Recommended acquisition of Berendsen plc by Elis SA
(Thomson Reuters ONE) -
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
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
FOR IMMEDIATE RELEASE
12 June 2017
RECOMMENDED ACQUISITION
OF
BERENDSEN PLC
BY
ELIS SA
TO CREATE A PAN-EUROPEAN TEXTILE, HYGIENE AND FACILITY SERVICES LEADER
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.
Summary
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
£12.50[1] (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 basis[2].
* 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.
* 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,
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.
* 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:
* 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
* a premium of approximately 50 per cent. to Berendsen's six month volume
weighted average share price to 17 May 2017 of £8.29.
* The Transaction values Berendsen as at 9 June 2017 at an implied Enterprise
Value / 2016 Adjusted EBITDA multiple of 7.6x and an implied Enterprise
Value / 2016 Adjusted Operating Profit multiple of 16.5x.[3]
* 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
?19.74[4] per Elis Share (the "CPPIB Cash Placing"). The total proceeds of
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.
* It is intended that the Transaction will be implemented by means of Court-
sanctioned scheme of arrangement of Berendsen under Part 26 of the 2006 Act.
However, Elis reserves the right to implement the Transaction by way of an
Offer, subject to the Panel's consent.
* 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.[5]
* The Elis Directors intend unanimously to recommend that Elis Shareholders
vote in favour of the Elis Shareholder Resolutions at the Elis General
Meeting, as the chief executive officer and chief financial officer of Elis
have irrevocably undertaken to do 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.
* Elis has received irrevocable undertakings from certain Elis Shareholders to
vote (or procure the voting) in favour of the Elis Shareholder Resolutions
in respect of, in aggregate, 44,395,942 Elis Shares representing in
aggregate approximately 39.8 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. 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 such undertakings.
* Further details of the irrevocable undertakings received by Elis and
Berendsen (including details of the circumstances in which the irrevocable
undertakings will cease to be binding) are set out in paragraphs 15, 16 and
17 of this Announcement.
* Elis believes the combination of Berendsen and Elis offers a compelling
opportunity to create a pan-European textile, hygiene and facility services
leader, combining Berendsen's competitive position in Northern Europe with
Elis' strengths in the rest of Europe and a number of high-growth emerging
markets. Elis also notes that:
* together, the Combined Group would have revenues in excess of ?3
billion[6] and EBITDA of c.?960 million[7], with over 440 sites and
operations in 28 countries;
* 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; and
* in Germany, the Transaction would result in a stronger, more balanced
footprint with combined revenues of approximately ?310 million[8], 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 Shareholders and Elis Shareholders from a
strategic and financial perspective by continuing to pursue the four pillars
of Elis' strategic plan: (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.
* Elis expects the Combined Group to generate recurring pre-tax operating and
capital expenditure synergies of at least ?40 million per annum by the end
of the third year following completion of the Transaction. This is comprised
of ?35 million per annum of operating expenditure EBITDA synergies and ?5
million per annum of capital expenditure synergies.
* 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.[9]
* Elis intends to retain a strong and robust balance sheet with a target
leverage of ~3x (consistent with its current level) 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 3.1x.[10]
* 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.
* Commenting on the Transaction, Xavier Martiré, CEO of Elis, said:
"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 share[11] (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, representing 75 per
cent. or more in nominal value of the Scheme Shares held by those Scheme
Shareholders.
* 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.
* The Transaction will be on the terms and subject to the Conditions set out
in Appendix 1 to this Announcement. 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 Scheme is expected to become effective in the third or fourth quarter of
2017, subject to satisfaction or (where permissible) waiver of the
Conditions and compliance with certain further terms set out in Appendix 1
to this Announcement.
* It is intended that the French Prospectus will be published at or around the
same time as the Scheme Document is posted to Berendsen 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.
Investor and Analyst Conference Call Details
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
Enquiries:
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 / Tel:
+44 (0) 20 7187 2000
Vasco Litchfield / Eugene Schreider
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
Further information
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.corporate-elis.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).
Additional restrictions regarding the United States and other Overseas
Jurisdictions
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.
Cautionary note regarding forward-looking statements
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.
Rounding
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.
Disclosure requirements of the Code
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.
Publication on website and availability of hard copies
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).
Responsibility
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
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
FOR IMMEDIATE RELEASE
12 June 2017
RECOMMENDED ACQUISITION
OF
BERENDSEN PLC
BY
ELIS SA
TO CREATE A PAN-EUROPEAN TEXTILE, HYGIENE AND FACILITY SERVICES LEADER
1. Introduction
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.
2. 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.
The terms of the Transaction as set out above valued each Berendsen Share at
£12.50[12] (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 basis[13].
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:
* 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
* a premium of approximately 50 per cent. to Berendsen's six month volume
weighted average share price to 17 May 2017 of £8.29.
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 20.1x[14]. In addition, the
Transaction values Berendsen as at 9 June 2017 at an implied Enterprise Value /
2016 Adjusted Operating Profit multiple of 16.5x.
3. Background to, and reasons for, the Transaction
A Compelling Opportunity: Transaction Would Create a Pan-European Leader In
Textile, Hygiene and Facility Services
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 billion[15] and
EBITDA of c.?960 million[16], 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 million[17],
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.
Significant Synergy Opportunity for Both Berendsen Shareholders and Elis
Shareholders
The Elis Board believes that the Combined Group would generate attractive
synergies and create additional shareholder value.
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:
* replicating Elis' track record of introducing new service offerings to
existing clients (notably pest control and beverages), across Berendsen's
clients to leverage existing distribution channels;
* providing an attractive, integrated offering to customers who organise
procurement at a pan-European level;
* developing and maintaining Berendsen's relationships with a broad range of
customers in Berendsen's territories; and
* combining Berendsen and Elis' planned and ongoing development initiatives,
such as in RFID tags and connected appliances.
4. Impact of the Transaction on the balance sheet of the Combined Group
Reserve capital increase from CPPIB
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
?19.74[18] per Elis Share (the "CPPIB Cash Placing"). The total proceeds of 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.
Robust balance sheet for the Combined Group
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 3.1x[19].
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).
Double digit earnings accretion
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]
5. Background to and reasons for the recommendation
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 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.
6. Recommendations
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.
7. Information relating to Berendsen
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.
8. Information relating to Elis
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 billion[22] and consolidated EBITDA of
?530 million[23] in 2016. Elis serves more than 240,000 customers of all sizes
in the Hospitality, Healthcare, 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:
* consolidating its positions through organic growth and acquisitions;
* developing its activities in Latin America;
* continuing to improve its operational excellence; and
* introducing new products and services at limited marginal cost.
9. Management and employees
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.
10. Berendsen current trading
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 within our business lines. Our
outlook for 2017 is unchanged and we remain confident in the medium term growth
prospects for the Berendsen Group."
11. Elis current trading
An extract from Elis' Q1 2017 press release dated 27 April 2017 is set out
below:
"France
Q1 revenue in France was up +1.3 per cent. (+0.7 per cent. on an organic basis).
- Revenues for the Trade & Services segment increased by 1.5 per cent. on an
organic basis, in an economic environment that remains uncertain.
- Organic revenue growth for the Hospitality segment was 2.8 per cent.. Elis
noted an improvement in activity in the Parisian region, despite the positive
calendar effect seen in 2016 (Easter week in March and the impact of an
additional day in February as 2016 was a leap year) which made the comparable
base more challenging.
- Revenues for the Industry segment were down 2.6 per cent. on an organic
basis due to the loss of some contracts in 2016.
- Revenues for the Healthcare segment grew by 1.5 per cent., as the rollout
of large contracts for both shortstay and long-stay came to an end in 2016.
Europe (excluding France)
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.
Latin America
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."
12. Mix and Match Facility and dealing arrangements
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 wh
Unternehmensinformation / Kurzprofil:
Datum: 12.06.2017 - 08:00 Uhr
Sprache: Deutsch
News-ID 547339
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contact information:
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