Final Rec'd Revised Bid
Carillion PLC
14 December 2005
THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN, INTO OR
FROM THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN
14 December 2005
PART I
CARILLION PLC
RECOMMENDED FINAL REVISED CASH AND SHARE ACQUISITION
OF
MOWLEM PLC
On 7 December 2005 the Boards of Carillion and Mowlem announced the terms of a
recommended proposal made by Carillion to acquire, for cash and shares, the
entire issued and to be issued share capital of Mowlem.
The Boards of Carillion and Mowlem are now pleased to announce that agreement
has been reached on final revised terms for the Acquisition of the entire issued
and to be issued share capital of Mowlem by Carillion. The Acquisition is to be
implemented by means of a scheme of arrangement under section 425 of the
Companies Act and is unanimously recommended by the Mowlem Board.
Highlights
* The final revised terms of the recommended cash and share Acquisition value each Mowlem
share at 220 pence
* Consideration for each Mowlem Share is 0.46 New Carillion Shares valued at 138 pence (based
on the Closing Price of a Carillion Share on 14 December 2005, the last practicable date
prior to this announcement) and 82 pence in cash, with a Mix and Match Facility being made
available
* Irrevocable undertakings have been received from Mowlem Shareholders in respect of
40,780,576 Mowlem Shares, representing approximately 28.7 per cent. of the existing issued
share capital of Mowlem
* In addition, letters of intent have been received from Mowlem Shareholders such that
irrevocable undertakings and letters of intent have been received in respect of, in
aggregate, 49,060,192 Mowlem Shares, representing approximately 34.5 per cent. of the
existing issued share capital of Mowlem
* Enlarged Group expected to achieve an annual running rate of cost savings of £15 million by
the end of 2007 (the first full year after completion of the Acquisition) and the
Acquisition is expected to be materially earnings enhancing in that year (see Note)
* Cost savings are expected to arise as follows:
- approximately one third from the restructuring of head office and rationalisation
of regional properties;
- approximately one third from improved supply chain management; and
- the remainder from savings in support functions, insurances, property and other
costs (see Note).
* Carillion management has a strong track record within its existing business of delivering
substantial savings in the same areas
* Holders of New Carillion Shares following completion of the Acquisition will receive the
Carillion final dividend for the year to 31 December 2005 which, in the absence of
unforeseen circumstances, is expected to be not less than 5 pence per Carillion Share
* Acquisition price of 220 pence represents a premium of approximately 41 per cent. to the
average Closing Price of 156 pence for each Mowlem Share for the three months prior to and
including 28 October 2005, the last Business Day prior to the day of the announcement by
Mowlem that it had received an approach
* The terms set out in this announcement are Carillion's final proposal and will not be
further improved, save that Carillion continues to reserve the right, in its sole
discretion, to implement the Acquisition by way of a takeover offer rather than by way of
the Scheme and to make appropriate amendments to the terms of the Acquisition in order to do
so
Commenting on the revised terms of the Proposed Acquisition, Philip Rogerson,
Chairman of Carillion said:
'We are delighted to have secured such substantial support from Mowlem
shareholders for this revised proposal. This transaction will create a leading
support services and construction company and we are confident that it will
deliver excellent value for both Mowlem and Carillion shareholders.'
Commenting on the revised terms of the Proposed Acquisition, Joe Darby, Chairman
of Mowlem said:
'I am very pleased to be able to recommend this improved final offer from
Carillion. I firmly believe that the combination of Mowlem and Carillion will
create a strong company and that Mowlem shareholders will derive significant
value.'
Lazard is acting as financial adviser to Carillion. Morgan Stanley and Oriel
Securities are acting as joint corporate brokers to Carillion.
Rothschild is acting as financial adviser to Mowlem. Hoare Govett is acting as
corporate broker to Mowlem.
This summary should be read in conjunction with, and is subject to, the full
text of the following announcement. In particular, the Acquisition is subject
to the conditions set out in Part II of this announcement.
Note The anticipated operational cost savings have been calculated on the basis of the existing cost
and operating structures of the Carillion and Mowlem Groups. 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.
The statements that the Acquisition is expected to be materially earnings enhancing for
Carillion in 2007 (the first full year following completion of the Acquisition) relate to future
actions and circumstances, which, by their nature, involve risks, uncertainties and other
factors.
These statements do not constitute a profit forecast and should not be interpreted to mean that
earnings for that year or any subsequent financial period would necessarily match or be greater
than those for any preceding financial period.
ENQUIRIES
CARILLION
CARILLION PLC +44 (0)1902 422 431
John McDonough, Chief Executive
Chris Girling, Chief Financial Officer
John Denning, Director, Group Corporate Affairs
LAZARD +44 (0)20 7187 2000
Marcus Agius
Matthew Jarman
Samuel Bertrand
MORGAN STANLEY (Joint Corporate Broker) +44 (0)20 7425 8000
Nick Wiles
Piers Coombs
ORIEL SECURITIES (Joint Corporate Broker) +44 (0)20 7710 7600
Simon Bragg
David Arch
MAITLAND CONSULTANCY (PR Adviser)
Angus Maitland +44 (0)20 7379 5151
Neil Bennett
MOWLEM
MOWLEM PLC +44 (0)20 8568 9111
Simon Vivian, Chief Executive
Paul Mainwaring, Finance Director
ROTHSCHILD +44 (0)20 7280 5000
John Deans
Stuart Vincent
HOARE GOVETT (Corporate Broker) +44 (0)20 7678 8000
Antonia Rowan
John MacGowan
CARDEW & CO. (PR Adviser) +44 (0)20 7930 0777
Anthony Cardew +44 (0)7770 720 389
Dealing Restrictions
Under the provisions of Rule 8.3 of the City Code on Takeovers and Mergers (the
'Code'), if any person is, or becomes, 'interested' (directly or indirectly) in
1% or more of any class of 'relevant securities' of Carillion or of Mowlem, all
'dealings' in any 'relevant securities' of that company (including by means of
an option in respect of, or a derivative referenced to, any such 'relevant
securities') must be publicly disclosed by no later than 3.30pm (London time) on
the London business day following the date of the relevant transaction. This
requirement will continue until the date on which the offer becomes, or is
declared, unconditional as to acceptances, lapses or is otherwise withdrawn or
on which the 'offer period' otherwise ends. If two or more persons act together
pursuant to an agreement or understanding, whether formal or informal, to
acquire an 'interest' in 'relevant securities' of Carillion or Mowlem, they will
be deemed to be a single person for the purpose of Rule 8.3.
Under the provisions of Rule 8.1 of the Code, all 'dealings' in 'relevant
securities' of Carillion or Mowlem by Carillion or Mowlem, or by any of their
respective 'associates' must be disclosed by no later than 12.00 noon (London
time) on the London business day following the date of the relevant transaction.
A disclosure table, giving details of the companies in whose 'relevant
securities' 'dealings' should be disclosed, and the number of such securities in
issue, can be found on the Panel's website at www.thetakeoverpanel.org.uk.
'Interests in securities' arise, in summary, when a person has long economic
exposure, whether conditional or absolute, to changes in the price of
securities. In particular, a person will be treated as having an 'interest' by
virtue of the 'ownership' or control of securities, or by virtue of any option
in respect of, or derivative referenced to, securities.
Terms in quotation marks are defined in the Code, which can also be found on the
Panel's website. If you are in any doubt as to whether or not you are required
to disclose a 'dealing' under Rule 8, you should consult the Panel.
Lazard, which is authorised and regulated in the United Kingdom by the Financial
Services Authority, is acting exclusively for Carillion and no one else in
connection with the Acquisition and this announcement and will not be
responsible to anyone other than Carillion for providing the protections
afforded to clients of Lazard nor for providing advice in connection with the
Acquisition or this announcement or any matter referred to herein.
Rothschild, which is authorised and regulated in the United Kingdom by the
Financial Services Authority, is acting exclusively for Mowlem and no one else
in connection with the Acquisition and this announcement and will not be
responsible to anyone other than Mowlem for providing the protections afforded
to clients of Rothschild nor for providing advice in connection with the
Acquisition or this announcement or any matter referred to herein.
Morgan Stanley, which is authorised and regulated in the United Kingdom by the
Financial Services Authority, is acting exclusively for Carillion and no one
else in connection with the Acquisition and this announcement and will not be
responsible to anyone other than Carillion for providing the protections
afforded to clients of Morgan Stanley nor for providing advice in connection
with the Acquisition or this announcement or any matter referred to herein.
Oriel Securities, which is authorised and regulated in the United Kingdom by the
Financial Services Authority, is acting exclusively for Carillion and no one
else in connection with the Acquisition and this announcement and will not be
responsible to anyone other than Carillion for providing the protections
afforded to clients of Oriel Securities nor for providing advice in connection
with the Acquisition or this announcement or any matter referred to herein.
Hoare Govett, which is authorised and regulated in the United Kingdom by the
Financial Services Authority, is acting exclusively for Mowlem and no one else
in connection with the Acquisition and this announcement and will not be
responsible to anyone other than Mowlem for providing the protections afforded
to clients of Hoare Govett nor for providing advice in connection with the
Acquisition or this announcement or any matter referred to herein.
This announcement does not constitute an offer to sell or invitation to purchase
any securities or the solicitation of any vote for approval in any jurisdiction,
nor shall there be any sale, issue or transfer of the securities referred to in
this announcement in any jurisdiction in contravention of applicable law.
The release, publication or distribution of this announcement in certain
jurisdictions may be restricted by law. The availability of the New Carillion
Shares and the Mix and Match Facility under the terms of the Scheme (or, if the
offer is implemented by way of a takeover offer, of that offer), if made, to
persons not resident in the United Kingdom may be affected by the laws of the
relevant jurisdictions in which they are located. Persons who are not resident
in the United Kingdom or who are subject to other jurisdictions should inform
themselves of, and observe, any applicable requirements.
This announcement is not an offer of securities for sale in the US and the New
Carillion Shares have not been, and will not be, registered under the US
Securities Act of 1933 (the 'Securities Act') or under the securities laws of
any state, district or other jurisdiction of the US, Australia, Canada or Japan
and no regulatory clearance in respect of the New Carillion Shares has been, or
will be, applied for in any jurisdiction other than the UK. It is expected
that the New Carillion Shares will be issued in reliance upon the exemption from
the registration requirements of the Securities Act provided by Section 3(a)
(10) thereof. Under applicable US securities laws, Mowlem Shareholders who are
or will be deemed to be 'affiliates' of Mowlem or Carillion prior to, or of
Carillion after, the Effective Date will be subject to certain transfer
restrictions relating to the New Carillion Shares received in connection with
the Acquisition.
If the Acquisition is carried out by way of a takeover offer, it will not be
made, directly or indirectly, in or into the United States, Canada, Australia or
Japan and will not be capable of acceptance from or within the United States,
Canada, Australia or Japan. Accordingly, copies of this announcement and all
documents relating to the takeover offer will not be, and must not be, mailed or
otherwise forwarded, distributed or sent in, into or from the United States,
Canada, Australia or Japan. If the Acquisition is carried out by way of
takeover offer, the New Carillion Shares to be issued in connection with such
takeover offer will not be registered under the Securities Act or under the
securities laws of any state, district or jurisdiction of the United States and
may not be offered, sold or delivered, directly or indirectly, in the United
States, other than pursuant to an exemption from any such registration
requirements. Carillion does not intend to register any such takeover offer or
any part thereof in the United States or to conduct a public offering of the New
Carillion Shares in the United States.
Whether or not a Mowlem Shareholder's Mowlem Shares are voted at the Scheme
Meeting or the Mowlem Extraordinary General Meeting, if the Scheme becomes
Effective, those Mowlem Shares will be acquired pursuant to the Scheme and
Mowlem Shareholders will, subject to the Mix and Match Facility, receive a
payment of 82 pence in cash and 0.46 New Carillion Shares for every Mowlem
Share.
Mowlem will prepare the Scheme Document to be distributed to Mowlem
Shareholders. Carillion and Mowlem urge Mowlem Shareholders to read the Scheme
Document when it becomes available because it will contain important information
relating to the Acquisition. Mowlem Shareholders may obtain a further free copy
of the Scheme Document, when it becomes available, from Macfarlanes.
This announcement contains statements about Carillion and Mowlem that are or may
be forward looking statements. All statements other than statements of
historical facts included in this announcement may be forward looking
statements. Without limitation, any statements preceded or followed by or that
include the words 'targets', 'plans' 'believes', 'expects', 'aims',' intends', '
will', 'may', 'anticipates', 'estimates', 'projects' or, words or terms of
similar substance or the negative thereof, are forward looking statements.
Forward looking statements include statements relating to the following: (i)
future capital expenditures, expenses, revenues, earnings, synergies, economic
performance, indebtedness, financial condition, dividend policy, losses and
future prospects; (ii) business and management strategies and the expansion and
growth of Carillion's or Mowlem's operations and potential synergies resulting
from the Acquisition; and (iii) the effects of government regulation on
Carillion's or Mowlem's business.
Such forward looking statements involve risks and uncertainties that could
significantly affect expected results and are based on certain key assumptions.
Many factors could cause actual results to differ materially from those
projected or implied in any forward looking statements. Due to such
uncertainties and risks, readers are cautioned not to place undue reliance on
such forward looking statements, which speak only as of the date hereof.
Carillion and Mowlem disclaim any obligation to update any forward looking or
other statements contained herein, except as required by applicable law.
THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN, INTO OR
FROM THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN
14 December 2005
PART II
CARILLION PLC
RECOMMENDED FINAL REVISED CASH AND SHARE ACQUISITION
OF
MOWLEM PLC
1. Introduction
On 7 December 2005, the Boards of Carillion and Mowlem announced the terms of a
recommended proposal made by Carillion to acquire, for cash and shares, the
entire issued and to be issued share capital of Mowlem.
The Boards of Carillion and Mowlem are now pleased to announce that agreement
has been reached on final revised terms of the Acquisition of the entire issued
and to be issued share capital of Mowlem by Carillion. The final revised terms
of the Acquisition value each Mowlem Share at 220 pence and Mowlem's existing
issued share capital at approximately £313 million.
The Acquisition is to be implemented by means of a scheme of arrangement under
section 425 of the Companies Act and is unanimously recommended by the Mowlem
Board. Carillion reserves the right, in its sole discretion, to implement the
Acquisition by making a takeover offer for the entire issued and to be issued
share capital of Mowlem and to make appropriate amendments to the terms of the
Acquisition in order to do so. Otherwise, the terms set out in this
announcement are Carillion's final proposal and will not be further improved.
2. The Revised Terms of the Acquisition
Under the terms of the Scheme, which will be subject to the conditions and
further terms set out in Appendix I of this announcement and the full terms and
conditions that will be set out in the Scheme Document, Mowlem Shareholders will
be entitled to receive:
for each Mowlem Share 0.46 New Carillion Shares
and
82 pence in cash
and so in proportion for any number of Mowlem Shares held. Based on the Closing
Price of a Carillion Share immediately prior to this announcement, this
entitlement represents 138 pence in New Carillion Shares plus 82 pence in cash.
A Mix and Match Facility will also be made available pursuant to which Mowlem
Shareholders may, subject to availability, elect to vary the proportions in
which they receive New Carillion Shares and cash in respect of their holdings of
Mowlem Shares. Further details of the Mix and Match Facility are set out in
paragraph 5 below.
3. Irrevocable Undertakings
Mowlem Directors who also hold Scheme Shares have irrevocably undertaken to vote
such Scheme Shares (in aggregate, 46,193 Mowlem Shares, representing
approximately 0.033 per cent. of the existing issued share capital of Mowlem) in
favour of the Acquisition and the Scheme at the Scheme Meeting and the Mowlem
Extraordinary General Meeting. Such Mowlem Directors have also undertaken that,
if following this announcement, Carillion decides to implement the Acquisition
by means of a takeover offer instead of by way of the Scheme, that such Mowlem
Directors shall accept such takeover offer in respect of their Scheme Shares.
In addition, irrevocable undertakings to vote in favour of the Scheme and the
Acquisition at the Scheme Meeting and the Mowlem Extraordinary General Meeting
have been received from Schroder Investment Management Limited in respect of
17,373,714 Mowlem Shares, from Societe Generale Asset Management in respect of
16,133,470 Mowlem Shares and from Aberforth Partners LLP in respect of 7,227,199
Mowlem Shares.
Separately, a non-legally binding letter of intent has been received from Morley
Fund Management in respect of 8,279,616 Mowlem Shares.
Accordingly, Carillion has received irrevocable undertakings on the terms set
out above and letters of intent in respect of, in aggregate, 49,060,192 Mowlem
Shares, representing approximately 34.5 per cent. of Mowlem's existing issued
share capital.
The irrevocable undertakings referred to above given by certain Mowlem Directors
will cease to be binding on, amongst other occurrences, (a) the Mowlem Directors
determining not to recommend, or withdrawing their recommendation of, the
Acquisition, (b) if the Acquisition is to be implemented by the Scheme, the
Scheme failing to become Effective or (c) if the Acquisition is to be
implemented by means of a takeover offer, if such takeover offer lapses or is
withdrawn.
The irrevocable undertaking referred to above given by Schroder Investment
Management Limited will remain binding in the event of a competing offer being
made for Mowlem but will cease to be binding if the Scheme fails to become
Effective. Under the irrevocable undertaking referred to above given by Societe
Generale Asset Management, Societe Generale Asset Management retains the right
to accept a higher competing offer made for Mowlem Shares which represents an
improvement of not less than the higher of 10 per cent. above the value of
Carillion's offer on (a) the day of this announcement and (b) the day of
announcement of a competing bid, in each case using the average Closing Price of
a Carillion Share on each of the five business days before the relevant
announcement. Each of these irrevocable undertakings will also cease to be
binding in relation to any Mowlem Shares held by Schroder Investment Management
Limited or Societe Generale Asset Management on behalf of clients who terminate
the mandate for holding such Mowlem Shares with Schroder Investment Management
Limited or, as the case may be, Societe Generale Asset Management. Under the
irrevocable undertaking referred to above given by Aberforth Partners LLP,
Aberforth Partners LLP retains the right to accept a higher competing offer made
for Mowlem Shares which represents, in its reasonable opinion, an improvement of
not less than 10 per cent. in the value offered by Carillion.
4. Recommendation
The Mowlem Directors, who have been so advised by Rothschild, consider the
revised terms of the proposed acquisition to be fair and reasonable. In
providing its advice to the Mowlem Directors, Rothschild has taken into account
the commercial assessments of the Mowlem Directors.
In coming to this recommendation, the Mowlem Directors have taken account of
Balfour Beatty plc's approach but the Mowlem Directors have decided that, in
view of the value, certainty and quality of Carillion's offer, they should
recommend Carillion's offer.
Accordingly, the Board of Mowlem will unanimously recommend Mowlem Shareholders
vote in favour of the resolutions to be proposed at the Scheme Meeting and the
Mowlem Extraordinary General Meeting, as they have irrevocably undertaken to do
in respect of their own respective beneficial holdings, amounting in aggregate
to 46,193 Mowlem Shares, representing approximately 0.033 per cent. of Mowlem's
issued share capital.
5. Further Details of the Acquisition and Terms of the Mix and Match Facility
Based on the Closing Price of 300.5 pence per Carillion Share on 14 December
2005, being the last Business Day before this announcement, the Acquisition
values each Mowlem Share at approximately 220 pence and the existing issued
share capital of Mowlem at approximately £313 million. These revised terms
represent a premium of approximately:
* 27 per cent. to the Closing Price of 173 pence per Mowlem Share on 28 October 2005, the last
Business Day prior to the day of the announcement made by Mowlem that it had received an
approach; and
* 41 per cent. to the average closing price of approximately 156 pence per Mowlem Share over the
last three months prior to and including 28 October 2005, being the last Business Day before the
day of the announcement made by Mowlem that it had received an approach.
Assuming a maximum number of 65.4 million New Carillion Shares will be issued
pursuant to the revised terms of the Acquisition, Mowlem Shareholders will hold
Carillion Shares representing approximately 23.3 per cent. of the Enlarged
Group. In addition, Mowlem Shareholders will have received cash consideration,
in aggregate, of approximately £116 million.
As fractions of New Carillion Shares will not be allotted or issued to persons
pursuant to the Scheme, fractional entitlements to New Carillion Shares will be
aggregated and sold in the market and the net proceeds of sale will be
distributed pro rata to persons entitled thereto.
It is currently expected that the following will happen in the order set out
below immediately prior to the Scheme becoming Effective:
* The Scheme Shares will be subdivided and converted into two further new classes of shares in the
capital of Mowlem; and
* further Scheme Shares will be issued to participants in the Mowlem Share Schemes who have
exercised their options and awards under such schemes (see paragraph 17),
and upon the Scheme becoming Effective:
* the Scheme Shares will be cancelled and in their place new ordinary shares of 25 pence each in
the capital of Mowlem will be issued to Carillion (or its nominee(s)), whereupon Mowlem will
become a wholly-owned subsidiary of Carillion; and
* the cash and/or New Carillion Shares due to each Mowlem Shareholder pursuant to the Scheme will
be paid or issued to such Mowlem Shareholder within 14 days of the Effective Date.
Mowlem Shareholders (other than certain Overseas Persons) will be entitled to
elect, subject to availability, to vary the proportions in which they receive
New Carillion Shares and cash in respect of their holdings of Mowlem Shares.
However, the total number of New Carillion Shares to be issued and the maximum
aggregate amount of cash to be paid under the Scheme will not be varied as a
result of elections under the Mix and Match Facility.
Accordingly, elections made by Mowlem Shareholders under the Mix and Match
Facility will only be satisfied to the extent that other Mowlem Shareholders
make offsetting elections. Satisfaction of elections under the Mix and Match
Facility will be effected on the basis of 300.5 pence in cash (being the Closing
Price of a Carillion Share on 14 December 2005, the last practicable date before
this announcement) for each New Carillion Share. To the extent that elections
cannot be satisfied in full, they will be scaled down on a pro rata basis. As a
result, Mowlem Shareholders who make an election under the Mix and Match
Facility will not know the exact number of New Carillion Shares or the amount of
cash they will receive until settlement of the consideration due to them in
respect of the Acquisition.
The Mix and Match Facility is conditional upon the Acquisition becoming
Effective and further details on the Mix and Match Facility will be included in
the Scheme Document.
6. Background to, and reasons for, the Acquisition
Carillion continues to believe that the Acquisition will create significant
value for its shareholders by bringing together two companies with an excellent
strategic fit and complementary skills and market strengths, particularly in
support services and private finance. The Acquisition will create one of the
largest support services and construction companies in the UK, with a combined
turnover of approximately £4.1 billion.
The Acquisition is consistent with Carillion's strategic objective of seeking to
deliver sustainable, profitable growth through:
* growing support services organically and by acquisition;
* creating value through investments in Public Private Partnership ('PPP') projects;
* maintaining a strong and selective construction capability focused on higher added value
contracts for longer term customers; and
* developing and marketing integrated solutions tailored to the needs of customers, including
project finance, design, construction, maintenance and lifetime asset management.
The Acquisition of Mowlem is an important step change in Carillion's development
and Carillion is confident that the Acquisition will produce attractive returns
for its shareholders. Through careful integration and management, Carillion is
targeting increases in Mowlem's margins in Support Services and Construction
with a view over time of bringing them towards those of Carillion. In addition,
the Acquisition is expected to generate significant cost synergies (see note 4,
Appendix II). Furthermore, Carillion believes the Acquisition will materially
enhance earnings in 2007, the first full year after completion of the
Acquisition (see note 5, Appendix II).
Support Services
The Enlarged Group will benefit from significantly enhanced capabilities and
positions in a number of support services markets with strong growth dynamics.
With annual turnover of approximately £1.5 billion, it will also be one of the
largest suppliers of support services in the UK.
The Enlarged Group will have a broader range of skills and capabilities,
strengthening its integrated services offering across the UK facilities
management ('FM') market. The Acquisition will combine Carillion's strengths in
the telecommunications, health and defence sectors with Mowlem's strengths in
the financial services and retail sectors. The stronger integrated services
offering of the Enlarged Group will make it better equipped to enter and succeed
in new sectors. Mechanical and electrical engineering ('M&E') maintenance is a
major element of an integrated FM service and combining the M&E maintenance
capabilities of Carillion and Mowlem will create a market leading M&E
maintenance business in the UK.
In the UK rail infrastructure services market, Carillion's position as a leading
supplier of integrated solutions for projects to upgrade and renew the rail
network will be strengthened by the addition of Mowlem's specialist rail
services skills.
Investments
Carillion's position as a market leader in PPP projects will be significantly
enhanced by the Acquisition as Mowlem also has a major presence in this sector.
Carillion has a portfolio of 18 financially closed projects, in which it has
invested equity of approximately £29 million and commitments to invest a further
£20 million. Mowlem has a portfolio of 10 financially closed equity
participation PPP projects in which it has either invested or has existing
commitments to invest equity of approximately £51 million at par value. The
total equity invested or committed to date for the combined portfolios of
Carillion and Mowlem is expected to be approximately £100 million as at 6
December 2005.
The Enlarged Group will have a strong pipeline of new PPP projects with the
potential to create significant additional value. Mowlem is currently the
preferred bidder for 3 equity participation projects for the Ministry of
Defence, in which it expects to invest total equity of approximately £46.5
million at par value, including £30 million in the Allenby Connaught project.
Beyond that, the Enlarged Group is shortlisted for a further 10 PPP projects
with a potential equity requirement of up to £73.5 million.
In addition to creating a larger and more diversified portfolio of PPP equity
investments, the ability of the Enlarged Group to bid for and win new PPP
projects will be significantly improved through the increased availability of
specialist private finance, support services and construction skills and
resources to the Enlarged Group, which is currently the main constraint to
growth.
Construction Services
The construction services activities of Carillion and Mowlem will have a
combined turnover of approximately £2.5 billion and together will be a leading
building business in the UK market. The business will be managed in line with
Carillion's selective approach to construction.
In the UK commercial building sector, Carillion is primarily focused on larger
building projects with a particularly strong presence in the education, retail,
high-rise urban residential, offices and mixed-use development sectors. The
addition of Mowlem's skills and resources, particularly its strengths in the
education and defence sectors and also in smaller-scale building projects, will
create a leading UK building business.
In UK civil engineering, Carillion's activities are tightly focused on projects
procured under the Government's Early Contractor Involvement Programme.
Carillion believes that Mowlem's capabilities in infrastructure will complement
these activities.
International
Carillion has well-established and successful international regional businesses
in the Middle East, Canada and the Caribbean. While the majority of revenues
from these businesses are currently generated from construction services, an
increasing proportion is being generated from support services and PPP
investments. Carillion's strategy is to maintain an international presence only
where it can develop support services and PPP investments alongside strong and
selective construction businesses. The Enlarged Group will adopt the same
strategy for Mowlem's businesses in Australia and the US.
Synergies
In addition to the expected benefits of the Acquisition referred to above, there
is the potential to generate significant synergy benefits.
Carillion believes it can achieve an annual running rate of operating cost
savings in the Enlarged Group of approximately £10 million by the end of 2006,
which will broadly equal the one-off costs of delivering those savings, and of
£15 million per year by the end of 2007 (see note 4, Appendix II). Cost savings
are expected to arise broadly equally from the restructuring of head office and
regional properties, from improved supply chain management and from savings in
support functions, insurances, property and other costs. Within its existing
business, Carillion has already demonstrated that it can make substantial
savings in these same areas.
Carillion also believes that the Acquisition will create a number of
cross-selling opportunities within the Enlarged Group and generate revenue
synergies in areas such as rail, FM, M&E maintenance, vehicle fleet management
and the recruitment and supply of operational personnel.
7. Financial Effects of the Acquisition
The Acquisition is expected to be materially earnings enhancing (see note 5,
Appendix II) for Carillion in 2007, the first full year following completion of
the Acquisition. Given the benefits of the Acquisition outlined above,
Carillion is confident of the financial and trading prospects of the Enlarged
Group.
As at 31 October 2005, Carillion had net cash of £76 million and Mowlem had net
debt of £76 million (see note 6, Appendix II) which Carillion will refinance on
completion of the Acquisition. Carillion has arranged new debt financing
facilities with The Royal Bank of Scotland to finance the Acquisition and the
working capital needs of the Enlarged Group. On a proforma basis for 2006, it
is expected that the Enlarged Group will have average net debt of approximately
£200 million and a peak net debt position of approximately £250 million in that
year. As a result of actions to be taken by Carillion management, including
disposals, Carillion expects to achieve a substantial reduction in net debt
within the next 24 months.
It is expected that, consistent with Carillion's existing approach, Carillion
will adjust the balance sheet of Mowlem by approximately £120 million, of which
approximately £45 million relates to writedowns on a small number of contracts
and the remainder to changes in the carrying values of goodwill and the deferred
tax asset. Carillion will subsequently disclose any material releases from
these provisions.
8. Background to and reasons for recommending the Acquisition
Mowlem has been through a period of significant change in 2005 with the
appointment of a new Chairman, Chief Executive and Finance Director during the
year. There has been a great deal of internal activity with the reorganisation
of the construction services division in April and the recent closure of a
number of unprofitable operations. Improved risk management processes have been
implemented and, following a comprehensive review of the contracts portfolio,
new more prudent rules on claims valuation and profit recognition have been
introduced. These changes have provided Mowlem with a strong foundation to
further develop the business in future, but the Mowlem Directors believe the
combination of the two groups has attractive strategic advantages for both
companies and offers the opportunity to accelerate the delivery of value to
Mowlem Shareholders.
The Mowlem Directors therefore continue to believe that the Acquisition is in
the best interests of Mowlem Shareholders and, therefore, will unanimously
recommend that they approve the Acquisition on its revised terms. The revised
terms of the Acquisition being offered by Carillion provide Mowlem Shareholders
with a significant proportion of their current investment in cash while the
enhanced share element gives them the ability to benefit significantly from a
recovery in Mowlem's business and the value to be created from the combination
of Carillion and Mowlem, and its future growth.
9. Information on Carillion
Since its demerger from Tarmac in 1999, Carillion has been successfully
transformed from a predominantly construction business to become a leading
support services and construction company both in the UK and in its chosen
international regions. The change in business mix and introduction of rigorous
new management procedures has significantly improved the risk profile of its
activities and the predictability of its earnings.
Carillion has three business segments for reporting purposes:
* Support Services, which includes rail and road infrastructure services, facilities management,
mechanical and electrical engineering maintenance and other support services;
* Investments, in which segment Carillion reports the returns on its equity investments in PPP
projects; and
* Construction Services, which includes all UK building and civil engineering activities together
with those of its international regional businesses.
Carillion's current portfolio comprises many high-profile successful contracts
in the UK and overseas, including:
* in the UK: FM contracts for BT, Telewest Broadband, ten NHS hospitals and various other
government and commercial properties; maintenance of the M11, M25 and M40; the upgrading of
large sections of the UK rail network; and the construction of the M6 Toll motorway and the new
Government Communications Headquarters in Cheltenham; and
* through its international operations: in Canada, two of the country's first PPP hospitals and
the maintenance of a substantial proportion of the provincial road network in Ontario; in the
Middle East, it is building large parts of the multi-billion pound Dubai Festival City
development and growing a substantial FM business.
As at 14 December 2005 (the last Business Day before the date of this
announcement), Carillion had a market capitalisation of approximately £646
million. In the year to 31 December 2004 as reported under UK GAAP, Carillion
generated revenues (including its share of joint ventures) of £2.0 billion,
profit on ordinary activities before tax, goodwill amortisation and exceptional
items of £51 million, and as at 31 December 2004 had net assets of £187 million.
In the six months to 30 June 2005 as reported under IFRS, Carillion generated
revenues (including its share of joint ventures) of £1,011 million, profit on
ordinary activities before tax, amortisation and exceptional items of £18
million, and as at 30 June 2005 had net assets of £114 million. At that date,
the Carillion Directors valued Carillion's portfolio of PPP investments at £84
million.
10. Current Trading
Carillion will be announcing its normal pre-close trading update in early
January 2006 but in the meantime can confirm that trading continues to be in
line with its expectations.
11. Information on Mowlem
Mowlem is an international provider of construction and support services to
public and private sector customers operating across a comprehensive range of
market sectors. Mowlem offers a wide range of construction and support
services, from major building and infrastructure projects through to smaller
building and civil engineering works; and from total facilities management
through to direct delivery of mechanical and electrical (M&E), cleaning and
security services.
Recent years have seen a radical change in the nature and shape of the Mowlem
business, successfully evolving from being a pure construction contractor into
one of the UK's leading construction and support services group, able to deliver
a full range of capabilities to the built environment.
Mowlem has four business segments for reporting purposes:
* Construction Services: this includes Building, which provides a comprehensive national building
service to the public and private sectors, from larger building projects through to smaller
building works, delivered through a network of regional offices covering the UK; Infrastructure,
a multi-discipline business spanning the full range of civil engineering and related
disciplines, offering total infrastructure services capability to clients, including the rail,
highways, water and utilities sectors; and Engineering, comprising specialist businesses from M&
E, multi-discipline design, construction and maintenance services across all commercial and
industrial applications;
* Support Services: this includes Mowlem Asset Services, the strategic customer facilities and
asset management business, the Mowlem Pall Mall cleaning services and security business and the
Mowlem Environmental Sciences Group;
* Projects: this integrates Mowlem's PPP, public sector services and major project building
activities into one business. Mowlem has a broad portfolio with a number of investment
projects in the health, education, defence, judicial and medical sectors. The largest project
in this portfolio (a joint venture with Kellogg, Brown and Root) is the Allenby Connaught
project for the Ministry of Defence, which is at preferred bidder stage and involves £7 billion
of new build, refurbishment and facilities management services over 35 years; and
* International: an engineering and construction business covering the building, civil engineering
and rail sectors through the Group's Australian subsidiary, Barclay Mowlem, and its US building
business, Charter Builders.
For the year ended 31 December 2004 as reported under UK GAAP, Mowlem generated
turnover (including its share of joint ventures) of £2.0 billion, profit on
ordinary activities before tax, goodwill amortisation and operating exceptional
items of £0.3 million, and as at 31 December 2004 had net assets of £187
million. In six months to 30 June 2005 as reported under IFRS, Mowlem generated
turnover (including its share of joint ventures) of £1.1 billion, profit on
ordinary activities before tax, amortisation and exceptional items of £4.1
million and at 30 June 2005 had net assets of £54 million. At September 2005
and at a discount rate of 10 per cent. the Mowlem Directors valued Mowlem's
portfolio of PPP investments and preferred bidder opportunities at £73 million.
12. Implementation Deed and Inducement Fee Arrangements
Carillion and Mowlem have entered into the Implementation Deed which governs
their relationship during the period until the Acquisition becomes Effective or
lapses. Among other things, the parties have agreed to co-operate with regard
to the process of implementing the Acquisition. The Implementation Deed will
terminate (without prejudice to any obligations on Mowlem to pay the break fee
(see below)) in certain circumstances, including if the Acquisition lapses or if
the Scheme or the Acquisition is not approved at the Scheme Meeting or the
Mowlem Extraordinary General Meeting or the Carillion Extraordinary General
Meeting (as appropriate).
Carillion and Mowlem have agreed a break fee letter under which Mowlem has
agreed to pay Carillion a break fee (inclusive of value added tax) equal to one
per cent. of the value of Mowlem calculated by reference to the original terms
of the Acquisition as at 7 December 2005 if (i) a third party transaction is
announced before the Acquisition lapses or is withdrawn; and thereafter (ii)
such third party transaction, or any other third party transaction announced
after the Acquisition is formally announced, becomes or is declared
unconditional in all respects or is completed.
13. The New Carillion Shares
The New Carillion Shares to be issued pursuant to the revised terms of the
Acquisition will be ordinary shares of 50 pence each in the capital of
Carillion. The New Carillion Shares will be issued in registered form, will be
capable of being held in both certificated and uncertificated form, will be
issued credited as fully paid and will rank pari passu in all respects with the
existing Carillion Shares. The New Carillion Shares will carry the right to
Carillion's final dividend in respect of the year to 31 December 2005.
14. Dividend Policy
Following completion of the Acquisition, Carillion intends to maintain its
existing dividend policy. In the absence of unforeseen circumstances, the Board
of Carillion expects to propose a final dividend of not less that 5 pence per
Carillion Share in respect of the year ending 31 December 2005.
15. Directors, Management, Employees of Mowlem
Carillion attaches great importance to the skills and experience of the existing
management and employees of Mowlem and believes that opportunities for them will
be enhanced in the event that the Acquisition becomes Effective.
On completion of the Acquisition, Carillion intends to invite Simon Vivian, the
Chief Executive of Mowlem, to join its Board as an executive director.
The Board of Carillion has also given assurances to the Mowlem Directors that,
following the Acquisition becoming Effective, the existing contractual
employment rights of all employees of the Mowlem Group will be fully
safeguarded.
16. Disclosure of Interests in Mowlem
Save for the arrangements with Mowlem Shareholders in relation to irrevocable
undertakings summarised in paragraph 3 above, neither Carillion nor, so far as
the Carillion Directors are aware, any person deemed to be acting in concert
with Carillion owns or controls any Mowlem Shares or any securities convertible
or exchangeable into Mowlem Shares or options (including traded options) in
respect of, or derivatives referenced to, any such shares ('Relevant Mowlem
Securities') nor does any such person have any arrangement in relation to
Relevant Mowlem Securities. For these purposes, 'arrangement' includes any
indemnity or option arrangement, any agreement or understanding, formal or
informal, of whatever nature, relating to Relevant Mowlem Securities which may
be an inducement to deal or refrain from dealing in such Relevant Mowlem
Securities.
17. Mowlem Share Schemes
The Acquisition will, as described in paragraph 5 above, extend to all Mowlem
Shares issued upon the exercise of the options under the Mowlem Share Schemes
before the Scheme becomes Effective. Appropriate proposals will be made in due
course to participants in the Mowlem Share Schemes.
18. Pensions
Mowlem will continue to make regular contributions to its two main pension
schemes to fund the cost of ongoing accrual of benefits. In addition, Mowlem
intends to make further contributions of £13 million per annum to these schemes
from 2006 onwards with the aim of eliminating the schemes' deficits on a funding
basis by 31 December 2016. Carillion will discuss with the trustees of its
pension scheme additional contributions (over and above the regular
contributions) to the schemes in order to address the scheme deficits. While
the cash amounts of any incremental payments may be significant, they are not
expected to have a material impact on reported profits.
19. Settlement, Listing and Dealing of New Carillion Shares
Applications will be made to the UK Listing Authority and to the London Stock
Exchange for the New Carillion Shares to be issued in connection with the
Acquisition to be admitted to the Official List and to trading on the London
Stock Exchange's main market for listed securities. It is expected that
admission of the New Carillion Shares to the Official List and to trading on the
London Stock Exchange's main market for listed securities will become effective,
and that dealings for normal settlement in the New Carillion Shares will
commence, on the date on which the Scheme become Effective.
The existing Carillion Shares are already admitted to CREST. It is expected
that all of the New Carillion Shares, when issued and fully paid, will be
capable of being held and transferred by means of CREST. It is expected that
the New Carillion Shares will trade under ISIN GB0007365546.
Further details on listing, dealing and settlement will be included in the
formal Scheme Document.
20. Implementation of the Scheme and cancellation of listing
It is intended that the Acquisition will be effected by means of a scheme of
arrangement between Mowlem and the Mowlem Shareholders under section 425 of the
Companies Act. The procedure involves an application by Mowlem to the Court to
sanction the Scheme and confirm the cancellation of all the existing Mowlem
Shares (other than any Mowlem Shares already beneficially held by the Carillion
Group (if any)). In consideration for the cancellation of their Mowlem Shares,
Mowlem Shareholders, who are Scheme Shareholders, will receive cash and New
Carillion Shares as outlined in paragraph 2 above. Following implementation of
the Scheme, Mowlem will become a wholly-owned subsidiary of Carillion.
The Scheme will be subject, among other things, to the Conditions set out in
Appendix I to this announcement, including approval by Mowlem Shareholders by
the passing of a resolution at a meeting of the Mowlem Shareholders convened by
the order of the Court pursuant to section 425 of the Companies Act to consider
and, if thought fit, approve the Scheme with or without any modification thereof
(and any adjournment thereof). This resolution must be approved by a majority
in number of the holders of Mowlem Shares (other than members of the Carillion
Group, if relevant) present and voting, either in person or by proxy, at the
Scheme Meeting, representing not less than three-fourths in value of the Mowlem
Shares held by such holders. The Scheme must also be sanctioned by the Court
and the associated Capital Reduction must be confirmed by the Court, in each
case at the relevant Court Hearings.
In addition, the implementation of the Scheme will require separate approval by
the passing of a special resolution at the Mowlem Extraordinary General Meeting,
inter alia, to:
* approve the Scheme and to authorise the Mowlem Directors to take such action as they consider
necessary or appropriate to effect the Scheme;
* reclassify and subsequently cancel any existing Mowlem Shares (other than Mowlem Shares already
held by Carillion (if any)) and approve the issue of new shares of 25 pence each in Mowlem to
Carillion (and/or its nominee(s)) in accordance with the Scheme; and
* amend the Mowlem articles of association to ensure that the Mowlem Shares issued under the
Mowlem Share Schemes will be subject to the Scheme or, if issued following the Scheme Record
Time, will be automatically transferred to Carillion on the same terms as under the Scheme.
The Mowlem Extraordinary General Meeting will be held directly after the Scheme
Meeting.
If the Scheme becomes Effective, it will be binding on all Scheme Shareholders
irrespective of whether or not they attend or vote in favour of the Scheme at
the Scheme Meeting or in favour of the special resolution to be proposed at the
Mowlem Extraordinary General Meeting. Prior to the Scheme becoming Effective,
Carillion intends to apply to the Financial Services Authority for the listing
of Mowlem Shares to be cancelled and to the London Stock Exchange for the Mowlem
Shares to cease to be admitted to trading on the London Stock Exchange's market
for listed securities. This will take effect on the Effective Date.
21. Carillion Shareholder Approval
The Acquisition constitutes a Class 1 transaction (as defined in the Listing
Rules of the UKLA) for Carillion. Accordingly, Carillion will be required to
seek the approval of its shareholders for the Acquisition at the Carillion
Extraordinary General Meeting. Carillion will prepare and send to its
shareholders, as soon as is reasonably practicable, an explanatory circular
summarising the background to and reasons for the Acquisition (which will
include a notice convening the Carillion Extraordinary General Meeting). The
Acquisition will be conditional on, among other things, the requisite resolution
being passed by the Carillion Shareholders at the Carillion Extraordinary
General Meeting.
22. Overseas Shareholders
The availability of New Carillion Shares under the terms of the Acquisition to
persons not resident in the United Kingdom may be affected by the laws of the
relevant jurisdiction. Such persons should inform themselves about and observe
any applicable requirements. Further details in relation to Overseas
Shareholders will be contained in the Scheme Document.
23. General
The formal documentation setting out the details of the Acquisition, including
the Scheme Document setting out the procedures to be followed to approve the
Scheme, with the forms of proxy for use in connection with the Scheme Meeting
and the Mowlem Extraordinary General Meeting and the forms of election under
which Mowlem Shareholders can elect for varying proportions of cash and New
Carillion Shares under the Mix and Match Facility, together with the Information
Memorandum relating to Carillion and the New Carillion Shares, will be posted to
Mowlem Shareholders and, for information only, to participants in the Mowlem
Share Schemes (other than to persons with addresses in Restricted Territories)
as soon as is reasonably practicable and, in any event within 28 days of the
date of this announcement (or such later date as Carillion and Mowlem may, with
the consent of the Panel, agree).
The Scheme Document will include full details of the Scheme, together with
notices of the Court Meeting and the Mowlem Extraordinary General Meeting and
the expected timetable, and will specify the necessary action to be taken by the
Scheme Shareholders.
The sources and bases of information set out in this announcement are contained
in Appendix II. The definitions of certain expressions used in this
announcement are contained in Appendix III.
ENQUIRIES
CARILLION
CARILLION PLC +44 (0)1902 422 431
John McDonough, Chief Executive
Chris Girling, Finance Director
John Denning, Director, Group Corporate Affairs
LAZARD +44 (0)20 7187 2000
Marcus Agius
Matthew Jarman
Samuel Bertrand
MORGAN STANLEY (Joint Corporate Broker) +44 (0)20 7425 8000
Nick Wiles
Piers Coombs
ORIEL SECURITIES (Joint Corporate Broker) +44 (0)20 7710 7600
Simon Bragg
David Arch
MAITLAND CONSULTANCY (PR Adviser) +44 (0)20 7379 5151
Angus Maitland
Neil Bennett
MOWLEM
MOWLEM PLC +44 (0)20 8568 9111
Simon Vivian, Chief Executive
Paul Mainwaring, Finance Director
ROTHSCHILD +44 (0)20 7280 5000
John Deans
Stuart Vincent
HOARE GOVETT (Corporate Broker) +44 (0)20 7678 8000
Antonia Rowan
John MacGowan
CARDEW & CO. (PR Adviser) +44 (0)20 7930 0777
Anthony Cardew +44 (0)7770 720 389
Dealing Restrictions
Under the provisions of Rule 8.3 of the City Code on Takeovers and Mergers (the
'Code'), if any person is, or becomes, 'interested' (directly or indirectly) in
1% or more of any class of 'relevant securities' of Carillion or of Mowlem, all
'dealings' in any 'relevant securities' of that company (including by means of
an option in respect of, or a derivative referenced to, any such 'relevant
securities') must be publicly disclosed by no later than 3.30pm (London time) on
the London business day following the date of the relevant transaction. This
requirement will continue until the date on which the offer becomes, or is
declared, unconditional as to acceptances, lapses or is otherwise withdrawn or
on which the 'offer period' otherwise ends. If two or more persons act together
pursuant to an agreement or understanding, whether formal or informal, to
acquire an 'interest' in 'relevant securities' of Carillion or Mowlem, they will
be deemed to be a single person for the purpose of Rule 8.3.
Under the provisions of Rule 8.1 of the Code, all 'dealings' in 'relevant
securities' of Carillion or Mowlem by Carillion or Mowlem, or by any of their
respective 'associates' must be disclosed by no later than 12.00 noon (London
time) on the London business day following the date of the relevant transaction.
A disclosure table, giving details of the companies in whose 'relevant
securities' 'dealings' should be disclosed, and the number of such securities in
issue, can be found on the Panel's website at www.thetakeoverpanel.org.uk.
'Interests in securities' arise, in summary, when a person has long economic
exposure, whether conditional or absolute, to changes in the price of
securities. In particular, a person will be treated as having an 'interest' by
virtue of the 'ownership' or control of securities, or by virtue of any option
in respect of, or derivative referenced to, securities.
Terms in quotation marks are defined in the Code, which can also be found on the
Panel's website. If you are in any doubt as to whether or not you are required
to disclose a 'dealing' under Rule 8, you should consult the Panel.
Lazard, which is authorised and regulated in the United Kingdom by the Financial
Services Authority, is acting exclusively for Carillion and no one else in
connection with the Acquisition and this announcement and will not be
responsible to anyone other than Carillion for providing the protections
afforded to clients of Lazard nor for providing advice in connection with the
Acquisition or this announcement or any matter referred to herein.
Rothschild, which is authorised and regulated in the United Kingdom by the
Financial Services Authority, is acting exclusively for Mowlem and no one else
in connection with the Acquisition and this announcement and will not be
responsible to anyone other than Mowlem for providing the protections afforded
to clients of Rothschild nor for providing advice in connection with the
Acquisition or this announcement or any matter referred to herein.
Morgan Stanley, which is authorised and regulated in the United Kingdom by the
Financial Services Authority, is acting exclusively for Carillion and no one
else in connection with the Acquisition and this announcement and will not be
responsible to anyone other than Carillion for providing the protections
afforded to clients of Morgan Stanley nor for providing advice in connection
with the Acquisition or this announcement or any matter referred to herein.
Oriel Securities, which is authorised and regulated in the United Kingdom by the
Financial Services Authority, is acting exclusively for Carillion and no one
else in connection with the Acquisition and this announcement and will not be
responsible to anyone other than Carillion for providing the protections
afforded to clients of Oriel Securities nor for providing advice in connection
with the Acquisition or this announcement or any matter referred to herein.
Hoare Govett, which is authorised and regulated in the United Kingdom by the
Financial Services Authority, is acting exclusively for Mowlem and no one else
in connection with the Acquisition and this announcement and will not be
responsible to anyone other than Mowlem for providing the protections afforded
to clients of Hoare Govett nor for providing advice in connection with the
Acquisition or this announcement or any matter referred to herein.
This announcement does not constitute an offer to sell or invitation to purchase
any securities or the solicitation of any vote for approval in any jurisdiction,
nor shall there be any sale, issue or transfer of the securities referred to in
this announcement in any jurisdiction in contravention of applicable law.
The release, publication or distribution of this announcement in certain
jurisdictions may be restricted by law. The availability of the new Carillion
Shares and the Mix and Match Facility under the terms of the Scheme (or, if the
offer is implemented by way of a takeover offer, of that offer), if made, to
persons not resident in the United Kingdom may be affected by the laws of the
relevant jurisdictions in which they are located. Persons who are not resident
in the United Kingdom or who are subject to other jurisdictions should inform
themselves of, and observe, any applicable requirements.
If the Acquisition is carried out by way of a takeover offer, it will not be
made, directly or indirectly, in or into the United States, Canada, Australia or
Japan and will not be capable of acceptance from or within the United States,
Canada, Australia or Japan. Accordingly, copies of this announcement and all
documents relating to the takeover offer will not be, and must not be, mailed or
otherwise forwarded, distributed or sent in, into or from the United States,
Canada, Australia or Japan. If the Acquisition is carried out by way of
takeover offer, the New Carillion Shares to be issued in connection with such
takeover offer will not be registered under the Securities Act or under the
securities laws of any state, district or jurisdiction of the United States and
may not be offered, sold or delivered, directly or indirectly, in the United
States, other than pursuant to an exemption from any such registration
requirements. Carillion does not intend to register any such takeover offer or
any part thereof in the United States or to conduct a public offering of the New
Carillion Shares in the United States.
This announcement is not an offer of securities for sale in the US and the New
Carillion Shares have not been, and will not be, registered under the US
Securities Act of 1933 (the 'Securities Act') or under the securities laws of
any state, district or other jurisdiction of the US, Australia, Canada or Japan
and no regulatory clearance in respect of the New Carillion Shares has been, or
will be, applied for in any jurisdiction other than the UK. It is expected that
the New Carillion Shares will be issued in reliance upon the exemption from the
registration requirements of the Securities Act provided by Section 3(a) (10)
thereof. Under applicable US securities laws, Mowlem Shareholders who are or
will be deemed to be 'affiliates' of Mowlem or Carillion prior to, or of
Carillion after, the Effective Date will be subject to certain transfer
restrictions relating to the New Carillion Shares received in connection with
the Acquisition.
Whether or not a Mowlem Shareholder's Mowlem Shares are voted at the Scheme
Meeting or the Mowlem Extraordinary General Meeting, if the Scheme becomes
Effective, those Mowlem Shares will be acquired pursuant to the Scheme and
Mowlem Shareholders will, subject to the Mix and Match Facility, receive a
payment of 82 pence in cash and 0.46 New Carillion Shares for every Mowlem
Share.
Mowlem will prepare the Scheme Document to be distributed to Mowlem
Shareholders. Carillion and Mowlem urge Mowlem Shareholders to read the Scheme
Document when it becomes available because it will contain important information
relating to the Acquisition. Mowlem Shareholders may obtain a further free copy
of the Scheme Document, when it becomes available, from Macfarlanes.
This announcement contains statements about Carillion and Mowlem that are or may
be forward looking statements. All statements other than statements of
historical facts included in this announcement may be forward looking
statements. Without limitation, any statements preceded or followed by or that
include the words 'targets', 'plans' 'believes', 'expects', 'aims',' intends', '
will', 'may', 'anticipates', 'estimates', 'projects' or, words or terms of
similar substance or the negative thereof, are forward looking statements.
Forward looking statements include statements relating to the following: (i)
future capital expenditures, expenses, revenues, earnings, synergies, economic
performance, indebtedness, financial condition, dividend policy, losses and
future prospects; (ii) business and management strategies and the expansion and
growth of Carillion's or Mowlem's operations and potential synergies resulting
from the Acquisition; and (iii) the effects of government regulation on
Carillion's or Mowlem's business.
Such forward looking statements involve risks and uncertainties that could
significantly affect expected results and are based on certain key assumptions.
Many factors could cause actual results to differ materially from those
projected or implied in any forward looking statements. Due to such
uncertainties and risks, readers are cautioned not to place undue reliance on
such forward looking statements, which speak only as of the date hereof.
Carillion and Mowlem disclaim any obligation to update any forward looking or
other statements contained herein, except as required by applicable law.
APPENDIX I
CONDITIONS TO AND CERTAIN FURTHER TERMS OF THE OFFER
The Acquisition will be conditional upon the Scheme of Arrangement becoming
unconditional and effective by a date falling 120 days after the date on which
the Scheme Document is posted or such later date as Carillion and Mowlem may
agree and (if required) the Court may allow.
PART A
Conditions of the Acquisition
1 The Scheme will be subject to the following conditions:
a) its approval by a majority in number representing not less than three-fourths in
value of the holders of Mowlem Shares who are on the register of members of
Mowlem at the Scheme Voting Record Time, present and voting, whether in person
or by proxy, at the Scheme Meeting (or any adjournment thereof);
b) the special resolution required to approve and implement the Scheme being passed
at the Mowlem Extraordinary General Meeting (or any adjournment thereof); and
c) the sanction (with or without modification (but subject to such modification
being acceptable to Carillion and Mowlem)) of the Scheme and the confirmation of
the Capital Reduction by the Court, an office copy of the Court Order and of the
Minute being delivered for registration to the Registrar of Companies and
registration of the Court Order confirming the Capital Reduction and of the
Minute with the Registrar of Companies.
2 The Acquisition will be conditional upon the passing at the Carillion Extraordinary
General Meeting (or any adjournment thereof) of such resolution or resolutions as are
necessary to approve, implement and effect the Acquisition and the acquisition of Mowlem
Shares pursuant to the Acquisition or otherwise (as such resolutions may be set out in the
Carillion Shareholder Circular, including a resolution or resolutions to increase the
share capital of Carillion and authorise the creation and allotment of New Carillion
Shares).
3 Mowlem and Carillion have agreed that, subject to the provisions of paragraph 5 below, the
Scheme will also be conditional upon, and accordingly the necessary actions to make the
Acquisition Effective will only be taken on, the satisfaction or waiver of the following
Conditions:
a) (i) the Office of Fair Trading in the United Kingdom indicating, in terms
reasonably satisfactory to Carillion, that the proposed acquisition of
Mowlem by Carillion or any matter arising therefrom or related thereto
will not be referred to the Competition Commission and the deadline for
appealing such a decision to the Competition Appeal Tribunal having
expired or lapsed (as appropriate);
(ii) all filings having been made and all or any appropriate waiting periods
under the United States Hart-Scott-Rodino Antitrust Improvements Act of
1976 and the regulations thereunder having expired, lapsed or been
terminated as appropriate in each case in respect of the Acquisition of
any Mowlem Shares or control of Mowlem by Carillion or any member of the
Carillion Group; and
(iii) to the extent that the Irish Competition Act 2002 (the 'Irish Act') is
applicable, the Irish Competition Authority (the 'Irish Authority')
informing Carillion that it has determined that the Acquisition may be put
into effect or the period specified in Section 21(2) of the Irish Act
having elapsed without the Irish Authority having informed Carillion of
the determination (if any) which it has made under Section 21(2)(a) of the
Irish Act;
b) the admission to the Official List of the New Carillion Shares to be issued in
connection with the Acquisition 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 Carillion and Mowlem 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 Scheme becoming Effective.
c) except as (i) publicly announced in accordance with the Listing Rules by Mowlem
prior to 7 December 2005, (ii) disclosed in the annual report and accounts of
Mowlem for the financial year ended 31 December 2004 or (iii) disclosed in the
interim report of Mowlem for the six months ended 30 June 2005, there being no
provision of any agreement, arrangement, licence, permit or other instrument to
which any member of the wider Mowlem 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 Acquisition or the proposed acquisition of any shares or
other securities in Mowlem by the Carillion Group or because of a change in the
control or management of Mowlem or otherwise, would or might reasonably be
expected to result (in each case to an extent which is material in the context
of the wider Mowlem Group as a whole or the wider Carillion Group as a whole)
in:
(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 otherwise
than in the ordinary course of business;
(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 being
prejudiced or adversely affected;
(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 Mowlem Group is a party or by or to which any such member or any of its
assets may be bound, entitled or subject, would result in or would reasonably be
expected to result in any of the events or circumstances as are referred to in
sub-paragraphs (i) to (viii) of this paragraph 3(c) (in each case to an extent
which is material in the context of the wider Mowlem Group as a whole);
d) 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 or made any statute, regulation, decision or order, or having taken
any other steps which would or would reasonably be expected to (in each case to
an extent which is material in the context of the wider Mowlem Group as a
whole):
(i) require, prevent or delay the divestiture, or alter the terms envisaged
for any proposed divestiture by any member of the wider Carillion Group
or any member of the wider Mowlem Group of all or any portion of their
respective businesses, assets or property or impose any material
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 material part thereof;
(ii) require, prevent or delay the divestiture by any member of the wider
Carillion Group of any shares or other securities in Mowlem;
(iii) impose any limitation on, or result in a delay in, the ability of any
member of the wider Carillion 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 Mowlem
Group or the wider Carillion Group or to exercise management control
over any such member;
(iv) otherwise adversely affect the business, assets or profits of any
member of the wider Carillion Group or of any member of the wider
Mowlem Group;
(v) make the Acquisition or its implementation or the acquisition or
proposed acquisition by Carillion or any member of the wider Carillion
Group of any shares or other securities in, or control of Mowlem 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 materially interfere therewith;
(vi) require any member of the wider Carillion Group or the wider Mowlem
Group to offer to acquire any shares or other securities (or the
equivalent) or interest in any member of the wider Mowlem Group or the
wider Carillion Group owned by any third party;
(vii) result in any member of the wider Mowlem Group ceasing to be able to
carry on business under any name under which it presently does so;
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 Acquisition or the acquisition or proposed
acquisition of any Mowlem Shares having expired, lapsed or been terminated;
e) all necessary filings or applications having been made in connection with the
Acquisition and all statutory or regulatory obligations in any jurisdiction
having been complied with in connection with the Acquisition or the acquisition
by any member of the wider Carillion Group of any shares or other securities in,
or control of, Mowlem and all authorisations, orders, recognitions, grants,
consents, licences, confirmations, clearances, permissions and approvals
(collectively 'Consents') reasonably deemed necessary by for or in respect of,
the Acquisition or the proposed acquisition of any shares or other securities
in, or control of, Mowlem by any member of the wider Carillion Group having been
obtained in terms and in a form reasonably satisfactory to Carillion from all
appropriate Third Parties or persons with whom any member of the wider Mowlem
Group has entered into contractual arrangements, and all such Consents together
with all material Consents reasonably necessary to carry on the business of any
member of the wider Mowlem Group 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 Acquisition otherwise becomes Effective and all necessary
statutory or regulatory obligations in any jurisdiction having been complied
with in all material respects;
f) except as (i) publicly announced in accordance with the Listing Rules by Mowlem
prior to 7 December 2005, (ii) disclosed in the annual report and accounts of
Mowlem for the financial year ended 31 December 2004 or (iii) disclosed in the
interim report of Mowlem for the six months ended 30 June 2005, no member of the
wider Mowlem Group having, since 31 December 2004:
(i) save as between Mowlem and wholly-owned subsidiaries of Mowlem or for
Mowlem Shares issued pursuant to the exercise of options granted under
the Mowlem Share Schemes, issued, authorised or proposed the issue of
additional shares of any class;
(ii) save as between Mowlem and wholly-owned subsidiaries of Mowlem or for
the grant of options under the Mowlem Share Schemes, issued or agreed
to issue, authorised or proposed the issue of securities convertible or
exchangeable 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 Mowlem 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;
(iv) save for intra-Mowlem 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-Mowlem 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-Mowlem Group transactions), save in the ordinary course of
business, incurred or increased any indebtedness or become subject to
any guarantee or 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 would
be reasonably likely to be materially restrictive on the businesses of
the wider Mowlem Group or the wider Carillion Group taken as a whole 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 in each such case is or would be reasonably likely to be material
in the context of the wider Mowlem Group;
(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 Mowlem Group or
the wider Carillion Group other than to a nature and extent which is
normal in the context of the business concerned, to an extent which is
or would be reasonably likely to be material in the context of the
wider Mowlem Group as a whole or wider Carillion Group as a whole;
(xii) waived or compromised any claim otherwise than in the ordinary course
of business and in any case which is or would be reasonably likely to
be material in the context of the wider Mowlem Group as a whole; 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 'Mowlem Group' shall mean Mowlem and its wholly-owned subsidiaries;
g) since 31 December 2004 and save as disclosed in the accounts for the year then
ended and save as (i) disclosed in the interim report of Mowlem for the six
months ended 30 June 2005 or (ii) publicly announced in accordance with the
Listing Rules by Mowlem prior to 7 December 2005:
(i) no material adverse change or deterioration having occurred in the
business, assets, financial or trading position or profits of the wider
Mowlem Group taken as a whole;
(ii) no litigation, arbitration proceedings, prosecution or other legal
proceedings to which any member of the wider Mowlem 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 Mowlem Group having been instituted announced or threatened
by or against or remaining outstanding in respect of any member of the
wider Mowlem Group which in any such case would have or would
reasonably be expected to have a material adverse effect on the wider
Mowlem Group as a whole;
(iii) no contingent or other liability having arisen which would have or
would reasonably be expected to have a material adverse effect on the
wider Mowlem Group as a whole;
(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 Mowlem Group which is necessary for the
proper carrying on of its business and the absence of which in any case
would have or would reasonably be expected to have a material adverse
effect on the wider Mowlem Group as a whole;
h) save as (i) publicly announced in accordance with the Listing Rules by the
Mowlem prior to 7 December 2005, (ii) disclosed in the annual report and
accounts of Mowlem for the financial year ended 31 December 2004 or (iii)
disclosed in the interim report of Mowlem for the six months ended 30 June 2005,
Carillion not having discovered:
i) that any financial, business or other information concerning the wider
Mowlem Group as contained in the information publicly disclosed at any
time by or on behalf of any member of the wider Mowlem Group is
materially misleading, contains a material misrepresentation of fact or
omits to state a fact necessary to make that information not materially
misleading; or
ii) that any member of the wider Mowlem Group is subject to any liability
(contingent or otherwise which is material in the context of the Mowlem
Group as a whole) which is not disclosed in the annual report and
accounts of Mowlem for the year ended 31 December 2004;
i) Carillion not having discovered that:
i) any past or present member of the wider Mowlem 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
Mowlem Group and which is material in the context of the wider Mowlem
Group as a whole; or
ii) there is, or is likely to be, for that or any other reason whatsoever,
any liability (actual or contingent) of any past or present member of
the wider Mowlem 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 Mowlem 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 Mowlem Group as a whole.
4 For the purposes of these conditions the 'wider Mowlem Group' means Mowlem and its
subsidiary undertakings, associated undertakings and any other undertaking in which Mowlem
and/or such undertakings (aggregating their interests) have a significant interest and the
'wider Carillion Group' means Carillion and its subsidiary undertakings, associated
undertakings and any other undertaking in which Carillion 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), provided that investments in the equity of any entity for the purposes of any PPP
project shall be excluded from the 'wider Mowlem Group'.
5 Carillion reserves the right to waive, in whole or in part, all or any of the above
conditions, except conditions 1, 2 and 3(b).
6 If Carillion is required by the Panel to make an offer for Mowlem Shares under the
provisions of Rule 9 of the Code, Carillion may make such alterations to any of the above
conditions as are necessary to comply with the provisions of that Rule.
7 Carillion reserves the right to elect to implement the Acquisition by way of a takeover
offer under section 428 of the Companies Act. In such event, the Acquisition will be
implemented on the same terms (subject to appropriate amendments including (without
limitation) an acceptance condition set at 90 per cent. of the shares to which the
Acquisition relates), so far as applicable, as those which would apply to the
implementation of the Acquisition by means of the Scheme.
8 The Acquisition will not proceed if, after the date of this announcement and before the
Mowlem Extraordinary General Meeting, the Acquisition is referred to the Competition
Commission.
9 This Acquisition will be governed by English law and be subject to the jurisdiction of the
English courts, to the conditions set out in this announcement and in the formal Scheme
Document and related Form of Election.
PART B
Certain further terms of the Acquisition
1 Fractions of New Carillion Shares will not be allotted or issued pursuant to the Scheme.
Fractional entitlements to New Carillion Shares will be aggregated and sold in the market and
the net proceeds of sale distributed pro rata to persons entitled thereto.
2 The New Carillion Shares to be issued pursuant to the Scheme 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 Carillion
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.
3 The New Carillion Shares will be issued credited as fully paid and will rank pari passu in
all respects with the existing Carillion Shares. Applications have been made to the UK
Listing Authority for the New Carillion Shares to be admitted to the Official List and to the
London Stock Exchange for the New Carillion Shares to be admitted to trading.
APPENDIX II
SOURCES AND BASES
1 Unless otherwise stated:
* financial information relating to Carillion has been extracted or provided (without
material adjustment) from the audited annual report and accounts for Carillion for
the year ended 31 December 2004 reported under UK GAAP and the unaudited interim
report and accounts for the six months ended 30 June 2005 reported under IFRS
* financial information relating to Mowlem has been extracted or provided (without
material adjustment) from the audited annual report and accounts for Mowlem for the
year ended 31 December 2004 reported under UK GAAP and the unaudited interim report
and accounts for the six months ended 30 June 2005 reported under IFRS
2 The terms of the Acquisition value each Mowlem Share at 220 pence. The Acquisition price is
based on a share price of 300.5 pence per Carillion Share (the Closing Price on 14 December
2005, the last practicable date prior to this announcement) and 0.46 Carillion Shares to be
issued for each Mowlem Share representing 138 pence in Carillion Shares, plus 82 pence in
cash
3 As at the close of business on 14 December 2005, Carillion had in issue 214,903,021 ordinary
shares of 50 pence each; and Mowlem had in issue 142,086,776 ordinary shares of 25 pence
each
4 The expected operational cost savings have been calculated on the basis of the existing cost
and operating structures of the Carillion and Mowlem Groups. 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 is not intended to be a profit forecast and
should not be interpreted to mean that the earnings per share in 2006, 2007 or in any
subsequent financial period, would necessarily match or be greater than those for the
relevant preceding financial period
5 The statements that the Acquisition is expected to be materially earnings enhancing for
Carillion in 2007 (the first full year following completion of the Acquisition) relate to
future actions and circumstances, which, by their nature, involve risks, uncertainties and
other factors. These statements do not constitute a profit forecast and should not be
interpreted to mean that earnings for that year or any subsequent financial period would
necessarily match or be greater than those for any preceding financial period. Earnings in
this context represent net after tax earnings before the amortisation of intangible assets
and non-operating items
6 Net debt / cash in this context represents total debt, excluding finance leases, less total
cash balances (including cash in joint ventures)
APPENDIX III
DEFINITIONS
In this announcement, the following definitions apply unless the context
requires otherwise:
'Acquisition' the proposed acquisition (as revised) of the entire
issued and to be issued share capital of Mowlem by
Carillion, and references to the Acquisition by way of
the Scheme shall include, if applicable, the
Acquisition by way of takeover offer under section 428
of the Companies Act
'Australia' the Commonwealth of Australia, its states, territories
or possessions and all areas subject to its
jurisdiction or any sub-division thereof
'Business Day' any day on which banks are generally open in England
and Wales for the transaction of business, other than a
Saturday, Sunday or public holiday
'Canada' Canada, its provinces and territories and all areas
subject to its jurisdiction or any political
sub-division thereof
'Capital Reduction' the proposed reduction of share capital of Mowlem
pursuant to the Scheme
'Carillion' or 'Company' Carillion plc, registered in England and Wales (no.
3782379)
'Carillion Board' the board of Carillion Directors
'Carillion Directors' the directors of Carillion
''Carillion Extraordinary General Meeting' the extraordinary general meeting of Carillion to
consider and, if thought fit, to approve the
Acquisition
'Carillion Group' Carillion and its subsidiary undertakings
'Carillion Shares' ordinary shares of 50 pence in the capital of Carillion
'Carillion Shareholder Circular' the circular to be sent to Carillion Shareholders
outlining the Acquisition and containing the notice
convening the Carillion Extraordinary General Meeting
'Carillion Shareholders' the registered holders of ordinary shares of 50 pence
each in the capital of Carillion or a person entitled
to any such ordinary shares by transmission
'City Code' the City Code on Takeovers and Mergers issued from time
to time by or on behalf of the Panel
'Closing Price' the closing middle market price of a relevant share as
derived from SEDOL
'Companies Act' the Companies Act 1985 (as amended)
'Conditions' the conditions to the Acquisition and the Scheme set
out in Appendix I of this announcement
'Court' the High Court of Justice in England and Wales
'Court Hearings' the two separate hearings by the Court of the petition
to sanction the Scheme and to confirm the cancellation
and extinguishment of the Scheme Shares provided for by
the Scheme under section 137 of the Companies Act
'Effective' in the context of the Acquisition:
(i) if the Acquisition is implemented by way of the
Scheme, the Scheme having become effective
pursuant to its terms; or
(ii) if the Acquisition is implemented by way of a
takeover offer, the takeover offer having been
declared or become unconditional in all respects
in accordance with the requirements of the City
Code
''Effective Date' the date on which the Acquisition becomes Effective
'Enlarged Group' the Carillion Group (including the Mowlem Group)
following the Effective Date
'First Court Order' the first order of the Court sanctioning the Scheme
under section 425 of the Companies Act and confirming
the reduction of share capital under section 137 of the
Companies Act provided by the Scheme
'FSMA' the Financial Services and Markets Act 2000 (as
amended)
'Hoare Govett' Hoare Govett Limited
'Implementation Deed' the implementation deed dated 7 December 2005 between
Carillion and Mowlem in relation to the Acquisition
'Information Memorandum' a document containing information on Carillion and the
New Carillion Shares that is equivalent to a Prospectus
as defined under the Prospectus Rules
'Japan' Japan, its cities, prefectures, territories and
possessions and all areas subject to its jurisdiction
or any sub-division thereof
'Lazard' Lazard & Co., Limited
'Listing Rules' the rules and regulations of the UKLA, as amended
'London Stock Exchange' London Stock Exchange plc, together with any successors
thereto
'Meetings' the Scheme Meeting and the Mowlem Extraordinary General
Meeting
'Minute' the minute (approved by the Court) showing with respect
to Mowlem's share capital, as altered by the Second
Court Order confirming the Capital Reduction, the
information required by section 138 of the Companies
Act
'Mix and Match Facility' the mix and match facility under which Mowlem
Shareholders may, subject to availability, elect to
vary the proportion of New Carillion Shares and cash
they will receive under the Scheme
'Morgan Stanley' Morgan Stanley & Co. International Limited
'Mowlem' Mowlem plc, registered in England and Wales (no.
00077628)
'Mowlem Board' the Board of Mowlem Directors
'Mowlem Directors' the directors of Mowlem
'Mowlem Extraordinary General Meeting' the extraordinary general meeting of the Mowlem
Shareholders to be held directly after the Scheme
Meeting
'Mowlem Group' Mowlem and its subsidiary undertakings, associated
undertakings and any other undertaking in which Mowlem
and/or such undertakings (aggregating their interests)
have a significant interest and 'significant interest'
means a direct or indirect interest in 20 per cent. or
more of the equity share capital (as defined in the
Companies Act) of any undertaking
'Mowlem Shareholders' holders of Mowlem Shares
'Mowlem Shares' (i) prior to the Reorganisation Record Time, Ordinary
Shares and (ii) after the Reorganisation Record Time,
the shares in the capital of Mowlem into which the
issued Ordinary Shares are converted
'Mowlem Share Schemes' the Mowlem Share-Save Scheme 2004, the John Mowlem &
Company Savings Related Share Option Scheme 1994, the
Mowlem plc Share Matching Plan 2003 and the Mowlem
Share Option Plan 2003
'New Carillion Shares' the Carillion Shares proposed to be issued and credited
as paid pursuant to the Scheme
'Official List' the official list of the UKLA
'Ordinary Shares' ordinary shares of 25 pence each in the capital of
Mowlem
'Oriel Securities' Oriel Securities Limited
'Overseas Persons' Scheme Shareholders who are resident in, ordinarily
resident in, or citizens of, jurisdictions outside the
United Kingdom
'Panel' the Panel on Takeovers and Mergers
'Pounds', 'pence' and '£' the lawful currency of the United Kingdom
'PPP' Public Private Partnership
'Registrar of Companies' the Registrar of Companies in England and Wales, within
the meaning of the Companies Act
'Regulatory Information Service' any of the services set out in Schedule 12 to the
Listing Rules of the UKLA
'Reorganisation Record Time' the time and date on which the First Court Order under
section 425 of the Companies Act sanctioning the Scheme
is delivered to the Registrar of Companies for
registration
'Restricted Territories' Australia, Canada or Japan or any other jurisdiction
where either sending the Scheme Document or the
Information Memorandum would violate the law of that
jurisdiction
'Rothschild' N M Rothschild & Sons Limited
'Scheme' the proposed scheme of arrangement under section 425 of
the Companies Act between Mowlem and the Mowlem
Shareholders to implement the Acquisition
'Scheme Document' the circular to Mowlem Shareholders proposing the
Scheme to be posted by Mowlem as soon as is reasonably
practicable after the date of this announcement
'Scheme Meeting' the meeting of Mowlem Shareholders to be convened by
order of the Court under section 425 of the Companies
Act to consider and, if thought fit, approve the Scheme
'Scheme Record Time' 6.00 p.m. on the Business Day before the Scheme becomes
Effective
'Scheme Shareholders' holders of Scheme Shares
'Scheme Shares' (i) the Mowlem Shares in issue at the date of the
Scheme Circular;
(ii) any Mowlem Shares issued after the date of the
Scheme Circular and before the Scheme Voting
Record Time; and
(iii) any Mowlem Shares issued at or after the
Reorganisation Record Time and before 6.00 p.m.
on the day before the date on which the Second
Court Order is made in respect of which the
original or any subsequent holders thereof are,
or shall have agreed in writing to be, bound by
the Scheme
in each case other than Mowlem Shares beneficially
owned by the Carillion Group
'Scheme Voting Record Time' 6.00 p.m. on the day which is two days before the
Scheme Meeting or, if the Scheme Meeting is adjourned,
6.00 p.m. on the second day before the date of such
adjourned meeting
'Second Court Order' the second order of the Court sanctioning the Scheme
under section 425 of the Companies Act and confirming
the reduction of share capital under section 137 of the
Companies Act provided by the Scheme
'SEDOL' the London Stock Exchange Daily Official List
'subsidiary', 'subsidiary undertaking', ' have the meanings ascribed to them under the Companies
associated undertaking' and 'undertaking' Act
'UKLA' the UK Listing Authority, being the Financial Services
Authority acting in its capacity as the competent
authority for the purposes of Part IV of FSMA
'United Kingdom' or 'UK' United Kingdom of Great Britain and Northern Ireland
'United States', 'US' or 'USA' the United States of America, its territories and
possessions, any State of the United States of America
and the District of Columbia
Unless otherwise stated, all times referred to in this announcement are
references to the time in London.
This information is provided by RNS
The company news service from the London Stock Exchange
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