Heineken and Carlsberg (the "Consortium") note the public announcement made by S&N today in response to the Consortium's approach to the board of S&N.
The Consortium confirms that earlier today it submitted to the Chairman of S&N a written proposal and requested a meeting to further discuss a possible offer. The letter referred to the exclusive agreement between Carlsberg and Heineken as well as setting out the terms upon which it would be prepared to proceed with a cash offer at a price of 720 pence per share for the entire issued and to be issued ordinary share capital of S&N (the "Proposal").
The price of 720 pence per share set out in the Proposal represents a compelling proposition for S&N shareholders:
- a multiple of 13.2x S&N's EV/EBITDA for the year ended 31 December 2006;
- a premium of 36% to the share price of 531 pence on 28 March 2007 (being the date immediately before speculation first arose around a possible offer for S&N); and
- a value which is significantly in excess of the standalone independent value of S&N.
Under the Proposal, the making of any offer would be subject to certain pre-conditions, all of which are waivable at the discretion of the Consortium, and all of which the Consortium believes to be customary. These pre-conditions include satisfactory completion of limited confirmatory due diligence, recommendation of the S&N board and assurance from the trustees of S&N's UK pension schemes regarding the level of contributions that Heineken would be expected to make going forwards.
It has always been the strong preference of Carlsberg and Heineken to approach the board of S&N in private to explain the Proposal in detail in order to secure due diligence access and negotiate a transaction on a recommended basis. Due to the increase in S&N's share price on Wednesday 17 October, the Consortium was obliged under the rules of the City Code on Takeovers and Mergers (the "Code") to publicly confirm its interest in pursuing an offer for S&N. Nevertheless, the Consortium wishes to confirm its desire to pursue a transaction on a recommended basis.
The board of S&N has rejected the Proposal, has not granted the Consortium its request for limited due diligence and refused to enter into discussions. The Consortium strongly believes that its Proposal is strategically compelling and that a recommended transaction is in the best interests of S&N's shareholders.
Structure and financing
The Proposal contemplates the formation of a newly incorporated company ("BidCo") to act as the offeror. BidCo will be jointly managed by Carlsberg and Heineken as a 50/50 venture throughout the offer period with the economic contributions by Carlsberg and Heineken being approximately 54% and 46% respectively.
The Consortium intends that, following closing of any offer, 50% of BBH, the French and Greek operations as well as the participation in the Chinese business will be transferred to Carlsberg. Heineken would hold the remaining businesses, principally the UK & Irish, Portuguese, Finnish, Belgian and US operations as well as the participation in the Indian business.
The Consortium has undertaken a detailed analysis of potential anti-trust issues in all jurisdictions where S&N operates. Whilst the Consortium will co-operate fully with all necessary regulatory processes, based on public information the Consortium is confident that the proposed transaction structure will avoid any substantive issues.
Carlsberg and Heineken have secured separate committed financing arrangements for the provision to BidCo of the necessary financing to effect the offer.
Carlsberg has secured committed new debt facilities underwritten by Lehman Commercial Paper Inc. - UK Branch, BNP Paribas, Danske Bank A/S and Nordea Bank AB (publ) to fund its contribution to BidCo. Approximately DKK31 billion of the new debt facilities comprise an equity bridge loan to a rights issue. The funding has been structured to ensure Carlsberg's debt facilities remain investment grade.
Heineken's financing will be provided through a committed new facility, which is being provided by Credit Suisse, as well as existing loan facilities.
Other
This announcement does not constitute an announcement of a firm intention to make an offer under Rule 2.5 of the Code. There can be no certainty that any offer will be made even if the pre-conditions referred to above are satisfied or waived.
Press enquiries
Véronique Schyns
Tel: +31 (0)20 52 39 355
veronique.schyns@heineken.com
