Announcement of recommended cash offer for Punch by Vine Acquisitions Limited

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If you are in any doubt as regards the contents of this letter, you are recommended to seek your own financial advice immediately from your stockbroker, bank manager, solicitor or other independent adviser
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If you are in any doubt as regards the contents of this letter, you are recommended to seek your own financial advice immediately from your stockbroker, bank manager, solicitor or other independent adviser authorised under the Financial Services and Markets Act 2000 if you are in the United Kingdom, or from another appropriately authorised independent financial adviser if you are in a territory outside the United Kingdom. If you have sold or otherwise transferred all of your ordinary shares in Punch, please send this document at once to the purchaser or transferee or to the stockbroker, bank or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee. If you have sold or transferred only part of your holding of ordinary shares in Punch, you should retain this document and consult the bank, stockbroker or other agent through whom the sale was effected. However, this document should not be forwarded or transmitted, in whole or in part, into any jurisdiction where to do so would constitute a violation of the relevant laws or regulations of that jurisdiction. 16 December 2016 To: Punch Taverns plc ( Punch ) shareholders Dear Shareholder, Announcement of recommended cash offer for Punch by Vine Acquisitions Limited On 15 December 2016, Vine Acquisitions Limited ( Vine ) and Punch announced that they had reached agreement on the terms of a recommended final cash offer for the entire issued and to be issued share capital of Punch by Vine (the Offer ) and the associated disposal of the Punch A Group to Heineken UK Limited. In accordance with Rule 2.11 of the City Code on Takeovers and Mergers (the Code ), please find enclosed a copy of the firm intention announcement setting out the terms of the Offer (the Announcement ). A copy of this letter and the Announcement can also be found on Punch s website at lt is expected that the Offer will be implemented by way of a scheme of arrangement and associated documentation will be sent to Punch shareholders in due course, subject to any restrictions on distribution described in the Announcement. Shareholders are not required to take any action at the present time. Please be aware that addresses, electronic addresses and certain other information provided by Punch shareholders, persons with information rights, option holders and other relevant persons for the receipt of communications from Punch may be provided to Vine during the offer period as required under Section 4 of Appendix 4 of the Code. Yours faithfully, Duncan Garrood Chief Executive Officer Punch Taverns plc Enc. 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 securities exchange 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 securities exchange 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 securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) of the Code 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 securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange 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 securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange 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 securities exchange offeror, save to the extent that these details have previously been disclosed under Rule 8 of the Code. A Dealing Disclosure by a person to whom Rule 8.3(b) of the Code applies must be made by no later than 3.30pm (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 securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3 of the Code. 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 of the Code). Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made con be found in the Disclosure Table on the Takeover Panel's website at including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0) if you ore in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT JURISDICTION FOR IMMEDIATE RELEASE 15 DECEMBER 2016 Summary THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION VINE ACQUISITIONS LIMITED ANNOUNCES RECOMMENDED FINAL CASH OFFER FOR PUNCH TAVERNS PLC AND ASSOCIATED DISPOSAL OF THE PUNCH A GROUP The boards of Vine Acquisitions Limited ( Bidco ), a newly incorporated company formed at the direction of Patron Fund V, and Punch Taverns plc ( Punch ), are pleased to announce that they have agreed the terms of a recommended final cash offer (the Offer ) to be made by Bidco for the entire issued and to be issued ordinary share capital of Punch, and the associated disposal (the Disposal ) of the Punch A Group to Heineken UK Limited ( Heineken ) (the Offer and the Disposal together comprising the Transaction ). The Offer has received the support of Punch's top three shareholders (Glenview Capital, Avenue Capital and Warwick Capital Partners) and of the Punch Directors, representing in aggregate 52.3 per cent. of the existing issued ordinary share capital of Punch. The aforementioned shareholders and the Punch Directors who hold or are beneficially entitled to Punch Shares have each executed irrevocable undertakings as further described in paragraph 14 and Appendix 3. Under the Offer, each Punch Shareholder shall be entitled to receive: For each Punch Share held 180 pence in cash (the Offer Consideration ) The Offer represents a premium of approximately: 40.1 per cent. to the Closing Price of pence per Punch Share on 13 December 2016 (being the last Business Day prior to the start of the Offer Period); per cent. to the Closing Price of 89.8 pence per Punch Share on 7 July 2016 (being the last Business Day prior to the first joint offer letter submitted by Patron Capital and Heineken N.V. to the Punch Board); and 74.6 per cent. to the volume weighted average Closing Price of pence per Punch Share for the six months ended 13 December 2016 (being the last Business Day prior to the start of the Offer Period). The Offer values the entire issued and to be issued ordinary share capital of Punch at approximately million. In addition, including Punch's total net leverage as at 20 August 2016 of 1,372.9 million (including swap value of million), the Offer implies an enterprise value of 1,775.6 million and represents a multiple of approximately 10 times Punch's EBITDA for the 52 weeks ended 20 August The Offer is final and will not be increased, except that Bidco reserves the right to increase the Offer Consideration if there is, on or after the date of this announcement, (i) an announcement of a firm intention to make an offer for Punch by a third party offeror; (ii) an announcement of a possible offer for Punch by a third party potential offeror (other than Emerald Investment Partners Limited ( Emerald )); or (iii) an announcement by Punch identifying a third party potential offeror for Punch (other than Emerald). It is currently envisaged that the Offer will be effected by way of a court-sanctioned scheme of arrangement of Punch under Part 26 of the 2006 Act. In connection with the Transaction, Bidco has entered into the SPA with Heineken pursuant to which Bidco will, subject only to the Scheme becoming Effective, procure: the sale of the Punch A Group (including Punch A and all entities currently held, directly or indirectly, by Punch A) and certain pubs to Heineken; and the refinancing, assignment, transfer or otherwise of the rights and benefits of the Punch Intercompany Loans to Heineken, for an aggregate consideration of 305,030,201 in cash (the Disposal Proceeds ), subject to any post-completion adjustment. The existing external debt of the Punch A Group will remain in place. Bidco will fund part of the aggregate Offer Consideration using the Disposal Proceeds. The Offer will be conditional, among other things, on: (i) approval by the requisite majorities of Punch Shareholders at the Meetings; and (ii) the requisite European Commission and/or CMA antitrust clearances being obtained in order to effect the Disposal. The Punch Directors, who have been so advised by Goldman Sachs International as to the financial terms of the Offer, consider the terms of the Offer to be fair and reasonable. In providing advice to the Punch Directors, Goldman Sachs International has taken into account the commercial assessments of the Punch Directors. The Punch Directors intend unanimously to recommend that Punch Shareholders vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the Punch General Meeting (or, if Bidco, subject to the consent of the Panel and the terms of the Co-operation Agreement, exercises its right to implement the Offer by way of a takeover offer, to accept, or procure acceptances of, such takeover offer). The Punch Directors who hold or are beneficially entitled to Punch Shares have irrevocably undertaken to vote, or procure to be voted, in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the Punch General Meeting, in respect of their own beneficial holdings of Punch Shares (excluding any Punch Shares held on their behalf by the trustee of the Punch Share Bonus Plan) amounting to, in aggregate, 89,637 Punch Shares, representing approximately 0.04 per cent. of the existing issued ordinary share capital of Punch in issue on 14 December 2016 (being the last Business Day prior to the date of the publication of this announcement). Bidco and Heineken have also received irrevocable undertakings from Glenview Capital, Avenue Capital and Warwick Capital Partners to vote, or procure votes, in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the Punch General Meeting (or, if Bidco, subject to the consent of the Panel and the terms of the Co-operation Agreement, exercises its right to implement the Offer by way of a takeover offer, to accept, or procure acceptances of, such takeover offer) in respect of, in aggregate, 116,094,847 Punch Shares, representing approximately 52.3 per cent. of the existing issued ordinary share capital of Punch. The Offer will be put to Punch Shareholders at the Court Meeting and the Punch General Meeting. To become Effective, the Scheme requires, among other things, the approval of a majority in number representing not less than 75 per cent. in value of the relevant Punch Shareholders present and voting in person or by proxy at the Court Meeting, which is convened by order of the Court, and the passing of the resolutions necessary to implement the Offer at the Punch General Meeting. The Scheme must also be sanctioned by the Court. The Offer will be on the terms and subject to the Conditions set out in Appendix 1 to this announcement. Full details of the Transaction will be set out in the Scheme Document. It is expected that the Scheme Document and the forms of proxy accompanying the Scheme Document will be published in January 2017 and Meetings will be held in the first quarter of 2017, and that the Scheme will become Effective in the first half of 2017 subject to the satisfaction or waiver of the Conditions and certain further terms set out in Appendix 1 to this announcement. Stephen Green, Senior Partner of Patron Capital, said: Our offer creates an exciting opportunity for Punch as a more focused business. Under private ownership, with strong financial backing, and a commitment to continued investment, pubs and publicans will have our full support to deal with changing market dynamics and provide their customers with the best possible offer. These are high quality pubs with excellent future potential. Stefan Orlowski, Regional President Europe for Heineken N.V., said: This transaction is a significant step forward in our strategy to unlock value in the UK pub market. The performance of our Star Pubs & Bars business clearly shows that well invested pubs, in the hands of skilled and ambitious independent operators can outperform. Leveraging our extensive experience will enable us to realise increased potential from the pubs we are acquiring and deliver positive returns to our shareholders. David Forde, Managing Director of Heineken UK, added: Today s announcement is a huge vote of confidence in the Great British Pub. Our proven track record of success demonstrates that well invested and well run pubs in the leased and tenanted sector can thrive. Today s development is good news for pub-goers across the UK who will see the benefit of better pubs in their communities. We look forward to welcoming new licensees in to Star Pubs & Bars, and to working with them to grow their businesses. Stephen Billingham, Chairman of Punch, said: The Punch Board and management team have positioned Punch to drive long term value for shareholders and our recent performance has demonstrated the successful execution of this strategy reflecting the hard work and quality of the whole Punch team. While the Board did not solicit this offer for the company, we believe this is a good outcome for shareholders as the offer provides cash certainty at a significant premium. This summary should be read in conjunction with the following announcement and the Appendices. The Offer will be on the terms and subject to the Conditions set out in Appendix 1. Full details of the Transaction will be set out in the Scheme Document. The bases and sources for certain financial information contained in this announcement are set out in Appendix 2. Details of the irrevocable undertakings received by Bidco and Heineken are set out in Appendix 3. Certain definitions and terms used in this announcement are set out in Appendix 4. Enquiries: PATRON CAPITAL Shane Law Stephen Green ROTHSCHILD (financial adviser to Patron Fund V and Bidco) Avi Goldberg Edward Duckett HEINEKEN Sonya Ghobrial (for investor/analyst enquiries) Nigel Pollard (for press enquiries) NOMURA INTERNATIONAL PLC (financial adviser to Heineken International) Oliver Tucker Harry Goss PUNCH TAVERNS PLC Stephen Billingham, Chairman Duncan Garrood, Chief Executive Officer Steve Dando, Chief Financial Officer GOLDMAN SACHS INTERNATIONAL (financial adviser to Punch) Nick Harper Chris Emmerson Mihir Lal Tel: Tel: Tel: Tel: Tel: Tel: Tel: REDLEAF COMMUNICATIONS (PR adviser to Patron Capital and Bidco) Emma Kane Henry Columbine TENEO BLUE RUBICON (PR adviser to Heineken) Charles Armitstead Ben Ullman BRUNSWICK GROUP LLP (PR adviser to Punch) Jonathan Glass Joe Shipley Tel: Tel: Tel: Further information This announcement is not intended to, and does not, constitute or form part of any offer or invitation to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the Offer or otherwise. The Offer will be implemented by way of scheme of arrangement pursuant to the Scheme Document (or in the event that the Offer is to be implemented by means of a takeover offer, an offer document), which will contain the full terms and conditions of the Offer, including details of how to vote in respect of the Offer. Any decision in respect of, or other response to, the Offer should be made only on the basis of the information contained in the Scheme Document. This announcement does not constitute a prospectus or prospectus equivalent document. Important notices relating to financial advisers Rothschild, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively for Patron Fund V and Bidco and no one else in connection with the Transaction and will not be responsible to anyone other than Patron Fund V and Bidco for providing the protections afforded to clients of Rothschild nor for giving advice in relation to the Transaction or any matter or arrangement referred to in this announcement. Nomura International plc, which is authorised by the Prudential Regulation Authority and regulated by the Prudential Regulation Authority and the Financial Conduct Authority in the United Kingdom, is acting exclusively for Heineken International and no one else in connection with the Transaction and Nomura International plc, its affiliates and its respective officers, employees, agents, representatives and/or associates will not regard any other person as their client, nor will they be responsible to anyone other than Heineken International for providing the protections afforded to clients of Nomura International plc nor for giving advice in relation to the Transaction or any matter or arrangement referred to in this announcement. Goldman Sachs International, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting exclusively for Punch and no one else in connection with the Transaction and will not be responsible to anyone other than Punch for providing the protections afforded to clients of Goldman Sachs International, or for providing advice in relation to the Transaction or any matter or arrangement referred to in this announcement. No profit forecasts or estimates Unless expressly stated otherwise, no statement in this announcement is intended as a profit forecast or a profit estimate and no statement in this announcement should be interpreted to mean that earnings per Punch Share for the current or future financial years would necessarily match or exceed the historical published earnings per Punch Share. Forward-looking statements This announcement (including information incorporated by reference in this announcement), oral statements made regarding the Transaction, and other information published by Bidco, Patron Capital and (as relevant) Punch and Heineken, contain statements which are, or may be deemed to be, forward-looking statements . All statements, other than statements of historical fact are,
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