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Norcros PLC (NCRO)

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Wednesday 06 October, 1999

Norcros PLC

Recommended Cash Offer - Pt.1

NORCROS PLC
6 October 1999


Part 1

Not for release, publication or distribution in or into the United States,
Canada, Australia or Japan.

                             RECOMMENDED CASH OFFER
                                       by
                                  DEUTSCHE BANK
                                  on behalf of
                               STORMGRANGE LIMITED
                                       for
                                 NORCROS p.l.c.

SUMMARY

*  The Board of Stormgrange and the Independent Directors of Norcros announce
that they have agreed the terms of a recommended cash offer, to be made by
Deutsche Bank on behalf of Stormgrange, to acquire the entire issued and to
be issued share capital of Norcros p.l.c.

*  The Offer, which will be recommended by the Independent Directors of
Norcros, who are being advised by ING Barings, will be made on the following
basis:

               For each Norcros Share   103 pence in cash

*  The Offer values the existing issued share capital of Norcros at
approximately £171 million.

*  The Offer represents a premium of approximately 8 per cent. to the closing
middle market price of 95.5 pence per Norcros Share on 5 October 1999, being
the last dealing day prior to this announcement. The Offer represents a
premium of approximately 26 per cent. to the closing middle market price of
82 pence per Norcros Share on 1 October 1999, being the last dealing day
prior to the announcement earlier this week that the Board of Norcros had
received a further approach from NWEP to take Norcros private. The Offer also
represents a premium of approximately 61 per cent. to the closing middle
market price of 64 pence per Norcros Share on 27 January 1999, being the last
dealing day prior to the date of the initial announcement earlier this year
that the Board of Norcros was in discussions which may or may not lead to an
offer.

*  Stormgrange is a company specifically established for the purpose of
making the Offer. Following the Offer becoming or being declared
unconditional in all respects and completion of the Shareholders' Agreement,
the principal shareholders of Stormgrange will be a nominee of the NWEP Funds
and Management (Joseph Matthews, Nicholas Kelsall and David Hamilton).

*  Stormgrange has received undertakings to accept or procure the acceptance
of the Offer from the directors of Norcros, including the Independent
Directors, and certain other Norcros Shareholders (including P and DFM,
Aberforth, M and G and Norwich Union) in respect of 73,819,064 Norcros Shares
in aggregate representing approximately 44.44 per cent. of Norcros's existing
issued share capital.

*  Commenting on the Offer, Hamish Bryce, the Chairman of Norcros said:
 'I am pleased that the strategic review which we initiated at the end of
1998 has resulted in this offer. The Independent Directors believe the offer
represents fair value for Norcros Shareholders and provides a firm base for
the future development of the Norcros group'.

 Enquiries:

For Stormgrange Limited                              
Stormgrange Limited/NWEP  Alastair Gibbons           0171 374 3444
Deutsche Bank             Mark Aedy                  0171 545 8000
                          Hilary Bowman              
                                                     
For Norcros p.l.c.                                   
Norcros p.l.c.            Hamish Bryce               0181 946 4405
ING Barings               Mark Burch                 0171 767 1000

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,
facsimile transmission, telex or telephone) 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.
Accordingly, copies of this announcement are not being, and must not be,
mailed or otherwise distributed or sent in, into or from the United States,
Canada, Australia or Japan and persons receiving such documents (including,
without limitation, custodians, nominees and trustees) must not distribute or
send them in, into or from the United States, Canada, Australia or Japan.
Doing so may render invalid any purported acceptance of the Offer.

Deutsche Bank, which is regulated in the United Kingdom by The Securities and
Futures Authority Limited, is acting for Stormgrange and no-one else in
connection with the Offer, and will not be responsible to any person other
than Stormgrange for providing the protections afforded to customers of
Deutsche Bank or for giving advice in relation to the Offer.

ING Barings, which is regulated in the United Kingdom by The Securities and
Futures Authority Limited, is acting for Norcros, acting through its
Independent Directors, and no-one else in connection with the Offer, and will
not be responsible to any person other than Norcros for providing the
protections afforded to customers of ING Barings or for giving advice in
relation to the Offer.

THIS SUMMARY SHOULD BE READ IN CONJUNCTION WITH THE FULL TEXT OF THE
FOLLOWING ANNOUNCEMENT.



Not for release, publication or distribution in or into the United States,
Canada, Australia or Japan.

                           RECOMMENDED CASH OFFER
                                     by
                                DEUTSCHE BANK
                                on behalf of
                            STORMGRANGE LIMITED
                                    for
                               NORCROS p.l.c.

1. Introduction
On 6 July 1999 it was announced that the offer talks in which the Board of
Norcros had been engaged relating to a possible proposal to take Norcros
private, backed by NatWest Equity Partners and involving participation by the
executive directors of Norcros, had been terminated. As announced on 4
October 1999, discussions in relation to such a proposal have recently
recommenced and the Board of Stormgrange and the Independent Directors of
Norcros announce that they have now reached agreement on the terms of a
recommended cash offer, to be made by Deutsche Bank on behalf of Stormgrange,
to acquire the entire issued and to be issued share capital of Norcros.

Stormgrange is a company specifically established for the purpose of making
the Offer. Following the Offer becoming or being declared unconditional in
all respects and completion of the Shareholders' Agreement, the principal
shareholders of Stormgrange will be a nominee of the NWEP Funds and
Management. In view of the involvement of the executive directors of Norcros
in the Offer, the Independent Directors of Norcros, Hamish Bryce and David
Stark, have taken responsibility for considering the Offer on behalf of
Norcros Shareholders and in doing so have taken advice from ING Barings.

The consideration under the Offer is 103 pence in cash for each Norcros
Share, which values the existing issued share capital of Norcros at
approximately £171 million.

The Offer represents a premium of approximately 61 per cent. to the closing
middle market price of 64 pence per Norcros Share on 27 January 1999, being
the last dealing day prior to the date of the announcement earlier this year
that the Board of Norcros was in the offer talks referred to above. The Offer
represents a premium of approximately 26 per cent. to the closing middle
market price of 82 pence per Norcros Share on 1 October 1999, being the last
dealing day prior to the announcement earlier this week that the Board of
Norcros had received a further approach from NWEP to take Norcros private.
Stormgrange has received undertakings to accept or procure the acceptance of
the Offer from the directors of Norcros, including the Independent Directors,
and certain other Norcros Shareholders in respect of 73,819,064 Norcros
Shares in aggregate representing approximately 44.44 per cent. of Norcros's
existing issued share capital. Further details of these undertakings are set
out in paragraph 8 below.

The Independent Directors, Hamish Bryce and David Stark, who have been so
advised by ING Barings, consider the terms of the Offer to be fair and
reasonable. In providing advice to the Independent Directors, ING Barings has
taken into account the Independent Directors' commercial assessment.
Accordingly, the Independent Directors will be recommending Norcros
Shareholders to accept the Offer, as they have irrevocably undertaken to do
in respect of their own beneficial interests comprising 64,904  Norcros
Shares in aggregate, representing approximately 0.04 per cent. of Norcros's
existing issued share capital.

Certain terms used in this announcement are defined in Appendix III to this
announcement.

2. The Offer
The Offer, which will be subject to the conditions and further terms
summarised below and in Appendix I to this announcement and which will be set
out in full in the Offer Document and the accompanying form of acceptance,
will be made on the following basis:

               For each Norcros Share   103 pence in cash

The Offer represents a premium of approximately 8 per cent. to the closing
middle market price, as derived from the Official List, of 95.5 pence per
Norcros Share on 5 October 1999, being the last dealing day prior to the date
of this announcement. The Offer represents a premium of approximately 26 per
cent. to the closing middle market price, as derived from the Official List,
of 82 pence per Norcros Share on 1 October 1999, being the last dealing day
prior to the announcement earlier this week that the Board of Norcros had
received a further approach from NWEP to take Norcros private. The Offer also
represents a premium of approximately 61 per cent. to the closing middle
market price, as derived from the Official List, of 64 pence per Norcros
Share on 27 January 1999, being the last dealing day prior to the date of the
initial announcement earlier this year that the Board of Norcros was in
discussions which may or may not lead to an offer.

The Norcros Shares will be acquired by Stormgrange pursuant to the Offer
fully paid and free from all liens, equities, charges, encumbrances, rights
of pre-emption and other third party rights and interests of any nature
whatsoever 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 on or after the date of this
announcement.

3. Financial effects of acceptance of the Offer
Details of the financial effects of acceptance of the Offer are set out in
Appendix II to this announcement.

4. Background to and reasons for the Offer
During the course of 1995, the Board of Norcros took the decision to
restructure the Norcros group around the core businesses of ceramic tiles,
adhesives and showers by disposing of certain of its building products and
print and packaging businesses. The aim of the restructuring was to focus on
a more cohesive group of businesses, to strengthen the Norcros group balance
sheet and to improve overall profitability through cost savings and the
elimination of loss making businesses.

Over the past four years, Norcros has systematically implemented the
restructuring through a number of disposals, including five building products
businesses and DSRM, NorSystems, P.P.Payne and the two operating divisions of
Norprint. The Board of Norcros decided to retain Autotype following a
significant turnaround in the performance of that business and an assessment
of its medium term prospects.

The restructuring has also involved Norcros making a number of 'in-fill'
acquisitions in its core businesses, including acquiring the outstanding
interests in Norcros's adhesives businesses, BAL, ABA and TAL, and acquiring
Dunlop Adhesives. At the same time, Norcros has actively sought to reduce
costs.  With the restructuring programme now completed, the Board of Norcros
believes the group is well positioned in its chosen markets.

However, the Board was disappointed to see that, despite the restructuring
and the improvement in the Group's profitability, the price of Norcros Shares
declined significantly over the three years leading up to the end of 1998.
The Board believes that this was principally due to the fall from favour of
the building products and speciality chemicals sectors during this period,
combined with generally adverse UK investor sentiment towards smaller
capitalisation and diversified industrial stocks. In the view of the Board, a
key implication of this poor valuation environment was that Norcros
Shareholders had limited opportunity to realise fair value for their holdings
through the stock market. It also resulted in Norcros being the target of bid
speculation, leading to uncertainty over the future of the business.

Further, one of Norcros's core businesses, H and R Johnson, the UK ceramic
tiles business, operated in, and continues to operate in, difficult market
conditions due to the particularly competitive nature of the global tiles
market. The Board of Norcros has anticipated for some time that significant
capital expenditure and restructuring would be required in order to maintain
H and R  Johnson's market position and to improve its cost competitiveness.
However, the implementation of such a restructuring would be likely to have
an adverse impact on the profitability of Norcros in the short to medium
term.

With a view to achieving fair value for Norcros Shareholders while allowing H
and R Johnson's investment programme to proceed, the Board of Norcros,
following a strategic review towards the end of 1998, unanimously decided to
explore the possibility of taking Norcros private. Accordingly, a small
number of private equity providers were approached and discussions were
pursued with NatWest Equity Partners. On 6 July 1999, it was announced that
these discussions, which related to a possible proposal to take Norcros
private, backed by NatWest Equity Partners and involving participation by the
executive directors of Norcros, had been terminated, due to a failure at that
time to resolve the issue of the provision of debt finance to the potential
offeror within a satisfactory time frame. As announced on 4 October 1999,
discussions in relation to such a proposal have recently recommenced.

In view of the encouraging trading by Norcros in the first five months of the
current financial year and a perception that UK investor sentiment towards
smaller capitalisation stocks may have improved in recent months, the
Independent Directors have approached a small number of key institutional
shareholders of Norcros to ascertain whether the proposal put forward during
the discussions with NatWest Equity Partners would be acceptable to such
shareholders. Shareholders holding together a significant proportion of the
issued share capital of Norcros confirmed that this was the case.

The Independent Directors, who have no financial interest in Stormgrange, are
not connected with the Offer and have received advice from ING Barings,
believe the Offer represents fair value for Norcros Shareholders and will be
recommending its acceptance.

5. Information on Norcros
Norcros is a holding company whose principal activities are carried on
through subsidiary, associated or joint venture companies engaged in the
manufacture of light building products or speciality chemicals:

*  Through the H and R Johnson group of companies, Norcros is a leading
manufacturer of ceramic tiles. Manufacturing operations are located in the
UK, Australia, South Africa, Greece and India. In most of its markets, H and
R Johnson holds a leading market position.

*  Triton is a UK market leader in the manufacture of showers with a strong
position in electric showers and a developing presence in mixer and power
showers. Triton also exports products to Continental Europe, South Africa and
other overseas markets.

*  The Norcros Adhesives Group manufactures adhesives and ancillary products
under inter alia the brand names BAL, Dunlop, ABA and TAL. Operations are
located in the UK, Australia, South Africa, Greece, Taiwan and China. The
Norcros Adhesives Group is primarily involved in the specialist ceramic tile
adhesives sector with an expanding presence in industrial adhesives.

*  Autotype provides high technology speciality chemical products for the
electronics, industrial and printing industries worldwide, based on its core
competence in specialist-coated films and allied chemistry. Operations are
located in the UK, the US, Singapore and Denmark.

For the year ended 31 March 1999, Norcros reported turnover from continuing
operations of £197.2 million (1998: £204.9 million) and profit before
taxation and exceptional items of £15.3 million (1998: £14.3 million) on a
consolidated basis. Earnings per share on a normalised basis for the year
ended 31 March 1999 were 7.0 pence (1998: 6.6 pence) with basic earnings per
share amounting to 3.7 pence (1998: 1.4 pence). Consolidated net assets as at
31 March 1999 totalled £135.1 million (1998: £134.1 million).

Trading in the first five months of the current financial year has been
encouraging, with sales in the continuing businesses of the Group slightly
ahead of the same period last year.

6. Information on NWEP
NatWest Equity Partners is a leading European provider of private equity,
specialising in structuring and leading UK and Continental European
transactions.

NatWest Equity Partners, which currently has approximately £1.8 billion of
funds under management from NatWest and other institutional clients, operates
from six offices in the UK and five in Continental Europe. In the year ended
31 December 1998, NatWest Equity Partners invested over £350 million in 33
transactions.

7. Information on Stormgrange and financing
Stormgrange is a private company incorporated in England and Wales on 5
January 1999 which has not traded since incorporation except for the purposes
of making the Offer. The current directors of Stormgrange are Alastair
Gibbons, a managing director, and David Shaw, chief executive, of NatWest
Equity Partners. Following completion of the Shareholders' Agreement, the
following Norcros directors, Joseph Matthews (Group Chief Executive),
Nicholas Kelsall (Group Finance Director) and David Hamilton(Commercial
Director) will join the Board of Stormgrange as executive directors. At that
time David Shaw will become non-executive chairman and Alastair Gibbons will
become a non-executive director of Stormgrange.

The equity funding for Stormgrange will initially be provided by the NWEP
Funds and by the Management.

Following completion of the Shareholders' Agreement, the equity share capital
of Stormgrange will be held as to 93.3 per cent. by the NWEP Funds and 6.7
per cent. by Management. Other members of the management of the Norcros group
may be given the opportunity to subscribe, directly or indirectly, for up to
6.25 per cent. of the equity share capital of Stormgrange. If so, the NWEP
Funds' and Management's holdings will be reduced to a minimum of 87.5 per
cent. and 6.25 per cent. respectively of the equity share capital of
Stormgrange. In due course, if a certain performance target is met, the
entitlement of the management of the Norcros group (including Management) to
participate in the equity share capital of Stormgrange would increase to a
maximum of 17.5 per cent.

Subject to completion of the Shareholders' Agreement, the NWEP Funds shall
subscribe for £69.75million in nominal value of Stormgrange Loan Notes. The
Stormgrange Loan Notes will be fixed rate, subordinated and unsecured and
will be redeemable in two equal instalments on 1 April 2009 and 30 September
2009.

CIBC has agreed to make available £131 million of senior debt financing and,
in association with ICG, a further £26 million of subordinated debt financing
in the form of a mezzanine loan facility for the purposes of financing the
Offer and expenses in connection with the Offer, refinancing the existing
Norcros group debt and providing additional working capital.

Attached to the mezzanine loan facility will be warrants which on exercise
will give the holders thereof 4.0 per cent. of each class of the issued share
capital of Stormgrange on a fully diluted basis.

Further information relating to Stormgrange and the financing of the Offer
will be set out in the Offer Document.

ING Barings considers the terms of the arrangements between Stormgrange and
Management to be fair and reasonable in the context of the Offer so far as
other Norcros Shareholders are concerned.

8. Undertakings to accept the Offer
Stormgrange has received undertakings to accept or procure the acceptance of
the Offer from certain Norcros Shareholders as set out below. The percentage
figures are based on the number of Norcros Shares in issue on 4 October 1999,
being the last practicable date prior to the date of this announcement.

                                                Norcros Shares
                                        Number       Percentage
Independent Directors                                
                                                     
Hamish Bryce                            54,904       0.03
David Stark                             10,000       0.01
                                                     
Management and spouses                               
                                                     
Joseph Matthews                         30,000       0.02
Nicholas Kelsall                        19,200       0.01
David Hamilton                          35,534       0.02
Mrs Kelsall                             10,800       0.01
Mrs Hamilton                            64,466       0.04
                                                     
Other Norcros Shareholders                           
                                                     
Aberforth Partners                      9,524,037    5.73
Aberforth Unit Trust Managers Limited   4,180,270    2.52
M and G                                 14,519,569   8.74
Norwich Union                           7,459,777    4.49
P and DFM                               37,910,507   22.82
                                                     
Total                                   73,819,064   44.44

Accordingly, Stormgrange has received undertakings to accept the Offer in
respect of a total of 73,819,064 Norcros Shares representing approximately
44.44 per cent. of Norcros's existing issued share capital.

The undertakings given by Aberforth Partners, Aberforth Unit Trust Managers
Limited, P and DFM and Norwich Union will cease to be binding in the event of
a competing offer for the Company at a price of not less than 113.5 pence per
Norcros Share unless (in the case of the undertakings given by Aberforth and
Norwich Union) Stormgrange at least matches that competing offer.  The
undertaking given by M and G will cease to be binding in the event of a
competing offer which in M and G's reasonable opinion is more favourable than
the Offer.

Save as disclosed above, neither Stormgrange nor, so far as the directors of
Stormgrange are aware, any person acting in concert with Stormgrange owns or
controls any Norcros Shares or has any options or rights or has entered into
any derivative referenced to Norcros Shares.

9. Management and Employees
The Board of Stormgrange has given assurances to the Independent Directors
that, on the Offer becoming or being declared unconditional in all respects,
the existing employment rights, including pension rights, of all the
employees of the Norcros group will be fully safeguarded. The continuing
involvement of existing management and employees of Norcros in its
development as a private company has been an important factor in NWEP's
decision to invest.

The Independent Directors intend to resign from the Board of Norcros
following the Offer becoming or being declared unconditional in all respects.

10. Norcros Share Option Schemes
The Offer will extend to all Norcros Shares which are unconditionally
allotted or issued and fully paid (or credited as fully paid) on or prior to
the date on which the Offer closes (or such earlier time and/or date as
Stormgrange may decide, with the Panel's consent and in accordance with the
City Code, not being earlier than the date on which the Offer becomes or is
declared unconditional as to acceptances or, if later, the first closing date
of the Offer), whether as a result of the exercise of options granted under
the Norcros Share Option Schemes or otherwise.

Stormgrange will make appropriate proposals, including a cash cancellation
offer, to Norcros Optionholders. Further details of these proposals will be
sent to Norcros Optionholders in due course.

11. Compulsory acquisition, de-listing and re-registration
Stormgrange intends, assuming it becomes so entitled, to use the procedures
set out in sections 428 to 430F of the Companies Act to acquire compulsorily
any remaining minority following the Offer becoming or being declared
unconditional in all respects. Subject to the Offer becoming or being
declared unconditional in all respects and to Stormgrange becoming entitled
to use the procedures referred to above, Stormgrange intends to apply for
cancellation of Norcros's listing of its shares on the Official List and to
re-register Norcros as a private company under the relevant provisions of the
Companies Act. It is anticipated that the cancellation of Norcros's listing
on the London Stock Exchange will take effect not less than 20 business days
after the date of posting the Offer Document.

12. Other information
The Offer Document, containing the full terms and conditions of the Offer,
will be posted to Norcros Shareholders and for information only to Norcros
Optionholders shortly.  This announcement does not constitute an offer or an
invitation to purchase any securities.

The availability of the Offer to persons not resident in the UK may be
affected by the laws of the relevant jurisdiction. Persons who are not
resident in the UK should inform themselves about and observe any applicable
requirements. Further details in relation to overseas shareholders will be
contained in the Offer Document.

Save as summarised in this announcement and as provided for in the
undertakings to accept the Offer, neither Stormgrange nor, so far as the
directors of Stormgrange are aware, any person acting in concert with
Stormgrange for the purposes of the Offer, has any arrangement in relation to
Stormgrange Ordinary Shares or Norcros Shares or any securities convertible
or exchangeable into Stormgrange Ordinary Shares or Norcros Shares or options
(including traded options) in respect of, or derivatives referenced to, any
such shares. For these purposes, 'arrangement' includes any indemnity or
option arrangement, any agreement or understanding, formal or informal, of
whatever nature, relating to Stormgrange Ordinary Shares or Norcros Shares
which may be an inducement to deal or refrain from dealing in such shares.

Enquiries:
For Stormgrange Limited                              
Stormgrange Limited/NWEP  Alastair Gibbons           0171 374 3444
Deutsche Bank             Mark Aedy                  0171 545 8000
                          Hilary Bowman
                                                     
For Norcros p.l.c.                                   
Norcros p.l.c.            Hamish Bryce               0181 946 4405
ING Barings               Mark Burch                 0171 767 1000

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,
facsimile transmission, telex or telephone) 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.
Accordingly, copies of this announcement are not being, and must not be,
mailed or otherwise distributed or sent in, into or from the United States,
Canada, Australia or Japan and persons receiving such documents (including,
without limitation, custodians, nominees and trustees) must not distribute or
send them in, into or from the United States, Canada, Australia or Japan.
Doing so may render invalid any purported acceptance of the Offer.

Deutsche Bank, which is regulated in the United Kingdom by The Securities and
Futures Authority Limited, is acting for Stormgrange and no-one else in
connection with the Offer, and will not be responsible to any person other
than Stormgrange for providing the protections afforded to customers of
Deutsche Bank or for giving advice in relation to the Offer.

ING Barings, which is regulated in the United Kingdom by The Securities and
Futures Authority Limited, is acting for Norcros, acting through its
Independent Directors, and no-one else in connection with the Offer and will
not be responsible to any person other than Norcros for providing the
protections afforded to customers of ING Barings or for giving advice in
relation to the Offer.

MORE TO FOLLOW

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