NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION.
This announcement is not an announcement of a firm intention to make an offer under Rule 2.7 of the Takeover Code (the "Code") and there can be no certainty that an offer will be made, nor as to the terms on which any offer will be made.
5 January 2016
For immediate release
J Sainsbury plc statement regarding a possible offer for Home Retail Group plc
J Sainsbury plc ("Sainsbury's") confirms that it made an approach in November to Home Retail Group plc's ("Home Retail Group") Board of Directors regarding a possible offer for Home Retail Group, in the form of Sainsbury's shares and cash. The approach was rejected by Home Retail Group and Sainsbury's is considering its position. There can be no certainty that this will result in a formal offer, nor as to the terms of any such offer.
Over the last year, Sainsbury's has been working in partnership with Home Retail Group trialling a number of Argos concessions in Sainsbury's stores. The Board of Sainsbury's believes the combination of Sainsbury's and Home Retail Group is an attractive proposition for the customers and shareholders of both companies, establishing a platform for long-term value creation. The combination is an opportunity to bring together two of the UK's leading retail businesses, with complementary product offers, focused on delivering quality products and services at fair prices, through an integrated, multi-channel proposition.
Specifically, the Board of Sainsbury's believes a combination of Home Retail Group and Sainsbury's will:
· Create a food and non-food retailer of choice for customers, building on the strong heritages of both businesses whose brands are renowned for trust, quality, value and customer service;
· Deliver profitable sales growth by offering customers the right combination of location, range, speed and flexibility, across a wide range of products;
· Bring together multi-channel capabilities and delivery networks for fast, flexible and reliable delivery to store or to home across a wide range of food and non-food products;
· Optimise the use of their combined retail space. The combined entity would have attractively located stores across the UK, with an enhanced supply and delivery network and a strong presence across food and grocery, clothing, homewares, toys, stationery, electricals, furniture and other general merchandise;
· Create a financial services proposition that will provide a wider range of customer-centric services including credit cards, loans, deposits, insurance and ATMs;
· Deliver revenue synergy potential through the ability to sell to each other's customers, including the operation of Argos concessions within Sainsbury's stores, and the sale of Sainsbury's products and services through Argos's network;
· Provide additional cost synergy potential through property rationalisation, scale benefits and operational efficiencies.
Sainsbury's reserves the right to introduce other forms of consideration and/or vary the mix of consideration.
In accordance with Rule 2.6(a) of the Code, Sainsbury's must, by not later than 5.00 p.m. on 2 February 2016, either announce a firm intention to make an offer for Home Retail Group in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer for Home Retail Group, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. This deadline will only be extended with the consent of Home Retail Group and the Takeover Panel in accordance with Rule 2.6(c) of the Code.
A further statement will be made as appropriate.
For further information please contact:
Investor Relations, J Sainsbury plc
Duncan Cooper +44 (0) 20 7695 4740
Media Relations, J Sainsbury plc
Louise Evans +44 (0) 7341 070 270
Morgan Stanley +44 (0) 20 7425 8000
UBS +44 (0) 20 7567 8000
Hew Glyn Davies
Anna Richardson Brown
Brunswick +44 (0) 20 7404 5959
Important notices relating to financial advisers
Morgan Stanley & Co. International plc ("Morgan Stanley") which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the UK is acting as joint financial adviser to Sainsbury's and no one else in connection with the matters set out in this announcement. 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 contents of this announcement or any other matter referred to herein.
UBS Limited ("UBS") which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the UK is acting as joint financial adviser to Sainsbury's and no one else in connection with the matters set out in this announcement. In connection with such matters, UBS, its affiliates, and its or 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 contents of this announcement or any other matter referred to herein.
This announcement is not intended to, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities whether pursuant to this announcement or otherwise.
The distribution of this announcement in jurisdictions outside the United Kingdom may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about, and observe, such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities law of any such jurisdiction.
Publication on a website
A copy of this announcement will be made available, subject to certain restrictions relating to persons resident in restricted jurisdictions, on Sainsbury's website at http://www.j-sainsbury.co.uk/investor-centre/investor-news/rns/#tabbed_section by no later than 12 noon (London time) on 6 January 2016. The content of the website referred to in this announcement is not incorporated into and does not form part of this announcement.
Disclosure requirements of the Code
Under Rule 8.3(a) of the Code, any person who is interested in 1% 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% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.
Forward looking statements
This announcement may contain certain "forward looking statements". The forward-looking statements contained in this announcement include statements relating to Sainsbury's proposal to the Board of Home Retail Group, and other statements other than historical facts. Forward looking statements often use words such as "believe", "expect", "estimate", "intend", "anticipate" and words of a similar meaning. These forward-looking statements may include statements relating to the expected characteristics of the combined group and expected benefits of the proposed transaction. You should not place undue reliance on these forward-looking statements, which reflect the current views of Sainsbury's, are subject to risks and uncertainties about Sainsbury's and Home Retail Group and are dependent on many factors, some of which are outside of Sainsbury's control. There are important factors, risks and uncertainties that could cause actual outcomes and results to be materially different, including that there can be no certainty that the approach in respect of the proposed transaction described in this announcement will result in a formal offer, nor as to the terms on which any such offer may be made. Except as required by law, Sainsbury's undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Rule 2.10 information
In accordance with Rule 2.10 of the Takeover Code, Sainsbury's confirms that as at the close of business on 4 January 2016 it had the following securities in issue:
· 1,923,739,622 ordinary shares of 28 4/7 pence each admitted to trading on the London Stock Exchange's main market for listed securities. The International Securities Identification Number for Sainsbury's ordinary shares is B00B019KW72;
· A sponsored Level 1 American Depositary Receipts ("ADRs") programme for which The Bank of New York Mellon acts as the depositary bank. Each ADR represents four ordinary shares in the capital of Sainsbury's. The ADRs trade in the over-the-counter market in the United Sates under the trading symbol JSAIY and the ISIN is US4662492085;
· GBP 450,000,000 of convertible bonds due in November 2019 with a coupon of 1.25 per cent. per annum (the "2019 Convertible Bonds"). The 2019 Convertible Bonds are convertible into ordinary shares in Sainsbury's. The International Securities Identification Number for the 2019 Convertible Bonds is XS1139087933; and
· GBP 250,000,000 of subordinated perpetual convertible bonds with a coupon of 2.875 per cent. per annum (the "Perpetual Convertible Bonds"). The Perpetual Convertible Bonds are convertible into ordinary shares in Sainsbury's until 23 July 2021. The International Securities Identification Number for the Perpetual Convertible Bonds is XS1268412993.