Travis Perkins Plc Recommended Cash And Shares -7-

5th Jul 2010 07:00

Travis Perkins announced an interim management statement on 2 July 2010. In Travis Perkins' Interim Management Statement in May, it reported a strong rebound in trading following a slow start in the first two months of the year. This trend has continued through the remainder of the first half and Travis Perkins now expects to report a result for the six months to 30 June 2010 ahead of management expectations. The Travis Perkins Group's revenue for the six months ended 30 June 2010 was up by 4.7 per cent., with like-for-like sales up 3.4 per cent. Like-for-like turnover in the last two months is 10.3 per cent. ahead in merchanting and in the last nine weeks is 1.6 per cent. ahead in retail. Current trading continues to be ahead of management expectations. Merchanting For the six months ended 30 June 2010, merchanting division revenue increased by 6.1 per cent. including like-for-like growth of 5.3 per cent., compared to the same period in 2009. The increase in like-for-like sales was split 4.5 per cent. for general merchanting and 5.8 per cent. for specialist merchanting. Gross margins remained slightly lower than last year. Retail Revenue for Travis Perkins' retail division, on a delivered basis, for the 26-week period ended 30 June 2010, increased by 2.1 per cent., with like-for-like sales declining by 0.4 per cent. compared to the same period in 2009. Wickes continues to gain market share and maintained gross margins over this period. As previously indicated, the rate of market share gain is expected to begin to abate through 2010 as Wickes' new strategy in the kitchen and bathroom market begins to mature. +----+-----------------------------------------------------------+ | 9. | Information on BSS | +----+-----------------------------------------------------------+ BSS, headquartered in Leicester, is a leading distributor to specialist trades. The principal activities of the BSS Group are the distribution and sale of heating, ventilation and plumbing products, tools and industrial supplies to, amongst others, industrial contractors, domestic plumbers, independent merchants and industrial end users. The BSS Group's businesses operate primarily through three divisions, Domestic, Industrial and Specialist. Its operations are entirely based in the UK (439 branches) and the Republic of Ireland (3 branches). The BSS Group's revenue for the year ended 31 March 2010 was GBP1.35 billion and the BSS Group had an adjusted operating profit of GBP55.0 million with adjusted profit before tax of GBP49.6 million and an adjusted earnings per share of 28.5 pence. +-----+-----------------------------------------------------------+ | 10. | Implementation Agreement | +-----+-----------------------------------------------------------+ Travis Perkins and BSS have entered into the Implementation Agreement in relation to the Acquisition which governs their relationship during the period until the Acquisition becomes Effective or lapses or is withdrawn or the agreement is otherwise terminated. The parties have agreed, amongst other things, to co-operate with regard to the process of implementing the Acquisition. The agreement contains certain assurances and confirmations between the parties (including terms regarding the conduct of the business of the BSS Group and the Travis Perkins Group pending completion of the Acquisition). Break Fee Each of BSS and Travis Perkins have agreed to pay a break fee of GBP5,508,669 (such amount being exclusive of any amount in respect of VAT if any, but subject to a reduction to the extent such VAT is not recoverable by the payer) or, if the price per BSS Share pursuant to the Acquisition is revised, one per cent. of the value of BSS at the revised offer price (exclusive of VAT as aforesaid). Such break fee shall be payable by BSS (the "BSS Break Fee") if: (i) following the publication of this announcement, and before the Scheme or the Offer (as applicable) lapses, is withdrawn, terminates or otherwise fails or (with the consent of the Panel) is not made, an announcement regarding a Competing Proposal is made and that Competing Proposal, subsequently becomes or is declared unconditional in all respects or is otherwise completed or becomes effective; (ii) the BSS Directors do not in the Scheme Document unanimously and without qualification recommend the BSS Shareholders to vote in favour of the Scheme at the Scheme Meeting and in favour of the resolution at the BSS General Meeting or, if Travis Perkins elects to implement the Acquisition by means of an Offer, the BSS Directors do not in the Offer Document unanimously and without qualification recommend the BSS Shareholders to accept the Offer and thereafter the Scheme or the Offer (as applicable) lapses, is withdrawn, terminates or otherwise fails or (with the consent of the Panel) is not made or does not proceed other than (i) if the obligation to pay a break fee by Travis Perkins (as referred to below) (the "Travis Perkins Break Fee") has already been triggered; or (ii) following an event that leads to a BSS Protection Condition being invoked by BSS; or (iii) the BSS Directors withdraw, qualify or adversely modify the BSS Board Recommendation or agree or resolve to recommend a Competing Proposal other than (i) if the obligation to pay the Travis Perkins Break Fee has already been triggered; or (ii) following an event that leads to a BSS Protection Condition being invoked. For these purposes, BSS deciding to postpone the despatch of the Scheme Document (save to the extent attributable to a breach by Travis Perkins of its obligations under the Implementation Agreement) or postponing or adjourning either the Scheme Meeting and/or the BSS General Meeting shall (save to the extent attributable to any external circumstances beyond the control of BSS including where it is required to do so by the Court, BSS's articles of association, or applicable law or regulation (but not where required to do so by the Court if the adjournment or postponement is procured or instigated by or on behalf of BSS unless necessitated by such external circumstances beyond the control of BSS which makes such adjournment or postponement necessary as a practical matter)) constitute a modification of the BSS Board Recommendation. The Travis Perkins Break Fee shall be payable if: (i) the Travis Perkins Board Recommendation is not given or if it is subsequently withdrawn, qualified or adversely modified, in each case other than (i) if the obligation to pay the BSS Break Fee has already been triggered or (ii) following an event that leads to a Condition to the Acquisition (other than a BSS Protection Condition or the Regulatory Condition) being invoked by Travis Perkins; or (ii) the Regulatory Condition is not satisfied or waived by Travis Perkins ("Non-Satisfaction") on or before the Court hearing to sanction the Scheme (as defined, where applicable, pursuant to the Implementation Agreement) or the Acquisition (or any part of it) is referred to the United Kingdom Competition Commission (a "Reference") save where such Non-Satisfaction or Reference is as a result of BSS not complying with certain obligations specified in the Implementation Agreement. If a break fee becomes payable, BSS or Travis Perkins (as applicable) shall pay the break fee in immediately available funds (without any deductions or withholding, save only as required by law, and without regard to any lien, right of set-off, counterclaim or otherwise), within five Business Days after the date on which the relevant break fee trigger occurs. Non-solicitation Undertakings The Implementation Agreement includes an undertaking from BSS not, directly or indirectly, to solicit, initiate, encourage or otherwise seek to procure any Competing Proposal to the Acquisition. In addition, BSS has agreed to notify Travis Perkins promptly, and in any event, within 24 hours, of any approach made or any circumstances indicating that an approach is likely to be made to BSS in relation to a Competing Proposal and to notify Travis Perkins of the material terms of such Competing Proposal. BSS has also agreed to keep Travis Perkins informed as to the progress of any such Competing Proposal. Matching Rights BSS has also agreed with Travis Perkins that, in the event BSS receives a Competing Proposal or a Competing Proposal is announced, the BSS Directors will not (a) accept, approve, recommend or enter into any agreement to implement such Competing Proposal, (b) withhold, withdraw, change, qualify or adversely modify its recommendations or advice to the BSS Shareholders in respect of the Acquisition, or (c) withdraw or fail to proceed with the Scheme, unless Travis Perkins fails to announce within 48 hours (excluding for the purposes of calculating the 48 hour period any hours falling between 6pm on a Friday and 9am on a Monday and any public or bank holidays in England and Wales) following it being notified of such Competing Proposal by BSS its firm intention to improve the terms of the Acquisition, that is, so as to provide for a price per BSS Share which is equal to or more than the price per BSS Share offered under the Competing Proposal or so that such terms otherwise provide financial value to the BSS Shareholders which is equal to or more than the value provided by the Competing Proposal (the "Revised Offer"). If Travis Perkins announces a Revised Offer that provides equal or better value than such Competing Proposal within the 48 hour period, the BSS Board has agreed that the Revised Offer will be the (MORE TO FOLLOW) Dow Jones Newswires July 05, 2010 02:00 ET (06:00 GMT)