Travis Perkins Plc Recommended Cash And Shares -5-

5th Jul 2010 07:00

| | for each BSS | 232.91 pence in | | | | Share | cash | | +-----------+-------------------+-------------------+----------+ | | | and | | +-----------+-------------------+-------------------+----------+ | | | 0.2608 New Travis | | | | | Perkins Shares | | +-----------+-------------------+-------------------+----------+ and so in proportion for any number of BSS Shares held. BSS Shareholders also remain entitled to receive and retain the BSS Final Dividend of 6.09 pence per BSS Share as announced in BSS's preliminary results on 25 May 2010. The BSS Final Dividend, subject to BSS Shareholder approval at BSS's annual general meeting, will be payable as at 30 July 2010 to BSS Shareholders on the register of members on 2 July 2010 and the ex-dividend date was 30 June 2010. In its interim management statement on 2 July 2010, Travis Perkins announced that, in the absence of unforeseen circumstances, it expects to declare an Interim Dividend. Holders of the New Travis Perkins Shares will also be entitled to receive the Interim Dividend subject to certain exceptions as further explained in paragraph 16 below. A Mix and Match Facility will also be made available pursuant to which BSS Shareholders (other than certain Overseas Persons) may, subject to availability, elect to vary the proportions in which they receive New Travis Perkins Shares and cash in respect of their holdings of BSS Shares. Further details of the Mix and Match Facility are set out in paragraph 11 below. A Loan Note Alternative will be made available to BSS Shareholders (other than certain Overseas Persons) enabling them to take Loan Notes instead of all or part of the cash to which they would otherwise be entitled, including any additional cash consideration to which they become entitled as a result of an election under the Mix and Match Facility. Further details of the Loan Note Alternative are set out in paragraph 12 below. Assuming a maximum number of 33.4 million New Travis Perkins Shares will be issued pursuant to the Acquisition, BSS Shareholders will hold Travis Perkins Shares representing approximately 13.8 per cent. of the issued share capital of the Enlarged Group. Based on the Closing Price of 754.5 pence per Travis Perkins Share on 2 July 2010, being the last Business Day before this announcement, the Acquisition values each BSS Share at approximately 435.8 pence and the issued and to be issued share capital of BSS at approximately GBP557.6 million. These terms represent a premium of approximately: +----+-----------------------------------------------------------+ | * | 4.7 per cent. to the Closing Price of 416.2 pence for | | | each BSS Share on 2 July 2010, the last Business Day | | | prior to this announcement; and | +----+-----------------------------------------------------------+ | | | +----+-----------------------------------------------------------+ | * | 34.1 per cent. to the Closing Price of 325 pence per BSS | | | Share on 27 May 2010, the last Business Day prior to the | | | announcement that the boards of Travis Perkins and BSS | | | were in advanced discussions regarding a possible offer. | +----+-----------------------------------------------------------+ The offer represents a multiple of 10.7 times BSS's adjusted 2010 EBITDA of GBP61.9 million. Fractions of New Travis Perkins Shares will not be allotted or issued pursuant to the Scheme. Fractional entitlements to New Travis Perkins Shares will be aggregated and sold in the market and the net proceeds of sale will be distributed pro rata to persons entitled thereto. +----+-----------------------------------------------------------+ | Upon the Scheme becoming Effective: | +----------------------------------------------------------------+ | | | +----+-----------------------------------------------------------+ | * | the Scheme Shares will be cancelled and in their place | | | new ordinary shares in the capital of BSS will be issued | | | to Travis Perkins, whereupon BSS will become a private | | | limited company and a wholly-owned subsidiary of Travis | | | Perkins; | +----+-----------------------------------------------------------+ | | | +----+-----------------------------------------------------------+ | * | the cash and/or Loan Notes due to each BSS Shareholder | | | pursuant to the Scheme will be paid or issued to such BSS | | | Shareholder within 14 days of the Effective Date; and | +----+-----------------------------------------------------------+ | | | +----+-----------------------------------------------------------+ | * | the New Travis Perkins Shares will be issued credited as | | | fully paid and will rank pari passu in all respects with | | | the Travis Perkins Shares in issue at the time the New | | | Travis Perkins Shares are issued pursuant to the | | | Acquisition, including the right to receive and retain | | | dividends and other distributions declared, made or paid | | | by reference to a record date falling after the Effective | | | Date. | +----+-----------------------------------------------------------+ +----+-----------------------------------------------------------+ | 3. | Recommendation | +----+-----------------------------------------------------------+ The BSS Directors, who have been so advised by Lazard and RBS Hoare Govett, consider the terms of the Acquisition to be fair and reasonable. In providing their advice to the BSS Directors, Lazard and RBS Hoare Govett have taken into account the commercial assessments of the BSS Directors. Lazard is acting as the financial adviser to BSS for the purposes of providing independent advice to the BSS Directors on the Acquisition under Rule 3 of the City Code. Accordingly, the BSS Directors intend unanimously to recommend that BSS Shareholders vote in favour of the resolutions to be proposed at the Scheme Meeting and the BSS General Meeting, as they have irrevocably undertaken to do (or procure to be done) in respect of their own beneficial holdings, amounting in aggregate to 283,648 BSS Shares, representing approximately 0.23 per cent. of BSS's existing issued share capital. +----+-----------------------------------------------------------+ | 4. | Background to, and reasons for, the Acquisition | +----+-----------------------------------------------------------+ The Travis Perkins Board has, for some time, believed that further consolidation in the UK building materials merchanting sector offers significant scale benefits in terms of cost savings and improved operational efficiency to those that proactively participate in such consolidation. In addition, Travis Perkins believes that the recession accelerated the long-term trend of customers' increasing use of different distribution channels to source building materials. Travis Perkins believes this trend is set to continue, especially in light of the challenging outlook for public sector spending, albeit in part offset by an uneven private sector recovery. Against this backdrop, Travis Perkins believes there is a powerful strategic logic which underpins a combination of Travis Perkins' plumbing and heating activities with BSS. Creates leading business in an attractive market The combination would create the leading plumbing and heating trade and retail distribution business in the UK, in addition to Travis Perkins' leading position in UK heavy side distribution. The Enlarged Group would have complementary strengths across the market, serving installers, plumbers, plumbing contractors and heating and ventilation engineers, providing Travis Perkins with access to new plumbing and heating market segments. In particular, the Acquisition will combine Travis Perkins' scale and strengths, including margin management, with BSS's expertise in sales and marketing. The Enlarged Group would therefore be well positioned to capitalise on the attractive long-term growth drivers of the plumbing and heating market, namely: +----+-----------------------------------------------------------+ | * | shorter plumbing and heating refurbishment cycles than | | | other construction sectors; | +----+-----------------------------------------------------------+ | | | +----+-----------------------------------------------------------+ | * | a backlog of required upgrading work; | +----+-----------------------------------------------------------+ | | | +----+-----------------------------------------------------------+ | * | rising energy costs, encouraging more fuel efficient | | | systems; | +----+-----------------------------------------------------------+ | | | +----+-----------------------------------------------------------+ (MORE TO FOLLOW) Dow Jones Newswires July 05, 2010 02:00 ET (06:00 GMT)