Merger-TI Grp-FullDetailsPt 2
Smiths Industries PLC
18 September 2000
PART 2
APPENDIX I
CONDITIONS TO THE IMPLEMENTATION OF THE SCHEME AND THE MERGER
1. The Merger is conditional upon the Scheme becoming unconditional and
becoming effective by not later than 31 January 2001 or such later date as
Smiths Industries, TI Group and the High Court may agree.
The Scheme will be conditional upon:
(a) approval of the Scheme by a majority in number representing three
fourths in value of the holders of TI Group Shares present and voting, either in
person or by proxy, at the TI Group meeting convened by order of the High Court;
(b) the resolutions required to approve and implement the Scheme and the
Merger being passed at an extraordinary general meeting of TI Group;
(c) any resolution of Smiths Industries Shareholders required in connection
with the approval and implementation of the Scheme and the Merger being passed
at an extraordinary general meeting of Smiths Industries;
(d) the sanction (with or without modification) of the Scheme (and
confirmation of any reduction of capital involved therein by the High Court) and
an office copy of the Order of the High Court being delivered for registration
to the Registrar of Companies in England and Wales (and registration of the
Order confirming any reduction of capital involved in the Scheme with the
Registrar of Companies in England and Wales);
(e) the admission to the Official List of the new Smiths Industries Shares
becoming effective in accordance with the Listing Rules or (if Smiths Industries
and TI Group so determine and subject to the consent of the Panel) the UK
Listing Authority agreeing to admit such shares to the Official List; and
(f) the admission to trading of the new Smiths Industries Shares becoming
effective in accordance with the rules of the London Stock Exchange or (if
Smiths Industries and TI Group so determine and subject to the consent of the
Panel) the London Stock Exchange agreeing to admit such shares to trading.
2. Subject as stated in paragraph 3 below, the Merger will also be
conditional upon (and accordingly the necessary action to make the Scheme
effective will not be taken unless the following conditions are satisfied or,
where relevant, waived as referred to below):
(a) if the Merger gives rise to a concentration with a Community dimension
for the purposes of Council Regulation (EEC) 4064/89 as amended by Council
Regulation (EC) 1310/97 (the 'Merger Regulation') then, without limitation of
paragraphs (f) and (g) below:
(i) the European Commission having issued a decision, in terms reasonably
satisfactory to Smiths Industries and TI Group, under Article 6(1)(b) of the
Merger Regulation (or being deemed to have done so under Article 10(6) of the
Merger Regulation);
(ii) in the event that the European Commission makes a referral or referrals
under Article 9(3)(b) of the Merger Regulation (and/or is deemed to have done so
under Article 9(5) of the Merger Regulation) to any competent authority or
authorities of one or more Member States of the European Economic Area ('an EEA
State') (together 'Competent Authorities'), confirmation having been received
from all such Competent Authorities in terms reasonably satisfactory to Smiths
Industries and TI Group that the Merger (or that part, or all of those parts, of
it that is or are subject to the referral or referrals back) is or are approved
or deemed to be approved pursuant to the relevant competition laws of the EEA
States concerned; and
(iii) in the event that any Competent Authority or any other relevant
authority of one or more EEA States (together, 'Relevant Authorities') invokes
Article 21(3) of the Merger Regulation and/or Article 296 of the Treaty
Establishing the European Community (as amended), confirmation having been
received from all such Relevant Authorities in terms reasonably satisfactory to
Smiths Industries and TI Group that the Merger (or that part, or those parts, of
it that are subject to the invocation of Article 21(3) and/or Article 296
referred to above) is (or are) approved or deemed to be approved pursuant to the
relevant competition laws of the EEA States concerned, and/or the Merger is
allowed to proceed on terms reasonably satisfactory to Smiths Industries and TI
Group;
(b) if the Secretary of State for Trade and Industry has jurisdiction to
make a reference to the Competition Commission under the Fair Trading Act 1973
section 64(1) and/or 75 other than in the circumstances provided for in
paragraph (a) above and subject to the provisions of paragraphs (f) and (g)
below, the Office of Fair Trading indicating in terms reasonably satisfactory to
Smiths Industries and TI Group that it is not the intention of the Secretary of
State for Trade and Industry to refer the Merger, or any matter arising
therefrom, to the Competition Commission;
(c) the expiry or termination of all applicable waiting periods (including
any extensions thereof) under the United States Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and the regulations made thereunder;
(d) if applicable to the Merger, the expiry of the review period in respect
of the Merger under Section 721 of Title VII of the United States Defense
Production Act of 1950, as amended, and the Committee on Foreign Investment in
the United States not having taken any action or made any recommendation to the
President of the United States to prevent the completion of the Merger;
(e) if applicable to the Merger, notice of the Merger shall have been filed
with the Office of Defense Trade Controls ('DTC') within the US Department of
State pursuant to the International Traffic in Arms Regulations and either (i)
60 days shall have passed since such filing without any notice or inquiry to TI
Group or Smiths Industries from DTC or any other US agency having potential
jurisdiction over the Merger, or (ii) not less than 60 days shall have passed
since such filing and all requests or issues raised by DTC or any other US
agency having potential jurisdiction over the acquisition shall have been
satisfied or resolved and DTC or such other agency shall have approved the
intended acquisition, or (iii) prior to the expiry of the 60 day period referred
to in (i) above, Smiths Industries and TI Group has received approval from DTC
or such other agency for the Merger;
(f) all authorisations, orders, grants, recognitions, confirmations,
consents, clearances, certificates, licences, permissions and approvals
necessary or reasonably considered by Smiths Industries and TI Group to be
appropriate for or in respect of the Merger and the implementation of the Scheme
having been obtained, in terms and in a form reasonably satisfactory to Smiths
Industries and TI Group, and, where the absence of any such authorisations,
orders, grants, recognitions, confirmations, consents, clearances, certificates,
licences, permissions and approvals would, in the opinion of Smiths Industries
and TI Group, have a material adverse effect on the Merged Group taken as a
whole, these remaining in full force and effect, and no intimation of an
intention to revoke or not renew any of these having been received, and all
necessary notifications and filings having been made and all necessary waiting
periods (including any extensions thereof) under any applicable legislation or
regulation of any jurisdiction having expired or having been terminated (as
appropriate) and all necessary statutory and regulatory obligations in
connection with the Merger and the implementation of the Scheme in any
jurisdiction having been complied with;
(g) no central bank, government, government department or governmental,
quasi-governmental, supranational, statutory, regulatory or investigative body,
authority (including any national anti-trust or merger control authority),
court, trade agency, association, institution or professional or environmental
body or any other similar person or body in any jurisdiction having taken,
instituted, implemented or threatened any action, proceeding, suit,
investigation or enquiry, or enacted, made or proposed any statute, regulation
or order, or taken any other step that would or might in any respect be material
to the Merged Group taken as a whole (i) require the divestiture by Smiths
Industries or TI Group or any of their respective subsidiaries of all or any
portion of their respective businesses, assets or properties or (ii) require any
member of either the Smiths Industries Group or the TI Group to make an offer to
acquire any shares or other securities in any member of either group owned by
any third party; or (iii) impose any limitation on the ability of any of them to
conduct their respective businesses or to own their respective assets or
properties; or (iv) make the Merger or the Scheme or their respective
implementation illegal, void or unenforceable in or under the laws of any
jurisdiction;
(h) save as fairly disclosed in writing by Smiths Industries to TI Group
regarding the Smiths Industries Group or by TI Group to Smiths Industries
regarding the TI Group in any such case on or prior to the day preceding the
date of this announcement, there being no provision of any arrangement,
agreement, licence, permit, franchise or other instrument to which Smiths
Industries or TI Group or any of their respective subsidiary undertakings or
companies in which any member of their respective groups has a direct or
indirect interest in 20 per cent. or more of the voting capital ('associates')
is a party, or by or to which Smiths Industries or TI Group or any of their
respective subsidiary undertakings or associates may be bound or be subject,
which could or might result, in each case to an extent which is material in the
context of the Merged Group taken as a whole, in (i) any moneys borrowed by
Smiths Industries or TI Group or any of their respective subsidiaries or
associates being repayable or capable of being declared repayable prior to their
stated maturity; (ii) any such arrangement, agreement, licence, permit,
franchise or other instrument being terminated or materially modified, or any
material action being taken or adverse effect arising thereunder; or (iii) the
interests of Smiths Industries or TI Group or any of their respective
subsidiaries or associates in, or the business of Smiths Industries or TI Group
or any of their respective subsidiary undertakings or associates with, any
person being terminated, modified or materially affected, in each case as a
result of the Merger or the Scheme;
(i) Smiths Industries not having discovered regarding TI Group, and TI Group
not having discovered regarding Smiths Industries, that:
(i) any financial, business or other information which has been publicly
disclosed or disclosed to Smiths Industries or TI Group at any time by any
member of the relevant group is misleading or contains any misrepresentation of
fact or omits to state a fact necessary to make the information contained
therein not misleading, and which in any such case is material in the context of
the Merger; or
(ii) any member of the relevant group is subject to any liability
(contingent or otherwise) which has not been reflected in the last published
audited consolidated accounts of its group or otherwise publicly announced on or
prior to the date preceding the date of this announcement and which is material
in the context of the group of the party not having made such disclosure;
(j) since 31 December 1999, being the date to which the latest audited
consolidated report and accounts of TI Group were made up, and unless otherwise
publicly announced by TI Group, or fairly disclosed in writing by TI Group to
Smiths Industries, on or prior to the date preceding the date of this
announcement:
(i) no litigation, arbitration proceedings, prosecution or other legal
proceedings to which any member of the TI Group is a party (whether as plaintiff
or defendant or otherwise), in each case which is material and adverse in the
context of the TI Group taken as a whole, having been instituted or threatened
or remaining outstanding;
(ii) there having been no material adverse change in the business, financial
or trading position of the TI Group taken as a whole; and
(iii) no contingent or other liability of any member of the TI Group having
arisen which would be likely materially and adversely to affect the TI Group
taken as a whole;
(k) since 31 July 1999, being the date to which the latest audited
consolidated report and accounts of Smiths Industries were made up, and unless
otherwise publicly announced by Smiths Industries on or prior to the date
preceding the date of this announcement:
(i) no litigation, arbitration proceedings, prosecution or other legal
proceedings to which any member of the Smiths Industries Group is a party
(whether as plaintiff or defendant or otherwise), in each case which is material
and adverse in the context of the Smiths Industries Group taken as a whole,
having been instituted or threatened or remaining outstanding;
(ii) there having been no material adverse change in the business, financial
or trading position of the Smiths Industries Group taken as a whole; and
(iii) no contingent or other liability of any member of the Smiths
Industries Group having arisen which would be likely materially and adversely to
affect the Smiths Industries Group taken as a whole;
(l) save as publicly announced by TI Group or Smiths Industries or fairly
disclosed in writing by Smiths Industries to TI Group regarding the Smiths
Industries Group or by TI Group to Smiths Industries regarding the TI Group in
any such case on or prior to the date preceding the date of this announcement,
no member of the TI Group having, since 31 December 1999, being the date to
which the latest audited consolidated report and accounts of TI Group were made
up, and no member of the Smiths Industries group having, since 31 July 1999,
being the date to which the latest audited consolidated report and accounts of
Smiths Industries were made up:
(i) issued or authorised or proposed the issue of additional shares of any
class, or securities convertible into, or rights, warrants or options to
subscribe for or acquire, any such shares or convertible securities (save in
connection with the Merger or pursuant to a scrip dividend alternative to Smiths
Industries' final dividend for the year ended 31 July 2000 or the grant of
options under the Smiths Industries Share Option Schemes in accordance with
Smiths Industries' normal practice following the announcement of its annual
results or as between TI Group and Smiths Industries respectively and their
respective wholly-owned subsidiaries or for options granted, and any shares in
TI Group or Smiths Industries respectively issued upon exercise of options
granted, on or prior to the date preceding the date of this announcement, under
or pursuant to the TI Group Share Option Schemes or the Smiths Industries Share
Option Schemes) or redeemed, purchased or reduced any of its own shares or other
securities to an extent which (save in the case of such issue, authorisation,
proposal, redemption, purchase or reduction by TI Group or Smiths Industries
respectively) is material in the context of the TI Group or the Smiths
Industries Group respectively taken as a whole;
(ii) authorised or proposed or announced its intention to propose any merger
or any change in its share or loan capital or (other than in the ordinary course
of business or pursuant to the Merger) any acquisition or disposal of assets or
shares, which is material in the context of the TI Group or the Smiths
Industries Group respectively taken as whole;
(iii) entered into any contract, transaction or commitment (whether in
respect of capital expenditure or otherwise) which is of a long term or unusual
or onerous nature or which involves or could involve an obligation of a nature
or magnitude which is material in the context of the TI Group or the Smiths
Industries Group respectively taken as a whole;
(iv) issued or proposed the issue of any debentures or, save in the ordinary
course of business, incurred or increased any indebtedness or contingent
liability, when taken together of an aggregate amount, which might materially
and adversely affect the TI Group or the Smiths Industries Group respectively
taken as a whole; or
(v) declared, paid or made or proposed the declaration, paying or making of
any dividend, bonus or other distribution other than (i) between members of the
TI Group or the Smiths Industries Group respectively or (ii) of an amount which
(save in the case of any such dividend, bonus or other distribution by TI Group
or Smiths Industries) is not material in the context of the TI Group or the
Smiths Industries Group respectively taken as a whole.
(m) save as publicly announced by TI Group or Smiths Industries or as fairly
disclosed in writing by Smiths Industries to TI Group regarding the Smiths
Industries Group or by TI Group to Smiths Industries regarding the TI Group in
any such case on or prior to the date preceding the date of this announcement,
Smiths Industries not having discovered regarding TI Group, and TI Group not
having discovered regarding Smiths Industries, that:
(i) any past or present member of the relevant group has failed to comply
with any applicable legislation or regulations or authorisations of any
jurisdiction with regard to the use, treatment, handling, storage, transport,
production, supply, disposal, discharge, spillage, leak or emission of any waste
or hazardous substance or any substance likely to impair the environment or harm
human health, or otherwise relating to environmental matters or the health and
safety of any person, or that there has otherwise been any such use, treatment,
handling, storage, transport, production, supply, disposal, discharge, spillage,
leak or emission (whether or not the same constituted a non-compliance by any
person with any such legislation or regulations or authorisations, and wherever
the same may have taken place) which, in any such case, would be likely to give
rise to any liability (whether actual or contingent) or cost on the part of any
member or former member of the relevant group which is material in the context
of that group taken as a whole; or
(ii) there is, or is likely to be, any liability (whether actual or
contingent) of any past or present member of the relevant 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 relevant group, under any environmental
legislation, regulation, notice, circular, order or other lawful requirement of
any relevant authority or third party or otherwise which, in any such case, is
material in the context of that group taken as a whole.
3. Smiths Industries and TI Group, acting together, may waive all or any of
the conditions contained in paragraphs 2(a), (b), (c), (d), (e), (f) and (g) in
whole or in part. Smiths Industries reserves the right to waive all or any of
the conditions in paragraphs 2(h), (i), (l) and (m) above, so far as they relate
to TI Group, and in paragraph 2(j) above, in each case in whole or in part, and
TI Group reserves the right to waive all or any of the conditions contained in
paragraphs 2(h), (i), (l) and (m) above, so far as they relate to Smiths
Industries, and in paragraph 2(k) above, in each case in whole or in part.
4. Except with the consent of the Panel, the Merger will lapse and the
Scheme will not proceed if, before the date of the TI Group's shareholders'
meeting to be convened by order of the High Court, the European Commission
either initiates proceedings under Article 6(1)(c) of the Merger Regulation or,
following a referral to a competent authority in the United Kingdom under
Article 9(1) of the Merger Regulation, there is a subsequent reference to the
Competition Commission.
For the purposes of these conditions 'publicly announced' means announced by the
delivery of an announcement to the Company Announcements Office of the London
Stock Exchange.
APPENDIX II
INFORMATION ON SMITHS INDUSTRIES
Smiths Industries is a UK based leading manufacturer of aerospace electronics,
medical systems and specialised industrial products.
The Aerospace business is a first-tier supplier of advanced avionics to all
major civilian and military aircraft manufacturers. The Medical Systems
business is a leading supplier of equipment used during critical and intensive
care medical procedures. The Specialised Industrial Products business
manufactures specialised engineering products, including air movement systems,
electrical connectors and cables.
Approximately 38 per cent. of Smiths Industries' total revenues arise in the UK,
48 per cent. in the US, 8 per cent. in Continental Europe and 6 per cent. in
other countries. As at 31 July 2000, the company had some 16,500 employees.
Summary consolidated financial information for Smiths Industries for the three
most recent financial years is set out in the table below:
Year ended July 1998 1999 2000
Turnover (£m) 1,199 1,290 1,464
Profit before tax, exceptional
item and goodwill amortisation (£m) 218 241 266
Profit before tax (£m)* 218 238 256
Profit after tax (£m)* 150 164 178
Earnings per share (p) before tax,
exceptional items and goodwill amortisation 48.2 53.5 57.0
Earnings per share (p)* 48.2 52.5 56.2
Total shareholders' funds (£m) 226 359 499
Net debt (£m) 83 93 285
*After amortisation of goodwill and exceptional items
The above information is prepared in accordance with UK GAAP.
APPENDIX III
INFORMATION ON TI GROUP
TI Group is a global engineering group, with market leading positions in
mechanical and polymer sealing solutions, aerospace systems and automotive fluid
storage and delivery systems.
In the year ended 31 December 1999, approximately 20 per cent. of TI Group's
total revenues arose in the UK, 46 per cent. in the US, 27 per cent. in
Continental Europe and 7 per cent. in other countries. As at 31 December 1999,
the company had some 40,000 employees.
Summary consolidated financial information for the TI Group for the three most
recent financial years is set out in the table below:
Year ended December 1997 1998 1999
Turnover (£m) 1,870 2,168 2,729
Profit before tax, exceptional item
and goodwill amortisation (£m) 223 239 257
Profit before tax (£m)* 221 227 186
Profit after tax (£m)* 152 146 116
Earnings per share (p) before tax,
exceptional items and goodwill amortisation 32.0 34.3 35.4
Earnings per share (p)* 31.6 30.4 23.1
Total shareholders' funds (£m) 404 607 723
Net debt (£m) 38 513 1,161
*After amortisation of goodwill and exceptional items
The above information is prepared in accordance with UK GAAP.
APPENDIX IV
BASES AND SOURCES OF INFORMATION
(i) The estimate (contained in the section of this announcement headed
'Rationale for the Merger and Merger Benefits') of the Merged Group's combined
sales of approximately £3 billion is based on the sales of the Smiths Industries
Group in the twelve months to 31 July 2000 using Smiths Industries' unaudited
preliminary announcement of results for the financial year ended 31 July 2000
and the TI Group's sales in the twelve months to 30 June 2000 using TI Group's
unaudited half year results to 30 June 2000 and the audited accounts for the
financial year ended 31 December 1999.
(ii) The percentage ownership of the Merged Group held by Smiths Industries
Shareholders and TI Group Shareholders is based on the number of new Smiths
Industries Shares in issue following the Merger becoming effective, being the
aggregate of the 316.2 million Smiths Industries Shares in issue on 15 September
2000 and the 232.7 million new Smiths Industries Shares to be issued to TI Group
Shareholders pursuant to the Merger. This assumes no exercise of options under
the Smiths Industries Share Option Schemes or the TI Group Share Option Schemes.
(iii) The financial information relating to TI Group is extracted from its
annual report and audited accounts for the two financial years ended 31 December
1999.
(iv) The financial information relating to Smiths Industries is extracted
from its annual report and audited accounts for the two financial years ended 31
July 1999 and its unaudited preliminary announcement of results for the
financial year ended 31 July 2000.
APPENDIX V
DEFINITIONS
The following definitions apply throughout this document unless the context
requires otherwise:
'Automotive Systems Division' TI Group's Automotive Systems division
'Chase' Chase Manhattan plc
'City Code' or 'Code' the City Code on Takeovers and Mergers
'Companies Act' the Companies Act 1985, as amended
'CREST' the computerised settlement system to
facilitate the transfer of title to shares in
uncertificated form, operated by CrestCo
Limited
'High Court' the High Court of Justice in England and
Wales
'London Stock Exchange' London Stock Exchange plc
'Merged Group' Smiths Industries and its subsidiary
undertakings following the Merger
'Merger' the proposed merger of TI Group and Smiths
Industries by way of the Scheme
'Morgan Stanley Dean Witter' Morgan Stanley & Co. Limited
'new Smiths Industries Shares' the new Smiths Industries Shares proposed to
be issued credited as fully paid pursuant to
the Merger
'Official List' the Official List of the UK Listing
Authority
'Panel' the Panel on Takeovers and Mergers
'Scheme' the proposed scheme of arrangement under
section 425 of the Companies Act between TI
Group and the holders of TI Group Shares for
the purposes of the Merger, with or subject
to any modification, addition or condition
approved or imposed by the High Court and
agreed by Smiths Industries and TI Group
'Securities Act' the United States Securities Act of 1933 (as
amended)
'Smiths Industries' or 'Company' Smiths Industries plc
'the Smiths Industries Group' Smiths Industries and its subsidiary
undertakings
'Smiths Industries Share Option Schemes'
the Smiths Industries (1984)
Executive Share Option Scheme, the
Smiths Industries 1995 Executive
Share Option Scheme, the Smiths
Industries 1982 SAYE Share Option
Scheme and the Smiths Industries
Senior Executive Deferred Share
Scheme
'Smiths Industries Shareholders' holders of Smiths Industries Shares
'Smiths Industries Shares' ordinary shares of 25p each in the capital
of Smiths Industries
'TI Group' TI Group plc
'the TI Group' TI Group and its subsidiary undertakings
'TI Group Share Option Schemes' the TI (1990) Executive Share Option
Scheme (UK and International Sections),
the TI (1994) Savings Related Share Option
Scheme, the Senior Executive Rolling Three
Year Bonus Plan (comprising separate
individual plans for certain of the
executive directors and senior
executives), the TI International Senior
Executive Long Term Incentive Plan, the TI
1999 Executive Share Option Scheme and the
TI Senior Executive Share Incentive Plan
'TI Group Shareholders' holders of TI Group Shares
'TI Group Shares' ordinary shares of 25p each in the capital
of TI Group
'UBS Warburg' UBS Warburg, a business group of UBS AG
'UK Listing Authority' the Financial Services Authority as the
competent authority for listing in the UK
under Part IV of the Financial Services
Act 1986
'United Kingdom' or 'UK' the United Kingdom of Great Britain and
Northern Ireland
'United States' or 'US' the United States of America, its
territories and possessions, any state of
the United States and the District of
Columbia, and all other areas subject to
its jurisdiction or any subdivisions
thereof
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