Offer for Home Retail Group plc

RNS Number : 6453S
Sainsbury(J) PLC
18 March 2016
 

 

Appendix 1
CONDITIONS AND FURTHER TERMS OF THE OFFER

The Offer will be subject to the applicable requirements of the Takeover Code, the Panel, the London Stock Exchange and the FCA. The Offer will be governed by English law and will be subject to the exclusive jurisdiction of the English courts. In addition, the Offer will be subject to the terms and conditions set out below and to be set out in the Offer Document and the Form of Acceptance.

Each Condition shall be regarded as a separate Condition (as the case may be) and shall not be limited by reference to any other Condition.

1.         Conditions of the Offer

Acceptance condition

(a)        valid acceptances of the Offer being received (and not, where permitted, withdrawn) by no later than 1.00 p.m. on the First Closing Date (or such later time(s) and/or date(s) as Sainsbury's may, in accordance with the Takeover Code or with the consent of the Panel, decide) in respect of not less than 90 per cent. (or such lesser percentage as Sainsbury's may decide) of the HRG Shares to which the Offer relates and of the voting rights attached to those shares, provided that this Condition 1(a) will not be satisfied unless Sainsbury's and/or any member of the Sainsbury's Group shall have acquired or agreed to acquire (whether pursuant to the Offer or otherwise), directly or indirectly, HRG Shares carrying in aggregate more than 50 per cent. of the voting rights then normally exercisable at a general meeting of HRG, including for this purpose (except to the extent otherwise agreed by the Panel) any such voting rights attaching to HRG 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.

For the purposes of this Condition:

(i)         HRG Shares which have been unconditionally allotted shall be deemed to carry the voting rights they will carry upon being entered into the register of members of HRG;

(ii)        all percentages of voting rights, share capital and relevant securities are to be calculated by reference to the percentage held and in issue outside treasury; and

(iii)       the expression "HRG Shares to which the Offer relates" shall be construed in accordance with Chapter 3 of Part 28 of the 2006 Act;

Admission of New Sainsbury's Shares

(b)        (i) the FCA having acknowledged to Sainsbury's or its agent (and such acknowledgement not having been withdrawn) that the application for the admission of the New Sainsbury's Shares to the Official List with a premium listing has been approved and (after satisfaction of any conditions to which such approval is expressed to be subject ("listing conditions")) admission will become effective as soon as a dealing notice has been issued by the FCA and any listing conditions having been satisfied; and (ii) the London Stock Exchange having acknowledged to Sainsbury's or its agent (and such acknowledgement not having been withdrawn) that the New Sainsbury's Shares will be admitted to trading;

Regulatory conditions

(c)        the FCA giving notice in writing pursuant to section 189(4)(a) of FSMA, in terms reasonably satisfactory to Sainsbury's, of its approval (or being treated as having given such approval under section 189(6) of FSMA) in respect of each person (whether or not a member of the Wider Sainsbury's Group) who will acquire control or (if applicable) increase control over (as defined in sections 181 and 182 of FSMA) any member of the Wider HRG Control Group which is (or shall be as at the time the Offer becomes or is declared unconditional in all respects) a UK authorised person (as defined in section 191G(1) of FSMA), and which in either case would result from or in connection with or is contemplated by the implementation of the Offer and the FCA not having cancelled or varied, and not having notified (or intimated that it may notify) any proposal to cancel or vary, any permission (within the meaning of FSMA) held by any such authorised person at the date of this announcement;

(d)        the GFSC either giving notice in writing pursuant to The Insurance Business (Bailiwick of Guernsey) Law, 2002 (the "Insurance Law"), in terms reasonably satisfactory to Sainsbury's, of no objection or being deemed to have given such no objection pursuant to the Insurance Law, as a result of or in connection with or is contemplated by the implementation of the Offer in respect of any member of the Wider HRG Control Group which is (or shall be as at the time the Offer becomes or is declared unconditional in all respects) a GFSC licensed entity, and the GFSC not having cancelled, varied or imposed conditions on, and not having notified (or intimated that it may notify) any proposal to cancel, vary or impose conditions on, the terms of any licence held by any such GFSC licensed entity at the date of this announcement;

Merger control

(e)        the CMA deciding not to make a Phase 2 CMA Reference in respect of the Acquisition;

Other Third Party clearances

(f)         other than in respect of Conditions 1(c) to 1(e), no central bank, government or governmental, quasi‑governmental, supranational, statutory, regulatory, environmental, administrative, fiscal or investigative body, court, trade agency, association, institution, environmental body, employee representative body or any other body or person whatsoever in any jurisdiction (each a "Third Party") having given notice of a decision to take, institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference, or having required any action to be taken or otherwise having done anything or having enacted, made or proposed any statute, regulation, decision, order or change to published practice and there not continuing to be outstanding any statute, regulation, decision or order which would or might reasonably be expected to:

(i)         make the Offer, its implementation or the acquisition or proposed acquisition of any shares or other securities in, or control or management of, any member of the Wider HRG Group by any member of the Wider Sainsbury's Group void, illegal and/or unenforceable under the laws of any relevant jurisdiction, or otherwise directly or indirectly prevent, prohibit, or materially restrain, restrict, impede, challenge, delay or otherwise interfere with the implementation of, or impose additional material conditions or obligations with respect to, the Offer or the acquisition of any shares or other securities in, or control or management of, any member of the Wider HRG Group by any member of the Wider Sainsbury's Group or require amendment of the Offer;

(ii)        require, prevent or delay the divestiture or alter the terms envisaged for such divestiture by any member of the Wider Sainsbury's Group or by any member of the Wider HRG Group of all or any part of their businesses, assets or property or impose any limitation on the ability of all or any of them to conduct their businesses (or any part thereof) or to own, control or manage any of their assets or properties (or any part thereof) in each case to an extent which is material in the context of the Wider HRG Group taken as a whole or the Wider Sainsbury's Group taken as a whole or in the context of the Offer (as the case may be);

(iii)       impose any material limitation on, or result in a material delay in, the ability of any member of the Wider Sainsbury's Group directly or indirectly to acquire or hold or to exercise effectively all or any rights of ownership in respect of shares or other securities in HRG (or any member of the Wider HRG Group) or on the ability of any member of the Wider HRG Group or any member of the Wider Sainsbury's Group directly or indirectly to hold or exercise effectively any rights of ownership in respect of shares or other securities (or the equivalent) in, or to exercise management control over, any member of the Wider HRG Group in each case to an extent which is material in the context of the Wider HRG Group taken as a whole or the Wider Sainsbury's Group taken as a whole or in the context of the Offer (as the case may be);

(iv)       other than pursuant to the implementation of the Offer, require any member of the Wider Sainsbury's Group or the Wider HRG Group to acquire or offer to acquire any shares, other securities (or the equivalent) or interest in any member of the Wider HRG Group or any asset owned by any third party which is material in the context of the Wider HRG Group or the Wider Sainsbury's Group, in either case taken as a whole or in the context of the Offer;

(v)        require, prevent or delay a divestiture by any member of the Wider Sainsbury's Group of any shares or other securities (or the equivalent) in any member of the Wider HRG Group to an extent which is material in the context of the Wider HRG Group or the Wider Sainsbury's Group, in either case taken as a whole or in the context of the Offer;

(vi)       result in any member of the Wider HRG Group ceasing to be able to carry on business under any name under which it presently carries on business to an extent which is material in the context of the Wider HRG Group taken as a whole or in the context of the Offer;

(vii)      impose any limitation on the ability of any member of the Wider Sainsbury's Group or any member of the Wider HRG Group to conduct, integrate or co‑ordinate all or any part of their respective businesses with all or any part of the business of any other member of the Wider Sainsbury's Group and/or the Wider HRG Group in each case in a manner which is materially adverse to the Wider Sainsbury's Group taken as a whole and/or the Wider HRG Group, taken as a whole or in the context of the Offer; or

(viii)      except as Fairly Disclosed, otherwise affect the business, assets, value, profits, prospects or operational performance of any member of the Wider HRG Group or any member of the Wider Sainsbury's Group in each case in a manner which is adverse to and material in the context of the Wider HRG Group taken as a whole or of the obligations of any member of the Wider Sainsbury's Group in connection with the financing of the Offer or in the context of the Offer;

and all applicable waiting and other time periods (including any extensions thereof) during which any such Third Party could decide to take, institute, implement or threaten any such action, proceeding, suit, investigation, enquiry or reference or take any other step under the laws of any jurisdiction in respect of the Offer or proposed acquisition of any HRG Shares or otherwise intervene having expired, lapsed, or been terminated;

(g)        no material undertakings or assurances being sought from any member of the Wider Sainsbury's Group or any member of the Wider HRG Group by the Secretary of State or any other Third Party, except on terms reasonably satisfactory to Sainsbury's;

(h)        other than in respect of Conditions 1(c) to 1(e), all material notifications, filings or applications which are necessary or appropriate having been made in connection with the Offer and all necessary waiting and other time periods (including any extensions thereof) under any applicable legislation or regulation of any jurisdiction having expired, lapsed or been terminated (as appropriate) and all statutory and regulatory obligations in any jurisdiction having been complied with and all Authorisations which are necessary or appropriate in any jurisdiction for or in respect of the Offer or the proposed acquisition of any shares or other securities in, or control of, HRG by any member of the Wider Sainsbury's Group having been obtained in terms and in a form reasonably satisfactory to Sainsbury's from all appropriate Third Parties or (without prejudice to the generality of the foregoing) from any person or bodies with whom any member of the Wider HRG Group or the Wider Sainsbury's Group has entered into contractual arrangements and all such Authorisations which are necessary or appropriate to carry on the business of any member of the Wider HRG Group in any jurisdiction having been obtained in each case where the direct consequence of a failure to make such notification or filing or to wait for the expiry, lapse or termination of any such waiting or other time period or to comply with such obligation or obtain such Authorisation would be unlawful in any relevant jurisdiction or have a material adverse effect on the Wider HRG Group or the Wider Sainsbury's Group in each case taken as a whole or the ability of Sainsbury's to implement the Offer and all such Authorisations remaining in full force and effect at the time at which the Offer becomes otherwise unconditional in all respects and there being no notice or intimation of an intention to revoke, suspend, restrict, modify or not to renew such Authorisations;

(i)         no temporary restraining order, preliminary or permanent injunction, preliminary or permanent enjoinment, or other order threatened or issued and being in effect by a court or other Third Party which has the effect of making the Offer or any acquisition or proposed acquisition of any shares or other securities or control or management of, any member of the Wider HRG Group by any member of the Wider Sainsbury's Group, or the implementation of either of them, void, voidable, illegal and/or unenforceable under the laws of any relevant jurisdiction, or otherwise directly or indirectly prohibiting, preventing, restraining, restricting, delaying or otherwise interfering with the consummation or the approval of the Offer or any matter arising from the proposed acquisition of any shares or other securities in, or control or management of, any member of the Wider HRG Group by any member of the Wider Sainsbury's Group, in each case in a manner which is adverse to and material in the context of the Offer;

Confirmation of absence of adverse circumstances

(j)         except as Fairly Disclosed, there being no provision of any arrangement, agreement, licence, permit, franchise, lease or other instrument to which any member of the Wider HRG Group is a party or by or to which any such member or any of its assets is or may be bound, entitled or be subject or any event or circumstance which, as a consequence of the Offer or the proposed acquisition by any member of the Wider Sainsbury's Group of any shares or other securities in HRG or because of a change in the control or management of any member of the Wider HRG Group or otherwise, would or might reasonably be expected to result in, in each case to an extent which is material in the context of the Wider HRG Group taken as a whole or in the context of the Offer or to the obligations of any member of the Wider Sainsbury's Group in connection with the financing of the Offer:

(i)         any monies borrowed by, or any other indebtedness, actual or contingent of, or any grant available to, any member of the Wider HRG Group being or becoming repayable, or capable of being declared repayable, immediately or prior to its or their stated maturity date or repayment date, or the ability of any such member to borrow monies or incur any indebtedness being withdrawn or inhibited or being capable of becoming or being withdrawn or inhibited;

(ii)        the rights, liabilities, obligations, interests or business of any member of the Wider HRG Group or any member of the Wider Sainsbury's Group under any such arrangement, agreement, licence, permit, lease or instrument or the interests or business of any member of the Wider HRG Group or any member of the Wider Sainsbury's Group in or with any other firm or company or body or person (or any agreement or arrangement relating to any such business or interests) being or likely to become terminated or adversely modified or affected or any onerous obligation or liability arising or any adverse action being taken or arising thereunder;

(iii)       any member of the Wider HRG Group ceasing to be able to carry on business under any name under which it presently carries on business;

(iv)       any assets or interests of, or any asset the use of which is enjoyed by, any member of the Wider HRG 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 or could cease to be available to any member of the Wider HRG Group otherwise than in the ordinary course of business;

(v)        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 member of the Wider HRG Group or any such mortgage, charge or other security interest (whenever created, arising or having arisen), becoming enforceable;

(vi)       the business, assets, value, financial or trading position, profits, prospects or operational performance of any member of the Wider HRG Group being prejudiced or adversely affected;

(vii)      the creation or acceleration of any liability (actual or contingent) by any member of the Wider HRG Group; or

(viii)      any liability of any member of the Wider HRG Group to make any severance, termination, bonus or other payment to any of its directors or other officers;

No material transactions, claims or changes in the conduct of the business of the HRG Group

(k)        since 28 February 2015 and except as Fairly Disclosed, no member of the Wider HRG Group having:

(i)         save as between HRG and its wholly‑owned subsidiaries or between such wholly‑owned subsidiaries and save for the issue or transfer out of treasury of HRG Shares on the exercise of options or vesting of awards granted before the date of this announcement in the ordinary course, issued or agreed to issue or authorised or proposed or announced its intention to authorise or propose the issue of additional shares of any class, or securities or securities convertible into, or exchangeable for, or rights, warrants or options to subscribe for or acquire, any such shares or convertible securities or transferred or sold or agreed to transfer or sell or authorised or proposed the transfer or sale of HRG Shares out of treasury;

(ii)        recommended, declared, paid or made or proposed to recommend, declare, pay or make any bonus, dividend or other distribution (whether payable in cash or otherwise) other than to HRG or one of its wholly‑owned subsidiaries;

(iii)       save as between HRG and its wholly‑owned subsidiaries or between such wholly‑owned subsidiaries, merged with (by statutory merger or otherwise) or demerged from or acquired any body corporate, partnership or business or acquired or disposed of, or, other than in the ordinary course of business, transferred, mortgaged or charged or created any security interest over, any assets or any right, title or interest in any asset (including shares and trade investments) or authorised, proposed or announced any intention to do so;

(iv)       save as between HRG and its wholly‑owned subsidiaries or between such wholly‑owned subsidiaries, made, authorised, proposed or announced an intention to propose any change in its loan capital;

(v)        issued, authorised or proposed or announced an intention to authorise or propose the issue of, or made any change in or to the terms of, any debentures or (save in the ordinary course of business and save as between HRG and its wholly‑owned subsidiaries or between such wholly‑owned subsidiaries) incurred or increased any indebtedness or become subject to any contingent liability to an extent which is material in the context of the Wider HRG Group or in the context of the Offer;

(vi)       entered into, varied, authorised or proposed entry into or variation of, or announced its intention to enter into or vary, any material contract, transaction, arrangement or commitment (whether in respect of capital expenditure or otherwise) (otherwise than in the ordinary course of business) which is of a long term, unusual or onerous nature, or which involves or could reasonably be expected to involve an obligation of a nature or magnitude which is, in any such case, material in the context of the Wider HRG Group or in the context of the Offer, or which is or is reasonably likely to be restrictive on the business of any member of the Wider HRG Group or the Wider Sainsbury's Group to an extent which is or is likely to be material to the Wider HRG Group or the Wider Sainsbury's Group in each case taken as a whole or in the context of the Offer;

(vii)      entered into any licence or other disposal of intellectual property rights of any member of the Wider HRG Group which are material in the context of the Wider HRG Group and outside the normal course of business;

(viii)      entered into, varied, authorised or proposed entry into or variation of, or announced its intention to enter into or vary the terms of or made any offer (which remains open for acceptance) to enter into or vary the terms of, any contract, commitment, arrangement or any service agreement with any director or senior executive of the Wider HRG Group to an extent which is material in the context of the Wider HRG Group or in the context of the Offer save for salary increases, bonuses or variations of terms in the ordinary course;

(ix)       proposed, agreed to provide or modified the terms of any share option scheme, incentive scheme, or other benefit relating to the employment or termination of employment of any employee of the Wider HRG Group which, taken as a whole, are material in the context of the Wider HRG Group taken as a whole or in the context of the Offer;

(x)        other than as provided for in the agreement entered into on 17 March 2016 by the trustee of the Home Retail Group Pension Scheme and Sainsbury's in relation to the future funding of that scheme following Completion, taken or having procured the trustees of the relevant pension scheme to take, or any such trustees having taken any action, to (I) propose, make or agree to any significant change to: (a) the terms of the trust deeds, rules, policy or other governing documents constituting any pension scheme or other retirement or death benefit arrangement established for the directors, former directors, employees or former employees of any entity in the Wider HRG Group or their dependants (a "Relevant Pension Plan"); (b) the basis on which benefits accrue, pensions which are payable or the persons entitled to accrue or be paid benefits, under any Relevant Pension Plan; (c) the basis on which the liabilities of any Relevant Pension Plan are funded or valued; (d) the manner in which the assets of any Relevant Pension Plan are invested; (e) the basis or rate of employer contribution to a Relevant Pension Plan; or (II) enter into or propose to enter into one or more bulk annuity contracts in relation to any Relevant Pension Plan; or (III) carry out any act: (a) which would or could reasonably be expected to lead to the commencement of the winding up of any Relevant Pension Plan; (b) which would or might create a material debt owed by an employer to any Relevant Pension Plan; (c) which would or might accelerate any obligation on any employer to fund or pay additional contributions to any Relevant Pension Plan; or (d) which would or might give rise directly or indirectly to a liability in respect of a Relevant Pension Plan arising out of the operation of sections 38 to 56 inclusive of the Pensions Act 2004 in relation to the scheme;

(xi)       changed the trustee or trustee directors or other fiduciary of any Relevant Pension Plan;

(xii)      entered into, implemented or effected, or authorised, proposed or announced its intention to implement or effect, any joint venture, asset or profit sharing arrangement, partnership, composition, assignment, reconstruction, amalgamation, commitment, scheme or other transaction or arrangement (other than the Offer) which is material in the context of the Wider HRG Group taken as a whole or in the context of the Offer;

(xiii)      purchased, redeemed or repaid or announced any proposal to purchase, redeem or repay any of its own shares or other securities or reduced or, save in respect of the matters mentioned in sub‑paragraph (i) above, made any other change to any part of its share capital;

(xiv)     waived, compromised or settled any claim otherwise than in the ordinary course of business which is material in the context of the Wider HRG Group taken as a whole or in the context of the Offer;

(xv)      made any material alteration to its articles of association or other constitutional documents;

(xvi)     taken or proposed any steps, corporate action or had any legal proceedings instituted or threatened against it in relation to the suspension of payments, a moratorium of any indebtedness, its winding‑up (voluntary or otherwise), dissolution, reorganisation or for the appointment of any administrator, receiver, manager, administrative receiver, trustee or similar officer of all or any of its assets or revenues or any analogous proceedings in any jurisdiction or appointed any analogous person in any jurisdiction or had any such person appointed;

(xvii)     been unable, or admitted in writing that it is unable, to pay its debts or commenced negotiations with one or more of its creditors with a view to rescheduling or restructuring any of its indebtedness, 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;

(xviii)    entered into any contract, commitment, agreement or arrangement otherwise than in the ordinary course of business or passed any resolution or made any offer (which remains open for acceptance) with respect to or announced an intention to, or to propose to, effect any of the transactions, matters or events referred to in this Condition;

(xix)     terminated or varied the terms of any agreement or arrangement between any member of the Wider HRG Group and any other person in a manner which would or might be expected to have a material adverse effect on the financial position of the Wider HRG Group taken as a whole; or

(xx)      having taken (or agreed or proposed to take) any action which requires, or would require, the consent of the Panel or the approval of HRG Shareholders in general meeting in accordance with, or as contemplated by, Rule 21.1 of the Takeover Code;

No material adverse change

(l)         since 28 February 2015 and except as Fairly Disclosed:

(i)         there having been no adverse change and no circumstance having arisen which would be expected to result in any adverse change or deterioration in the business, assets, value, financial or trading position, profits, prospects or operational performance of any member of the Wider HRG Group to an extent which is material to the Wider HRG Group taken as a whole or in the context of the Offer or in the context of the obligations of any member of the Wider Sainsbury's Group in connection with the financing of the Offer;

(ii)        no litigation, arbitration proceedings, prosecution or other legal proceedings including, without limitation, with regard to intellectual property rights used by the Wider HRG Group having been threatened, announced or instituted by or against or remaining outstanding against any member of the Wider HRG Group or to which any member of the Wider HRG Group is or may become a party (whether as claimant or defendant or otherwise) and no enquiry, review, investigation or enforcement proceedings by, or complaint or reference to, any Third Party against or in respect of any member of the Wider HRG Group having been threatened, announced or instituted by or against, or remaining outstanding in respect of, any member of the Wider HRG Group which, in any such case, might reasonably be expected to have a material adverse effect on the Wider HRG Group taken as a whole or in the context of the Offer;

(iii)       no contingent or other liability having arisen, increased or become apparent which might be likely adversely to affect the business, assets, financial or trading position, profits, prospects or operational performance of any member of the Wider HRG Group to an extent which is material to the Wider HRG Group taken as a whole or in the context of the Offer; and

(iv)       no steps having been taken and no omissions having been made which are likely to result in the withdrawal, cancellation, termination or modification of any licence held by any member of the Wider HRG Group, which is necessary for the proper carrying on of its business and the withdrawal, cancellation, termination or modification of which is material and likely to have a material adverse effect on the Wider HRG Group taken as a whole or in the context of the Offer;

(m)       since 28 February 2015 and except as Fairly Disclosed, Sainsbury's not having discovered:

(i)         that any financial, business or other information concerning the Wider HRG Group publicly announced or disclosed to any member of the Wider Sainsbury's Group at any time by or on behalf of any member of the Wider HRG Group or to any of their advisers is misleading, contains a misrepresentation of fact or omits to state a fact necessary to make that information not misleading and which is, in any case, adverse to and material in the context of the Wider HRG Group taken as a whole or the Offer;

(ii)        that any member of the Wider HRG Group is subject to any liability, contingent or otherwise, and which is adverse to and material in the context of the Wider HRG Group or the Offer; or

(iii)       any information which affects the import of any information disclosed to Sainsbury's at any time by or on behalf of any member of the Wider HRG Group which is material in the context of the Wider HRG Group or in the context of the Offer;

Environmental liabilities

(n)        except as Fairly Disclosed, Sainsbury's not having discovered that:

(i)         any past or present member of the Wider HRG Group has not complied with any applicable legislation or regulations, notices or other requirements of any jurisdiction or any Third Party or any Authorisations relating to the use, treatment, storage, carriage, disposal, discharge, spillage, release, leak or emission of any waste or hazardous substance or greenhouse gas, or any substance likely to impair the environment (including property) or harm the health of humans, animals or other living organisms or eco‑systems or otherwise relating to environmental matters or the health and safety of humans, which non‑compliance would be likely to give rise to any liability including any penalty for non‑compliance (whether actual or contingent) on the part of any member of the Wider HRG Group in each case which is material in the context of the Wider HRG Group taken as a whole or in the context of the Offer; or

(ii)        there has been a disposal, discharge, spillage, accumulation, leak, emission, release or the migration, production, supply, treatment, storage, transport or use of any waste or hazardous substance or greenhouse gas or any substance likely to impair the environment (including any property) or harm human health which (whether or not giving rise to non‑compliance with any law or regulation) would be likely to give rise to any liability (whether actual or contingent) on the part of any member of the Wider HRG Group in each case which is material in the context of the Wider HRG Group taken as a whole or in the context of the Offer; or

(iii)       there is or is likely to be any obligation or liability (whether actual or contingent) or requirement to make good, remediate, repair, re‑instate or clean up any property, asset currently or previously owned, occupied or made use of by any past or present member of the Wider HRG Group (or on its behalf), or in which any such member may have or previously have had or be deemed to have had an interest, or other elements of the environment (including any controlled waters) under any environmental legislation, common law, regulation, notice, circular, Authorisation, other legally binding requirement or order of any Third Party or to contribute to the cost thereof or associated therewith or indemnify any person in relation thereto in any such case to an extent which is material in the context of the Wider HRG Group taken as a whole or in the context of the Offer; or

(iv)       circumstances exist (whether as a result of the Offer or otherwise):

(A)       which would be likely to lead to any Third Party instituting; or

(B)       whereby any member of the Wider Sainsbury's Group or any present or past member of the Wider HRG Group would be likely to be required to institute,

an environmental audit or take any other steps which would in any such case be likely to result in any liability (whether actual or contingent) to improve, modify existing or install new plant, machinery or equipment or carry out changes in the processes currently carried out or make good, remediate, repair, re‑instate or clean up any land or other asset currently or previously owned, occupied or made use of by any past or present member of the Wider HRG Group (or on its behalf) or by any person for which a member of the Wider HRG Group is or has been responsible, or in which any such member may have or previously have had or be deemed to have had an interest, which in any case is material in the context of the Wider HRG Group taken as a whole or in the context of the Offer; or

(v)        circumstances exist whereby a person or class of persons would be likely to have any claim or claims in respect of any product or process of manufacture or materials used therein currently or previously manufactured, sold or carried out by any past or present member of the Wider HRG Group which claim or claims would be likely, adversely to affect any member of the Wider HRG Group and which is material in the context of the Wider HRG Group taken as a whole or in the context of the Offer;

Intellectual Property

(o)        no circumstance having arisen or event having occurred in relation to any intellectual property owned or used by any member of the Wider HRG Group which would have a material adverse effect on the Wider HRG Group taken as a whole or is otherwise material in the context of the Offer, including:

(i)         any member of the Wider HRG Group losing its title to any intellectual property, or any intellectual property owned by the Wider HRG Group and being revoked, cancelled or declared invalid;

(ii)        any claim being asserted in writing or threatened in writing by any person challenging the ownership of any member of the Wider HRG Group to, or the validity or effectiveness of, any of its intellectual property; or

(iii)       any agreement regarding the use of any intellectual property licensed to or by any member of the Wider HRG Group being terminated or varied;

Anti‑corruption and sanctions

(p)        except as Fairly Disclosed, Sainsbury's not having discovered that:

(i)         any past or present member, director, officer or employee of the Wider HRG Group or any person that performs or has performed services for or on behalf of any such company is or has at any time engaged in any activity, practice or conduct (or omitted to take any action) in contravention of the UK Bribery Act 2010, the US Foreign Corrupt Practices Act of 1977, as amended or any other applicable anti‑corruption legislation;

(ii)        any past or present member, director, officer or employee of the Wider HRG Group or any person that performs or has performed services for or on behalf of any such company may be liable or responsible for the Wider HRG Group has engaged in any activity or business with, or made any investments in, or made any funds or assets available to, or received any funds or assets from any government, entity or individual covered by any of the economic sanctions administered by the United Nations or the European Union (or any of their respective member states) or the United States Office of Foreign Assets Control or any other governmental or supranational body or authority in any jurisdiction; and

No criminal property

(q)        except as Fairly Disclosed, Sainsbury's not having discovered that any asset of any member of the Wider HRG Group constitutes criminal property as defined by section 340(3) of the Proceeds of Crime Act 2002 (but disregarding paragraph (b) of that definition).

2.         Waiver and invocation of the Conditions

Subject to the requirements of the Panel, Sainsbury's reserves the right to waive, in whole or in part, all or any of the Conditions except for Conditions 1(a) to 1(d) inclusive, which cannot be waived. Conditions 1(b) to 1(q) inclusive must be fulfilled or (if capable of waiver) waived on or before midnight on the 21st calendar day after the later of the First Closing Date and the date on which Condition 1(a) is fulfilled (or, in each case, such later date as the Panel may agree), failing which the Offer will lapse. Sainsbury's shall be under no obligation to waive (if capable of waiver) or treat as fulfilled any of the Conditions by a date earlier than the latest date specified above for the fulfilment or waiver thereof, notwithstanding that any other Conditions may at any 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 fulfilment. In any event, all of the Conditions to the Offer must be fulfilled or (if capable of waiver) waived on or before midnight on the 81st calendar day following the date on which the Offer Document is published or such other date as may be agreed with the Panel.

If Sainsbury's is required by the Panel to make an offer for HRG Shares under the provisions of Rule 9 of the Takeover Code, Sainsbury's may make such alterations to the Conditions and further terms of the Offer as are necessary to comply with the provisions of that Rule.

3.         Implementation by way of a Scheme

Sainsbury's reserves the right to implement the Acquisition by way of a court-sanctioned Scheme in accordance with Part 26 of the 2006 Act (with the consent of the Panel). In such an event, the terms of the Acquisition would be substantially the same as those of the Offer, subject to appropriate amendments as set out in paragraph 24 of this announcement (which involves a cancellation scheme followed by New TopCo Capital Reduction). Sainsbury's reserves the right to implement the Acquisition by way of a transfer scheme under Part 26 of the 2006 Act or through different steps and processes (with the consent of the Panel, if required).

4.         Further terms of the Offer

The Offer will lapse if there is a Phase 2 CMA Reference before 1.00 p.m. on the First Closing Date or the date on which the Offer becomes or is declared unconditional as to acceptances, whichever is later. If the Offer so lapses, the Offer will cease to be capable of further acceptance and accepting HRG Shareholders and Sainsbury's will cease to be bound by Forms of Acceptance submitted before the time when the Offer lapses.

If any dividend or other distribution is announced, declared, made, paid or becomes payable by HRG in respect of the HRG Shares on or after the date of this announcement and prior to the date on which the Offer becomes or is declared unconditional in all respects, other than or in excess of the Special Dividend, Sainsbury's reserves the right to reduce the value of the Offer Consideration (including, for the avoidance of doubt, by reducing the cash element of the Offer Consideration and/or adjusting the Exchange Ratio) by the amount of all or part of the dividend or other distribution, or all or part of the amount in excess of the Special Dividend, that has been announced, declared, made, paid or become payable. In calculating the amount of any such reduction, the value of New Sainsbury's Shares will be calculated by reference to the Closing Price of Sainsbury's Shares on the last trading day before Sainsbury's announcement of a reduction in the Offer Consideration.

The HRG Shares will be acquired pursuant to the Offer with full title guarantee, fully paid and free from all liens, charges, equities, encumbrances, rights of pre-emption and any other interests of any nature whatsoever and together with all rights now or hereafter attaching thereto, including without limitation voting rights and the right to receive and retain in full all dividends and other distributions (if any) declared, made or paid on or after the date of this announcement, other than the Special Dividend.

The New Sainsbury's Shares will be issued credited as fully paid and will rank pari passu in all respects with the Existing Sainsbury's Shares from the date of issue, save that they will not participate in any dividend payable by Sainsbury's with reference to a record date prior to the date on which the Offer becomes or is declared unconditional in all respects.

Fractions of New Sainsbury's Shares will not be allotted or issued to HRG Shareholders and entitlements will be rounded down to the nearest whole number of New Sainsbury's Shares and all fractions of New Sainsbury's Shares will be aggregated and sold in the market as soon as practicable after the date the Offer becomes or is declared unconditional in all respects. The net proceeds of such sale (after deduction of all expenses and commissions incurred in connection with the sale) will be distributed in due proportions to HRG Shareholders who would otherwise have been entitled to such fractions, save that individual entitlements to amounts of less than £5 will be retained for the benefit of the Combined Group.

The availability of the Offer to HRG Shareholders who are not resident in the UK or who are subject to the laws and/or regulations of another jurisdiction (including the ability of such HRG Shareholders to accept the Offer and/or to execute and deliver a Form of Acceptance) may be restricted by the laws and/or regulations of those jurisdictions. Therefore any persons who are not resident in the UK or who are subject to the laws and/or regulations of any jurisdiction other than the UK should inform themselves about, and observe, any applicable legal or regulatory requirements.

The New Sainsbury's Shares to be issued pursuant to the Offer have not been, and will not be, listed on any stock exchange other than the London Stock Exchange and have not been, and will not be, registered under the US Securities Act or under any laws or with any securities regulatory authority of any state, district or other jurisdiction, of the United States, nor have clearances been, nor will they be, obtained from the securities commission or similar authority of any province or territory of Canada and no prospectus has been, or will be, filed, or registration made, under any securities law of any province or territory of Canada, nor has a prospectus in relation to the New Sainsbury's Shares been, nor will one be, lodged with, or registered by, the Australian Securities and Investments Commission, nor have any steps been taken, nor will any steps be taken, to enable the New Sainsbury's Shares to be offered in compliance with applicable securities laws of Japan and no regulatory clearances in respect of the New Sainsbury's Shares have been, or will be, applied for in any other jurisdiction. Accordingly, unless an exemption under relevant securities laws is available, the New Sainsbury's Shares are not being, and may not be, offered, sold, resold, delivered or distributed, directly or indirectly, in, into or from the United States or any other Restricted Jurisdiction or any resident of the United States or any other Restricted Jurisdiction. Neither the SEC nor any US state securities commission has approved or disapproved of the New Sainsbury's Shares, or determined if this announcement is accurate or complete. Any representation to the contrary is a criminal offence.

Appendix 2
SOURCES AND BASES OF INFORMATION

Unless otherwise stated in this announcement:

1.         the value attributed to HRG's issued ordinary share capital is based on 813,445,001 HRG Shares in issue as at the Last Practicable Date;

2.         any references to the existing issued share capital of Sainsbury's are based on 1,924,286,429 Sainsbury's Shares in issue as at the Last Practicable Date;

3.         the market capitalisation for Sainsbury's is based on 1,924,286,429 Sainsbury's Shares in issue and the Closing Price of 281.5 pence per Sainsbury's Share on the Last Practicable Date;

4.         the market capitalisation for HRG is based on 813,445,001 HRG Shares in issue and the Closing Price of 181.2 pence per HRG Share on the Last Practicable Date;

5.         unless otherwise stated, the financial information relating to Sainsbury's is extracted from the audited consolidated financial statements of the Sainsbury's Group for the 52-week period ended 14 March 2015, prepared in accordance with IFRS;

6.         unless otherwise stated, the financial information relating to HRG is extracted from the audited consolidated financial statements of the HRG Group for the 52-week period ended 28 February 2015, prepared in accordance with IFRS; and

7.         unless otherwise stated, all prices for HRG and Sainsbury's Shares have been derived from the Daily Official List and represent Closing Prices on the relevant date(s).

Appendix 3
REVISED quantified Financial benefits statement

PART A

Paragraph 4 of this announcement includes revised statements of estimated cost savings and synergies expected to arise from the Offer (together, the "Revised Quantified Financial Benefits Statement"). A copy of the Revised Quantified Financial Benefits Statement is set out below:

"The Sainsbury's Directors now expect a higher level of EBITDA synergies in the third full year after Completion of not less than £160 million. This represents an increase of one third compared to the previous estimate of not less than £120 million EBITDA synergies. This higher EBITDA synergy estimate results from (i) an increase of £15 million in the estimated synergies from Argos concessions due to an increase in the number of concession opportunities and increased occupancy cost savings, offset by a reduction in the estimated Sainsbury's food and grocery halo sales; (ii) an increase of £30 million in the estimated cost synergies from central and support functions savings as well increased buying cost savings; and (iii) a decrease of £5 million in other revenue synergies as a result of revised assumptions on clothing, homewares and seasonal revenue synergies (3).

Note:

(3)           Numbers refer to synergies in the third full year after Completion.

Approximately 15 per cent. of the estimated EBITDA synergies are expected to be realised in the first full year after Completion, approximately 65 per cent. in the second full year after Completion and 100 per cent. in the third full year after Completion.

The constituent elements of quantified synergies, which are in addition to savings previously targeted by Sainsbury's and HRG separately, comprise the following:

·          approximately 45 per cent. of the identified synergies (approximately £75 million) are expected to be generated from Argos concessions, arising from (i) cost savings generated from the relocation of certain existing Argos stores into concessions in Sainsbury's stores, and (ii) revenue gains from new concessions within Sainsbury's stores, including but not limited to cross-selling opportunities and the expansion of Click and Collect desks. Of these synergies, approximately 15 per cent. are expected to be realised in the first full year after Completion, approximately 60 per cent. in the second full year after Completion and 100 per cent. in the third full year after Completion;

·          approximately 45 per cent. of the identified synergies (approximately £70 million) are expected to be cost synergies generated by removing duplication and overlap from both central and support functions at Sainsbury's and HRG. There are also benefits to the Combined Group in purchasing of goods for resale and goods not for resale from sharing best practice and increased scale. Of these synergies, approximately 15 per cent. are expected to be realised in the first full year after Completion, approximately 65 per cent. in the second full year after Completion and 100 per cent. in the third full year after Completion; and

·          the remainder of the identified synergies (approximately £15 million) are expected to be further revenue synergies, principally from the sale of Sainsbury's clothing, homewares and seasonal and leisure ranges through the existing Argos network together with the roll-out of Sainsbury's ATMs to Argos locations and the sale of Habitat products through Sainsbury's channels. Of these synergies, approximately 25 per cent. are expected to be realised in the first full year after Completion, approximately 80 per cent. in the second full year after Completion and 100 per cent. in the third full year after Completion.

It is expected that the realisation of the identified synergies will require one-off exceptional costs of approximately £130 million, of which approximately 50 per cent. are expected to be incurred in the first full year after Completion, 20 per cent. in the second full year after Completion and 30 per cent. in the third full year after Completion.

It is also expected that incremental capital expenditure of approximately £140 million will be incurred in the three years following Completion, relating to store fit-out expenditure. Approximately 30 per cent. of this capital expenditure is to be incurred in the first full year after Completion, 40 per cent. in the second full year after Completion and 30 per cent. in the third full year after Completion.   

The synergies referred to above are expected to be recurring and are expected to arise as a direct result of the Offer and could not be achieved independently of the Offer. The synergies are also stated net of anticipated dis-synergies, which arise principally from lost sales in the Argos stores moving more than one mile or changing to a different retail location type as well as estimated cannibalisation impact of new infill Argos concessions. For the avoidance of doubt, the EBITDA impact of the synergies as set out above already reflects the impact of these identified dis-synergies."

Further information on the bases of belief supporting the Revised Quantified Financial Benefits Statement, including the principal assumptions and sources of information, is set out below.

Bases of Belief and Principal Assumptions

Following initial discussions regarding the Offer, a synergy development team was established to evaluate and assess the potential synergies available for the integration and undertake an initial planning exercise (the "Sainsbury's Synergy Team" or the "Team"). The Team, which comprises senior strategy and financial colleagues, has worked collaboratively to identify and quantify potential synergies as well as estimate any associated costs on behalf of the Sainsbury's Directors. The Team also worked alongside external consultants to prepare a detailed synergy plan.

The Team has engaged with the relevant functional heads and other personnel to provide input into the development process and to agree on the nature and quantum of the identified synergy initiatives. In preparing the Revised Quantified Financial Benefits Statement, Sainsbury's has had a level of due diligence access to HRG in order to confirm certain key data points as well as information available to it from existing trials of Argos concessions in its stores. In circumstances where data has been limited due to lack of access to HRG, the Team has made estimates and assumptions to aid its development of individual synergy initiatives. The assessment and quantification of the potential synergies have in turn been informed by Sainsbury's management's industry experience and knowledge of its existing business.

The Sainsbury's Synergy Team has sought to assess synergies in relation to the HRG Group central functions and the Argos business. The cost bases used as the basis for the Revised Quantified Financial Benefits Statement are those contained in the management accounts of HRG for the financial year ended 28 February 2015 and the 2015 Annual Report and Accounts of Sainsbury's.

The majority of cost saving synergies are driven by physical consolidation that is within the influence of Sainsbury's management, whereas the delivery of the revenue synergies is more complex and to some extent outside the full control of Sainsbury's management.

In general, the synergy assumptions have in turn been risk adjusted, exercising a degree of prudence in the calculation of the estimated synergy benefit set out above.

Reports

As required by Rule 28.1(a) of the Takeover Code, Deloitte, as reporting accountants to Sainsbury's, have provided a report stating that, in their opinion, the Revised Quantified Financial Benefits Statement has been properly compiled on the basis stated. In addition, Morgan Stanley and UBS, as joint financial advisers to Sainsbury's, have provided a joint report stating that, in their view, the Revised Quantified Financial Benefits Statement has been prepared with due care and consideration.

Copies of these reports are included in Part B and Part C of this Appendix 3. Each of Deloitte, Morgan Stanley and UBS has given and not withdrawn its consent to the publication of its report in this announcement in the form and context in which it is included.

Notes

1.         These statements are not intended as a profit forecast and should not be interpreted as such. These statements of estimated synergies relate to future actions and circumstances which, by their nature, involve risks, uncertainties and contingencies. As a result, the estimated synergies referred to may not be achieved, or may be achieved later or sooner than estimated, or those achieved could be materially different from those estimated. Neither the Revised Quantified Financial Benefits Statement nor any other statement in this announcement should be construed as a profit forecast or interpreted to mean that Sainsbury's earnings in the first full year following Completion, or in any subsequent period, will necessarily match or be greater than or be less than those of Sainsbury's or HRG for the relevant preceding financial period or any other period.

2.         Due to the scale of the enlarged Sainsbury's business, there may be additional changes to the Combined Group's operations. As a result, and given the fact that the changes relate to the future, the resulting synergies may be materially greater or less than those estimated.

3.         In arriving at the estimate of synergies set out in this announcement, the Sainsbury's Synergy Team has assumed that:

(a)       there will be no significant impact on the underlying operations of either business;

(b)       there will be no material change to macroeconomic, political or legal conditions in the markets or regions in which in the Combined Group operates which will materially impact on the implementation of or costs to achieve the proposed cost savings; and

(c)       there will be no material change in exchange rates.

 

 

PART B
REPORT FROM DELOITTE

The Board of Directors

on behalf of J Sainsbury Plc

33 Holborn

London

EC1N 2HT

 

UBS Limited

1 Finsbury Avenue

London

EC2M 2PP

 

Morgan Stanley & Co International plc

25 Cabot Square

Canary Wharf

London

E14 4QA

 

18 March 2016

 

Dear Sirs

OFFER FOR HOME RETAIL GROUP PLC (THE "TARGET") BY J SAINSBURY PLC (THE "OFFEROR")

We report on the statement made by the directors of the Offeror (the "Directors") of quantified financial benefits set out in Part A of Appendix 3 of the announcement (the "Announcement") dated 18 March 2016 issued by the Offeror (the "Statement"). The Statement has been made in the context of the disclosures within Part A setting out, inter alia, the basis of the Directors' belief (identifying the principal assumptions and sources of information) supporting the Statement and their analysis, explanation and quantification of the constituent elements. 

Responsibilities

It is the responsibility of the Directors to prepare the Statement in accordance with Rule 28 of the Takeover Code. 

It is our responsibility to form our opinion, as required by Rule 28.1(a) of the Takeover Code, as to whether the Statement has been properly compiled on the basis stated and to report that opinion to you.

This report is given solely for the purposes of complying with Rule 28.1(a)(i) of the Takeover Code and for no other purpose. Therefore, to the fullest extent permitted by law we do not assume any other responsibility to any person for any loss suffered by any such person as a result of, arising out of, or in connection with this report or our statement, required by and given solely for the purposes of complying with Rule 23.3 of the Takeover Code, consenting to its inclusion in the Announcement.

Basis of opinion

We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom.

Our work included considering whether the Statement has been accurately computed based upon the disclosed bases of belief (including the principal assumptions). Whilst the bases of belief (and the principal assumptions) upon which the Statement is based are solely the responsibility of the Directors, we considered whether anything came to our attention to indicate that any of the bases of belief (or principal assumptions) adopted by the Directors which, in our opinion, are necessary for a proper understanding of the Statement, have not been disclosed or if any basis of belief (or principal assumption) made by the Directors appears to us to be unrealistic. Our work did not involve any independent examination of any of the financial or other information underlying the Statement.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with reasonable assurance that the Statement has been properly compiled on the basis stated.

Since the Statement (and the principal assumptions on which it is based) relates to the future, the actual financial benefits achieved are likely to be different from those anticipated in the Statement and the differences may be material. Accordingly, we can express no opinion as to the achievability of the financial benefits identified by the Directors in the Statement.

Our work has not been carried out in accordance with auditing or other standards and practices generally accepted in jurisdictions outside the United Kingdom, including the United States of America, and accordingly should not be relied upon as if it had been carried out in accordance with those standards and practices. We have not consented to the inclusion of this report and our opinion in any registration statement filed with the SEC under the US Securities Act of 1933 (either directly or by incorporation by reference) or in any offering document enabling an offering of securities in the United States (whether under Rule 144A or otherwise). We therefore accept no responsibility to, and deny any liability to, any person using this report and opinion in connection with any offering of securities inside the United States of America or who makes a claim on the basis they had acted in reliance on the protections afforded by United States of America law and regulation.

Opinion

In our opinion, based on the foregoing, the Statement has been properly compiled on the basis stated.

Yours faithfully

Deloitte LLP

Chartered Accountants

Deloitte LLP is a limited liability partnership registered in England and Wales with registered number OC303675 and its registered office at 2 New Street Square, London EC4A 3BZ, United Kingdom.  Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited ("DTTL"), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.

PART C
REPORT FROM MORGAN STANLEY AND UBS

 

The Directors

J Sainsbury plc

33 Holborn

London

EC1N 2HT

 

18 March 2016

 

Dear Sirs,

Offer for Home Retail Group plc ("HRG") by J Sainsbury plc ("Sainsbury's")

We refer to the Revised Quantified Financial Benefits Statement, the bases of belief thereof and the notes thereto (together, the "Statement") as set out in Part A of Appendix 3 of this announcement, for which the Board of Directors of Sainsbury's (the "Directors") are solely responsible under Rule 28 of the City Code on Takeovers and Mergers (the "Code").

We have discussed the Statement (including the assumptions and sources of information referred to therein) with the Directors and those officers and employees of Sainsbury's who developed the underlying plans. The Statement is subject to uncertainty as described in this announcement and our work did not involve an independent examination of any of the financial or other information underlying the Statement.

We have relied upon the accuracy and completeness of all the financial and other information provided to us by or on behalf of Sainsbury's, or otherwise discussed with us, and we have assumed such accuracy and completeness for the purposes of providing this letter.

We do not express any opinion as to the achievability of the quantified financial benefits identified by the Directors.

We have also reviewed the work carried out by Deloitte LLP and have discussed with them the opinion set out in Part B of Appendix 3 of this announcement addressed to yourselves and ourselves on this matter.

This letter is provided to you solely in connection with Rule 28.1(a)(ii) of the Code and for no other purpose. We accept no responsibility to Sainsbury's or its shareholders or any person other than the Directors in respect of the contents of this letter; no person other than the Directors can rely on the contents of this letter, and to the fullest extent permitted by law, we exclude all liability (whether in contract, tort or otherwise) to any other person, in respect of this letter, its contents or the work undertaken in connection with this letter or any of the results that can be derived from this letter or any written or oral information provided in connection with this letter, and any such liability is expressly disclaimed except to the extent that such liability cannot be excluded by law.

On the basis of the foregoing, we consider that the Statement, for which you as the Directors are solely responsible for purposes of Rule 28 of the Code, has been prepared with due care and consideration.

Yours faithfully,

Morgan Stanley & Co. International plc and UBS Limited

 

 

Appendix 4
SAINSBURY'S PROFIT Estimate

 

1.         Sainsbury's Profit Estimate

The Sainsbury's Group made a statement at the time of its second quarter trading statement for the 16 weeks to 26 September 2015, announced on 30 September 2015, that should current market trends continue, it expected its full year (that is, for the 52 weeks ended 12 March 2016 ("FY 2016")) underlying profit before tax (defined as profit before tax before any profit or loss on the disposal of properties, investment property fair value movements, retailing financing fair value movements, IAS 19 pension financing element and defined benefit pension scheme expenses, acquisition adjustments and one-off items that are material and infrequent in nature, but after the coupons on the perpetual subordinated capital securities and perpetual subordinated convertible bonds) ("UPBT") to be moderately ahead of its published consensus profit (which, at the time of such announcement, was £548 million) (the "Sainsbury's Profit Estimate").

The above statement constitutes a profit estimate for the purposes of Rule 28 of the Takeover Code.

An estimate has been made of UPBT rather than profit before tax because, in the view of the Sainsbury's Directors, UPBT is a key metric that provides a clear and consistent presentation of the underlying results of Sainsbury's ongoing business for shareholders and investors.

2.         Basis of Preparation

The Sainsbury's Directors confirm that the Sainsbury's Profit Estimate has been properly compiled on the basis stated below and on a basis consistent with the accounting policies of Sainsbury's, which are in accordance with IFRS and are those which Sainsbury's is applying in preparing its financial statements for FY 2016.

The Sainsbury's Directors prepared the Sainsbury's Profit Estimate on the basis of the published unaudited interim financial statements for the 28 weeks ended 26 September 2015, the unaudited management accounts of the Sainsbury's Group for the 20 weeks ended 13 February 2016 and a forecast for the four weeks ended 12 March 2016.

The Sainsbury's Profit Estimate excludes the costs and ongoing impact of the Offer.

3.         Sainsbury's Directors' confirmation

The Sainsbury's Directors have considered the Sainsbury's Profit Estimate and confirm that it remains valid as at the date of this announcement and that it has been properly compiled on the basis set out above and that the basis of the accounting used is consistent with Sainsbury's accounting policies.

 

 

Appendix 5
DEFINITIONS

The following definitions apply throughout this announcement unless the context otherwise requires:

"2006 Act"

the Companies Act 2006, as amended from time to time

"2015 Annual Report and Accounts of HRG"

the annual report and audited accounts of the HRG Group for the 52-week period ended 28 February 2015

"2015 Annual Report and Accounts of Sainsbury's"

the annual report and audited accounts of the Sainsbury's Group for the 52-week period ended 14 March 2015

"Acquisition"

the proposed acquisition by Sainsbury's of the entire issued and to be issued share capital of HRG by means of an Offer or a Scheme

"Additional HRG Payment"

2.8 pence per HRG Share proposed to be paid to HRG Shareholders in lieu of a final dividend in respect of HRG's financial year ended 27 February 2016

"Admission"

the admission of the New Sainsbury's Shares by the FCA to the Official List and to trading on the London Stock Exchange's main market for listed securities

"Agreed Terms Announcement"

the announcement by Sainsbury's and HRG under Rule 2.4 of the Takeover Code on 2 February 2016 setting out the key financial terms of a possible offer for HRG

"Amendment and Restatement Agreement"

the amendment and restatement agreement dated 18 March 2016 between, amongst others, Sainsbury's and the lenders set out therein making certain amendments to the existing facility agreement dated 5 May 2015, as described in paragraph 7 of this announcement

"associated undertaking"

shall be construed in accordance with paragraph 19 of Schedule 6 to The Large and Medium‑sized Companies and Groups (Accounts and Reports) Regulations 2008 (SI 2008/410) but for this purpose ignoring paragraph 19(1)(b) of Schedule 6 to those regulations)

"Authorisations"

authorisations, orders, grants, recognitions, confirmations, consents, licences, clearances, certificates, permissions or approvals

"Board"

the board of directors of a company

"Business Day"

a day, not being a public holiday, Saturday or Sunday, on which clearing banks in London are open for normal business

"Closing Price"

the closing middle market price of a share as derived from the Daily Official List on any particular date

"CMA"

Competition and Markets Authority of the UK

"Combined Group"

the enlarged group following Completion of the Offer, comprising the HRG Group and the Sainsbury's Group

"Completion"

the Offer having been declared or having become unconditional in all respects in accordance with the requirements of the Takeover Code, or if the Acquisition is implemented by way of a Scheme (and subsequent steps contemplated by the Scheme), the Scheme having become effective pursuant to its terms and the New TopCo Reduction Court Order having been registered with the Registrar of Companies

"Conditions"

the conditions of the Offer, as set out in Appendix 1 to this announcement and to be set out in the Offer Document

"Confidentiality Agreement"

the confidentiality agreement dated 3 February 2016 between Sainsbury's and HRG, as described in paragraph 13 of this announcement

"Court"

the High Court of Justice in England and Wales

"Daily Official List"

means the daily official list of the London Stock Exchange

"Dealing Disclosure"

an announcement pursuant to Rule 8 of the Takeover Code containing details of dealings in interests in relevant securities of a party to an offer

"Deloitte"

Deloitte LLP

"Disclosure and Transparency Rules"

the Disclosure and Transparency Rules of the FCA in its capacity as the UKLA under FSMA and contained in the UKLA's publication of the same name

"EBITDA"

earnings before interest, tax, depreciation and amortisation

"Euroclear"

Euroclear UK & Ireland Limited

"Exchange Ratio"

0.321 Sainsbury's Shares for each HRG Share held

"Existing Sainsbury's Shares"

the Sainsbury's Shares in issue as the date of this announcement

"Fairly Disclosed"

the information which has been fairly disclosed by or on behalf of HRG: (i) prior to the date of this announcement by or on behalf of HRG to Sainsbury's or Sainsbury's financial, accounting, tax or legal advisers (specifically as Sainsbury's advisers in relation to the Offer); (ii) in the 2015 Annual Report and Accounts of HRG; (iii) in the circular dated 2 February 2016 published by HRG in connection with the Homebase Sale; (iv) in a public announcement made in accordance with the Disclosure Rules and Transparency Rules by HRG after 28 February 2015 and prior to the date of this announcement; or (v) in this announcement

"FCA" or "Financial Conduct Authority"

Financial Conduct Authority or its successor from time to time

"FCA Handbook"

the FCA's Handbook of rules and guidance as amended from time to time

"First Closing Date"

the first closing date of the Offer, to be set out in the Offer Document

"Form of Acceptance"

the Form of Acceptance, Authority and Election for use by HRG Shareholders in connection with the Offer

"FSMA"

the Financial Services and Markets Act 2000 (as amended from time to time)

"GFSC"

the Guernsey Financial Services Commission

"Homebase Payment"

25 pence per HRG Share, reflecting the £200 million return to shareholders in respect of the Homebase Sale, as announced by HRG on 18 January 2016

"Homebase Sale"

the sale of Homebase business by Home Retail Group (UK) Limited to Bunnings (UK & I) Holdings Limited pursuant to the Homebase Sale Agreement, as announced by HRG on 18 January 2016 and which completed on 27 February 2016

"Homebase Sale Agreement"

the share purchase agreement entered into between, among others, HRG, Home Retail Group (UK) Limited and Bunnings (UK & I) Holdings Limited on 17 January 2016 in relation to the Homebase Sale

"HRG"

Home Retail Group plc

"HRG ADR Holders"

holders of HRG ADRs

"HRG ADRs"

sponsored level 1 American Depositary Receipts (or, as the context requires, the American Depositary Shares) of HRG for which Citibank N.A. acts as depositary

"HRG Employee Share Plans"

the Home Retail Group UK Tax-Qualified Sharesave Plan, the Home Retail Group Irish Approved Sharesave Plan 2007, the Home Retail Group Performance Share Plan and the Home Retail Group Share Option Plan

"HRG Group"

HRG and its subsidiary undertakings from time to time, and where the context permits, each of them

"HRG Shareholder(s)"

holders of HRG Shares

"HRG Share(s)"

the existing unconditionally allotted or issued and fully paid ordinary shares of 10 pence each in the capital of HRG and any further shares which are unconditionally allotted or issued before the date on which the Offer closes (or such earlier date or dates, not being earlier than the date on which the Offer becomes unconditional as to acceptances or, if later, the
First Closing Date of the Offer, as Sainsbury's may decide) but excluding in both cases any such shares held or which become held in treasury

"IAS"

International Accounting Standards

"IFRS"

international accounting standards and international financial reporting standards and interpretations thereof, approved or published by the International Accounting Standards Board and adopted by the European Union

"Last Practicable Date"

17 March 2016, being the last practicable date prior to the date of this announcement

"Listing Rules"

the listing rules, made by the FCA under Part 6 FSMA, as amended from time to time

"London Stock Exchange"

the London Stock Exchange plc or its successor

"Mix and Match Facility"

the facility under which HRG Shareholders are entitled to elect to vary the proportions in which they receive New Sainsbury's Shares and in which they receive cash in respect of their holdings of HRG Shares to the extent that other such HRG Shareholders make off‑setting elections

"Morgan Stanley"

Morgan Stanley & Co. International plc

"New Sainsbury's Shares"

Sainsbury's ordinary shares of 284/7 pence each proposed to be issued credited as fully paid pursuant to the Offer

"New TopCo"

if Sainsbury's elects to implement the Acquisition by way of a Scheme as described in paragraph 24 of this announcement, a company to be incorporated in due course which will hold the entire issued share capital of HRG upon the Scheme becoming effective

"New TopCo Capital Reduction"

if Sainsbury's elects to implement the Acquisition by way of a Scheme as described in paragraph 24 of this announcement, the proposed capital reduction of New TopCo as described in paragraph 24 of this announcement

"New TopCo Reduction Court Order"

the Court order confirming the New TopCo Capital Reduction

"Offer"

the offer to be made by Sainsbury's to acquire the entire issued and to be issued share capital of HRG on the terms and subject to the Conditions set out in this announcement and to be set out in the Offer Document and the Form of Acceptance including, where the context so requires, any subsequent revision, variation, extension or renewal of such offer and includes any election available in connection with it

"Offer Consideration"

the consideration offered by Sainsbury's under the terms of the Offer in the form of 55 pence in cash and 0.321 New Sainsbury's Shares for each HRG Share

"Offer Document"

the document to be sent to HRG Shareholders containing, among other things, the terms and Conditions of the Offer

"Offer Period"

the period which commenced on 5 January 2016 and ending on whichever of the following dates shall be the latest: (i) 1.00 p.m. on the First Closing Date; (ii) the date on which the Offer lapses or is withdrawn; and (iii) the date on which the Offer becomes or is declared unconditional as to acceptances

"Official List"

the Official List of the FCA

"Opening Position Disclosure"

an announcement containing details of interests or short positions in, or rights to subscribe for, any relevant securities of a party to the Offer if the person concerned has such a position, as defined in Rule 8 of the Takeover Code

"Panel"

the Panel on Takeovers and Mergers

"Phase 2 CMA Reference"

a reference of the Offer to the chair of the CMA for the constitution of a group under Schedule 4 to the Enterprise and Regulatory Reform Act 2013

"Prospectus"

the prospectus relating to Sainsbury's to be published in respect of the New Sainsbury's Shares to be issued in connection with the Offer

"Prudential Regulation Authority"

Prudential Regulation Authority or its successor from time to time

"Registrar of Companies"

the Registrar of Companies in England and Wales

"Regulatory Information Service"

a regulatory information service as defined in the FCA Handbook

"relevant securities"

shall be construed in accordance with the Takeover Code

"Restricted Jurisdiction"

the United States and any other jurisdiction where local laws or regulations may result in a significant risk of civil, regulatory or criminal exposure if the Offer is made, or information concerning the Offer is sent or made available, to HRG Shareholders in that jurisdiction

"Revised Quantified Financial Benefits Statement"

the statement of revised estimated synergies arising from the Offer as set out in paragraph 4 and Part A of Appendix 3 to this announcement

"Sainsbury's"

J Sainsbury plc

"Sainsbury's Directors"

the directors of Sainsbury's

"Sainsbury's Group"

Sainsbury's and its subsidiary undertakings from time to time, and where the context permits, each of them

"Sainsbury's Profit Estimate"

the profit estimate of Sainsbury's for the 52-week period ended 12 March 2016 as set out in paragraph 1 of Appendix 4 to this announcement

"Sainsbury's Share(s)"

the existing Sainsbury's ordinary shares of 284/7pence each in the capital of Sainsbury's

"Scheme"

if Sainsbury's so elects, a scheme of arrangement under Part 26 of the 2006 Act between HRG and the holders of the HRG Shares, with or subject to any modification, addition or condition approved or imposed by the Court and agreed by HRG and Sainsbury's

"Scheme Document"

if Sainsbury's elects to implement the Acquisition by way of a Scheme, the document to be sent by HRG to HRG Shareholders containing, among other things, the terms and conditions of the Scheme and the Acquisition

"Special Dividend"

the special dividend representing the sum of the Homebase Payment and the Additional HRG Payment expected to be (subject to approval by the HRG Board) paid by HRG to the HRG Shareholders

"Steinhoff"

Steinhoff International Holdings N.V.

"subsidiary", "subsidiary undertaking" and "undertaking"

shall be construed in accordance with the 2006 Act

"Takeover Code"

the City Code on Takeovers and Mergers, as amended from time to time

"treasury" or "treasury shares"

shares held as treasury shares as provided for in section 724 of the 2006 Act

"UBS"

UBS Limited

"UK" or "United Kingdom"

United Kingdom of Great Britain and Northern Ireland

"UKLA"

the Financial Conduct Authority acting in its capacity as the competent authority for listing under Part VI of FSMA

"US Securities Act"

the US Securities Act of 1933, as amended and the rules and regulations promulgated thereunder

"Wider HRG Control Group"

the Wider HRG Group, together with any other body corporate, partnership, joint venture or person (in each case, from time to time) in which any member of the Wider HRG Group holds 10 per cent. or more of the voting power or the shares or over the management of which any member of the Wider HRG Group has significant influence (within the meaning used in section 181(2)(c) of FSMA)

"Wider HRG Group"

HRG and associated undertakings and any other body corporate, partnership, joint venture or person (in each case, from time to time) in which HRG and such undertakings (aggregating their interests) have an interest of more than 20 per cent. of the voting or equity capital or the equivalent

"Wider Sainsbury's Group"

Sainsbury's Group and associated undertakings and any other body corporate, partnership, joint venture or person (in each case, from time to time) in which Sainsbury's and such undertakings (aggregating their interests) have an interest of more than 20 per cent. of the voting or equity capital or the equivalent.

All times referred to are London time unless otherwise stated.

All references to "GBP", "pence", "sterling" or "£" are to the lawful currency of the United Kingdom.

All references to statutory provision or law or to any order or regulation shall be construed as a reference to that provision, law, order or regulation as extended, modified, replaced or re-enacted from time to time and all statutory instruments, regulations and orders from time to time made thereunder or deriving validity therefrom.

Words importing the singular shall include the plural and vice versa, and words importing the masculine gender shall include the feminine or neutral gender.


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
OFFZMGMFVRKGVZM

Companies

Sainsbury (J) (SBRY)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today