Offer for T&S Stores Plc
Offer for T&S Stores Plc
LONDON--(BUSINESS WIRE)--Oct. 30, 2002--
Tesco PLC
Recommended Offer for T&S Stores Plc
Tesco to expand in convenience market
SUMMARY
The Boards of Tesco and T&S announce that they have reached
agreement on the terms of a recommended all share Offer, to be made by
Greenhill on behalf of Tesco, for T&S.
Commenting on the Offer, Sir Terry Leahy, Chief Executive of Tesco,
said:
'This acquisition is great news for customers and staff. It will
create value for shareholders and at the same time allow Tesco to grow
in the convenience market. The conversion of many of T&S' stores to
the Tesco Express format will create jobs overall and will strengthen
our presence in many neighbourhoods across the country. We are
delighted to be making this agreed offer with the full support of the
T&S Board.'
Kevin Threlfall, Chairman of T&S, said:
'This is a good deal for T&S Shareholders and I am confident that
it will bring benefits to our customers. It will combine our
specialist skills in convenience stores with the Tesco Group's
know-how and retailing skills. The Offer caps an excellent share price
run this year and allows T&S Shareholders to stay in the sector as
part of the UK's leading retail group.'
Good for T&S and Tesco Shareholders
o T&S Shareholders will be offered 2.2414 new Tesco Shares for each
T&S Share, valuing each T&S Share at 455 pence(1).
o The Offer represents a premium of 26.7 per cent. to yesterday's
closing middle market price for T&S and a premium of 36.3 per
cent. to T&S' average closing middle market price over the last 90
business days.
o The Offer values the entire issued and to be issued share capital
of T&S at approximately £377.3 million(2). In addition, Tesco will
assume T&S' net debt, which was approximately £153 million as at
24 August 2002.
o T&S Shareholders will be entitled to retain the T&S interim
dividend payable on 29 November 2002 to shareholders on the
register as at the record date of 1 November 2002.
o The offer of Tesco Shares will allow T&S Shareholders to
participate in future value creation by the Enlarged Tesco Group.
o Tesco believes that the Acquisition will be earnings enhancing in
the first full year(3) after the acquisition and will create value
for Tesco Shareholders.
o Tesco's know-how and retailing capability will drive significant
improvements for customers and financial benefits across T&S'
portfolio of convenience stores.
o The Offer has the unanimous support and recommendation of the
Board of T&S. Tesco has received irrevocable undertakings to
accept the Offer from all members of the Board of T&S.
T&S
o T&S is a leading specialist neighbourhood store operator based in
the West Midlands.
o It operates 862 convenience stores under the One Stop and Day &
Nite fascias, as well as Dillons, the newsagent chain, and
Supercigs, a chain of tobacco discount shops.
o It reported revenues and operating profits of £933 million and £46
million respectively in 2001.
In line with Tesco's strategy
o T&S' geographically complementary store portfolio will accelerate
Tesco's planned roll out of Tesco Express stores (currently over
100 stores) and will allow Tesco to grow in the broader
convenience market.
o The UK convenience retailing segment is highly fragmented and,
following the Acquisition, Tesco's share of this segment, measured
by sales, will amount to about 5 per cent. on a national basis.
Tesco has analysed the Acquisition carefully and has concluded
that the T&S convenience stores and Tesco stores are
geographically highly complementary. Therefore, Tesco is confident
that it will deliver substantial benefits to a large number of
consumers without causing significant competition issues.
o Tesco plans to sell on T&S' non-core fascias, Dillons and
Supercigs, which in 2001 accounted for about 24 per cent. of T&S'
sales and around 12 per cent. of operating profit and,
potentially, a small number of other stores.
Good for customers
o The combination will deliver significant benefits to T&S'
customers and will bring the Tesco shopping experience to a
large number of additional neighbourhoods.
o Tesco anticipates that around 450 of T&S' 862 convenience
stores will be converted over the next three to four years to
the Tesco Express format where customers will benefit from:
o lower prices overall;
o improved service and store environment; and
o better product availability, quality and choice.
o The remaining T&S neighbourhood convenience stores will
continue to trade independently as One Stop or Day & Nite,
benefiting from improved ranges and a better store
environment.
Good for T&S staff
o The rights of all of T&S' employees will remain in place.
o Tesco will continue to operate an independent head office
function and distribution facilities for One Stop and Day &
Nite.
o Conversion to Tesco Express will create some 1,400 new local
jobs overall in small neighbourhoods across the country.
The Offer is subject to the terms and conditions set out in
Appendix I.
The above should be read in conjunction with the full text of the
following announcement.
Notes
1. Based on the closing price of 203 pence per Tesco Share on 29
October 2002, the last business day prior to the date of this
announcement.
2. Value is of T&S' existing issued and to be issued share
capital (assuming the exercise in full of all outstanding
options under the T&S Option Schemes).
3. This statement should not be taken to mean that the future
earnings per share of Tesco, as enlarged by the Acquisition,
will necessarily be greater than its historical earnings per
share.
Enquiries:
Tesco
Lucy Neville-Rolfe +44 (0)1992 646606
Steven N. Butler +44 (0)1992 644800
Greenhill (Financial adviser to Tesco) +44 (0)20 7440 0400
Simon Borrows
David Wyles
Maitland Consultancy (PR adviser to Tesco) +44 (0)20 7379 5151
Angus Maitland
T&S +44 (0)1543 363 003
Kevin Threlfall
Jim McCarthy
Rothschild (Financial adviser to T&S) +44 (0)20 7280 5000
Robert Leitao
Alex Midgen
ING Barings (Joint broker to T&S) +44 (0)20 7767 5705
Simon Edwards
CSFB (Joint broker to T&S) +44 (0)20 7888 6446
John McIvor
*T
The availability of the Offer to persons outside the United
Kingdom may be affected by the laws of other jurisdictions. Such
persons should inform themselves about and observe any applicable
requirements of those jurisdictions.
The Offer will not be made, directly or indirectly, in or into, or
by use of the mails or by any means or instrumentality (including,
without limitation, by means of telephone, facsimile, telex, internet
or other forms of electronic communication) of interstate or foreign
commerce of, or by any facilities of a national securities exchange
of, the United States, nor will it be made in or into Canada,
Australia or Japan and the Offer will not be capable of acceptance by
any such use, means, instrumentality or facility or from within the
United States, Canada, Australia or Japan. Accordingly, copies of this
announcement and any offer documents are not being, and must not be,
mailed or otherwise forwarded, distributed or sent, in whole or in
part, in, into or from, the United States, Canada, Australia or Japan.
The Tesco Shares to be issued in connection with the Offer have
not been, nor will they be, registered under the US Securities Act or
under the securities laws of any state of the United States, the
relevant clearances have not been, and will not be, obtained from the
securities commission of any province or territory of Canada, no
prospectus has been or will be lodged with, or registered by, the
Australian Securities and Investments Commission or the Japanese
Ministry of Finance and the Tesco Shares have not been, and nor will
they be, registered under or offered in compliance with applicable
securities laws of any state, province, territory or jurisdiction of
Canada, Australia or Japan. Accordingly, the Tesco Shares may not
(unless an exemption under relevant securities laws is applicable) be
offered, sold, resold or delivered, directly or indirectly, in or into
the United States, Canada, Australia or Japan or any other
jurisdiction outside the United Kingdom if to do so would constitute a
violation of the relevant laws of, or require registration thereof in,
such jurisdiction or to, or for the account or benefit of, a person
located in the United States, Canada, Australia or Japan.
This press release does not constitute an offer to sell or the
solicitation of an offer to buy securities in the United States,
Canada, Australia or Japan or in any other jurisdiction in which such
an offer or solicitation would be unlawful.
This announcement contains a number of forward-looking statements
relating to Tesco and T&S with respect to, among others, the
following: financial condition; results of operation; the businesses
of Tesco and T&S; future benefits of the transaction; and management
plans and objectives. Tesco and T&S consider any statements that are
not historical facts as 'forward-looking statements'. They involve a
number of risks and uncertainties that could cause actual results to
differ materially from those suggested by the forward-looking
statements. Important factors that could cause actual results to
differ materially from estimates or forecasts contained in the
forward-looking statements include, among others, the following
possibilities: future revenues are lower than expected; costs or
difficulties relating to the integration of the businesses of Tesco
and T&S, or of other future acquisitions, are greater than expected;
expected cost savings from the transaction or from other future
acquisitions are not fully realised or realised within the expected
time frame; competitive pressures in the industry increase; general
economic conditions or conditions affecting the relevant industries,
whether internationally or in the places Tesco and T&S do business are
less favourable than expected, and/or conditions in the securities
market are less favourable than expected.
Greenhill, which is regulated in the United Kingdom by the
Financial Services Authority, is acting exclusively for Tesco as
financial adviser (within the meaning of the Rules of the Financial
Services Authority) and for no-one else in connection with the Offer
and will not be responsible to anyone other than Tesco for providing
the protections afforded to clients of Greenhill nor for providing
advice in relation to the Offer.
Rothschild, which is regulated in the United Kingdom by the
Financial Services Authority, is acting exclusively for T&S as
financial adviser (within the meaning of the Rules of the Financial
Services Authority) and for no-one else in connection with the Offer
and will not be responsible to anyone other than T&S for providing the
protections afforded to clients of Rothschild nor for providing advice
in relation to the Offer.
ING Barings, which is regulated in the United Kingdom by the
Financial Services Authority, is acting as joint broker (within the
meaning of the Rules of the Financial Services Authority) to T&S and
for no-one else in connection with the Offer and will not be
responsible to anyone other than T&S for providing the protections
afforded to clients of ING Barings nor for providing advice in
relation to the Offer.
CSFB, which is regulated in the United Kingdom by the Financial
Services Authority, is acting as joint broker (within the meaning of
the Rules of the Financial Services Authority) to T&S and for no-one
else in connection with the Offer and will not be responsible to
anyone other than T&S for providing the protections afforded to
clients of CSFB nor for providing advice in relation to the Offer.
Tesco PLC
Recommended Offer for T&S Stores Plc
1. Introduction
The Boards of Tesco and T&S announce that they have reached
agreement on the terms of a recommended all share Offer, to be made by
Greenhill on behalf of Tesco, for the whole of the issued and to be
issued share capital of T&S.
2. The Offer
The Offer, which will be subject to the conditions and further
terms set out in Appendix I, and to be set out in the Offer Document
and Form of Acceptance, will be made on the following basis:
for each T&S Share 2.2414 new Tesco Shares
*T
and so in proportion to any other number of T&S Shares held.
Based on the closing price of 203 pence per Tesco Share on 29
October 2002, the last business day prior to the date of this
announcement, the Offer:
- values each T&S Share at approximately 455 pence;
- represents a premium of approximately 26.7 per cent. over the
closing middle market price of 359 pence per T&S Share on 29
October 2002, the last business day prior to the date of this
announcement; and
- represents a premium of approximately 36.3 per cent. over the
average closing middle market price of 333.8 pence per T&S
Share for the last 90 business days prior to the date of this
announcement.
In addition, T&S Shareholders will be entitled to retain the right
to receive the interim dividend of 4.92 pence per share to be paid on
29 November 2002 by reference to shareholders on the register as at
the record date of 1 November 2002.
The Offer values the entire issued and to be issued share capital
of T&S at £377.3 million (assuming the exercise in full of all
outstanding options under the T&S Option Schemes). In addition, Tesco
will assume T&S' net debt, which was approximately £153 million as at
24 August 2002.
If the Offer becomes, or is declared unconditional in all
respects, full acceptance of the Offer, assuming exercise of all
exercisable options outstanding under the T&S Option Schemes, would
result in the issue of up to approximately 185.9 million new Tesco
Shares representing approximately 2.6 per cent. of the issued ordinary
share capital of Tesco as enlarged by the Acquisition.
The offer of Tesco Shares as consideration for the Acquisition
will allow T&S Shareholders to remain invested in the food retailing
sector and to participate in future value creation by the Enlarged
Tesco Group.
Application will be made for the new Tesco Shares to be admitted
to the Official List of the UK Listing Authority and to trading on the
London Stock Exchange's market for listed securities.
Further details of the bases and sources of the financial
information on the Offer are set out in Appendix II.
3. Irrevocable undertakings
Tesco has received irrevocable undertakings to accept the Offer
from T&S Directors in respect of their entire beneficial holdings
(including options) amounting in aggregate to at least 2,781,910 T&S
Shares, representing approximately 3.4 per cent., in aggregate, of
T&S' fully diluted ordinary share capital. Such undertakings will
cease to be binding only if the Offer lapses or is withdrawn.
In addition, Tesco has received an irrevocable undertaking to
accept the Offer from David Lockett-Smith (co-founder of T&S) in
respect of 1,330,000 T&S Shares, representing approximately 1.6 per
cent. of T&S' fully diluted ordinary share capital. David
Lockett-Smith's undertaking will cease to be binding only if the Offer
lapses or is withdrawn.
In aggregate, therefore, Tesco has received irrevocable
undertakings to accept the Offer in respect of at least 4,111,910 T&S
Shares (including options) representing approximately 5.0 per cent. of
T&S' fully diluted ordinary share capital.
4. Background to and reasons for the Offer
The Acquisition is
o Good for T&S and Tesco Shareholders
o In line with Tesco's strategy
o Good for customers
o Good for T&S staff
Good for T&S and Tesco Shareholders
The offer of new Tesco Shares will allow T&S Shareholders to
participate in future value creation by the Enlarged Tesco Group.
Tesco believes that the Acquisition will be earnings enhancing in the
first full year following completion of the Acquisition(1) and that
the combination will create value for Tesco Shareholders.
Tesco's know-how and retailing capability will drive significant
improvements for customers and bring financial benefits across T&S'
portfolio of convenience stores.
In line with Tesco's strategy
Growth in its core UK business remains a cornerstone of Tesco's
strategy. In the UK, the convenience retailing segment is highly
dynamic. It represents close to 20 per cent. of the total UK grocery
market in value terms and comprises some 55,000 outlets. The segment
has experienced growth and development with many players with
different formats entering in recent years. Current trends suggest
that there will be further segment growth in the short to medium term,
stemming from the changing lifestyles of a growing working population
that increasingly demands convenience, choice and value. Accordingly,
Tesco is planning to accelerate its store opening programme through
the expansion of its Tesco Express format.
The Acquisition represents an opportunity for Tesco to combine its
organic growth strategy with a value enhancing acquisition in its core
UK business. Through the Acquisition, with its geographically
complementary portfolio of neighbourhood convenience stores, Tesco
will accelerate its planned rollout of Tesco Express, enhancing
Tesco's growth.
The UK convenience retailing segment is highly fragmented and,
following the Acquisition, Tesco's share of this segment, measured by
sales, will amount to about 5 per cent. on a national basis. Tesco has
analysed the Acquisition carefully and has concluded that the T&S
convenience stores and Tesco stores are geographically highly
complementary. Therefore, Tesco is confident that it will deliver
substantial benefits to a large number of consumers without causing
significant competition issues.
Tesco plans to sell on T&S' non-core fascias, Dillons and
Supercigs, which in 2001 accounted for about 24 per cent. of T&S'
sales and around 12 per cent. of operating profit and, potentially, a
small number of other stores.
Good for customers
The combination of Tesco and T&S will deliver significant benefits
to T&S' customers and will bring the Tesco shopping experience to a
larger number of neighbourhoods.
Tesco's Express format has been highly successful with consumers.
It has brought higher quality, more fresh produce, excellent service
and an enhanced shopping environment at great prices to convenience
retailing. The Acquisition will make these benefits available to a
wider customer base.
Tesco anticipates that it will convert around 450 of T&S' 862
convenience stores to the Tesco Express format over the next three to
four years.
The remaining T&S neighbourhood convenience stores will continue
to trade independently as One Stop or Day & Nite, benefiting from
improved ranges and a better store environment.
In the Tesco Express format, customers will benefit from:
o lower prices overall;
o improved service and store environment; and
o better product availability, quality and choice.
Good for T&S staff
Following the Acquisition, the existing employment rights of all
of T&S' employees will remain in place. Tesco estimates that the
planned conversion of T&S stores to the Tesco Express format will
create some 1,400 new local jobs overall in small neighbourhoods
across the country. Tesco will continue to operate an independent head
office function and distribution facilities for One Stop and Day &
Nite.
5. Information on T&S
Introduction
T&S was founded in 1975 and was admitted to the Official List in
May 1987. Since its inception, the company has grown both organically
and by acquisition, and currently operates some 1,200 stores.
Business description
The group is organised into two divisions - (i) convenience stores
and (ii) newsagents and tobacco discount stores.
The convenience stores division operates 862 stores under two main
brands, One Stop and Day & Nite, and accounts for about 76 per cent.
of T&S' turnover and around 88 per cent. of operating profits. This
division offers a wide selection of merchandise to its customers,
including groceries, some chilled meals, greeting cards and
off-licence sales. Certain stores also offer additional in-store
services, such as National Lottery, ATM, Pay Point and sub-post
offices.
The newsagents and tobacco discount stores division comprises
principally of Dillons, the newsagent chain with 209 stores, and
Supercigs, a chain of 134 tobacco discount shops. The division
accounts for some 24 per cent. of sales and around 12 per cent. of
operating profits. It represents a declining proportion of T&S' sales
and profits.
Strategy
In recent years, T&S' strategy has allowed it to become a leading
specialist neighbourhood store operator, with an outstanding track
record for growth. Acquisitions have been a key plank in this strategy
- M&W plc, One Stop Community Stores Limited and Day and Nite Stores
Limited were acquired in October 1997, April 1999 and May 2000
respectively, and now form the backbone of the current convenience
stores division.
Financial information
For the 52 weeks to 29 December 2001, T&S reported consolidated
revenues of approximately £933 million, operating profit from
continuing operations before exceptional items of approximately £46
million, and free cash flow of approximately £23 million. As at 29
December 2001, T&S had net assets of approximately £62 million.
For the 26 weeks to 29 June 2002, T&S reported consolidated
revenues of approximately £473 million and operating profit from
continuing operations before exceptional items of approximately £22
million. As at 29 June 2002, T&S had net assets of approximately £65
million.
6. Information on Tesco
Introduction
Tesco is the UK's leading retailer and an established overseas
operator. Tesco operates over 1,000 stores worldwide and at the
year-end will employ some 285,000 people across ten countries. Over 40
per cent. of group space is located outside the UK and Tesco is well
positioned to become a leading retailer in Central Europe and South
East Asia.
Business description & strategy
Tesco's strategy is built around four key areas - a strong core UK
business, growth in non-food, retailing services and international
development.
The UK remains Tesco's core market. At its half-year end on 10
August 2002, Tesco operated 766 stores in the UK, across four key
formats including Express, its convenience format at 1,500 to 3,000
sq.ft. per store; Metro, its high street format at an average of
12,400 sq.ft. per store; superstores, at an average of 31,200 sq.ft.
per store; and Extra, its hypermarket format with stores of up to
100,000 sq. ft. In 2001 the company opened 55 new stores in the UK
which, including extensions and refits, added another 1.3 million sq.
ft. of new floor space. 30 of the 55 new stores opened were Express
stores. Tesco is continuing to open more than one Express per week,
and had a total of 100 on 17 September 2002.
Tesco's focused strategy of providing exceptional value and choice
for customers has served the company, and its customers, well. Tesco
has invested some £1.2bn over the past five years to reduce prices for
customers. Tesco continues to pursue growth opportunities, including
through the acceleration of the roll-out of its Express convenience
store format - fully consistent with the Acquisition. In addition,
Tesco is refreshing its superstores and introducing new product lines
to provide customers with even greater choice.
In the non-food area, Tesco continues to build its presence in the
marketplace through initiatives such as the recent launch of a
non-food version of its popular Value lines and the new Cherokee
clothing range. The company has grown its non-food market share to
over 4 per cent. and its strategy is to be as strong in non-food as in
food.
Tesco's retailing services ventures have been highly successful.
Tesco.com is the world's largest online grocery retailer with some
85,000 grocery orders per week. Tesco Personal Finance, Tesco's
financial services business, has over three million accounts. It is
one of the UK's fastest growing financial services businesses and
offers products including insurance, credit cards and loans.
Tesco's strategy of building an international business of scale
continues to gain momentum. After five years of international
expansion, Tesco is well positioned to become a leading retailer in
Central Europe and South East Asia in terms of both sales and profits.
The company now has over 40 per cent. of group space outside of the UK
and employs some 65,000 people in its international operations.
The Tesco four part strategy - strong core UK business, non-food,
retailing services and international growth have all delivered
outstanding results. This is underpinned by a core purpose that
defines the way Tesco runs its businesses - creating value for
customers to earn their lifetime loyalty. The way we work together at
Tesco is described by a set of principles we call the Tesco Values.
The two main Values are `Treat people how we like to be treated' and
`No-one tries harder for customers'.
Financial information
For the 52 weeks to 23 February 2002, Tesco reported consolidated
revenues of approximately £25,654 million and operating profit of
approximately £1,322 million. As at 23 February 2002, Tesco had net
assets of approximately £5,566 million.
For the 24 weeks to 10 August 2002, Tesco reported consolidated
revenues of approximately £12,733 million and operating profit of
approximately £592 million. As at 10 August 2002, Tesco had net assets
of approximately £5,842 million.
7. Management and employees
The Board of Tesco has confirmed that, upon the Offer becoming or
being declared unconditional in all respects, the existing employment
rights, including pension rights, of all employees of the T&S Group
will remain in place.
Tesco estimates that the planned conversion of T&S stores to the
Tesco Express format will create some 1,400 new local jobs overall.
Tesco will continue to operate an independent head office function and
distribution facilities for One Stop and Day & Nite.
Tesco has agreed certain arrangements with the executive Directors
of T&S regarding their future participation in the operational
management of T&S and details of these arrangements will be set out in
the Offer document. It is proposed that Ian Vickery, Robert Davies and
Charles Lawrence, the non-executive T&S Directors, will resign upon
the Offer becoming or being declared unconditional in all respects.
8. T&S Option Schemes
The Offer will extend to any T&S Shares which are issued or
unconditionally allotted and fully paid (or credited as fully paid)
while the Offer remains open for acceptance (or, subject to the City
Code, by such earlier date as Tesco may decide), including T&S Shares
issued pursuant to the exercise of options granted under the T&S
Option Schemes or otherwise.
To the extent that such options have not been exercised in full,
Tesco will make appropriate proposals to the holders of T&S Options
once the Offer becomes or is declared unconditional in all respects.
9. Financial effects of the Offer
Details of the financial effects of the Offer are set out in
Appendix II.
10. Recommendation
The T&S Directors, who have been so advised by Rothschild,
consider the terms of the Offer to be fair and reasonable so far as
T&S Shareholders are concerned. In providing advice to T&S Directors,
Rothschild has taken account of the T&S Directors' commercial
assessments.
Accordingly, T&S Directors will unanimously recommend all T&S
Shareholders to accept the Offer, as they have irrevocably undertaken
to do so in respect of their own beneficial holdings (including
options) of, in aggregate, at least 2,781,910 T&S Shares, representing
approximately 3.4 per cent. of the fully diluted ordinary share
capital of T&S.
11. Break fee
Tesco and T&S have entered into an arrangement under which T&S has
agreed to pay Tesco a break fee of £3.65 million in the event that the
Offer lapses or is withdrawn either following the announcement of a
third party offer which subsequently becomes or is declared
unconditional in all respects, or, following the announcement of a
third party offer, T&S Directors withdraw or modify in a manner
adverse to Tesco their approval or recommendation of the Offer.
12. Further details of the Offer
The T&S Shares will be acquired by Tesco fully paid and free from
all liens, equities, charges, encumbrances and other interests and
together with all rights now or hereafter attaching thereto, including
the right to receive and retain all dividends and other distributions
(if any) declared, made or paid hereafter, save for the T&S interim
dividend, in respect of which T&S Shareholders, on the register at the
close of business on 1 November 2002 will retain the right to receive
the interim dividend of 4.92 pence per T&S Share in respect of the 26
weeks ended 29 June 2002 payable on 29 November 2002.
Application will be made to the UK Listing Authority for the new
Tesco Shares to be admitted to the Official List and to trading on the
London Stock Exchange's market for listed securities. It is expected
that listing will become effective and that dealings will commence in
the new Tesco Shares on the first dealing day following the day on
which the Offer becomes or is declared unconditional in all respects
(save only for the admission of such shares becoming effective).
Certificates for new Tesco Shares to be issued to T&S Shareholders
will be despatched no later than 14 days after the Offer becomes or is
declared unconditional in all respects or 14 days after receipt of a
valid acceptance of the Offer, whichever is later.
The new Tesco Shares will be issued free from all liens, equities,
charges, encumbrances and other interests. The new Tesco Shares will
be issued credited as fully paid and will rank equally in all respects
with existing Tesco Shares, including the right to receive all
dividends and other distributions declared, made or paid hereafter,
save for the right to receive the interim dividend of 1.87 pence per
Tesco Share in respect of the 24 weeks ended 10 August 2002 payable on
29 November 2002.
Fractions of new Tesco Shares will not be allotted or issued
pursuant to the Offer but will be aggregated and retained for the
benefit of Tesco.
If the offer becomes, or is declared, unconditional in all
respects and sufficient acceptances are received, Tesco intends to
apply the provisions of Sections 428 to 430F (inclusive) of the
Companies Act to acquire compulsorily any outstanding T&S Shares to
which the Offer relates not acquired or agreed to be acquired pursuant
to the Offer or otherwise.
It is also intended that, following the Offer becoming or being
declared wholly unconditional and subject to any applicable
requirements of the UK Listing Authority, Tesco will procure that T&S
applies to the UK Listing Authority for the listing of the T&S Shares
on the Official List to be cancelled and to the London Stock Exchange
for the admission to trading of the T&S Shares to be cancelled. It is
anticipated that such cancellation will take effect no earlier than 20
business days after the Offer becomes or is declared unconditional in
all respects. Delisting would significantly reduce the liquidity and
marketability of any T&S Shares in respect of which acceptances of the
Offer are not submitted.
13. General
The Offer will be subject to the applicable requirements of the
City Code. The Offer Document containing the full terms and conditions
of the Offer will be posted to T&S Shareholders as soon as
practicable.
This announcement does not constitute an offer or invitation to
purchase or subscribe for any securities.
Save as set out in this announcement, neither Tesco, nor any of
the Tesco Directors, nor, so far as Tesco is aware, any party presumed
to be acting in concert with either of them, owns or controls any T&S
Shares or holds any options to purchase T&S Shares or has entered into
any derivative referenced to securities of T&S. In view of the
requirement for confidentiality, Tesco has not made any enquiries in
this respect of certain parties who may be deemed by the Panel to be
acting in concert with either of them for the purposes of the Offer.
The availability of the Offer to persons resident outside the
United Kingdom may be affected by the laws of other jurisdictions.
Such persons should inform themselves about and observe any applicable
requirements of those jurisdictions.
The Offer will not be made, directly or indirectly, in or into, or
by use of the mails or by any means or instrumentality (including,
without limitation, by means of telephone, facsimile, telex, internet
or other forms of electronic communication) of interstate or foreign
commerce of, or by any facilities of a national securities exchange
of, the United States, nor will it be made in or into Canada,
Australia or Japan and the Offer will not be capable of acceptance by
any such use, means, instrumentality or facility or from within the
United States, Canada, Australia or Japan. Accordingly, copies of this
announcement and any offer documents are not being, and must not be,
mailed or otherwise forwarded, distributed or sent, in whole or in
part, in, into or from, the United States, Canada, Australia or Japan.
The Tesco Shares to be issued in connection with the Offer have
not been, nor will they be, registered under the US Securities Act or
under the securities laws of any state of the United States; the
relevant clearances have not been, and will not be, obtained from the
securities commission of any province or territory of Canada; no
prospectus has been, or will be, lodged with, or registered by, the
Australian Securities and Investments Commission or the Japanese
Ministry of Finance and the Tesco Shares have not been, and nor will
they be, registered under or offered in compliance with applicable
securities laws of any state, province, territory or jurisdiction of
Canada, Australia or Japan. Accordingly, Tesco Shares may not (unless
an exemption under relevant securities laws is applicable) be offered,
sold, resold or delivered, directly or indirectly, in or into the
United States, Canada, Australia or Japan or any other jurisdiction
outside the United Kingdom if to do so would constitute a violation of
the relevant laws of, or require registration thereof in, such
jurisdiction or to, or for the account or benefit of, a person located
in the United States, Canada, Australia or Japan.
This press release does not constitute an offer to sell or the
solicitation of an offer to buy securities in the United States,
Canada, Australia or Japan or in any other jurisdiction in which such
an offer or solicitation would be unlawful.
The bases and sources of certain financial information contained
in this announcement are set out in Appendix II and definitions of
certain expressions used in this announcement are contained in
Appendix III.
Enquiries:
Tesco
Lucy Neville-Rolfe +44 (0)1992 646606
Steven N. Butler +44 (0)1992 644800
Greenhill (Financial adviser to Tesco) +44 (0)20 7440 0400
Simon Borrows
David Wyles
Maitland Consultancy (PR adviser to Tesco)
Angus Maitland +44 (0)20 7379 5151
T&S +44 (0)1543 363 003
Kevin Threlfall
Jim McCarthy
Rothschild (Financial adviser to T&S) +44 (0)20 7280 5000
Robert Leitao
Alex Midgen
ING Barings (Joint broker to T&S) +44 (0)20 7767 5705
Simon Edwards
CSFB (Joint broker to T&S) +44 (0)20 7888 6446
John McIvor
*T
Note:
1. This statement should not be taken to mean that the future
earnings per share of Tesco, as enlarged by the Acquisition,
will necessarily be greater than its historical earnings per
share.
Greenhill, which is regulated in the United Kingdom by the
Financial Services Authority, is acting exclusively for Tesco as
financial adviser (within the meaning of the Rules of the Financial
Services Authority) and for no-one else in connection with the Offer
and will not be responsible to anyone other than Tesco for providing
the protections afforded to clients of Greenhill nor for providing
advice in relation to the Offer.
Rothschild, which is regulated in the United Kingdom by the
Financial Services Authority, is acting exclusively for T&S as
financial adviser (within the meaning of the Rules of the Financial
Services Authority) and for no-one else in connection with the Offer
and will not be responsible to anyone other than T&S for providing the
protections afforded to clients of Rothschild as nor providing advice
in relation to the Offer.
ING Barings, which is regulated in the United Kingdom by the
Financial Services Authority, is acting as joint broker (within the
meaning of the Rules of the Financial Services Authority) to T&S and
for no-one else in connection with the Offer and will not be
responsible to anyone other than T&S for providing the protections
afforded to clients of ING Barings nor for providing advice in
relation to the Offer.
CSFB, which is regulated in the United Kingdom by the Financial
Services Authority, is acting as joint broker (within the meaning of
the Rules of the Financial Services Authority) to T&S and for no-one
else in connection with the Offer and will not be responsible to
anyone other than T&S for providing the protections afforded to
clients of CSFB nor for providing advice in relation to the Offer.
This announcement contains a number of forward-looking statements
relating to Tesco and T&S with respect to, among others, the
following: financial condition; results of operation; the businesses
of Tesco and T&S; future benefits of the transaction; and management
plans and objectives. Tesco and T&S consider any statements that are
not historical facts as 'forward-looking statements'. They involve a
number of risks and uncertainties that could cause actual results to
differ materially from those suggested by the forward-looking
statements. Important factors that could cause actual results to
differ materially from estimates or forecasts contained in the
forward-looking statements include, among others, the following
possibilities: future revenues are lower than expected; costs or
difficulties relating to the integration of the businesses of Tesco
and T&S, or of other future acquisitions, are greater than expected;
expected cost savings from the transaction or from other future
acquisitions are not fully realised or realised within the expected
time frame; competitive pressures in the industry increase; general
economic conditions or conditions affecting the relevant industries,
whether internationally or in the places Tesco and T&S do business are
less favourable than expected, and/or conditions in the securities
market are less favourable than expected.
Appendix I
Conditions and further terms of the Offer
1. Conditions of the Offer
The Offer will be subject to the following conditions:
(a) valid acceptances being received (and not, where permitted,
withdrawn) by not later than 3.00 p.m. (London time) on the first
closing date of the Offer (or such later time(s) and/or date(s)
as Tesco may, subject to the rules of the City Code, decide) in
respect of not less than 90 per cent. (or such lower percentage
as Tesco may decide) in nominal value of the T&S Shares to which
the Offer relates, provided that this condition will not be
satisfied unless Tesco and/or any of its subsidiaries shall have
acquired or agreed to acquire (whether pursuant to the Offer or
otherwise) T&S Shares carrying in aggregate more than 50 per
cent. of the voting rights then normally exercisable at a general
meeting of T&S, including for this purpose (to the extent, if
any, required by the Panel) any such voting rights attaching to
any T&S Shares that are unconditionally allotted or issued before
the Offer becomes or is declared unconditional as to acceptances,
whether pursuant to the exercise of any outstanding subscription
or conversion rights or otherwise; and for this purpose:
(i) the expression 'T&S Shares to which the Offer relates' shall
be construed in accordance with sections 428 to 430F of the
Companies Act 1985; and
(ii) T&S Shares which have been unconditionally allotted shall be
deemed to carry the voting rights which they will carry upon
issue;
(b) admission of the new Tesco Shares (i) to listing on the Official
List of the UK Listing Authority becoming effective in accordance
with the Listing Rules of the UK Listing Authority and (ii) to
trading on the London Stock Exchange's market for listed
securities becoming effective in accordance with paragraph 2.1 of
the Admission and Disclosure Standards made by the London Stock
Exchange from time to time, or (if Tesco so determines and
subject to the consent of the Panel) the UK Listing Authority and
the London Stock Exchange agreeing to admit such shares to
listing and trading respectively subject to allotment of such
shares and/or the Offer becoming or being declared unconditional
in all respects;
(c) without limitation to condition (d) below the Office of Fair
Trading having indicated, in terms satisfactory to Tesco acting
reasonably, that it is not the intention of the Secretary of
State for Trade and Industry to refer the Acquisition, or any
matters arising from the Acquisition, to the Competition
Commission;
(d) no Third Party having intervened and there not continuing to be
outstanding any statute, regulation or order of any Third Party
in each case which would or might reasonably be expected (in any
case, to an extent which is material and adverse in the context
of the Wider Tesco Group or the Wider T&S Group, as the case may
be, in each case taken as a whole) to:
(i) make the Offer, its implementation or the acquisition or
proposed acquisition by Tesco or any member of the Wider Tesco
Group of any shares or other securities in, or control or
management of, T&S or any member of the Wider T&S Group void,
illegal and/or unenforceable in any relevant jurisdiction, or
otherwise directly or indirectly restrain, prevent, prohibit,
restrict or delay the same or impose additional conditions or
obligations with respect to the Offer or such acquisition, or
otherwise impede, challenge or interfere with the Offer or
such acquisition, or require amendment to the terms of the
Offer or the acquisition or proposed acquisition of any T&S
Shares or the acquisition of control of T&S or the Wider T&S
Group by Tesco;
(ii) limit or delay the ability of any member of the Wider Tesco
Group or any member of the Wider T&S Group to acquire or to
hold or to exercise effectively, directly or indirectly, all
or any rights of ownership in respect of shares or other
securities (or the equivalent) in, or to exercise voting or
management control over, any member of the Wider T&S Group or
any member of the Wider Tesco Group;
(iii) require, prevent or delay the divestiture or alter the terms
envisaged for any proposed divestiture by any member of the
Wider Tesco Group of any shares or other securities in T&S;
(iv) require, prevent or delay the divestiture or alter the terms
envisaged for any proposed divestiture by any member of the
Wider Tesco Group or by any member of the Wider T&S Group of
all or any portion of their respective businesses, assets or
properties or limit the ability of any of them to conduct any
of their respective businesses or to own or control any of
their respective assets (including shares or other securities
(or the equivalent) in T&S, any other member of the Wider T&S
Group or any member of the Wider Tesco Group) or properties or
any part thereof;
(v) require any member of the Wider Tesco Group or of the Wider
T&S Group to acquire, or to offer to acquire, any shares or
other securities (or the equivalent) in any member of the
Wider Tesco Group or the Wider T&S Group (other than T&S)
owned by any third party;
(vi) limit the ability of any member of the Wider Tesco Group or
of the Wider T&S Group to conduct or integrate or co-ordinate
its business, or any part of it, with the businesses or any
part of the businesses of any other member of the Wider Tesco
Group or of the Wider T&S Group;
(vii) result in any member of the Wider T&S Group or the Wider
Tesco Group ceasing to be able to carry on business under any
name under which it presently does so; or
(viii) otherwise materially and adversely affect the business,
assets, profits, financial or trading position or prospects of
any member of the Wider T&S Group or of the Wider Tesco Group,
and all applicable waiting and other time periods during which any
Third Party could intervene under the laws of any relevant
jurisdiction having expired, lapsed or been terminated;
(e) all notifications and filings which are necessary having been
made, all appropriate waiting and other time periods (including
any extensions of such waiting and other time periods) under any
applicable legislation or regulation of any relevant jurisdiction
having expired, lapsed or been terminated (as appropriate) and
all statutory or regulatory obligations in any relevant
jurisdiction having been complied with in each case in connection
with the Offer or the acquisition or proposed acquisition of any
shares or other securities in, or control of, T&S or any other
member of the Wider T&S Group by any member of the Wider Tesco
Group or which would have a material and adverse affect on the
business of any member of the Wider T&S Group;
(f) all Authorisations which are necessary in any relevant
jurisdiction for or in respect of the Offer or the acquisition or
proposed acquisition of any shares or other securities in, or
control of, T&S or any other member of the Wider T&S Group by any
member of the Wider Tesco Group or the carrying on by any member
of the Wider T&S Group of its business having been obtained, in
terms and in a form reasonably satisfactory to Tesco, from all
appropriate Third Parties or from any persons or bodies with whom
any member of the Wider T&S Group has entered into contractual
arrangements in each case where the absence of such Authorisation
would have a material adverse effect on the Wider T&S Group taken
as a whole and all such Authorisations remaining in full force
and effect and there being no notice or intimation of any
intention to revoke, suspend, restrict, modify or not to renew
any of the same;
(g) except as publicly announced by T&S (by the delivery of an
announcement to a Regulatory Information Service) prior to 30
October 2002 or as fairly disclosed in writing to Tesco or its
professional advisers by or on behalf of T&S prior to 30 October
2002, there being no provision of any arrangement, agreement,
licence, permit, franchise or other instrument to which any
member of the Wider T&S Group is a party, or by or to which any
such member or any of its assets is or are or may be bound,
entitled or subject or any circumstance, which, in each case as a
consequence of the Offer or the acquisition or proposed
acquisition of any shares or other securities in, or control of,
T&S or any other member of the Wider T&S Group by any member of
the Wider Tesco Group or otherwise, could or might reasonably be
expected to result in, (in any case to an extent which is or
would be material in the context of the Wider T&S Group taken as
a whole):
(i) any monies borrowed by or any other indebtedness or
liabilities (actual or contingent) of, or any grant available
to, any member of the Wider T&S Group being or becoming
repayable or capable of being declared repayable immediately
or prior to its stated repayment date or the ability of any
member of the Wider T&S Group to borrow monies or incur any
indebtedness being withdrawn or inhibited or becoming capable
of being withdrawn;
(ii) the creation or enforcement of any mortgage, charge or other
security interest over the whole or any part of the business,
property, assets or interests of any member of the Wider T&S
Group or any such mortgage, charge or other security interest
(wherever created, arising or having arisen) becoming
enforceable;
(iii) any such arrangement, agreement, licence, permit, franchise
or instrument, or the rights, liabilities, obligations or
interests of any member of the Wider T&S Group thereunder,
being, or becoming capable of being, terminated or adversely
modified or adversely affected or any adverse action being
taken or any obligation or liability arising thereunder;
(iv) any asset or interest of any member of the Wider T&S Group
being or falling to be disposed of or ceasing to be available
to any member of the Wider T&S Group or any right arising
under which any such asset or interest could be required to
be disposed of or could cease to be available to any member
of the Wider T&S Group otherwise than in the ordinary course
of business;
(v) any member of the Wider T&S Group ceasing to be able to carry
on business under any name under which it presently does so
or, so far as the T&S Directors are aware having made
reasonable enquiry, any person presently not able to carry on
business under any name under which any member of the Wider
T&S Group presently does becoming able to do so;
(vi) the creation of liabilities (actual or contingent) by any
member of the Wider T&S Group; or
(vii) the financial or trading position or the prospects or the
value of any member of the Wider T&S Group being prejudiced or
adversely affected;
(viii) and no event having occurred which, under any provision of
any such arrangement, agreement, licence, permit or other
instrument, could result in any of the events or
circumstances which are referred to in paragraphs (i) to
(vii) of this condition (g) in any case to an extent which is
or would be material in the context of the Wider T&S Group
taken as a whole;
(h) since 29 December 2001 and except as disclosed in T&S' annual
report and accounts for the year then ended, or in T&S' interim
report for the 26 weeks ended 29 June 2002, or as otherwise
publicly announced by T&S (by the delivery of an announcement to
a Regulatory Information Service) prior to 30 October 2002 or as
otherwise fairly disclosed in writing to Tesco by or on behalf of
T&S prior to 30 October 2002 no member of the Wider T&S Group
having:
(i) issued or agreed to issue, or authorised the issue of,
additional shares of any class, or securities convertible
into or exchangeable for, or rights, warrants or options to
subscribe for or acquire, any such shares or convertible
securities other than as between T&S and wholly-owned
subsidiaries of T&S and other than any options granted as
disclosed to Tesco prior to 30 October 2002 and any shares
issued upon the exercise of any options granted under any
of the T&S Share Option Schemes;
(ii) purchased or redeemed or repaid any of its own shares or
other securities or reduced or made any other change to
any part of its share capital;
(iii) recommended, declared, paid or made any bonus (not, for the
avoidance of doubt, including bonuses to employees in the
ordinary course of business), dividend or other
distribution whether payable in cash or otherwise (other
than to T&S or a wholly-owned subsidiary of T&S);
(iv) made or authorised any change in its loan capital which
is or would be material in the context of the Wider T&S
Group taken as a whole;
(v) (other than any acquisition or disposal in the ordinary
course of business or a transaction between T&S and a
wholly-owned subsidiary of T&S) merged with, demerged or
acquired any body corporate, partnership or business 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 assets (including
shares in any undertaking and trade investments) or
authorised the same (which in any case is material in the
context of the Wider T&S Group taken as a whole);
(vi) issued or authorised the issue of, or made any change in or
to, any debentures or (except in the ordinary course of
business) incurred or increased any indebtedness or
liability (actual or contingent) which in any case is
material in the context of the Wider T&S Group taken as a
whole;
(vii) entered into, varied, or authorised any agreement,
transaction, arrangement or commitment (whether in respect
of capital expenditure or otherwise) which:
(A) is of a long term, onerous or unusual nature or
magnitude or which is or could involve an obligation
of such nature or magnitude; or
(B) could restrict the business of any member of the Wider
T&S Group; or
(C) is other than in the ordinary course of business,
and which in any such case is material in the context of the Wider
T&S Group taken as a whole;
(viii) entered into, implemented, effected or authorised any
merger, demerger, reconstruction, amalgamation, scheme,
commitment or other transaction or arrangement in respect
of itself or another member of the Wider T&S Group
otherwise than in the ordinary course of business which in
any case is material in the context of the Wider T&S Group
taken as a whole;
(ix) entered into or varied the terms of, any contract,
agreement or arrangement with any of the directors of T&S
or (to the extent it is material in the context of the
Wider T&S Group taken as a whole) senior executives of any
member of the Wider T&S Group;
(x) taken any corporate action or had any legal proceedings
instituted or threatened against it or petition presented
or order made for its winding-up (voluntarily or
otherwise), dissolution or reorganisation or for the
appointment of a receiver, administrator, administrative
receiver, trustee or similar officer of all or any material
part of its assets and revenues or any analogous
proceedings in any jurisdiction or appointed any analogous
person in any jurisdiction which in any case is material in
the context of the Wider T&S Group taken as a whole;
(xi) been unable, or admitted in writing that it is unable, to
pay its debts or having stopped or suspended (or threatened
to stop or suspend) payment of its debts generally or
ceased or threatened to cease carrying on all or a
substantial part of its business in any case which is or
would be material in the context of the Wider T&S Group
taken as a whole;
(xii) waived or compromised any claim which is material in
the context of the Wider T&S Group taken as a whole;
(xiii) made any alteration to its memorandum or articles of
association;
(xiv) entered into any agreement, commitment or arrangement or
passed any resolution or made any offer (which remains open
for acceptance) or proposed or announced any intention with
respect to any of the transactions, matters or events
referred to in this condition (h);
(i) since 29 December 2001 and except as disclosed in T&S' annual
report and accounts for the year then ended, or in T&S' interim
report for the 26 weeks ended 29 June 2002, or as otherwise
publicly announced by T&S (by the delivery of an announcement to
a Regulatory Information Service) prior to 30 October 2002 or as
otherwise fairly disclosed in writing to Tesco by or on behalf of
T&S prior to 30 October 2002:
(i) there having been no adverse change in the business, assets,
financial or trading positions or profit or prospects of any
member of the Wider T&S Group which in any such case is
material in the context of the Wider T&S Group taken as a
whole;
(ii) no contingent or other liability of any member of the Wider
T&S Group having arisen or become apparent or increased which
in any such case is material and adverse in the context of
the Wider T&S Group taken as a whole;
(iii) no litigation, arbitration proceedings, prosecution or other
legal proceedings to which any member of the Wider T&S Group
is or may become a party (whether as plaintiff, defendant or
otherwise) having been threatened, announced, implemented or
instituted by or against or remaining outstanding against or
in respect of any member of the Wider T&S Group which in any
such case is material and adverse in the context of the Wider
T&S Group taken as a whole; and
(iv) (other than as a result of the Offer) no enquiry or
investigation by, or complaint or reference to, any Third
Party having been threatened, announced, implemented,
instituted by or against or remaining outstanding against or
in respect of any member of the Wider T&S Group which in any
such case is material and adverse in the context of the Wider
T&S Group taken as a whole;
(j) Tesco not having discovered:
(i) that any financial or business or other information concerning
the Wider T&S Group disclosed at any time by or on behalf of
any member of the Wider T&S Group, whether publicly, to any
member of the Wider Tesco Group or otherwise, is misleading or
contains any misrepresentation of fact or omits to state a fact
necessary to make any information contained therein not
misleading and which was not subsequently corrected before 30
October 2002 by disclosure either publicly or otherwise to
Tesco to an extent which in any such case is material and
adverse in the context of the Wider T&S Group taken as a whole;
(ii) that any member of the Wider T&S Group is subject to any
liability (actual or contingent) which is not disclosed in T&S'
annual report and accounts for the financial year ended 29
December 2001 or in T&S' interim report for the 26 weeks ended
29 June 2002 and which in any such case is material and adverse
in the context of the Wider T&S Group taken as a whole; or
(iii) any information which affects the import of any information
disclosed at any time by or on behalf of any member of the
Wider T&S Group to an extent which is material and adverse in
the context of the Wider T&S Group taken as a whole;
(k) Tesco not having discovered:
(i) that save as fairly disclosed either publicly or to
Tesco by or on behalf of T&S prior to 30 October 2002
any past or present member of the Wider T&S Group has
not complied with any applicable legislation or
regulations of any relevant jurisdiction with regard
to the use, treatment, handling, storage, transport,
release, 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, animal
or creature, or that there has otherwise been any such
use, treatment, handling, storage, transport, release,
disposal, discharge, spillage, leak or emission
(whether or not this constituted a non-compliance by
any person with any legislation or regulations and
wherever the same may have taken place) which, in any
case, would be likely to give rise to any liability
(whether actual or contingent, civil or criminal) or
cost on the part of any member of the Wider T&S Group
which in any case is material in the context of the
Wider T&S Group taken as a whole;
(ii) that save as fairly disclosed either publicly or to
Tesco by or on behalf of T&S prior to 30 October 2002
there is, or is likely to be, any liability, whether
actual or contingent, to make good, alter, improve,
repair, reinstate, clean up or otherwise assume
responsibility for any property now or previously
owned, occupied, made use of or in respect of which a
guarantee or other similar obligation has been assumed
by any past or present member of the Wider T&S Group
or any other property or clean up any controlled
waters or other pollution caused by its occupation or
control of any such property 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 the Wider T&S Group taken
as a whole; or
(iii) save as fairly disclosed either publicly or to Tesco
by or on behalf of T&S prior to 30 October 2002 that
circumstances exist whereby a person or class of
persons would be likely to have a claim in respect of
any product or process of manufacture or materials
used therein now or previously manufactured, sold or
carried out by any past or present member of the Wider
T&S Group which is or would be material in the context
of the Wider T&S Group taken as a whole.
For the purpose of these conditions:
(a) 'Authorisations' means authorisations, orders, grants,
recognitions, determinations, certificates, confirmations,
consents, licences, clearances, provisions and approvals;
(b) 'Third Party' means any 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
whatsoever in any relevant jurisdiction;
(c) a Third Party shall be regarded as having 'intervened' if it has
decided to take, institute, implement or threaten any action,
proceeding, suit, investigation, enquiry or reference or made,
proposed or enacted any statute, regulation, decision or order
or taken any measures or other steps or required any action to
be taken or information to be provided or otherwise having done
anything and 'intervene' shall be construed accordingly.
2. Certain further terms of the Offer
Subject to the requirements of the Panel, Tesco reserves the right
to waive all or any of the above conditions, in whole or in part,
except conditions 1(a) and 1(b). If the Panel requires Tesco to make
an offer for T&S Shares under the provisions of Rule 9 of the City
Code, Tesco may make such alterations to the conditions of the Offer,
including to condition 1(a), as are necessary to comply with the
provisions of that Rule.
Each of conditions 1(a) to 1(k) shall be regarded as a separate
condition and shall not be limited by reference to any other
condition.
The Offer will lapse unless conditions 1(b) to 1(k) inclusive have
been fulfilled or (if capable of waiver) waived by midnight on the day
which is 21 days after the later of (i) the first closing date of the
Offer and (ii) the date on which condition 1(a) is fulfilled or
becomes or is declared fulfilled (or such later date as Tesco with the
consent of the Panel, may agree). Tesco shall be under no obligation
to waive (if so capable of waiver) or treat as fulfilled any of the
conditions 1(b) to 1(k) until the latest date for the fulfilment of
such conditions referred to in the previous sentence notwithstanding
that the other conditions of the Offer may at such earlier date have
been waived or fulfilled and that there are at such earlier date no
circumstances indicating that any of such conditions may not be
capable of fulfilment.
If the Offer lapses, the Offer will cease to be capable of further
acceptance and the T&S Shareholders accepting the Offer and Tesco
shall thereupon cease to be bound by acceptances delivered on or
before the date on which the Offer so lapses.
The Offer will lapse (unless otherwise agreed by the Panel) if the
Acquisition is referred to the Competition Commission before the later
of 3.00 p.m. on the first closing date of the Offer and the date when
the Offer becomes or is declared unconditional as to acceptances. In
such a case, the Offer will cease to be capable of further acceptance
and T&S Shareholders accepting the Offer and Tesco shall thereupon
cease to be bound by acceptances delivered on or before the date on
which the Offer lapses.
The T&S Shares will be acquired by Tesco fully paid up and free
from all liens, equities, charges, encumbrances and other third party
rights and/or interests and together with all rights now or hereafter
attaching thereto, including the right to receive and retain all
dividends, interest and other distributions declared, made or paid
hereafter save as set out in this announcement.
The Offer will be on the terms and will be subject to the
conditions which are set out in part 1 above and those terms and
conditions which will be set out in the Offer Document and in the Form
of Acceptance and such further terms as may be required to comply with
the Listing Rules of the UK Listing Authority and the applicable rules
and regulations of the Financial Services Authority, the London Stock
Exchange and the provisions of the City Code. The Offer and any
acceptances thereunder will be governed by English law and will be
subject to the jurisdiction of the courts of England.
Fractions of new Tesco Shares will not be allotted or issued
pursuant to the Offer but will be aggregated and retained for the
benefit of Tesco.
Appendix II
Sources and bases
(i) Unless otherwise stated, financial information concerning T&S
has been derived from the T&S Annual Report and Accounts and
the T&S Interim Statement.
(ii) Free cash flow is defined as cash before financing, adjusted
for dividends paid.
(iii) Unless otherwise stated, financial information concerning
Tesco has been derived from the Tesco Annual Report and
Accounts and the Tesco Interim Statement.
(iv) References to the value of the Offer are based on 82,924,903
T&S Shares in issue and to be issued. The closing middle
market price of T&S is derived from Bloomberg for the
relevant date.
(v) Fully diluted share capital data for T&S is derived from
information provided by T&S relating to the number of
unexercised options over T&S Shares.
Financial effects of acceptance
The following table sets out, for illustrative purposes only, on
the bases and assumptions set out in the notes below, the financial
effects on capital value and gross income for a holder of 100 T&S
Shares validly accepting the Offer, assuming the Offer becomes or is
declared unconditional in all respects:
(i) Increase in capital value Notes Offer (£)
Market value of 224.14 Tesco Shares (1) 455.00
Market value of 100 T&S Shares (2) 359.00
-----------
Increase in capital value 96.00
Representing an increase of: 26.7%
(ii) Gross income effect Notes Offer (£)
Gross dividend from 224.14 Tesco Shares (3) 14.44
Gross dividend from 100 T&S Shares (4) 13.69
-----------
Increase in gross income 0.75
Representing an increase of: 5.5%
*T
Notes:
1. The market value of Tesco Shares is based on the closing middle
market quotation of a Tesco Share of 203 pence as derived from
Bloomberg at the close of business on 29 October 2002, the last
business day prior to the date of this announcement.
2. The market value of T&S Shares is based on the closing middle
market quotation of a T&S Share of 359 pence as derived from
Bloomberg at the close of business on 29 October 2002, the last
business day prior to the date of this announcement.
3. The gross dividend income on Tesco Shares is based on the
aggregate of:
a. the final dividend of 3.93p (net) per Tesco Share paid in
respect of the 52 weeks ended 23 February 2002 together with
an associated tax credit of one-ninth of the amount paid; and
b. the interim dividend of 1.87p (net) per Tesco Share paid in
respect of the 24 weeks ended 10 August 2002 together with an
associated tax credit of one-ninth of the amount paid.
4. The gross dividend income on T&S Shares is based on the
aggregate of:
c. the final dividend of 7.4p (net) per T&S Share paid in respect
of the 52 weeks ended 29 December 2001 together with an
associated tax credit of one-ninth of the amount paid; and
d. the interim dividend of 4.92p (net) per T&S Share paid in
respect of the 26 weeks ended 29 June 2002 together with an
associated tax credit of one-ninth of the amount paid.
5. No account has been taken of any liability to taxation (except
as mentioned in note 3 and 4 above).
Appendix III
Definitions
The following definitions apply throughout this announcement
unless the context otherwise requires:
Acquisition means the proposed acquisition of T&S by Tesco to be
effected by means of the Offer;
City Code means the City Code on Takeovers and Mergers;
Companies Act means the Companies Act 1985 (as amended);
CSFB means Credit Suisse First Boston (Europe) Limited;
Enlarged Tesco Group means Tesco Group as enlarged by the
Acquisition;
Form of Acceptance means the form of acceptance and authority for
use in connection with the Offer and which is to be despatched with
the Offer Document;
Greenhill means Greenhill & Co. International LLP;
ING Barings means ING Barings Limited;
Listing Rules means the listing rules of the UK Listing Authority;
London Stock Exchange means London Stock Exchange plc;
new Tesco Shares means the new Tesco Shares to be issued to T&S
Shareholders credited as fully paid pursuant to the Offer;
Offer means the recommended offer to be made by Greenhill on
behalf of Tesco on the terms and subject to the conditions set out in
this announcement and the terms to be set out in the Offer Document
and the Form of Acceptance to acquire all of the T&S Shares
(including, where the context so requires, any subsequent revision,
variation, extension or renewal of such offer);
Offer Document means the document to be sent to T&S Shareholders
setting out the terms and conditions of the Offer and, where
appropriate, any other document(s) containing terms and conditions of
the Offer constituting the full terms and conditions of the Offer;
Official List means the Official List of the UK Listing Authority;
Panel means the Panel on Takeovers and Mergers;
Regulatory Information Service means any of the services set out
in Schedule 12 to the Listing Rules;
Rothschild means N M Rothschild & Sons Limited;
Substantial Interest means a direct or indirect interest in 20 per
cent. or more of the voting equity capital of an undertaking;
T&S means T&S Stores Plc;
T&S Annual Report and Accounts means the annual report and
accounts of T&S for the 52 weeks ended 29 December 2001;
T&S Directors means the current directors of T&S Stores plc;
T&S Group means T&S and its subsidiary undertakings;
T&S Interim Statement means the interim statement of T&S for the
26 week period ended 29 June 2002;
T&S Option Schemes means the T&S Savings Related Share Option
Scheme, the T&S Share Option Scheme, the T&S Approved Executive Share
Option Scheme, the T&S (1995) Share Option Scheme, the T&S Annual
Incentive Plan and the T&S Long Term Incentive Plan;
T&S Options means options or other rights to acquire T&S Shares
(or as of the Unconditional Date, Tesco Shares) under the T&S Option
Schemes outstanding on the Unconditional Date;
T&S Shareholders means holders of T&S Shares;
T&S Shares means the existing unconditionally allotted or issued
and fully paid (or credited as a fully paid) ordinary shares of 5p
each in the capital of T&S and any further such shares which are
unconditionally allotted or issued before the Offer closes or before
such earlier date as Tesco (subject to the City Code) may determine
not being earlier than the date on which the Offer becomes or is
declared unconditional as to acceptances;
Tesco means Tesco PLC;
Tesco Directors means the current directors of Tesco plc;
Tesco Group means Tesco and its subsidiary undertakings;
Tesco Shareholders means holders of Tesco Shares;
Tesco Shares means ordinary shares of 5p each in Tesco;
UK Listing Authority means the Financial Services Authority in its
capacity as the competent authority for the purposes of Part VI of the
Financial Services and Markets Act 2000;
UK or United Kingdom means the United Kingdom of Great Britain and
Northern Ireland;
Unconditional Date means the date on which the Offer becomes or is
declared unconditional in all respects;
United States of America, US or United States means the United
States of America, its possessions and territories, any State of the
United States and the District of Columbia;
US Securities Act means the United States Securities Act of 1933,
as amended;
Wider T&S Group means T&S and the subsidiaries and subsidiary
undertakings of T&S and associated undertakings (including any joint
venture, partnership, firm or company in which any member of the T&S
Group is interested) or any undertaking in which T&S and such
undertakings (aggregating their interests) have a Substantial
Interest; and
Wider Tesco Group means Tesco and the subsidiaries and subsidiary
undertakings of Tesco and associated undertakings (including any joint
venture, partnership, firm or company in which any member of the Tesco
Group is interested) or any undertaking in which Tesco and such
undertakings (aggregating their interests) have a Substantial
Interest.
For the purposes of this announcement, subsidiary, subsidiary
undertaking, undertaking, associated undertaking have the meaning
given by the Companies Act 1985 (but for this purpose ignoring
paragraph 20(1)(b) of Schedule 4A of the Companies Act 1985).
Short Name: Tesco PLC
Category Code: OFF
Sequence Number: 00001091
Time of Receipt (offset from UTC): 20021030T073850+0000
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