Offer by Barclays PLC-Part 1
Woolwich PLC
11 August 2000
Part 1
RECOMMENDED OFFER BY
BARCLAYS PLC FOR WOOLWICH PLC
SUMMARY
- The boards of Barclays and Woolwich announce that they have reached
agreement on the terms of an offer by Barclays for Woolwich. The Offer will
be unanimously recommended by the board of Woolwich.*
THE OFFER
- Under the terms of the Offer, Woolwich Shareholders will receive 0.1175
New Barclays Shares and £1.64 for each Woolwich Share. A Mix and Match
Election will also be available.
- Woolwich Shareholders will be entitled to retain the interim dividend
of 4.4p per Woolwich Share declared on 2 August 2000 and payable on 9
October 2000 to Woolwich Shareholders on the register on 25 August 2000.
- Based on the closing middle market price of 1581p per Barclays Share on
10 August 2000, less the 20.0p interim dividend, the Offer together with the
Woolwich interim dividend values each Woolwich Share at approximately 352p
and the issued ordinary share capital of Woolwich at approximately £5.4
billion.
- On the same basis, the Offer together with the Woolwich interim
dividend represents a premium of approximately 31 per cent. over the closing
middle market price of 269p per Woolwich Share on 8 August 2000, the day
before the announcement that Barclays and Woolwich were in talks regarding a
potential offer for Woolwich.
- Following completion of the Offer, Woolwich Shareholders will own
approximately 11 per cent. of the enlarged issued share capital of Barclays.
Background to and Reasons for the Offer
- The combination of Barclays and Woolwich will bring together two
complementary and leading financial services businesses in the UK and will
be able to provide value for customers through enhanced product offerings,
greater choice and extended access.
- The Enlarged Barclays Group will have a major presence in the mortgage
market. Mortgages represent a key point in the financial lives of many
customers and are therefore an important opportunity for customer
relationship development.
- Woolwich is one of the leading financial services groups in the UK with
a reputation for innovation and strong management, and a well respected
brand. The transaction is therefore an important step towards attaining
Barclays objective of becoming the leading retailer of financial services in
the UK.
- The transaction will bring together two groups with similar strategic
vision: both Barclays and Woolwich are acknowledged as leaders in e-finance
with over 1.4 million online customers between them.
- With around 16 million retail customers, the Enlarged Barclays Group
will have one of the largest customer bases of any financial services group
in the UK.
- The transaction will allow Woolwich's innovative Open Plan proposition
to be developed on a larger scale, with Open Plan being used as a key tool
to develop the retail customer franchises within the Enlarged Barclays
Group.
- Woolwich's Global Home Loans joint venture provides a platform for one
of the most efficient mortgage servicing operations in Europe.
- The transaction will give Barclays access to Woolwich's proven and
successful IFA operations, which is expected to provide an important
extension of Barclays distribution options for the benefit of customers.
General
- The Woolwich senior management team, with its reputation for
innovation, will enhance the management capability of the Barclays Group.
- Sir Brian Jenkins, Chairman of Woolwich, will be appointed a Deputy
Chairman of Barclays. Stephen Russell, Chief Executive of Boots and a non
executive director of Woolwich, will be appointed a non executive director
of Barclays.
- John Stewart will be appointed Deputy Group Chief Executive of Barclays
with responsibility for Barclays Retail Financial Services, which will
incorporate the Woolwich business.
- John Varley, an executive director of Barclays, will assume the new
role of Group Director, Integration to focus on the integration of the
operations of Woolwich and Barclays.
- Both brands, including separate Barclays and Woolwich branches, will be
retained. Woolwich will become the group mortgage brand. Back office
infrastructure will be fully integrated, offering substantial efficiency
gains.
- By the end of the third year following completion of the transaction
the combination is expected to generate total pre-tax synergies of at least
£240 million per annum, of which cost savings are estimated to amount to at
least £150 million.**
- The transaction is expected to be earnings enhancing in 2001 and beyond
(before accounting for goodwill and restructuring charges but after the
inclusion of synergies).**
- It is proposed that a low cost dealing facility will be put in place
for Woolwich Shareholders who receive New Barclays Shares under the Offer
and who would like to sell part or all of their holdings of New Barclays
Shares or who would like to invest cash received in order to increase their
holdings of Barclays Shares.
- Barclays will finance the cash consideration payable under the Offer
from its own resources.
- The Offer will be effected by means of a scheme of arrangement of
Woolwich.
- The Offer will require, amongst other matters, the sanction of the High
Court as well as approval by Woolwich Shareholders and the satisfaction or
waiver of certain competition and regulatory conditions. Formal
documentation relating to the Offer will be despatched to Woolwich
Shareholders as soon as practicable. It is expected that the transaction
will become effective in the final quarter of 2000.
Commenting on the Offer, Sir Peter Middleton, Chairman of Barclays, said:
'The acquisition of Woolwich is a key step for Barclays in developing its
UK retail financial services business with a commercial fit which is highly
complementary. It will create additional value for our shareholders and
enhances the growth opportunities for an important part of the Barclays
Group.'
Commenting on the Offer, Sir Brian Jenkins, Chairman of Woolwich, said:
'This is a great deal for both Barclays and Woolwich shareholders.
'From the Woolwich we bring our popular brand, innovation and highly
successful management team to join in this exciting venture.
'Combined with Barclays strengths, we can all go forward changing the
nature of retail banking in the United Kingdom.'
Barclays is being advised by Credit Suisse First Boston, Woolwich is being
advised by Schroder Salomon Smith Barney. Credit Suisse First Boston de
Zoete & Bevan, Cazenove and Schroder Salomon Smith Barney are brokers to
the transaction.
This summary should be read in conjunction with the full text of the
following announcement.
There will be a presentation today, Friday 11 August, for analysts
commencing at 9.30am and a press briefing commencing at 11.45am, both at 54
Lombard Street, London EC3.
ENQUIRIES
Barclays
Ian Roundell Telephone: 020 7699 2961
Leigh Bruce 020 8699 2658
Credit Suisse First Boston Telephone: 020 7888 8888
Philip Remnant
Ewen Stevenson
Stuart Upcraft
Hogarth Telephone: 020 7357 9477
Chris Matthews
Rachel Hirst
Woolwich Telephone: 020 8298 5500
David Blake
Schroder Salomon Smith Barney Telephone: 020 7986 4000
Will Samuel
Chris Jillings
Ian Hart
The Maitland Consultancy Telephone: 020 7379 5151
Philip Gawith
Lydia Stewart
Credit Suisse First Boston, which is regulated in the United Kingdom by The
Securities and Futures Authority Limited, is acting for Barclays and for no
one else in connection with the Offer and will not be responsible to anyone
other than Barclays for providing the protections afforded to customers of
Credit Suisse First Boston or for giving advice in relation to the Offer.
Schroder Salomon Smith Barney, which is regulated in the United Kingdom by
The Securities and Futures Authority Limited, is acting for Woolwich and
for no one else in connection with the Offer and will not be responsible to
anyone other than Woolwich for providing the protections afforded to
customers of Schroder Salomon Smith Barney or for giving advice in relation
to the Offer.
This announcement does not constitute an offer to sell or an invitation to
purchase any securities.
Shareholders should note that Barclays and Woolwich are providing the
following cautionary statement:
This announcement contains certain forward looking statements with respect
to the financial condition, results of operations and businesses of
Barclays and Woolwich, synergies and cost savings and management's plans
and objectives for the Enlarged Barclays Group. These statements and
forecasts involve risk and uncertainty because they relate to events and
depend upon circumstances that will occur in the future. There are a
number of factors that could cause actual results and developments to
differ materially from those expressed or implied by these forward looking
statements and forecasts, such as the ability of Barclays and Woolwich to
integrate their large and complex businesses and realise synergies and
achieve cost savings, delays in new product launches, exposure to
fluctuations in exchange rates for foreign currencies, the impact of
competition, price controls, other regulatory action and price reductions
and inflation, adverse economic conditions, and the inability of the
Enlarged Barclays Group to market existing and new products effectively.
The foregoing paragraph is also relevant to use of the 'Safe Harbor'
provisions of the United States Private Securities Litigation Reform Act of
1995.
The New Barclays Shares to be issued to Woolwich Shareholders under the
Scheme will be issued in reliance upon the exemption from the registration
requirements of the US Securities Act 1933 (as amended) provided by Section
3(a)(10) of that Act and, as a consequence, the New Barclays Shares will
not be registered under the US Securities Act.
* Mr John Nelson, a non-executive director of Woolwich, is also Chairman
of Credit Suisse First Boston. Credit Suisse First Boston is acting as
financial adviser to Barclays in respect of the Offer. Accordingly, Mr
Nelson will abstain from the recommendation to Woolwich Shareholders.
** The expected net revenue synergies and cost savings, referred to in
this announcement, have been estimated on the basis of the existing cost,
operating structures and business volumes of the two groups and by
reference to forecast price increases, economic conditions and the
current regulatory environment. Nothing in this announcement should be
construed as a profit forecast or be interpreted to mean that the future
earnings per share of the Enlarged Barclays Group will necessarily be
greater than the historic published earnings per share of the Barclays
Group.
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