Rank Board Response to Extension of Offer

RNS Number : 6808J

Rank Group PLC

04 July 2011

 

4 July 2011

The Rank Group Plc ("Rank")

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO THE SAME WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

Response to Extension of Offer by Guoco Group Limited ("Guoco Group")

Board Appointment

Change of Rank Board Recommendation

Summary

- Rank welcomes the announcement of the extension of the Offer by Guoco Group and the new mechanism for the close of the Offer

- New mechanism addresses the Board's concern regarding the uncertainty and risk facing Rank shareholders

- Rank shareholders now have a genuine choice between the potential future benefits of holding their shares in a listed Rank and the ability to receive 150p per share

- Ian Burke has rejoined the Board of Rank as Chief Executive and is to become Chairman and Chief Executive on close of the Offer

- In addition, the Board has received helpful assurances from Guoco Group regarding the operation of a listed Rank following the close of the Offer

- The Board continues to believe that the Offer substantially undervalues Rank and fails to reflect its underlying value and prospects

- The Board believes that Rank shareholders who have accepted the Offer between 17 June 2011 and 1 July 2011 should submit indications of withdrawals

- Independent Directors now recommend shareholders reject the Offer

The announcement below sets out Rank's understanding of the extension of the Offer and the new mechanism for its close as announced by Guoco Group on 30 June 2011.  Importantly, the announcement also sets out the Board's views on the Offer and the Board's recommendation to Rank shareholders.

Ian Burke, Chief Executive of Rank, said:

"I am pleased to rejoin the Board. Guoco Group's announcement regarding the extension of the Offer and the mechanism to close it has addressed concerns that had provided significant uncertainty for shareholders."

"Along with the Board, I am excited about the future for Rank and providing all shareholders with the ability to benefit fully from the substantial opportunities for growth and value creation that are available to Rank.  We believe that Rank is an excellent business with strong positions and trusted brands in fundamentally attractive markets.  Now that certain risks and uncertainties have been removed, we do not believe that this is the right price at which to sell shares in Rank."

1. Extension of the Offer and New Mechanism to Close the Offer

On 30 June 2011 Guoco Group announced:

- Offer will remain open for a further 14 days until 1.00pm on 15 July 2011;

- Any Rank Shareholder who has accepted the Offer between 17 June 2011 and 1.00pm on 1 July 2011 and who has not already been sent the consideration payable to him under the terms of the Offer will be entitled to withdraw his acceptance (by notice to be received no later than 1.00pm on 15 July 2011).  For any Rank Shareholder who has accepted the Offer between 17 June 2011 and 1.00pm on 1 July 2011 and who has already been sent the consideration payable to him under the terms of the Offer, appropriate proposals will be made;

- In the event that by 1.00pm on 15 July 2011, Guoco Group has received acceptances of the Offer (after taking into account any withdrawals received up to that time), which, together with Rank shares already owned by the Guoco Group, represent less than 75 per cent. of Rank shares, the Offer will close at that time and will not be extended. In these circumstances, Rank Shareholders will either own shares in a listed Rank or receive 150p per Rank share; and

- In the event that by 1.00pm on 15 July 2011, Guoco Group has received acceptances of the Offer (after taking into account any withdrawals received up to that time), which, together with Rank shares already owned by the Guoco Group, represent 75 per cent. or more of Rank shares, the Offer will remain open for acceptance for a further seven days until 1.00pm on 22 July 2011 at which time the Offer will close. Rank Shareholders who have accepted the Offer by 15 July 2011 and who have not withdrawn their acceptance will receive 150p per Rank Share. Those shareholders who have not accepted and are concerned by the risk of cancellation of the Listing and owning shares in an unlisted company controlled by Guoco Group will then have seven days to accept the Offer if they so choose and receive 150p per Rank Share.

While the Board believes that such a mechanism to close the Offer does not provide certainty that the Listing will be maintained, it provides Rank shareholders with the ability either to continue to hold their Rank shares in a listed company or, in the event that Guoco Group receives sufficient acceptances to own 75 per cent. or more of Rank shares by 15 July 2011, to receive 150p per share by accepting the Offer which will then remain open for a further seven days until 22 July 2011.  Specifically, this new mechanism allows Rank shareholders the opportunity to dispose of their Rank shares in the event that Guoco Group receives sufficient acceptances to own 75 per cent. or more of Rank shares by 15 July 2011 and therefore avoid the risk of owning shares in an unlisted company controlled by Guoco Group.

Following the announcement by Guoco Group on 17 June 2011 of a final close date which would not be extended, the Board discussed with the Takeover Panel the ability of Guoco Group to extend the Offer in certain circumstances. The Board therefore welcomes this announcement by Guoco Group.

2. Ian Burke Rejoins the Board as Chief Executive and will become Chairman on Close of the Offer

Rank announces the reappointment of Ian Burke to the Board as Chief Executive.  Ian believes that the announcement by Guoco Group of the extension of the Offer and new mechanism for the closing of the Offer has addressed the concerns that he raised at the time of his resignation.  The directors welcome Ian's return to the Board and give him their full support in his role as a director and Chief Executive of Rank.  The appointment has also received the full support of Guoco Group.  Upon the close of the Offer, Ian Burke will become Chairman and Chief Executive of Rank.  As previously announced Peter Johnson will step down from the Board.  The Board would like to thank Peter for his significant contribution to Rank since his appointment to the Board in January 2007.

3. Assurances Received from Guoco Group

Rank has sought a number of assurances from the Guoco Group since the Offer became unconditional in relation to maintaining the Listing and how Rank would operate following the close of the Offer.  Guoco Group provided certain assurances regarding its intentions to maintain the Listing on 24 June 2011.  Following the announcement by Guoco Group on 30 June 2011, Rank and its advisers have discussed a number of assurances that Guoco Group could provide to Rank shareholders. Today Guoco Group has provided the following assurances to Rank shareholders as set out in its announcement:

- Guoco Group believes Rank is well positioned for future growth and is supportive of Rank's current strategic direction;

- Guoco Group believes that there are a number of potentially attractive investment opportunities for Rank and the expansion of the business should be an important priority for management;

- Guoco Group regards the payment of regular dividends as an important part of Rank's investment proposition and is supportive of Rank's dividend policy; and

- Guoco Group intends that Rank will continue to have strong, credible, independent directors, both on the Board and on the various Board committees.

In conjunction with the appointment of Ian Burke as Chairman and Chief Executive, the Board believes that these assurances are helpful to shareholders as they assess the potential benefits of continuing to hold listed Rank shares.

4. Views of the Board on the Offer

The Board continues to believe that Guoco Group's final Offer of 150p per share substantially undervalues Rank and fails to reflect its underlying value and prospects.

Since the announcement by Guoco Group on 17 June 2011 of a final close date of the Offer which would not be extended, the Board has been very focused on ensuring that Rank shareholders are not put in a position of owning shares in an unlisted company controlled by Guoco Group without sufficient opportunity to accept the Offer and receive 150p per share.  The Board believes that the announcement by Guoco Group on 30 June 2011 provides an appropriate mechanism to give Rank shareholders the ability to either continue to hold their Rank shares in a listed company or, in the event that Guoco Group receives sufficient acceptances to own 75 per cent. or more of Rank shares by 15 July 2011, to receive 150p per share by accepting the Offer which will then remain open for a further seven days until 22 July 2011.  In the event that Guoco Group does receive sufficient valid acceptances to own 75 per cent. or more of Rank shares by 15 July 2011 then those shareholders who have not accepted the Offer will have seven days to assess the potential risk of the cancellation of the Listing and resulting concerns regarding owning shares in an unlisted company controlled by Guoco Group, and to decide whether to accept the Offer before it closes.

The Board also notes the announcement today by Guoco Group that it had received acceptances as at 1.00pm on 1 July 2011 representing approximately 44.86 per cent of Rank shares and, as a result, that Guoco Group owns or has valid acceptances for approximately 85.69 per cent. of Rank shares.  Guoco Group has also announced that it has received indications of withdrawals of approximately 4.93 per cent. of Rank shares which, when taken into account, would reduce the level of Rank shares owned or for which valid acceptances have been received by Guoco Group to approximately 80.76 per cent. of Rank shares.

Given the Offer substantially undervalues Rank and the new mechanism to the closing of the Offer provides the ability to receive 150p per share in the event that Guoco Group receives sufficient acceptances to own 75 per cent. or more of Rank shares at the next close date of the Offer, the Board believes that Rank shareholders who have accepted the Offer between 17 June 2011 and 1 July 2011 should now submit indications of withdrawal.

5. Board Recommendation to Rank Shareholders

The Independent Directors of Rank, who have been so advised by Goldman Sachs International, consider the Offer to substantially undervalue Rank. For the reasons stated above, the Independent Directors recommend that shareholders reject the Offer, as they will be doing in respect of their own beneficial shareholdings that will be withdrawn from the Offer to the extent that it is possible to do so.  In providing advice to the Independent Directors, Goldman Sachs International has taken into account the Independent Directors' commercial assessments.

As appropriate a further announcement will be made following the next close date of the Offer of 15 July 2011.

No further information is required to be disclosed in respect of Ian Burke pursuant to Listing Rule 9.6.13R (1) to (6).

Enquiries:

The Rank Group Plc

Dan Waugh                   [phone]

Goldman Sachs International

Nick Harper                   [phone]

Financial Dynamics

Ben Foster                    [phone]

The Independent Directors, accept responsibility for the information contained in this document, except that the only responsibility accepted by them in respect of the information contained in this document relating to Guoco Group, its subsidiary undertakings and the directors of Guoco Group and/or any such subsidiary undertakings, which has been compiled from published sources, is to ensure that such information has been correctly and fairly reproduced and presented. Subject to the aforesaid, to the best of the knowledge and belief of the Independent Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this document for which they accept responsibility is in accordance with the facts and does not omit anything likely to affect the import of that information.

The "Independent Directors" are the Directors of Rank, whose names are set out the circular dated 26 May 2011, except for Tim Scoble.

Tim Scoble is a non-executive director of Rank and acts, and has done so since his appointment, as a representative of Guoco Group on Rank's Board. To manage this conflict of interest, Tim Scoble has not participated, and will not participate, in the Board's discussions or receive any information in relation to the Offer.  Tim Scoble does not, therefore, accept responsibility for the views and opinions of the Independent Directors of Rank in relation to the Offer as set out in this announcement.

Goldman Sachs International, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Rank and for no-one else in connection with the offer and will not be responsible to any person other than Rank for providing the protections afforded to clients of Goldman Sachs International, nor for providing advice in relation to the offer or any other matters referred to herein.

 

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