BSD.L Regulatory News (BSD)

Emblaze Ltd (LSE:BLZ) ("Emblaze" or "the Company") Proposed acquisition of a controlling stake in WFI Tel Aviv, Israel, 3 March, 2014 The Company announces that on 2 March 2014, it signed an agreement (the "Agreement") to acquire a controlling stake in Willi-Food Investments Ltd. ("WFI"), a company listed on the Tel Aviv Stock Exchange, subject to thesatisfaction of the condition precedent and the additional terms referred tobelow (the "Transaction"). The Agreement was signed with Zwi Williger ("ZW")and Joseph Williger ("JW" and, together with ZW, the "Sellers") to acquire upto their entire interests in WFI. WFI in turn, owns approximately 58% of GWilli-Food International Ltd. ("WFINT", together with WFI, "Willi-Food"), acompany listed on NASDAQ. WFINT is the principal operating entity within theWFI group of companies. The Agreement also governs the ongoing relationship ofthe Company with the Sellers both before and after completion of theTransaction. The Transaction The Transaction is structured as follows: The Transaction is subject to the receipt of Israeli anti-trust authoritiesapproval. The Company and the Sellers will endeavour to obtain the approvalfollowing signing of the Agreement (the "Condition Precedent"). Subject to fulfilment of the Condition Precedent: a. The Company will acquire shares carrying 44.99% of the voting rights in WFI, from the Sellers or companies controlled by the Sellers. b. The Company will then, within seven business days of fulfilment of the Condition Precedent, publish a special tender offer (the "Special Tender Offer") addressed to all shareholders of WFI pursuant to Israeli companies law in order to acquire shares carrying 5% of the voting rights in WFI. The Sellers have undertaken to participate in the Special Tender Offer in relation to their remaining shares in WFI not sold by them pursuant to (a) above (the "Remaining Shares"). c. Subject to the successful completion of the Special Tender Offer, the Company will make a further purchase from the Sellers of their remaining shares in WFI, such that the Sellers will have sold, in aggregate, approximately 58% of the shares of WFI (or approximately 55% on a fully diluted basis), comprising their entire holding of shares in WFI (and which includes any such shares sold by them pursuant to ‎(a) and ‎(b) above). d. If the Company fails to complete the Special Tender Offer, the Sellers may elect, within seven business days of such date on which the Special Tender Offer lapsed to rescind the Agreement unless the Company elects, within a nine business day period starting from the date on which the Special Tender Offer lapsed, to purchase from the Sellers their Remaining Shares (the " Call Option") (in which case the Agreement will not be rescinded). If the Company elects to purchase the Remaining Shares in these circumstances, then pursuant to Israeli companies law, any shares in WFI held by the Company or any person connected with it for the purposes of the Israeli companies law, which would give the Company or such persons an interest in more than 44.99% of the voting rights in WFI will be treated as "dormant" and would not entitle them to exercise or enjoy any voting or economic rights for as long as the Company and such persons continue to hold, in aggregate, more than 44.99% of the voting rights in WFI or if and when the holding of such voting rights would no longer cause a breach of Israeli companies law with regard to any requirement on the Company and such persons, to make a Special Tender Offer. Alternatively, if the Company fails to complete the Special Tender Offer andthe Sellers have not elected to rescind the Agreement within the seven businessday period referred to above and provided that the Company has not exercisedthe Call Option the Company will grant the Sellers a put option (the "WFI PutOption") exercisable at any time during a period of five years from completionof the Transaction, to sell all or some of the Remaining Shares to the Company.Exercise of the WFI Put Option by the Sellers will be subject to such exercisenot breaching Israeli companies law with regard to any requirement on theCompany to make a Special Tender Offer. The WFI Put Option relates to thenumber of Remaining Shares less any shares of WFI sold by the Sellers betweenthe date of completion of the Transaction and the exercise of the WFI PutOption. During the WFI Put Option exercise period, the Company will hold thebenefit of a power of attorney which would enable it to procure the Sellers tosell their Remaining Shares to a third party, subject to compliance withapplicable laws. The power of attorney may be cancelled by the Sellers at anytime during that period, although such cancellation would lead to the immediatecancellation of the WFI Put Option in relation to such Remaining Shares inrelation to which the power of attorney was cancelled. e. The Sellers also hold shares and employee options in relation to approximately 7% of the shares of WFINT on a fully diluted basis (the " WFINT Put Option Shares"). The Company has granted the Sellers a put option to sell all or some of such shares as vested from time to time (the "WFINT Put Option") exercisable for a period of four years (commencing on the first anniversary of completion of the Transaction) at a price of US$12 per share. The WFINT Put Option relates to the WFINT Put Option Shares less any shares sold by the Sellers between the date of completion of the Transaction and exercise of the WFINT Put Option. During the WFINT Put Option exercise period, the Company will hold the benefit of a power of attorney which would enable it to procure the Sellers to sell their WFINT shares to a third party at a price per share not below US$12, subject to compliance with applicable laws. The power of attorney may be cancelled by the Sellers at any time during that period, although such cancellation would lead to the immediate cancellation of the WFINT Put Option in respect of such WFINT Put Option shares in relation to which the power of attorney was cancelled. As from completion of the Transaction and until the exercise or expiry of the WFINT Put Option, the Sellers will each grant the Company an irrevocable proxy with respect to their holdings in WFINT, so as to allow the Company to vote such shares at general meetings of WFINT. f. ZW and JW will continue to be engaged by WFINT and will serve as chairman of the board (in respect of ZW) and as president (in respect of JW), or as joint chief executive officers of Willi-Food for an additional period, commencing upon termination of ZW and JW's current service agreements with WFINT (September 2014), of between 18 months and three years therefrom. Subject to further agreement between the parties and to applicable law, ZW and JW may continue their respective engagement also following such period. g. Each of the Sellers will be prohibited from competing against Willi-Food in any material way, subject to certain agreed exceptions described below, for an additional period commencing on the termination of his respective engagement with WFINT and terminating up to six years from completion of the Transaction. In consideration of such non-compete undertakings, each of the Sellers will be entitled to an additional annual payment of NIS1,500,000 (approximately £250,000) per year following termination of his respective engagement, to be paid by the Company, or, subject to applicable law. Willi-Food. Under the Agreement, each of the Sellers shall have the rights to be releasedfrom his engagement, in which case (except in the case of (viii) below) thenon-compete undertaking shall cease to apply in relation to him, where: (i)Willi-Food's accounts will include a `going concern' provision as a result ofany activity which is not within the Willi-Food's business operations in thefield of import, export, marketing and distribution of food products (the "Current Business Activity"); (ii) the board of directors of WFI, WFINT or anyother organ of the Willi-Food group materially disrupts ZW or JW's ability tooperate in the Current Business Activity as part of said engagement; (iii) ZWor JW are not reappointed as directors in WFI or WFINT during said engagementperiod; (iv) WFI or the Company, as the case may be, have not voted, asshareholders of WFINT, in favour or extending ZW and JW's service contracts;(v) ZW or JW's engagements were terminated for unreasonable reasons by WFI orWFINT; (vi) sale of control in the Current Business Activity, WFI or WFINT to athird party; (vii) introduction of a third party as a partner in the CurrentBusiness Activity or in the control in WFI or WFINT unless previously approvedby the Sellers, such approval not to be unreasonably withheld; or (viii)incapacity of ZW or JW. h. The Transaction is expected to be completed soon after the successful completion of the Special Tender Offer or, alternatively, following its lapse. This is expected to occur during Q2, 2014. Background on Willi-Food WFI, through its operating subsidiary WFINT, is engaged, directly and throughsubsidiaries, in the development, import, export, marketing and distribution ofa wide variety of over 600 food products world-wide. Most of WFINT's sales aremade in Israel with widespread demand in the Israeli marketplace, as well asproducts which cater to more select groups. WFINT purchases food products fromover 150 suppliers located in Israel and throughout the world, including fromthe Far East (China, India, the Philippines and Thailand), Ethiopia, EasternEurope (Poland, Lithuania, Bulgaria and Latvia), South America (Ecuador andCosta Rica), the United States, Canada, Western and Central Europe (theNetherlands, Belgium, Monaco, Germany, Sweden, Switzerland, Denmark, andFrance) and Southern Europe (Spain, Portugal, Italy, Turkey, Greece). WFINT'sproducts are marketed and sold to approximately 1,500 customers in Israel andaround the world (for example, to the United States, the United Kingdom andFrance), including to supermarket chains, wholesalers and institutionalconsumers, but its current operations outside Israel are small in comparison toits Israeli operations. As at 30 September 2013, Willi-Food's principal consolidated financial figuresare as follows: Cash and cash NIS301,242,000equivalent Total assets NIS476,379,000 Equity NIS257,081,000 Operational profit NIS24,244,000 Net profit NIS43,107,000 Consideration The aggregate consideration for the shares in WFI to be acquired from theSellers (including the Remaining Shares and whether or not such shares areacquired pursuant to the WFI Put Option or not) is approximately NIS268,000,000(approximately £45,800,000). The consideration to be offered to WFI's shareholders as part of the SpecialTender Offer represents the same price per share as paid to the Sellers fortheir shares in WFI, and is expected to be, in aggregate, approximatelyNIS23,000,000 (approximately £3,900,000). Assuming, therefore, that all the shareholders of WFI other than the Sellerparticipate in the Special Tender Offer in relation to their entireshareholdings, then the Company expects to acquire up to 61.80% (though theactual number may be lower, depending on the breakdown of shareholderacceptances under the Special Tender Offer) of the shares in WFI for anaggregate consideration of approximately up to NIS285,500,000 (approximately £48,804,000). Background on the Sellers ZW, age 58, has served as the active chairman of WFINT since January 1997. FromJanuary 1997 until September 2011 he also served as chief operating officer ofWFINT and from the inception of WFINT in January 1994 until January 1997, as adirector and manager of marketing development of WFINT. ZW has also served as adirector of WFINT's subsidiaries, W.F.D. (Import, Marketing and Trading) Ltd.("W.F.D.") and Gold Frost Ltd. ("Gold Frost") since November 1996 and April2001, respectively. In addition, ZW has served as a director of WFI sinceDecember 1992 and as a director of Titanic Food Ltd. ("Titanic"), a company heowns together with JW, since April 1990. ZW attended Fresno University inCalifornia. ZW is the brother of JW, president and a director of WFINT. JW, age 56, has served as president of WFINT since September 2011 and adirector of WFINT since WFINT's inception. Since WFINT's inception untilSeptember 2011 he served as the chief executive officer (or general manager) ofWFINT. He has also served as a chairman of WFINT's subsidiaries, W.F.D. andGold Frost, since November 1996 and April 2001, respectively. JW has alsoserved as a director and as chairman of the board of WFI, the controllingshareholder of WFINT, since December 1992 and June 1994, respectively. JW hasserved as director of Titanic since April 1990. JW attended Bar-Ilan Universityin Israel and Northridge University in Los Angeles. JW is the brother of ZW,chairman of the board of directors of WFINT. Commercial rational and the expected effect of the Transaction on the Company Following completion of the Transaction, the Company will exercise control overWFI by means of (i) its ability to exercise control over between 44.99% and61.80% of the votes exercisable at shareholder meetings of WFI; and (ii) itsright to appoint the majority of board members of WFI and WFINT at completionof the Transaction. The Company intends to be actively involved in the management of Willi-Foodthrough, amongst other things, the appointment of directors to the boards ofWFI and WFINT and through involvement in the nomination of Willi-Food's seniormanagement. Through such involvement, the Company hopes to be able to improvethe results and profitability of Willi-Food, thereby creating value to theCompany and its shareholders. Among other things, the Company is consideringvarious options for the expansion of Willi-Food's operations, both in Israeland internationally. The board considers that the acquisition of a controlling interest in WFIrepresents an attractive opportunity for the Company and its shareholders as awhole and is aligned with the intentions of the Company's management which areaimed at maximizing value for the Company's shareholders. No obligation to seek shareholder approval As set out in the Company's circular of October 2013 in relation to its move toa Standard Listing, a standard listed company is not required to comply withthe provisions of Listing Rule 10 which sets out requirements for shareholdersto be notified of certain transactions and to have the opportunity to vote onproposed significant transactions. As such, the Company is able to undertakesignificant transactions (including the Transaction) without requiringshareholder approval. Share suspension and re-admission Given the Transaction by the Company would constitute a reverse takeover underthe Listing Rules and after consultation with the UK Listing Authority, theCompany has requested that trading in its shares be temporarily suspended witheffect from 7.30 a.m. today pending either (i) the publication of a prospectusby Company in connection with the requirement on it to re-apply for the listingof its shares following completion of the Transaction; or (ii) the terminationof the Agreement in accordance with their respective terms. Until the Company has completed the formal application process and satisfiedthe UKLA as to its eligibility, there is no certainty that the UKLA willapprove the re-listing of the Company's shares to trading on the Standard List.In such circumstances, the Company would cease to be listed although the boardwould actively explore the possibility of moving to AIM or an alternativelisting or admission venue. Furthermore, there can be no guarantee that the completion of the Transactionwill occur before the date on which the Company is able to publish a prospectusin connection to its re-application for the listing of its shares. In thisregard, the UKLA have confirmed that trading in the Company's shares willcontinue to be suspended pending publication of a prospectus by Company inconnection with the application for relisting of its shares followingcompletion of the Transaction. Enquiries: Eyal Merdler, CFO: Eyal.Merdler@emblaze.com The Emblaze Group has been traded on the London Stock Exchange (LSE: BLZ) since1996. www.emblaze.com

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