transaction, the CPPIB Cash Placing and the Interim Dividend would be 3.1x19 .
Elis expects the Transaction to result in a stronger business profile for the Combined Group given its increased geographical reach and diversified business mix with exposure to resilient end-markets, the expected cost synergies of at least €40 million per annum with potential for further revenue synergies, and robust EBITDA margins of above 30 per cent. (before synergies).
19 Adjusted 2016 net debt figure for Elis of €1,611 million ("Adjusted Elis 2016 net debt") represents the aggregate of: (a) the consolidated net debt of Elis (€1,596 million) as of 31 December 2016 extracted from Elis' financial statements for the year ended 31 December 2016; (b) the proceeds from the share capital increase launched by Elis in January 2017 (€325 million); and (c) the consideration paid as part of the acquisition of Lavebras (€340 million) which closed on 23 May 2017. The resulting aggregate net debt is derived from the addition of these components with no further adjustments to conform to Elis' accounting policies or otherwise.
Combined Group 2016 net debt of €3,007 million represents the aggregate of: (a) the Adjusted Elis 2016 net debt; (b) the consolidated net debt of Berendsen (€502 million) extracted from Berendsen's annual report and accounts for the year ended 31 December 2016 and converted to euro at the exchange rate of 1:170 on 31 December 2016; (c) the cash component of the Offer (€1,072 million) based on a cash consideration of £5.40 per Berendsen Share multiplied by the aggregate of 172,627,894 Berendsen Shares currently in issue and 1,784,529 Berendsen options and awards (being the maximum number of Berendsen options which become exercisable or awards that vest on a change of control must be satisfied using newly issued Berendsen Shares and cannot be satisfied by Berendsen Shares currently held by the Berendsen EBT) (assuming the issue of new Berendsen Shares to satisfy all such options), and converted to euro at the exchange rate of 1:138 on 9 June 2017; (d) the aggregate amount of the Interim Dividend payable to Berendsen Shareholders of €22 million (based on an Interim Dividend of £0.11 per Berendsen Share and multiplied by 172,627,894 outstanding Berendsen Shares and converted to euro at an exchange rate of 1:138); less the proceeds from the reserved capital increase subscribed by CPPIB of €200 million. The resulting aggregate net debt is derived from the addition of these components with no further adjustments to conform to Elis' accounting policies or otherwise.
Elis expects the Transaction to lead to double digit earnings accretion on an adjusted earnings per share basis for Elis in 2018 by comparison with the position if the Transaction had not taken place.20
In November 2015, Berendsen announced its Berendsen Excellence strategy, a strategy designed to enhance the capability of the company's operations, improving the quality of services and providing a platform for sustainable growth. The strategy was based on four key pillars: customer focus, operational excellence, organisational capability and effective use of capital.
In early March 2017, Berendsen announced an update to its strategy. Berendsen's management had identified three common root causes to the problems in the UK textile businesses: underinvestment in customer and market focus, underinvestment in plant and machinery and underinvestment in people and capabilities. The consequences of this underinvestment were significant increases in the costs of quality in the UK textile businesses. Berendsen's management identified a significant opportunity to minimise these increased costs of quality and put in place a clear strategy to take advantage of that opportunity including an investment in Berendsen's commercial and customer service capabilities, accelerating its capital investment in plant and machinery in the UK and in Europe, and investing in plant conversions and new builds. The growth investment in the business of £300 million was expected to generate a return on capital employed in excess of 15%.
The updated strategy has provided the Berendsen Board with greater visibility and confidence in Berendsen's medium-term growth opportunities and the Berendsen Board believes it represents a competitive and sustainable platform for future value creation. Berendsen has built good momentum in the delivery of its strategy, underpinning the Berendsen Board's confidence in its medium-term targets. This was reflected in Berendsen's announcement on 24 May 2017 in which the Berendsen Board reconfirmed the 2017 Profit Forecast of approximately £150 million and announced a new 2018 Profit Forecast of approximately £170 million. Further details of the 2017 Profit Forecast and the 2018 Profit Forecast are set out at Appendix 4 to this Announcement.
The Berendsen Board remains confident that Berendsen's strategy would deliver significant value for the Berendsen Shareholders on a standalone basis. However, it also believes that the terms of the Transaction substantially acknowledges the quality of the Berendsen business and the strength of its future prospects. Furthermore, the Berendsen Board recognises that the Transaction will create a pan-European leader in textile services, with attractive positions in the markets in which it operates and with
20 Adjusted EPS excludes goodwill impairments, amortisation of customer relationships, restructuring, intangible assets, and other exceptional items. The estimated adjusted EPS for 2018 of Elis assumes completion of the Transaction, and accordingly includes Elis' estimate of the Berendsen adjusted net income contribution for 2018 and takes account of the synergies expected to occur in 2018. It is then compared to Elis' estimated adjusted EPS for 2018 assuming no Transaction. The statement that the Transaction is earnings accretive should not be construed as a profit forecast and is therefore not subject to the requirements of Rule 28 of the Code. It should not be interpreted to mean that the earnings per share in 2018 or any other future financial period will necessarily match or be greater than those for any preceding financial period. This statement is the sole responsibility of Elis. The Berendsen estimated 2018 adjusted net income contribution referred to above is Elis' own estimate of such net income which takes into account publicly available information on Berendsen.
sufficient scale and footprint to provide customers with the most efficient and comprehensive textile services offering across the European continent.
In addition, the value of the Transaction represents, as at 9 June 2017, an attractive premium of approximately 44% to Berendsen's share price on 17 May 2017, the last business day preceding the announcement by Elis of a possible offer for Berendsen, and an implied Enterprise Value / 2016 Adjusted Operating Profit multiple of 16.5x, which is above that of the 15.2x valuation of Rentokil Initial's workwear and hygiene businesses transferring into its joint venture with Haniel & Cie.21 It also secures delivery of Berendsen's medium-term value potential today, whilst allowing the Berendsen Shareholders to participate in the possible future value creation accruing from the combination. As such, the Berendsen Board intends unanimously to recommend the Transaction to Berendsen Shareholders.
In reaching its conclusion, the Berendsen Board considered the terms of the Transaction in relation to the value and prospects of Berendsen's underlying business and the potential medium-term value of the Berendsen Shares on a standalone basis, the potential financial and strategic benefits resulting from a combination of Elis and Berendsen, the target leverage of the Combined Group as well as the potential prospects and value of the Combined Group.
The Elis Directors intend unanimously to recommend that Elis Shareholders vote in favour of the Elis Shareholder Resolutions at the Elis General Meeting.
The Berendsen Directors, who have been so advised by Credit Suisse and J.P. Morgan Cazenove as to the financial terms of the Transaction, consider the terms of the Transaction to be fair and reasonable. In providing its financial advice, each of Credit Suisse and J.P. Morgan Cazenove has taken into account the commercial assessments of the Berendsen Directors.
Accordingly, the Berendsen Directors intend unanimously to recommend that Berendsen Shareholders vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the Berendsen General Meeting (or, in the event that the Transaction is implemented by way of an Offer, to recommend that Berendsen Shareholders accept the Offer), as they have irrevocably undertaken to do in respect of the beneficial holdings which are under their control of, in aggregate, 572,144 Berendsen Shares representing approximately 0.33 per cent. of Berendsen's issued share capital on 9 June 2017, being the last Business Day before this Announcement.
Further details of these irrevocable undertakings (including details of the circumstances in which the irrevocable undertakings will cease to be binding) are set out in paragraph 15 of this Announcement.
21 Based on adjusted profit before interest, tax and amortisation for 12 months to 30 June 2016 for the business transferred by Rentokil Initial into the JV with Haniel & Cie as extracted from Rentokil Initial's investor presentation "Joint Venture with Haniel, Delivering Shareholder Value" dated 16 December 2016.
Berendsen is a focused European textile, hygiene and safety solutions business. Berendsen provides service solutions to design, source, lease, clean and maintain textiles, medical and well-being devices. Its services includes investment in the stock of goods, management of the stock, pick-up of soiled items, and delivery of professionally cleaned, repaired and quality-checked goods.
Berendsen provides professional expertise in design of workwear, textile sourcing and purchasing, textile maintenance, decontamination and sterilisation of medical and well-being devices and an optimised service for each customer. Outsourcing such services to Berendsen offers significant benefits to the customer, saving costs, freeing up time, space, staff and capital and allowing our customers to concentrate on their core business.
In 2016, Berendsen put into effect a new organisational structure with four customer-facing business lines: (i) Workwear, (ii) Facility (iii) Healthcare; and (iv) Hospitality, to ensure direct alignment with their customers' needs. The Workwear business line provides efficient and cost-effective outsourced workwear services to 80,000 customers across Europe supporting them in management of complexity and risk in areas such as hygiene, protection, safety and corporate identity. The Facility business line offers three distinct services: washroom, mats and cleanroom, all of which address specific requirements for both large sophisticated customers and very small customers. The Healthcare business line offers services for hospital wards, clinics, operating theatres and elderly care homes, support customers' drive for greater patient safety, infection control and efficiency. The Hospitality business line provides linen solution, such as linen hire and laundry services, primarily to customers who operate in the hotel, restaurant and catering services.
Berendsen employs approximately 16,000 employees across 16 countries throughout Europe. Its headquarters are located in London, while its business line offices are found in Basingstoke and in Copenhagen.
Elis is a multi-service leader in the rental, laundry and maintenance of flat linen, workwear and hygiene and well-being appliances in Europe and Latin America. With a workforce of approximately 30,000 people in 14 countries, Elis recorded consolidated revenue of €1.7 billion22 and consolidated EBITDA of €530 million23 in 2016. Elis serves more than 240,000 customers of all sizes in the Hospitality, Healthcare,
22 Adjusted 2016 revenue figure for Elis of €1,742 million ("Adjusted Elis 2016 Revenue") represents the aggregate of: (a) the consolidated revenue of Elis (€1,513 million) for the 12 month period ended 31 December 2016 extracted from Elis' financial statements for the year ended 31 December 2016; (b) the estimated unaudited consolidated revenue of each of Indusal (€90 million) and Lavebras (€103 million) for the 12 month period ended 31 December 2016 as published by Elis on 20 December 2016; and (c) an unaudited adjustment for the full-year 2016 impact of the acquisition of Puschendorf (€37 million) as provided by Elis' management. The resulting aggregate revenue is derived from the addition of these components with no further adjustments to conform to Elis' accounting policies or otherwise.
23 Adjusted 2016 EBITDA figure for Elis of €532 million ("Adjusted Elis 2016 EBITDA") represents the aggregate of: (a) the consolidated EBITDA of Elis (€468 million) for the 12 month period ended 31 December 2016 extracted from Elis' financial statements for the year ended 31 December 2016; (b) the estimated unaudited consolidated EBITDA of each of Indusal (€24 million based on estimated EBITDA margin of 27 per cent. as published by Elis on 20 December 2016) and Lavebras (€31 million based on minimum estimated EBITDA margin of 30 per cent. as published by Elis on 20 December 2016) for
Industry, Retail and Services sectors, via its network of more than 300 production and distribution centres and 13 clean rooms, ensuring that it has close proximity to its customers.
Elis provides multi-service offerings to its customers in its various end markets, thanks to its good network coverage and industrial know-how. Elis aims to continue to strengthen its network and its offering in order to maintain its growth and improve returns, which are already among the highest in the sector. To reach this objective, its strategy focuses on four pillars:
Elis attaches great importance to the skills and experience of the existing employees of Berendsen. Elis intends to approach the integration of the broader management team in an open and transparent manner with the aim of retaining and motivating the best talent across the Combined Group. Once integration is completed, Elis aims to create a stable working environment across the Combined Group to facilitate employee development.
Elis confirms that it intends to safeguard the existing employment and pension rights of all existing management and employees of Berendsen in accordance with applicable law.
Berendsen released its AGM trading update on 27 April 2017, for the first quarter, from 1 January to 31 March 2017, which included the following information in relation to its current trading and prospects:
"Trading in the period was in line with management expectations. Underlying revenue, at constant exchange rates and before acquisitions, grew by 3% compared to the prior year; solid underlying revenue growth in Continental Europe more than offset an expected decline in each of the UK textile businesses. Reported revenue, including the impact of foreign exchange and acquisitions, grew by over 10%.
The Berendsen Group continues to implement its Berendsen Excellence strategy. In the UK, progress remains on track, as we invest in our people, processes, systems, plant and machinery. We are confident that the actions being taken will enable us to progressively capture the sizeable opportunity for margin improvement in the UK. Common processes and controls continue to be installed across the Berendsen Group; these are giving greater operational visibility and strengthening our ability to share best practice
the 12 month period ended 31 December 2016; and (c) an unaudited adjustment for the full-year 2016 impact of the acquisition of Puschendorf (€9 million) as provided by Elis' management. The resulting aggregate EBITDA is derived from the addition of these components with no further adjustments to conform to Elis' accounting policies or otherwise.
within our business lines. Our outlook for 2017 is unchanged and we remain confident in the medium term growth prospects for the Berendsen Group."
An extract from Elis' Q1 2017 press release dated 27 April 2017 is set out below:
Q1 revenue in France was up +1.3 per cent. (+0.7 per cent. on an organic basis).
Q1 revenue growth in Northern Europe was +27.8 per cent., driven by the acquisitions made in 2016 in Germany and Switzerland. Organic revenue growth was +3.0 per cent. despite subdued hospitality activity in Switzerland during the winter.
Southern Europe continued to be very dynamic with revenue growth of +65.9 per cent., driven by the acquisition of Indusal in Spain in December 2016. Organic growth in the region was +6.8 per cent.. This performance was again driven by Spain and Portugal, which both delivered organic revenue growth above 7 per cent. despite the same unfavourable calendar effect as the one described for France, but with an even more material impact. This performance reflects the Elis Group's commercial momentum with the opening of new markets.
Q1 revenue growth was +38.2 per cent.. Organic growth was +7.2 per cent., also unfavourably impacted by the 2016 calendar effect. Elis recorded a positive 27.7 per cent. impact from currency evolution. Commercial momentum remains very good in Brazil (more than 8 per cent. organic growth, with c. +4 per cent. from price increases despite the marked slowdown in inflation). For the record, on top of the calendar effect, activity from hospitals, laboratories and medical centers was very strong in Q1 2016 as a consequence of epidemics that impacted Brazil during its summer period."
Under the terms of the Transaction, Elis intends to make available a Mix and Match Facility to Berendsen Shareholders. Under the Mix and Match Facility, accepting Berendsen Shareholders may elect to vary the proportions in which they receive New Elis Shares and cash consideration, subject to off-setting elections being made by other Berendsen Shareholders. To the extent the elections cannot be satisfied in full, they will be scaled down on a pro rata basis. Elis and Berendsen will seek to work together to address costs of holding and dealing in Elis Shares for certain Berendsen Shareholders.
Participants in the Berendsen Share Schemes will be contacted regarding the effect of the Transaction on their rights under these schemes and appropriate proposals will be made and communicated to such participants in due course.
Elis and Berendsen entered into a mutual confidentiality agreement on 8 June 2017 (the "Confidentiality Agreement") pursuant to which each of them has undertaken to keep certain information relating to: (i) the Transaction; and (ii) the other party and its businesses, customers or financial affairs confidential and not to disclose such information to third parties, except (a) to its directors, officers, employees, advisers and, in certain circumstances, certain other permitted recipients for the purposes of evaluating the Transaction, or (b) if required to do so by law or regulation or by any regulatory or governmental authority to which it is subject.
Pursuant to the Confidentiality Agreement, each of Elis and Berendsen undertook, for a period of 12 months from the date of the Confidentiality Agreement, not to have any contact in relation to the Proposed Transaction (as defined therein) with the other party's directors, officers and employees (other than certain individuals designated by each party for the purpose from time to time), customers, contractors, sub-contractors, suppliers or lenders without the other party's prior written consent and not to solicit, engage or employ or offer to employ any senior employee of the other party, save in certain circumstances.
Save as referred to above, the obligations pursuant to the Confidentiality Agreement will remain in force until completion of the Transaction or, if the Transaction fails to complete, for a period of 18 months from the date of the Confidentiality Agreement.
All of the Berendsen Directors who hold Berendsen Shares or otherwise control the voting rights in respect of such shares have irrevocably undertaken to vote (or procure the voting) in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the Berendsen General Meeting (or, in the event that the Transaction is implemented by way of an Offer, accept the Offer), in respect of the beneficial holdings which are under their control, of, in aggregate, 572,144 Berendsen Shares representing approximately 0.33 per cent. of the issued ordinary share capital of Berendsen on 9 June 2017 (being the last business day before the date of this Announcement).24 The individual irrevocable undertakings which have been provided by the Berendsen Directors who hold Berendsen Shares are as follows:
| Director | Number of Berendsen Shares | Percentage of Berendsen Shares in Issue (%) |
|---|---|---|
| James Drummond | 142,840 | 0.083 |
| Kevin Quinn | 215,404 | 0.125 |
| Iain Ferguson | 150,000 | 0.087 |
| David Lowden | 32,500 | 0.019 |
| Andrew Wood | 20,000 | 0.012 |
| Maarit Aarni-Sirviö | 1,400 | 0.001 |
| Lucy Dimes | 10,000 | 0.006 |
| Total | 572,144 | 0.33 |
The undertakings from the Berendsen Directors will cease to be binding only if: (i) the Transaction is not completed on or prior to the Long Stop Date; (ii) the Panel consents to Elis not proceeding with the Transaction; or (iii) the Scheme or Offer lapses or is withdrawn and, in the case of (ii) and (iii), no new, revised or replacement Scheme or Offer is announced by Elis in accordance with Rule 2.7 of the Code at the same time. The undertakings will remain binding in the event that a higher competing offer for Berendsen is made.
Elis has received undertakings from25:
Eurazeo, on behalf of itself and its subsidiary Legendre Holding 27, to vote in favour of the Elis Shareholder Resolutions, in respect of a total of 23,635,032 Elis Shares carrying the right to cast
24 The irrevocable undertakings for James Drummond and Kevin Quinn also apply to Berendsen Shares that are issued or received on the exercise of any options or the vesting of any awards held by the relevant Berendsen Director. Accordingly, the number of Berendsen Shares the subject of the irrevocable undertakings will change in the event any options or awards held by those Berendsen Directors are exercised or vest.
25 Berendsen Shareholders should be aware that, under French law, Elis Shares held in registered form for more than two years attract additional voting rights, so voting rights at Elis general meetings do not necessarily match economic ownership.
42,892,699 votes, representing approximately 26.8 per cent. of the voting rights26 of Elis Shares in issue on 5 June 2017, being the latest practicable date before the date of this Announcement;
The undertakings given by Eurazeo and Predica to vote in favour of the Elis Shareholder Resolutions are not subject to any conditions and will expire on 31 December 2017 (but cannot otherwise be terminated other than by mutual agreement).
For as long as the Elis Directors continue to recommend that Elis Shareholders vote in favour of the Elis Shareholder Resolutions at the Elis General Meeting, Elis will not agree, except with Berendsen's consent, to the release of the undertakings given by Eurazeo or Predica to vote in favour of the Elis Shareholder Resolutions.
The undertaking given by CPPIB to vote in favour of the Elis Shareholder Resolutions is set out in the agreement between Elis and CPPIB relating to the CPPIB Cash Placing. It is not subject to any conditions and can be terminated by CPPIB in the following circumstances: (a) if the Effective Date does not occur on or prior to the earlier of (i) 31 March 2018, and (ii) the last day of the 9-month period starting on the date of this Announcement; (b) if the resolutions required to approve and implement the Elis Reserved Capital Increase are not duly passed by Elis Shareholders on or prior to 31 December 2017; (c) if the Elis Shareholder Resolutions are not duly passed by Elis Shareholders on or prior to 31 December 2017; (d) if the Scheme or any resolution relating to the implementation of the Scheme is not approved by the requisite majority at the Court Meeting or the General Meeting; (e) if the Scheme is not sanctioned by the Court; (f) in the event the Transaction is implemented by means of an Offer, if such Offer lapses or is withdrawn; (g) if Elis announces to the public, in accordance with the Code, that it does not intend to proceed with the Transaction; or (h) if an event of default entitling the lenders under the bridge facility agreement entered into by Elis (as described in paragraph 20) to refuse to lend under such agreement has occurred and CPPIB has not waived its right to terminate.
For as long as the Elis Directors continue to recommend that Elis Shareholders vote in favour of the Elis Shareholder Resolutions at the Elis General Meeting, Elis will not agree, except with Berendsen's consent, to the release of the undertaking given by CPPIB to vote in favour of the Elis Shareholder Resolutions. For the avoidance of doubt, this shall not apply to the remainder of the agreement with CPPIB relating to the CPPIB Cash Placing.
26 Elis Shares in issue as at 5 June 2017 carry the right to cast 159,823,503 votes in total (including voting rights attached to treasury shares).
The following members of Elis management have irrevocably undertaken to vote (or procure the voting) in favour of the Elis Shareholder Resolutions at the Elis General Meeting in respect of the beneficial holdings which are under their control of, in aggregate, 197,457 Elis Shares representing in aggregate approximately 0.19 per cent. of the voting rights of Elis Shares in issue on 5 June 2017, being the latest practicable date before the date of this Announcement:
| Member of Elis Management |
Number of Elis Shares | Number of Voting Rights |
Percentage of Voting Rights of Elis Shares in Issue (%) |
|---|---|---|---|
| Xavier Martire | 153,119 | 239,041 | 0.150 |
| Louis Guyot | 44,338 | 67,401 | 0.042 |
| Total | 197,457 | 306,442 | 0.19 |
The undertakings from Elis management will cease to be binding only if: (i) the Transaction is not completed on or prior to the Long Stop Date; (ii) the Panel consents to Elis not proceeding with the Transaction; or (iii) the Scheme or Offer lapses or is withdrawn and, in the case of (ii) and (iii), no new, revised or replacement Scheme or Offer is announced by Elis in accordance with Rule 2.7 of the Code at the same time.
It is intended that the Transaction will be effected by way of a Court-sanctioned scheme of arrangement under Part 26 of the 2006 Act. The Scheme is an arrangement between Berendsen and the Scheme Shareholders, to which Elis will adhere, and is subject to the approval of the Court. The purpose of the Scheme is to provide for Elis to become the owner of the whole of the share capital of Berendsen in issue at the Scheme Record Time. This will be achieved by the transfer to Elis of the Scheme Shares held by Scheme Shareholders. In consideration, the Scheme Shareholders will receive consideration in the form of cash and New Elis Shares on the basis set out in paragraph 2 above. The procedure involves, amongst other matters, applications by Berendsen to the Court to convene the Court Meeting and to sanction the Scheme.
The Transaction will be subject to the Conditions and certain further terms and conditions set out in Appendix 1 to this Announcement and to the full terms and Conditions which will be set out in the Scheme Document.
The Scheme will only become effective if, amongst other matters, the following events occur on or before the Long Stop Date:
a resolution to approve the Scheme is passed by a majority in number of the Scheme Shareholders present and voting (and entitled to vote) at the Court Meeting, either in person or by proxy, representing 75 per cent. or more in value of each class of the Scheme Shares held by those Scheme Shareholders;
Upon the Scheme becoming effective: (i) it will be binding on all Berendsen Shareholders, irrespective of whether or not they attended or voted at the Court Meeting or the Berendsen General Meeting (and, if they attended and voted, whether or not they voted in favour); and (ii) share certificates in respect of Berendsen Shares will cease to be valid and entitlements to Berendsen Shares held in CREST will be cancelled.
Any Berendsen Shares issued before the Scheme Record Time will be subject to the terms of the Scheme. The Berendsen Resolutions will, amongst other matters, amend the Berendsen Articles to incorporate new provisions and/or other amendments, in terms approved by Elis, requiring any Berendsen Shares issued after the Scheme Record Time (other than to Elis and/or its nominee(s)) to be automatically transferred to Elis on the same terms as the Scheme (other than terms as to timings, formalities and the ability to make an election under the Mix and Match Facility). These new provisions of and/or amendments to the Berendsen Articles will avoid any person (other than Elis and its nominee(s)) holding shares in the capital of Berendsen after the Effective Date.
If the Scheme does not become effective on or before the Long Stop Date (or such later date as Berendsen and Elis may, with the consent of the Panel, agree and, if required, the Court may approve), it will lapse and the Transaction will not proceed (unless the Panel otherwise consents).
The Scheme Document will include full details of the Scheme, together with notice of the Court Meeting and the Berendsen General Meeting. The Scheme Document will also specify the actions available to be taken by the Scheme Shareholders. It is expected that the Scheme Document, containing further information about the Transaction and notices of the Court Meeting and General Meeting, together with the Forms of Proxy, will be posted to Berendsen Shareholders no later than 31 July 2017. An expected timetable of principal events will be included in the Scheme Document.
The Berendsen Shares will be acquired under the Scheme fully paid and free from all liens, charges, equitable interests, charges, encumbrances, rights of pre-emption and other third party rights of any nature whatsoever and together with all rights attaching to them as at the date of this Announcement or subsequently attaching or accruing to them, save for the right to receive the Interim Dividend and any other dividend and/or distribution and/or share repurchase payment and/or return of capital in respect of which a corresponding reduction has been made to the Consideration in accordance with paragraph 4(d) of Appendix 1.
Any New Elis Shares issued to Berendsen Shareholders in connection with the Scheme will carry the right to receive and retain dividends and other distributions declared, made or paid by reference to a record date falling on or after the date on which they are issued (but will not, for the avoidance of doubt, carry the right to receive any dividends and other distributions for which the record date is before the date on which they are issued).
Elis will be entitled, in the event that any dividend or other distribution or return of value is authorised, announced, declared, made or paid by Berendsen on or after the date of this Announcement and prior to the Effective Date (other than the Interim Dividend), to reduce the cash and/or share component of the Consideration by the gross amount of such dividend, other distribution or return of value in accordance with paragraph 4(d) of Appendix 1.
The Scheme will be governed by English law and will be subject to the jurisdiction of the courts of England. The Scheme will be subject to the applicable requirements of the Code, the Panel, the London Stock Exchange and the UK Listing Authority.
Elis reserves the right to elect (subject to the prior consent of the Panel) to effect the Transaction by way of an Offer.
It is intended that dealings in Berendsen Shares will be suspended at 5:00 p.m. London time on the business day prior to the Effective Date. It is further intended that Berendsen will apply for the cancellation of the listing of the Berendsen Shares on the Official List and trading on the London Stock Exchange for listed securities, with effect as of or shortly following the Effective Date. Elis also proposes that, after the Berendsen Shares are delisted, Berendsen will be re-registered as a private company.
Elis intends to finance the cash portion of the Consideration from third party debt.
Elis has entered into a bridge loan facility with two of its relationship banks, BNP Paribas and Crédit Agricole Corporate and Investment Bank, in connection with, amongst other matters, financing the cash portion of the Consideration.
The funds raised by the CPPIB Cash Placing will not be used to fund the cash portion of the Consideration but will be used to repay borrowing incurred by Elis to finance the cash portion of the Consideration and to help Elis meet its 2018 leverage target of ~3x (consistent with its current level) if the Transaction is completed.
In accordance with Rule 2.7(d) of the Code, Lazard, as financial adviser to Elis, is satisfied that sufficient resources are available to Elis to satisfy in full the cash portion of the Consideration.
Further information on the financing of the Transaction will be set out in the Scheme Document.
Save for 121,965 Berendsen Shares held by Amundi Asset Management27, as at 8 June 2017 (being the latest practicable date prior to the date of this Announcement) neither Elis nor, so far as Elis is aware, any person acting in concert (within the meaning of the Code) with Elis:
The availability of the Transaction, and the distribution of this Announcement, to persons who are not resident in the United Kingdom, may be affected by the laws of the relevant jurisdiction in which they are located. Such persons should inform themselves of and observe any applicable legal or regulatory requirements of their jurisdiction. Berendsen Shareholders who are in doubt about such matters should consult an appropriate independent professional adviser in the relevant jurisdiction without delay.
This Announcement does not constitute an offer for sale of any securities or an offer or an invitation to purchase any securities. Berendsen Shareholders are advised to read carefully the Scheme Document once these have been dispatched.
This Announcement does not constitute the extension of an offer to acquire, purchase, subscribe for, sell or exchange (or the solicitation of an offer to acquire, purchase, subscribe for, sell or exchange), any securities in any jurisdiction, including the United States of America, Australia, Canada, Japan or any other jurisdiction where to do so would constitute a violation of the laws of such jurisdiction and any such offer (or solicitation) may not be extended in any such jurisdiction. Any securities to be offered have not been and will not be registered under the US Securities Act or with any securities regulatory authority of any state of the United States and may not be offered or sold in the United States absent registration or an applicable exemption from registration thereunder. There may be no public offering of securities in the United States.
27 The 27,460 Berendsen Shares held by Oppenheim Asset Management Services S.à.r.l as at 1 June 2017, as set out in Elis' Opening Position Disclosure dated 31 May 2017 (as updated on 8 June 2017), have been transferred to a third party agent outside of the Deutsche Bank group as part of the transfer of fund administration on 1 June 2017. These Berendsen Shares are therefore no longer considered to be a holding of a person acting in concert with Elis.
The Transaction will require merger control approvals in Germany, Austria and Poland. The Transaction is conditional on Elis obtaining these approvals. To the extent that any aspect of the Transaction constitutes a concentration with a European Union dimension within the meaning of the EU Merger Regulation, Elis will file a notification with the European Commission and the Transaction will be conditional on Elis obtaining the approval of the European Commission in Phase 1.
Because Berendsen UK Limited, a wholly-owned subsidiary of Berendsen, is regulated (on a limited permission basis) by the FCA in relation to its entry into consumer hire agreements, the Transaction is also conditional on the FCA Clearance.
The Transaction is also conditional upon, amongst other matters:
The Transaction is also conditional upon Elis Shareholders passing at the Elis General Meeting the resolution to authorise the issue of the New Elis Shares by a two-thirds majority of the votes of Elis Shareholders present or represented at the Elis General Meeting and the admission of the New Elis Shares to listing on Euronext Paris.
Elis will convene the Elis General Meeting for a date which is as close as reasonably practicable to the date for the Court Meeting and the Berendsen General Meeting.
Each of Lazard, Zaoui, Credit Suisse and J.P. Morgan Cazenove has given and not withdrawn its consent to the publication of this Announcement with the inclusion in it of the references to its name in the form and context in which they appear.
Copies of the following documents will, by no later than 12 noon on 13 June 2017, be published on Elis' website at www.corporate-elis.com and Berendsen's website at www.berendsen.com until the end of the Offer Period:
The Transaction will be on the terms and subject to the conditions set out in this Announcement (including in Appendix 1), and the full terms to be set out in the Scheme Document when issued. Relevant documentation will be sent to Berendsen Shareholders and, for information purposes, to persons with information rights and participants in the Berendsen Share Schemes, in due course. It is intended that the French Prospectus will be published on the same date as the Scheme Document.
In deciding whether or not to vote in favour of the Scheme in respect of their Berendsen Shares, Berendsen Shareholders should consider the information contained in, and the procedures described in such documentation.
The bases and sources of certain information contained in this Announcement are set out in Appendix 2. Certain terms used in this Announcement are defined in Appendix 5.
Elis Nicolas Buron Tel: +33 (0) 1 75 49 98 30 Brunswick – Public Relations Adviser to Elis Jonathan Glass / Tom Burns Tel: +44 (0) 20 7404 5959
| Thomas Kamm / Aurélia de Lapeyrouse | Tel: +33 (0) 1 53 96 83 83 |
|---|---|
| Lazard & Co., Limited – Financial Adviser to Elis |
|
| William Rucker / William Lawes / Vasco Litchfield / Eugene Schreider |
Tel: +44 (0) 20 7187 2000 |
| Pierre Tattevin / Charles Duhamel | Tel: +33 (0) 1 44 13 01 11 |
| Zaoui & Co Ltd – Financial Adviser to Elis |
|
| Yoel Zaoui / Michael Zaoui / Serge Mouracade | Tel: +44 (0) 20 7290 5580 |
| Deutsche Bank – Financial Adviser and Corporate Broker to Elis |
|
| Neil Collingridge / Chris Raff / Simon Hollingsworth |
Tel: +44 (0) 20 7545 8000 |
| Berendsen | |
| Pete Young | Tel: +44 (0) 7825 297 198 |
| Credit Suisse - Financial adviser to Berendsen |
|
| Jonathan Grundy / Joe Hannon / Vasyl Dutchak | Tel: +44 (0) 20 7888 8888 |
| J.P. Morgan Cazenove - Financial adviser and joint corporate broker to Berendsen |
|
| Robert Constant / Dwayne Lysaght / Richard Walsh | Tel: +44 (0) 20 7742 4000 |
| HSBC Bank plc - Financial adviser and joint corporate broker to Berendsen |
|
| Mark Dickenson / Philip Noblet / Keith Welch | Tel: +44 (0) 20 7991 8888 |
| FTI Consulting | |
| Richard Mountain | Tel: +44 (0) 20 3727 1374 |
Berendsen Shareholders should carefully review the French Prospectus (including the French Registration Document, the French Registration Document Update (if applicable) and the French Listing Prospectus, which includes the summary of the French Prospectus set out therein), when approved by the AMF and published. The French Prospectus (including the French Registration Document) will be available free of charge from the AMF's website (www.amf-france.org) and Elis' website (www.corporateelis.com). The French Prospectus will present a detailed description of Elis, its business, strategy, financial condition and results of operations. Berendsen Shareholders' attention is drawn to the risk factors described in Chapter 2 "Risk factors and insurance policy" of the French Registration Document, as will be amended and supplemented by Chapter 2 of the French Registration Document Update (if applicable) and the risk factors section of the French Listing Prospectus. The materialisation of one or more of the risks described in the French Prospectus may have a material adverse effect on Elis' activities, assets, financial position, results or prospects, as well as on the market price of Elis Shares. Any investment decision relating to the New Elis Shares should only be made on the basis of the French Prospectus.
Lazard & Co., Limited ("Lazard"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively as financial adviser to Elis and no one else in connection with the Transaction and will not be responsible to anyone other than Elis for providing the protections afforded to clients of Lazard & Co., Limited nor for providing advice in relation to the Transaction and matters referred to in this Announcement. Neither Lazard & Co., Limited nor any of its affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Lazard & Co., Limited in connection with the Transaction, this Announcement, any statement contained herein or otherwise.
Zaoui & Co Ltd ("Zaoui & Co") is authorised and regulated in the United Kingdom by the Financial Conduct Authority. Zaoui & Co is acting exclusively as financial adviser for Elis and no one else in connection with the matters set out in this Announcement and will not regard any other person as its client in relation to the matters in this Announcement and will not be responsible to anyone other than Elis for providing the protections afforded to clients of Zaoui & Co, nor for providing advice in relation to any matter referred to herein.
Deutsche Bank AG is authorised under German Banking Law (competent authority: European Central Bank) and, in France, by the Autorité de Contrôle Prudentiel et de Résolution. It is subject to supervision by the European Central Bank and by BaFin, Germany's Federal Financial Supervisory Authority, and is subject to limited regulation in France by the AMF. Details about the extent of its authorisation and regulation by BaFin, the Autorité de Contrôle Prudentiel et de Résolution and the AMF are available on request. Deutsche Bank is acting as financial adviser and corporate broker to Elis and no one else in connection with the Transaction or the contents of this Announcement and will not be responsible to anyone other than Elis for providing the protections afforded to clients of Deutsche Bank or for providing advice in relation to the Transaction or any other matters referred to herein.
In accordance with, and to the extent permitted by, the City Code, normal UK market practice and Rule 14e-5 under the US Exchange Act, Deutsche Bank AG, London Branch and its affiliates may continue to act as exempt principal traders in Berendsen Shares on the London Stock Exchange and will engage in certain other purchasing activities consistent with their respective normal and usual practice and applicable law, including Rule 14e-5 under the US Exchange Act. To the extent required to be disclosed in accordance with applicable regulatory requirements, information about any such purchases will be disclosed to the Panel by no later than 12 noon on the next "business day", as such term is defined in the Code, and will be available from any Regulatory Information Service, including the regulatory news service on the London Stock Exchange website (www.londonstockexchange.com).
Credit Suisse International ("Credit Suisse"), which is authorised by the PRA and regulated by the FCA and the PRA in the United Kingdom, is acting as financial adviser exclusively for Berendsen and no one else in connection with the matters set out in this announcement and will not be responsible to any person other than Berendsen for providing the protections afforded to clients of Credit Suisse, nor for providing advice in relation to the content of this announcement or any matter referred to herein. Neither Credit Suisse nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Credit Suisse in connection with this announcement, any statement contained herein or otherwise.
J.P. Morgan Limited, which conducts its UK investment banking business as J.P. Morgan Cazenove ("J.P. Morgan Cazenove"), is authorised and regulated by the Financial Conduct Authority in the UK. J.P. Morgan Cazenove is acting exclusively as financial adviser to Berendsen and no one else in connection with the matters set out in this announcement and will not regard any other person as its client in relation to the matters set out in this announcement and will not be responsible to anyone other than Berendsen for providing the protections afforded to clients of J.P. Morgan Cazenove or its affiliates, or for providing advice in relation to the contents of this announcement or any other matter referred to herein.
HSBC Bank plc ("HSBC"), which is authorised by the Prudential Regulation Authority and regulated in the United Kingdom by the FCA and the Prudential Regulation Authority, is acting as financial adviser to Berendsen and for no one else in connection with the contents of this announcement and will not be responsible to anyone other than Berendsen for providing the protections afforded to its clients or for providing advice in relation to the contents of this announcement or any other matters referred to in this announcement.
In accordance with, and to the extent permitted by, the Code, normal UK market practice and Rule 14e-5 under the US Exchange Act, Credit Suisse, J.P. Morgan Limited and HSBC and their respective affiliates may continue to act as exempt principal traders in Berendsen Shares on the London Stock Exchange and will engage in certain other purchasing activities consistent with their respective normal and usual practice and applicable law, including Rule 14e-5 under the US Exchange Act. To the extent required to be disclosed in accordance with applicable regulatory requirements, information about any such purchases will be disclosed to the Panel by no later than 12 noon on the next "business day", as such term is defined in the Code, and will be available from any Regulatory Information Service, including the regulatory news service on the London Stock Exchange website (www.londonstockexchange.com).
This Announcement does not constitute the extension of an offer to acquire, purchase, subscribe for, sell or exchange (or the solicitation of an offer to acquire, purchase, subscribe for, sell or exchange), any securities in any jurisdiction, including the United States of America, Australia, Canada, Japan or any other jurisdiction where to do so would constitute a violation of the laws of such jurisdiction and any such offer (or solicitation) may not be extended in any such jurisdiction. Any securities to be offered have not been and will not be registered under the US Securities Act, or with any securities regulatory authority of any state of the United States and may not be offered or sold in the United States absent registration or an applicable exemption from registration thereunder. There may be no public offering of securities in the United States.
This document has been prepared in accordance with English law and the Code and information disclosed may not be the same as that which would have been prepared in accordance with the laws of jurisdictions outside England.
This Announcement contains certain statements which are, or may be deemed to be, "forward-looking statements" which are prospective in nature. The words "believe", "anticipate", "expect", "intend", "aim", "plan", "predict", "continue", "assume", "positioned", "may", "will", "should", "shall", "risk" and other similar expressions that are predictions of or indicate future events and future trends identify forward-looking statements. These forward-looking statements include all matters that are not current or historical facts. By their nature, forward-looking statements involve risks and uncertainties because such statements relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not indicative of future performance and Elis' or Berendsen's actual results of operations, financial condition and liquidity, and the development of the industry in which Elis or Berendsen operates, may differ materially from those made in or suggested by the forward-looking statements contained in this Announcement. The cautionary statements set out above should be considered in connection with any subsequent written or oral forward-looking statements that Elis, or persons acting on its behalf, may issue.
Certain figures included in this Announcement have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.
Under Rule 8.3(a) of the Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.
This Announcement will be available on Elis' website (www.corporate-elis.com) and Berendsen's website (www.berendsen.com) by no later than 12 noon (London time) on 13 June 2017, but will not be available to persons in the United States, Australia, Canada, Japan or any other jurisdiction where this would violate applicable law. For the avoidance of doubt, the content of such websites is not incorporated into and does not form part of this document.
You may request a hard copy of this Announcement by contacting Berendsen on +44 (0) 20 7259 6663. You may also request that all future documents, announcements and information to be sent to you in relation to the Transaction should be in hard copy form.
Copies of this Announcement and any other document relating to the Transaction or any offering of New Elis Shares may not be mailed, distributed, forwarded or otherwise transmitted or made available in, into or from the United States, Australia, Canada, Japan or any other jurisdiction where this would violate applicable law (including by custodians, nominees and trustees).
The Elis Directors accept responsibility for the information set out in this Announcement, except for that information for which the Berendsen Directors accept responsibility as set out below. To the best of the knowledge and belief of the Elis Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this Announcement for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information.
The Berendsen Directors accept responsibility for the information set out in this Announcement which relates to Berendsen, to the Berendsen Directors, or to their respective close relatives, related trusts and other connected persons and persons acting in concert with Berendsen. To the best of the knowledge and belief of the Berendsen Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this Announcement for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information.
The Transaction will comply with the Code and all applicable rules and regulations of the London Stock Exchange, the FCA, Euronext Paris and the AMF, will be governed by and construed in accordance with English law and will be subject to the jurisdiction of the courts of England and Wales. In addition, it will be subject to the following conditions and to the terms and conditions set out in the Scheme Document.
The Transaction will be conditional upon the Scheme becoming effective, subject to the Code, by no later than the Long Stop Date.
The Scheme will be conditional upon:
In addition, subject to the requirements of the Panel and the Code, the Transaction is subject to the following Conditions and, accordingly, the necessary actions to make the Scheme effective will not be taken (i) unless such Conditions have been satisfied and continue to be satisfied immediately prior to the commencement of the Scheme Court Hearing or, if capable of waiver, are waived by Elis immediately prior to the Scheme Court Hearing, or (ii) in the event that any Condition becomes incapable of fulfilment at any time:
(a) the passing at the Elis General Meeting of the Elis Shareholder Resolutions (as such resolutions are set out in the notice of the Elis General Meeting) by a two-thirds majority of the votes of Elis Shareholders present or represented at the Elis General Meeting;
(b) (i) Elis obtaining the AMF approval (visa) on the French Listing Prospectus and (ii) the publication of Euronext Paris's notice confirming the future admission to trading of the New Elis Shares on Euronext Paris, with such admission to become effective on or shortly after the date of issue of such notice;
(ii) to the extent that the European Commission refers (or is deemed to have referred) any part of the Transaction to the Merger Control Authority of one or more Member States of the European Union under Article 9 of the EU Merger Regulation (other than in the case of a reference to the CMA, which shall be addressed pursuant to Condition 2(e)), the relevant Merger Control Authority having approved the Transaction on terms reasonably satisfactory to Elis;
(e) to the extent that the European Commission refers any part of the Transaction to the CMA under Article 9 of the EU Merger Regulation, confirmation having been received on terms reasonably satisfactory to Elis that there will not be a reference by the CMA of the Transaction, any part of it or any matter arising from it to its chair for the constitution of a group under schedule 4 to the Enterprise and Regulatory Reform Act 2013;
(ii) within one month from receipt of the Bundeskartellamt Notification, the Bundeskartellamt not having informed Elis that it has opened an in-depth investigation of the Transaction (Hauptprüfverfahren) pursuant to Section 40(1) GWB; or
(iii) the Bundeskartellamt having issued a notice stating that it has declined jurisdiction to review the Transaction; or
securities in, or control or management of, Berendsen by any member of the Wider Elis Group;
and all applicable waiting and other time periods (including any extensions thereof) during which any such Third Party could decide to take, institute, implement or threaten any such action, proceeding, suit, investigation, enquiry or reference or take any other step under the laws of any jurisdiction in respect of the Transaction or the acquisition or proposed acquisition of any Berendsen Shares or otherwise intervene having expired, lapsed, or been terminated;
(k) no temporary restraining order, preliminary or permanent injunction, preliminary or permanent enjoinment, or other equivalent order threatened or issued and being in effect by a court or other Third Party which has the effect of making the Transaction, the Scheme or the acquisition or the proposed acquisition of any shares or other securities in, or control or management of, any member of the Wider Berendsen Group by Elis or any other member of the Wider Elis Group, or the implementation of any of the foregoing, void, voidable, illegal and/or unenforceable under the laws of any relevant jurisdiction or otherwise directly or indirectly preventing, prohibiting or restraining the consummation of the Transaction or Scheme or any matter arising from the acquisition or proposed acquisition of any shares or other securities in, or control or management of, any member of the Wider Berendsen Group by Elis or any other member of the Wider Elis Group;
(l) the UK Secretary of State for Business, Energy and Industrial Strategy or any Third Party not requiring any undertakings or assurances from Elis, any member of the Wider Elis Group or any member of the Wider Berendsen Group, except on terms reasonably satisfactory to Elis, or prohibiting the Transaction, the Scheme or the acquisition or proposed acquisition of any shares or other securities in, or control or management of, any member of the Wider Berendsen Group by Elis or any other member of the Wider Elis Group, or the implementation of any of the foregoing, or taking any other action to directly or indirectly prevent, prohibit, retain, restrict, delay or otherwise interfere with the implementation of any of the foregoing, in each case to an extent which is material in the context of the Wider Elis Group or Wider Berendsen Group taken as a whole or in the context of the Transaction;
under which any such asset or interest could be required to be disposed of or charged or could cease to be available to any member of the Wider Berendsen Group;
and no event having occurred which, under any provision of any arrangement, agreement, licence, permit, franchise, lease or other instrument to which any member of the Wider Berendsen Group is a party or by or to which any such member or any of its assets may be bound, entitled or be subject, would or might result in any events or circumstances as are referred to in paragraphs (m)(i) to (viii), in each case to an extent which is material in the context of the Wider Berendsen Group taken as a whole or in the context of the Transaction;
(ii) (except for (i) the final dividend of 22.50 pence per Berendsen Share in respect of the year ended 31 December 2016 that was paid on 5 May 2017 to Berendsen Shareholders in the register of members on 7 April 2017, and (ii) the Interim Dividend) recommended, declared, paid or made or proposed to recommend, declare, pay or make any dividend or other distribution (whether payable in cash or otherwise) or any bonus issue, in each case other than to Berendsen or one of its wholly owned subsidiaries;
(iii) (other than pursuant to the Transaction) implemented, effected, authorised, proposed or announced its intention to implement, effect, authorise or propose any joint venture, asset or profit sharing arrangement, partnership, merger (by statutory merger or otherwise), demerger, reconstruction, assignment, composition, amalgamation, scheme, commitment or acquisition or disposal of any assets or shares (or the equivalent thereof), or any right, title or interest in any assets or shares (or equivalent thereof), in any undertaking or undertakings, disposed of or transferred, mortgaged or created any security interest over any asset or any right, title or interest in any asset or authorised, proposed or announced any intention to do so, in each case to an extent which is material in the context of the Wider Berendsen Group taken as a whole or in the context of the Transaction;
Appendix 1, a "Relevant Pension Plan"); (b) the basis on which benefits accrue, pensions which are payable or the persons entitled to accrue or be paid benefits, under any Relevant Pension Plan; (c) the basis on which the liabilities of any Relevant Pension Plan are funded or valued; (d) the manner in which the assets of any Relevant Pension Plan are invested; (e) the basis or rate of employer contribution to a Relevant Pension Plan; or (II) entered into or proposed to enter into one or more bulk annuity contracts in relation to any Relevant Pension Plan; or (III) carried out any act: (a) which would or might lead to the commencement of the winding up of any Relevant Pension Plan; (b) which would or might create a material debt owed by an employer to any Relevant Pension Plan; (c) which would or might accelerate any obligation on any employer to fund or pay additional contributions to a Relevant Pension Plan; or (d) which would or might give rise directly or indirectly to a liability in respect of a Relevant Pension Plan arising out of the operation of sections 38 to 56 inclusive of the Pensions Act 2004 in relation to the scheme;
(xvii) been unable, or admitted in writing that it is unable, to pay its debts or commenced negotiations with one or more of its creditors with a view to rescheduling or restructuring any of its indebtedness, or having stopped or suspended (or threatened to stop or suspend) payment of its debts generally or ceased or threatened to cease carrying on all or a substantial part of its business or compromised or settled any claim;
(xviii) entered into any contract, commitment, agreement or arrangement or passed any resolution or made any offer (which remains open for acceptance) with respect to or announced an intention to, or to propose to, effect any of the transactions, matters or events referred to in this Condition; or
have had or be deemed to have had an interest, under any environmental legislation, common law, regulation, notice, circular, Authorisation, other legally binding requirement or order of any Third Party or to contribute to the cost thereof or associated therewith or indemnify any person in relation thereto, in each case to an extent which is material in the context of the Wider Berendsen Group taken as a whole or in the context of the Transaction;
an environmental audit or take any other equivalent steps which would in any such case be likely to result in any liability (whether actual or contingent) to improve, modify existing or install new plant, machinery or equipment or carry out changes in the processes currently carried out or make good, remediate, repair, re-instate or clean up any land or other asset currently or previously owned, occupied or made use of by any past or present member of the Wider Berendsen Group (or on its behalf) or by any person for which a member of the Wider Berendsen Group is or has been responsible, or in which any such member may have or previously have had or be deemed to have had an interest, in each case to an extent which is material in the context of the Wider Berendsen Group taken as a whole or in the context of the Transaction; or
(v) that circumstances exist whereby a person or class of persons would be likely to have any claim or claims in respect of any product or process of manufacture or materials used therein currently or previously manufactured, sold or carried out by any past or present member of the Wider Berendsen Group which claim or claims would be reasonably likely to affect any member of the Wider Berendsen Group to an extent which is material in the context of the Wider Berendsen Group taken as a whole or in the context of the Transaction; and
Corrupt Practices Act of 1977 or any other applicable anti-corruption legislation and regulation;
(s) since 31 December 2016 and save as Disclosed, no circumstance having arisen or event having occurred in relation to any intellectual property owned, used or licensed by the Wider Berendsen Group or to any third parties that has resulted or would reasonably be expected to result in:
in each case to an extent which is material in the context of the Wider Berendsen Group taken as a whole or in the context of the Transaction.
percentage, being more than 50 per cent. as Elis may decide), so far as applicable, as those which would apply to the Scheme.
(e) Fractions of New Elis Shares will not be issued pursuant to the Transaction. Berendsen Shareholders who otherwise would have received a fraction of a New Elis Share will instead receive an amount in cash rounded to the nearest 1p, based on the amount obtained by multiplying such fraction by the average of the high and low sales prices of Elis Shares on Euronext Paris on each of the five consecutive trading days ending on the trading day that is two trading days prior to the Effective Date, except that individual entitlements of less than 1p will not be paid but will be retained for the benefit of the Combined Group.
(f) Each New Elis Share will be issued credited as fully paid and will rank pari passu in all respects with Elis Shares in issue at the time it is issued pursuant to the Transaction, including the right to receive and retain dividends and other distributions declared, made or paid by reference to a record date falling on or after the Effective Date. Application will be made to Euronext Paris for the New Elis Shares to be listed on Euronext Paris.
In this Announcement, unless otherwise stated, or the context otherwise requires, the following sources and bases of calculation have been used:
(b) the maximum number of Berendsen options and awards which become exercisable or awards that vest on a change of control which must satisfied using newly issued Berendsen Shares and cannot be satisfied by Berendsen Shares currently held by the Berendsen EBT, amounting to 1,784,529 Berendsen Shares.
The information in this Appendix 3 has been compiled by Elis.
The following statements of estimated cost savings and synergies arising from the Transaction together comprise the "Elis Quantified Financial Benefits Statement".
"The Elis Board believes that the Combined Group will generate attractive synergies and create additional shareholder value.
The Elis Board expects the Combined Group to generate recurring run-rate pre-tax operating and capital expenditure synergies (together, "Cost Synergies") of at least €40 million per annum by the end of the third year following completion. This is comprised of €35 million per annum of operating expenditure EBITDA synergies, and €5 million per annum of capital expenditure synergies.
These synergies are expected to arise as a direct result of the Transaction and could not be achieved independently of the Transaction.
The constituent elements of quantified operating and capital expenditure synergies, which are expected to originate from the cost bases of both Elis and Berendsen, comprise:
Further benefit may be derived from productivity gains from sharing of best practices, however these have not been included in the quantified operational cost synergies.
o Renegotiation of supplier terms on the basis of consolidated order volumes;
o Fewer small batch orders, cutting down on related additional expenses;
The identified procurement savings consist of €5 million in capital expenditure synergies and €1 million in operating expenditure EBITDA synergies.
Elis expects to achieve the identified corporate overhead savings in the first full year following completion.
Central cost savings: Elis expects to generate €17 million per annum in central cost savings (corresponding to approximately 40 per cent. of the identified Cost Synergies) from the reduction of duplicate costs across central administration and support functions.
It is expected that the realisation of the quantified synergies will require estimated one-off cash costs of approximately €40 million, incurred materially in the first two years after completion. The phasing will be assessed further and refined as part of the detailed integration planning in due course.
Aside from the one-off costs referred to above, the Elis Board does not expect any material dis-synergies to arise as a direct result of the Transaction."
Further information on the bases of belief supporting the Elis Quantified Financial Benefits Statement, including the principal assumptions and sources of information, is set out below.
In preparing the Elis Quantified Financial Benefits Statement of potential synergies that are expected to be available from the Transaction, Elis has performed a detailed analysis based on publicly available sources of information. In circumstances where data has been limited for commercial or other reasons, Elis has made estimates and assumptions to aid the development of individual synergy initiatives.
The assessment and quantification of the potential synergies has been informed by Elis management's deep industry and customer expertise, as well as its track record of driving incremental shareholder value from past acquisitions and its recent experience in the ongoing integrations of Indusal and Lavebras.
The cost bases for Berendsen and Elis used as the basis for the Elis Quantified Financial Benefits Statement are those contained in Berendsen's 2016 Annual Report and Accounts (with additional reference to Berendsen's 2014 and 2015 Annual Report and Accounts to determine a normalised level of executive compensation) and Elis' 2016 Management Accounts, respectively.
In arriving at the estimate of synergies set out in this Announcement, the Elis Board made the following operational assumptions:
The majority of the forecast Cost Synergies are driven by physical consolidation that is within the influence of the Elis Board, whereas the delivery of the revenue synergies is more complex and to some extent outside the full control of the Elis Board.
The Elis Board has also assumed that Elis will own 100 per cent. of the ordinary share capital of Berendsen.
The Elis Board has, in addition, made the following assumptions, all of which are outside the influence of the Elis Board:
There will be no change in tax legislation or tax rates or other legislation or regulation in the countries in which Elis and Berendsen operate that could materially impact the ability to achieve any benefits.
As required by Rule 28.1(a) of the Code, Deloitte, as reporting accountants to Elis, and Lazard and Zaoui, as financial advisers to Elis, have provided the reports required under that Rule. Each of Deloitte, Lazard and Zaoui has given and has not withdrawn its consent to the publication of its report in the form and context in which it is included herein.
The Boards of Directors, Elis SA 5, Boulevard Louis Loucheur 92210 Saint-Cloud France
Lazard & Co., Limited 50 Stratton Street London W1J 8LL United Kingdom
Zaoui & Co., Ltd 11 Hill Street London W1J 5LF United Kingdom
12 June 2017
Dear Sirs
We report on the statement made by the directors of the Offeror (the "Directors") of synergy benefits set out in Part A of Appendix 3 to the announcement (the "Announcement") issued by the Offeror (the "Quantified Financial Benefits Statement" or the "Statement"). The Statement has been made in the context of the disclosures within Part A setting out, inter alia, the basis of the Directors' belief (identifying the principal assumptions and sources of information) supporting the Statement and their analysis, explanation and quantification of the constituent elements.
It is the responsibility of the Directors to prepare the Statement in accordance with Rule 28 of the City Code on Takeovers and Mergers (the "Takeover Code").
It is our responsibility to form our opinion, as required by Rule 28.1(a) of the Takeover Code, as to whether: the Statement has been properly compiled on the basis stated and to report that opinion to you.
This report is given solely for the purposes of complying with Rule 28.1(a)(i) of the Takeover Code and for no other purpose. Therefore, to the fullest extent permitted by law we do not assume any other responsibility to any person for any loss suffered by any such person as a result of, arising out of, or in connection with this report or our statement, required by and given solely for the purposes of complying with Rule 23.2 of the Takeover Code, consenting to its inclusion in the Announcement.
We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom.
Our work included considering whether the Statement has been accurately computed based upon the disclosed bases of belief (including the principal assumptions). Whilst the bases of belief (and the principal assumptions) upon which the Statement is based are solely the responsibility of the Directors, we considered whether anything came to our attention to indicate that any of the bases of belief (or principal assumptions) adopted by the Directors which, in our opinion, are necessary for a proper understanding of the Statement have not been disclosed or if any basis of belief (or principal assumption) made by the Directors appears to us to be unrealistic. Our work did not involve any independent examination of any of the financial or other information underlying the Statement.
We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with reasonable assurance that the Quantified Financial Benefits Statement has been properly compiled on the basis stated.
Since the Statement (and the principal assumptions on which it is based) relates to the future, the actual synergy benefits achieved are likely to be different from those anticipated in the Statement and the differences may be material. Accordingly, we can express no opinion as to the achievability of the synergy benefits identified by the Directors in the Statement.
Our work has not been carried out in accordance with auditing or other standards and practices generally accepted in jurisdictions outside the United Kingdom, including the United States of America, and accordingly should not be relied upon as if it had been carried out in accordance with those standards and practices. We have not consented to the inclusion of this report and our opinion in any registration statement filed with the SEC under the US Securities Act of 1933 (either directly or by incorporation by reference). Save for our responsibilities referred to above to comply with Rule 28.1 of the Takeover Code, we therefore accept no responsibility to, and deny any liability to, any person using this report and opinion in connection with any offering of securities inside the United States of America. We accept no responsibility to, and deny any liability to, any person who makes a claim on the basis they had acted in reliance on the protections afforded by United States of America law and regulation.
In our opinion, based on the foregoing, the Quantified Financial Benefits Statement has been properly compiled on the basis stated.
Yours faithfully
Deloitte LLP
Deloitte LLP is a limited liability partnership registered in England and Wales with registered number OC303675 and its registered office at 2 New Street Square, London, EC4A 3BZ, United Kingdom.
Deloitte LLP is the United Kingdom affiliate of Deloitte NWE LLP, a member firm of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ("DTTL"). DTTL and each of its member firms are legally separate and independent entities. DTTL and Deloitte NWE LLP do not provide services to clients. Please see www.deloitte.com/about to learn more about our global network of member firms.
© 2017 Deloitte LLP. All rights reserved.
The Boards of Directors Elis SA 5, Boulevard Louis Loucheur 92210 Saint-Cloud France
12 June 2017
Dear Sirs,
We refer to the Quantified Financial Benefits Statement, the bases of belief thereof and the notes thereto (together, the "Statement") as set out in Part A of Appendix 3 to this Announcement, for which the board of directors of Elis (the "Elis Board") are solely responsible under Rule 28 of the City Code on Takeovers and Mergers (the "Code").
We have discussed the Statement (including the assumptions and sources of information referred to therein), with the Elis Board and those officers and employees of Elis who developed the underlying plans. The Statement is subject to uncertainty as described in this Announcement and our work did not involve an independent examination of any of the financial or other information underlying the Statement.
We have relied upon the accuracy and completeness of all the financial and other information provided to us by, or on behalf of, Elis, or otherwise discussed with or reviewed by us, and we have assumed such accuracy and completeness for the purposes of providing this letter.
We do not express any opinion as to the achievability of the quantified financial benefits identified by the Elis Board.
We have also reviewed the work carried out by Deloitte LLP and have discussed with them the opinion set out in Part B of Appendix 3 to this Announcement addressed to yourselves and ourselves on this matter.
This letter is provided to you solely in connection with Rule 28.1(a)(ii) of the Code and for no other purpose. We accept no responsibility to Elis or its shareholders or any person other than the Elis Board in respect of the contents of this letter; no person other than the Elis Board can rely on the contents of this letter, and to the fullest extent permitted by law, we exclude all liability (whether in contract, tort or otherwise) to any other person, in respect of this letter, its contents, or the work undertaken in connection with this letter, or any of the results or conclusions that can be derived from this letter or any written or oral information provided in connection with this letter, and any such liability is expressly disclaimed except to the extent that such liability cannot be excluded by law.
On the basis of the foregoing, we consider that the Statement, for which you as the Elis Board are solely responsible, has been prepared with due care and consideration.
Yours faithfully,
Lazard & Co., Limited
Zaoui & Co Ltd
In the announcement titled "Berendsen plc Results for the Full Year ended 31 December 2016" dated 3 March 2017, Berendsen announced that "we expect adjusted operating profit¹ for 2017 to be approximately £150 million" and "Profitability is expected to be more weighted to the second half (approximately 40:60 split), than in previous years" (the "2017 Profit Forecast").
The 2017 Profit Forecast was published before Elis made an approach with regard to a possible offer for Berendsen and therefore the requirements of Rule 28.1(c) of the City Code apply to the 2017 Profit Forecast. In accordance with Rule 28.1(c) the Berendsen Directors confirm that the 2017 Profit Forecast remains valid and confirm that the 2017 Profit Forecast has been properly compiled on the basis of the assumptions stated below and that the basis of accounting used is consistent with Berendsen's accounting policies.
The 2017 Profit Forecast does not take into account any impact of Elis' possible offer.
The Berendsen Directors prepared the 2017 Profit Forecast on the basis of the following assumptions, any of which could turn out to be incorrect and therefore affect whether the 2017 Profit Forecast is achieved:
On the basis of the assumptions stated below, the Berendsen Directors expect adjusted operating profit¹ for the financial year to 31 December 2018 to be approximately £170 million (the "2018 Profit Forecast").
In accordance with Rule 28.2 of the City Code, the Panel has granted Berendsen a dispensation from the requirement to include reports from reporting accountants and Berendsen's financial advisers in relation to the 2018 Profit Forecast because it is for a financial period ending more than 15 months from the date of this announcement, which is the date on which it is first published.
The Berendsen Directors confirm that the 2018 Profit Forecast has been properly compiled on the basis of the assumptions stated below and that the basis of accounting used is consistent with Berendsen's accounting policies.
The 2018 Profit Forecast does not take into account any impact of Elis' possible offer.
The Berendsen Directors prepared the 2018 Profit Forecast on the basis of the following assumptions, any of which could turn out to be incorrect and therefore affect whether the 2018 Profit Forecast is achieved.
(e) there will be no business disruptions that materially affect Berendsen, its customers, operations, supply chain or labour supply, including natural disasters, acts of terrorism, cyber-attack and/or technological issues;
(f) foreign exchange rates will be an average of GBP:EUR sterling exchange rate of 1.16; and
Factors within the influence and control of the Berendsen Board
1: Adjusted operating profit is the basis that Berendsen uses for its adjusted earnings per share calculation. Adjusted operating profit is presented to eliminate the impact of exceptional items, amortisation of customer contracts and non-recurring tax items for a transparent comparison of the year on year performance of the group's operations.
| "2006 Act" | the Companies Act 2006 |
|---|---|
| "2017 Profit Forecast" | has the meaning given in Appendix 4 |
| "2018 Profit Forecast" | has the meaning given in Appendix 4 |
| "Act on Competition and Consumer Protection" |
the Act on Competition and Consumer Protection of 16 February 2007 of Poland (2017 Journal of Laws, item 229, consolidated text as amended) |
| "AMF" | the Autorité des marchés financiers |
| "Announcement" | this Announcement made pursuant to Rule 2.7 of the Code |
| "associated undertaking" | has the meaning given in paragraph 19 of Schedule 6 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 other than paragraph 19(1)(b) of Schedule 6 to those Regulations which shall be excluded for this purpose |
| "Austrian Cartel Act" | the Austrian Cartel Act 2005 |
| "Authorisations" | authorisations, orders, grants, recognitions, confirmations, consents, licences, clearances, certificates, permissions or approvals |
| "Berendsen" | Berendsen plc, a public limited company incorporated in England and Wales with its registered address at 1 Knightsbridge, London SW1X 7LX and company number 01480047 |
| "Berendsen Annual Report and Accounts" |
the annual report and accounts of Berendsen for the year ended 31 December 2016 |
| "Berendsen Articles" | the articles of association of Berendsen in force from |
| time to time | |
| "Berendsen Board" | the Berendsen Directors collectively |
time
"Berendsen EBT" Estera Trust (Jersey) Limited as the trustee of the Berendsen Employee Benefit Trust
"Berendsen General Meeting" the general meeting of Berendsen Shareholders (including any adjournment thereof) to be convened in connection with the Scheme
"Berendsen Group" Berendsen and its subsidiaries and subsidiary undertakings
"Berendsen Resolutions" the resolutions to be proposed at the Berendsen General Meeting in connection with the Scheme, including a resolution to amend the Berendsen Articles to incorporate new provisions and/or other amendments, in terms approved by Elis, that avoid any person (other than Elis and its nominee(s)) remaining as a holder of Berendsen Shares after the Effective Date, such new provisions and/or amendments to be set out in full in the notice of the Berendsen General Meeting in the Scheme Document
"Berendsen Share Schemes" the following employee share schemes of Berendsen:
"Berendsen Shareholders" the holders of Berendsen Shares from time to time
| "Berendsen Shares" | the ordinary shares of £0.30 each in the capital of Berendsen |
|---|---|
| "Bundeskartellamt" | the German Federal Cartel Office |
| "Business Day" | a day (not being a Saturday or Sunday) on which clearing banks are generally open in London and Paris for the transaction of normal banking business |
| "Closing Price" | the closing middle market price of a share as derived from (i) for Berendsen, the daily official list of the London Stock Exchange; and (ii) for Elis, Euronext Paris |
| "CMA" | the UK Competition and Markets Authority, being the body responsible for investigating mergers, market shares and conditions and the regulation of firms under UK competition law created by the Enterprise and Regulatory Reform Act 2013 |
| "Code" | the City Code on Takeovers and Mergers |
| "Combined Group" | the group of companies, comprising the Elis Group and the Berendsen Group, following the Transaction |
| "Condition" | a condition of the Transaction set out in Part A of Appendix 1 to this Announcement and to be set out in the Scheme Document |
| "Consideration" | the consideration to be delivered by Elis under the terms of the Transaction in the form of £5.40 in cash and 0.403 New Elis Shares for each Berendsen Share |
| "Court" | the High Court of Justice in England and Wales |
| "Court Meeting" | the meeting of the Scheme Shareholders (or the relevant class or classes thereof, if applicable) convened by order of the Court pursuant to Section 899 of the 2006 Act for the purpose of considering, and if thought fit, approving the Scheme (with or without amendment) and any adjournment thereof |
| "CPP Fund" | the funds of the Canada Pension Plan managed by CPPIB |
| "CPPIB" | Canada Pension Plan Investment Board, a federal crown corporation incorporated pursuant to the Canada |
| Pension Plan Investment Board Act 1997, whose registered address is One Queen Street East, Suite 2500, Toronto, Ontario M5C 2W5, Canada |
||
|---|---|---|
| "CPPIB Cash Placing" | the issue of 10,131,713 New Elis Shares to CPPIB at a price of €19.74 per Elis Share |
|
| "CPPIB Shares"` | the 10,131,713 new Elis Shares to be issued by Elis to CPPIB following the Elis Reserved Capital Increase |
|
| "CREST" | the | relevant system (as defined in the Uncertificated Securities Regulations 2001 (SI 2001/3755)) in respect of which Euroclear UK & Ireland Limited is the Operator (as defined in the Regulations) |
| "Deloitte LLP" | whose | Deloitte LLP, the United Kingdom affiliate of Deloitte NWE LLP, a member firm of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, member firms are legally separate and independent entities |
| "Deutsche Bank" | Deutsche Bank AG, Paris Branch (Succursale de Paris) of 23-25 avenue Franklin Delano Roosevelt, 75008 Paris, France |
|
| "Disclosed" | Information | |
| (a) | which has been disclosed by or on behalf of Berendsen to Elis between 8 June 2017 and 11 June 2017 (both dates inclusive), whether verbally or in writing; |
|
| (b) | which has been publicly announced to a Regulatory Information Service by Berendsen before the date of this Announcement; |
|
| (c) | which is set out in the Berendsen Annual Report and Accounts; or |
|
| (d) | which is set out in this Announcement | |
| "EBITDA" | amortisation | earnings before interest, taxation, depreciation and |
| "Effective Date" | the date upon which either: | |
| (a) | the Scheme becomes effective in accordance |
-73-
| (b) if Elis implements the Transaction by way of an Offer, the Offer becomes or is declared unconditional in all respects |
|
|---|---|
| "Elis" | Elis SA, a joint stock corporation (société anonyme), with its registered office at 5 Boulevard Louis Loucheur, 92210 Saint-Cloud, France, and registered with the Trade and Companies Register of Nanterre under number 499 668 440 |
| "Elis Board" | the Elis Directors collectively |
| "Elis Directors" | at any relevant time, the members of the supervisory board of Elis at that time |
| "Elis General Meeting" | a general meeting of Elis Shareholders to be convened to approve certain matters in connection with the Transaction and the Elis Reserved Capital Increase, notice of which will be sent to Elis Shareholders, including any adjournment thereof |
| "Elis Group" | Elis and its subsidiaries and subsidiary undertakings from time to time |
| "Elis Quantified Financial Benefits Statement" |
has the meaning given in Part A of Appendix 3 |
| "Elis Reserved Capital Increase" | the proposed reserved capital increase of Elis in an amount of EUR 200 million for the purpose of the issue by Elis of the CPPIB Shares to CPPIB |
| "Elis Shareholder Resolutions" | the resolutions to be proposed at the Elis General Meeting for the approval of the issue of the New Elis Shares in connection with the Transaction (but not, for the avoidance of doubt, the CPPIB Cash Placing), by a two-thirds majority of the votes cast on such resolution of Elis Shareholders present or represented at the Elis General Meeting |
| "Elis Shareholders" | the holders of Elis Shares from time to time |
| "Elis Shares" | shares of common stock in the capital of Elis having a par value of €10 each at the date of this Announcement, such par value to be decreased to €1 |
| each on 15 June 2017 as a result of the share capital decrease approved by Elis in general meeting on 19 May 2017, subject to the absence of any admissible creditors' objections |
||
|---|---|---|
| "Eurazeo" | Eurazeo SE, societas europaea, with its registered office at 1 rue Georges Berger 75017 Paris, France and registered with the Trade and Companies Register of Paris under number 692 030 992 |
|
| "EU Merger Regulation" | Council Regulation (EC) No. 139/2004 (as amended) | |
| "Euronext Paris" | Euronext Paris S.A. | |
| "European Commission Proceedings" | proceedings initiated by the European Commission under Article 6(1)(c) of the EU Merger Regulation in respect of the Transaction |
|
| "Excluded Shares" | any Berendsen Shares which are registered in the name of or beneficially owned by any member of the Elis Group or its nominee(s) and any Berendsen Shares which are held or become held in treasury (unless such Berendsen Shares cease to be so held) |
|
| "FCA" | the Financial Conduct Authority | |
| "FCA Clearance" | the FCA having been given, or being treated as having given, the approvals set out in Condition 2(c) |
|
| "Forms of Proxy" | the form of proxy in connection with each of the Court Meeting and the Berendsen General Meeting, which shall accompany the Scheme Document |
|
| "French Listing Prospectus" | the listing prospectus (note d'opération) to be filed by Elis with the AMF |
|
| "French Prospectus" | the prospectus prepared in connection with the issue of the New Elis Shares, comprised of: |
|
| (A) | the French Registration Document; | |
| (B) | the French Registration Document Update, if applicable; and |
|
| (C) | the French Listing Prospectus (including the summary of the French Prospectus set out |
| "French Registration Document" | the registration document (document de référence) registered by Elis with the AMF under no. R.17-0013 on 6 April 2017 |
|---|---|
| "French Registration Document Update" | any update to the French Registration Document (actualisation du document de référence) to be filed by Elis with the AMF, if applicable |
| "FSMA" | the Financial Services and Markets Act 2000 |
| "GWB" | the German Act Against Restrictions of Competition |
| "J.P. Morgan Cazenove" | J.P. Morgan Limited, which conducts its UK investment banking business as J.P. Morgan Cazenove |
| "Lazard" | Lazard & Co., Limited |
| "Legendre Holding 27" | Legendre Holding 27 SAS, a simplified joint stock corporation (société par actions simplifiée), with its registered office at 1 rue Georges Berger 75017 Paris, France and registered with the Trade and Companies Register of Paris under number 532 862 877 |
| "London Stock Exchange" | London Stock Exchange plc |
| "Long Stop Date" | 31 December 2017, or such later date (if any) as may be agreed between Berendsen and Elis which the Panel and, if required, the Court may permit; |
| "Merger Control Authority" | any national, supra-national or regional, government or governmental, quasi-governmental, statutory, regulatory or investigative body or court, in any jurisdiction, responsible for the review and/or approval of mergers, acquisitions, concentrations, joint ventures, or any other similar matter |
| "Mix and Match Facility" | a facility under which Berendsen Shareholders would be permitted to elect, subject to availability and off setting elections, to vary the proportion of New Elis Shares and cash consideration they will receive pursuant to the Scheme |
| "New Elis Shares" | the new Elis Shares proposed to be issued to Berendsen Shareholders pursuant to the Scheme |
| "Offer" | if the Transaction is implemented by way of a takeover offer as defined in Chapter 3 of Part 28 of the 2006 Act, the offer made by Elis to acquire the entire issued and to be issued share capital of Berendsen on the terms and subject to the conditions set out in the related offer document (and, where the context so requires, any subsequent revision, variation, extension or renewal of such offer, including any election or alternative available in connection with it) |
|---|---|
| "Offer Period" | the offer period (as defined by the Code) relating to Berendsen, which commenced on 18 May 2017 |
| "Official List" | the official list maintained by the UK Listing Authority |
| "Opening Position Disclosure" | an announcement containing details of interests or short positions in, or rights to subscribe for, any relevant securities of a party to the Transaction if the person concerned has such a position |
| "Overseas Shareholders" | Berendsen Shareholders who are resident in, ordinarily resident in, or citizens of, jurisdictions outside the United Kingdom |
| "Panel" | the Panel on Takeovers and Mergers |
| "Predica" | Predica Prévoyance Dialogue du Crédit Agricole, with its registered office at 50-56 rue de la Procession, 75015 Paris, France and registered with the Trade and Companies Register of Paris under number 334 028 123 |
| "Regulatory Information Service" | any service authorised from time to time by the FCA for the purpose of disseminating regulatory announcements |
| "Scheme" | the proposed scheme of arrangement under Part 26 of the 2006 Act between Berendsen and the Scheme Shareholders to implement the Transaction |
| "Scheme Court Hearing" | the hearing of the Court to sanction the Scheme under section 899 of the 2006 Act |
| "Scheme Court Order" | the order of the Court sanctioning the Scheme under Part 26 of the 2006 Act |
| "Scheme Document" | the | document to be despatched to Berendsen Shareholders containing and setting out, amongst other matters, the full terms of the Scheme and the explanatory statement required by section 897 of the 2006 Act, and containing the notices convening the Court Meeting and the Berendsen General Meeting |
|---|---|---|
| "Scheme Record Time" | the time and date specified as such in the Scheme Document (as may be amended as set out in the Scheme Document) |
|
| "Scheme Shareholder" | a holder of Scheme Shares | |
| "Scheme Shares" | (a) | the Berendsen Shares in issue at the date of the Scheme Document; and |
| (b) | any Berendsen Shares issued after the date of the Scheme Document and before the Voting Record Time; and |
|
| (c) | any Berendsen Shares issued at or after the Voting Record Time and prior to the Scheme Record Time in respect of which the original or any subsequent holder is bound by the Scheme, or shall by such time have agreed in writing to be bound by the Scheme, |
|
| but in each case other than any Excluded Shares | ||
| "SEC" | the US | Securities and Exchange Commission |
| "subsidiary" | has the meaning given in section 1159 of the 2006 Act | |
| "subsidiary undertaking" | has the meaning given in section 1162 of the 2006 Act | |
| "Third Party" | has the meaning given in Condition 2(i) | |
| "Transaction" | the proposed acquisition by Elis of the entire issued and to be issued share capital of Berendsen, pursuant to the Scheme as described in this Announcement (or pursuant to the Offer under certain circumstances described in this Announcement) |
|
| "UK" or "United Kingdom" |
Ireland | the United Kingdom of Great Britain and Northern |
| "UK Listing Authority" | the FCA acting in its capacity as the authority for listing in the UK |
|---|---|
| "US Exchange Act" | the US Securities Exchange Act of 1934, as amended |
| "US Securities Act" | the US Securities Act of 1933, as amended |
| "Voting Record Time" | the time and date specified as such in the Scheme Document by reference to which entitlement to vote at the Court Meeting will be determined, which is expected to be 6:00 p.m. on the day which is two days before the Court Meeting or, if the Court Meeting is adjourned, 6:00 p.m. on the day which is two days before the date of such adjourned Court Meeting |
| "Wider Berendsen Group" | Berendsen and its subsidiaries, subsidiary undertakings and associated undertakings and any other body corporate, partnership, joint venture or person in which Berendsen and all such undertakings (aggregating their interests) have an interest of more than 20 per cent. of the voting or equity capital or the equivalent |
| "Wider Elis Group" | Elis and its subsidiaries, subsidiary undertakings and associated undertakings and any other body corporate, partnership, joint venture or person in which Elis and all such undertakings (aggregating their interests) have an interest of more than 20 per cent. of the voting or equity capital or the equivalent |
"Zaoui" Zaoui & Co Ltd
A reference to "includes" shall mean "includes without limitation", and references to "including" and any other similar term shall be construed accordingly.
All times referred to are London time unless otherwise stated.
All references to "€", "EUR" and "Euro" are to the lawful currency of the European Union.
All references to "GBP", "pence", "pounds sterling", "sterling" or "£" are to the lawful currency of the United Kingdom.
All references to statutory provision or law or to any order or regulation shall be construed as a reference to that provision, law, order or regulation as extended, modified, replaced or re-enacted from time to time and all statutory instruments, regulations and orders from time to time made thereunder or deriving validity therefrom.
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