The boards of Highland and House of Fraser are pleased to announce that they have reached agreement on the terms of a recommended acquisition of the issued and to be issued share capital of House of Fraser by Highland for 148 pence per share in cash.
Highland is a newly incorporated company that has been formed for the purposes of completing the acquisition. Highland will be owned by the Highland Consortium, which consists of Baugur Group (through its wholly-owned subsidiary, BG Holding) and its investment partners, Don McCarthy, FL Group, TBH Trading, Kevin Stanford, Bank of Scotland (through its wholly-owned subsidiary, Uberior) and Stefan Cassar.
The acquisition is proposed to be effected by means of a scheme of arrangement under section 425 of the Companies Act 1985, subject to the requisite Court and House of Fraser Shareholder approvals being obtained.
The consideration of 148 pence in cash for each House of Fraser Share represents a premium of:
- 32.3 per cent. to 111.9 pence per share, being the average Closing Price in the 30 Business Days up to and including 24 February 2006, the date on which House of Fraser announced (after the London Stock Exchange had closed for dealing) that it had received a very preliminary approach for the acquisition of its issued share capital from a third party. The cessation of the discussions following this approach was announced on 17 March 2006; and
- 24.4 per cent. to 119 pence per share, being the Closing Price on 28 April 2006, the last Business Day prior to the date on which House of Fraser announced that it had received a new approach for the acquisition of its issued share capital. It was clarified on 9 June 2006 that this approach had been made by Baugur Group.
The House of Fraser Board intends unanimously to recommend the acquisition which values the existing issued share capital of House of Fraser at approximately £351.4 million, and represents an enterprise value of approximately £453.4 million. As such, the House of Fraser Directors intend unanimously to recommend that House of Fraser Shareholders vote in favour of the resolutions to be proposed at the Court Meeting and the EGM.
Each of the House of Fraser Directors has irrevocably undertaken to vote in favour of the resolutions to be proposed at the Court Meeting and the EGM in respect of their own beneficial holdings which, in aggregate, total 1,305,698 House of Fraser Shares. At the request of certain House of Fraser Directors, the trustee of the employee benefit trust established in connection with the House of Fraser Share Schemes has irrevocably undertaken to vote in favour of the resolutions to be proposed at the Court Meeting and the EGM in respect of 3,002,454 House of Fraser Shares. On the Reference Date, these irrevocable undertakings together related to approximately 1.8 per cent. of the existing issued share capital of House of Fraser. All of these irrevocable undertakings will continue to be binding if a Competing Offer is made.
Baugur Group is currently the beneficial holder of 22,515,289 House of Fraser Shares, representing approximately 9.5 per cent. of the existing issued share capital of House of Fraser.
It is expected that the Scheme Circular will be posted to House of Fraser Shareholders on or around 9 September 2006. The Court Meeting and the EGM are expected to be held on 3 October 2006 and, subject to the requisite Shareholder and Court approvals being obtained, it is expected that the Scheme will become effective on 8 November 2006. All dates in this announcement which relate to the implementation of the Scheme are subject to the approval of the Court and are therefore subject to change.
Source: Baugur Group
