Indicative Offer

RNS Number : 6951M

Travis Perkins PLC

28 May 2010

 



NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM AUSTRALIA, CANADA, JAPAN, UNITED STATES OF AMERICA OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

This is an announcement falling under Rule 2.4 of the City Code on Takeovers and Mergers (the "Code") and does not constitute an offer or invitation to purchase any securities nor an announcement of a firm intention to make an offer or to pursue any other transaction under Rule 2.5 of the Code. Accordingly, The BSS Group plc shareholders are advised that there can be no certainty that a formal offer for The BSS Group plc will be forthcoming, even if the pre-conditions in this announcement are satisfied or waived.

28 May 2010

TRAVIS PERKINS PLC'S INDICATIVE OFFER FOR THE BSS GROUP PLC

Indicative cash and share offer valuing The BSS Group plc at 433 pence per ordinary share

The boards of Travis Perkins plc ("Travis Perkins") and The BSS Group plc ("BSS") today announce that they are in advanced discussions regarding a cash and share offer for the entire issued and to be issued share capital of BSS. The indicative offer comprises 232.91 pence in cash, 0.2608 new Travis Perkins shares per BSS share and the payment of BSS's final dividend for the year ended 31 March 2010 of 6.09 pence (the "BSS Dividend") per share (the "Indicative Offer"). The Indicative Offer values BSS at a price of 433 pence per BSS share (based on the closing share price of 745 pence per Travis Perkins share on 27 May 2010, the last trading day prior to the date of this announcement) and values the entire issued and to be issued share capital of BSS at approximately £553 million.

While the board of BSS remains confident in the stand-alone prospects for BSS, given the current volatility in the equity markets, the support of certain shareholders for the Indicative Offer and the significant scale benefits from a combination, the board of BSS would currently be prepared to recommend an offer by Travis Perkins to acquire the entire issued and to be issued share capital of BSS if made on the same terms as the Indicative Offer.

Strategic Rationale

The board of Travis Perkins has, for some time, believed that further consolidation in the UK building materials merchanting sector offers significant scale benefits in terms of cost savings and improved operational efficiency to those that proactively participate. In addition, Travis Perkins believes that the recession has accelerated the long-term trend of customers' increasing use of different distribution channels to source building materials. Against this backdrop, Travis Perkins believes there is a powerful strategic logic which underpins a combination of Travis Perkins' plumbing and heating activities through its existing distribution and retailing businesses with BSS. Specifically:

§ The combination would create the leading plumbing and heating trade and retail distribution business in the UK;

§ The enlarged group would have operational and financial size and scale to purchase products more competitively and secure the benefits of global sourcing;

§ The enlarged group should allow customers to be serviced more efficiently locally and nationally using Travis Perkins' low cost, layered "route to market" supply chain;

§ The BSS business should benefit from being integrated into Travis Perkins' information technology platform, thereby reducing the reliance on external vendors; and

§ Travis Perkins' medium and long term property strategy should give both businesses access, at lower cost, to attractive trading locations.

Having successfully integrated a number of merchanting and retailing businesses into the Travis Perkins group, Travis Perkins believes that similar success can be achieved through a combination with BSS and that it should be well placed to realise synergies arising from purchasing efficiencies and the removal of central costs.

The Indicative Offer

The Indicative Offer comprises 232.91 pence in cash, 0.2608 new Travis Perkins shares per BSS share and the BSS Dividend of 6.09 pence per share. The Indicative Offer values BSS at a price of 433 pence per BSS share (based on the closing share price of 745 pence per Travis Perkins share on 27 May 2010, the last trading day prior to the date of this announcement) and values the entire issued and to be issued share capital of BSS at approximately £553 million. A mix and match facility will also be provided as part of the Indicative Offer. It is intended that the cash element of the Indicative Offer will be funded from the Travis Perkins group's existing facilities. The Indicative Offer is pre-conditional, inter alia, on the recommendation of the board of BSS; such pre-condition is waivable at the sole discretion of Travis Perkins.

The boards of BSS and Travis Perkins have consulted with certain of BSS's largest institutional shareholders who have indicated their support for the Indicative Offer at this level and with this mix of consideration.

It is anticipated that the transaction will be reviewed by the Office of Fair Trading, under the merger control provisions of the Enterprise Act 2002. Travis Perkins believes that there should be no material competition issues and that the transaction would be approved at the end of a first phase review process.

Reservations Relating to the Indicative Offer

Travis Perkins reserves the right to reduce the offer price (by reducing either or both the cash component and the share component) and/or amend the mix of cash and shares and/or not provide a mix and match facility in the event that:

i)   The board of BSS agrees and recommends any such change; or

ii)   A third party announces a firm intention to make an offer for BSS; or

iii)  BSS announces, declares or pays a dividend or any other distribution or other payments to its shareholders the value of which would be greater than the BSS Dividend.

A further announcement will be made in due course.

Enquiries

Travis Perkins
Travis Perkins plc	[phone]
Geoff Cooper, Chief Executive Officer Paul Hampden Smith, Finance Director

HSBC Bank plc (Joint Financial Adviser)	[phone]
Charles Packshaw Simon Cloke James Pincus
Nomura (Joint Financial Adviser)	[phone]
Michael Pescod Andrew McNaught Oliver Tucker
Credit Suisse Securities (Europe) Limited (Joint Corporate Broker)	[phone]
John Hannaford Will MacLaren
Citi (Joint Corporate Broker) Andrew Seaton Robert Redshaw	[phone]
Square1 Consulting (PR Adviser) David Bick Mark Longson	[phone]
BSS
The BSS Group plc	[phone]
Gavin Slark, Group Chief Executive Roddy Murray, Group Finance Director
Lazard (Lead Financial Adviser)	+ 44 (0)20 7187 2000
Richard Stables Vasco Litchfield
RBS Hoare Govett (Corporate Broker and Financial Advisor)	+ 44 (0)20 7678 8000
John MacGowan Simon Hardy Nick Adams
Hogarth (PR Adviser)	[phone]
Andrew Jaques Rachel Hirst

In accordance with Rule 2.10 of the Code, Travis Perkins confirms that, as at close of business on 27 May 2010, it had 208,656,130 ordinary shares of 10 pence each in issue and is admitted to trading on the London Stock Exchange under the ISIN code: GB0007739609.

In accordance with Rule 2.10 of the Code, BSS confirms that, as at close of business on 27 May 2010, it had 124,364,404 ordinary shares of 5 pence each in issue and is admitted to trading on the London Stock Exchange under the ISIN code: GB00B09BY452.

Forward-looking Statements

This announcement, including information included in this announcement, contains certain forward-looking statements concerning Travis Perkins and BSS that are subject to risks and uncertainties. Information in this announcement regarding BSS has been compiled from published sources. These forward-looking statements may be identified by words such as "believes", "expects", "anticipates", "projects", "intends", "should", "seeks", "estimates", "future" or similar expressions or by discussion of, among other things, strategy, goals, plans or intentions. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Many of these risks and uncertainties relate to factors that are beyond Travis Perkins' ability to control or estimate precisely, such as (i) future market conditions; (ii) change in regulatory environment; (iii) economic and currency conditions; (iv) competitive and technological factors; (v) the risk that the transaction may not be consummated; (vi) the risk that the transaction may be referred to the Competition Commission or clearance is obtained subject to conditions that are not anticipated; (vii) the risk that BSS will not be integrated successfully into Travis Perkins; and (viii) the risk that revenue opportunities, cost savings and other anticipated synergies from the transaction may not be fully realized or may take longer to realize than expected. Travis Perkins can give no assurances that such forward-looking statements will prove to have been correct. The reader is cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this announcement. Travis Perkins undertakes no obligation to update or revise publicly any of the forward-looking statements set out herein, whether as a result of new information, future events or otherwise, except to the extent legally required.

Nothing contained herein shall be deemed to be a forecast, projection or estimate of the future financial performance of Travis Perkins, BSS or, if the transaction is implemented, the enlarged group.

Dealing Disclosure Requirements

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any paper offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any paper offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any paper offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a paper offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any paper offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any paper offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a paper offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4). Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. If you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure, you should contact the Panel's Market Surveillance Unit on [phone].

Purchase by offeror, nominees or brokers other than pursuant to the Indicative Offer

To the extent permitted by applicable law, in accordance with, and to the extent permitted by, the Code and normal UK market practice, the offeror or its nominees or brokers (acting as agents) or their respective affiliates may from time to time make certain purchases of, or arrangements to purchase, shares or other securities in Travis Perkins and BSS, other than pursuant to the Indicative Offer, before or during the period in which the Indicative Offer remains open for acceptance. These purchases may occur either in the open market at prevailing prices or in private transactions at negotiated prices. Any such purchases, or arrangements to purchase, will comply with all applicable UK rules, including the Code and the rules of the London Stock Exchange. In addition, in accordance with, and to the extent permitted by, the Code and normal UK market practice, Nomura International plc, HSBC Bank plc, Credit Suisse Securities (Europe) Limited, Citigroup Global Markets Limited, Lazard & Co. Limited and RBS Hoare Govett Limited and its respective affiliates will continue to act as exempt principal traders and/or exempt fund managers in Travis Perkins and BSS shares on the London Stock Exchange and engage in certain other purchasing activities consistent with their respective normal and usual practice and applicable law. To the extent required by the applicable law (including the Code), any information about such purchases will be disclosed to the Panel on Takeovers and Mergers and a Regulatory Information Service including the Regulatory News Service on the London Stock Exchange website, www.londonstockexchange.com.

Restricted Jurisdiction

The distribution of this announcement in jurisdictions other than the United Kingdom may be restricted by the laws of those jurisdictions and therefore persons into whose possession this announcement comes should inform themselves about and observe any such restrictions. Failure to comply with any such restrictions may constitute a violation of the securities laws of any such jurisdiction. In particular, this announcement is not for publication or distribution (directly or indirectly) to US persons or in or into the United States (including its territories and possessions, any state of the United States and the District of Columbia).

If the Indicative Offer is implemented, such offer will not be made, directly or indirectly, in or into or by the use of the mails of, or by any other means (including, without limitation, electronic mail, facsimile transmission, telex, telephone, internet or other forms of electronic communication) of interstate or foreign commerce of, or any facility of a national securities exchange of any jurisdiction where the relevant action would constitute a violation of the relevant laws and regulations of such jurisdiction or would result in a requirement to comply with any governmental or other consent or any registration, filing or other formality which Travis Perkins regards as unduly onerous (a "Restricted Jurisdiction") and will not be capable of acceptance by any such use, means or facility or from within any such Restricted Jurisdiction. Accordingly, unless otherwise determined by Travis Perkins, copies of this announcement and any documentation relating to the Indicative Offer are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any Restricted Jurisdiction and persons receiving such documents (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send any such documents in or into or from any such Restricted Jurisdiction, as doing so may invalidate any purported acceptance of any such offer. Any person (including, without limitation, custodians, nominees and trustees) who would, or otherwise intends to, or who may have a contractual or legal obligation to, forward this announcement and/or any other documentation relating to the Indicative Offer to any jurisdiction outside the United Kingdom should inform themselves of, and observe, any applicable legal or regulatory requirements of any relevant jurisdiction.

This announcement has been prepared for the purposes of complying with English law and the Code and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside of England.

Publication on the Travis Perkins and BSS Websites

A copy of this announcement will be available free of charge, subject to certain restrictions relating to persons resident in restricted jurisdictions, for inspection on Travis Perkins' website at www.travisperkinsplc.com and on The BSS Group website at www.bssgroup.comby no later than 12.00 noon (London time) on 28 May 2010.

APPENDIX I

SOURCES AND BASES

1.	As at the close of business on 27 May 2010 Travis Perkins had in issue 208,656,130 ordinary shares of 10 pence each; and BSS had in issue 124,364,404 ordinary shares of 5 pence each.
2.	The fully diluted ordinary share capital of BSS (being 127.6 million BSS Shares) is calculated on the basis of:
	*	the number of issued BSS Shares on 27 May 2010, the last Business Day prior to the date of this announcement, being 124,364,404 BSS Shares; and
	*	any further BSS Shares which may be issued on or after the date of this announcement on the exercise of options or vesting of awards under the BSS share option and share incentive schemes, which options or awards have been granted on or before the date of this announcement, amounting in aggregate to 3,253,000 BSS Shares.
3.	The equity value of the acquisition is calculated on the basis of the fully diluted ordinary share capital of BSS referred to in paragraph 2 above.
4.	The statement that the acquisition is expected to deliver synergies relates to future actions and circumstances, which, by their nature, involve risks, uncertainties and other factors. This statement does not constitute a profit forecast and should not be interpreted to mean that earnings for that year or any subsequent financial period would necessarily match or be greater than those for any preceding financial period. Earnings in this context represent net after tax earnings before the amortisation of intangible assets and non-operating items.

 

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