Shareholder Update

RNS Number : 3514Q
DP Eurasia N.V
27 October 2021
 

For Immediate Release


27 October 2021

 

Shareholder Update

 

DP Eurasia N.V.

(DP Eurasia or the Company, and together with its subsidiaries, the Group)

Further to the announcement on 25 October 2021, the committee of the board of the Company (the "IndependentCommittee"), comprising  all the independent directors, being the Chairman of the Board of DP Eurasia, Peter Williams, and the Senior Independent Non-Executive Director, David Adams, provides a further update by way of a recommendation to shareholders following the Independent Committee's completion of its evaluation of the fairness of the terms of the reverse bookbuild by Jubilant Foodworks Netherlands B.V. ("Jubilant") (the "RBB").

Potential impact of the RBB on the Company

As previously notified to the Company's shareholders in its Annual Report for the years ended 31 December 2019 and 2020, neither the UK takeover regime (the "Takeover Code") nor the Dutch takeover regime apply to the Company.  Consequently, there is no legal or other requirement for the directors of the Company (or, in this case, the Independent Committee) to provide its opinion on whether the financial terms of the RBB are fair and reasonable (in the way that would be required under Rule 3 of The Takeover Code if the Company were subject to the UK takeover regime). However, the Independent Committee believes it is important to provide shareholders with such an opinion given Jubilant's ownership could potentially increase to 49.99% following the RBB,   in combination with the absence of future appropriate protections for the balance of shareholders including the risk of delisting .  

The Independent Committee acknowledges that the RBB does not constitute a full offer for the Company and that given the RBB is at a premium of 23.4% to the share price of the Company on 29 September 2021 (being the last practical day prior to the announcement) and at a premium of 4.4% to the price at the close of business on 26 October 2021, some shareholders may see the RBB as an attractive opportunity for a liquidity event.

However, in the opinion of the Independent Committee, by virtue of the influence Jubilant would be able to exert through the increase in its significant shareholding in combination with its board representation, and the intention of Jubilant to treat the Company as a consolidated subsidiary, that the RBB should be appraised as a change of control transaction.

Whilst the Takeover Code does not apply to the Company and therefore the RBB, the Independent Committee wishes to draw attention to General Principle 1 of the Takeover Code which states "All holders of the securities of an offeree company of the same class must be afforded equivalent treatment; moreover, if a person acquires control of a company, the other holders of securities must be protected."  The Independent Committee wishes to reiterate that Jubilant has failed to treat all shareholders equally since non-institutional shareholders in the Company have not been afforded the opportunity to participate in the RBB. 

Moreover, following the Independent Committee highlighting its consideration of the key risks of the RBB in the announcement of 25 October 2021, and despite the efforts of the Independent Committee and its advisers to engage with Jubilant, neither Jubilant nor its parent has sought to discuss further any undertakings or protections for minority shareholders.  The Independent Committee concludes, as a result, that there is potential for a heightened risk of a worsening impact on the future liquidity of shares for remaining shareholders were Jubilant to increase its stake to 49.99%.

 

Current trading and outlook

 

On 7 September 2021, the Company published its guidance for the outlook for 2021, which it re-iterates, and is reproduced as follows:

 

"Whilst the Board is conscious of the potential continued risks posed by the pandemic, the strong like-for-like performance achieved in Turkey in the first half of the year and the expectation of continued buoyant trading enables raised guidance for full year like-for-like growth rates in Turkey.  In late March 2021, guidance was set at 21-25%, which is now being raised to 35-40%.

 

Given the stronger revenue performance than anticipated earlier in the year, the Board is pleased to report that adjusted EBITDA is now likely to be slightly ahead of the market's current expectations."

 

Recommendation

 

The Independent Committee, which has been advised by Liberum Capital Limited ("Liberum") as to the financial terms of the RBB, believes that the RBB materially undervalues the Company given its future prospects and does not consider the financial terms of the RBB to be fair and reasonable. In providing its financial advice to the Independent Committee, Liberum has taken into account the commercial assessment of the Independent Committee.

In particular, the Independent Committee believes the potential impact of Jubilant owning a 49.99% stake, with the risks identified, for those shareholders to whom the RBB has not been made available and to those tendering shareholders participating in the RBB whose allocations are disproportionately scaled back on a discretionary basis, may, future prospects for the Company notwithstanding, impact the value of the shares if any of the identified risks cannot be satisfactorily mitigated.

Given both the financial terms of the RBB and the impact of the potential risks highlighted above for all shareholders, the Independent Committee recommends that shareholders do not tender their shares in accordance with the terms of the RBB.

 

Regardless of the outcome of the RBB, the Company (through the Independent Committee) will continue to seek both to engage constructively with Jubilant and to act in the interests of all shareholders, which will include efforts to mitigate the future risk of a de-listing and attempting to introduce some elements of shareholder protection, recognising any necessary changes to the Articles will require shareholder approval and any changes to the Relationship Agreement which binds the actions of Jubilant will need to be bilaterally negotiated.

 

Enquiries

DP Eurasia N.V.


Selim Kender, Chief Strategy Officer & Head of Investor Relations

+90 212 280 9636



Buchanan (Financial Communications)


Richard Oldworth / Victoria Hayns / Tilly Abraham / Verity Parker

+44 20 7466 5000

dp@buchanan.uk.com

Liberum (Financial Adviser and Corporate Broker)

M&A: Tim Medak/Mark Harrison

Corporate Broking: Andrew Godber/Edward Thomas

 

 

+44 20 3100 2000

Notes to Editors

 

DP Eurasia N.V. is the exclusive master franchisee of the Domino's Pizza brand in Turkey, Russia, Azerbaijan and Georgia. The Company was admitted to the premium listing segment of the Official List of the Financial Conduct Authority and to trading on the main market for listed securities of the London Stock Exchange plc on 3 July 2017. The Company (together with its subsidiaries, the "Group") is the largest pizza delivery company in Turkey and the third largest in Russia. The Group offers pizza delivery and takeaway/ eat-in facilities at its 789 stores (584 in Turkey, 192 in Russia, nine in Azerbaijan and four in Georgia as at 30 June 2021), and operates through its owned corporate stores (28%) and franchised stores (72%). The Group maintains a strategic balance between corporate and franchised stores, establishing networks of corporate stores in its most densely populated areas to provide a development platform upon which to promote best practice and maximise profitability. The Group has adapted the Domino's Pizza globally proven business model to its local markets.  

Important Notices

Liberum Capital Limited ("Liberum"), which is authorised and regulated in the United Kingdom by the FCA, is acting as financial adviser exclusively for the Company and no one else in connection with the matters set out in this announcement and will not regard any other person as its client in relation to the matters set out in this announcement and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Liberum, nor for providing advice in relation to the contents of this announcement or any other matter referred to herein. Neither Liberum nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Liberum in connection with this announcement, any statement contained herein or otherwise. Neither Liberum nor any of its affiliates nor any of their respective directors, officers, employees, advisers or agents accepts any responsibility or liability whatsoever for, or makes any representation or warranty, express or implied, as to, the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company.

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 this announcement or otherwise. The distribution of this announcement in jurisdictions other than the United Kingdom and the availability of any offer to shareholders of the Company who are not resident in the United Kingdom 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 shareholders of the Company who are not resident in the United Kingdom will need to inform themselves about, and observe any applicable requirements.

Forward-looking statements

This document, including information included or incorporated by reference in this document, may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements may be identified by the use of forward-looking terminology, including the terms "targets", "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts and involve predictions. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements reflect the Company's current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Company's business, results of operations, financial position, liquidity, prospects, growth or strategies and the industry in which it operates. Forward-looking statements speak only as of the date they are made and cannot be relied upon as a guide to future performance. There are many factors that could cause actual results to differ materially from those expressed or implied in forward-looking statements. Among such factors are changes in the global, political, social, economic, business, competitive, market and regulatory forces, future exchange and interest rates, changes in tax rates, future business combinations or disposals, and any epidemic, pandemic or disease outbreak.

These forward-looking statements are based on numerous assumptions regarding the present and future business strategies of such persons and the environment in which each will operate in the future. By their nature, these forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. The factors described in the context of such forward-looking statements in this document may cause the actual results, performance or achievements of any such person, or industry results and developments, to be materially different from any results, performance or achievements expressed or implied by such forward-looking statements. No assurance can be given that such expectations will prove to have been correct and persons reading this document are therefore cautioned not to place undue reliance on these forward-looking statements that speak only as at the date of this document. All subsequent oral or written forward-looking statements attributable to the Company or its affiliates or any persons acting on its behalf are expressly qualified in their entirety by the cautionary statement above. The Company does not intend, nor undertakes any obligation, to update publicly or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required.

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