REG - Sainsbury(J) PLC Home Retail Grp Plc - Recommended Offer for Home Retail Group PLC <Origin Href="QuoteRef">HOME.L</Origin> <Origin Href="QuoteRef">SBRY.L</Origin> - Part 4
01/04/2016 07:06
- Part 4: For the preceding part double click ID:nRSA8096Tc
market capitalisation for Home Retail Group plc is based on
813,445,001 Home Retail Group Shares in issue and the Closing Price of 165.8
pence per Home Retail Group Share on the Last Practicable Date;
5. unless otherwise stated, the financial information relating to
Sainsbury's is extracted from the audited consolidated financial statements of
the Sainsbury's Group for the 52-week period ended 14 March 2015, prepared in
accordance with IFRS;
6. unless otherwise stated, the financial information relating to Home
Retail Group plc is extracted from the audited consolidated financial
statements of the Home Retail Group for the 52-week period ended 28 February
2015, prepared in accordance with IFRS; and
7. unless otherwise stated, all prices for Home Retail Group plc and
Sainsbury's Shares have been derived from the Daily Official List and
represent Closing Prices on the relevant date(s).
Appendix 3
DETAILS OF IRREVOCABLE UNDERTAKINGS
The following Home Retail Group Directors have given irrevocable undertakings
in respect of their own beneficial holdings of Home Retail Group Shares (or
those Home Retail Group Shares over which they have control).
Name Total Number of Percentage of Home Retail Group plc's existing issued share capital
Home Retail Group Shares
John Coombe 10,000 0.00
John Walden 649,983 0.08
Richard Ashton 1,160,947 0.14
Michael Darcey 59,719 0.01
Ian Durant 45,421 0.01
Catherine Keers 48,207 0.01
Jacqueline de Rojas 16,402 0.00
Each irrevocable undertaking includes undertakings:
(a) to vote, or procure the vote, in favour of the Scheme at the Court
Meeting and all resolutions relating to the Scheme and the Acquisition at the
Home Retail Group General Meeting; and
(b) if Sainsbury's exercises its right to structure the Acquisition as
a Takeover Offer, to accept, or procure the acceptance of, such Takeover
Offer.
The obligations of the Home Retail Group Directors under the irrevocable
undertakings shall lapse and cease to have effect on and from the earlier of
the following occurrences:
(i) Sainsbury's announces, with the consent of the Panel, that it does
not intend to proceed with the Acquisition and no new, revised or replacement
Scheme or Takeover Offer is announced by Sainsbury's in accordance with Rule
2.7 of the Code; or
(ii) the Scheme or the Takeover Offer (as applicable) does not become
effective, lapses or is withdrawn in accordance with its terms, save in
circumstances where the Scheme or the Takeover Offer (as applicable) does not
become effective, lapses or is withdrawn and Sainsbury's publicly confirms its
election to implement the Acquisition by way of a Scheme (if originally
Takeover Offer) or a Takeover Offer (if originally a Scheme) in each case in
accordance with the terms of the Co-operation Agreement.
Appendix 4
REVISED quantified Financial benefits statement
The Original Announcement included revised statements of estimated cost
savings and synergies expected to arise from the Acquisition (together, the
"RevisedQuantified Financial Benefits Statement"), which was repeated in
paragraph 4 of this announcement. A copy of the Revised Quantified Financial
Benefits Statement is set out below (8):
Note:
(8) References to "Offer" and "HRG" in the Revised Quantified
Financial Benefits Statement set out in the Original Announcement have been
replaced with "Acquisition" and "Home Retail Group plc" respectively.
"The Sainsbury's Directors now expect a higher level of EBITDA synergies in
the third full year after Completion of not less than £160 million. This
represents an increase of one third compared to the previous estimate of not
less than £120 million EBITDA synergies. This higher EBITDA synergy estimate
results from (i) an increase of £15 million in the estimated synergies from
Argos concessions due to an increase in the number of concession opportunities
and increased occupancy cost savings, offset by a reduction in the estimated
Sainsbury's food and grocery halo sales; (ii) an increase of £30 million in
the estimated cost synergies from central and support functions savings as
well increased buying cost savings; and (iii) a decrease of £5 million in
other revenue synergies as a result of revised assumptions on clothing,
homewares and seasonal revenue synergies. (2)
Note:
(2) Numbers refer to synergies in the third full year after
Completion.
Approximately 15 per cent. of the estimated EBITDA synergies are expected to
be realised in the first full year after Completion, approximately 65 per
cent. in the second full year after Completion and 100 per cent. in the third
full year after Completion.
The constituent elements of quantified synergies, which are in addition to
savings previously targeted by Sainsbury's and Home Retail Group plc
separately, comprise the following:
· approximately 45 per cent. of the identified synergies
(approximately £75 million) are expected to be generated from Argos
concessions, arising from (i) cost savings generated from the relocation of
certain existing Argos stores into concessions in Sainsbury's stores, and (ii)
revenue gains from new concessions within Sainsbury's stores, including but
not limited to cross-selling opportunities and the expansion of Click and
Collect desks. Of these synergies, approximately 15 per cent. are expected to
be realised in the first full year after Completion, approximately 60 per
cent. in the second full year after Completion and 100 per cent. in the third
full year after Completion;
· approximately 45 per cent. of the identified synergies
(approximately £70 million) are expected to be cost synergies generated by
removing duplication and overlap from both central and support functions at
Sainsbury's and Home Retail Group plc. There are also benefits to the Combined
Group in purchasing of goods for resale and goods not for resale from sharing
best practice and increased scale. Of these synergies, approximately 15 per
cent. are expected to be realised in the first full year after Completion,
approximately 65 per cent. in the second full year after Completion and 100
per cent. in the third full year after Completion; and
· the remainder of the identified synergies (approximately £15
million) are expected to be further revenue synergies, principally from the
sale of Sainsbury's clothing, homewares and seasonal and leisure ranges
through the existing Argos network together with the roll-out of Sainsbury's
ATMs to Argos locations and the sale of Habitat products through Sainsbury's
channels. Of these synergies, approximately 25 per cent. are expected to be
realised in the first full year after Completion, approximately 80 per cent.
in the second full year after Completion and 100 per cent. in the third full
year after Completion.
It is expected that the realisation of the identified synergies will require
one-off exceptional costs of approximately £130 million, of which
approximately 50 per cent. are expected to be incurred in the first full year
after Completion, 20 per cent. in the second full year after Completion and 30
per cent. in the third full year after Completion.
It is also expected that incremental capital expenditure of approximately £140
million will be incurred in the three years following Completion, relating to
store fit-out expenditure. Approximately 30 per cent. of this capital
expenditure is to be incurred in the first full year after Completion, 40 per
cent. in the second full year after Completion and 30 per cent. in the third
full year after Completion.
The synergies referred to above are expected to be recurring and are expected
to arise as a direct result of the Acquisition and could not be achieved
independently of the Acquisition. The synergies are also stated net of
anticipated dis-synergies, which arise principally from lost sales in the
Argos stores moving more than one mile or changing to a different retail
location type as well as estimated cannibalisation impact of new infill Argos
concessions. For the avoidance of doubt, the EBITDA impact of the synergies as
set out above already reflects the impact of these identified dis-synergies."
Further information on the bases of belief supporting the Revised Quantified
Financial Benefits Statement, including the principal assumptions and sources
of information, is set out below.
Bases of Belief and Principal Assumptions
Following initial discussions regarding the Acquisition, a synergy development
team was established to evaluate and assess the potential synergies available
for the integration and undertake an initial planning exercise (the
"Sainsbury's Synergy Team" or the "Team"). The Team, which comprises senior
strategy and financial colleagues, has worked collaboratively to identify and
quantify potential synergies as well as estimate any associated costs on
behalf of the Sainsbury's Directors. The Team also worked alongside external
consultants to prepare a detailed synergy plan.
The Team has engaged with the relevant functional heads and other personnel to
provide input into the development process and to agree on the nature and
quantum of the identified synergy initiatives. In preparing the Revised
Quantified Financial Benefits Statement, Sainsbury's has had a level of due
diligence access to the Home Retail Group in order to confirm certain key data
points as well as information available to it from existing trials of Argos
concessions in its stores. In circumstances where data has been limited due to
lack of access to the Home Retail Group, the Team has made estimates and
assumptions to aid its development of individual synergy initiatives. The
assessment and quantification of the potential synergies have in turn been
informed by Sainsbury's management's industry experience and knowledge of its
existing business.
The Sainsbury's Synergy Team has sought to assess synergies in relation to the
Home Retail Group central functions and the Argos business. The cost bases
used as the basis for the Revised Quantified Financial Benefits Statement are
those contained in the management accounts of Home Retail Group plc for the
financial year ended 28 February 2015 and the 2015 Annual Report and Accounts
of Sainsbury's.
The majority of cost saving synergies are driven by physical consolidation
that is within the influence of Sainsbury's management, whereas the delivery
of the revenue synergies is more complex and to some extent outside the full
control of Sainsbury's management.
In general, the synergy assumptions have in turn been risk adjusted,
exercising a degree of prudence in the calculation of the estimated synergy
benefit set out above.
Reports and confirmations
As required by Rule 28.1(a) of the Takeover Code, Deloitte, as reporting
accountants to Sainsbury's, provided a report on 18 March 2016 stating that,
in their opinion, the Revised Quantified Financial Benefits Statement has been
properly compiled on the basis stated. In addition Morgan Stanley and UBS, as
joint financial advisers to Sainsbury's, provided a joint report on 18 March
2016 stating that, in their view, the Revised Quantified Financial Benefits
Statement has been prepared with due care and consideration. Copies of these
reports were included in Appendix 3 to the Original Announcement.
The Sainsbury's Directors have confirmed that there have been no material
changes to the Revised Quantified Financial Benefits Statement since 18 March
2016 and the Revised Quantified Financial Benefits Statement remains valid.
Deloitte, Morgan Stanley and UBS, have also confirmed to Sainsbury's that the
reports they produced in connection with the Revised Quantified Financial
Benefits Statement (copies of which were set out in Appendix 3 to the Original
Announcement) continue to apply.
Notes
1. These statements are not intended as a profit forecast and should
not be interpreted as such. These statements of estimated synergies relate to
future actions and circumstances which, by their nature, involve risks,
uncertainties and contingencies. As a result, the estimated synergies referred
to may not be achieved, or may be achieved later or sooner than estimated, or
those achieved could be materially different from those estimated. Neither the
Revised Quantified Financial Benefits Statement nor any other statement in
this announcement should be construed as a profit forecast or interpreted to
mean that Sainsbury's earnings in the first full year following Completion, or
in any subsequent period, will necessarily match or be greater than or be less
than those of Sainsbury's or Home Retail Group plc for the relevant preceding
financial period or any other period.
2. Due to the scale of the enlarged Sainsbury's business, there may be
additional changes to the Combined Group's operations. As a result, and given
the fact that the changes relate to the future, the resulting synergies may be
materially greater or less than those estimated.
3. In arriving at the estimate of synergies set out in this
announcement, the Sainsbury's Synergy Team has assumed that:
(a) there will be no significant impact on the underlying operations of
either business;
(b) there will be no material change to macroeconomic, political or
legal conditions in the markets or regions in which in the Combined Group
operates which will materially impact on the implementation of or costs to
achieve the proposed cost savings; and
(c) there will be no material change in exchange rates.
Appendix 5
PROFIT ESTIMATES
PART A
SAINSBURY'S GROUP PROFIT ESTIMATE
1. Sainsbury's Group Profit Estimate
The Sainsbury's Group made a statement at the time of its second quarter
trading statement for the 16 weeks to 26 September 2015, announced on 30
September 2015, that should current market trends continue, it expected its
full year (that is, for the 52 weeks ended 12 March 2016 ("FY 2016"))
underlying profit before tax (defined as profit before tax before any profit
or loss on the disposal of properties, investment property fair value
movements, retailing financing fair value movements, IAS 19 pension financing
element and defined benefit pension scheme expenses, acquisition adjustments
and one-off items that are material and infrequent in nature, but after the
coupons on the perpetual subordinated capital securities and perpetual
subordinated convertible bonds) ("UPBT") to be moderately ahead of its
published consensus profit (which, at the time of such announcement, was £548
million) (the "Sainsbury's Group Profit Estimate").
The above statement constitutes a profit estimate for the purposes of Rule 28
of the Takeover Code.
An estimate has been made of UPBT rather than profit before tax because, in
the view of the Sainsbury's Directors, UPBT is a key metric that provides a
clear and consistent presentation of the underlying results of Sainsbury's
ongoing business for shareholders and investors.
2. Basis of Preparation
The Sainsbury's Directors confirm that the Sainsbury's Group Profit Estimate
has been properly compiled on the basis stated below and on a basis consistent
with the accounting policies of Sainsbury's, which are in accordance with IFRS
and are those which Sainsbury's is applying in preparing its financial
statements for FY 2016.
The Sainsbury's Directors prepared the Sainsbury's Group Profit Estimate on
the basis of the published unaudited interim financial statements for the 28
weeks ended 26 September 2015, the unaudited management accounts of the
Sainsbury's Group for the 20 weeks ended 13 February 2016 and a forecast for
the four weeks ended 12 March 2016.
The Sainsbury's Group Profit Estimate excludes the costs and ongoing impact of
the Acquisition.
3. Sainsbury's Directors' confirmation
The Sainsbury's Directors have considered the Sainsbury's Group Profit
Estimate and confirm that it remains valid as at the date of this announcement
and that it has been properly compiled on the basis set out above and that the
basis of the accounting used is consistent with Sainsbury's accounting
policies.
PART B
HOME RETAIL GROUP PROFIT ESTIMATE
1. Home Retail Group Profit Estimate
In the Home Retail Group Q4 Trading Statement, Home Retail Group plc stated
that it expects that Home Retail Group Benchmark Profit before Tax for the
financial year ended 27 February 2016 will be in line with the current
consensus of market expectations of £93 million (the "Home Retail Group Profit
Estimate").
The above statement constitutes a profit estimate for the purposes of Rule 28
of the Takeover Code.
The Home Retail Group's tax charge for the financial year ended 27 February
2016 will be calculated using the effective tax rate applicable at the balance
sheet date using tax rates enacted or substantively enacted by the balance
sheet date.
The Home Retail Group Profit Estimate excludes the impact of the proposed
disposal of Homebase and related transaction costs.
2. Basis of Preparation
The Home Retail Group Profit Estimate has been properly compiled on the basis
stated below, on a basis consistent with the accounting policies of Home
Retail Group plc, which are in accordance with IFRS and are those which will
be applicable for the financial year ended 27 February 2016.
Benchmark Profit before Tax is defined as profit before amortisation of
acquisition intangibles, post-employment benefit scheme administration costs,
store impairment and onerous lease charges or releases and costs or income
associated with store closures, exceptional items, financing fair value
re-measurements, financing impact on post-employment benefit obligations, the
discount unwind on non-benchmark items and taxation. Benchmark Profit before
Tax is a non-IFRS metric and therefore may not be directly comparable with
similarly titled measures used by other companies, however, the Home Retail
Group Directors believe that Benchmark Profit before Tax is considered useful
in that it provides investors with an alternative means to evaluate the
underlying performance of the Home Retail Group's operations.
The Home Retail Group Directors prepared the Home Retail Group Profit Estimate
based on the unaudited interim results of the Home Retail Group for the 26
weeks to 29 August 2015 and the unaudited management accounts for the 26-week
period to 27 February 2016.
3. Home Retail Group Directors' confirmation
The Home Retail Group Directors have considered the Home Retail Group Profit
Estimate and confirm that it remains valid as at the date of this announcement
and that it has been properly compiled on the basis set out above and that the
basis of the accounting used is consistent with Home Retail Group plc's
accounting policies.
Appendix 6
DEFINITIONS
The following definitions apply throughout this announcement unless the
context otherwise requires:
"2006 Act" the Companies Act 2006, as amended from time to time
"2015 Annual Report and Accounts of Home Retail Group" the annual report and audited accounts of the Home Retail Group for the 52-week period ended 28 February 2015
"2015 Annual Report and Accounts of Sainsbury's" the annual report and audited accounts of the Sainsbury's Group for the 52-week period ended 14 March 2015
"Acquisition" the proposed direct or indirect acquisition by Sainsbury's of the entire issued and to be issued share capital of Home Retail Group plc not already owned by or on behalf
of the Sainsbury's Group pursuant to the Scheme (and subsequent steps contemplated by the Scheme), or should Sainsbury's so elect, by means of a Takeover Offer
"Additional Home Retail Group Payment" 2.8 pence per Home Retail Group Share proposed to be paid to Home Retail Group Shareholders in lieu of a final dividend in respect of Home Retail Group plc's financial
year ended 27 February 2016
"Admission" the admission of the New Sainsbury's Shares by the FCA to the Official List and to trading on the London Stock Exchange's main market for listed securities
"Agreed Terms Announcement" the announcement by Sainsbury's and Home Retail Group plc under Rule 2.4 of the Takeover Code on 2 February 2016 setting out the key financial terms of a possible offer
for Home Retail Group plc
"Amendment and Restatement Agreement" the amendment and restatement agreement dated 18 March 2016 between, amongst others, Sainsbury's and the lenders set out therein making certain amendments to the existing
facility agreement dated 5 May 2015, as described in paragraph 8 of this announcement
"associated undertaking" shall be construed in accordance with paragraph 19 of Schedule 6 to The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (SI 2008/410)
but for this purpose ignoring paragraph 19(1)(b) of Schedule 6 to those regulations
"Authorisations" authorisations, orders, grants, recognitions, confirmations, consents, licences, clearances, certificates, permissions or approvals
"Bank of America Merrill Lynch" Merrill Lynch International, a subsidiary of Bank of America Corporation
"Benchmark Profit before Tax" profit before amortisation of acquisition intangibles, post-employment benefit scheme administration costs, store impairment and onerous lease charges or releases and
costs or income associated with store closures, exceptional items, financing fair value re-measurements, financing impact on post-employment benefit obligations, the
discount unwind on non-benchmark items and taxation
"Board" the board of directors of a company
"Business Day" a day, not being a public holiday, Saturday or Sunday, on which clearing banks in London are open for normal business
"Closing Price" the closing middle market price of a share as derived from the Daily Official List on any particular date
"CMA" Competition and Markets Authority of the UK
"Co-operation Agreement" the co-operation agreement dated 1 April 2016 between Sainsbury's and Home Retail Group plc, as described in paragraph 14(b) of this announcement
"Combined Group" the enlarged group following Completion of the Acquisition, comprising the Home Retail Group and the Sainsbury's Group
"Completion" or "Complete" in the context of the Acquisition:(i) if the Acquisition is implemented pursuant to the Scheme, the Scheme and the New TopCo Capital Reduction having become Effective and
all other Conditions having been fulfilled or (if capable of waiver) waived; or(ii) if the Acquisition is implemented by way of a Takeover Offer, the Takeover Offer
having become or been declared unconditional in all respects
"Completion Date" the date on which Completion of the Acquisition occurs
"Conditions" the conditions of the Acquisition, as set out in Appendix 1 to this announcement and to be set out in the Scheme Document
"Confidentiality Agreement" the confidentiality agreement dated 3 February 2016 between Sainsbury's and Home Retail Group plc, as described in paragraph 14(a) of this announcement
"Court" the High Court of Justice in England and Wales
"Court Meeting" the meeting of Home Retail Group Shareholders to be convened at the direction of the Court pursuant to Part 26 of the 2006 Act at which a resolution will be proposed to
approve the Scheme, including any adjournment thereof
"CREST" the system for the paperless settlement of trades in securities and the holding of uncertificated securities operated by Euroclear
"Daily Official List" means the daily official list of the London Stock Exchange
"Dealing Disclosure" an announcement pursuant to Rule 8 of the Takeover Code containing details of dealings in interests in relevant securities of a party to an offer
"Deloitte" Deloitte LLP
"Disclosure and Transparency Rules" the Disclosure and Transparency Rules of the FCA in its capacity as the UKLA under FSMA and contained in the UKLA's publication of the same name
"EBITDA" earnings before interest, tax, depreciation and amortisation
"Effective" (i) in respect of the Scheme, the Scheme having become effective pursuant to its terms;(ii) in respect of the New TopCo Capital Reduction, the Reduction Court Order
having been delivered to and registered by the Registrar of Companies
"Euroclear" Euroclear UK & Ireland Limited
"Exchange Ratio" 0.321 Sainsbury's Shares for each Home Retail Group Share which, following the Scheme becoming Effective, shall be interpreted to mean 0.321 Sainsbury's Shares for each
New TopCo Share
"Existing Sainsbury's Shares" the Sainsbury's Shares in issue as the date of this announcement
"Fairly Disclosed" the information which has been fairly disclosed by or on behalf of Home Retail Group plc: (i) prior to the date of the Original Announcement by or on behalf of Home
Retail Group plc to Sainsbury's or Sainsbury's financial, accounting, tax or legal advisers (specifically as Sainsbury's advisers in relation to the Acquisition); (ii) in
the 2015 Annual Report and Accounts of the Home Retail Group; (iii) in the circular dated 2 February 2016 published by Home Retail Group plc in connection with the
Homebase Sale; (iv) in a public announcement made in accordance with the Disclosure Rules and Transparency Rules by Home Retail Group plc after 28 February 2015 and prior
to the date of the Original Announcement; or (v) in the Original Announcement or this announcement
"FCA" or "Financial Conduct Authority" Financial Conduct Authority or its successor from time to time
"FCA Handbook" the FCA's Handbook of rules and guidance as amended from time to time
"Form of Election" the form of election in relation to the Mix and Match Facility which shall accompany the Scheme Document
"Form of Proxy" the form of proxy in connection with each of the Court Meeting and the Home Retail Group General Meeting which shall accompany the Scheme Document
"FSMA" the Financial Services and Markets Act 2000 (as amended from time to time)
"GFSC" the Guernsey Financial Services Commission
"Home Retail Group" Home Retail Group plc (and with effect from the Scheme becoming Effective, New TopCo) and its subsidiary undertakings from time to time, and where the context permits,
each of them
"Home Retail Group ADR Holders" holders of Home Retail Group ADRs
"Home Retail Group ADRs" sponsored level 1 American Depositary Receipts (or, as the context requires, the American Depositary Shares) of Home Retail Group plc for which Citibank N.A. acts as
depositary
"Home Retail Group Directors" the directors of Home Retail Group plc
"Home Retail Group Employee Share Plans" the Home Retail Group Deferred Bonus Plan, the Home Retail Group Performance Share Plan, the Home Retail Group Tax Qualified Share Option Plan and the Home Retail Group
UK Tax Qualified Sharesave Plan
"Home Retail Group General Meeting" the general meeting of Home Retail Group Shareholders to be convened to consider and if thought fit pass, inter alia, certain resolutions in relation to the Scheme and
the Acquisition, including any adjournments thereof
"Home Retail Group Meetings" the Court Meeting and the Home Retail Group General Meeting
"Home Retail Group Profit Estimate" the profit estimate of the Home Retail Group for the financial year ended 27 February 2016 as set out in paragraph 1 of Part B of Appendix 5 to this announcement
"Home Retail Group Q4 Trading Statement" the trading statement published by Home Retail Group plc on 10 March 2016 in respect of the final eight-week trading period for the financial year ended 27 February 2016
"Home Retail Group Share(s)" the existing unconditionally allotted or issued and fully paid ordinary shares of 10 pence each in the capital of Home Retail Group plc and any further shares which are
unconditionally allotted or issued but excluding in both cases any such shares held or which become held in treasury
"Home Retail Group Shareholder(s)" holders of Home Retail Group Shares and with effect from the Scheme becoming Effective, holders of New TopCo Shares, as the context requires
"Homebase Payment" 25 pence per Home Retail Group Share to be paid to Home Retail Group Shareholders, reflecting the £200 million return to shareholders in respect of the Homebase Sale, as
announced by Home Retail Group plc on 18 January 2016
"Homebase Sale" the sale of the Homebase business by Home Retail Group (UK) Limited to Bunnings (UK & I) Holdings Limited pursuant to the Homebase Sale Agreement, as announced by Home
Retail Group plc on 18 January 2016 and which completed on 27 February 2016
"Homebase Sale Agreement" the share purchase agreement entered into between, amongst others, Home Retail Group plc, Home Retail Group (UK) Limited and Bunnings (UK & I) Holdings Limited on 17
January 2016 in relation to the Homebase Sale
"IAS" International Accounting Standard
"IFRS" international accounting standards and international financial reporting standards and interpretations thereof, approved or published by the International Accounting
Standards Board and adopted by the European Union
"Last Practicable Date" 31 March 2016, being the last practicable date prior to the date of this announcement
"Listing Rules" the listing rules, made by the FCA under Part 6 FSMA, as amended from time to time
"London Stock Exchange" the London Stock Exchange plc or its successor
"Long Stop Date" 29 March 2017
"Mix and Match Facility" the facility under which Home Retail Group Shareholders are entitled to elect to vary the proportions in which they receive New Sainsbury's Shares and in which they
receive cash in respect of their holdings of Home Retail Group Shares to the extent that other such Home Retail Group Shareholders make off-setting elections
"Morgan Stanley" Morgan Stanley & Co. International plc
"New Sainsbury's Shares" Sainsbury's ordinary shares of 284/7 pence each proposed to be issued credited as fully paid pursuant to the Acquisition
"New TopCo" a company to be incorporated in due course which will hold the entire issued ordinary share capital of Home Retail Group plc upon the Scheme becoming Effective
"New TopCo Capital Reduction" the proposed reduction of capital of New TopCo through a Court procedure under Part 17 of the 2006 Act, as described in paragraph 18 of this announcement
"New TopCo Shareholders" holders of New TopCo Shares
"New TopCo Shares" ordinary shares in the capital of New TopCo
"OfferConsideration" the consideration offered by Sainsbury's under the terms of the Acquisition in the form of 55 pence in cash and 0.321 New Sainsbury's Shares for each Home Retail Group
Share, which, following the Scheme becoming Effective, shall be interpreted to mean 55 pence in cash and 0.321 Sainsbury's Shares for each New TopCo Share
"Offer Document" if Sainsbury's elects to implement the Acquisition by way of a Takeover Offer, the document to be sent by Sainsbury's to Home Retail Group Shareholders containing,
amongst other things, the terms and conditions of the Takeover Offer
"Offer Period" the period which commenced on 5 January 2016 and ending on the later of (i) the Completion Date; or (ii) the date on which the Acquisition lapses or is withdrawn (or such
other date as the Panel may decide)
"Official List" the Official List of the FCA
"Opening Position Disclosure" an announcement containing details of interests or short positions in, or rights to subscribe for, any relevant securities of a party to the Acquisition if the person
concerned has such a position, as defined in Rule 8 of the Takeover Code
"Original Announcement" the announcement by Sainsbury's on 18 March 2016 setting out the terms of the Acquisition, which was originally to be implemented by way of a Takeover Offer
"Panel" the Panel on Takeovers and Mergers
"Permitted Home Retail Group Payments" the aggregate of the Proposed Capital Returns and the Permitted Home Retail Group plc Interim Dividend
"Permitted Home Retail Group plc Interim Dividend" has the meaning given to it in paragraph 16 of this announcement
"Phase 2 CMA Reference" a reference of the Acquisition to the chair of the CMA for the constitution of a group under Schedule 4 to the Enterprise and Regulatory Reform Act 2013
"Proposed Capital Returns" the proposed capital return of 27.8 pence per Home Retail Group Share, representing the sum of Homebase Payment and the Additional Home Retail Group Payment, to be
effected through the New TopCo Capital Reduction
"Prospectus" the prospectus relating to Sainsbury's to be published in respect of the New Sainsbury's Shares to be issued in connection with the Acquisition
"Prudential Regulation Authority" Prudential Regulation Authority or its successor from time to time
"Reduction Court Order" the Court order confirming the New TopCo Capital Reduction
"Registrar of Companies" the Registrar of Companies in England and Wales
"relevant securities" shall be construed in accordance with the Takeover Code
"Restricted Jurisdiction" any jurisdiction where local laws or regulations may result in a significant risk of civil, regulatory or criminal exposure if the Acquisition is made, or information
concerning the Acquisition is sent or made available to Home Retail Group Shareholders in that jurisdiction
"RevisedQuantified Financial Benefits Statement" the statement of revised estimated synergies arising from the Acquisition as set out in paragraph 4 and Appendix 4 to this announcement
"Sainsbury's" J Sainsbury plc
"Sainsbury's Directors" the directors of Sainsbury's
"Sainsbury's Group" Sainsbury's and its subsidiary undertakings from time to time, and where the context permits, each of them
"Sainsbury's Group Profit Estimate" the profit estimate of the Sainsbury's Group for the 52-week period ended 12 March 2016 as set out in paragraph 1 of Part A of Appendix 5 to this announcement
"Sainsbury's Interim Dividend Record Time" the date and time determined by the Sainsbury's Directors as being the time at which Sainsbury's Shareholders on the share register of Sainsbury's are entitled to receive
the interim dividend from Sainsbury's for the 28 weeks ending 24 September 2016
"Sainsbury's Share(s)" the existing Sainsbury's ordinary shares of 284/7pence each in the capital of Sainsbury's
"Scheme" the proposed scheme of arrangement under Part 26 of the 2006 Act between Home Retail Group plc and the holders of the Home Retail Group Shares, with or subject to any
modification, addition or condition approved or imposed by the Court and agreed by Home Retail Group plc and Sainsbury's
"SchemeCourt Order" the order of the Court sanctioning the Scheme under Part 26 of the 2006 Act
"Scheme Document" the document to be sent to Home Retail Group Shareholdersand persons with information rights containing, amongst other things, the Scheme and notices of the Home Retail
Group Meetings and proxy forms in respect of the Home Retail Group Meetings
"Scheme Effective Date" the date on which the Scheme becomes Effective
"Scheme Record Time" 6.00 p.m. on the date of the Court hearing to sanction the Scheme
"Scheme Shareholders" holders of Scheme Shares
"Scheme Shares" all Home Retail Group Shares: (i) in issue at the date of the Scheme Document; (ii) (if any) issued after the date of the Scheme Document but before the Voting Record
Time; and (iii) (if any) issued at or after the Voting Record Time and before the Scheme Record Time in respect of which the original or any subsequent holders thereof
are, or shall have agreed in writing to be, bound by the Scheme
"SEC" the US Securities and Exchange Commission
"Special Dividend" if Sainsbury's elects to implement the Acquisition by way of a Takeover Offer, the special dividend representing the sum of the Homebase Payment and the Additional Home
Retail Group Payment expected to be (subject to approval by the Home Retail Group plc Board) paid by Home Retail Group plc to the Home Retail Group Shareholders, as
further described in the Original Announcement
"subsidiary", "subsidiary undertaking" and "undertaking" shall be construed in accordance with the 2006 Act
"Takeover Code" the City Code on Takeovers and Mergers, as amended from time to time
"Takeover Offer" if Sainsbury's so elects, the offer by Sainsbury's for the entire issued and to be issued share capital of Home Retail Group plc by means of a takeover offer, including,
where the context so requires, any subsequent revision, variation, extension or renewal of such offer and includes any election available in connection with it
"Transformation Plan" the five-year plan launched by the Home Retail Group in October 2012 to reinvent Argos as a digital retail leader
"treasury" or "treasury shares" shares held as treasury shares as provided for in section 724 of the 2006 Act
"UBS" UBS Limited
"UK" or "United Kingdom" United Kingdom of Great Britain and Northern Ireland
"UKLA" the Financial Conduct Authority acting in its capacity as the competent authority for listing under Part VI of FSMA
"US" or "United States" the United States of America, its possessions and territories, all areas subject to its jurisdiction or any subdivision thereof, any State of the United States and the
District of Columbia
"US Exchange Act" the US Securities Exchange Act of 1934, as amended
"US Securities Act" the US Securities Act of 1933, as amended and the rules and regulations promulgated thereunder
"Voting Record Time" the time which shall be set out in the Scheme Document as being the time at which Home Retail Group Shareholders must be on the register in order to be entitled to vote
at the Home Retail Group Meetings
"Wider Home Retail Control Group" the Wider Home Retail Group, together with any other body corporate, partnership, joint venture or person (in each case, from time to time) in which any member of the
Wider Home Retail Group holds 10 per cent. or more of the voting power or the shares or over the management of which any member of the Wider Home Retail Group has
significant influence (within the meaning used in section 181(2)(c) of FSMA)
"Wider Home Retail Group" Home Retail Group and associated undertakings and any other body corporate, partnership, joint venture or person (in each case, from time to time) in which Home Retail
Group plc (and with effect from the Scheme becoming Effective, New TopCo) and such undertakings (aggregating their interests) have an interest of more than 20 per cent.
of the voting or equity capital or the equivalent
"Wider Sainsbury's Group" Sainsbury's Group and associated undertakings and any other body corporate, partnership, joint venture or person (in each case, from time to time) in which Sainsbury's
and such undertakings (aggregating their interests) have an interest of more than 20 per cent. of the voting or equity capital or the equivalent.
All times referred to are London time unless otherwise stated.
All references to "pence" or "£" are to the lawful currency of the United
Kingdom.
All references to statutory provision or law or to any order or regulation
shall be construed as a reference to that provision, law, order or regulation
as extended, modified, replaced or re-enacted from time to time and all
statutory instruments, regulations and orders from time to time made
thereunder or deriving validity therefrom.
Words importing the singular shall include the plural and vice versa, and
words importing the masculine gender shall include the feminine or neutral
gender.
This information is provided by RNS
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