Alliance/Change of Name
Bemrose Corp PLC
6 July 2000
BEMROSE CORPORATION PLC
Proposed trading partnership with, and issue of warrants to,
Lands' End, Inc.
Proposed change of name to 4imprint Group plc
Bemrose, the UK's leading supplier of promotional marketing
products, is pleased to announce that it has entered into a
significant and exclusive trading alliance with Lands' End,
Inc. ('Lands' End'), one of the leading direct merchandising
companies in North America.
Key points of the agreement:
* Bemrose will be the exclusive supplier of hard' goods
(non-clothing) to Lands' End corporate customers for an
initial 3-year period.
* Bemrose will issue warrants to subscribe for 1,703,729
Ordinary Shares representing 5.0% of the ordinary share
capital at £5.00, exercisable after the share price has
reached £7.00.
* Additional warrants will be issued dependent upon certain
sales targets - up to a maximum of 4.99 % of the company
Lands' End:
* Lands' End is a leading worldwide direct marketeer of
clothing for men, women and children.
* NYSE listed, capitalised at $1.03bn, sales to year-end
28.01.2000 of $1.3 bn.
* Sales to corporate customers last year of $140m.
* Sells more apparel online than any other clothing company
worldwide.
* Nine out of ten Fortune 500 companies are Lands' End
clients.
Benefits to Bemrose:
* 28 % of customers promotional marketing spend in the US
is on soft' goods with 72 % spent on 'hard' goods. Potential
revenues from Lands' End existing corporate client base to
Bemrose is therefore $360m p.a. (based on Lands' End corporate
sales of $140m)
* Potential to develop significant share of corporate
programme market in the US and subsequently in Europe.
* Earnings enhancing in first full year of operation.
Name Change
* Following approval by shareholders, Bemrose Corporation
Plc will change its name to 4imprint Group plc and all company
trading names in the UK and the US will be re-branded
4imprint. The printing businesses recently sold to management
will be called Bemrose Group Ltd
Dick Nelson, Chief Executive, commented:
'To understand the significance of this deal it is vital to
appreciate the business opportunities of partnering with an
organisation such as Lands' End, which has sales of $1.3
billion and sells more products online than any other apparel
company world-wide. The commercial benefits now available to
Bemrose through this exclusive alliance represent significant
incremental revenue streams.'
PLEASE NOTE: THERE WILL BE A CONFERENCE CALL FOR ANALYSTS AT
4PM TODAY - PLEASE CONTACT MARK EDWARDS / JEREMY GARCIA AT
BUCHANAN COMMUNICATIONS FOR DETAILS - 020 7466 5000
For further information, please contact:
Bemrose Corporation
Dick Nelson, Chief Executive 001 920 2367270
(after 1.0pm GMT)
Rodger Booth, Chairman 0468 791 546
Richard Harrison, Finance Director 01482 876862
N M Rothschild & Sons
David M Forbes 0113 200 1900
Buchanan Communications
Mark Edwards, Jeremy Garcia 020 7466 5000
Lands' End
Beverley Holmes, Communications Director 001 608 935 4985
Introduction
Bemrose is pleased to announce that it has entered into a
significant trading partnership with Lands' End, Inc. ('Lands'
End'). The principal focus of this partnership will be to
offer comprehensive promotional product programme management
services to large companies, initially in the US. It is
intended that a contractual framework will also be put in
place to accommodate a wider collaboration on sales and
marketing initiatives. In recognition of the substantial
benefits to the Company that are expected to arise from this
partnership, it is proposed that warrants to subscribe for
1,703,729 ordinary shares in Bemrose ('Ordinary Shares') are
issued to Lands' End immediately following shareholder
approval being obtained and that additional warrants be
issued, the exercise of which is subject to the achievement of
certain revenues arising from the partnership. The issue of
warrants requires the approval of ordinary shareholders. The
commercial agreements which constitute the partnership are
conditional upon such approval being given.
In addition, as explained in the circular to shareholders
dated 15 June 2000, your Board believes that it is now
appropriate to change the Company name to 4imprint Group plc.
The current name, Bemrose Corporation plc, is more strongly
associated with the printing businesses which have recently
been sold.
An Extraordinary General Meeting of the Company is to be held
at North Bar House, Beverley, East Yorkshire HU17 8DG at 10.30
a.m. on 31 July 2000, at which resolutions to approve the
issue of warrants and to change the name of the company will
be proposed. The issue of initial warrants is expected to
occur following this meeting and at this point the partnership
agreements will be unconditional.
Background to and reasons for the partnership with Lands' End
In recent months the Company has explored a number of
strategies to develop its presence in the growing market for
managing comprehensive promotional product programmes for
large companies in the US. Such programmes are typically
subject to term contracts of one year or more. At present,
Bemrose's penetration of this market in the US has been
relatively limited. The proposed partnership with Lands' End
offers a highly attractive route into this substantial US
market and complements the Bemrose group's existing catalogue
and internet product ranges in the US and builds on its
considerable experience gained through Broadway Incentives Ltd
in the UK. The Directors believe that the Bemrose group is the
market leader in the UK for promotional product programme
management. Significant customers include IBM Corporation,
Microsoft Corporation and British Airways plc.
The Counselor Magazine (August 1999) estimated the size of the
US market for managing comprehensive promotional product
programmes to be approximately US$13 billion in terms of
sales, with 'hard' goods (i.e. non-clothing) accounting for
approximately 72 per cent. and 'soft' goods (i.e. clothing)
accounting for approximately 28 per cent.
Lands' End, based in Dodgeville, Wisconsin, in the US, is a
leading direct merchant in the US of classically inspired
casual clothing for men, women and children, as well as
accessories, shoes, soft luggage and home products. It also
has operations in Japan, the UK and Germany. Lands' End is
listed on the New York Stock Exchange with a market
capitalisation as at the close of business on 3 July 2000 of
approximately US$1,028 million.
Under the terms of the Corporate Program Agreement, Bemrose
would partner with the corporate sales division of Lands' End
which achieved sales of US$140 million in the year ended 28
January 2000, representing 11 per cent. of Lands' End's total
sales in that year. This growing division has progressively
supplemented its traditional catalogue and direct marketing
channels with internet capabilities. These include customised
on-line clothing stores for large companies. In practice, the
partnership will extend Lands' End's current product offering
of soft' products through its corporate sales division to
include hard' promotional products sourced via Bemrose. It
is anticipated that this partnership will be extended to
Europe in the longer term.
The Board believes that the principal benefits of this
collaboration for Bemrose will be as follows:
* the ability to offer a comprehensive product range to
large corporates by combining the complementary product ranges
of Bemrose and Lands' End;
* access to Lands' End's substantial existing customer base
and to the Lands' End brand in the US; and
* the opportunity to develop significant market share in
the US far more quickly than would otherwise be possible.
The Directors believe that sufficient incremental business
will arise from these arrangements so that the partnership
with Lands' End will enhance earnings per share in the first
full year of operation.
Details of the Lands' End partnership agreements
The proposed partnership with Lands' End will be effected
through three separate agreements, as follows:
Participation Warrant Agreement: Following the passing of the
relevant resolutions, this agreement provides for the issue to
Lands' End of initial warrants to subscribe for 1,703,729
Ordinary Shares, representing 5.0 per cent. of the ordinary
share capital of the Company (on a fully diluted basis and as
enlarged as if the warrants were exercised). The exercise
price for these initial warrants is £5 per ordinary share,
which represents a premium of 27.1 per cent. over the Bemrose
ordinary share price of 393.5 pence on 5 July 2000 (being the
latest practicable date before the issue of this document).
Lands' End will also be entitled to receive additional
warrants representing up to 4.99 per cent. of the ordinary
share capital, on a fully diluted and as if converted basis,
dependent upon the percentage of the ordinary share capital of
Bemrose acquired by Lands' End (ignoring, for these purposes,
shares acquired as a result of the exercise of warrants). The
exercise of such additional warrants will be dependent on the
achievement of certain sales targets under the Corporate
Program Agreement and Sales and Marketing Agreement.
The Participation Warrant Agreement allows Lands End to
exercise warrants from time to time to the extent that such
exercise would result in the issue pursuant to the warrants of
less than 10 per cent. of the issued ordinary share capital of
the Company from time to time (excluding those Ordinary Shares
issued pursuant to initial or additional warrants).
Neither the initial or additional warrants are exercisable
until the Bemrose share price has averaged £7 over a
successive 60 day period, except in certain limited
circumstances.
This agreement also permits Lands' End to appoint one director
of the Company upon it holding, or being entitled to exercise
warrants, so that it would hold 15 per cent. or more of the
fully diluted issued ordinary share capital of the Company.
Corporate Program Agreement: As set out above, this principal
agreement provides a framework for a marketing collaboration
with Lands' End focused on promotional product programme
management services to large companies, initially in the US.
Sales and Marketing Agreement: This agreement provides a
framework for wider collaboration with Lands' End on sales and
marketing initiatives.
The Corporate Program Agreement and the Sales and Marketing
Agreement are conditional on the passing of the relevant
resolutions to permit the issue of warrants at the
Extraordinary General Meeting.