REG - Betfair Group PLC Paddy Power plc - Rule 2.7 Announcement <Origin Href="QuoteRef">BETF.L</Origin> <Origin Href="QuoteRef">PLSA.I</Origin> - Part 2
08/09/2015 07:02
- Part 2: For the preceding part double click ID:nRSH3714Ya
for the purposes of Rule 3 of the Code.
Accordingly, the Betfair Directors intend unanimously to recommend that
Betfair Shareholders vote in favour of the Scheme at the Court Meeting and the
Betfair Resolutions relating to the Merger to be proposed at the Betfair
General Meeting, as the Betfair Directors who hold or are beneficially
entitled to Betfair Shares have irrevocably undertaken to do in respect of
their own beneficial holdings of 256,221 Betfair Shares representing, in
aggregate, approximately 0.276 per cent. of Betfair's ordinary share capital
in issue on 7 September 2015 (being the latest practicable date prior to this
Announcement).
Given the size of Betfair relative to the current size of Paddy Power, the
Merger will be put to the vote of Paddy Power Shareholders as a class 1
transaction for Paddy Power for the purposes of the Listing Rules. The Paddy
Power Directors consider the Merger to be in the best interests of Paddy Power
and the Paddy Power Shareholders as a whole and intend unanimously to
recommend that Paddy Power Shareholders vote in favour of the Paddy Power
Resolutions to be proposed at the Paddy Power General Meeting to approve the
Merger and related matters, as the Paddy Power Directors who hold or are
beneficially entitled to Paddy Power Shares have irrevocably undertaken to do
in respect of their own beneficial holdings of 404,442 Paddy Power Shares
representing, in aggregate, approximately 0.918 per cent. of Paddy Power's
ordinary share capital in issue on 7 September 2015 (being the latest
practicable date prior to this Announcement).
The Paddy Power Directors have received financial advice from Morgan Stanley
and IBI Corporate Finance in relation to the Merger. In providing its advice
to the Paddy Power Directors, Morgan Stanley and IBI Corporate Finance have
relied upon the Paddy Power Directors' commercial assessments of the Merger.
5. Irrevocable undertakings
In aggregate, Paddy Power and Betfair have received irrevocable undertakings
from:
· those of the Betfair Directors who hold or are beneficially
entitled to (or may, upon the exercise or vesting of options and/or awards,
hold or become beneficially entitled to) Betfair Shares to vote in favour of
the Scheme at the Court Meeting and the Betfair Resolutions to be proposed at
the Betfair General Meeting, in respect of:
· an aggregate of 256,221 Betfair Shares, representing, in
aggregate, approximately 0.276 per cent. of Betfair's ordinary share capital
in issue on 7 September 2015 (being the latest practicable date prior to this
Announcement); and
· an aggregate of 1,701,895 Betfair Shares which may be issued upon
the exercise or vesting of options and/or awards, representing, in aggregate,
approximately 1.759 per cent. of Betfair's fully diluted ordinary share
capital in issue on 7 September 2015 (being the latest practicable date prior
to this Announcement); and
· those of the Paddy Power Directors who hold or are beneficially
entitled to (or may, upon the exercise or vesting of options and/or awards,
hold or become beneficially entitled to) Paddy Power Shares to vote in favour
of the Paddy Power Resolutions to be proposed at the Paddy Power General
Meeting to approve the Merger and related matters, in respect of:
· an aggregate of 404,442 Paddy Power Shares, representing, in
aggregate, approximately 0.918 per cent. of Paddy Power's ordinary share
capital in issue on 7 September 2015 (being the latest practicable date prior
to this Announcement); and
· an aggregate of 126,062 Paddy Power Shares which may be issued
upon the exercise or vesting of options and/or awards, representing, in
aggregate, approximately 0.283 per cent. of Paddy Power's fully diluted share
capital in issue on 7 September 2015 (being the latest practicable date prior
to this Announcement).
Further details of the irrevocable undertakings in relation to the Merger are
set out in Appendix III to this Announcement.
6. Change of name
It is intended that a resolution to change the name of Paddy Power to "Paddy
Power Betfair plc", to take effect on Completion, will be put to Paddy Power
Shareholders at the Paddy Power General Meeting.
7. Board of Paddy Power Betfair
The Paddy Power Betfair Board will be drawn from the current Boards of Paddy
Power and Betfair as follows:
Gary McGann
Chairman
Breon Corcoran
Chief Executive Officer
Andy McCue
Chief Operating Officer
Alex Gersh
Chief Financial Officer
In addition, the Board of Paddy Power Betfair will include further
non-executives from the Boards of Paddy Power and Betfair nominated to ensure
equal representation between non-executives of Paddy Power and Betfair. Any
executive or non-executive directors from Paddy Power not appointed to the
Paddy Power Betfair Board will step down from the Paddy Power Board upon the
Scheme becoming Effective. Each of the Paddy Power Directors stepping down
from the Paddy Power Board is fully supportive of the rationale for the Merger
and of its terms and conditions.
Any executive or non-executive directors from Betfair not appointed to the
Paddy Power Betfair Board will step down from the Betfair Board upon
Completion. Each of the Betfair Directors who will not join the Board of Paddy
Power Betfair is fully supportive of the rationale for the Merger and of its
terms and conditions.
8. Listing and indexation
In accordance with the current listings of Paddy Power and Betfair, it is
expected that Paddy Power Betfair will be listed on the premium listing
segment of the Official List of the FCA and admitted to trading on the London
Stock Exchange's main market for listed securities.
From Completion, it is also expected that Paddy Power Betfair will be
reclassified from its current primary listing on the Irish Stock Exchange to
the secondary listing segment of the Irish Stock Exchange's Main Securities
Market as an overseas company. It is intended that the reclassification to a
secondary listing as an overseas company would become effective on
Completion.
Based on initial discussions, FTSE have indicated to the Boards of Paddy Power
and Betfair that, reflecting the proposed listings of Paddy Power Betfair,
they would anticipate allocating a UK nationality classification to Paddy
Power Betfair for the purposes of ongoing inclusion in the FTSE UK Index
Series and the FTSE Global Index Series following Completion. As such, it is
anticipated that Paddy Power Betfair would be eligible for inclusion in the
FTSE All-Share and the FTSE 250 or FTSE 100 as appropriate.
9. Dividends and dividend policy
The Boards of Paddy Power and Betfair have agreed to retain their current
dividend policies for the period prior to Completion.
Following Completion and subject to the approval of the Paddy Power Betfair
Board, Paddy Power Betfair intends to adopt a progressive dividend policy
consistent with Paddy Power Betfair's enhanced growth strategy which balances
returns to shareholders with the need to retain sufficient funds to drive
growth. In setting its initial dividend, it is expected that the Board of
Paddy Power Betfair will target a payout ratio of approximately 50 per cent.
of the Combined Group's profit after tax.
The New Paddy Power Betfair Shares will carry the right to all dividends and
other distributions declared, made or paid on or after Completion. For the
avoidance of doubt, the New Paddy Power Betfair Shares will not carry
entitlement to the special dividend referred to in paragraph 2 above.
10. Information relating to Paddy Power
Paddy Power is an international multichannel betting and gaming group. Paddy
Power operates primarily in the United Kingdom, Ireland, Australia, and Italy.
Paddy Power has three business segments; online, retail and telephone
contributing 63 per cent., 34 per cent. and 3 per cent., respectively, by 2014
annual revenues. Paddy Power offers fixed odds sports betting, online games
and casino, B2B services, as well as peer to peer games, including online
bingo and poker. Paddy Power was founded in 1988 and is headquartered in
Dublin, Ireland. Paddy Power employs over 5,000 people globally.
For the 52 weeks ended 31 December 2014, Paddy Power's revenue was E881.6
million (2013: E745.2 million) and it made a profit before tax of E166.6
million (2013: E141.0 million). For the six months ended 30 June 2015 Paddy
Power's revenue was E527.8 million (2014: E396.5 million) and it made a profit
before tax of E80.5 million (2014: E61.6 million).
Paddy Power Shares are traded on both the Irish Stock Exchange and the London
Stock Exchange's main market for listed securities.
Current trading
On 26 August 2015, Paddy Power announced its interim results for the six
months ended 30 June 2015. Paddy Power noted "Paddy Power has delivered a very
strong performance in the first half with net revenue up 25 per cent. in
constant currency and operating profit up 33 per cent. Underlying operating
profit was up 68 per cent. in constant currency excluding the impact of new
taxes and product fees. While this performance was broadly based across all
our online and retail divisions, Australia has been the standout with reported
operating profit up 78 per cent. We have made substantial progress
implementing the strategy we set out in March, with further payback to come
from new mobile product releases, refreshed marketing campaigns and efficiency
gains. We now expect full year 2015 reported operating profit to be a mid to
high single digit percentage above 2014 and the consensus market forecast".
Current trading for Paddy Power continues in line with statements made in its
announcement on 26 August 2015.
Paddy Power Profit Forecast
Included in Paddy Power's interim results announcement released on 26 August
2015 for the six months ended 30 June 2015 was a statement which for the
purposes of Rule 28 of the Code constitutes a profit forecast for the
financial year ending 31 December 2015.
The Paddy Power Profit Forecast, the assumptions on which the Paddy Power
Profit Forecast is based and the reports from Paddy Power's reporting
accountants, KPMG, and its financial adviser, Morgan Stanley, as required by
Rule 28.1 of the Code are set out in Appendix V to this Announcement. Each of
KPMG and Morgan Stanley has given and not withdrawn its consent to the
publication of its report in this Announcement in the form and context in
which it is included.
11. Information relating to Betfair
Betfair is one of the world's largest international online sports betting
providers, founded in 1999 by Andrew Black and Edward Wray. In 2000, Betfair
pioneered the betting exchange concept allowing customers to bet at odds set
by themselves or by other customers. The Exchange processes more than seven
million transactions every day. In 2013, Betfair launched a fixed odds
Sportsbook to offer greater choice to the recreational betting market. Betfair
has more than 1.7 million active customers. Betfair holds gambling licences in
Ireland, the UK, Gibraltar, Malta, Spain, Italy, the United States, Bulgaria,
Denmark, Romania and Germany and has agreed over 50 Memoranda of Understanding
with sports governing bodies. Betfair is headquartered in London, United
Kingdom and employs over 2,000 people across 13 offices worldwide.
For the 52 weeks ended 30 April 2015, Betfair's revenue was £476.5 million
(2014: £393.6 million) and it made a profit before tax of £101.2 million
(2014: £61.1 million). For the three months ended 31 July 2015 Betfair's
revenue was £135.4 million (2014: £117.3 million).
Betfair Shares are traded on the London Stock Exchange and Betfair is a member
of the FTSE 250 index.
Current trading
On 26 August 2015, Betfair announced its quarterly results for the three
months ended 31 July 2015. Betfair noted "While profitability in the coming
quarters will be adversely affected by the loss of revenues from Portugal,
phasing of marketing spend and increased product investment, Betfair continues
to operate with a high level of operational gearing and our top-line momentum
means we are well placed to continue to deliver profitable growth".
Current trading for Betfair continues in line with statements made in its
announcement on 26 August 2015.
12. Management, employees and head office location
Details of the proposed Board of Paddy Power Betfair are set out in paragraph
7 above.
Betfair and Paddy Power recognise the skills and experience of their
respective management and employees and expect the management teams of both
Paddy Power and Betfair to play a leading role in the combined business in the
future and that employees will benefit from the greater opportunities for the
business following Completion.
In order to achieve the full potential benefits of the Merger and in the
long-term interests of Paddy Power Betfair, a business, operational and
administrative review will be undertaken following Completion. The initial
synergies work carried out has highlighted the potential to generate savings
for the Combined Group in areas where there may be duplication across general
corporate overheads and facilities, and by rationalising certain operational
and support functions. The Paddy Power Directors and the Betfair Directors
anticipate that this may involve some headcount reduction.
As at the date of this Announcement, no decisions have been made by either
Paddy Power or Betfair in relation to specific actions that may be taken as
part of this business, operational and administrative review. Prior to any
decisions being made, there will need to be detailed discussions held between
Paddy Power, Betfair and appropriate stakeholders.
The Boards of Paddy Power and Betfair have each confirmed that the existing
contractual and employment rights, including pension rights, of all Paddy
Power and Betfair employees will be fully safeguarded on Completion.
It is expected that the Combined Group will be headquartered in Dublin and
that the Combined Group will maintain a significant presence in both Ireland
and the United Kingdom.
13. Share Schemes
Participants in the Betfair Share Schemes will be contacted separately
regarding the effect of the Merger on their outstanding awards and options
under the Betfair Share Schemes and will be provided with further details
concerning the proposals which will be made to them in due course. Paddy Power
and Betfair have agreed that the participants in the Paddy Power Share Schemes
will be treated equitably with the participants in the Betfair Share Schemes
in determining whether any adjustment to their entitlements is necessary to
reflect the impact of the Merger on those schemes.
Betfair LTIP
Paddy Power and Betfair have agreed that outstanding awards granted under the
Betfair Long Term Incentive Plan ("Betfair LTIP Awards") in 2013/14, 2014/15
and 2015/16 will not vest on Completion but will be replaced by awards over an
equivalent number of Paddy Power Betfair shares (calculated by reference to
the Exchange Ratio) which will have the same normal vesting dates as the
original awards but be subject to certain absolute vesting levels.
The vesting levels of the replacement awards will be crystallised on grant
reflecting the extent to which the Betfair Remuneration Committee considers
that the performance conditions applying to the relevant awards would have
been satisfied at the end of the original vesting periods (the "BetfairFixed
Vesting Level"). The Betfair Fixed Vesting Levels for each of the awards will
be as follows:
· 2013/14 LTIP awards - 100 per cent. of the underlying shares vesting in
full on the normal vesting dates between July 2016 and April 2017;
· 2014/15 LTIP awards - 100 per cent. of the underlying shares vesting in
full on the normal vesting dates between June 2017 and March 2018; and
· 2015/16 LTIP awards - a proportion of the underlying shares vesting in
full on the normal vesting date in July 2018. This proportion will be the
time-pro rata proportion of the three year vesting period (from July 2015)
which has elapsed at the later of the date of Completion and the date on which
the 2015 Performance Based Award (as defined below) becomes effective.
In the case of the 2015/16 awards, an additional replacement award will be
granted in respect of the balance of the awards that is not reflected in the
Betfair Fixed Vesting Level which will be capable of vesting in July 2018
according to the extent to which specified performance conditions relating to
the performance of the Combined Group are satisfied (the "2015 Performance
Based Award"). These performance conditions will be set by the Paddy Power
Betfair Remuneration Committee at a level which it considers to be no more or
less challenging to achieve in the context of the Combined Group than would
have been the case for the original Betfair performance conditions had the
Merger not occurred, taking account of the performance of Betfair in the
period up to Completion.
Betfair Sharesave - UK and Ireland
Options granted under the Betfair Sharesave Plan and the Betfair Irish
Sharesave Scheme will be exercisable for a period of six months following the
date of the Court Order. These options will be exercisable over Betfair Shares
to the extent of savings made under the related savings contract at the time
of exercise. Paddy Power will offer participants in the Betfair Sharesave Plan
and the Betfair Irish Sharesave Plan the opportunity (as an alternative to
exercise) to exchange their options over Betfair Shares for equivalent options
over Paddy Power Betfair Shares which will be eligible to vest at the normal
maturity dates. The basis on which the exchange will be calculated will be
subject to any approvals that may be required of relevant tax authorities.
Other Betfair Employee Share Plans
Outstanding options and awards over Betfair Shares under the Betfair Deferred
Share Incentive Plan, the Betfair Restricted Share Awards Plan and the Betfair
Unapproved Share Option Plan will, to the extent not already vested, vest in
full in accordance with the applicable rules on the date of the Court Order.
Paddy Power LTIP
Paddy Power and Betfair have agreed that outstanding awards granted under the
Paddy Power Long Term Incentive Plan ("Paddy Power LTIP Awards") in 2013, 2014
and 2015 will not vest on Completion but will have the same normal vesting
dates subject to certain absolute vesting levels.
The vesting levels of the Paddy Power LTIP Awards will be crystallised on
Completion reflecting the extent to which the Paddy Power Remuneration
Committee considers that the performance conditions applying to the relevant
Paddy Power LTIP Awards would have been satisfied at the end of the original
vesting periods (the "Paddy PowerFixed Vesting Level"). The Paddy Power Fixed
Vesting Levels for each of the awards will be as follows:
· 2013 LTIP awards - 100 per cent. of the underlying shares vesting in
full on the normal scheduled vesting dates in 2016;
· 2014 LTIP awards - 100 per cent. of the underlying shares vesting in
full on the normal scheduled vesting dates in 2017; and
· 2015 LTIP awards - a proportion of the underlying shares vesting in full
on the normal scheduled vesting dates in 2018. This proportion will be the
time-pro rata proportion of the three year vesting period (from date of grant)
which has elapsed at the date of Completion.
In the case of the 2015 awards, the balance of the awards not reflected in the
Paddy Power Fixed Vesting Level will remain outstanding and will be capable of
vesting in 2018 according to the extent to which specified performance
conditions relating to the performance of the Combined Group are satisfied.
The existing performance conditions for such balance of the existing 2015
awards will be adjusted by the Paddy Power Betfair Remuneration Committee at a
level which it considers to be no more or less challenging to achieve in the
context of the Combined Group than would have been the case for the original
Paddy Power performance conditions had the Merger not occurred, taking account
of the performance of Paddy Power in the period up to Completion.
Paddy Power Share Save Scheme
Options granted under the Paddy Power Share Save Scheme will remain unchanged
and will continue in accordance with their terms.
Paddy Power Share Option Scheme
Options granted under the Paddy Power Share Option Scheme will remain
unchanged and will continue in accordance with their terms.
As required by, and solely for the purposes of, Rule 16.2 of the Code, Goldman
Sachs has (in its capacity as independent adviser to Betfair for the purposes
of Rule 3 of the Code) confirmed to the Panel that it has reviewed the terms
of the management incentivisation arrangements referred to above in relation
to the Betfair Share Schemes, together with other information deemed relevant
and considers them to be fair and reasonable so far as the Betfair
Shareholders are concerned. In providing its advice, Goldman Sachs has taken
into account the commercial assessments of Betfair. Goldman Sachs'
confirmation to the Panel addressed only the matters required to be addressed
by Rule 16.2 of the Code and addressed no other matter.
14. Conditions
The Merger will be subject to the Conditions set out in Appendix I to this
Announcement. The Scheme and the Merger is conditional, amongst other things,
on:
· the Court Meeting and the Betfair General Meeting being held on or
before the 22nd day after the expected date of such meetings as set out in the
Scheme Document in due course (or such later date as may be agreed between
Paddy Power and Betfair in writing and the Court may allow);
· the approval of the Scheme by a majority in number representing not less
than 75 per cent. in value of the Scheme Shareholders who are on the register
of members of Betfair at the Scheme Voting Record Time, present and voting,
whether in person or by proxy, at the Court Meeting (or any adjournment
thereof);
· the approval of, amongst other things, such of the Betfair Resolutions
as are necessary to implement the Merger by the requisite majorities of
Betfair Shareholders at the Betfair General Meeting (or any adjournment
thereof);
· the Scheme being sanctioned by the Court (with or without modification,
on terms agreed by Paddy Power and Betfair) on or before the 22nd day after
the expected date of the Court Hearing to approve the Scheme as set out in the
Scheme Document in due course (or such later date as may be agreed between
Paddy Power and Betfair in writing and the Court may allow);
· the Scheme becoming unconditional and effective no later than the Long
Stop Date (or such later date as Paddy Power and Betfair may, with the consent
of the Panel, agree and (if required) the Court may allow) and the delivery of
the office copy of the Court Order to the Registrar of Companies;
· all relevant anti-trust approvals being obtained (as further described
in paragraphs (f),(g),(h) and (i) of Appendix I to this Announcement);
· the Court Hearing being held on or before the 22nd day after the
expected date of the Court sanction as set out in the Scheme Document in due
course (or such later date as may be agreed between Paddy Power and Betfair in
writing and the Court may allow);
· approval of such of the Paddy Power Resolutions as are necessary to
implement the Merger by the requisite majorities of Paddy Power Shareholders
at the Paddy Power General Meeting (or any adjournment thereof); and
· the UK Listing Authority, the London Stock Exchange and Irish Stock
Exchange having acknowledged to Paddy Power or its agent (and such
acknowledgement not having been withdrawn) that the application for Admission
of the New Paddy Power Betfair Shares has been approved and (subject to
satisfaction of any conditions to which such approval is expressed) will
become effective as soon as a dealing notice has been issued by the Irish
Stock Exchange, UK Listing Authority and the London Stock Exchange having
acknowledged to Paddy Power Betfair or its agent (and such acknowledgement not
having been withdrawn) that the New Paddy Power Betfair Shares will be
admitted to: (i) listing on the premium listing segment of the Official List
of the FCA and to the secondary listing segment of the Official List of the
Irish Stock Exchange as an overseas company; and (ii) trading on the London
Stock Exchange's main market for listed securities and the Irish Stock
Exchange's regulated market for listed securities.
15. Offer-related arrangements
Confidentiality Agreement
Paddy Power and Betfair have entered into a mutual Confidentiality Agreement
dated 18 August 2015 pursuant to which each of Paddy Power and Betfair has
undertaken to keep certain information relating to the Merger and the other
party confidential and not to disclose it to third parties (other than to
permitted disclosees) unless required by law or regulation. These
confidentiality obligations will remain in force until Completion.
Co-operation Agreement
Paddy Power and Betfair have entered into a Co-operation Agreement on 8
September 2015 in connection with the Merger.
Pursuant to the Co-operation Agreement, Paddy Power and Betfair have agreed to
co-operate with each other and to each use its reasonable endeavours to secure
the regulatory clearances and authorisations necessary to satisfy certain of
the Conditions, including by accepting the imposition of, or offering,
undertakings or commitments by or to the relevant authorities that are
acceptable to both Paddy Power and Betfair.
Paddy Power and Betfair have agreed to certain undertakings to co-operate and
provide each other with reasonable information, assistance and access in
relation to the filings, submissions and notifications to be made in relation
to such regulatory clearances and authorisations.
Paddy Power or Betfair may terminate the Co-operation Agreement if the Scheme
has not become effective by a specified date, the consummation of the Merger
becomes illegal or otherwise prohibited, the Betfair Resolutions which are
necessary to implement the Merger are not approved at the Betfair General
Meeting, the Paddy Power Resolutions which are necessary to implement the
Merger are not approved at the Paddy Power General Meeting or the Scheme or
Merger Offer, as the case may be, is withdrawn or lapses before the specified
date.
Paddy Power has the right to terminate the Co-operation Agreement if the
Betfair Board fails to recommend or withdraws, amends, modifies or qualifies,
in a manner adverse to Paddy Power or fails to publicly reaffirm, its
recommendation of the Merger until such time as the Betfair Resolutions which
are necessary to implement the Merger have been approved or if the Betfair
Board or a committee thereof approves or recommends a disposal of certain
assets or shares or certain other transactions. Betfair has the right to
terminate the Co-operation Agreement if the Paddy Power Board fails to
recommend or withdraws, amends, modifies or qualifies, in a manner adverse to
Betfair or fails to publicly reaffirm, its recommendation of the Merger until
such time as the Paddy Power Resolutions which are necessary to implement the
Merger have been approved or if the Paddy Power Board or a committee thereof
approves or recommends a disposal of certain assets or shares or certain other
transactions.
The Co-operation Agreement records Paddy Power's and Betfair's intention to
implement the Merger by way of the Scheme, subject to the ability of Paddy
Power to proceed by way of a Merger Offer: (i) with Betfair's consent; (ii) if
a third party announces a firm intention to make an offer for the issued and
to be issued ordinary share capital of Betfair which is recommended by the
Betfair Board; or (iii) if the Betfair Board withdraws its unanimous and
unconditional approval of the Scheme.
16. Structure of the Merger
It is intended that the Merger will be implemented by way of a
Court-sanctioned scheme of arrangement between Betfair and the Scheme
Shareholders, under Part 26 of the Companies Act, under which Paddy Power will
acquire all of the shares in Betfair. However, Paddy Power reserves the right
to implement the Merger by way of a Merger Offer, subject to Panel consent and
the terms of the Co-operation Agreement.
The purpose of the Scheme is to provide for Paddy Power to become the holder
of the entire issued and to be issued ordinary share capital of Betfair. This
is to be achieved by the transfer of the Scheme Shares to Paddy Power in
consideration for which Scheme Shareholders will receive New Paddy Power
Betfair Shares on the basis set out in paragraph 2 of this Announcement.
Upon the Scheme becoming Effective, it will be binding on all Scheme
Shareholders, irrespective of whether or not they attended or voted at the
Court Meeting or the Betfair General Meeting (and if they attended and voted,
whether or not they voted in favour), and share certificates in respect of
Betfair Shares will cease to be valid and entitlements to Betfair Shares held
within the CREST system will be cancelled.
Scheme Shares will be acquired by Paddy Power pursuant to the Scheme fully
paid and free from all liens, charges, equities, encumbrances, rights of
pre-emption and any other interests of any nature whatsoever and together with
all rights attaching thereto, including voting rights and the rights to
receive and retain in full all dividends and other distributions declared,
made or paid on or after the Effective Date, save where the record date for
such dividend or other distribution falls prior to the Effective Date or
otherwise where Paddy Power and Betfair agree.
The New Paddy Power Betfair Shares issued to Scheme Shareholders pursuant to
the Scheme will be issued credited as fully paid and will rank pari passu in
all respects with existing Paddy Power Shares, including the right to receive
dividends and other distributions declared, made or paid on Paddy Power Shares
by reference to a record date falling after the Effective Date. For the
avoidance of doubt, the New Paddy Power Betfair Shares will not carry
entitlement to the special dividend referred to in paragraph 2 above. The New
Paddy Power Betfair Shares will be issued in registered form and will trade
under the same ISIN number as the existing Paddy Power Shares.
Fractions of New Paddy Power Betfair Shares will not be allotted or issued to
Scheme Shareholders and entitlements will be rounded down to the nearest whole
number of Paddy Power Shares and all fractions of New Paddy Power Betfair
Shares will be aggregated and sold in the market as soon as practicable after
the Effective Date. The net proceeds of such sale (after deduction of all
expenses and commissions incurred in connection with the sale) will be
distributed by Paddy Power in due proportions to Scheme Shareholders who would
otherwise have been entitled to such fractions, save that individual
entitlements to amounts of less than £5 will be retained for the benefit of
the Combined Group.
If the Scheme does not become Effective on or before the Long Stop Date (or
such later date as Paddy Power and Betfair may agree with the consent of the
Panel), it will lapse and the Merger will not proceed.
The Scheme Document will include full details of the Scheme, together with
notices of the Court Meeting and the Betfair General Meeting. The Scheme
Document will also contain the expected timetable for the Merger, and will
specify the necessary actions to be taken by Betfair Shareholders.
The Scheme Document, together with the Forms of Proxy, will be posted to
Betfair Shareholders and, for information only, to persons with information
rights and to holders of options and awards granted under the Betfair Share
Schemes in November 2015. For the purposes of paragraph 3(a) of Appendix 7 to
the Code and with the agreement of Betfair, the Panel has consented to these
arrangements. It is expected that the Betfair General Meeting will be held in
December, at the same time as the Paddy Power General Meeting. Completion is
expected to occur during the first quarter of 2016, subject to the Conditions
and certain further terms set out in Appendix I to this Announcement.
17. Paddy Power General Meeting
Given the size of Betfair relative to the current size of Paddy Power, the
Merger will require the approval of Paddy Power Shareholders as it constitutes
a class 1 transaction for Paddy Power under the Listing Rules. Accordingly,
Paddy Power will be required to seek the approval of Paddy Power Shareholders
for the Merger at the Paddy Power General Meeting and to authorise an increase
in the share capital of Paddy Power and the allotment of the New Paddy Power
Betfair Shares.
The Paddy Power Circular summarising the background to and reasons for the
Merger and containing the notice convening the Paddy Power General Meeting
will be sent to Paddy Power Shareholders at the same time as the Scheme
Document is posted to Betfair Shareholders, which is expected to be in
November 2015. It is expected that the Paddy Power General Meeting will be
held in December, at the same time as the Betfair General Meeting.
Paddy Power will also be required to make the Paddy Power Betfair Prospectus
available to the public in accordance with the Prospectus Rules. The Paddy
Power Betfair Prospectus will contain information relating to the Combined
Group and the New Paddy Power Betfair Shares. It is expected that the Paddy
Power Betfair Prospectus will be published at or around the same time as the
Scheme Document is posted to Betfair Shareholders and the Paddy Power Circular
is posted to Paddy Power Shareholders.
18. Accounting considerations
The Paddy Power financial year ends on 31 December and the Betfair financial
year ends on 30 April.
It is intended that Paddy Power Betfair will have an accounting financial year
ending on 31 December and that it will pay an interim dividend in September
and a final dividend in May. It is also expected that Paddy Power Betfair's
reporting currency will be GBP.
For accounting purposes, it is expected that Betfair will be consolidated into
Paddy Power's balance sheet. A fair value exercise in respect of Betfair's
assets and liabilities will be conducted following Completion, resulting in
Betfair's assets and liabilities being included at fair value on the Combined
Group's balance sheet. Intangible assets arising will include goodwill and
brands.
19. Listing, dealings and settlement of the New Paddy Power Betfair
Shares
Applications will be made to the Irish Stock Exchange, UK Listing Authority
and the London Stock Exchange, respectively for the New Paddy Power Betfair
Shares to be admitted to: (i) the premium listing segment of the Official List
of the FCA and to the secondary listing segment of the Official List of the
Irish Stock Exchange as an overseas company; and (ii) trading on the London
Stock Exchange's main market for listed securities and the Irish Stock
Exchange's Main Securities Market. It is expected that Admission will become
effective and that dealings for normal settlement in the New Paddy Power
Betfair Shares will commence on the London Stock Exchange and the Irish Stock
Exchange at 8.00 a.m. on or shortly after the Effective Date.
20. De-listing of Betfair
Prior to the Scheme becoming Effective, applications will be made to the UK
Listing Authority for the cancellation of the listing of the Betfair Shares on
the Official List of the FCA and to the London Stock Exchange for the
cancellation of trading of the Betfair Shares on the London Stock Exchange's
main market for listed securities, in each case to take effect on or shortly
after the Effective Date.
On the Effective Date, Betfair will become a wholly-owned subsidiary of Paddy
Power and share certificates in respect of Betfair Shares will cease to be
valid and entitlements to Betfair Shares held within the CREST system will be
cancelled.
21. Disclosure of interest in relevant securities
As at the close of business on 7 September 2015, being the last practicable
date prior to the publication of this Announcement, save for: (i) the
disclosures in this paragraph 21; and (ii) the irrevocable undertakings
referred to in paragraph 5 above, none of Paddy Power or any of its directors
or, so far as Paddy Power and the Paddy Power Directors are aware, any person
acting, or deemed to be acting, in concert with Paddy Power:
· had an interest in, or right to subscribe for, relevant securities
of Betfair;
· had any short position in (whether conditional or absolute and
whether in the money or otherwise), including any short position under a
derivative, any agreement to sell or any delivery obligation or right to
require another person to purchase or take delivery of, relevant securities of
Betfair;
· had procured an irrevocable commitment or letter of intent to
accept the Merger in respect of relevant securities of Betfair; or
· had borrowed or lent any Betfair Shares.
Furthermore, no arrangement exists with Paddy Power, Betfair or an associate
of Paddy Power in relation to Betfair Shares. For these purposes, an
"arrangement" includes any indemnity or option arrangement, any agreement or
any understanding, formal or informal, of whatever nature, relating to Betfair
Shares which may be an inducement to deal or refrain from dealing in such
securities.
Paddy Power confirms that it made an Opening Position Disclosure, setting out
the details required to be disclosed by it under Rule 8.1(a) of the Code, on 7
September 2015.
Betfair confirms that it made an Opening Position Disclosure, setting out the
details required to be disclosed by it under Rule 8.2(a) of the Code, on 7
September 2015.
22. Overseas Shareholders
The availability of New Paddy Power Betfair Shares under the Merger, 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. Betfair
Shareholders who are in doubt regarding 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. Betfair Shareholders are
advised to read carefully the Scheme Document, the Paddy Power Betfair
Prospectus and the Forms of Proxy once these have been dispatched. Paddy Power
Shareholders are advised to read carefully the Paddy Power Betfair Prospectus,
the Paddy Power Circular and the form of proxy accompanying the Paddy Power
Circular once these have been dispatched.
23. General
The Merger will be subject to the Conditions and certain further terms set out
in Appendix I and to be set out in the Scheme Document when published.
The Scheme and the Merger will lapse if there is a Phase 2 CMA Reference
before the later of the Court Meeting and the Betfair General Meeting. In such
event, Betfair will not be bound by the terms of the Scheme.
The Scheme will be governed by English law and will be subject to the
jurisdiction of the courts of England and Wales. The Scheme will be subject to
the applicable requirements of the Code, the Panel, the London Stock Exchange,
the Irish Stock Exchange and the FCA.
The bases and sources of certain financial information contained in this
Announcement are set out in Appendix II. Certain terms used in this
Announcement are defined in Appendix VI.
A copy of this Announcement is and will be available, subject to certain
restrictions relating to persons resident in Restricted Jurisdictions, for
inspection on Paddy Power's website at www.paddypowerplc.com and on Betfair's
website at http://corporate.betfair.com by no later than 12 noon (London time)
on the day following this Announcement. For the avoidance of doubt, the
contents of those websites are not incorporated and do not form part of this
Announcement.
24. Documents available on website
Copies of the following documents will published by no later than 12 noon
(London time) on the day following this Announcement on Paddy Power's website
at www.paddypowerplc.com and on Betfair's website at
http://corporate.betfair.com and will be made available until the end of the
Offer Period:
· a copy of this Announcement;
· the irrevocable undertakings referred to in paragraph 5 and set
out in Appendix III to this Announcement;
· the Confidentiality Agreement referred to in paragraph 15; and
· the Co-operation Agreement referred to in paragraph 15.
Enquiries:
Paddy Power plc
Cormac McCarthy +353 (0) 1 905 1013
Catherine Collums, Corporate Affairs +44 (0) 207 874 9103
Morgan Stanley (Financial adviser to Paddy Power)
Colm Donlon +44 (0) 207 425 8888
Laurence Hopkins
David Kitterick
IBI Corporate Finance (Financial adviser to Paddy Power)
Tom Godfrey +353 (0) 7 6623 4800
Ger Heffernan
Laurence O'Shaughnessy
Goodbody (Corporate broker to Paddy Power)
Linda Hickey +353 (0) 1 667 0400
Finsbury (Public relations adviser to Paddy Power)
Conor McClafferty +44 (0) 207 251 3801
Drury Porter Novelli (Public relations adviser to Paddy Power) Billy Murphy +353 (1) 2605000 Karen Ferris
Betfair Group plc
Paul Rushton, Investor Relations +44 (0) 208 834 6139
James Midmer, Corporate Communications +44 (0) 208 834 6843
Goldman Sachs (Financial adviser and corporate broker to Betfair)
Anthony Gutman +44 (0) 207 774 1000
Nick Harper
Stephen Little
Richard Cormack (Corporate Broking)
Powerscourt (Public relations adviser to Betfair)
Rory Godson +44 (0) 207 250 1446
Victoria Palmer-Moore
Important notices
Morgan Stanley which is authorised by the Prudential Regulation Authority and
regulated by the Financial Conduct Authority and the Prudential Regulation
Authority in the United Kingdom is acting as financial adviser to Paddy Power
and no one else in connection with the Merger. In connection with such
matters, Morgan Stanley, its affiliates and their respective directors,
officers, employees and agents will not regard any other person as their
client, nor will they be responsible to any other person for providing the
protections afforded to their clients or for providing advice in relation to
the Merger, the contents of this Announcement or any other matter referred to
herein.
IBI Corporate Finance, which is regulated in Ireland by the Central Bank of
Ireland, is acting exclusively for Paddy Power and for no one else in
connection with the Merger and will not be responsible to anyone other than
Paddy Power for providing the protections afforded to customers of IBI
Corporate Finance or for providing advice in relation to the Merger, the
contents of this Announcement or any transaction or arrangement referred to
herein.
Goodbody Stockbrokers, trading as Goodbody, which is regulated in Ireland by
the Central Bank of Ireland, is acting exclusively for Paddy Power and for no
one else in connection with the Merger and will not be responsible to anyone
other than Paddy Power for providing the protections afforded to customers of
Goodbody or for providing advice in relation to the Merger, the contents of
this Announcement or any transaction or arrangement referred to herein.
Goldman Sachs, which is authorised by the Prudential Regulation Authority and
regulated by the Financial Conduct Authority and the Prudential Regulation
Authority in the United Kingdom, is acting exclusively for Betfair and no one
else in connection with the matters referred to in this Announcement and will
not be responsible to anyone other than Betfair for providing the protections
afforded to clients of Goldman Sachs, or for providing advice in connection
with the Merger, the contents of this Announcement or any other matter
referred to herein.
Forward-looking statements
This Announcement contains statements about Paddy Power, Betfair and the
Combined Group that are or may be forward looking statements. All statements
other than statements of historical facts included in this Announcement may be
forward looking statements. Without limitation, any statements preceded or
followed by or that include the words "targets", "should", "continue",
"plans", "believes", "expects", "aims", "intends", "will", "may",
"anticipates", "estimates", "projects" or words or terms of similar substance
or the negative thereof, are forward looking statements. Forward looking
statements include statements relating to the following: (i) future capital
expenditures, expenses, revenues, earnings, synergies, economic performance,
indebtedness, financial condition, dividend policy, losses and future
prospects; (ii) business and management strategies and the expansion and
growth of Paddy Power's, Betfair's or the Combined Group's operations and
potential synergies resulting from the Merger; and (iii) the effects of
government regulation on Paddy Power's, Betfair's or the Combined Group's
business.
Such forward looking statements involve risks and uncertainties that could
significantly affect expected results and are based on certain key
assumptions. Many factors could cause actual results to differ materially from
those projected or implied in any forward looking statements. Due to such
uncertainties and risks, readers are cautioned not to place undue reliance on
such forward looking statements, which speak only as of the date hereof. Paddy
Power and Betfair disclaim any obligation to update any forward looking or
other statements contained herein, except as required by applicable law or
regulation.
If you are in any doubt about the contents of this Announcement or the action
you should take, you are recommended to seek your own independent financial
advice immediately from your stockbroker, bank manager, solicitor, accountant
or independent financial adviser duly authorised under the Financial Services
and Market Act 2000 (as amended) if you are resident in the United Kingdom, or
authorised or exempted under the Investment Intermediaries Act 1995 of Ireland
or the European Communities (Markets in Financial Instruments) Regulations
(Numbers 1 to 3) 2007 if you are resident in Ireland, or, if not, from another
appropriately authorised independent financial adviser.
Quantified Financial Benefits Statement
Statements of estimated cost savings and synergies relate to future actions
and circumstances which, by their nature, involve risks, uncertainties and
contingencies. As a result, the cost savings and synergies referred to may not
be achieved, may be achieved later or sooner than estimated, or those achieved
could be materially different from those estimated. No statement in the
Quantified Financial Benefits Statement, or this Announcement generally,
should be construed as a profit forecast (other than the Paddy Power Profit
Forecast) or interpreted to mean that the Combined Group's earnings in the
first full year following the effective date of the Scheme, or in any
subsequent period, would necessarily match or be greater than or be less than
those of Paddy Power and/or Betfair for the relevant preceding financial
period or any other period. For the purposes of Rule 28 of the Code, the
Quantified Financial Benefits Statement contained in this Announcement is the
responsibility of Paddy Power and the Paddy Power Directors.
Paddy Power Profit Forecast
The Paddy Power Profit Forecast is a profit forecast for the purposes of Rule
28 of the Code. The Paddy Power Profit Forecast, the assumptions on which the
Paddy Power Profit Forecast is based and the reports from Paddy Power's
reporting accountants, KPMG, and its financial adviser, Morgan Stanley, as
required by Rule 28.1 of the Code are set out in Appendix V to this
Announcement. Each of KPMG and Morgan Stanley has given and not withdrawn its
consent to the publication of its report in this Announcement in the form and
context in which it is included.
Other than the Paddy Power Profit Forecast, no statement in this Announcement
is intended as a profit forecast or estimate for any period and no statement
in this Announcement should be interpreted to mean that earnings or earnings
per share for Paddy Power or Betfair, as appropriate, for the current or
future financial years would necessarily match or exceed the historical
published earnings or earnings per share for Paddy Power or Betfair, as
appropriate.
Opening Position and Dealing Disclosure Requirements under 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
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