Tender Offer

RNS Number : 3492D

Domino's Pizza UK & IRL PLC

01 December 2009

 

Domino's Pizza UK & IRL plc

1 December 2009 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA AND JAPAN 

 

Domino's Pizza UK & IRL plc (the "Company")

Tender Offer

Proposed purchase of up to 6,000,000 Ordinary Shares by way of the Tender Offer

Introduction

On 16 November 2009, the Company announced that it intended to return excess cash to Shareholders by way of a tender offer (the "Original Tender Offer"). However, on 27 November 2009, the Company announced that, in light of movements in the share price since the date of the announcement of the Original Tender Offer, which closed at 1.00 p.m. on 26 November 2009, the tender price of 317 pence per Ordinary Share was in excess of the maximum price which the Company could pay for an Ordinary Share pursuant to the Existing Share Buy-Back Authority. As a result of this, and in accordance with the formal terms and conditions of the Original Tender Offer, the Original Tender Offer could not proceed and tenders from qualifying shareholders were not accepted. 

However, the Company also stated that it was committed to returning cash to Shareholders and, believing that a tender offer is still the most appropriate method to achieve this, today announces that it intends to return up to approximately £17.5 million of cash to Shareholders by way of a tender offer (the "Tender Offer"). Pursuant to the Tender Offer, Numis Securities Limited ("Numis"), as principal, will offer to purchase up to 3,000,000 Ordinary Shares and Altium Capital Limited ("Altium"), as principal, will offer to purchase up to 3,000,000 Ordinary Shares from Qualifying Shareholders following which the Company will have the option to repurchase for cancellation from Numis and Altium respectively on market and at the Tender Price all those Ordinary Shares purchased under the terms of the Tender Offer. 

The price at which the Ordinary Shares will be purchased is 292 pence per Ordinary Share, unless the share price of an Ordinary Share falls to the extent that the price of 292 pence per Ordinary Share is outside the Existing Share Buy-Back Authority, in which case the price will be the maximum price at which the Company is authorised to repurchase Ordinary Shares under the Existing Share Buy-Back Authority, rounded down to the nearest whole pence (the "Tender Price"). If the share price of an Ordinary Share increases, the Tender Price will remain at 292 pence per Ordinary Share and will not be increased.

By way of illustration, if for example the closing share price for an Ordinary Share (as derived from the Daily Official List of the London Stock Exchange plc) averages 275 pence over the five business days prior to the closing of the Tender Offer on 11 December 2009 then, in accordance with the Existing Share Buy-Back Authority, the maximum price per Ordinary Share that the Company would be able to pay would be 288.75 pence, and, therefore, the proposed purchase price of 292 pence per Ordinary Share is outside the Existing Share Buy-Back Authority. In this instance, the Ordinary Shares would be purchased at 288 pence per Ordinary Share, being the maximum price at which the Company is authorised to repurchase its own Ordinary Shares under the Existing Share Buy-Back Authority, rounded down to the nearest whole pence. If the closing share price for an Ordinary Share (as derived from the Daily Official List of the London Stock Exchange plc) over the five business days prior to 11 December 2009 averages, for example, 304 pence, although 105 per cent. of this average price is higher than 292 pence, the Tender Price will remain at 292 pence per Ordinary Share.

Qualifying Shareholders are not obliged to tender all or any of their Ordinary Shares if they do not wish to do so and the Directors are making no recommendation as to individual Qualifying Shareholders' participation in the Tender Offer.

The Circular providing more information in relation to the Tender Offer and setting out the formal terms and conditions of the Tender Offer will be posted to Shareholders today (the "Circular").

Background to and reasons for the Tender Offer

On 1 October 2009, the Company announced an interim management statement covering the 13 week period ended 27 September 2009. In that announcement, the Company stated that "the Milton Keynes commissary project is progressing well and is on track to be operational as planned by the end of the second quarter of 2010. With this phase of its infrastructure development expenditure now substantially complete, the Company looks forward to utilising its continued strong cash generation in enhancing cash returns to shareholders". 

During 2004, the Company commenced its programme of buying back its own Ordinary Shares. Since 9 June 2004, the Company has returned approximately £31.7 million of cash to Shareholders through the purchase of a total of 23,042,622 Ordinary Shares, representing approximately 14.1 per cent. of the existing issued share capital of the Company. In continuation of this buy-back strategy, it is the Company's intention to purchase approximately 2 to 3 per cent. of the existing issued share capital of the Company on an annual basis providing it enhances earnings per Ordinary Share, (although this should not be interpreted to mean that earnings per Ordinary Share will necessarily be greater than those for the relevant preceding financial period).

As a result of the continued generation of cash that the Directors consider surplus to the Company's current requirements, the Company now proposes to return up to approximately £17.5 million to Shareholders by means of the Tender Offer. 

The Directors believe that the Tender Offer will satisfy their objective of returning capital to Shareholders in a manner that is earnings enhancing and enables all Shareholders to participate pro rata, should they so choose. 

The Company currently intends to continue to return any further excess capital generated by means of either on market share buy-backs, dividend payments, or by way of further tender offers.

The Tender Offer

The Board is proposing to return up to approximately £17.5 million to Shareholders through the repurchase by the Company of Ordinary Shares for cancellation. This return of capital is to be effected by Numis purchasing, as principal, up to 3,000,000 Ordinary Shares and Altium purchasing, as principal, up to 3,000,000 Ordinary Shares, in each case, at 292 pence per Ordinary Share from Qualifying Shareholders and then selling such Ordinary Shares on market to the Company for cancellation at the Tender Price. The share repurchase will be effected pursuant to the Existing Share Buyback Authority so if the share price of an Ordinary Share falls to the extent that the price of 292 pence per Ordinary Share is outside the Existing Share Buy-Back Authority, the Tender Price will be the maximum price at which the Company is authorised to repurchase its own Ordinary Shares under the Existing Share Buy-Back Authority, rounded down to the nearest whole pence.

The maximum number of 6,000,000 Ordinary Shares to be purchased pursuant to the Tender Offer represents approximately 3.7 per cent. of the existing issued share capital of the Company. 

Qualifying Shareholders will be able to decide whether to tender some or all of their Ordinary Shares up to their Maximum Entitlement under the Tender Offer. However, tenders in excess of a Qualifying Shareholder's Basic Entitlement up to their Maximum Entitlement will only be satisfied to the extent that other Qualifying Shareholders tender less than their Basic Entitlement or do not tender any Ordinary Shares, and provided that the tender is not more than such Qualifying Shareholder's Maximum Entitlement.

The Tender Offer will close at 1.00 p.m. on 11 December 2009 and will only be available to Shareholders on the register of members at the Record Date (being 5.00 p.m. on 10 December 2009).

Repurchase Agreement

Under the terms of the Repurchase Agreement, Numis and Altium will have the option to sell, and the Company will have the option to acquire, through an on market transaction, all of the Ordinary Shares acquired by Numis and Altium pursuant to the Tender Offer, at a price per Ordinary Share equal to the Tender Price. All transactions will be carried out on the London Stock Exchange.

Qualifying Shareholders' entitlements

Qualifying Shareholders may participate in the Tender Offer by tendering all or a proportion of their Basic Entitlement. In addition, Qualifying Shareholders may tender Ordinary Shares in excess of their Basic Entitlement up to their Maximum Entitlement, but such excess tenders will only be satisfied to the extent that other Qualifying Shareholders have not tendered all or any part of their Basic Entitlement, as the case may be, and provided that the tender is not more than such Qualifying Shareholder's Maximum Entitlement. Tenders in excess of the Basic Entitlement up to the Maximum Entitlement will be satisfied pro rata in proportion to the Basic Entitlement of those Shareholders who have indicated they wish to tender Ordinary Shares in excess of their Basic Entitlement, rounded down to the nearest whole number of Ordinary Shares. Any fractional entitlements of Qualifying Shareholders will be aggregated and used to satisfy surplus tenders at the discretion of the Board. In the event that a Qualifying Shareholder tenders more than their Maximum Entitlement, such tender will be treated as a tender of Ordinary Shares up to their Maximum Entitlement.

Current trading

In its interim management statement covering the 13 week period ended 27 September 2009, announced on 1 October 2009, the Company stated that "as a result of strong trading in the third quarter, the Board believes it is on track to exceed market expectations for the full year".

Since that date, trading has continued strongly and the Board is confident of the Company fully meeting the market's current expectations for the full year.

Overseas Shareholders

The Tender Offer is not being made, directly or indirectly, in or into, the United States, Canada, Australia, Japan or any other Restricted Jurisdiction or by use of the mails or by any means or instrumentality (including, without limitation, facsimile transmission, telex, e-mail or telephone) of interstate or foreign commerce, or any facilities of a national securities exchange, of the United States, Canada, Australia, Japan or any other Restricted Jurisdiction and the Tender Offer is not capable of acceptance by any such use, means, instrumentality or facility, or otherwise from or within the United States, Canada, Australia, Japan or any other Restricted Jurisdiction.

Directors' intentions

The following Directors who are beneficially entitled to Ordinary Shares have indicated that they will participate in the Tender Offer up to their Basic Entitlement: Stephen Hemsley; Colin Halpern; Christopher Moore; and Nigel Wray.  

Expected timetable

Tender Offer commences	2 December 2009
Record Date for the Tender Offer	5.00 p.m. on 10 December 2009
Latest time and date for receipt of Forms of Tender and TTE instructions	1.00 p.m. on 11 December 2009
Tender Offer closes	1.00 p.m. on 11 December 2009
Confirmation of Tender Price announced if 292 pence per Ordinary Share is outside the Existing Share Buy-Back Authority	7.00 a.m. on 11 December 2009
Result of Tender Offer announced	11 December 2009
Purchase of Ordinary Shares under the Tender Offer	11 December 2009
CREST accounts credited with Tender Offer proceeds and any unsold Ordinary Shares	16 December 2009
Despatch of cheques for certificated Ordinary Shares purchased pursuant to the Tender Offer	by 16 December 2009
Despatch of balance certificates in respect of any unsold Ordinary Shares	by 16 December 2009
Enquiries:
Domino's Pizza UK & IRL plc Lee Ginsberg, Chief Financial Officer	[phone]
Numis Securities Limited  Corporate Broking: David Poutney / James Serjeant Corporate Finance: Richard Thomas	[phone]
Altium Capital Limited Ben Thorne/Tim Richardson	[phone]
Hogarth Partnership Ltd  Fiona Noblet / Anthony Arthur / Simon Hockridge	[phone]

DEFINITIONS The following definitions apply throughout this announcement, unless the context otherwise requires:
Altium	Altium Capital Limited, a company registered in England and Wales with registered number 1072627
Australia	the Commonwealth of Australia, its states, territories and possessions
Basic Entitlement	the entitlement of each Qualifying Shareholder to sell up to 3.7 per cent. of Ordinary Shares registered in such Qualifying Shareholder's name on the Record Date rounded down to the nearest whole number of Ordinary Shares pursuant to the Tender Offer
Canada	Canada, its provinces and territories and all areas subject to its jurisdiction and any political subdivision thereof
certificated or in certificated form	in relation to a share or other security, a share or other security which is not in uncertificated form
Circular	the document containing the Tender Offer to be sent to Shareholders on or about the same date as this announcement
CREST	the relevant system (as defined in the CREST Regulations) in respect of which Euroclear is the Operator (as defined in the CREST Regulations)
CREST Manual	the compendium of documents entitled CREST Manual issued by Euroclear from time to time and comprising the CREST Reference Manual, the CREST Central Counterparty Service Manual, the CREST International Manual, CREST Rules, CCSS Operations Manual and the CREST Glossary of Terms
Directors or Board	the board of directors of Domino's
Domino's or the Company	Domino's Pizza UK & IRL plc
Euroclear	Euroclear UK & Ireland Limited, the operator of CREST
Existing Share Buyback Authority	the authority granted by the Shareholders to the Company to repurchase its own Ordinary Shares at the Annual General Meeting of the Company held on 23 April 2009 which provides that the maximum price per Ordinary Share payable on any exercise of the authority shall be the higher of (i) an amount equal to 105 per cent. of the average of the market value for an Ordinary Share as derived from the Daily Official List of the London Stock Exchange plc for the five business days prior to making any purchase; and (ii) the higher of the price of the last independent trade and the highest current bid on the London Stock Exchange plc at the time the purchase is carried out. The minimum price payable shall be 1.5625 pence per Ordinary Share, being the nominal value of an Ordinary Share
Form of Tender	the form of tender to be enclosed with the Circular for use in relation to the Tender Offer
FSMA	the Financial Services and Markets Act 2000, as amended
London Stock Exchange	London Stock Exchange plc
Maximum Entitlement	the maximum number of Ordinary Shares that each Qualifying Shareholder is entitled to tender pursuant to the Tender Offer, being 10 per cent. of the Ordinary Shares registered in such Qualifying Shareholder's name on the record date, rounded down to the nearest whole number of Ordinary Shares pursuant to the Tender Offer
Numis	Numis Securities Limited
Ordinary Shares	ordinary shares of 1.5625 pence each in the capital of the Company
Overseas Shareholders	a Shareholder who is resident in, or citizen of, a jurisdiction outside the United Kingdom
Qualifying Shareholders	shareholders on the register of members of the Company at the Record Date
Record Date	5.00 p.m. on 10 December 2009
Repurchase Agreement	the repurchase agreement entered into between Numis, Altium and the Company on 30 November 2009
Restricted Jurisdiction	the United States, Canada, Australia, Japan or any other jurisdiction where the extension or availability of the Tender Offer (and/or any other transaction contemplation thereby) would breach any applicable law or regulation
Shareholders	the holders of Ordinary Shares
Tender Offer	the tender offer to be made by Numis and Altium for up to 6,000,000 Ordinary Shares in aggregate (being up to 3,000,000 Ordinary Shares in the case of Numis and up to 3,000,000 Ordinary Shares in the case of Altium) at the Tender Price on the terms and subject to the conditions set out in this Circular and the Form of Tender
TTE instruction	transfer to escrow instruction (as defined in the CREST Manual)
uncertificated or in uncertificated form	a share or other security recorded on the register as being held in uncertificated form in CREST and title to which, by virtue of the CREST Regulations, may be transferred by means of CREST
United Kingdom or UK	the United Kingdom of Great Britain and Northern Ireland
United States or US	the United States of America, its territories and possessions, any state of the United States and other areas subject to its jurisdiction and the District of Columbia
£	the lawful currency of the United Kingdom

Numis Securities Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting for Domino's and no-one else in connection with the Tender Offer and will not regard any other person (whether or not a recipient of the Circular) as a client in relation to the Tender Offer and will not be responsible to anyone other than Domino's for providing the protections afforded to its customers or for providing advice in relation to the Tender Offer or any matters referred to in this announcement.

Altium Capital Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting for Domino's and no-one else in connection with the Tender Offer and will not regard any other person (whether or not a recipient of the Circular) as a client in relation to the Tender Offer and will not be responsible to anyone other than Domino's for providing the protections afforded to its customers or for providing advice in relation to the Tender Offer or any matters referred to in this announcement.

 

END

 

 

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