Offer for Peterhouse Group
Babcock International Group PLC
22 March 2004
Not for release or publication in or into the United States, Canada, Japan or
Australia
Recommended Offer to acquire Peterhouse Group plc for £105.7 million
to be made by Credit Suisse First Boston (Europe) Limited
on behalf of Babcock International Group PLC
22 March 2004
Babcock International Group expands in Civil Support Services major strategic
step
Babcock International Group PLC ('Babcock'), the support services company,
announces that the Board of Babcock and the Independent Directors of Peterhouse
Group plc ('Peterhouse') have agreed the terms of a recommended cash and shares
offer for Peterhouse to be made by Credit Suisse First Boston (Europe) Limited
('Credit Suisse First Boston') on behalf of Babcock, to acquire the entire
issued, and to be issued, ordinary share capital of Peterhouse.
TRANSACTION SUMMARY
• The Offer values each Peterhouse Share at 220 pence (which comprises
216 pence per share and the right to receive the proposed final dividend of 4
pence per share recommended on 9 March 2004) and the issued share capital of
Peterhouse at £105.7 million.
• The Offer will be 1.1858 New Babcock Shares and 64.8 pence in cash
plus the right to receive the proposed final dividend of 4 pence per share
recommended on 9 March 2004 for each Peterhouse Share.
• The Offer represents:
- a premium of 56.9 per cent. to the average closing middle market
price of approximately 140.2 pence per Peterhouse Share in the period between 1
December 2003 and 30 January 2004; and
- a premium of 26.1 per cent. over the closing middle market price of
174.5 pence per Peterhouse Share as at 30 January 2004, being the last business
day prior to the announcement by Peterhouse that it had received an approach
which might, or might not, lead to an offer for the whole of the issued share
capital of Peterhouse.
ACQUISITION RATIONALE
The Directors of Babcock believe the Acquisition:
• furthers Babcock's strategy to broaden its customer base in the
civil support services sector, which will provide greater security of earnings
and enhanced growth opportunities;
• gives Babcock entry into a number of new markets where Peterhouse is
well established in terms of both market share and reputation;
• provides opportunities to realise significant operational and
financial synergies. The Directors of Babcock have identified approximately £4
million per annum of operational cost savings for the Enlarged Group*.
Financial synergies are expected to add approximately a further £1.3 million per
annum in after tax earnings*; and
• will enhance earnings, pre-goodwill and exceptional items, and yield
a return on investment in excess of Babcock's weighted average cost of capital,
as a result of the synergies outlined above, in the first full financial year
following the completion of the Acquisition.**
Commenting on the Offer, Gordon Campbell, Chairman of Babcock said:
'Babcock has an excellent track record of integrating and managing businesses
similar to Peterhouse. I am confident the Enlarged Group will produce a strong
commercial offering, cost savings and a well-balanced portfolio. This will add
value for both sets of shareholders, employees and customers.'
Commenting on the Offer, Ted Adams, Deputy Chairman of Peterhouse said:
'Peterhouse fits well with Babcock and the Enlarged Group will have a
significant presence in the infrastructure and support services markets. The
Independent Directors of Peterhouse therefore unanimously recommend that
Peterhouse Shareholders accept the Offer.'
Babcock has received irrevocable undertakings from the Independent Directors of
Peterhouse in respect of 363,004 Peterhouse Shares in aggregate representing 0.8
per cent. of Peterhouse's existing entire issued ordinary share capital. These
irrevocable undertakings will only cease to be binding in the event that the
Offer lapses or is withdrawn. In addition, non-binding indications of an
intention to accept the Offer have been received from other Peterhouse
Shareholders in respect of 5,746,583 Peterhouse Shares in aggregate representing
12.0 per cent. of Peterhouse's existing issued ordinary share capital.
This summary should be read in conjunction with the full text of the following
Announcement. Appendix III to the following Announcement contains definitions
of certain expressions used in this summary and the following Announcement:
A presentation to analysts will be held today, 22 March 2004, at Financial
Dynamics, Holborn Gate, 26 Southampton Buildings, London, WC2, at 12:30pm.
ENQUIRIES
Babcock International Group PLC +44 (0)20 7291 5000
Gordon Campbell, Chairman
Peter Rogers, Chief Executive
Bill Tame, Finance Director
Peterhouse Group plc +44 (0)1422 374 757
Ted Adams, Deputy Chairman
Alan Robertson, Chief Executive
John O'Kane, Finance Director
Credit Suisse First Boston (Financial Adviser to Babcock) +44 (0)20 7888 8888
Justin Crookenden
Richard Probert
Cazenove (Broker to Babcock) +44 (0)20 7588 2828
Malcolm Moir
Dermot McKechnie
Close Brothers (Financial Adviser to Peterhouse) +44 (0)20 7655 3100
Peter Alcaraz
Gareth Davies
Financial Dynamics (Public Relations Adviser to Babcock) +44 (0)20 7831 3113
Andrew Lorenz
Richard Mountain
Buchanan Communications (Public Relations Adviser to Peterhouse) +44 (0)20 7466 5000
Tim Anderson
Isabel Podda
James Strong
* The expected operational cost savings and financial synergies have been
calculated on the basis of the existing cost and operating structures of the
companies and by reference to current prices and the current regulatory
environment. These statements of estimated cost savings and one-off costs for
achieving them relate to future actions and circumstances which, by their
nature, involve risks, uncertainties and other factors. Because of this, the
cost savings referred to may not be achieved, or those achieved could be
materially different from those estimated. This statement should not be
interpreted to mean that the earnings per share in the first full financial year
following the Acquisition, or in any subsequent period, would necessarily match
or be greater than those for the relevant preceding financial period. Please
refer to this paragraph when reading any text in the body of this announcement
marked with an asterisk.
** The statement that the proposed Offer will be earnings enhancing,
pre-goodwill and exceptional items, in the first full financial year following
the completion of the Acquisition when compared to the earnings per share that
Babcock would have achieved without the Acquisition, and will yield a return on
investment in excess of its weighted average cost of capital, does not
constitute a profit forecast and should not be interpreted to mean that the
earnings per share in the first full financial year following the Acquisition,
or in any subsequent period, would necessarily match or be greater than those
for the relevant preceding financial period. Please refer to this paragraph
when reading any text in the body of this announcement marked with two
asterisks.
This Announcement does not constitute an offer or an invitation to purchase any
securities. The laws of the relevant jurisdictions may affect the availability
of the Offer to persons not resident in the United Kingdom. Persons who are not
resident in the United Kingdom, or who are subject to the laws of any
jurisdiction other than the United Kingdom, should inform themselves about, and
observe, any applicable requirements. Further details in relation to overseas
shareholders will be contained in the Offer Document.
Credit Suisse First Boston, which is regulated in the United Kingdom by the
Financial Services Authority, is acting only for Babcock and no-one else in
connection with the Offer and will not regard any other person as its client or
be responsible to any person other than Babcock for providing the protections
afforded to clients of Credit Suisse First Boston, nor for giving advice in
relation to the Offer.
Cazenove, which is regulated in the United Kingdom by the Financial Services
Authority, is acting only for Babcock and no-one else in connection with the
Offer and will not regard any other person as its client or be responsible to
any person other than Babcock for providing the protections afforded to clients
of Cazenove, nor for giving advice in relation to the Offer.
Close Brothers, which is regulated in the United Kingdom by the Financial
Services Authority, is acting only for Peterhouse and no-one else in connection
with the Offer and will not regard any other person as its client or be
responsible to any person other than Peterhouse for providing the protections
afforded to clients of Close Brothers, nor for giving advice in relation to the
Offer.
This Announcement does not constitute, or form part of, any offer for, or any
solicitation of any offer for, securities. Any acceptance or other response to
the Offer should be made only on the basis of information referred to in the
Offer Document which Babcock intends to despatch shortly to Peterhouse
Shareholders and, for information only, to holders of options under the
Peterhouse Share Option Schemes.
The Offer will not be made, directly or indirectly, in or into, or by use of the
mails of, or by any means or instrumentality (including, without limitation,
telephonically or electronically) of interstate or foreign commerce of, or any
facility of a national securities exchange of, the United States, Canada,
Australia or Japan and will not be capable of acceptance by any such use, means,
instrumentality or facility. Accordingly, neither this Announcement nor the
Offer Document nor the accompanying Form of Acceptance is being, and must not
be, mailed or otherwise forwarded, transmitted, distributed or sent in, into or
from the United States, Canada, Japan or Australia. Doing so may render invalid
any purported acceptance of the Offer. All Peterhouse Shareholders or other
persons (including nominees, trustees or custodians) who would or otherwise
intend to, or may have a contractual or legal obligation to, forward this
Announcement or the Offer Document or the accompanying Form of Acceptance to any
jurisdiction outside the United Kingdom, should refrain from doing so and seek
appropriate professional advice before taking any action.
This Announcement is not an offer of securities for sale in the United States
and the New Babcock Shares have not been, and will not be, registered under the
US Securities Act or under the securities laws of any state, district or other
jurisdiction of the United States, Canada, Australia or Japan and no regulatory
clearances in respect of the New Babcock Shares have been, or will be, applied
for in any jurisdiction other than the UK. Accordingly, unless an exemption
under the US Securities Act or other relevant securities laws is applicable, the
New Babcock Shares are not being, and may not be, offered, sold, resold,
delivered or distributed, directly or indirectly, in or into the United States,
Canada, Australia or Japan or to, or for the account or benefit of, any US
person or any person resident in Canada, Australia or Japan.
This Announcement contains a number of forward-looking statements relating to
Babcock, Peterhouse and the Enlarged Group with respect to, among others, the
following: financial condition; results of operations; the business of the
Enlarged Group; future benefits of the Acquisition; and management plans and
objectives. Babcock and Peterhouse consider any statements that are not
historical facts as 'forward-looking statements'. They involve a number of
risks and uncertainties that could cause actual results to differ materially
from those suggested by the forward-looking statements. Important factors that
could cause actual results to differ materially from estimates or forecasts
contained in the forward-looking statements include, among others, the following
possibilities: future revenues are lower than expected; costs or difficulties
relating to the integration of the businesses of Babcock and Peterhouse, or of
other future acquisitions, are greater than expected; expected cost savings from
the Acquisition or from other future acquisitions are not fully realised or
realised within the expected time frame; competitive pressures in the industry
increase; general economic conditions or conditions affecting the relevant
industries, whether internationally or in the places Babcock and Peterhouse do
business, are less favourable than expected, and/or conditions in the securities
market are less favourable than expected.
The Directors of Babcock accept responsibility for the information contained in
this announcement other than paragraph 7 relating to the 'Background to and
reasons for the Independent Directors of Peterhouse to recommend the Offer',
paragraph 8 relating to the 'Recommendation' and information relating to the
Independent Directors of Peterhouse. To the best of the knowledge and belief of
the Directors of Babcock (who have taken all reasonable care to ensure that such
is the case), the information contained in this announcement for which they
accept responsibility is in accordance with the facts and does not omit anything
likely to affect the import of such information.
The Independent Directors of Peterhouse accept responsibility for the
information contained in this announcement in paragraph 7 relating to the '
Background to and reasons for the Independent Directors of Peterhouse to
recommend the Offer', paragraph 8 relating to the 'Recommendation' and
information relating to the Independent Directors of Peterhouse. To the best of
the knowledge and belief of the Independent Directors of Peterhouse (who have
taken all reasonable care to ensure that such is the case), the information
contained in this announcement for which they accept responsibility is in
accordance with the facts and does not omit anything likely to affect the import
of such information.
Not for release or publication in or into the United States, Canada, Japan or
Australia
Recommended Offer to acquire Peterhouse Group plc for £105.7 million
to be made by Credit Suisse First Boston (Europe) Limited
on behalf of Babcock International Group PLC
22 March 2004
1. Introduction
The Board of Babcock and the Independent Directors of Peterhouse are pleased to
announce that they have agreed the terms of a recommended cash and shares offer
for Peterhouse to be made by Credit Suisse First Boston on behalf of Babcock, to
acquire the entire issued and to be issued ordinary share capital of Peterhouse.
In view of the involvement of David Jackson and Simon Foster in a potential
offer for Peterhouse, the Independent Directors of Peterhouse (comprising Ted
Adams, Ian Richardson, Peter Corley, John O'Kane, Alan Robertson and Janette
Anderson) being the directors of Peterhouse who do not have a financial interest
in such potential offer, nor a conflicting interest with regard to the Offer,
unanimously recommend that Peterhouse Shareholders accept the Offer, as they
have irrevocably undertaken to do in respect of their own beneficial holdings
of, in aggregate, 363,004 Peterhouse Shares. In doing so, the Independent
Directors have taken advice from Close Brothers. In providing its advice to the
Independent Directors of Peterhouse, Close Brothers has taken into account the
commercial assessments of the Independent Directors of Peterhouse.
2. The Offer
On behalf of Babcock, Credit Suisse First Boston will offer to acquire, on the
terms and subject to the conditions to be set out in a formal Offer Document and
in the accompanying Form of Acceptance, the entire issued and to be issued
ordinary share capital of Peterhouse on the following basis:
for each Peterhouse Share 1.1858 Babcock Shares and 64.8 pence in cash plus the
recommended final dividend of 4 pence per share
and so in proportion for any other number of Peterhouse Shares.
The Offer values the entire issued and to be issued ordinary share capital of
Peterhouse at £105.7 million and each Peterhouse Share at 220 pence (which
comprises 216 pence per share and the right to receive the proposed final
dividend of 4 pence per share recommended on 9 March 2004), representing:
(a) a premium of 56.9 per cent. to the average closing middle
market price of approximately 140.2 pence per Peterhouse Share in the period
between 1 December 2003 and 30 January 2004;
(b) a premium of 26.1 per cent. over the closing middle
market price of 174.5 pence per Peterhouse Share as at 30 January 2004, being
the last business day prior to the announcement by Peterhouse that it had
received an approach which might or might not lead to an offer for the whole of
the issued share capital of Peterhouse;
(c) a discount of 0.9 per cent. over the closing middle
market price of 222 pence per Peterhouse Share as at 19 March 2004, the last
business day prior to the announcement of the Offer; and
(d) an exit multiple of 12.4 on a 2003 fully diluted and
adjusted earnings basis.
The Offer is deemed to include the payment by Peterhouse of the recommended
final dividend of 4 pence per Peterhouse Share (as set out in the Peterhouse
Preliminary Results Announcement). In light of the Offer, the record date in
respect of the recommended final dividend has been changed to 13 April 2004
rather than 30 April 2004 as previously announced. In the event that the Offer
becomes or is declared unconditional in all respects prior to the time when such
final dividend is to be approved, Babcock will duly approve payment of such
final dividend.
The conditions and certain further terms of the Offer are set out in Appendix I
to this Announcement.
Full acceptance of the Offer (assuming full exercise of options under the
Peterhouse Share Option Schemes where the exercise price is less than the Offer)
would involve the issue of up to 57,058,275 New Babcock Shares (representing
approximately 27.5 per cent. of the enlarged issued share capital of the
Enlarged Group).
As fractions of New Babcock Shares will not be allotted or issued to persons
accepting the Offer, fractional entitlements to New Babcock Shares will be
aggregated and sold in the market and the net proceeds of sale will be retained
for the benefit of the Enlarged Group.
The Peterhouse Shares will be acquired pursuant to the Offer fully paid and free
from all liens, charges, equitable interests, encumbrances and rights of
pre-emption and any other interests of any nature whatsoever and together with
all rights now or hereafter attaching thereto including voting rights and the
right to receive all dividends or other distributions declared made or paid
after the date of the Offer save for the recommended final dividend of 4 pence
per Peterhouse Share announced on 9 March 2004.
The New Babcock Shares will be issued credited as fully paid and will rank pari
passu in all respects with existing Babcock Shares and will be entitled to all
dividends and other distributions declared, made or paid after the date of the
Offer, including the final Babcock dividend for the year ended 31 March 2004
assuming the Offer becomes wholly unconditional as to acceptances before the
record date, which is expected to be on or about 9 July 2004, for any final
Babcock dividend for the year ended 31 March 2004.
3. Mix and Match Facility
Peterhouse Shareholders may elect under the terms of the Offer, subject to
availability, to vary the proportions in which they receive New Babcock Shares
and cash consideration under the Offer in respect of their holdings of
Peterhouse Shares. However, the total number of New Babcock Shares to be issued
and the maximum aggregate amount of cash to be paid under the Offer will not be
varied as a result of elections under the Mix and Match Facility. Accordingly,
satisfaction of elections made by Peterhouse Shareholders under the Mix and
Match Facility will depend on the extent to which other Peterhouse Shareholders
make offsetting elections. Satisfaction of elections under the Mix and Match
Facility will be effected on the basis of 127.5 pence in cash for each New
Babcock Share (and vice versa). To the extent that elections cannot be
satisfied in full, they will be scaled down on a pro rata basis.
As a result, Peterhouse Shareholders who make an election under the Mix and
Match Facility will not necessarily know the exact number of New Babcock Shares
or the amount of cash they will receive until settlement of the consideration
under the Offer.
Elections under the Mix and Match Facility will not affect the entitlements of
those Peterhouse Shareholders who do not make any such elections.
The Mix and Match Facility will remain open until the first closing date of the
Offer. If the Offer is not then unconditional as to acceptances, Babcock may
extend the Mix and Match Facility to a later date. If the Mix and Match
Facility has been closed, Babcock reserves the right to reintroduce a Mix and
Match Facility, subject to the rules of the City Code. The Mix and Match
Facility is conditional on the Offer becoming or being declared unconditional in
all respects.
4. Background to and reasons for the Offer
Babcock's strategy for the last three years has been to transform its business
from that of an engineering conglomerate into a support services company. This
was predicated on the Directors' belief that services companies offer higher
growth opportunities and more secure earnings than engineering conglomerates.
This part of the strategy has now been completed with the sale of all the
materials handling businesses which comprised 50 per cent. of Babcock's annual
turnover some three years ago. This turnover has been replaced by growth in the
support services provided by Babcock which have developed both organically and
by acquisition. The successful acquisitions of Hunting Defence Services and SGI
have added to Babcock's position as a major service provider to the defence
sector.
Growth has been achieved by major contract wins for the management of Her
Majesty's Naval Base Clyde and the Ministry of Defence's Single Living
Accommodation Modernisation programme. Growth is expected to continue with the
securing of the RAF Valley Contract worth £65 million over the next five years,
Babcock's selection, in a joint venture with Bovis Lend Lease, as preferred
bidder on the South West Regional Prime Contract (expected to result in an
aggregate contribution to turnover in excess of £450 million over the next seven
years) and with the appointment of a Babcock led consortium as sole bidder for
the operation of the Royal School of Military Engineering. Turnover on
continuing businesses in the six months to 30 September 2003 was 38 per cent.
higher than in the six months to 30 September 2002. Operating profit from
continuing businesses increased by 22 per cent. when comparing the same two six
month periods.
In the period from 1 November 2000 to 19 March 2004, £100 invested in Babcock's
shares would have increased to £120, whereas the same figure invested in the
FTSE All Share Index would, on the same basis, have fallen to £79.
Whilst developing Babcock's business with the Ministry of Defence has been an
important element in its transformation, it has always been part of the strategy
to seek a substantial presence in civil markets. To achieve this in a
reasonable time frame will require the acquisition of a company which has such a
presence. Peterhouse, with well established positions in the rail,
telecommunications and power transmission support services markets, provides
such an opportunity.
The combination of the existing Babcock businesses with those of Peterhouse
would have led, on a pro forma basis for 2003, to an enlarged group in which
defence related turnover would have been approximately 37 per cent. of combined
group turnover compared to 70 per cent. in Babcock's existing business during
the year to 31 March 2003.
Peterhouse's involvement in the rail sector is through its subsidiary First
Engineering, which has significant market positions in Scotland and North West
England in track renewals and signalling. In power transmission, Peterhouse
holds over 20 per cent. of the market by reference to the annual spend of NGT on
power transmission line refurbishment, and in telecommunications, Peterhouse has
a significant market share in relation to its principal service of cellular
antennae rigging. The Directors believe that in order for these cellular
operators to preserve their margins they will increasingly look to outsource
their non-core activities.
The Directors believe that Babcock's skills and experience are in managing large
contracts with high technical and service content and in satisfying the needs of
large, often government owned, customers. This is similar to the business model
of Peterhouse and hence the Directors believe that the two businesses complement
each other. There is scope for cost savings to be made in a number of areas
including administration, property, back office services and agency labour. At
the operating level there are also a number of overlaps where further economies
can be anticipated.
The support services business in the UK is characterised by a large number of
small companies but increasingly large and complex projects. The Directors
believe that the Enlarged Group will be better placed to secure these
opportunities. Integration with Babcock's existing Infrastructure Services
business in Africa and the UK as well as Engineering Services at Rosyth is
expected to offer further potential opportunities for growth.
The Directors estimate that the Acquisition will lead to a reduction in costs in
the Enlarged Group of approximately £4 million per annum following the
completion of the Acquisition.* Financial synergies are expected to add
approximately a further £1.3 million per annum in after tax earnings.*
The Directors believe that the ongoing tax rate for the enlarged business in the
immediate future is expected to be approximately 24 per cent., including the
financial synergies referred to above.
Taking into account these benefits the Directors believe that the proposed Offer
will be earnings enhancing, pre-goodwill and exceptional items, and will yield a
return on investment in excess of Babcock's weighted average cost of capital in
the first full financial year following the completion of the Acquisition when
compared to the earnings per share that Babcock would have achieved without the
Acquisition.**
Two of Peterhouse's Executive Directors, Alan Robertson and Janette Anderson,
who are responsible for the Rail, Power, Transmission and Telecommunication
businesses are expected to join Babcock's Group Executive and Bid Executive
Committees.
Given the benefits of the Acquisition outlined above, including the synergy
opportunities, the Board of Babcock is confident about the prospects of the
Enlarged Group.
5. Financing the Offer
The cash consideration payable under the Offer will be financed from a new £140
million debt facility which has been arranged by Allied Irish Banks p.l.c., Bank
of Scotland, Danske Bank A/S, HSBC Bank plc and The Royal Bank of Scotland plc
as mandated lead arrangers. The Facility Agreement is conditional on, among
other things, the Offer becoming or being declared unconditional in all
respects. This Facility Agreement replaces Babcock's existing £60 million
facility.
Pro forma net debt on completion of the acquisition is expected to be
approximately £105 million, before taking into account any disposals announced
by Peterhouse after 31 December 2003, or the compensation payable by Network
Rail as a result of the termination by it of the rail maintenance contracts and
the transfer to it of the rail maintenance business. The pro forma net debt to
historic pro forma EBITDA ratio will be approximately 2 times.
Credit Suisse First Boston is satisfied that the necessary financial resources
are available to Babcock to enable it to satisfy full acceptance of the Offer.
Further details of the financing arrangements will be set out in the Offer
Document and Listing Particulars.
6. Irrevocable undertakings and indications of intention
to accept the Offer
Babcock has received irrevocable undertakings from the Independent Directors of
Peterhouse in respect of 363,004 Peterhouse Shares in aggregate representing 0.8
per cent. of Peterhouse's existing issued ordinary share capital. These
irrevocable undertakings will only cease to be binding in the event that the
Offer lapses or is withdrawn. In addition, non-binding indications of an
intention to accept the Offer have been received from other Peterhouse
Shareholders in respect of 5,746,583 Peterhouse Shares in aggregate representing
12.0 per cent. of Peterhouse's existing issued ordinary share capital.
7. Background to and reasons for the Independent Directors
of Peterhouse to recommend the Offer
The disposal of Propencity in January 2003 marked the beginning of Peterhouse's
recent strategy to refocus the business around the provision of infrastructure
services in the three core markets of rail, power transmission and
telecommunications. With the recently announced sales of Lydney Containers
Limited, Anglair Limited, Factair Limited, Jackson Civil Engineering and Eve
Shorco, Peterhouse is well advanced in achieving this strategy.
The Independent Directors believe that Babcock, which has repositioned itself as
a support services company has complementary technical service capabilities and
a range of long established client relationships. The Independent Directors
also believe that the Enlarged Group will have a significantly larger customer
base, have a more diverse skill set than Peterhouse has at present and will be a
pure infrastructure and support services business of significant scale.
The Offer from Babcock provides an opportunity for Peterhouse Shareholders to
realise a proportion in cash immediately as well as participating in the
potential growth inherent in both Peterhouse and Babcock.
8. Recommendation
The Independent Directors of Peterhouse, who have been so advised by Close
Brothers, consider the terms of the Offer to be fair and reasonable. In
providing their advice to the Independent Directors of Peterhouse, Close
Brothers have taken into account the commercial assessments of the Independent
Directors of Peterhouse.
In considering the Offer in the context of a potential competing proposal from a
financial investor group led by David Jackson, the Independent Directors have
taken into account the uncertainty and potential time frame for delivery of such
potential competing proposal.
Accordingly the Independent Directors of Peterhouse unanimously recommend that
Peterhouse Shareholders accept the Offer.
9. Information on Babcock
Babcock is a focused support services company working primarily with public
sector institutions to supply effective, long term solutions to support their
core operations. Its primary customer is the Ministry of Defence. Babcock is
organised into four core business divisions: Babcock Defence Services, Babcock
Engineering Services, Babcock Infrastructure Services and Babcock Naval
Services. Babcock is based in the United Kingdom with overseas operations in
Africa, North America and Australasia.
Babcock Defence Services provides logistic and equipment support services for
the Royal Navy, British Army and RAF including elementary flying training,
aircraft engineering and support to expeditionary forces. Babcock Engineering
Services supports companies in the defence, marine, oil & gas and supply chain
service markets. Recent major projects completed include the refit of the
aircraft carriers HMS Ark Royal and Invincible, and the Type 23 frigates HMS
Iron Duke and Monmouth. Babcock Infrastructure Services aids customers to
maintain and operate their estates efficiently, and to adapt property and
structures for new or expansion purposes. Typically its customers are public
sector organisations with large and complex built infrastructure portfolios to
service. Babcock Naval Services is responsible for engineering and a wide
variety of other support services at the two locations encompassed by HM Naval
Base Clyde.
Babcock is listed on the London Stock Exchange in the support services sector.
On 19 March 2004, the last dealing day before this announcement, Babcock's
market capitalisation was approximately £191.6 million and its closing middle
market price was 127.5 pence. In the year ended 31 March 2003 Babcock had
revenues of £423.5 million, operating profits (before goodwill amortisation and
exceptional items) of £20.8 million, and net assets of £87.4 million. In the
six months to 30 September 2003 (reported on an unaudited basis) Babcock had
revenues of £225.1 million, operating profits (before goodwill amortisation and
exceptional items) of £12.1 million, and net assets of £94.8 million.
10. Current trading of Babcock
Since 30 September 2003 Babcock has traded in line with the Directors'
expectations.
11. Information on Peterhouse
Peterhouse is a support services company that operates principally within the
United Kingdom, with its principal activities conducted through four core
business divisions: Rail Infrastructure Services, Rail Projects Services,
General Infrastructure Services and Health, Safety and Environmental Services.
Peterhouse is headquartered in West Yorkshire and has been listed since 1997.
Through a series of acquisitions including Jackson Group, Eve Group and First
Engineering, and the disposal of construction activities, the group has become a
support services company in the technical services market.
Peterhouse's Rail Infrastructure Services, which has reported sales of over £170
million, provides Network Rail with railway maintenance support, track renewals
and plant services. Network Rail announced in October 2003 that it intends to
take all maintenance contracts back in-house by summer 2004. In 2003, turnover
from the rail maintenance business was approximately £135 million.
The remaining rail infrastructure market is estimated to be worth in the region
of £3.3 billion per annum of which approximately 70 per cent. is estimated to
relate to rail renewals and approximately 30 per cent. to enhancements, although
this latter category is not yet formally agreed by the Office of the Rail
Regulator. Market estimates suggest that expenditure on track, structures and
signalling renewals is expected to grow in real terms from 2003/04 to 2008/09
and completion of the West Coast Main Line project is expected to release funds
for use on other expenditure programmes. The Directors believe that First
Engineering's reputation for quality and reliability enhances the potential for
this business to grow. The First Engineering business was awarded the 'plain
line' renewals contracts for Scotland and the North West of England in March
2004, a five year framework agreement, which is targeted to achieve turnover of
£69 million in the first year and some £130 to £140 million in the first two
years.
In Rail Projects, which has reported sales of over £135 million, First
Engineering has contracts in signalling and rail telecoms in Scotland and North
West England. It also has a seven year framework contract for power supply
upgrades in the Sussex area of the Southern Region of Network Rail. This
contract is expected to produce revenues of £24 million in 2004. It also has
contracts for facilities management of stations.
General Infrastructure Services provides engineering, design, and maintenance to
the power transmission, cellular phone and broadcasting markets, temporary
portable access systems and event management.
In Telecom, the Eve business with over 400 employees, installs, maintains and
upgrades mobile telecom infrastructure assets. Increasing demand for 3G
technology and regulatory requirements that operators cover 80 per cent. of the
population by the end of 2007 are expected to result in a further 3,000 base
stations being required in that time scale. Upgrades to existing and
development of new, non-3G, sites are also expected. Eve Telecom is estimated
to have a significant market share in relation to its principal service of
cellular antennae rigging, servicing customers such as Orange, Vodafone, 3 and
Crown Castle.
Eve Transmission is a leading provider of services relating to the refurbishment
and new build of power transmission lines principally to NGT. Expenditure on
the power transmission market is regulated by OFGEM and market data indicates
that current annual capital expenditure on high voltage lines is approximately
£95 million. It is estimated that Eve Transmission has more than 20 per cent.
share of this market. The anticipated need to renew the transmission network
and the expected requirement to meet new capacity resulting from the
Government's renewable energy sources programme is anticipated to result in
market growth until 2010. Eve Transmission's order book for 2004 is already
above 2003 full year actual sales.
Other businesses include Eve Trakway which provides temporary roadways, fencing,
barriers and other temporary structures, and Health, Safety and Environmental
Services which provides environmental monitoring and data capture, supply of
safety equipment and safety training. The combined sales of these other
businesses was approximately £75 million in 2003, of which sales in the
continuing businesses were approximately £45 million.
On 30 January 2004, the last business day prior to the announcement by
Peterhouse that it had received an approach which might or might not lead to a
formal offer for Peterhouse, Peterhouse's market capitalisation was
approximately £83.8 million and its closing price was 174.5 pence. In the year
ended 31 December 2003 Peterhouse had revenues of £489.8 million, operating
profits (before goodwill amortisation and exceptional items) of £14.4 million,
profit before tax (before goodwill amortisation and exceptional items) of £11.3m
and net assets of £86.2 million.
12. Current trading of Peterhouse
Peterhouse issued the following trading update on 9 March 2004 in its
Preliminary Results Announcement:
'Commenting on the results, David Jackson, Executive Chairman said:
'2003 was an exceptionally tough year by any standards. However Peterhouse has
risen to the challenges presented. We have continued to restructure and focus
the Group on our core businesses. The Board believes the core businesses have
significant growth opportunities and look forward to reporting on our progress
during 2004.''
In relation to prospects of the group the following statement was made:
'Despite 2003 being a difficult year the Board believes that the business has
significant growth opportunities in all its key sectors. The major growth
opportunities are as follows:
1) Rail
The recent signing of the National Track Renewals Plain Line contracts for
Scotland and North West England gives us a good base position and strong
visibility. These five year framework contracts, with extension options of up
to a further five years, are targeted to achieve turnover of £69m in the first
year. However, the major growth is anticipated to come from our projects
business with our expertise in signalling and combining the skills of rail,
power and telecommunications.
2) Transmission
Various industry commentators have speculated on the amount of investment
necessary worldwide in the power industry over the next 10 years. In the UK,
our order book at the present time is at its highest level ever and a major
programme of upgrading the network in Scotland is to be undertaken over the next
5 years to distribute the new source of green energy produced by onshore and
offshore wind farms. We are in an excellent position to take advantage of any
upturn in this market, although projects are not as yet certain.
3) Telecommunications
The current levels of activity indicate that 2004 should be a good year for the
telecoms business. The operators have an objective to increase substantially
the quantity of cellular masts compared to last year and as market leader in
this field, we should benefit from their expansion programme.'
In addition the following statement was made in relation to Network Rail
compensation:
'We are at an advanced stage of negotiations with Network Rail to reach a
compensation settlement arising from their decision to take maintenance
activities in house. Our claim incorporates compensation for loss of profits on
the remaining term of the contracts, asset sales to Network Rail and other
related items.'
13. Management and employees
The Board of Babcock has given assurances to the Independent Directors of
Peterhouse that, following the Offer becoming or being declared unconditional in
all respects, the existing employment rights (including pension rights) of all
employees of Peterhouse will be fully safeguarded.
Legislation which came into force on 15 March this year has increased the amount
of money which a solvent company can be required to pay into a defined benefit
pension scheme sponsored by it in circumstances where the winding up of that
scheme is triggered and a funding deficit exists.
In light of the new legislation, Babcock has reviewed the documentation
governing one of the defined benefit schemes of Peterhouse which has operated on
the basis that it has closed to future service accrual but has not yet commenced
winding up. It has been estimated by Babcock's actuary that a liability of
approximately £10 million could be triggered if the scheme were to commence
winding up at the current time. Babcock has reviewed legal advice given to
Peterhouse in relation to the available documentation relating to this scheme
and this advice indicates that Peterhouse controls the circumstances in which
the winding up of this scheme could be triggered.
14. Peterhouse Share Option Schemes
The Offer will extend to any Peterhouse Shares unconditionally issued or
allotted while the Offer remains open for acceptance (or by such earlier date as
Babcock may, subject to the City Code or with the consent of the Panel,
determine) including any such shares allotted or issued pursuant to the exercise
of Peterhouse Share Options. Babcock will make appropriate proposals to the
holders of Peterhouse Share Options subject to the Offer becoming or being
declared unconditional in all respects in which case a separate letter will be
sent to the holders of Peterhouse Share Options.
15. Inducement fee
As an inducement to Babcock to make the Offer, Peterhouse and Babcock have
entered into an agreement under which Peterhouse has agreed to pay £1.056
million to Babcock in the event that:-
• as a consequence of an announcement by any third party of a firm
intention to make an offer pursuant to Rule 2.5 of the Code in relation to an
independent competing transaction, the Offer is not made (with the consent of
the Panel), lapses or is withdrawn;
• the Independent Directors publicly recommend (or agree or resolve to
recommend) a transaction proposed by a third party as a result of which the
Offer is not made (with the consent the Panel) lapses or is withdrawn;
• the Independent Directors withdraw or adversely modify their approval
or recommendation of the Offer or resolve to take such actions, other than in
circumstances where there has occurred a material adverse change or
deterioration in the business, assets, or the financial or trading position or
profits or prospects of Babcock since the date to which the last audited
financial statements of Babcock were prepared but prior to the date of such
modification or withdrawal; or
• a Scheme of Arrangement does not become effective (after an election
by Babcock, subject to the consent of the Independent Directors, to implement
the Offer by way of a Scheme of Arrangement) as a result of the Independent
Directors deliberately taking any action to prevent a Scheme of Arrangement
becoming effective or deliberately failing to take any action within their power
required in order to make a Scheme of Arrangement effective, in either case
without the consent of Babcock.
Payment of that sum shall not be due from Peterhouse if Babcock Shareholders do
not approve the relevant resolution on which the Offer is conditional.
16. Advisers
Babcock's financial adviser on the Acquisition is Credit Suisse First Boston.
Cazenove are providing broking advice. Hawkpoint have also provided assistance
to Babcock. Close Brothers have provided financial advice to Peterhouse in
relation to the Acquisition.
17. Offer Document and Listing Particulars
The Offer Document and Listing Particulars, setting out details of the Offer and
enclosing the Form of Acceptance and Form of Proxy, will be despatched to
Peterhouse Shareholders shortly and in any event within twenty-eight days of the
date of this Announcement unless agreed otherwise with the Panel.
18. Babcock Extraordinary General Meeting
Given the size of the proposed Acquisition, in order to implement the Offer, in
accordance with the Listing Rules it will be necessary for Babcock Shareholders
to approve the Offer and to authorise an increase in the share capital of
Babcock and the allotment of the New Babcock Shares. An Extraordinary General
Meeting will be convened for this purpose. The Circular containing the notice
of Extraordinary General Meeting together with the Listing Particulars will be
sent to Babcock Shareholders shortly.
The Directors intend to vote in favour of the necessary resolution set out in
the notice of Extraordinary General Meeting, in respect of their own beneficial
shareholdings amounting to 115,046 Babcock Shares, representing approximately
0.1 per cent. of Babcock's current issued share capital.
19. Delisting and compulsory acquisition
If the Offer becomes or is declared unconditional in all respects, Babcock
intends to procure the making of an application by Peterhouse to delist the
Peterhouse Shares from the Official List and to cancel trading on the London
Stock Exchange's market for listed securities. It is anticipated that
cancellation of listing and trading will take effect no earlier than 20 Business
Days after the Offer becomes or is declared unconditional in all respects.
Delisting would significantly reduce the liquidity and marketability of any
Peterhouse Shares not assented to the Offer.
If Babcock receives acceptances under the Offer in respect of, and/or otherwise
acquires, 90 per cent. or more of the Peterhouse Shares to which the Offer
relates, Babcock will exercise its rights pursuant to the provisions of sections
428 to 430F (inclusive) of the Companies Act to acquire compulsorily the
remaining Peterhouse Shares.
20. Securities in issue
As at 7:00 a.m. on 22 March 2004, Babcock had 150,249,029 ordinary shares of 60
pence in issue (ISIN number GB0009697037) and Peterhouse had 48,027,958 ordinary
shares of 25 pence in issue (ISIN number GB0008054107)
21. Listing, dealings and settlement
Application will be made to the UK Listing Authority for the New Babcock Shares
to be admitted to the Official List and application will be made to the London
Stock Exchange for the New Babcock Shares to be admitted to trading on the
London Stock Exchange's market for listed securities. It is expected that
Admission will become effective and that dealings for normal settlement in the
New Babcock Shares will commence on the London Stock Exchange at 8.00 a.m. on
the first dealing day following the date on which the Offer becomes or is
declared unconditional in all respects (subject only to the condition relating
to Admission contained in paragraph (d) of Appendix I to this Announcement).
22. General
Neither Babcock, nor any of its directors, nor, so far as Babcock is aware, any
person deemed to be acting in concert with it, owns or controls any Peterhouse
Shares or has any option to acquire any Peterhouse Shares, or has entered into
any derivative referenced to securities of Peterhouse which remains outstanding.
The Offer will be on the terms and subject to the conditions set out herein and
in Appendix I and to be set out in the Offer Document and Form of Acceptance.
It is intended that the Offer Document (including a letter of recommendation
from the Deputy Chairman of Peterhouse), Forms of Acceptance and Listing
Particulars will be despatched shortly to Peterhouse Shareholders. Listing
Particulars and a Circular explaining the Offer and convening an Extraordinary
General Meeting to seek approval for the Offer, to increase the authorised share
capital of Babcock, to authorise the Directors to issue the New Babcock Shares
will also be despatched to Babcock Shareholders shortly.
ENQUIRIES
Babcock International Group PLC +44 (0)20 7291 5000
Gordon Campbell, Chairman
Peter Rogers, Chief Executive
Bill Tame, Finance Director
Peterhouse Group plc +44 (0)1422 374 757
Ted Adams, Deputy Chairman
Alan Robertson, Chief Executive
John O'Kane, Finance Director
Credit Suisse First Boston (Financial Adviser to Babcock) +44 (0)20 7888 8888
Justin Crookenden
Richard Probert
Cazenove (Broker to Babcock) +44 (0)20 7588 2828
Malcolm Moir
Dermot McKechnie
Close Brothers (Financial Adviser to Peterhouse) +44 (0)20 7655 3100
Peter Alcaraz
Gareth Davies
Financial Dynamics (Public Relations Adviser to Babcock) +44 (0)20 7831 3113
Andrew Lorenz
Richard Mountain
Buchanan Communications (Public Relations Adviser to Peterhouse) +44 (0)20 7466 5000
Tim Anderson
Isabel Podda
James Strong
* The expected operational cost savings and financial synergies have been
calculated on the basis of the existing cost and operating structures of the
companies and by reference to current prices and the current regulatory
environment. These statements of estimated cost savings and one-off costs for
achieving them relate to future actions and circumstances which, by their
nature, involve risks, uncertainties and other factors. Because of this, the
cost savings referred to may not be achieved, or those achieved could be
materially different from those estimated. This statement should not be
interpreted to mean that the earnings per share in the first full financial year
following the Acquisition, or in any subsequent period, would necessarily match
or be greater than those for the relevant preceding financial period. Please
refer to this paragraph when reading any text in the body of this announcement
marked with an asterisk.
** The statement that the proposed Offer will be earnings enhancing,
pre-goodwill and exceptional items, in the first full financial year following
the completion of the Acquisition when compared to the earnings per share that
Babcock would have achieved without the Acquisition, and will yield a return on
investment in excess of its weighted average cost of capital, does not
constitute a profit forecast and should not be interpreted to mean that the
earnings per share in the first full financial year following the Acquisition,
or in any subsequent period, would necessarily match or be greater than those
for the relevant preceding financial period. Please refer to this paragraph
when reading any text in the body of this announcement marked with two
asterisks.
This Announcement does not constitute an offer or an invitation to purchase any
securities. The laws of the relevant jurisdictions may affect the availability
of the Offer to persons not resident in the United Kingdom. Persons who are not
resident in the United Kingdom, or who are subject to the laws of any
jurisdiction other than the United Kingdom, should inform themselves about, and
observe, any applicable requirements. Further details in relation to overseas
shareholders will be contained in the Offer Document.
The Offer will not be made, directly or indirectly, in or into, or by use of the
mails of, or by any means or instrumentality (including, without limitation,
telephonically or electronically) of interstate or foreign commerce of, or any
facility of a national securities exchange of, the United States, Canada,
Australia or Japan and will not be capable of acceptance by any such use, means,
instrumentality or facility. Accordingly, neither this Announcement nor the
Offer Document nor the accompanying Form of Acceptance is being, and must not
be, mailed or otherwise forwarded, transmitted, distributed or sent in, into or
from the United States, Canada, Japan or Australia. Doing so may render invalid
any purported acceptance of the Offer. All Peterhouse Shareholders or other
persons (including nominees, trustees or custodians) who would or otherwise
intend to, or may have a contractual or legal obligation to, forward this
Announcement or the Offer Document or the accompanying Form of Acceptance to any
jurisdiction outside the United Kingdom, should refrain from doing so and seek
appropriate professional advice before taking any action.
The Offer will be on the terms and subject to the conditions set out herein and
in Appendix I and to be set out in the Offer Document and Form of Acceptance. It
is intended that the Offer Document (including a letter of recommendation from
the Deputy Chairman of Peterhouse), Forms of Acceptance and Listing Particulars
will be despatched shortly to Peterhouse Shareholders. Listing Particulars and
a Circular explaining the Offer and convening an Extraordinary General Meeting
to seek approval for the Offer, to increase the authorised share capital of
Babcock, to authorise the Directors of Babcock to issue the New Babcock Shares
will also be despatched to Babcock Shareholders shortly.
Appendix II contains the sources and bases for certain information set out in
this Announcement.
Appendix III contains the definitions and glossary used in this Announcement.
Credit Suisse First Boston, which is regulated in the United Kingdom by the
Financial Services Authority, is acting only for Babcock and no-one else in
connection with the Offer and will not regard any other person as its client or
be responsible to any person other than Babcock for providing the protections
afforded to clients of Credit Suisse First Boston, nor for giving advice in
relation to the Offer.
Cazenove, which is regulated in the United Kingdom by the Financial Services
Authority, is acting only for Babcock and no-one else in connection with the
Offer and will not regard any other person as its client or be responsible to
any person other than Babcock for providing the protections afforded to clients
of Cazenove, nor for giving advice in relation to the Offer.
Close Brothers, which is regulated in the United Kingdom by the Financial
Services Authority, is acting only for Peterhouse and no-one else in connection
with the Offer and will not regard any other person as its client or be
responsible to any person other than Peterhouse for providing the protections
afforded to clients of Close Brothers, nor for giving advice in relation to the
Offer.
This Announcement is not an offer of securities for sale in the United States
and the New Babcock Shares have not been, and will not be, registered under the
US Securities Act or under the securities laws of any state, district or other
jurisdiction of the United States, Canada, Australia or Japan and no regulatory
clearances in respect of the New Babcock Shares have been, or will be, applied
for in any jurisdiction other than the UK. Accordingly, unless an exemption
under the US Securities Act or other relevant securities laws is applicable, the
New Babcock Shares are not being, and may not be, offered, sold, resold,
delivered or distributed, directly or indirectly, in or into the United States,
Canada, Australia or Japan or to, or for the account or benefit of, any US
person or any person resident in Canada, Australia or Japan.
This Announcement contains a number of forward-looking statements relating to
Babcock, Peterhouse and the Enlarged Group with respect to, among others, the
following: financial condition; results of operations; the business of the
Enlarged Group; future benefits of the Acquisition; and management plans and
objectives. Babcock and Peterhouse consider any statements that are not
historical facts as 'forward-looking statements'. They involve a number of
risks and uncertainties that could cause actual results to differ materially
from those suggested by the forward-looking statements. Important factors that
could cause actual results to differ materially from estimates or forecasts
contained in the forward-looking statements include, among others, the following
possibilities: future revenues are lower than expected; costs or difficulties
relating to the integration of the businesses of Babcock and Peterhouse, or of
other future acquisitions, are greater than expected; expected cost savings from
the Acquisition or from other future acquisitions are not fully realised or
realised within the expected time frame; competitive pressures in the industry
increase; general economic conditions or conditions affecting the relevant
industries, whether internationally or in the places Babcock and Peterhouse do
business, are less favourable than expected, and/or conditions in the securities
market are less favourable than expected.
The Directors of Babcock accept responsibility for the information contained in
this announcement other than paragraph 7 relating to the 'Background to and
reasons for the Independent Directors of Peterhouse to recommend the Offer',
paragraph 8 relating to the 'Recommendation' and information relating to the
Independent Directors of Peterhouse. To the best of the knowledge and belief of
the Directors of Babcock (who have taken all reasonable care to ensure that such
is the case), the information contained in this announcement for which they
accept responsibility is in accordance with the facts and does not omit anything
likely to affect the import of such information.
The Independent Directors of Peterhouse accept responsibility for the
information contained in this announcement in paragraph 7 relating to the '
Background to and reasons for the Independent Directors of Peterhouse to
recommend the Offer', paragraph 8 relating to the 'Recommendation' and
information relating to the Independent Directors of Peterhouse. To the best of
the knowledge and belief of the Independent Directors of Peterhouse (who have
taken all reasonable care to ensure that such is the case), the information
contained in this announcement for which they accept responsibility is in
accordance with the facts and does not omit anything likely to affect the import
of such information.
APPENDIX I - CONDITIONS AND CERTAIN FURTHER TERMS OF THE OFFER
The Offer, which will be made by Credit Service First Boston on behalf of
Babcock, will comply with the rules and regulations of the Financial Services
Authority and the London Stock Exchange and the City Code;
Part A: Conditions of the Offer
The Offer will be subject to the following conditions:
(a) valid acceptances being received (and not, where permitted,
withdrawn) by not later than 3.00 p.m. on the first closing date of the Offer
(or such later time(s) and/or date(s) as Babcock may, with the consent of the
Panel or in accordance with the Code, decide) in respect of not less than 90 per
cent. (or such lower percentage as Babcock may decide) in nominal value of the
Peterhouse Shares to which the Offer relates, provided that this condition shall
not be satisfied unless Babcock and/or any of its wholly-owned subsidiaries
shall have acquired or agreed to acquire, whether pursuant to the Offer or
otherwise, shares in Peterhouse carrying in aggregate more than 50 per cent. of
the voting rights then normally exercisable at general meetings of Peterhouse;
and provided further that this condition shall be capable of being satisfied
only at a time when all other conditions have been satisfied or waived. For the
purposes of this condition:
(i) shares which have been unconditionally allotted but not issued
before the Offer becomes or is declared unconditional as to acceptances, whether
pursuant to the exercise of any outstanding subscription or conversion rights or
otherwise, shall be deemed to carry the voting rights they will carry on being
entered into the Register of Members of Peterhouse; and
(ii) the expression 'Peterhouse Shares to which the Offer relates' shall
be construed in accordance with sections 428 to 430F of the Companies Act 1985,
as amended;
(b) the Office of Fair Trading in the United Kingdom indicating, in terms
reasonably satisfactory to Babcock, that it does not intend to refer the
proposed acquisition of Peterhouse by Babcock or any matter arising therefrom or
related thereto to the Competition Commission;
(c) the passing at an Extraordinary General Meeting (or at any
adjournment thereof) of Babcock of such resolution or resolutions as are
necessary to approve, implement and effect the Offer and the acquisition of any
Peterhouse Shares including a resolution or resolutions to increase the share
capital of Babcock and to authorise the creation and allotment of New Babcock
Shares;
(d) the admission to the Official List of the New Babcock Shares to be
issued in connection with the Offer becoming effective in accordance with the
Listing Rules and the admission of such shares to trading becoming effective in
accordance with the Admission and Disclosure Standards of the London Stock
Exchange or if Babcock and Peterhouse so determine and subject to the consent of
the Panel the UKLA agreeing to admit such shares to the Official List and the
London Stock Exchange agreeing to admit such shares to trading subject only to
(i) the allotment of such shares and/or (ii) the Offer becoming or being
declared unconditional in all respects;
(e) there being no provision of any agreement, arrangement, licence,
permit or other instrument to which any member of the wider Peterhouse Group is
a party or by or to which any such member or any of its assets may be bound,
entitled or subject, which in consequence of the Offer or the proposed
acquisition of any shares or other securities in Peterhouse or because of a
change in the control or management of Peterhouse or otherwise, could or might
reasonably be expected to result in to an extent which is material in the
context of the wider Peterhouse Group as a whole or to Babcock in the context of
the Offer:
(i) any moneys borrowed by or any other indebtedness (actual or
contingent) of, or grant available to any such member, being or becoming
repayable or capable of being declared repayable immediately or earlier than
their or its stated maturity date or repayment date or the ability of any such
member to borrow moneys or incur any indebtedness being withdrawn or inhibited
or being capable of becoming or being withdrawn or inhibited;
(ii) any such agreement, arrangement, licence, permit or instrument or
the rights, liabilities, obligations or interests of any such member thereunder
being terminated or modified or affected or any obligation or liability arising
or any action being taken thereunder;
(iii) any assets or interests of any such member being or falling to be
disposed of or charged or any right arising under which any such asset or
interest could be required to be disposed of or charged;
(iv) the creation or enforcement of any mortgage, charge or other security
interest over the whole or any part of the business, property or assets of any
such member;
(v) the rights, liabilities, obligations or interests of any such member
in, or the business of any such member with, any person, firm or body (or any
arrangement or arrangements relating to any such interest or business) being
terminated, adversely modified or affected;
(vi) the value of any such member or its financial or trading position or
prospects being prejudiced or adversely affected in any material respect;
(vii) any such member ceasing to be able to carry on business under any
name under which it presently does so; or
(viii) the creation of any liability, actual or contingent, by any such
member;
and no event having occurred which, under any provision of any agreement,
arrangement, licence, permit or other instrument to which any member of the
wider Peterhouse Group is a party or by or to which any such member or any of
its assets may be bound, entitled or subject, could result to an extent which is
material in the context of the wider Peterhouse Group as a whole in any of the
events or circumstances as are referred to in sub-paragraphs (i) to (viii) of
this paragraph (e);
(f) no government or governmental, quasi-governmental, supranational,
statutory, regulatory, environmental or investigative body, court, trade agency,
association, institution or any other body or person whatsoever in any
jurisdiction (each a 'Third Party') having decided to take, institute, implement
or threaten any action, proceeding, suit, investigation, enquiry or reference,
or enacted, made or proposed any statute, regulation, decision or order, or
having taken any other steps which would or might reasonably be expected to:
(i) require, prevent or delay the divestiture, or alter the terms
envisaged for any proposed divestiture by any member of the wider Babcock Group
or any member of the wider Peterhouse Group of all or any portion of their
respective businesses, assets or property or impose any limitation on the
ability of any of them to conduct their respective businesses (or any of them)
or to own any of their respective assets or properties or any part thereof
which, in any such case, is material in the context of the wider Babcock Group
or the wider Peterhouse Group in either case taken as a whole or material to
Babcock in the context of the Offer;
(ii) require, prevent or delay the divestiture by any member of the wider
Babcock Group of any shares or other securities in Peterhouse;
(iii) impose any limitation on, or result in a delay in, the ability of
any member of the wider Babcock Group directly or indirectly to acquire or to
hold or to exercise effectively any rights of ownership in respect of shares or
loans or securities convertible into shares or any other securities (or the
equivalent) in any member of the wider Peterhouse Group or the wider Babcock
Group or to exercise management control over any such member in any such case in
a manner or to an extent which is material in the context of the wider Babcock
Group or the wider Peterhouse Group taken as a whole;
(iv) otherwise adversely affect the business, assets, profits or prospects
of any member of the wider Babcock Group or of any member of the wider
Peterhouse Group in a manner which is adverse to and material in the context of
the wider Babcock Group or the wider Peterhouse Group in either case taken as a
whole or material to Babcock in the context of the Offer;
(v) make the Offer or its implementation or the acquisition or proposed
acquisition by Babcock or any member of the wider Babcock Group of any shares or
other securities in, or control of Peterhouse void, illegal, and/or
unenforceable under the laws of any jurisdiction, or otherwise, directly or
indirectly, restrain, restrict, prohibit, delay or otherwise materially
interfere with the same, or impose additional conditions or obligations with
respect thereto, or otherwise challenge or interfere therewith;
(vi) require any member of the wider Babcock Group or the wider Peterhouse
Group to offer to acquire any shares or other securities (or the equivalent) or
interest in any member of the wider Peterhouse Group or the wider Babcock Group
owned by any third party in any such case in a manner or to an extent which is
material in the context of the wider Babcock Group or the wider Peterhouse Group
taken as a whole;
(vii) impose any limitation on the ability of any member of the wider
Peterhouse Group to co-ordinate its business, or any part of it, with the
businesses of any other members which is adverse to and material in the context
of the group concerned taken as a whole or material to Babcock in the context of
the Offer; or
(viii) result in any member of the wider Peterhouse Group ceasing to be
able to carry on business under any name under which it presently does so in any
such case in a manner or to an extent which is material in the context of the
wider Babcock Group or the wider Peterhouse Group taken as a whole;
and all applicable waiting and other time periods during which any such Third
Party could institute, implement or threaten any action, proceeding, suit,
investigation, enquiry or reference or any other step under the laws of any
jurisdiction in respect of the Offer or the acquisition or proposed acquisition
of any Peterhouse Shares having expired, lapsed or been terminated;
(g) all necessary filings or applications having been made in connection
with the Offer and all statutory or regulatory obligations in any jurisdiction
having been complied with in connection with the Offer or the acquisition by any
member of the wider Babcock Group of any shares or other securities in, or
control of, Peterhouse and all authorisations, orders, recognitions, grants,
consents, licences, confirmations, clearances, permissions and approvals
reasonably deemed necessary or appropriate by Babcock or the proposed
acquisition of any shares or other securities in, or control of, Peterhouse by
any member of the wider Babcock Group having been obtained in terms and in a
form satisfactory to Babcock acting reasonably from all appropriate Third
Parties or persons with whom any member of the wider Peterhouse Group has
entered into contractual arrangements and all such authorisations, orders,
recognitions, grants, consents, licences, confirmations, clearances, permissions
and approvals together with all material authorisations orders, recognitions,
grants, licences, confirmations, clearances, permissions and approvals necessary
or appropriate to carry on the business of any member of the wider Peterhouse
Group which is material in the context of the Babcock Group or the Peterhouse
Group as a whole or to Babcock in the context of the Offer remaining in full
force and effect and all filings necessary for such purpose have been made and
there being no notice or intimation of any intention to revoke or not to renew
any of the same at the time at which the Offer becomes otherwise unconditional
and all necessary statutory or regulatory obligations in any jurisdiction having
been complied with;
(h) except as publicly announced by Peterhouse prior to the date of this
Announcement or fairly disclosed in writing by Peterhouse to Babcock prior to
the date of this Announcement, no member of the wider Peterhouse Group having,
since 31 December 2003:
(i) save as between Peterhouse and wholly-owned subsidiaries of
Peterhouse or for Peterhouse Shares issued pursuant to the exercise of options
granted under the Peterhouse Share Option Schemes, issued, authorised or agreed
the issue of additional shares of any class;
(ii) save as between Peterhouse and wholly-owned subsidiaries of
Peterhouse or for the grant of options under the Peterhouse Share Option
Schemes, issued or agreed to issue or authorised the issue of securities
convertible into shares of any class or rights, warrants or options to subscribe
for, or acquire, any such shares or convertible securities;
(iii) other than to another member of the Peterhouse Group, recommended,
declared, paid or made or proposed to recommend, declare, pay or make any bonus,
dividend or other distribution whether payable in cash or otherwise, save for
the net final dividend of 4 pence per Peterhouse Share in respect of the year
ended 31 December 2003 which the Peterhouse directors have recommended should be
paid;
(iv) save for intra-Peterhouse Group transactions, merged or demerged with
any body corporate or acquired or disposed of or transferred, mortgaged or
charged or created any security interest over any assets or any right, title or
interest in any asset (including shares and trade investments) or authorised or
proposed or announced any intention to propose any merger, demerger, acquisition
or disposal, transfer, mortgage, charge or security interest, in each case,
other than in the ordinary course of business;
(v) save for intra-Peterhouse Group transactions, made or authorised or
proposed or announced an intention to propose any change in its loan capital;
(vi) issued, authorised or proposed the issue of any debentures or (save
for intra-Peterhouse Group transactions ), save in the ordinary course of
business, incurred or increased any indebtedness or become subject to any
contingent liability;
(vii) purchased, redeemed or repaid or announced any proposal to purchase,
redeem or repay any of its own shares or other securities or reduced or, save in
respect to the matters mentioned in sub-paragraph (i) above, made any other
change to any part of its share capital;
(viii) implemented, or authorised, proposed or announced its intention to
implement, any reconstruction, amalgamation, scheme, commitment or other
transaction or arrangement otherwise than in the ordinary course of business or
entered into or changed the terms of any contract with any director or senior
executive;
(ix) entered into or varied or authorised, proposed or announced its
intention to enter into or vary any contract, transaction or commitment (whether
in respect of capital expenditure or otherwise) which is of a long term, onerous
or unusual nature or magnitude or which is or could be materially restrictive on
the businesses of any member of the wider Peterhouse Group or the wider Babcock
Group or which involves or could involve an obligation of such a nature or
magnitude or which is other than in the ordinary course of business and which is
material in the context of the wider Peterhouse Group taken as a whole or to
Babcock in the context of the Offer;
(x) (other than in respect of a member which is dormant and was solvent
at the relevant time) taken any corporate action or had any legal proceedings
started or threatened against it for its winding-up, dissolution or
reorganisation or for the appointment of a receiver, administrative receiver,
administrator, trustee or similar officer of all or any of its assets or
revenues or any analogous proceedings in any jurisdiction or had any such person
appointed;
(xi) entered into any contract, transaction or arrangement which would be
restrictive on the business of any member of the wider Peterhouse Group or the
wider Babcock Group other than to a nature and extent which is normal in the
context of the business concerned;
(xii) waived or compromised any claim otherwise than in the ordinary course
of business; or
(xiii) entered into any contract, commitment, arrangement or agreement
otherwise than in the ordinary course of business or passed any resolution or
made any Offer (which remains open for acceptance) with respect to or announced
any intention to, or to propose to, effect any of the transactions, matters or
events referred to in this condition
and, for the purposes of paragraphs (iii), (iv), (v) and (vi) of this condition,
the term 'Peterhouse Group' shall mean Peterhouse and its wholly-owned
subsidiaries;
(i) since 31 December 2003 and save as disclosed in the accounts for the
year then ended and save as publicly announced in accordance with the Listing
Rules by Peterhouse prior to the date of this Announcement and save as fairly
disclosed in writing to Babcock by Peterhouse prior to the date of this
Announcement:
(i) no adverse change or deterioration having occurred in the business,
assets, financial or trading position or profits or prospects of any member of
the wider Peterhouse Group;
(ii) no litigation, arbitration proceedings, prosecution or other legal
proceedings to which any member of the wider Peterhouse Group is or may become a
party (whether as a plaintiff, defendant or otherwise) and no investigation by
any Third Party against or in respect of any member of the wider Peterhouse
Group having been instituted, announced or threatened by or against or remaining
outstanding in respect of any member of the wider Peterhouse Group which in any
such case might be expected to affect adversely any member of the wider
Peterhouse Group;
(iii) no contingent or other liability having arisen or become apparent to
Babcock which would be likely to adversely affect any member of the wider
Peterhouse Group; and
(iv) no steps having been taken which are likely to result in the
withdrawal, cancellation, termination or modification of any licence held by any
member of the wider Peterhouse Group which is necessary for the proper carrying
on of its business;
in each case which is material in the context of the wider Peterhouse Group
taken as a whole;
(j) save as publicly announced in accordance with the Listing Rules by
the Peterhouse prior to the date of this Announcement or as otherwise fairly
disclosed in writing to the Babcock prior to that date by any member of the
Peterhouse Group, Babcock not having discovered:
(i) that any financial, business or other information concerning the
wider Peterhouse Group as contained in the information publicly disclosed at any
time by or on behalf of any member of the wider Peterhouse Group is materially
misleading, contains a material misrepresentation of fact or omits to state a
fact necessary to make that information not misleading;
(ii) that any member of the wider Peterhouse Group partnership, company
or other entity in which any member of the wider Peterhouse Group has a
significant economic interest and which is not a subsidiary undertaking of the
Peterhouse is subject to any liability (contingent or otherwise) which is not
disclosed in the annual report and accounts of Peterhouse for the year ended
last year end which is material in the context of the wider Peterhouse Group
taken as a whole; or
(iii) any information which affects the import of any information
disclosed at any time by or on behalf of any member of the wider Peterhouse
Group and which is material in the context of the wider Peterhouse Group taken
as a whole or to Babcock in the context of the Offer.
(k) Save as publicly announced or fairly disclosed in writing to Babcock
by Peterhouse prior to the date of this Announcement, Babcock not having
discovered that:
(i) any past or present member of the wider Peterhouse Group has failed
to comply with any and/or all applicable legislation or regulation, of any
jurisdiction with regard to the disposal, spillage, release, discharge, leak or
emission of any waste or hazardous substance or any substance likely to impair
the environment or harm human health or animal health or otherwise relating to
environmental matters, or that there has otherwise been any such disposal,
spillage, release, discharge, leak or emission (whether or not the same
constituted a non-compliance by any person with any such legislation or
regulations, and wherever the same may have taken place) any of which disposal,
spillage, release, discharge, leak or emission would be likely to give rise to
any liability (actual or contingent) on the part of any member of the wider
Peterhouse Group and which is material in the context of the wider Peterhouse
Group taken as a whole or to Babcock in the context of the Offer; or
(ii) there is, or is reasonably likely to be, for that or any other
reason whatsoever, any liability (actual or contingent) of any past or present
member of the wider Peterhouse Group to make good, repair, reinstate or clean up
any property or any controlled waters now or previously owned, occupied,
operated or made use of or controlled by any such past or present member of the
wider Peterhouse group, under any environmental legislation, regulation, notice,
circular or order of any government, governmental, quasi-governmental, state or
local government, supranational, statutory or other regulatory body, agency,
court, association or any other person or body in any jurisdiction and which is
material in the context of the wider Peterhouse Group taken as a whole to
Babcock in the context of the Offer.
For the purposes of these conditions the 'wider Peterhouse Group' means
Peterhouse and its subsidiary undertakings, associated undertakings and any
other undertaking in which Peterhouse and/or such undertakings (aggregating
their interests) have a significant interest and the 'wider Babcock Group' means
Babcock and its subsidiary undertakings, associated undertakings and any other
undertaking in which Babcock and/or such undertakings (aggregating their
interests) have a significant interest and for these purposes 'subsidiary
undertaking', 'associated undertaking' and 'undertaking' have the meanings given
by the Companies Act 1985, other than paragraph 20(1)(b) of Schedule 4A to that
Act which shall be excluded for this purpose, and 'significant interest' means a
direct or indirect interest in ten per cent. or more of the equity share capital
(as defined in that Act).
(l) Receipt by Babcock of a letter of comfort from the Rail Regulator
appointed under the Railways Act 1993 in relation to the proposed acquisition of
Peterhouse by Babcock.
Babcock reserves the right to waive, in whole or in part, all or any of the
above conditions, except conditions (a), (c) and (d).
Conditions (c) and (d) must be fulfilled by, and conditions (e) to (l)
(inclusive) fulfilled or waived by midnight on the 21st day after the later of
the first closing date of the Offer and the date on which condition (a) is
fulfilled (or in each such case such later date as the Babcock may, with the
consent of the Panel, decide). Babcock shall be under no obligation to waive or
treat as satisfied any of the conditions (b), (c) and (e) to (l) (inclusive) by
a date earlier than the latest date specified above for the satisfaction
thereof, notwithstanding that the other conditions of the offer may at such
earlier date have been waived or fulfilled and that there are at such earlier
date no circumstances indicating that any of such conditions may not be capable
of fulfilment.
If Babcock is required by the Panel to make an offer for Peterhouse Shares under
the provisions of Rule 9 of the Code, Babcock may make such alterations to any
of the above conditions as are necessary to comply with the provisions of that
Rule.
Babcock reserves the right, with the consent of the Independent Directors of
Peterhouse, to elect to implement the acquisition of the Peterhouse Shares by
way of a Scheme of Arrangement under section 425 of the Companies Act. In such
event, the Scheme of Arrangement will be implemented on the same terms (subject
to appropriate amendments), so far as applicable, as those which would apply to
the Offer. In particular, condition (a) will not apply and the Scheme of
Arrangement will become effective and binding following:
(i) approval at the Court Meeting by a majority in number, representing 75
per cent. or more in value present and voting, either in person or by proxy, of
the holders of the Peterhouse Shares (or the relevant class or classes thereof);
(ii) the resolution (s) required to approve and implement the Scheme of
Arrangement and to be set out in the notice of Scheme Extraordinary General
Meeting to the holders of Peterhouse Shares being passed by the requisite
majority at such Scheme Extraordinary General Meeting; and
(iii) sanction of the Scheme of Arrangement and confirmation of the reduction
of capital involved therein by the Court (in both cases with or without
modifications, on terms reasonably acceptable to Babcock) and an office copy of
the order of the Court sanctioning the Scheme of Arrangement and confirming the
cancellation of share capital which forms part of it being delivered for
registration to the Registrar of Companies in England and Wales and being
registered by him.
The Offer will lapse if it is referred to the Competition Commission before 3.00
p.m. on the first closing date of the Offer or the date on which the Offer
becomes or is declared unconditional as to acceptances, whichever is the later.
This Offer will be governed by English law and be subject to the jurisdiction of
the English courts, to the conditions set out below and in the formal Offer
Document and related Form of Acceptance.
Part B: Certain further terms of the Offer
Fractions of New Babcock Shares will not be allotted or issued to persons
accepting the Offer. Fractional entitlements to New Babcock Shares will be
aggregated and sold in the market and the net proceeds of sale will be retained
for the benefit of the Enlarged Group.
The Offer will not be made, directly or indirectly, in or into, or by use of the
mails of, or by any means or instrumentality (including, without limitation,
facsimile transmission, telex, telephone or e-mail) of interstate or foreign
commerce of, or of any facility of a national securities exchange of, the United
States, Canada, Japan or Australia and the Offer will not be capable of
acceptance by any such use, means, instrumentality or facility or from within
the United States, Canada, Japan or Australia.
The New Babcock Shares to be issued pursuant to the Offer have not been and will
not be registered under the United States Securities Act of 1933 (as amended)
nor under any of the relevant securities laws of Canada, Japan or Australia.
Accordingly, the New Babcock Shares may not be offered, sold or delivered,
directly or indirectly, in the United States, Canada, Japan or Australia nor to
any United States person, except pursuant to exemptions from applicable
requirements of any such jurisdiction.
Applications will be made to the UK Listing Authority for the New Babcock Shares
to be admitted to the Official List and to the London Stock Exchange for the New
Babcock Shares to be admitted to trading.
Peterhouse Shares will be acquired under the Offer free from all liens,
equities, charges, encumbrances and other interests and together with all rights
attaching thereto save for the recommended final dividend of 4 pence per
Peterhouse Share announced on 9 March 2004.
APPENDIX II - SOURCES AND BASES
In this announcement:
1.unless otherwise stated, financial information relating to Babcock has been
extracted from the audited financial statements of Babcock for the relevant
financial year or from Babcock's interim results;
2.unless otherwise stated, financial information relating to Peterhouse has been
extracted from the audited financial statements of Peterhouse for the relevant
financial year or from Peterhouse's preliminary results;
3.the source for the closing middle market quotation of Babcock Shares and
Peterhouse Shares is the Daily Official List;
4.the value of the Offer is £105.7 million which is based on 48,027,958
Peterhouse Shares in issue on 19 March 2004, an exchange ratio of 1.1858 New
Babcock Shares and 64.8 pence in cash plus the recommended final dividend of 4
pence for each Peterhouse Share, and the middle market quotation of 127.5 pence
per Babcock Share, as derived from the Daily Official List at the close of
business on 19 March 2004 (being the last dealing day before the date of this
announcement);
5.the number of New Babcock Shares to be issued pursuant to the Offer, being up
to 57,058,275 (assuming full acceptance of the Offer and full exercise of
options under the Peterhouse Share Option Schemes where the exercise price is
less than the Offer) is based on 48,027,958 Peterhouse Shares in issue and
90,000 Peterhouse Options outstanding on 19 March 2004;
6.the Enlarged Group's pro forma market capitalisation of £264 million is based
on Babcock Shares (being the aggregate of 150,249,029 Babcock Shares in issue
as at 19 March 2004 and 56,951,553 New Babcock Shares to be issued pursuant to
the Offer, save in respect of the exercise of Peterhouse Options where the
exercise price is less than the Offer) and the middle market quotation of 127.5
pence, as derived from the Daily Official List, for a Babcock Share on 19 March
2004 (being the last day of dealings prior to the date of this announcement);
7.the exit multiple of 12.4 on a 2003 fully diluted and adjusted earnings basis
has been derived based on the Offer for each Peterhouse Share at 220 pence
(which comprises 216 pence per share and the right to receive the proposed final
dividend of 4 pence per share recommended on 9 March 2004) and the diluted
earnings per share of 17.7 pence (pre goodwill and exceptional items) as stated
in the Peterhouse Preliminary Results Announcement for the year ended 31
December 2003;
8.the pro forma net debt to historic pro forma EBITDA ratio of approximately 2
times has been derived based on pro forma net debt of approximately £105 million
and historic pro forma EBITDA (before exceptional items) of approximately £54
million; and
9.any reference in respect of £100 invested in Babcock and the FTSE All Share in
the period from 1 November 2000 to 19 March 2004, have been extracted from
Datastream as at 19 March 2004 and assume the re-investment of dividends.
APPENDIX III - DEFINITIONS AND GLOSSARY
'Act' or 'Companies Act' the Companies Act, 1985, as amended
'Acquisition' the proposed acquisition of the entire issued and to be issued share
capital of Peterhouse by Babcock
'Admission' the admission of New Babcock Shares to the Official List in
accordance with the Listing Rules and to trading on the London Stock
Exchange's market for listed securities in accordance with the
Admission and Disclosure Standards issued by London Stock Exchange
'Admission and Disclosure Standards' the requirements contained in the publication 'Admission and
Disclosure Standards' dated April, 2002 (as amended from time to
time) containing, amongst other things, the admission requirements
to be observed by companies seeking admission to trading on the
London Stock Exchange's market for listed securities
'Announcement' the announcement made by the Board of Babcock and the Independent
Directors of Peterhouse of a recommended cash and shares offer for
Peterhouse to be made by Credit Suisse First Boston on behalf of
Babcock, to acquire the entire issued and to be issued ordinary
share capital of Peterhouse
'Board' the board of Directors of Babcock as constituted from time to time
'Babcock Group' Babcock and its subsidiary undertakings
'Babcock Shares' the existing unconditionally allotted or issued and fully paid
ordinary shares of 60 pence each in the capital of Babcock
'Babcock Shareholders' the holders of Babcock Shares as appearing in the register of
members of Babcock from time to time
'Cazenove' Cazenove & Co. Ltd
'Circular' the Babcock circular to shareholders that will be sent out shortly
'City Code' or 'Code' the City Code on Takeovers and Mergers issued by the Panel
'Close Brothers' Close Brothers Corporate Finance Limited
'Court Meeting' any meeting or meetings of the holders of Peterhouse Shares (or
different classes thereof) as may be convened pursuant to an order
of the Court under section 425 of the Companies Act for the purposes
of considering and, if thought fit, approving a Scheme of
Arrangement (with or without amendment) in the event the acquisition
of Peterhouse Shares by Babcock is agreed to be implemented by a
Scheme of Arrangement
'Credit Suisse First Boston' Credit Suisse First Boston (Europe) Limited
'Director' an executive or non-executive director of Babcock
'EBITDA' earnings before interest, taxes, depreciation and amortisation
'Enlarged Group' the combined Babcock and Peterhouse Groups
'Eve' Certas Plc (formerly the Eve Group Plc)
'Extraordinary General Meeting' the extraordinary general meeting of Babcock convened by the notice
set out in the Circular to be sent to Babcock Shareholders,
including any adjournment thereof
'Facility Agreement' the £140 million facility agreement dated 22 March 2004 between
Allied Irish Banks p.l.c., Bank of Scotland, Danske Bank A/S, HSBC
Bank plc and The Royal Bank of Scotland plc and Babcock
'First Engineering' First Engineering Holdings Limited and its subsidiaries
'Form of Acceptance' the form of acceptance attached to the Offer Document
'Form of Proxy' the form of proxy for use at the Extraordinary General Meeting,
attached to the Offer Document
'FSMA' Financial Services and Markets Act 2000
'Independent Directors' Ted Adams, Ian Richardson, Peter Corley, Alan Robertson, John O'Kane
and Janette Anderson
'Listing Particulars' the listing particulars relating to Babcock and the New Babcock
Shares, prepared in accordance with the Listing Rules made under
section 74 FSMA
'Listing Rules' the Listing Rules of the UK Listing Authority as amended from time
to time
'London Stock Exchange' London Stock Exchange plc
'Mix and Match Facility' the mix and match facility as described in section 3 - Mix and Match
Facility on pages 7 and 8
'NGT' National Grid Transco PLC
'New Babcock Shares' Babcock Shares proposed to be issued fully paid pursuant to the
Offer
'Offer' the offer recommended by the Independent Directors of Peterhouse to
be made by Credit Suisse First Boston on behalf of Babcock to
acquire the entire issued and to be issued share capital of
Peterhouse held by the Peterhouse Shareholders as set out in the
Offer Document and, where the context admits, any subsequent
revision, variation, extension or renewal thereof
'Offer Document' the document to be sent to the Peterhouse Shareholders containing
the Offer
'Official List' the Official List of the UK Listing Authority
'Panel' the Panel on Takeovers and Mergers
'pence' or '£' or 'sterling' or 'GBP' the lawful currency of the United Kingdom
'Peterhouse Group' Peterhouse and its subsidiary undertakings
'Peterhouse Options' the options granted under the Peterhouse Share Option Schemes
'Peterhouse Preliminary Results the announcement dated 9 March 2004 of the preliminary results of
Announcement' Peterhouse for the twelve month period to 31 December 2003
'Peterhouse Shares' the existing unconditionally allotted or issued and fully paid
ordinary shares of 25 pence each in the capital of Peterhouse and
any further shares which are unconditionally allotted or issued
prior to the date on which the Offer closes (or such earlier date or
dates, as Babcock may, with the Panel's consent and subject to the
City Code, decide)
'Peterhouse Shareholders' holders of Peterhouse Shares
'Peterhouse Share Option Schemes' the Peterhouse Group plc Long Term Incentive Plan, the 1998
Peterhouse Group plc Approved Executive Share Option Scheme, the
2001 Peterhouse Group plc Unapproved Executive Share Option Scheme
and the Shorco Group Holdings Plc Executive Share Option Scheme
'Scheme of Arrangement' the potential acquisition of Peterhouse Shares by Babcock by way of
a Scheme of Arrangement under section 425 of the Companies Act in
accordance with this announcement
'Scheme Extraordinary General Meeting'any extraordinary general meeting of Peterhouse convened in
connection with the Scheme of Arrangement, including any adjournment
thereof
'SGI' Service Group International
'UK Listing Authority' or 'UKLA' the Financial Services Authority acting in its capacity as the
competent authority for the purposes of Part VI of FSMA
'UK' or 'United Kingdom' the United Kingdom of Great Britain and Northern Ireland
'US' or 'USA' or 'United States' the United States of America, its territories and possessions, any
state in the United States of America and the District of Columbia
'US Securities Act' the United States Securities Act of 1933, as amended
For the purposes of this document, 'subsidiary', 'subsidiary undertaking', '
undertaking' and 'associated undertaking' have the meanings given by the Act
(but for this purpose ignoring paragraph 20(1)(b) of Schedule 4A of the Act).
This information is provided by RNS
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