NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
FOR IMMEDIATE RELEASE
18 November 2016
INCREASED FINAL CASH OFFER
for
M.P. EVANS GROUP PLC ("MP EVANS" or the "COMPANY")
by
KUALA LUMPUR KEPONG BERHAD ("KLK")
through its wholly-owned subsidiary, KL-KEPONG INTERNATIONAL LTD ("KLKI")
Publication of Offer Document
1. Increased Offer
On 15 November 2016, the Board of KLK, through its wholly-owned subsidiary, KLKI, announced the terms of a revised cash offer at 740 pence per share for MP Evans by KLKI to acquire the entire issued and to be issued share capital of MP Evans (the "Increased Offer").
The Increased Offer is final and is not capable of being increased, save that KLKI reserves the right to increase the price per MP Evans Share payable pursuant to the terms of the Increased Offer in the event of: (i) a public announcement of the existence of a new offeror or potential offeror, whether publicly identified or not; or (ii) the recommendation of such an increased offer by KLK or KLKI by the board of MP Evans.
KLK notes the announcement from MP Evans on 16 November 2016 relating to, amongst other things, its receipt of letters of intent (the "Letters of Intent") from certain MP Evans Shareholders representing, in aggregate, 40.85 per cent. of the issued share capital of MP Evans, whose intention, as at that date, was not to accept the Increased Offer. KLK notes that MP Evans received letters of intent from MP Evans Shareholders representing 54.72 per cent. of the issued share capital of MP Evans in relation to its initial offer at 640 pence per MP Evans Share announced on 25 October 2016.
MP Evans Shareholders should note that the Letters of Intent do not bind the shareholders who have signed them. Indeed, they expressly provide for any such MP Evans Shareholder simply to notify MP Evans if it no longer intends to reject the Increased Offer, with the effect that the MP Evans Shareholders who have entered into the Letters of Intent can freely accept the Increased Offer at any time.
2. The Increased Offer is a compelling offer at a substantial premium with a high degree of certainty
The Increased Offer:
· represents a premium of approximately 77 per cent. to the volume-weighted average Closing Price for the 30 days ended 24 October 2016, being the last Business day prior the commencement of the Offer Period, and also a significant premium to the highest price that MP Evans Shares have traded at over the last 20 years. Taking into account MP Evans' substantial adjusted net cash balance (approximately US$54.1 million) [1] , which KLK would expect to acquire on a pound-for-pound basis, the premium implied by the Increased Offer Consideration in respect of the operating assets of MP Evans is 90.0 per cent. [2] ;
· represents a significant liquidity opportunity given the historic low trading volumes in MP Evans Shares. The daily average number of MP Evans Shares traded on a daily basis over the three years to 24 October 2016, being the last Business Day prior to the commencement of the Offer Period, was 26,755, representing less than 0.1 per cent. of the total number of MP Evans Shares in issue over that period.
· represents a price to earnings ratio of 54.2x, based on the Increased Offer Consideration compared with the reported full year earnings per share from continuing operations of MP Evans for the financial year ended 31 December 2015 (translated at a rate of $1.53:£1, being the average rate for the financial year ended 31 December 2015);
· represents an implied dividend yield of only 1.2 per cent., based on the Increased Offer Consideration and the aggregate of the final dividend paid by MP Evans in respect of the financial year ended 31 December 2015 of 6.5 pence per MP Evans Share and the Interim Dividend of 2.25 pence per MP Evans Share;
· implies a value of MP Evans' total planted area per hectare for MP Evans' effective share of its owned estates of approximately $14,100/ha[3]; and
· is solely conditional upon valid acceptances being received in respect of MP Evans Shares which, together with any MP Evans Shares acquired, or agreed to be acquired, by KLKI and/or any other wholly-owned subsidiary or wholly-owned subsidiaries of KLK (whether pursuant to the Increased Offer or otherwise) carry, in aggregate, more than 50 per cent. of the voting rights then normally exercisable at a general meeting of MP Evans. Accordingly, MP Evans Shareholders should note that the Increased Offer will succeed if KLKI acquires, or agrees to acquire, control of more than 50 per cent. of the voting rights attaching to the MP Evans Shares, pursuant to acceptances of the Increased Offer or otherwise, and MP Evans Shareholders will receive the Increased Offer Consideration in respect of any MP Evans Shares assented to the Increased Offer.
3. The Offer Document
KLK announces that the document containing the full terms and conditions and procedures for acceptance of the Increased Offer (the "Offer Document") and the associated Form of Acceptance (where applicable) will be posted today to MP Evans Shareholders and, for information only, to persons with information rights.
The First Closing Date of the Increased Offer is 9 December 2016.
4. Acceptance of the Increased Offer
To accept the Increased Offer in respect of MP Evans Shares held in certificated form (that is, not in CREST), you should complete, sign and return the Form of Acceptance so as to be received by the Receiving Agent, Capita Asset Services, by no later than 1.00 p.m. (London time) on 9 December 2016 in accordance with the procedures set out in the Offer Document. Acceptances in respect of MP Evans Shares held in uncertificated form should be made electronically through CREST. You should ensure that the Electronic Acceptance is made by you or on your behalf and that settlement occurs by no later than 1.00 p.m. (London time) on 9 December 2016 in accordance with the procedures set out in the Offer Document. CREST sponsored members should refer to their CREST sponsor as only CREST sponsors will be able to send the necessary TTE instruction to Euroclear.
5. General
The Offer Document and Form of Acceptance will be made available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on KLK's website at www.klk.com.my/investor-relations/mpevans while the Increased Offer remains open for acceptance. Hard copies of the Offer Document and the Form of Acceptance may be obtained by contacting the Receiving Agent, Capita Asset Services, in writing at Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU or by telephone on 0371 664 0321. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. The helpline is open between 9.00 a.m. and 5.30 p.m. (London time) Monday to Friday (excluding public holidays in England and Wales). Please note that Capita Asset Services cannot provide advice on the merits of the Increased Offer nor give any financial, legal or tax advice. Calls may be recorded and monitored for security and training purposes.
Capitalised terms used but not defined in this announcement shall have the meanings given to them in the Offer Document.
6. Sources and bases of information
Save as set out in this announcement, the following constitute the bases and sources of information referred to in this announcement:
6.1 Any references to the value of the Increased Offer for the entire issued and to be issued ordinary share capital of MP Evans are to 56,134,719 MP Evans Shares based on: (i) the number of MP Evans Shares currently in issue being 55,739,719; and (ii) the number of MP Evans Shares subject to outstanding options and/or awards granted under the MP Evans Share Schemes being 395,000, in each case, such numbers being based on information publicly available to KLKI as at the date of this announcement.
6.2 The implied value of MP Evans' operations per hectare for MP Evans' effective share of its owned estates of approximately $14,100 is calculated based on the $ equity value of MP Evans, which is calculated by:
(i) multiplying the Increased Offer Consideration by the issued and to be issued share capital of MP Evans as at the date of this document, producing $515.1 million (translated at a rate of $1.24:£1 as at 17 November 2016, being the last Business Day prior to the date of this announcement); subtracting
(ii) an adjusted net cash balance for MP Evans of $54.1 million (as described below) and the reported book value of MP Evans' 40 per cent. interest in Bertam Properties of $15.1 million as at 31 December 2015; and
(iii) dividing the resulting implied value for MP Evans' operations of $446 million by MP Evans' effective share of owned estates planted area of 31,713 hectares, as calculated on the basis described below (excluding any plantations held by smallholders under co-operative schemes as these are not owned and controlled by MP Evans).
The adjusted net cash balance for MP Evans of $54.1 million is calculated as the sum of net debt, negative $6.6 million as at 30 June 2016; plus the $79.7 million additional cash receipt on 21 July 2016 arising from the disposal of MP Evans' NAPCo business; less: (i) the deferred tax charge of $13.8 million (as reported in MP Evans' interim results for the six months ended 30 June 2016); (ii) $3.6 million, being the aggregate special dividend of five pence per MP Evans Share paid on 17 August 2016; and (iii) $1.6 million, being the aggregate Interim Dividend for the six months ended 30 June 2016 which was paid on 4 November 2016.
MP Evans' effective share of owned estates planted area is calculated based on the data set out in its annual report and accounts for the financial year ended 31 December 2015, as updated by MP Evans' presentation of its interim results for the six months ended 30 June 2016, extracted for convenience in the table below:
|
Planted Area |
|
Total Area (Ha) |
MP Evans stake (%) |
MP Evans stake (Ha) |
|
Majority Owned Estates |
|
|
||
|
Kalimantan |
|
10,250 |
95.0% |
9,738 |
|
Bangka |
|
5,450 |
90.0% |
4,905 |
|
Musi Rawa |
|
1,500 |
95.0% |
1,425 |
|
North Sumatran |
|
9,350 |
80.0% |
7,480 |
|
Majority Owned Estates (Effective Share) |
|
23,548 |
||
|
Associate Owned Estates (Effective Share) |
|
8,100 |
||
|
Bertam Estate |
|
65 |
||
|
Total Effective Share of Owned Estates Planted Area |
31,713 |
|||
6.3 The premium implied by the Increased Offer Consideration for the operations of MP Evans if the net cash position is acquired on a pound-for-pound basis has been calculated at 17 November 2016, being the last Business Day prior to the date of this announcement, by deducting the adjusted net cash balance for MP Evans of $54.1 million referred to at paragraph 6.2 above (translated at a rate of $1.24:£1 as at 17 November 2016) from the product of the Increased Offer Consideration multiplied by the issued and to be issued share capital of MP Evans and comparing this against the product of the undisturbed Closing Price of an MP Evans Share of 426.25 pence multiplied by the issued and to be issued share capital of MP Evans and deducting the net cash balance for MP Evans of $54.1 million (again, translated at a rate of $1.24:£1 as at 17 November 2016).
6.4 All prices quoted for MP Evans Shares have been derived from Factset and represent the closing middle market prices for MP Evans Shares on the relevant dates.
6.5 Foreign exchange rates as at any applicable date are taken from Factset.
6.6 Figures are stated subject to rounding and approximations.
7. Enquiries
|
KLK |
|
|
David Chong Teh Kwan Wey Yap Miow Kien
|
+603 7809 8962 +603 7809 8965 +605 240 8052 |
|
HSBC Bank plc |
|
|
Oliver Smith Rajeev Sahney Alex Thomas Nick Donald |
+44 20 7991 8888 |
|
|
|
Important notice relating to financial adviser
HSBC Bank plc ("HSBC") is authorised by the PRA and regulated by the FCA and the PRA in the United Kingdom and is acting exclusively for KLK and KLKI and no one else in connection with the Increased Offer and other matters referred to in this announcement and will not regard any other person (whether or not a recipient of this announcement) as a client in relation to the Increased Offer or any other matters referred to in this announcement and is not, and will not be, responsible to anyone other than KLK and KLKI for providing the protections afforded to its clients or for providing advice in relation to the Increased Offer, the contents of this announcement or any transaction or arrangement referred to in this announcement.
Further information
This announcement is not intended to, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities, or the solicitation of any vote or approval in any jurisdiction, pursuant to the Increased Offer or otherwise. The Increased Offer will be made solely by means of the Offer Document and the Form of Acceptance accompanying the Offer Document, which will contain the full terms and conditions of the Increased Offer, including details of how the Increased Offer may be accepted. Any response to the Increased Offer should be made only on the basis of information contained in the Offer Document and, where applicable, the Form of Acceptance. MP Evans Shareholders are advised to read the formal documentation in relation to the Increased Offer carefully once it has been despatched.
This announcement has been prepared for the purposes of complying with English law, the rules of the London Stock Exchange and the Code and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside the United Kingdom.
Overseas jurisdictions
The distribution of this announcement in jurisdictions other than the United Kingdom and the ability of MP Evans Shareholders who are not resident in the United Kingdom to participate in the Increased Offer may be affected by the laws of relevant jurisdictions. Therefore any persons who are subject to the laws of any jurisdiction other than the United Kingdom or MP Evans Shareholders who are not resident in the United Kingdom will need to inform themselves about, and observe, any applicable legal or regulatory requirements. Any failure to comply with the applicable restrictions may constitute a violation of the securities laws of any such jurisdiction. Further details in relation to overseas shareholders will be contained in the Offer Document.
The Increased Offer will not be made available, directly or indirectly, in or into or by the use of the mails of, or by any other means or instrumentality of interstate or foreign commerce of, or any facility of a national state or other securities exchange of any Restricted Jurisdiction, unless conducted pursuant to an exemption from the applicable securities laws of such Restricted Jurisdiction.
Accordingly, copies of this announcement and all documents relating to the Increased Offer are not being, and must not be, directly or indirectly, mailed, transmitted or otherwise forwarded, distributed or sent in, into or from any Restricted Jurisdiction except pursuant to an exemption from the applicable securities laws of such Restricted Jurisdiction and persons receiving this announcement (including, without limitation, agents, nominees, custodians and trustees) must not distribute, send or mail it in, into or from such jurisdiction. Any person (including, without limitation, any agent, nominee, custodian or trustee) who has a contractual or legal obligation, or may otherwise intend, to forward this announcement and/or the Offer Document and/or any other related document to a jurisdiction outside the United Kingdom should inform themselves of, and observe, any applicable legal or regulatory requirements of their jurisdiction.
Notice to US holders of MP Evans Shares
The Increased Offer, if required to be made in the United States, will be made in the United States pursuant to applicable exemptions under the US tender offer rules and securities laws and otherwise in accordance with the requirements of the Code, the Panel and the London Stock Exchange. Accordingly, the Increased Offer will be subject to disclosure and other procedural requirements, including with respect to withdrawal rights, offer timetable, settlement procedures and timing of payments that are different from those applicable under US domestic tender offer procedures and law.
The Increased Offer is being made for the securities of an English company quoted on AIM, a market of the London Stock Exchange. The Increased Offer is subject to UK disclosure requirements, which are different from certain United States disclosure requirements. The financial information on the KLK Group and MP Evans included in this announcement has been prepared in accordance with generally accepted accounting principles in Malaysia and IFRS, respectively, thus neither may be comparable to financial information of US companies or companies whose financial statements are prepared in accordance with generally accepted accounting principles in the United States.
The receipt of cash pursuant to the Increased Offer by a US holder of MP Evans Shares may be a taxable transaction for US federal income tax purposes and under applicable US state and local, as well as foreign and other, tax laws. Each MP Evans Shareholder is urged to consult his independent professional adviser immediately regarding the tax consequences of accepting the Increased Offer. Furthermore, the payment and settlement procedure with respect to the Increased Offer will comply with the relevant United Kingdom rules, which differ from the United States payment and settlement procedures, particularly with regard to the date of payment of consideration.
The Increased Offer, if required to be made in the United States, will be made in the United States by KLKI and no one else.
It may be difficult for US holders of MP Evans Shares to enforce their rights and any claim arising out of US federal securities laws since KLKI and KLK are incorporated under the laws of the Cayman Islands and Malaysia, respectively, and MP Evans is incorporated under the laws of England and Wales and some or all of their officers and directors are residents of non-US jurisdictions. In addition, most of the assets of KLKI, KLK and MP Evans are located outside the United States. US holders of MP Evans Shares may not be able to sue a non-US company or its officers or directors in a non-US court for violations of US securities laws.
Further, it may be difficult to compel a non-US company and its affiliates to subject themselves to a US court's judgment.
This announcement does not constitute an offer of securities for sale in the United States or an offer to acquire or exchange securities in the United States. No offer to acquire securities or to exchange securities for other securities has been made, or will be made, directly or indirectly, in or into, or by the use of the mails of, or by any means or instrumentality of interstate or foreign commerce or any facilities of a national securities exchange of, the United States or any other country in which such offer may not be made other than: (i) in accordance with the tender offer requirements under the US Securities Exchange Act of 1934 (as amended) (the "Exchange Act"), or the securities laws of such other country, as the case may be, or: (ii) pursuant to an available exemption from such requirements. Neither the US Securities and Exchange Commission nor any US state securities commission has approved or disapproved the Increased Offer, passed upon the merits or fairness of the Increased Offer or passed comment upon the adequacy or completeness of this announcement or the Offer Document. Any representation to the contrary is a criminal offence in the United States.
To the extent permitted by applicable law, in accordance with, and to the extent permitted by, the Code and normal UK market practice and subject to Rule 14e-5(b) under the Exchange Act, KLK, KLKI or its or their nominees or brokers (acting as agents) or their respective affiliates may from time to time make certain purchases of, or arrangements to purchase, shares or other securities in MP Evans, other than pursuant to the Increased Offer, at any time prior to completion of the Increased Offer becoming effective. These purchases may occur either in the open market at prevailing prices or in private transactions at negotiated prices. Any such purchases, or arrangements to purchase, will comply with all applicable UK rules, including the Code and the rules of the London Stock Exchange, to the extent applicable. No purchases will be made outside of the Increased Offer in the United States by or on behalf of KLK and/or KLKI. In addition, in accordance with, and to the extent permitted by, the Code and normal UK market practice, HSBC and its affiliates will continue to act as exempt principal traders in MP Evans Shares on the London Stock Exchange and engage in certain other purchasing activities consistent with their respective normal and usual practice and applicable law. To the extent required by the applicable law (including the Code), any information about such purchases will be disclosed on a next day basis to the Panel on Takeovers and Mergers and a Regulatory Information Service including the Regulatory News Service on the London Stock Exchange website, www.londonstockexchange.com.
Forward-looking statements
This announcement contains certain forward looking statements with respect to the financial condition, results of operations and business of MP Evans, the MP Evans Group and certain plans and objectives of the boards of directors of KLK and KLKI. These forward looking statements can be identified by the fact that they do not relate to historical or current facts. Forward looking statements often use words such as "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "will", "may", "should", "would", "could" or other words of similar meaning. These statements are based on assumptions and assessments made by the boards of directors of MP Evans, KLK and KLKI in the light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe appropriate. By their nature, forward looking statements involve risk and uncertainty and the factors described in the context of such forward looking statements in this announcement could cause actual results and developments to differ materially from those expressed in or implied by such forward looking statements.
Should one or more of these risks or uncertainties materialise, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this announcement. KLK and KLKI assume no obligation to update or correct the information contained in this announcement.
No profit forecasts or estimates
No statement in this announcement is intended as a profit forecast or estimate for any period and no statement in this announcement should be interpreted to mean that earnings or earnings per share for KLK or MP Evans, as appropriate, for the current or future financial years would necessarily match or exceed the historical published earnings or earnings per share for KLK or MP Evans, as appropriate.
Disclosure requirements of the Code
Under Rule 8.3(a) of the Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the Offer Period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.
Publication on website
A copy of this announcement will be available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, for inspection on KLK's website at http://www.klk.com.my/investor-relations/mpevans promptly and by no later than 12 noon (London time) on 21 November 2016. For the avoidance of doubt, the contents of that website are not incorporated, and do not form part of, this announcement.
In accordance with Rule 30.3 of the Code, a person so entitled may request a hard copy of this announcement, free of charge, by contacting HSBC on +44 20 7991 8888. For persons who receive a copy of this announcement in electronic form or via a website notification, a hard copy of this announcement will not be sent unless so requested. In accordance with Rule 30.3 of the Code, a person so entitled may also request that all future documents, announcements and information to be sent to them in relation to the Increased Offer should be in hard copy form.
-ENDS-