Offer for Highbury HouseComms
Future PLC
14 February 2005
14 February 2005
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO
AUSTRALIA, CANADA OR JAPAN
Recommended Offer (the 'Offer')
by
Morgan Stanley & Co. Limited ('Morgan Stanley') on behalf of
Future plc ('Future') (or by Future in the United States) for
Highbury House Communications plc ('Highbury')
Summary of the Offer
The Boards of Future and Highbury are pleased to announce that they have reached
agreement on the terms of a recommended share offer (with a Partial Cash
Alternative) to be made by Morgan Stanley, on behalf of Future (or by Future in
the United States), to acquire the whole of the issued and to be issued ordinary
share capital of Highbury.
• The Offer comprises 10 New Future Shares for every 83.25 Highbury Shares
and so on in proportion for any number of Highbury shares held.
• Under the Partial Cash Alternative, each Highbury Shareholder who
validly accepts the Offer, will be able to elect to receive 10.0 pence in
cash for each Highbury Share, instead of some or all of the New Future
Shares to which he would otherwise have become entitled, subject to the
aggregate amount of cash payable under the Partial Cash Alternative being
limited to £10 million. If such amount is insufficient to satisfy all
elections for the Partial Cash Alternative, such elections will be scaled
back pro rata to the applications.
• The New Future Shares will rank pari passu with existing Future Shares
in all respects, including the right to receive all dividends declared, made
or paid from the date the Offer becomes or is declared unconditional in all
respects. It is expected that Future's interim dividend for the six months
ending 31 March 2005 will be declared after the Offer becomes or is declared
unconditional in all respects.
• The Offer values the issued share capital of Highbury at approximately
£31.6 million and each Highbury Share at 10.0 pence (calculated using the
Closing Price of a Future Share of 83.25 pence on 11 February 2005, being
the last Dealing Day prior to this Announcement), representing a premium of:
- 35.5 per cent over the Closing Price of a Highbury Share of 7.38 pence
on 25 January 2005, being the last Dealing Day prior to Highbury's
announcement on 26 January 2005 that it had received an approach that
might or might not lead to an offer for Highbury;
- 6.6 per cent over the Closing Price of a Highbury Share of 9.38 pence
on 11 February 2005, being the last Dealing Day prior to this
Announcement; and
- 20.0 per cent over the price of 8.33 pence per Highbury Share, being
the average Closing Price of a Highbury Share over the last three months
prior to 26 January 2005.
• At the Offer price, Highbury has an enterprise value of £96.5 million,
including Highbury's current net debt of £64.9 million, which is being
assumed by the Enlarged Group.
• The Future Directors believe that the Acquisition represents an
attractive opportunity for Future to take a significant further step forward
in its stated growth strategy within the special-interest consumer magazine
sector and continues the diversification of Future's magazine portfolio.
• The Future Directors also believe that the Acquisition will bring
significant strategic, commercial and financial benefits to Future, through
revenue opportunities and cost saving initiatives from the Enlarged Group's
increased scale and stronger platform.
• The Future Directors believe that the annualised operating cost savings
that will result from combining the two businesses will amount to at least
£4.5 million in the first full financial year of ownership of Highbury (the
year to 30 September 2006). These savings will be realised through
operational efficiencies such as securing enhanced supply terms (including
paper, print and cover-mounts) throughout the Enlarged Group and the
rationalisation of stock exchange listing and headquarters' costs and other
overhead areas. The total costs of achieving these savings are expected to
amount to up to £4.0 million, which are expected to be incurred in the
current financial year. (see note 1)
• The Future Directors believe that other substantial benefits, at a cash
cost to be determined, could include improved distribution arrangements and,
separately, increased volume sales efficiency and rationalisation of the
property portfolio, especially in central London (which may lead to an
additional property provision).
• The Future Directors believe that the Acquisition will have an accretive
effect on earnings per share in the first full year of ownership. (see note
2)
• Following the Offer becoming or being declared unconditional in all
respects, Future will be the third-largest UK consumer magazine publisher,
and will be the second-largest UK publisher of special-interest consumer
magazines, as measured by retail sales value.
• Following the Offer becoming or being declared unconditional in all
respects, Future intends to continue the process of divestment of certain
Highbury business units, including the announced BCom disposal, in order to
focus on the consumer magazine portfolio.
• The Future Directors also believe that the Acquisition would also
benefit Highbury Shareholders by affording them an opportunity to share in
the success of the Enlarged Group, including the benefit of synergies not
otherwise available to Highbury as a stand-alone business.
• Irrevocable undertakings have been received from the Highbury Directors
(and certain of their connected persons) to accept the Offer in respect of
their entire holdings of 4,636,734 Highbury Shares, in aggregate,
representing approximately 1.5 per cent of Highbury's issued share capital.
These irrevocable undertakings to accept the Offer are binding, unless the
Offer lapses or is withdrawn.
• The Highbury Directors, who have been so advised by Close Brothers,
consider the terms of the Offer to be fair and reasonable and will
unanimously recommend all Highbury Shareholders to accept the Offer.
• Due to its size, the Offer will be conditional, inter alia, on approval
by Future Shareholders at an Extraordinary General Meeting. The Future
Directors intend unanimously to recommend Future Shareholders to vote in
favour of the Acquisition.
Commenting on the Offer, Greg Ingham, Chief Executive of Future, said:
'Highbury is a business that we know well and have followed for some time. We
consider that it represents an opportunity to acquire a significant asset at a
fair price. Whilst the business has faced some challenges in recent times, we
are confident that we can integrate the titles and teams, and improve the
financial performance and enhance shareholder value. Our respective businesses
are complementary so there is a genuine opportunity to generate important
synergies for the combined group.'
Commenting on the Offer, Mark Simpson, Chief Executive Officer of Highbury,
said:
'I am pleased to be recommending Future's offer. It represents fair value for
our shareholders, as well as the opportunity to participate in the significant
financial and commercial benefits of combining Highbury's and Future's
businesses. Importantly, I am confident the Offer will also be welcomed by
Highbury's other stakeholders. In particular, our employees should benefit from
the enhanced career opportunities that a larger, more stable group can offer.'
There will be a presentation for investors and analysts at 10.00 am today at
UBS's offices: 1 Finsbury Avenue, London EC2M 2PP.
This summary should be read in conjunction with the full text of the attached
Announcement. The Offer will be subject to the terms and conditions set out in
Appendix I to the attached Announcement and to the further terms which will be
set out in the Offer Document and the Form of Acceptance.
Note 1: The expected operating cost savings have been calculated on the basis of
the existing cost and operating structures of the Future and Highbury and by
reference to current prices and exchange rates and the current regulatory
environment. The statement of estimated operating cost savings relates to future
actions and circumstances which, by their nature, involve risks, uncertainties
and other factors. Because of this, the cost savings referred to may not be
achieved, or those achieved could be materially different from those estimated.
This statement should not be interpreted to mean that the earnings per share in
the financial year following the Acquisition, or in any subsequent period, would
necessarily match or be greater than those for the relevant preceding financial
period.
Note 2: This statement does not constitute a profit forecast nor should it be
interpreted to mean that future earnings per share of Future following the Offer
becoming or being declared unconditional in all respects will necessarily match
or exceed historical earnings per share of Future.
General Enquiries:
Future plc Highbury House Communications plc
Greg Ingham, Chief Executive Mark Simpson, Chief Executive Officer
John Bowman, Finance Director Owen Davies, Finance Director
Tel: 01225 442 244 Tel: 020 7608 6600
Morgan Stanley & Co. Limited Close Brothers
(Financial adviser to Future) (Financial adviser to Highbury)
John Krumins, Managing Director David Bezem, Director
Tom Hill, Vice President Darren Redmayne, Assistant Director
Tel: 020 7425 5000 Tel: 020 7655 3100
UBS Investment Bank Panmure Gordon, a division of Lazard & Co., Limited
(Broker to Future) (Broker to Highbury)
Adrian Haxby, Managing Director Richard Potts, Director
Jonathan Evans, Director Marianne Woods, Director
Tel: 020 7568 1000 Tel: 020 7187 2000
Hogarth Partnership College Hill
(Financial PR advisers to Future) (Financial PR advisers to Highbury)
James Longfield Adrian Duffield
Georgina Briscoe Tom Baldock
Tel: 020 7357 9477 Tel: 020 7457 2020
This Announcement does not constitute an offer to sell or the solicitation of an
offer to subscribe for or buy any security, nor is it a solicitation of any vote
or approval in any jurisdiction, nor will there be any sale, issuance or
transfer of the securities referred to in this Announcement in any jurisdiction
in contravention of applicable law.
Morgan Stanley & Co. Limited is acting for Future and no-one else in connection
with the Offer, and will not be responsible to anyone other than Future for
providing the protections afforded to its clients nor for providing advice in
relation to the Offer.
UBS Investment Bank is acting for Future and no-one else in connection with the
Offer, and will not be responsible to anyone other than Future for providing the
protections afforded to its clients nor for providing advice in relation to the
Offer.
Close Brothers, which is regulated by the Financial Services Authority, is
acting for Highbury and no-one else in connection with the Offer and will not be
responsible to anyone other than Highbury for providing the protections afforded
to its customers nor for providing advice in relation to the Offer. In addition,
Close Brothers has given and has not withdrawn its written consent to the issue
of this Announcement with the inclusion of its letter and the reference to its
name in the form and context in which it is included.
Panmure Gordon, a division of Lazard & Co., Limited is acting for Highbury and
no-one else in connection with the Offer, and will not be responsible to anyone
other than Highbury for providing the protections afforded to its clients nor
for providing advice in relation to the Offer.
Deloitte & Touche LLP has given and has not withdrawn its written consent to the
issue of this Announcement with the inclusion of its letter and the reference to
its name in the form and context in which it is included.
Unless otherwise determined by Future and except to the extent permitted by
applicable laws, the Offer will not be made, directly or indirectly, in or into
Australia, Canada or Japan and the Offer will not be capable of acceptance from
or within these jurisdictions. Accordingly, copies of this Announcement are not
being, and must not be, directly or indirectly, mailed or otherwise forwarded,
distributed or sent, in whole or in part, in, into or from Australia, Canada or
Japan and persons receiving this Announcement (including custodians, nominees
and trustees) must not mail or otherwise forward, distribute or send it in, into
or from Australia, Canada or Japan, if to do so would violate applicable laws in
such jurisdiction.
The ability of Highbury Shareholders who are not resident in the United Kingdom
to accept the Offer may be affected by the laws of the relevant jurisdictions in
which they are located. Persons who are not resident in the United Kingdom
should inform themselves of, and observe, any applicable requirements.
The New Future Shares have not been, and will not be, registered under the US
Securities Act or under the securities laws of any state of the United States;
have not been, and will not be, qualified for sale or resale under the
securities laws of any province or territory of Canada; and no prospectus in
relation to them has been, or will be, lodged with, or registered by, the
Australian Securities and Investments Commission or the Japanese Ministry of
Finance. Accordingly, the New Future Shares are not being and will not be
offered, sold, resold or delivered, directly or indirectly, in or into
Australia, Canada or Japan or any other jurisdiction or to or for the account or
benefit of any residents of Australia, Canada or Japan if to do so would
constitute a violation of the laws of, or require registration thereof in, the
relevant jurisdiction.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This document contains statements about members of the Future Group and the
Highbury Group that are or may be forward-looking statements. All statements
other than statements of historical facts included in this document may be
forward-looking statements. Any statements preceded or followed by or that
include the words 'targets', 'plans', 'believes', 'expects', 'aims', 'intends',
'will', 'may', 'anticipates' or similar expressions or the negative thereof are
forward-looking statements. Forward-looking statements include statements
relating to the following: (i) future capital expenditures, expenses, revenues,
profits, economic performance, financial condition, dividend policy, losses and
future prospects; (ii) business and management strategies and the expansion and
growth of Future's or Highbury's operations; and (iii) the effects of government
regulation on Future's or Highbury's businesses.
These forward-looking statements involve known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or
achievements of any such person, or industry results, to be materially different
from any results, performance, or achievements expressed or implied by such
forward-looking statements. 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. All
subsequent oral or written forward-looking statements attributable to Future or
Highbury, or any of their members or any persons acting on their behalf are
expressly qualified in their entirety by the cautionary statement above. Except
as required by law, neither Future nor any other party intends to update these
forward-looking statements, even though the affairs of Future will change from
time to time.
OFFER IN THE UNITED STATES
The Offer in the United States is being made solely by Future and neither Morgan
Stanley nor any of its affiliates or related entities is making the Offer in the
United States.
Notice to New Hampshire Residents: Neither the fact that a registration
statement or an application for a license has been filed under this chapter with
the State of New Hampshire nor the fact that a security is effectively
registered or a person is licensed in the State of New Hampshire constitutes a
finding by the New Hampshire Secretary of State that any document filed under
Chapter 421-B of the New Hampshire Revised Statutes Annotated is true, complete
and not misleading. Neither any such fact nor the fact that an exemption or
exception is available for a security or a transaction means that the Secretary
of State of New Hampshire has passed in any way upon the merits or
qualifications of, or recommended or given approval to, any person, security, or
transaction. It is unlawful to make, or cause to be made, to any prospective
purchaser, customer, or client any representation inconsistent with the
provisions of this paragraph.
Future is not aware of any jurisdiction in which the making of the Offer is
prohibited by any administrative or judicial action pursuant to any valid
statute of any state of the United States. If Future becomes aware of any valid
US state statute prohibiting the making of the Offer, it will make a good faith
effort to comply with such US state statute or seek to have such statute
declared inapplicable to the Offer. If, after such good faith effort, Future
cannot comply with any such state statute, the Offer will not be made to (and
tenders will not be accepted from or on behalf of) holders in such state.
The Offer is being made for securities of a United Kingdom company and United
States investors should be aware that this Announcement, the Offer Document, the
Listing Particulars and any other disclosure documents relating to the Offer
have been or will be prepared in accordance with the City Code (as applicable),
the Listing Rules (as applicable) and United Kingdom disclosure requirements,
format and style, all of which differ from those in the United States. Future's
and Highbury's financial statements, and all financial information that is
included in this Announcement or that may be included in the Offer Document or
the Listing Particulars or any other disclosure documents relating to the Offer,
have been or will be prepared in accordance with United Kingdom generally
accepted accounting principles and thus may not be comparable to financial
statements of United States companies.
Future is incorporated under the laws of England and Wales. All of the Future
Directors are residents of countries other than the United States. As a result,
it may not be possible for United States shareholders of Future to effect
service of process within the United States upon Future or such Future Directors
or to enforce against any of them judgements of the United States predicated
upon the civil liability provisions of the federal securities laws of the United
States. It may not be possible to sue Future or its officers or directors in a
non-US court for violations of the US securities laws.
In accordance with normal UK market practice, Future or its nominees or brokers
(acting as agents) may from time to time during the period in which the Offer
remains open for acceptance make certain purchases of, or arrangements to
purchase, Highbury Shares otherwise than under the Offer, such as in open market
or privately negotiated purchases. Such purchases, or arrangements to purchase,
will comply with all applicable UK rules, including the City Code, the Listing
Rules and the rules of the London Stock Exchange.
Any person who, alone or acting together with any other person(s) pursuant to an
agreement or any understanding (whether formal or informal) to acquire or
control securities of Highbury, owns or controls, or becomes the owner or
controller, directly or indirectly, of one per cent or more of the issued
Highbury Shares is generally required under the provisions of Rule 8 of the City
Code to notify a Regulatory Information Service and the Panel of every dealing
in such securities during the Offer period. Please consult your financial
adviser immediately if you believe this Rule may be applicable to you.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO
AUSTRALIA, CANADA OR JAPAN
Recommended Offer
by
Morgan Stanley & Co. Limited on behalf of
Future plc (or by Future in the United States) for
Highbury House Communications plc
1. Introduction
The Boards of Future and Highbury are pleased to announce that they have reached
agreement on the terms of a recommended share offer (with a Partial Cash
Alternative) to be made by Morgan Stanley, on behalf of Future (or by Future in
the United States), to acquire the whole of the issued and to be issued ordinary
share capital of Highbury.
2. The Offer
The Offer, which will be subject, inter alia, to the approval of Future
Shareholders, and to the terms and conditions set out in Appendix I to this
Announcement and the further terms set out in the Offer Document and the Form of
Acceptance, will be made by Morgan Stanley, on behalf of Future (or by Future in
the United States), on the following basis:
10 New Future Shares for every 83.25 Highbury Shares
and so on in proportion for any number of Highbury Shares held, provided that
fractions of New Future Shares will not be allotted to Highbury Shareholders who
accept the Offer. Entitlements to New Future Shares will be rounded down to the
nearest whole number of New Future Shares and fractional entitlements will be
aggregated and sold in the market and the net proceeds retained for the benefit
of the Enlarged Group.
The Offer will include a Partial Cash Alternative described in more detail
below.
The Offer values the issued share capital of Highbury at approximately £31.6
million and each Highbury Share at 10.0 pence (calculated using the Closing
Price of a Future Share of 83.25 pence on 11 February 2005, being the last
Dealing Day prior to this Announcement), representing a premium of:
- 35.5 per cent over the Closing Price of a Highbury Share of 7.38 pence
on 25 January 2005, being the last Dealing Day prior to Highbury's announcement
on 26 January 2005 that it had received an approach that might or might not lead
to an offer for Highbury;
- 6.6 per cent over the Closing Price of a Highbury Share of 9.38 pence
on 11 February 2005, being the last Dealing Day prior to this Announcement; and
- 20.0 per cent over the price of 8.33 pence per Highbury Share, being
the average Closing Price of a Highbury Share over the last three months prior
to 26 January 2005.
At the Offer price, Highbury has an enterprise value of £96.5 million, including
Highbury's current net debt of £64.9 million, which is being assumed by the
Enlarged Group.
The New Future Shares will rank pari passu with existing Future Shares in all
respects, including the right to receive all dividends declared, made or paid
from the date of the Offer becoming or being declared unconditional in all
respects. It is expected that Future's interim dividend for the six months
ending 31 March 2005 will be declared after the Offer becomes or is declared
unconditional in all respects.
The Offer will be conditional, inter alia, on the approval of the Acquisition by
Future Shareholders. An Extraordinary General Meeting of Future will be convened
in due course to approve, inter alia, the Acquisition, further details of which
will be set out in the Circular to be sent to Future Shareholders.
Full acceptance of the Offer (on the basis set out in Appendix I to this
Announcement) will result in the issue of up to approximately 38.0 million New
Future Shares by Future, and in Highbury Shareholders holding approximately 10.5
per cent of the Enlarged Share Capital (assuming no elections for cash under the
Partial Cash Alternative and no exercises of any of the options under the
Highbury Share Option Schemes).
Details of the conditions and certain further terms of the Offer are set out
below and in Appendix I to this Announcement. The full terms of the Offer will
also be set out in the Offer Document and in the Form of Acceptance, including
such further terms as may be required to comply with US federal securities laws.
3. Partial Cash Alternative
Under the Partial Cash Alternative, each Highbury Shareholder who validly
accepts the Offer will be entitled to elect to receive (subject to the
limitations set out below) 10.0 pence in cash for each Highbury Share, instead
of some or all of the New Future Shares to which he would otherwise become
entitled. The aggregate amount of cash payable pursuant to the Partial Cash
Alternative will not exceed £10 million. Accordingly, the extent to which effect
will be given to elections for the Partial Cash Alternative will depend upon the
extent to which elections under the Partial Cash Alternative are not made by
other Highbury Shareholders. If such cash amount is insufficient to satisfy all
elections for the Partial Cash Alternative such elections will be scaled down as
nearly as is practicable on a pro rata basis to the applications, with the
balance of entitlements being satisfied in New Future Shares (subject to
fractional entitlements being treated as above).
The Partial Cash Alternative will be made available until 3.00 p.m. on the First
Closing Date and may not be available thereafter. The Partial Cash Alternative
will be conditional upon the Offer becoming or being declared unconditional in
all respects.
The cash payable under the Partial Cash Alternative will be funded from a new
committed borrowing facility from Barclays Bank PLC.
4. Recommendation
The Highbury Directors, having been so advised by Close Brothers, consider the
terms of the Offer to be fair and reasonable. In providing advice to the
Highbury Board, Close Brothers has taken into account the commercial assessments
of the Highbury Directors.
Accordingly, the Highbury Directors will unanimously recommend that Highbury
Shareholders accept the Offer as they (and certain of their connected persons)
have irrevocably undertaken to do in respect of their entire holdings of
Highbury Shares amounting to approximately 1.5 per cent of the issued share
capital of Highbury.
5. Background to and reasons for the Offer
Future is a successful international publisher of special-interest consumer
magazines.
Future's stated strategy has been to focus on organic growth and selective
acquisition opportunities within the special-interest consumer magazines sector
which it knows well, primarily in the UK and US. This strategic focus has
enabled Future to increase group sales by 33 per cent and its adjusted annual
operating profit by 136 per cent comparing the audited year ended 31 December
2001 and the unaudited pro forma twelve months to 30 September 2004.
As part of this strategy, Future has acquired and successfully integrated 14
titles over the two years to 30 September 2004. These acquisitions were funded
from the Future Group's own net cash resources rather than debt. Since that date
Future has purchased a further 15 titles. The Future Directors consider that the
Future Group is well positioned for further acquisition-based growth.
The Acquisition of Highbury represents an attractive opportunity for the Future
Group to take a significant further step forward within the special-interest
consumer magazines sector. Following the Acquisition, Future intends to continue
the process of divestment of certain Highbury business units, initiated by the
management of Highbury, in order to focus on the consumer magazine portfolio.
Following the Acquisition, Future would become the second-largest publisher of
special-interest consumer magazines in the UK and the third-largest UK consumer
magazine publisher overall, in each case as measured by retail sales value. The
Enlarged Group would have pro forma revenues (excluding approximately £24.5
million of revenues relating to BCom) for the year ended 31 December 2003 of
£266.3 million and proforma adjusted operating profits (before projected annual
cost savings of at least £4.5 million and excluding approximately £0.8 million
of profits relating to BCom) for the year ended 31 December 2003 of £31.8
million. As at 31 December 2004, the Enlarged Group (excluding BCom) would have
had approximately 2,000 employees and would have published over 170 consumer
magazine titles (excluding Highbury Local titles).
The Future Directors believe that, as a result of combining the complementary
magazine portfolios, Future will have increased scale and financial strength for
stronger growth. The Future Directors believe that the Acquisition will be
beneficial to shareholders, customers and employees.
Specifically, given the synergies expected to be created through the
combination, shareholders in the Enlarged Group will benefit from the value
intended to be created by:
• Further diversification of Future's portfolio
Future will have an increasingly diverse portfolio of special-interest consumer
titles, lessening its dependence on any one sub-sector. In particular, the
Future Directors estimate that the revenue contribution from games titles for
Future, which was 46 per cent for the year ended 31 December 2003, would reduce
to below 35 per cent for the Enlarged Group (excluding BCom); and from 33 per
cent to below 25 per cent for the enlarged UK business.
• Expansion through the addition of a complementary portfolio of assets
The Future and Highbury portfolios are highly complementary and they generally
operate in the same or adjacent sectors. Indeed many of the attractive
special-interest titles now owned by Highbury have previously been considered as
acquisition targets by Future.
In particular, the acquisition of Highbury would build on Future's existing
offering in sectors such as cars, computer games, computing, digital
photography, hobbies & pastimes, home entertainment and parenting and will open
up new sectors adjacent to its current operations in areas such as gardening,
home interests, men's lifestyle, motorbikes and puzzles.
Future envisages that Highbury's US assets will be integrated into Future's
established US operations, which in 2003 accounted for 25 per cent of Future's
turnover; and that Highbury's contract publishing business will be merged with
Future Plus, its own existing contract publishing operation.
• Increased operational and financial scale
The acquisition of Highbury will deliver further momentum to Future's UK and US
operations through increased scale, strengthening its position within the retail
environment. It will provide further financial strength to drive both organic
and subsequent acquisition-led growth.
• Enhanced revenue opportunities
Future will use its financial strength and proven experience together with the
combined management skills in the Enlarged Group to drive the launch of new
titles and brand extensions. The portfolio of the Enlarged Group will be broader
and deeper. Revenue opportunities include:
• greater launch activity with a number of Highbury's titles acting as
important platforms;
• further development of Highbury's export and licensing activities;
• more bases for subsequent acquisitions; and
• building on successful contract publishing skill-set.
• Attractive cost savings
The Future Directors believe that the annualised operating cost savings as a
result of combining the two businesses will amount to at least £4.5 million in
the first full financial year of ownership of Highbury (the year to 30 September
2006). These savings will be realised through operational efficiencies such as
securing enhanced supply terms (including paper, print and cover-mounts)
throughout the Enlarged Group and the rationalisation of stock exchange listing
and headquarters' costs and other overhead areas. The total costs of achieving
these savings are expected to amount in total to up to £4.0 million, which are
expected to be incurred in the current financial year. (see note 3)
Other substantial benefits, at a cash cost to be determined, could include
improved distribution arrangements and, separately, increased volume sales
efficiency and rationalisation of the property portfolio, especially in central
London (which may lead to an additional property provision).
• More efficient balance sheet
Following the Offer becoming or being declared unconditional in all respects and
prior to the planned Highbury disposal of BCom, the Enlarged Group will assume
Highbury's current net debt of £64.9 million. The Enlarged Group will therefore
have pro forma borrowings of between £80 million and £90 million (assuming no
elections under the Partial Cash Alternative and no exercises of any of the
options under the Highbury Share Option Schemes and before receipt of the BCom
and former Highbury head office disposal proceeds). This level of gearing is
part of the Future Directors' plan for a more efficient capital structure. The
Future Directors will continue to maintain a prudent overall approach to
financing, whilst preserving flexibility to take advantage of further business
opportunities in due course.
• Earnings accretion
The Future Directors believe that the Acquisition will have an accretive effect
on earnings per share in the first full year of ownership. (This statement does
not constitute a profit forecast nor should it be interpreted to mean that
future earnings per share of Future following the Offer becoming or being
declared unconditional in all respects will necessarily match or exceed
historical earnings per share of Future).
• Integration plan
Future intends to blend Future's and Highbury's consumer businesses in the UK
and also to integrate Highbury's smaller US business with Future's US business
and to merge Highbury's contract publishing with Future Plus. Future also
intends to rationalise the Enlarged Group's property portfolio, preferably
establishing a single central London site.
In addition, Future will integrate the different elements of Highbury to provide
enhanced management visibility, control and responsiveness. The Future Directors
believe that the Enlarged Group will provide an increased range of career
opportunities for employees.
The Future Directors believe that, if approved, this transaction will also
benefit Highbury Shareholders by affording them an opportunity to share in the
success of the Enlarged Group including the benefit of synergies not otherwise
available to Highbury as a stand-alone business.
6. Inducement fee
As an inducement to Future to make the Offer, Highbury and Future have entered
into an agreement under which Highbury has agreed to pay Future in cash a fee of
approximately £0.3 million (inclusive of VAT), in the event that the Offer is
withdrawn (whether before or after posting of the Offer Document) or lapses in
accordance with its terms (other than solely as a consequence of (i) the non-
fulfilment of the regulatory condition set out in paragraph (d) of Appendix I to
the Announcement or (ii) in the event of a Higher Competing Offer (as defined
below), the non-fulfilment of the condition set out in paragraph (c) of Appendix
I to this Announcement) and prior to such withdrawal or lapse:
(i) any person or entity (other than Future or any person acting in concert with
Future, as such term is defined in the Code) publicly announces an intention to
make a Higher Competing Offer (as defined below) in accordance with Rule 2.5 of
the Code, which has not been withdrawn prior to the withdrawal or lapse of the
Offer and such Higher Competing Offer (as defined below) subsequently becomes or
is declared unconditional in all respects;
(ii) the Highbury Directors (or any independent committee of the Highbury board
of directors) withdraw or modify, in a manner adverse to Future, their
recommendation to the Highbury Shareholders in respect of the Offer; or
(iii) Highbury (or any other member(s) of the Highbury Group) enters into an
agreement to dispose of any of Highbury's (or the Highbury Group's) assets
(other than an agreement to dispose of BCom and/or Highbury Local) having an
aggregate value in excess of £6 million without the consent of Future.
For the purposes of this paragraph 6, a Higher Competing Offer means an offer or
proposal (however effected, including by means of a scheme of arrangement) to
acquire Highbury ordinary shares carrying more than 50 per cent of the voting
rights normally exercisable at general meetings which is made or to be made by,
or on behalf of, a person or entity other than Future or any person acting in
concert with Future and which involves either a cash offer (or a cash
alternative to a securities exchange offer) at a price in excess of 10.0 pence
per Highbury Share or a securities exchange offer (without a cash alternative),
involving either (a) the issue of securities of a class already admitted to
trading on the London Stock Exchange (or on the Alternative Investment Market of
the London Stock Exchange or admitted to trading on any other exchange) or (b)
the issue of unlisted securities, the value of which offer or proposal, in
either case, on the day of announcement exceeds 10.0 pence per Highbury Share.
7. Irrevocable undertakings to accept the Offer
Future has received irrevocable undertakings from the Highbury Directors (and
certain of their connected persons) to accept the Offer in respect of their
entire holdings of 4,636,734 Highbury Shares in aggregate representing
approximately 1.5 per cent of Highbury's issued share capital. These irrevocable
undertakings to accept the Offer are binding unless the Offer lapses or is
withdrawn.
8. Financing of the Partial Cash Alternative
The cash payable under the Partial Cash Alternative will be funded from a new
committed borrowing facility from Barclays Bank PLC.
9. Information on Future
Future was founded in the UK in 1985. Today, it publishes over 100 regular
monthly special-interest consumer magazines worldwide with strong portfolios
within the computing, computer games, music, sports and hobby sectors. It is the
fifth largest consumer magazine publisher in the UK as measured by retail sales
value. As at 11 February 2005, Future's market capitalisation was £270.9
million.
Future employs approximately 1,200 people in offices in the UK, US, France and
Italy. Over 100 international editions of Future's magazines are also published
under licence in 30 other countries across the world. Future is listed on the
London Stock Exchange (symbol FUTR) and is headquartered in Bath.
In the UK, Future's magazines are published principally in Bath and London by a
subsidiary, Future Publishing Limited. In the US, Future's magazines are
published by Future Network USA, Inc.; in France by Future France S.A.S.; and in
Italy by Future Media Italy S.p.A..
For the year ended 31 December 2003, Future reported audited turnover of £182.7
million and an audited profit before tax and goodwill amortisation of £22.7
million. As at 31 December 2003, Future had audited net assets of £111.9
million, including audited net cash of £13.4 million.
For the nine months ended 30 September 2004, Future reported audited turnover of
£133.0 million and an audited profit before tax and goodwill of £13.3 million.
As of 30 September 2004, Future had audited net assets of £107.7 million,
including audited net cash of £9.8 million. For the twelve months to 30
September 2004, Future had unaudited sales of £190.4 million and an unaudited
adjusted operating profit of £23.6 million.
10. Current trading for Future
To coincide with Future's Annual General Meeting on 26 January 2005, Future
released a trading update in relation to its revenues and general trading for
the three months ended 31 December 2004. The trading update indicated that
trading was satisfactory.
11. Information on Highbury
Highbury is a publisher of over 200 consumer, business to business and contract
magazines. It publishes 94 consumer titles primarily in the UK (from a number of
offices, including London, Swanley, Manchester, Ely, Orpington and Bournemouth),
and also has operations in South Africa, North America and Australia. It
distributes titles throughout Europe, North America and Africa, and employs
approximately 1,000 people in total.
In the year ended 31 December 2003, Highbury reported audited turnover of £108.1
million and an audited profit before tax, goodwill amortisation, impairment and
exceptional items of £7.1 million. As at 31 December 2003, Highbury had audited
net assets of £99.9 million including audited net debt of £61.9 million.
For the half year ended 30 June 2004, Highbury reported unaudited turnover of
£55.5 million and an unaudited profit before tax, goodwill amortisation,
impairment, exceptional items and refinancing fees of £2.3 million. As at 30
June 2004, Highbury had unaudited net assets of £74.0 million, including
unaudited net debt of £59.3 million.
On 9 February 2005, Highbury announced that it had entered into a conditional
agreement to dispose of BCom.
12. Current trading for Highbury
The text below is extracted from the pre-close trading statement made by
Highbury on 31 January 2005:
'Financial Review
As was indicated in the statement on 21 December 2004, trading was softer than
anticipated in Q3 and Q4 in parts of the Highbury Group's business. In December
trading was patchy, primarily weaker in some parts of the UK Lifestyle division,
but the Highbury Group enjoyed some pick-up in Highbury Entertainment, where
copy sales were stronger than expected. Highbury Group revenues in 2004 were
approximately £115m of which UK newsstand consumer businesses contributed nearly
£70m.
• UK Consumer
Overall, in the UK Consumer divisions, revenue from newsstand magazines in Q4
was 3% lower compared to 2003, of which circulation revenue was 2% lower and
advertising down 7%. On a like-for-like basis, taking into account titles closed
in 2004, revenues were respectively lower by 2%, 1% and 5%.
Performance was disappointing in Highbury Lifestyle (which includes Front, Real
Homes, Fast Car, Gardens Monthly) where both advertising and copy sales in the
men's lifestyle and home interest titles were weaker than expected. Overall, Q4
revenues were 7% lower than 2003. Nonetheless, the Highbury Group's most
profitable title, Fast Car, increased its share in a tough sector during this
period.
Trading was more robust in Highbury Entertainment with Q4 revenues 3% higher
than in 2003 due to a strong December most notably in videogames, home cinema,
digital photography and PC. Profits in the former Paragon Publishing division,
acquired in August 2003, were at a record monthly level in December despite
softer advertising revenues in the run-up to Christmas. Revenues here were also
7% higher in Q4 than the previous year, of which videogames was 9% higher and
computing 3% higher.
• Other UK
Highbury Business finished as expected in Q4 and cemented the recovery from
2003. Highbury Local weakened slightly in December due to soft property
advertising but has maintained its margins. Highbury Direct (direct mail,
newsletters and fulfilment) struggled, especially in December, and made a small
loss at year-end.
• International
Trading in the overseas divisions of South Africa and USA was on target and
revenues and operating profit for both finished the year ahead of 2003.
• Strategic and Operational Review
Good progress is being made with the disposal programme of non-core assets. The
Highbury board believes that the sale of Highbury Business is moving into its
final phase and still expects to complete this disposal by the end of Q1.
Negotiations are progressing for the sale of Highbury Local and a recent
approach to acquire Highbury's South African division is being carefully
considered. The sale of the Highbury Group's former head office has advanced
with exchange of contracts now having taken place. This disposal will realise
approximately £2m after expenses.
As indicated last month, the Highbury Group has also sought to exit from its
newsletters and direct marketing and fulfilment operations. The former is due to
be sold shortly albeit for a nominal sum, whilst the latter is due to be closed
down by the end of Q1 unless a buyer can be quickly found.
As a result of these management actions, and in light of the on-going disposals,
the Highbury Group will incur exceptional restructuring costs, in addition to
those highlighted in the Highbury Group's interim results and a significant
further non cash write down of intangible assets. Furthermore, following
management's review of the Highbury Group's balance sheet, significant
exceptional charges will also be made at the year-end.
The Highbury Group hopes to complete shortly, and before the end of February,
the renegotiation of new banking facilities to reflect the planned much changed
structure of the business. These discussions are at an advanced stage and
management are confident that these new terms will be satisfactorily concluded.
As a consequence of the reorganisation of the UK consumer operations in the past
six months, a significant number of new appointments have been made to
strengthen publishing management in both UK consumer divisions. These include a
new editor and publisher for Front magazine (the latter being a newly created
post to support this title's efforts in an increasingly competitive sector), as
well as a number of senior appointments of highly experienced managers in
Highbury Entertainment. Additionally, much of the Highbury Group's UK
advertising sales structure has been overhauled with many new replacement staff
joining. There is now more focus on cross-portfolio selling, incentivisation
plans have been changed and sales management tightened. Circulation and
publishing management teams have also been reorganised to make them more
customer focused.
The Highbury Group has made progress in repositioning many of its key titles
e.g. the imminent re-launch of all its UK home interest magazines, refocusing
and increasing promotion efforts and enhancing the creative execution of
editorial, design and packaging. Highbury's Management believes this will do
much to improve product competitiveness.
• Outlook
The Highbury Board believes that the action taken so far to improve the
operational capabilities of the Highbury Group, together with the anticipated
results of the disposals referred to above, will put Highbury on a firmer
footing from which to move forward.'
The text below is extracted from the profit estimate made by Highbury on 11
February 2005:
'Having completed the work necessary for the profit estimate to be reported on,
the board of Highbury confirms that its pre-tax profit for the year ended 31
December 2004 is expected to be approximately £3.8 million (before goodwill and
intangible amortisation and impairment, exceptional items, refinancing charges
and FRS4 debt issue cost amortisation).
As a result of actual and planned disposals and the closure of Wyvern and
certain titles, together with (Highbury) management's review of the ongoing
portfolio, the total intangible publishing rights and goodwill non-cash
impairment charge for the year to 31 December 2004 is expected to be not more
than £53 million. Of this figure, £26 million relates to the second half of the
year and of this £22 million is attributable to the businesses identified for
sale or closure.
As expected, and as foreshadowed in the Highbury trading update on 31 January,
further exceptional restructuring costs and significant exceptional charges have
been made at the year-ended 31 December 2004. These are expected to be
approximately £4.8 million, comprising approximately £1.9 million of
restructuring and legal costs (being £1.4 million of redundancy costs and £0.5
million of legal charges) and approximately £2.9 million of non-cash balance
sheet write-downs. The cash cost of the restructuring and legal charges was
substantially incurred in 2004. In addition, there are approximately £0.9
million exceptional refinancing costs, other refinancing charges of £0.6 million
and £0.3 million amortisation of FRS4 debt issue costs charged to interest.'
The above statements regarding financial performance for the twelve months ended
31 December 2004 and the year to that date (the 'Profit Estimate') constitute a
profit estimate within the definitions set out in the City Code. Accordingly,
the following statements are required.
The Profit Estimate has been prepared on the basis of the accounting policies
normally adopted by Highbury and takes into account the results shown by
unaudited interim accounts for the six months ended 30 June 2004, and the
results shown by unaudited management accounts for the six months ended 31
December 2004.
Letter from Deloitte & Touche LLP:
'The Directors
Highbury House Communications plc
Jordan House
47 Brunswick Place
London
N1 6EB
The Directors
Close Brothers Corporate Finance Limited
10 Crown Place
London
EC2A 4FT
14 February 2005
Dear Sirs
Highbury House Communications plc (the 'Company')
We have reviewed the accounting policies and calculations used in preparing the
profit estimate for the Company and its subsidiaries (the 'Group') for the year
ended 31 December 2004, for which the Directors of the Company are solely
responsible, as set out in the announcement by Future plc of a firm intention to
acquire the Company (the '14 February Announcement'). The profit estimate takes
account of the results shown by unaudited interim accounts for the six months
ended 30 June 2004, and the results shown by unaudited management accounts of
the Group for the six months ended 31 December 2004.
We conducted our work in accordance with the Statements of Investment Circular
Reporting Standards issued by the Auditing Practices Board.
Our work has not been carried out in accordance with auditing or other standards
and practices generally accepted in the United States or other jurisdictions and
accordingly should not be relied upon as if it had been carried out in
accordance with those standards and practices.
In our opinion, the profit estimate, so far as the accounting policies and
calculations are concerned, has been properly compiled on the basis stated by
the Directors of the Company in the 14 February Announcement and the basis of
accounting is consistent with the accounting policies of the Group.
The work we have carried out on the profit estimate is solely for the purpose of
reporting to the Directors of the Company, and hence to the existing
shareholders of the Company, and to the Directors of Close Brothers Corporate
Finance Limited. As a result, we assume no responsibility to any offeror or any
other person other than the Directors of the Company, and hence to the existing
shareholders of the Company, and to the Directors of Close Brothers Corporate
Finance Limited in respect of or arising out of or in connection with our work
on the profit estimate.
Yours faithfully
Deloitte & Touche LLP
Chartered Accountants'
Letter from Close Brothers:
'The Directors
Highbury House Communications plc
Jordan House
47 Brunswick Place
London
N1 6EB
14 February 2005
Dear Sirs
We refer to the statements regarding financial performance for the year ended 31
December 2004 of Highbury House Communication plc (the 'Profit Estimate') set
out in a press announcement of today's date.
We have considered the letter of today's date addressed to you and Close
Brothers Corporate Finance Limited from Deloitte & Touche LLP regarding the
accounting policies adopted and calculations made in arriving at the Profit
Estimate.
On the basis of our discussions with you and having regard to the letter from
Deloitte & Touche LLP, we consider that the Profit Estimate, for which you as
Directors of Highbury House Communications plc are solely responsible, has been
made after due and careful consideration.
Yours faithfully
Close Brothers Corporate Finance Limited'
13. Management and employees
Future has confirmed that the existing employment rights, including pension
rights, of all employees of Highbury will be fully safeguarded.
It is intended that Mark Simpson, Highbury's Chief Executive Officer, and Owen
Davies, its Finance Director, will be retained on a consultancy basis to assist
with the integration of Highbury and the various existing disposal projects. It
is intended that the other Highbury Directors will stand down from the board of
Highbury once the Offer becomes or is declared unconditional in all respects.
14. Disclosure of interests in Highbury
Save as disclosed in paragraph 7, neither Future nor, so far as Future is aware,
any person deemed to be acting in concert with Future owns or controls any
Highbury Shares or has any options to acquire Highbury Shares, nor does any such
person have any arrangements in relation to Highbury Shares or any securities
convertible into or exchangeable into Highbury 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 Highbury Shares which may be an inducement to deal or refrain from dealing in
such shares. In the interests of confidentiality prior to this Announcement,
Future has not made any enquiries in this respect of certain parties who may be
presumed by the Panel to be acting in concert with Future for the purposes of
the Offer.
15. Further details of the Offer
The Highbury Shares will be acquired by Future fully paid and free from all
liens, charges, equitable interests, encumbrances and any other third party
rights of any nature whatsoever and together with all rights now or hereafter
attaching to them, including the right to receive in full and retain all
dividends and other distributions (if any) subsequently declared, made or paid.
The New Future Shares to be issued pursuant to the Offer will be issued credited
as fully paid and free from all liens, equities and encumbrances. The New Future
Shares will rank pari passu in all respects with the existing Future Shares,
including the right to receive all future dividends and other distributions
declared, made or paid by Future following the date on which the Offer becomes
or is declared unconditional in all respects. Fractions of New Future Shares
will not be allotted to Highbury Shareholders who accept the Offer (including
holders who are deemed to accept the Offer) but will be aggregated and sold in
the market and the net proceeds retained for the benefit of the Enlarged Group.
The Offer will be subject to the conditions and terms of the Offer set out in
Appendix I, and the further terms that will be set out in the Offer Document and
in the Form of Acceptance and such further terms as may be required to comply
with US federal securities laws.
The Offer will lapse if it is referred to the Competition Commission before the
First Closing Date or the date on which the Offer becomes or is declared
unconditional as to acceptances, whichever is the later.
The Offer will also be conditional, inter alia, on Future Shareholders approving
the Acquisition. An Extraordinary General Meeting of Future will be convened in
due course to consider the appropriate resolutions, further details of which
will be set out in the Circular to be sent to Future Shareholders. The Future
Directors intend to recommend Future Shareholders to vote in favour of such
resolutions as they intend to do in respect of their entire beneficial holdings
of, in aggregate, 5,385,980 Future Shares (representing approximately 1.7 per
cent of Future's existing issued share capital).
An application for clearance will be made to the Inland Revenue under section
138 of the Taxation of Chargeable Gains Act 1992 to seek clearance that the
Offer will meet the commercial requirement necessary to qualify as a share for
share exchange. This is relevant to a Highbury Shareholder (if any) who, alone
or together with persons connected to him, holds more than 5 per cent of
Highbury Shares. The Offer is not conditional on such clearance being obtained.
16. Listing of and dealings in New Future Shares
Application will be made to the UKLA for the New Future Shares to be admitted to
the Official List of the UK Listing Authority and an application will also be
made to the London Stock Exchange for the New Future Shares to be admitted to
trading on the London Stock Exchange's markets for listed securities. Dealings
in the New Future Shares are expected to commence on the first Dealing Day
following the date on which the Offer becomes or is declared unconditional in
all respects (save for the condition relating to Admission).
17. Compulsory acquisition and cancellation of listing and trading
If Future receives acceptances under the Offer in respect of, and/or otherwise
acquires, 90 per cent or more of the Highbury Shares to which the Offer relates
and the Offer becomes unconditional in all respects, Future intends to exercise
its rights pursuant to the provisions of sections 428 to 430F (inclusive) of the
Act to acquire compulsorily Highbury Shares in respect of which acceptances have
not then been received.
It is intended that, following the Offer becoming or being declared
unconditional in all respects and subject to any applicable requirements of the
UK Listing Authority, Future will procure that Highbury applies to the UK
Listing Authority for the listing of the Highbury Shares on the Official List to
be cancelled and to the London Stock Exchange for the admission to trading of
the Highbury Shares to be cancelled. It is anticipated that such cancellations
will take effect no earlier than 20 business days after the Offer becomes or is
declared unconditional in all respects. Delisting would significantly reduce the
liquidity and marketability of any Highbury Shares in respect of which
acceptances of the Offer have not been submitted.
Following the Offer becoming or being declared unconditional in all respects, it
is also the intention of Future to propose a resolution to re-register Highbury
as a private company.
18. Highbury Share Option Schemes
The Offer will extend to any Highbury Shares issued or unconditionally allotted
and fully paid (or credited as fully paid) whilst the Offer remains open for
acceptance (or before such earlier date as, subject to the Code, Future may
decide). Appropriate proposals will be made to holders of options under the
Highbury Share Option Schemes in due course.
19. Overseas Shareholders
The availability of the Offer to Highbury Shareholders who are not resident in
the United Kingdom may be affected by the laws of the relevant jurisdictions.
Persons who are not resident in the United Kingdom should inform themselves of,
and observe, any applicable requirements. Further details in relation to
Overseas Shareholders will be contained in the Offer Document.
Unless otherwise determined by Future and except to the extent permitted by
applicable laws, the Offer will not be made, directly or indirectly, in or into
Australia, Canada or Japan and the Offer will not be capable of acceptance from
or within these jurisdictions. Accordingly, copies of this Announcement are not
being, and must not be, directly or indirectly, mailed or otherwise forwarded,
distributed or sent, in whole or in part, in, into or from Australia, Canada or
Japan, and persons receiving this Announcement (including custodians, nominees
and trustees) must not mail or otherwise forward, distribute or send it in, into
or from Australia, Canada or Japan, if to do so would violate applicable laws in
such jurisdiction.
The New Future Shares have not been and will not be registered under the US
Securities Act or under the securities laws of any state of the United States;
have not been and will not be qualified for sale or resale under the securities
laws of any province or territory of Canada; and no prospectus has been, or will
be, lodged with, or registered by, the Australian Securities and Investments
Commission or the Japanese Ministry of Finance. Accordingly, the New Future
Shares are not being and will not be offered, sold, resold or delivered,
directly or indirectly, in or into Australia, Canada or Japan or any other
jurisdiction or to or for the account or benefit of any residents of Australia,
Canada or Japan if to do so would constitute a violation of the laws of, or
require registration thereof in, the relevant jurisdiction.
20. Future issued share capital
In accordance with Rule 2.10 of the City Code, Future confirms that it has
325,375,703 ordinary shares in issue. The International Securities
Identification Number for Future Shares is GB0007239980.
21. General
The Offer Document, Listing Particulars and the Form of Acceptance will be
posted to Highbury Shareholders and, for information only, to holders of
Highbury Share Options as soon as reasonably practicable and in any event within
28 days of this Announcement.
The Circular and (for information only) Listing Particulars will be posted to
Future Shareholders as soon as practicable.
22. Appendices
(a) Appendix I to this Announcement contains the conditions and a
summary of certain further terms of the Offer.
(b) Appendix II to this Announcement contains further details of the
bases and sources of the financial and other information set out in this
Announcement.
(c) Appendix III to this Announcement contains definitions of certain
expressions used in this Announcement.
Note 3: The expected operating cost savings have been calculated on the basis of
the existing cost and operating structures of the companies and by reference to
current prices and exchange rates and the current regulatory environment. The
statement of estimated operating cost savings relates to future actions and
circumstances which, by their nature, involve risks, uncertainties and other
factors. Because of this, the cost savings referred to may not be achieved, or
those achieved could be materially different from those estimated. This
statement should not be interpreted to mean that the earnings per share in the
financial year following the Acquisition, or in any subsequent period, would
necessarily match or be greater than those for the relevant proceeding financial
period.
Enquiries:
Future plc Highbury House Communications plc
Greg Ingham, Chief Executive Mark Simpson, Chief Executive Officer
John Bowman, Finance Director Owen Davies, Finance Director
Tel: 01225 442 244 Tel: 020 7608 6600
Morgan Stanley & Co. Limited Close Brothers
(Financial adviser to Future) (Financial adviser to Highbury)
John Krumins, Managing Director David Bezem, Director
Tom Hill, Vice President Darren Redmayne, Assistant Director
Tel: 020 7425 5000 Tel: 020 7655 3100
UBS Investment Bank Panmure Gordon, a division of Lazard & Co., Limited
(Broker to Future) (Broker to Highbury)
Adrian Haxby, Managing Director Richard Potts, Director
Jonathan Evans, Director Marianne Woods, Director
Tel: 020 7568 1000 Tel: 020 7187 2000
Hogarth Partnership College Hill
(Financial PR advisers to Future) (Financial PR advisers to Highbury)
James Longfield Tom Baldock
Georgina Briscoe Adrian Duffield
Tel: 020 7357 9477 Tel: 020 7457 2020
This Announcement does not constitute an offer to sell or the solicitation of an
offer to subscribe for or buy any security, nor is it a solicitation of any vote
or approval in any jurisdiction, nor will there be any sale, issuance or
transfer of the securities referred to in this Announcement in any jurisdiction
in contravention of applicable law.
Morgan Stanley & Co. Limited is acting for Future and no-one else in connection
with the Offer, and will not be responsible to anyone other than Future for
providing the protections afforded to its clients nor for providing advice in
relation to the Offer.
UBS Investment Bank is acting for Future and no-one else in connection with the
Offer, and will not be responsible to anyone other than Future for providing the
protections afforded to its clients nor for providing advice in relation to the
Offer.
Close Brothers, which is regulated by the Financial Services Authority, is
acting for Highbury and no-one else in connection with the Offer and will not be
responsible to anyone other than Highbury for providing the protections afforded
to its clients nor for providing advice in relation to the Offer. In addition,
Close Brothers has given and has not withdrawn its written consent to the issue
of this Announcement with the inclusion of its letter and the reference to its
name in the form and context in which it is included.
Panmure Gordon, a division of Lazard & Co., Limited is acting for Highbury and
no-one else in connection with the Offer, and will not be responsible to anyone
other than Highbury for providing the protections afforded to its clients nor
for providing advice in relation to the Offer.
Deloitte & Touche LLP has given and has not withdrawn its written consent to the
issue of this Announcement with the inclusion of its letter and the reference to
its name in the form and context in which it is included.
Unless otherwise determined by Future and except to the extent permitted by
applicable laws, the Offer will not be made, directly or indirectly, in or into
Australia, Canada or Japan and the Offer will not be capable of acceptance from
or within these jurisdictions. Accordingly, copies of this Announcement are not
being, and must not be, directly or indirectly, mailed or otherwise forwarded,
distributed or sent, in whole or in part, in, into or from Australia, Canada or
Japan and persons receiving this Announcement (including custodians, nominees
and trustees) must not mail or otherwise forward, distribute or send it in, into
or from Australia, Canada or Japan, if to do so would violate applicable laws in
such jurisdiction.
The ability of Highbury Shareholders who are not resident in the United Kingdom
to accept the Offer may be affected by the laws of the relevant jurisdictions in
which they are located. Persons who are not resident in the United Kingdom
should inform themselves of, and observe, any applicable requirements.
The New Future Shares have not been, and will not be, registered under the US
Securities Act or under the securities laws of any state of the United States;
have not been, and will not be, qualified for sale or resale under the
securities laws of any province or territory of Canada; and no prospectus in
relation to them has been, or will be, lodged with, or registered by, the
Australian Securities and Investments Commission or the Japanese Ministry of
Finance. Accordingly, the New Future Shares are not being and will not be
offered, sold, resold or delivered, directly or indirectly, in or into
Australia, Canada or Japan or any other jurisdiction or to or for the account or
benefit of any residents of Australia, Canada or Japan if to do so would
constitute a violation of the laws of, or require registration thereof in, the
relevant jurisdiction.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This document contains statements about members of the Future Group and the
Highbury Group that are or may be forward-looking statements. All statements
other than statements of historical facts included in this document may be
forward-looking statements. Any statements preceded or followed by or that
include the words 'targets', 'plans', 'believes', 'expects', 'aims', 'intends',
'will', 'may', 'anticipates' or similar expressions or the negative thereof are
forward-looking statements. Forward-looking statements include statements
relating to the following: (i) future capital expenditures, expenses, revenues,
profits, economic performance, financial condition, dividend policy, losses and
future prospects; (ii) business and management strategies and the expansion and
growth of Future's or Highbury's operations; and (iii) the effects of government
regulation on Future's or Highbury's businesses.
These forward-looking statements involve known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or
achievements of any such person, or industry results, to be materially different
from any results, performance, or achievements expressed or implied by such
forward-looking statements. 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. All
subsequent oral or written forward-looking statements attributable to Future or
Highbury, or any of their members or any persons acting on their behalf are
expressly qualified in their entirety by the cautionary statement above. Except
as required by law, neither Future nor any other party intends to update these
forward-looking statements, even though the affairs of Future will change from
time to time.
OFFER IN THE UNITED STATES
The Offer in the United States is being made solely by Future and neither Morgan
Stanley nor any of its affiliates or related entities is making the Offer in the
United States.
Notice to New Hampshire Residents: Neither the fact that a registration
statement or an application for a license has been filed under this chapter with
the State of New Hampshire nor the fact that a security is effectively
registered or a person is licensed in the State of New Hampshire constitutes a
finding by the New Hampshire Secretary of State that any document filed under
Chapter 421-B of the New Hampshire Revised Statutes Annotated is true, complete
and not misleading. Neither any such fact nor the fact that an exemption or
exception is available for a security or a transaction means that the Secretary
of State of New Hampshire has passed in any way upon the merits or
qualifications of, or recommended or given approval to, any person, security, or
transaction. It is unlawful to make, or cause to be made, to any prospective
purchaser, customer, or client any representation inconsistent with the
provisions of this paragraph.
Future is not aware of any jurisdiction in which the making of the Offer is
prohibited by any administrative or judicial action pursuant to any valid
statute of any state of the United States. If Future becomes aware of any valid
US state statute prohibiting the making of the Offer, it will make a good faith
effort to comply with such US state statute or seek to have such statute
declared inapplicable to the Offer. If, after such good faith effort, Future
cannot comply with any such state statute, the Offer will not be made to (and
tenders will not be accepted from or on behalf of) holders in such state.
The Offer is being made for securities of a United Kingdom company and United
States investors should be aware that this Announcement, the Offer Document, the
Listing Particulars and any other disclosure documents relating to the Offer
have been or will be prepared in accordance with the City Code and United
Kingdom disclosure requirements, format and style, all of which differ from
those in the United States. Future's and Highbury's financial statements, and
all financial information that is included in this Announcement or that may be
included in the Offer Document or the Listing Particulars or any other
disclosure documents relating to the Offer have been or will be prepared in
accordance with United Kingdom generally accepted accounting principles and thus
may not be comparable to financial statements of United States companies.
Future is incorporated under the laws of England and Wales. All of the Future
Directors are residents of countries other than the United States. As a result,
it may not be possible for United States shareholders of Future to effect
service of process within the United States upon Future or such Future Directors
or to enforce against any of them judgements of the United States predicated
upon the civil liability provisions of the federal securities laws of the United
States. It may not be possible to sue Future or its officers or directors in a
non-US court for violations of the US securities laws.
In accordance with normal UK market practice, Future or its nominees or brokers
(acting as agents) may from time to time during the period in which the Offer
remains open for acceptance make certain purchases of, or arrangements to
purchase, Highbury Shares otherwise than under the Offer, such as in open market
or privately negotiated purchases. Such purchases, or arrangements to purchase,
will comply with all applicable UK rules, including the City Code, the rules of
the UKLA and the rules of the London Stock Exchange.
Any person who, alone or acting together with any other person(s) pursuant to an
agreement or any understanding (whether formal or informal) to acquire or
control securities of Highbury, owns or controls, or becomes the owner or
controller, directly or indirectly, of one per cent or more of the issued
Highbury Shares is generally required under the provisions of Rule 8 of the City
Code to notify a Regulatory Information Service and the Panel of every dealing
in such securities during the Offer period. Please consult your financial
adviser immediately if you believe this Rule may be applicable to you.
APPENDIX I
CONDITIONS AND CERTAIN FURTHER TERMS OF THE OFFER
PART 1
CONDITIONS OF THE OFFER
The Offer will be subject to the following conditions:
(a) valid acceptances being received (and not, where permitted,
withdrawn) by 3.00 p.m. on the First Closing Date or such later time(s) and/or
date(s) as Future may, subject to the Code, decide in respect of not less than
90 per cent in nominal value (or such lesser percentage as Future may decide) of
the Highbury Shares to which the Offer relates, provided that this condition
will not be satisfied unless Future and its wholly-owned subsidiaries shall have
acquired, or agreed to acquire, pursuant to the Offer or otherwise, Highbury
Shares carrying more than 50 per cent of the voting rights normally exercisable
at a general meeting of Highbury, including for this purpose (to the extent, if
any, required by the Panel) any such voting rights attaching to any Highbury
Shares that are unconditionally allotted or issued before the Offer becomes or
is declared unconditional as to acceptances whether pursuant to the exercise of
any outstanding subscription or conversion rights or otherwise and for the
purposes of this condition:
(i) shares which have been unconditionally allotted but not issued
shall be deemed to carry the voting rights they will carry on issue; and
(ii) the expression Highbury Shares to which the Offer relates shall
be construed in accordance with sections 428 to 430F of the Companies Act 1985;
(b) (i) the admission to the Official List of the New Future Shares
becoming effective in accordance with the Listing Rules or (if Future so
determines and subject to the consent of the Panel) the UK Listing Authority
having agreed to admit such shares to the Official List; and
(ii) the admission to trading of the New Future Shares becoming
effective in accordance with the rules of the London Stock Exchange or (if
Future so determines and subject to the consent of the Panel) the London Stock
Exchange having agreed to admit such shares to trading;
(c) the passing at an extraordinary general meeting of Future (or any
adjournment thereof) of such resolution(s) as may be required to approve and
implement the Offer, the acquisition of any Highbury Shares pursuant to the
Offer or otherwise and the allotment of New Future Shares pursuant to the Offer;
(d) it being established, in terms satisfactory to Future, that the
proposed acquisition of Highbury by Future or any matter arising from that
acquisition will not be referred to the Competition Commission, provided that,
if a request to the European Commission is made by the competent authorities of
one or more Member States under Article 22(3) of Council Regulation (EEC) 4064/
89 (as amended by Council Regulation (EC) 1310/97) (the Regulation) and is
accepted by the European Commission, then this paragraph (d) shall be deemed to
be satisfied if:
(i) it is established, in terms satisfactory to Future, that it is
not the intention of the European Commission to initiate proceedings under
Article 6(1)(c) of the Regulation; and
(ii) to the extent that one or more Member States retains
jurisdiction over any aspect of the proposed acquisition of Highbury by Future,
it is established, in terms satisfactory to Future, that the proposed
acquisition of Highbury by Future will be allowed to proceed in the Member State
or Member States concerned (and for these purposes the grant of a derogation
permitting the Offer to become unconditional in all respects prior to the
granting of substantive approval shall not be regarded as the grant of
substantive approval);
(e) no government or governmental, quasi-governmental, supranational,
statutory or regulatory body or association, institution or agency (including
any trade agency) or any court or other body (including any professional or
environmental body) or person in any jurisdiction (each a Relevant Authority)
having decided to take, instituted or threatened any action, proceeding, suit,
investigation, enquiry or reference or enacted, made or proposed and there not
continuing to be outstanding any statute, regulation, order or decision that
would or might reasonably be expected to:
(i) make the Offer or the acquisition or the proposed acquisition
of any shares in, or control of, Highbury by any member of the Wider Future
Group void, unenforceable or illegal or directly or indirectly prohibit or
otherwise restrict, delay or materially interfere with the implementation of, or
impose additional material conditions or obligations with respect to, or
otherwise challenge, the Offer or the acquisition of any shares in, or control
of, Highbury by any member of the Wider Future Group;
(ii) require, prevent or delay the divestiture (or alter the terms
of any proposed divestiture) by the Wider Future Group or the Wider Highbury
Group of all or any part of their respective businesses, assets or properties or
impose any limitation on their ability to conduct all or any part of their
respective businesses and to own any of their respective assets or properties,
in each case to an extent which is material in the context of the Wider Future
Group taken as a whole or, as the case may be, the Wider Highbury Group taken as
a whole;
(iii) impose any material limitation on, or result in any material
delay in, the ability of any member of the Wider Future Group to acquire or hold
or to exercise effectively, directly or indirectly, all or any rights of
ownership of shares or other securities (or the equivalent) in, or to exercise
management control over, any member of the Wider Highbury Group or on the
ability of any member of the Wider Highbury Group to hold or exercise
effectively, directly or indirectly, all or any rights of ownership of shares or
other securities (or the equivalent) in, or to exercise management control over,
any other member of the Wider Highbury Group;
(iv) require any member of the Wider Future Group or of the Wider
Highbury Group to acquire or offer to acquire any shares or other securities (or
the equivalent) in any member of the Wider Highbury Group or any member of the
Wider Future Group owned by any third party where such acquisition would be
material in the context of the Wider Future Group taken as a whole or, as the
case may be, the Wider Highbury Group taken as a whole;
(v) impose any limitation on the ability of any member of the Wider
Future Group or the Wider Highbury Group to integrate or co-ordinate its
business, or any part of it, with the businesses or any part of the businesses
of any other member of the Wider Future Group and/or the Wider Highbury Group to
an extent which is materially adverse to the Wider Future Group taken as a whole
or, as the case may be, the Wider Highbury Group taken as a whole; or
(vi) otherwise adversely affect the business, assets, financial or
trading position or profits or prospects of any member of the Wider Future Group
or of the Wider Highbury Group, in any such case to an extent which is material
in the context of the Wider Future Group taken as a whole or, as the case may
be, the Wider Highbury Group taken as a whole,
and all applicable waiting and other time periods during which any such Relevant
Authority could decide to take, institute or threaten any such action,
proceeding, suit, investigation, enquiry or reference having expired, lapsed or
been terminated;
(f) all necessary filings having been made and all appropriate
waiting periods (including any extensions thereof) under any applicable
legislation or regulation of any jurisdiction having expired, lapsed or been
terminated in each case in respect of the Offer and the acquisition of any
shares in, or control of, Highbury by Future and all authorisations, orders,
grants, recognitions, confirmations, licences, consents, clearances, permissions
and approvals (authorisations) necessary or appropriate in any jurisdiction for
or in respect of the Offer and the proposed acquisition of any shares in, or
control of, Highbury by Future being obtained in terms and in a form reasonably
satisfactory to Future from appropriate Relevant Authorities or from any persons
or bodies with whom any member of the Wider Future Group or the Wider Highbury
Group has entered into contractual arrangements and such authorisations the
absence of which would have a material adverse effect on the Wider Highbury
Group together with all authorisations necessary for any member of the Wider
Highbury Group to carry on its business remaining in full force and effect and
no intimation of any intention to revoke or not to renew any of the same having
been made and all necessary statutory or regulatory obligations in any
jurisdiction having been complied with;
(g) except as disclosed in the Annual Report or in the interim
financial statements of Highbury for the six months ended 30 June 2004 or as
fairly disclosed to Future or its advisers by or on behalf of Highbury in
connection with the Offer before the date of this Announcement or as otherwise
publicly announced to a Regulatory Information Service by or on behalf of
Highbury before the date of this Announcement, there being no provision of any
agreement, arrangement, licence or other instrument to which any member of the
Wider Highbury Group is a party or by or to which any such member or any of its
assets is or may be bound, entitled or subject which, in each case as a result
of the making or implementation of the Offer or the acquisition or proposed
acquisition by any member of the Wider Future Group of any shares in, or change
in the control or management of, Highbury or otherwise, would or might
reasonably be expected to result in (in each case to an extent which is or would
be material in the context of the Wider Highbury Group taken as a whole):
(i) any moneys borrowed by or any other indebtedness (actual or
contingent) of any such member of the Wider Highbury Group becoming repayable or
capable of being declared repayable immediately or earlier than the stated
repayment date or the ability of such member to borrow monies or incur any
indebtedness being withdrawn or inhibited;
(ii) the creation or enforcement of any mortgage, charge or other
security interest over the whole or any part of the business, property or assets
of any such member of the Wider Highbury Group or any such security interest
(whenever arising or having arisen) becoming enforceable;
(iii) any assets or interest of any such member of the Wider Highbury
Group being or falling to be disposed of or charged or any right arising under
which any such asset or interest could be required to be disposed of or charged,
other than in the ordinary course of trading;
(iv) the interest or business of any such member of the Wider Highbury
Group in or with any other person, firm or company (or any agreements or
arrangements relating to such interest or business) being terminated or
adversely affected;
(v) any such member of the Wider Highbury Group ceasing to be able to
carry on business under any name under which it presently does so;
(vi) the value of any such member of the Wider Highbury Group or its
financial or trading position being prejudiced or adversely affected;
(vii) any such agreement, arrangement, licence or other instrument being
terminated or adversely modified or any onerous obligation arising or any
adverse action being taken or arising thereunder; or
(viii) the creation of any liabilities (actual or contingent) by any such
member,
and no event having occurred which, under any provision of any agreement,
arrangement, licence or other instrument to which any member of the Wider
Highbury Group is a party or by or to which any such member or any of its assets
may be bound or be subject, could result in any events or circumstances as are
referred to in subparagraphs (i) to (viii) of this paragraph (g);
(h) except as disclosed in the Annual Report or the interim financial
statements of Highbury for the six months ended 30 June 2004 or as fairly
disclosed to Future or its advisers by or on behalf of Highbury in connection
with the Offer before the date of this Announcement or as otherwise publicly
announced to a Regulatory Information Service by or on behalf of Highbury before
the date of this Announcement, no member of the Wider Highbury Group having
since 30 June 2004:
(i) issued or agreed to issue or authorised the issue of additional
shares of any class, or securities convertible into, or rights, warrants or
options to subscribe for or acquire, any such shares or convertible securities
save as between Highbury and wholly-owned subsidiaries of Highbury prior to the
date of this Announcement or upon the exercise of rights to subscribe for
Highbury Shares pursuant to options granted under the Highbury Share Option
Schemes prior to the date of this Announcement;
(ii) recommended, declared, paid or made any bonus, dividend or
other distribution, whether payable in cash or otherwise, other than a
distribution by any wholly-owned subsidiary of Highbury;
(iii) save as between Highbury and wholly-owned subsidiaries of
Highbury, implemented or authorised any merger or demerger or (other than in the
ordinary course of business) acquired or disposed of or transferred, mortgaged
or charged, or created any other security interest over, any asset or any right,
title or interest in any asset save to the extent that the same is immaterial in
the context of the Wider Highbury Group as a whole;
(iv) implemented or authorised any reconstruction, amalgamation,
scheme or other transaction or arrangement (other than in the ordinary course of
business or save as between Highbury and wholly-owned subsidiaries of Highbury);
(v) purchased, redeemed or repaid any of its own shares or other
securities or reduced or (save for the matters referred to in subparagraph (i)
of this condition) made or authorised any other change in its share capital;
(vi) made or authorised any change in its loan capital or issued or
authorised the issue of any debentures or (other than in the ordinary course of
business and save as between Highbury and wholly-owned subsidiaries of Highbury)
incurred or increased any indebtedness or contingent liability to an extent
that, in the case of such indebtedness or liability, is material in the context
of the Wider Highbury Group taken as a whole;
(vii) entered into, varied or terminated, or authorised the entry into,
variation or termination of, any contract, commitment or arrangement (whether in
respect of capital expenditure or otherwise) which is outside the ordinary
course of business or which is of a long term, onerous or unusual nature or
magnitude or which involves or could involve an obligation of a nature or
magnitude and which in each case is or would be material in the context of the
Wider Highbury Group taken as a whole;
(viii) entered into any contract, commitment or arrangement which would
be materially restrictive on the business of any member of the Wider Highbury
Group (other than to a nature and extent which is normal in the context of the
business concerned);
(ix) been unable, or admitted in writing that it is unable, to pay
its debts or having stopped or suspended (or threatened to stop or suspend)
payment of its debts generally or ceased or threatened to cease carrying on all
or a substantial part of its business;
(x) (other than in respect of a member which is dormant and was
solvent at the relevant time) taken any corporate action or had any legal
proceedings started or threatened against it for its winding-up (voluntary or
otherwise), dissolution or reorganisation (or for any analogous proceedings or
steps in any jurisdiction) or for the appointment of a receiver, administrator,
administrative receiver, trustee or similar officer (or for the appointment of
any analogous person in any jurisdiction) of all or any material part of its
assets and revenues;
(xi) waived, compromised or settled any claim which is material in
the context of the Wider Highbury Group taken as a whole;
(xii) save in respect of normal annual salary increases in accordance
with past remuneration policies and in the ordinary course, entered into or
varied the terms of any service agreement or arrangement with any director or
senior executive of Highbury;
(xiii) made or consented to any change to the terms of the trust deeds
constituting the pension schemes established for its directors and/or employees
and/or their dependants or to the benefits which accrue, or to the pensions
which are payable thereunder, or to the basis on which qualification for or
accrual or entitlement to such benefits or pensions are calculated or
determined, or to the basis upon which the liabilities (including pensions) of
such pension schemes are funded or made, or agreed or consented to, any change
to the trustees; or
(xiv) entered into any contract, commitment or arrangement or passed any
resolution or made any offer (which remains open for acceptance) with respect
to, or proposed or announced any intention to effect or propose, any of the
transactions, matters or events referred to in this condition;
(i) since 31 December 2003 (except as disclosed in the Annual
Report or the interim financial statements of Highbury for the six months ended
30 June 2004 or as fairly disclosed to Future or its advisers by or on behalf of
Highbury in connection with the Offer before the date of this Announcement or as
publicly announced to a Regulatory Information Service by or on behalf of
Highbury before the date of this Announcement):
(i) no material adverse change having occurred in the business,
assets, financial or trading position or profits or prospects of any member of
the Wider Highbury Group in any case which is material in the context of the
Wider Highbury Group taken as a whole;
(ii) no litigation, arbitration proceedings, prosecution or other
legal proceedings having been threatened, announced, instituted or remaining
outstanding by, against or in respect of any member of the Wider Highbury Group
or to which any member of the Wider Highbury Group is a party (whether as
plaintiff or defendant or otherwise) and no investigation by any Relevant
Authority against or in respect of any member of the Wider Highbury Group having
been threatened, announced, instituted or remaining outstanding by, against or
in respect of any member of the Wider Highbury Group which in any such case
would or might reasonably be expected to adversely affect any member of the
Wider Highbury Group to an extent which in any such case is material in the
context of the Wider Highbury Group taken as a whole; and
(iii) no contingent or other liability having arisen which would or
might reasonably be expected to adversely affect the Wider Highbury Group to an
extent which in any case is material in the context of the Wider Highbury Group
taken as a whole;
(j) save as fairly disclosed to Future or its advisers by or on
behalf of Highbury before the date of this Announcement, Future not having
discovered that:
(i) any financial, business or other information concerning the
Wider Highbury Group publicly disclosed at any time by any member of the Wider
Highbury Group (other than to the extent corrected by way of public announcement
by or on behalf of Highbury to a Regulatory Information Service before the date
of this Announcement) is materially misleading, contains a material
misrepresentation of fact or omits to state a material fact necessary to make
the information contained therein not misleading;
(ii) any member of the Wider Highbury Group is subject to any
liability, contingent or otherwise, which is not disclosed in the Annual Report
or the interim financial statements of Highbury for the six months ended 30 June
2004 and which is material in the context of the Wider Highbury Group taken as a
whole;
(iii) any past or present member of the Wider Highbury Group has
failed to comply with any applicable legislation or regulations of any
jurisdiction or any notice or requirement of any Relevant Authority with regard
to the storage, disposal, discharge, spillage, release, leak or emission of any
waste or hazardous or harmful substance or any substance likely to impair the
environment or harm human or animal health or otherwise relating to
environmental matters or that there has otherwise been any such storage,
disposal, discharge, spillage, release, leak or emission (whether or not the
same constituted non-compliance by any person with any such legislation or
regulation, and whenever the same may have taken place), any of which
non-compliance would be likely to give rise to any liability (whether actual or
contingent) or cost on the part of any member of the Wider Highbury Group which
would be material in the context of the Wider Highbury Group taken as a whole;
or
(iv) there is or is reasonably expected to be any obligation or
liability (whether actual or contingent) to make good, repair, re-instate or
clean up any property now or previously owned, occupied, operated or made use of
or controlled by any past or present member of the Wider Highbury Group under
any environmental legislation, regulation, notice, circular or order of any
Relevant Authority in any jurisdiction which in any such case would be material
in the context of the Wider Highbury Group taken as a whole.
Future reserves the right to waive all or any of conditions (d) to (j)
inclusive, in whole or in part. The Offer will lapse unless all the above
conditions are fulfilled or (if capable of waiver) waived or, where appropriate,
determined by Future to have been or remain satisfied by midnight on the day
which is 21 days after the later of the First Closing Date and the date on which
the Offer becomes or is declared unconditional as to acceptances (or such later
date as Future may, with the consent of the Panel, decide). Future shall be
under no obligation to waive or treat as fulfilled any of conditions (d) to (j)
inclusive by a date earlier than the date specified above for the fulfillment
thereof notwithstanding that the other conditions of the Offer may at such
earlier date have been waived or fulfilled and that there are at such earlier
date no circumstances indicating that any of such conditions may not be capable
of fulfillment.
If Future is required by the Panel to make an offer for any Highbury Shares
under Rule 9 of the Code, Future may make such alterations to the above
conditions as are necessary to comply with that Rule.
The Offer will lapse (unless the Panel otherwise consents) if, before the First
Closing Date or the date when the Offer becomes unconditional as to acceptances
(whichever is the later), the acquisition of Highbury is referred to the
Competition Commission.
If the Offer lapses, the Offer will cease to be capable of further acceptance
and Highbury Shareholders accepting the Offer and Future will cease to be bound
by acceptances submitted at or before the time the Offer so lapses.
PART 2
CERTAIN FURTHER TERMS OF THE OFFER
The Highbury Shares will be acquired by Future free from all liens, charges,
encumbrances, rights of pre-emption and any other third party rights of any
nature whatsoever and together with all rights attaching thereto including the
right to receive in full all dividends and other distributions declared, paid or
made after the date of this Announcement.
Unless otherwise determined by Future and except to the extent permitted by
applicable laws, the Offer will not be made, directly or indirectly, in or into
Australia, Canada or Japan and the Offer will not be capable of acceptance from
or within these jurisdictions. Accordingly, copies of this Announcement are not
being, and must not be directly or indirectly, mailed or otherwise forwarded,
distributed or sent, in whole or part, in, into or from Australia, Canada or
Japan and persons receiving this Announcement (including custodians, nominees
and trustees) must not mail or otherwise forward, distribute or send it in, into
or from Australia, Canada or Japan, if to do so would violate applicable laws in
such jurisdiction.
The New Future Shares have not been, and will not be, registered under the US
Securities Act or under the securities laws of any state of the United States;
have not been, and will not be, qualified for sale or resale under the
securities laws of any province or territory of Canada; and no prospectus in
relation to them has been, or will be, lodged with, or registered by, the
Australian Securities and Investments Commission or the Japanese Ministry of
Finance. Accordingly, the New Future Shares are not being and will not be
offered, sold, resold or delivered, directly or indirectly, in or into
Australia, Canada or Japan or any other jurisdiction or to or for the account or
benefit of any residents of Australia, Canada or Japan if to do so would
constitute a violation of the relevant laws of, or require registration thereof
in, the relevant jurisdiction.
The provisions referred to in the previous two paragraphs may be waived or
varied by Future in its sole discretion as regards specific Highbury
Shareholders or generally.
APPENDIX II
SOURCES AND BASES
In this Announcement:
(i) unless otherwise stated in this Announcement, financial
information relating to Highbury has been extracted from the annual report and
accounts of Highbury for the year ended 31 December 2003 and the interim report
and accounts of Highbury for the six months ended 30 June, 2004;
(ii) unless otherwise stated in this Announcement, financial
information relating to Future has been extracted from the annual report and
accounts of Future for the year ended 31 December 2003 and for the nine-month
period ended 30 September 2004;
(iii) the value of the issued share capital of Highbury at the Offer
price of 10.0 pence per Highbury Share is calculated based upon 316,177,473
Highbury Shares in issue on 26 January 2005 (according to the records of
Highbury);
(iv) the market capitalisation of Future is based on a total of
325,375,703 Future Shares in issue on 11 February 2005 (according to the records
of Future) and the Closing Price for Future Shares on 11 February 2005 of 83.25
pence;
(v) the number of New Future Shares to be issued in respect of full
acceptance of the Offer is calculated based upon the number of Highbury Shares
in issue (as described in (iii) above) and assuming no Highbury Shares are
allotted or issued pursuant to the exercise of Highbury Share Options and
assuming that no elections are made for the Partial Cash Alternative;
(vi) references to retail sales value are based on revenues from
ABC-audited titles in respect of the year ended 31 December 2003; and
(vii) the pro forma borrowings of the Enlarged Group referred to in this
Announcement, include, inter alia, net debt of Highbury, an assumed level of
working capital, advisory fees and estimated cash costs of achieving synergies,
but before the proceeds from the disposals of BCom and the former Highbury head
office.
APPENDIX III
DEFINITIONS
The following definitions apply throughout this Announcement, unless the context
requires otherwise:
'ABC' Audit Bureau of Circulations;
'Acquisition' the proposed acquisition of all of the issued or to be issued
ordinary share capital of Highbury by Future by means of the
Offer;
'Act' or the Companies Act 1985 (as amended);
'Companies
Act'
'Admission' admission of the New Future Shares to the Official List and to
trading on the London Stock Exchange's market for listed
securities becoming effective in accordance with the Listing
Rules and the Admission and Disclosure Standards respectively;
'Admission and the rules issued by the London Stock Exchange in relation to the
Disclosure admission to trading of, and confirming requirements for,
Standards' securities admitted to the London Stock Exchange's market for
listed securities;
'Annual the annual report and accounts of Highbury for the year ended 31
Report' December 2003;
'BCom' or Highbury's business publishing operations, the proposed sale of
'Highbury which was announced by Highbury on 9 February 2005;
Business'
'Circular' the circular to be sent to Future Shareholders convening an
Extraordinary General Meeting to approve, inter alia, the
Acquisition;
'Close Close Brothers Corporate Finance Limited;
Brothers'
'Closing the closing middle market quotation of a Highbury Share or
Price' Future Share (as applicable) for the day to which such price
relates, as derived from the Daily Official List of the London
Stock Exchange for that day;
'Code' or 'City the City Code on Takeovers and Mergers;
Code'
'Dealing Day' a day on which the London Stock Exchange is open for business in
the trading of securities admitted to the Official List;
'Enlarged Future and its subsidiaries and subsidiary undertakings as
Group' enlarged by the Acquisition;
'Enlarged Share the issued share capital of Future as enlarged by the issue of
Capital' the New Future Shares;
'Extraordinary the extraordinary general meeting of Future to be held to
General approve, inter alia, the Acquisition, notice of which will be
Meeting' or contained in the Circular;
'EGM'
'First Closing the first closing date for the Offer, expected to fall 21 days
Date' after the date on which the Offer Document is posted;
'Form of the form of acceptance and election for use in connection with
Acceptance' the Offer that will accompany the Offer Document;
'Future' or Future plc;
'Company'
'Future the directors of Future;
Directors'
'Future Future, its subsidiaries and its subsidiary undertakings (prior
Group' to the Offer becoming or being declared unconditional in all
respects);
'Future holders of Future Shares;
Shareholders'
'Future Shares' ordinary shares of 1 penny each in the capital of Future;
or 'Ordinary
Shares'
'Highbury' Highbury House Communications plc;
'Highbury the directors of Highbury;
Directors'
'Highbury Highbury, its subsidiaries and its subsidiary undertakings
Group' (prior to the Offer becoming or being declared unconditional in
all respects);
'Highbury Highbury Local Publications, which is a London focused publisher
Local' of local lifestyle magazines;
'Highbury holders of Highbury Shares;
Shareholders'
'Highbury Share options held under the Highbury Share Option Schemes;
Options'
'Highbury Share the Highbury Sharesave Scheme, the Highbury 2000 Approved
Option Executive Share Option Scheme and Highbury 2000 Non-Approved
Schemes' Executive Share Option Scheme;
'Highbury the existing unconditionally allotted or issued and fully paid
Shares' ordinary shares of 5 pence each in the capital of Highbury and
any further such shares which are unconditionally allotted or
issued and fully paid (or credited as fully paid) after the date
hereof and before the Offer closes (or before such earlier date,
as Future may, subject to the City Code, decide in accordance
with the terms and conditions of the Offer), including such
shares which are unconditionally allotted or issued or granted
or subscribed for upon the exercise of any options granted under
the Highbury Share Option Schemes;
'Listing the document comprising Listing Particulars to be issued in
Particulars' relation to the New Future Shares for which application for
Admission will be made;
'Listing the rules and regulations made by the UK Listing Authority;
Rules'
'London Stock London Stock Exchange plc;
Exchange'
'Morgan Morgan Stanley & Co. Limited;
Stanley'
'New Future the new Future Shares proposed to be issued by Future (credited
Shares' as fully paid) to Highbury Shareholders pursuant to the Offer;
'Offer' the recommended share offer (with a Partial Cash Alternative) to
be made by Morgan Stanley on behalf of Future (or by Future in
the United States), to acquire the entire issued and to be
issued share capital of Highbury, on the terms and subject to
the conditions set out in this Announcement and the terms to be
set out in the Offer Document and the Form of Acceptance and
(where the context permits) any subsequent revision, variation,
extension or renewal thereof;
'Offer the document to be sent to Highbury Shareholders containing the
Document' full terms and conditions of the Offer;
'Offer shall have the meaning ascribed to it in the Code;
period'
'Official the Official List of the UK Listing Authority;
List'
'Overseas Highbury Shareholders resident in, or nationals or citizens of,
Shareholders' jurisdictions outside the UK or who are nominees of, or
custodians, trustees or guardians for, citizens or nationals of
such other jurisdictions;
'Panel' the Panel on Takeover and Mergers;
'Partial Cash the partial cash alternative under the Offer pursuant to which
Alternative' Highbury Shareholders may elect to receive cash on the basis set
out in this Announcement in lieu of all or part of the share
consideration which they would otherwise receive under the
Offer;
'Regulatory any of the services from time to time set out in Schedule 12 to
Information the Listing Rules;
Service'
'UBS Investment UBS Limited;
Bank'
'UK' or 'United the United Kingdom of Great Britain and Northern Ireland;
Kingdom'
'UK Listing the Financial Services Authority acting in its capacity as
Authority' or competent authority for the purpose of Part VI of the Financial
'UKLA' Services and Markets Act 2000 and in the exercise of its
function in respect of the admission to the Official List
otherwise than in accordance with Part VI of the Financial
Services and Markets Act 2000;
'United States' the United States of America, its territories and possessions,
or 'US' any state of the United States and the District of Columbia;
'US Securities the United States Securities Act of 1933, as amended from time
Act' to time;
'Wider Future Future and its subsidiary undertakings, associated undertakings
Group' and any other undertaking in which Highbury and/or such
undertakings (aggregating their interests) have a substantial
interest;
'Wider Highbury Highbury and its subsidiary undertakings, associated
Group' undertakings and any other undertaking in which Future and/or
such undertakings (aggregating their interests) have a
substantial interest.
All references to legislation in this document are to English legislation unless
the contrary is indicated. All references to time in this document are to London
time unless the contrary is indicated.
Any reference to any provision of any legislation shall include any amendment,
modification, re-enactment or extension thereof.
Words importing the singular shall include the plural and vice versa, and words
importing the masculine gender shall include the feminine or neutral gender
'Subsidiary undertaking', 'associated undertaking' and 'undertaking' have the
meanings given by the Companies Act (but for these purposes ignoring paragraph
20(1)(b) of Schedule 4A to the Companies Act) and 'substantial interest' means a
direct or indirect interest in 20 per cent or more of the equity capital of an
undertaking.
END
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The company news service from the London Stock Exchange