Offer for Beazer Group-Part 1
Persimmon PLC
24 January 2001
Part 1
Not for release, publication or distribution in or into the
United States of America, Canada, Australia or Japan
Persimmon plc
Final* offer for
Beazer Group Plc
Summary
The Board of Persimmon plc ('Persimmon') announces a final offer to be made by
ABN AMRO Corporate Finance Limited on behalf of Persimmon for the entire
issued and to be issued share capital of Beazer Group Plc ('Beazer').
- Under the terms of the Offer, Beazer Shareholders will receive 109p
in cash and 0.3086 New Persimmon Shares for each Beazer Share. A Mix
and Match Election will also be available.
- The Offer values each Beazer Share at approximately 188p. The Offer
includes the right to receive the Persimmon forecast final dividend.
The Offer values the entire existing issued share capital of Beazer
at approximately £537.5 million, based on the closing price of 256p
per Persimmon Share on 23rd January, 2001.
- The Offer represents:
- a premium of approximately 43.0 per cent. over the closing price
of 131.5p per Beazer Share on 13th December, 2000, the date
before the announcement of Beazer's merger with Bryant Group plc
('Bryant');
- a premium of approximately 15.0 per cent. over the closing price
of 163.5p per Beazer Share on 10th January, 2001, the date before
Taylor Woodrow plc announced that it had approached the Board of
Bryant; and
- a premium of approximately 6.5 per cent. over the closing price
of 176.5p per Beazer Share on 23rd January, 2001.
- By comparison with Persimmon's indicative offer for Beazer announced
on 19th January, 2001 ('Indicative Offer'):
- the Offer represents an increase of approximately £47 million in
the cash consideration payable to Beazer Shareholders;
*The Offer is final and will not be revised or increased. However,
Persimmon reserves the right to amend, improve, revise, increase or change
the terms of the Offer in the event of a revised offer from Bryant or any
other competitive situation arising or otherwise with the consent of the
Panel, and Persimmon reserves the right to introduce a loan note
alternative.
- the New Persimmon Shares issued pursuant to the Offer will carry
the right to receive the forecast final dividend of 8.5p per
Persimmon Share, which is equivalent to 2.6p per Beazer Share;
and
- the Offer therefore represents an increase of 6.2p per Beazer
Share, after adjusting the value of the Indicative Offer for the
Persimmon forecast final dividend, which would not have been
received by Beazer Shareholders under the Indicative Offer.
- The Board of Persimmon is forecasting the payment of a final dividend
of 8.5p per Persimmon Share for the year ended 31st December, 2000.
- The Offer is conditional on the merger of Bryant and Beazer lapsing.
The Board of Persimmon notes and welcomes the announcement that the
Board of Bryant has proposed the adjournment of the extraordinary
general meeting previously adjourned to Friday 26th January, 2001,
without proposing the resolution to approve the merger with Beazer.
- The Offer would create the UK's largest housebuilder with turnover of
approximately £1.6 billion and operating profit of £209 million, a
land bank of approximately 58,000 plots and a strategic land
portfolio of over 19,000 acres, all on a pro forma basis for the 12
months to 30th June, 2000.
- The geographic fit of the Enlarged Persimmon Group is compelling.
Persimmon would gain entry into the regional markets in the West
Midlands, Essex and Cumbria and further strengthen its position in
Scotland, the North, the Midlands, the South East, the South West and
in South Wales.
- The Persimmon Directors estimate that the successful completion of
the Acquisition would result in pre-tax cost-savings in excess of £20
million, from rationalising the combined regional office structure
and other identified cost-savings*. In addition to these cost
savings, further benefits would arise from maximising sales revenue
and the enhanced purchasing power of the Enlarged Persimmon Group.
- In the first year following the completion of the Acquisition,
Persimmon would manage the land bank in such a way as to release cash
of approximately £175 million in order to reduce the debt of the
Enlarged Persimmon Group.
- The Acquisition would be significantly earnings enhancing in the
first year before the cost savings and synergy benefits referred to
above**.
- The Enlarged Persimmon Group would continue Persimmon's strategy of
focusing on further enhancing profit margins and return on capital
employed.
- Due to its size, the Offer will also be conditional on, inter alia,
the approval of Persimmon Shareholders at an Extraordinary General
Meeting.
- Formal offer documentation will be posted as soon as practicable.
*This statement of estimated cost savings should be read in conjunction with
the notes set out in Appendix IV to this announcement. For the reasons set out
in such notes, the cost savings referred to may not be achieved, or those
achieved could be materially different from those estimated.
**This statement regarding earnings enhancement does not constitute a profit
forecast and should not be interpreted to mean that the earnings per share for
any period following the Offer will necessarily be greater than those for the
relevant preceding financial period.
Comment from the Chairman of Persimmon
Commenting on today's announcement, Duncan Davidson, the Chairman of
Persimmon, said:
'The Persimmon Offer delivers superior value to Beazer Shareholders. It
contains a substantial cash element and also offers an opportunity to be part
of the UK's leading housebuilder. As shareholders in the Enlarged Persimmon
Group, Beazer Shareholders would benefit from Persimmon's proven record for
integrating acquisitions and delivering value to shareholders.
We look forward to our Offer being positively received by the Board of Beazer
and its shareholders and to welcoming Beazer's customers, staff and
shareholders to the Persimmon Group.'
Analysts' meeting
There will be a presentation to analysts at 9.30 a.m. today at The City
Presentation Centre, Finsbury Square, 4 Chiswell Street, London EC1Y 4UP.
ABN AMRO Corporate Finance Limited is acting as financial adviser to Persimmon
and Hoare Govett Limited is acting as corporate broker. The financing of the
cash element of the Offer has been jointly arranged by The Royal Bank of
Scotland plc and Lloyds TSB Bank plc.
This summary should be read in conjunction with the full text of the following
announcement.
Press enquiries:
Persimmon plc John White, 020 7251 3801
Group Chief Executive (24th January only)
ABN AMRO Corporate Julian Goodwin 020 7678 8000
Finance Limited
Hoare Govett Limited Ranald McGregor-Smith 020 7678 8000
Finsbury Ed Orlebar 020 7251 3801
Faeth Finnemore
The Offer will not be made, directly or indirectly, in or into, or by the use
of mails or any means or instrumentality (including, without limitation,
telephonically or electronically) of interstate or foreign commerce of, or any
facility of a national securities exchange of, the United States of America,
Canada, Australia or Japan and the Offer will not be capable of acceptance by
any such use, means, instrumentality or facilities from within the United
States of America, Canada, Australia or Japan.
Accordingly, copies of this announcement are not being, and must not be,
mailed or otherwise forwarded, distributed or sent in or into or from the
United States of America, Canada, Australia or Japan and persons receiving
this announcement (including custodians, nominees and trustees) must not mail
or otherwise forward, distribute or send it into or from the United States of
America, Canada, Australia or Japan. Doing so may render invalid any
purported acceptance.
The availability of the Offer to persons who are not resident in the United
Kingdom may be affected by the laws of the relevant jurisdictions. Persons who
are not resident in the United Kingdom should inform themselves about and
observe any applicable requirements.
The New Persimmon Shares have not been, nor will they be, registered under the
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 of Canada; no prospectus has been lodged
with, or registered by, the Australian Securities and Investments Commission
or the Japanese Ministry of Finance; and the New Persimmon Shares have not
been, 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 New Persimmon 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 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, an
Overseas Shareholder.
ABN AMRO Corporate Finance Limited, which is regulated in the United Kingdom
by The Securities and Futures Authority Limited, is acting for Persimmon and
no-one else in connection with the Offer and will not be responsible to anyone
other than Persimmon for providing the protections afforded to customers of
ABN AMRO Corporate Finance Limited nor for giving advice in relation to the
Offer.
Hoare Govett Limited, which is regulated in the United Kingdom by The
Securities and Futures Authority Limited, is acting for Persimmon and no-one
else in connection with the Offer and will not be responsible to anyone other
than Persimmon for providing the protections afforded to customers of Hoare
Govett Limited nor for giving advice in relation to the Offer.
This announcement does not constitute an offer or an invitation to purchase
any securities.
Not for release, publication or distribution in or into the
United States of America, Canada, Australia or Japan
Persimmon plc
Final* offer for
Beazer Group Plc
1. INTRODUCTION
The Board of Persimmon plc ('Persimmon') announces a final offer to be made by
ABN AMRO Corporate Finance Limited on behalf of Persimmon for the entire
issued and to be issued share capital of Beazer Group Plc ('Beazer'). The
Offer will be conditional on the merger of Bryant Group plc ('Bryant') and
Beazer lapsing.
Due to its size, the Offer will be conditional on, inter alia, the approval of
Persimmon Shareholders at an Extraordinary General Meeting.
2. THE OFFER
The Offer, which will be subject, inter alia, to the conditions and further
terms summarised below and set out in Appendix I and to be set out in full in
the Offer Document and the accompanying Form of Acceptance, will be made on
the following basis:
For each Beazer Share 109p in cash
and
0.3086 New Persimmon Shares
and so in proportion for any other number of Beazer Shares held.
The Offer values each Beazer Share at approximately 188p. The Offer includes
the right to receive the Persimmon forecast final dividend. The Offer values
the entire existing issued share capital of Beazer at approximately £537.5
million, based on the closing price of 256p per Persimmon Share on 23rd
January, 2001. This represents:
- a premium of approximately 43.0 per cent. over the closing
price of 131.5p per Beazer Share on 13th December, 2000, the
date before the announcement of Beazer's merger with Bryant;
- a premium of approximately 15.0 per cent. over the closing
price of 163.5p per Beazer Share on 10th January, 2001, the
date before Taylor Woodrow plc announced that it had
approached the Board of Bryant; and
- a premium of approximately 6.5 per cent. over the closing
price of 176.5p per Beazer Share on 23rd January, 2001.
*The Offer is final and will not be revised or increased. However,
Persimmon reserves the right to amend, improve, revise, increase or
change the terms of the Offer in the event of a revised offer from
Bryant or any other competitive situation arising or otherwise with
the consent of the Panel, and Persimmon reserves the right to
introduce a loan note alternative.
By comparison with Persimmon's indicative offer for Beazer announced
on 19th January, 2001 ('Indicative Offer'):
- the Offer represents an increase of approximately £47
million in the cash consideration payable to Beazer
Shareholders;
- the New Persimmon Shares issued pursuant to the Offer will
carry the right to receive the forecast final dividend of
8.5p per Persimmon Share, which is equivalent to 2.6p per
Beazer Share; and
- the Offer therefore represents an increase of 6.2p per
Beazer Share, after adjusting the value of the Indicative
Offer for the Persimmon forecast final dividend, which would
not have been received by Beazer Shareholders under the
Indicative Offer.
The Board of Persimmon is forecasting the payment of a final dividend
of 8.5p per Persimmon Share for the year ended 31st December, 2000.
A Mix and Match Election will be made available under which Beazer
Shareholders may elect, subject to availability, to vary the proportions in
which they receive New Persimmon Shares and cash in respect of their holdings
in Beazer.
Further details of the financial effects of acceptance of the Offer are set
out in Appendix II.
Beazer Shares will be acquired by Persimmon fully paid and free from all
liens, charges, equities, equitable interests, encumbrances and other third
party rights and interests of any nature whatsoever, and together with all
rights now and hereafter attaching thereto, including the right to receive and
retain in full all dividends and other distributions declared, made or paid
after the date of this announcement other than the interim dividend of 2.9p
per Beazer Share declared on 14th December, 2000 to Beazer shareholders on the
register on 8th January, 2001.
The New Persimmon Shares to be issued in connection with the Offer will be
issued credited as fully paid and will rank pari passu in all respects with
existing Persimmon Shares, together with the right to receive and retain in
full all dividends and other distributions declared, made or paid after the
date of this announcement, and including any dividend to be paid to Persimmon
Shareholders in respect of the financial year ended 31st December, 2000.
Application will be made to the UK Listing Authority for the New Persimmon
Shares to be admitted to the Official List, and to the London Stock Exchange
for the New Persimmon Shares to be admitted to trading on the London Stock
Exchange's market for listed securities.
Fractions of New Persimmon Shares will not be allotted to Beazer Shareholders
and their entitlements will be rounded down to the nearest whole number of New
Persimmon Shares.
3. BACKGROUND TO AND REASONS FOR THE OFFER
Introduction
The growth of the Persimmon Group has been achieved through a combination of
organic expansion and acquisition. Persimmon's acquisition of the Ideal Homes
Group in 1996 remains one of the largest completed transactions in the UK
house-building sector to date. Early last year two new divisions, Persimmon
Homes South and Persimmon Homes North, were created in order to position
Persimmon for further growth and expansion across all of its businesses.
The Enlarged Persimmon Group
The Persimmon Directors believe that Beazer has a compelling strategic and
geographic fit with Persimmon and that the Enlarged Group would be the leading
force in UK housebuilding. On a pro forma basis for the twelve months to 30th
June, 2000, the Enlarged Persimmon Group would have turnover of approximately
£1.6 billion and operating profit of £209 million.
The geographic spread of the Enlarged Persimmon Group would be well balanced.
Persimmon would gain entry into regional markets in the West Midlands, Essex
and Cumbria complementing Persimmon's geographic strengths in Scotland, the
North including Yorkshire, the Midlands, the South East, the South West and in
South Wales.
Persimmon intends to expand the Charles Church brand to sales of 1,000 units a
year by 2002. Including the Charles Church business, Persimmon intends to
rationalise the Beazer portfolio to create an enlarged group with sales of
13,000 to 14,000 units a year distributed between Persimmon's North and South
divisions.
The Enlarged Persimmon Group would control the largest land bank in the UK
housebuilding industry, with approximately 58,000 plots (well-balanced between
greenfield and brownfield sites) and a strategic land portfolio of over 19,000
acres. This would place the Enlarged Persimmon Group in a strong position to
respond effectively to the requirements of the current planning environment.
In the first year following the completion of the Acquisition, Persimmon would
manage the land bank in such a way as to release cash of approximately £175
million in order to reduce the debt of the Enlarged Persimmon Group. The net
gearing of the Enlarged Persimmon Group on completion of the Acquisition would
be approximately 100 per cent, with a targeted reduction to approximately 70
per cent. by 31st December, 2001.
Shareholder value and earnings enhancement
The Persimmon Directors estimate that successful completion of the Acquisition
would result in pre-tax cost savings in excess of £20 million per annum from
rationalising the combined regional office structure and other identified
cost-savings*. The one-off costs of achieving these cost savings are
estimated to be in the region of £12 million**. In addition to these cost
savings, further benefits would arise from maximising sales revenue and the
enhanced purchasing power of the Enlarged Persimmon Group.
*This statement of estimated cost savings should be read in conjunction with
the notes set out in Appendix IV to this announcement. For the reasons set out
in such notes, the cost savings referred to may not be achieved, or those
achieved could be materially different from those estimated.
**This has been based on the figures in the Bryant/Beazer merger document and
the assumptions that the costs of achieving the cost savings referred in the
Bryant/Beazer merger document would be the same for Persimmon. This figure
has not been independently verified and may change once the Acquisition has
been completed.
The Persimmon Directors believe that the successful completion of the
Acquisition will create value for shareholders in the Enlarged Persimmon Group
and result in significant earnings enhancement in the first year before the
cost savings and synergy benefits mentioned above and before the amortisation
of goodwill arising on the acquisition of Beazer***.
***This statement regarding earnings enhancement is not a profit forecast and
should not be interpreted to mean that the earnings per share for any period
following the Offer will necessarily be greater than those for the relevant
preceding financial period.
The Persimmon Directors also believe that the Offer provides an attractive
opportunity for Beazer Shareholders to become shareholders in what would be
the UK's leading housebuilder. As shareholders in the Enlarged Persimmon
Group, Beazer Shareholders would share in the significant ongoing benefits
which are expected to arise following successful completion of the
Acquisition.
The Enlarged Persimmon Group would continue Persimmon's strategy of focusing
on further enhancing profit margins and the return on capital employed through
efficient use of the land bank and optimisation of the capital structure.
4. INFORMATION RELATING TO PERSIMMON
Persimmon is one of the UK's leading housebuilders. It develops, designs and
builds a wide variety of quality homes throughout the UK with a focus on the
middle-to-upper sector of the market and has a national network of 20 offices.
The market capitalisation of Persimmon is approximately £468.4 million.
Summary financial information extracted, without material adjustment, from
Persimmon's results for the years ended 31st December, 1997, 31st December,
1998 and 31st December, 1999 is set out in the table below:
1997 1998 1999
Turnover £525.5m £572.4m £695.9m
Operating profit £61.5m £73.2m £92.2m
Profit before tax £50.5m £60.5m £81.6m
EPS (before 21.3p 25.1p 32.1p
exceptional items)
Net assets £293.4m £320.7m £363.7m
Number of unit 6,521 6,483 7,101
completions
5. INFORMATION RELATING TO BEAZER
Beazer is one of the UK's largest housebuilders and has a multi-brand strategy
which spans family/mainstream, exclusive and social housing.
Summary financial information extracted, without material adjustment, from
Beazer's results for the years ended 30th June, 1998, 30th June, 1999 and 30th
June, 2000 is set out in the table below:
1998 1999 2000
Turnover £631.0m £701.7m £840.6m
Operating profit £84.2m £91.7m £104.0m
Profit before tax £79.2m £81.6m £94.4m
EPS (before 20.06p 20.92p 24.10p
exceptional items)
Net assets £324.1m £362.6m £406.9m
Number of UK unit 7,776 7,509 8,223
completions
6. FINANCING OF THE OFFER
The cash element of the Offer will be fully financed through committed loan
facilities to be made available to Persimmon. The committed facilities have
been jointly arranged by The Royal Bank of Scotland plc and Lloyds TSB Bank
plc.
7. THE MIX AND MATCH ELECTION
Beazer Shareholders may elect under the terms of the Offer, subject to
availability, to vary the proportions in which they receive New Persimmon
Shares and cash consideration in respect of their holdings of Beazer Shares.
However, the maximum number of New Persimmon Shares to be issued and the
maximum amount of cash consideration to be paid under the Offer will not be
varied as a result of Mix and Match Elections. Accordingly, the satisfaction
of Mix and Match Elections will be dependent upon the extent to which other
Beazer Shareholders make offsetting elections. To the extent that elections
cannot be satisfied in full, they will be scaled down on a pro rata basis.
As a result, Beazer Shareholders who make Mix and Match Elections will not
necessarily know the exact number of New Persimmon Shares or the amount of
cash they will receive until settlement of the consideration under the Offer.
The Mix and Match Election will not affect the entitlements of those Beazer
Shareholders who do not make Mix and Match Elections.
8. MANAGEMENT AND EMPLOYEES
Persimmon attaches great importance to the skills and experience of the
existing management and employees of the Beazer Group. Persimmon confirms that
the existing contractual employment rights of employees of the Beazer Group,
including pension rights, will be fully safeguarded.
9. BEAZER SHARE SCHEMES
The Offer will extend to any Beazer Shares issued or unconditionally allotted
prior to the date on which the Offer closes (or such earlier date as Persimmon
may, subject to the City Code, decide) as a result of the exercise of options
granted under the Beazer Share Schemes.
To the extent that such options are not exercised in full, it is intended that
appropriate proposals will be made to the holders of options under the Beazer
Share Schemes once the Offer becomes or is declared unconditional in all
respects.
10. DISCLOSURE OF INTERESTS IN BEAZER
As at the date of this announcement, Persimmon holds one Beazer Share.
Neither any of the Persimmon Directors nor, so far as Persimmon is aware, any
person acting in concert with Persimmon owns or controls any Beazer Shares or
holds any option to acquire any Beazer Shares or holds derivatives referenced
to Beazer Shares.
11. EXTRAORDINARY GENERAL MEETING
Due to its size, the Offer will be conditional on, inter alia, the approval of
Persimmon Shareholders at an Extraordinary General Meeting, which will be
convened for the purpose of passing the resolution required to approve and
implement the Acquisition. Persimmon has received irrevocable undertakings
from the Persimmon Directors and certain connected parties in respect of, in
aggregate, 19,077,605 Persimmon Shares in which they are interested (amounting
to 10.43 per cent. of the issued share capital of Persimmon) to vote in favour
of such resolution.
12. GENERAL
A circular to Persimmon Shareholders explaining the proposed Offer and
convening an Extraordinary General Meeting to approve the Acquisition, listing
particulars relating to Persimmon and the formal offer documentation will be
posted as soon as is practicable.
Appendix V contains definitions of the terms used in this announcement.
Press enquiries:
Persimmon plc John White, 020 7251 3801
Group Chief Executive (24th January only)
ABN AMRO Corporate Julian Goodwin 020 7678 8000
Finance Limited
Hoare Govett Limited Ranald McGregor-Smith 020 7678 8000
Finsbury Ed Orlebar 020 7251 3801
Faeth Finnemore
The Offer will not be made, directly or indirectly, in or into, or by the use
of mails or any means or instrumentality (including, without limitation,
telephonically or electronically) of interstate or foreign commerce of, or any
facility of a national securities exchange of, the United States of America,
Canada, Australia or Japan and the Offer will not be capable of acceptance by
any such use, means, instrumentality or facilities from within the United
States of America, Canada, Australia or Japan.
Accordingly, copies of this announcement are not being, and must not be,
mailed or otherwise forwarded, distributed or sent in or into or from the
United States of America, Canada, Australia or Japan and persons receiving
this announcement (including custodians, nominees and trustees) must not mail
or otherwise forward, distribute or send it into or from the United States of
America, Canada, Australia or Japan. Doing so may render invalid any
purported acceptance.
The availability of the Offer to persons who are not resident in the United
Kingdom may be affected by the laws of the relevant jurisdictions. Persons who
are not resident in the United Kingdom should inform themselves about and
observe any applicable requirements.
The New Persimmon Shares have not been, nor will they be, registered under the
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 of Canada; no prospectus has been lodged
with, or registered by, the Australian Securities and Investments Commission
or the Japanese Ministry of Finance; and the New Persimmon Shares have not
been, 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 New Persimmon 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 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, an
Overseas Shareholder.
ABN AMRO Corporate Finance Limited, which is regulated in the United Kingdom
by The Securities and Futures Authority Limited, is acting for Persimmon and
no-one else in connection with the Offer and will not be responsible to anyone
other than Persimmon for providing the protections afforded to customers of
ABN AMRO Corporate Finance Limited nor for giving advice in relation to the
Offer.
Hoare Govett Limited, which is regulated in the United Kingdom by The
Securities and Futures Authority Limited, is acting for Persimmon and no-one
else in connection with the Offer and will not be responsible to anyone other
than Persimmon for providing the protections afforded to customers of Hoare
Govett Limited nor for giving advice in relation to the Offer.
This announcement does not constitute an offer or an invitation to purchase
any securities.
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