Gusbourne Regulatory News (GUS)

27 Jul 2006 07:01

GUS PLC27 July 2006 NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN 27 July 2006 GUS plc Demerger of ARG and Experian GUS plc, the retail and business services group, announces that it has commencedposting documents to its shareholders proposing the demerger and public listingof its two remaining businesses, Argos Retail Group (ARG) and Experian. Subject, inter alia, to shareholder approval, the demerger will result in GUSshareholders receiving one share in each of ARG and Experian for every GUS sharethey hold. Immediately following the demerger, it is expected that Experian willissue further shares to raise new capital of approximately £800m. The expected timetable to achieve this is as below: Tuesday 29 August 2006 EGM to seek shareholder approval for the demerger Thursday 14 September 2006 Approximate date of publication of ARG and Experian prospectuses Friday 6 October 2006* Suspension of listing of, and dealings in, GUS shares at 4.30pm Tuesday 10 October 2006 Demerger becomes effective Wednesday 11 October 2006 Shares in ARG and Experian commence trading at 8am * See notes to editors Sir Victor Blank, Chairman of GUS, commented: "Today's announcement sets out the timetable for the demerger of ARG andExperian. We believe this demerger will create further value for ourshareholders by enabling them to invest directly in ARG and Experian, both ofwhich have clear strategies for growth." Enquiries GUS John Peace Group Chief Executive 020 7495 0070David Tyler Group Finance DirectorFay Dodds Director of Investor Relations Finsbury Rupert Younger 020 7251 3801Rollo Head Notes to Editors 1. Under the proposals, GUS shareholders on the register at 4.30 p.m. on Friday 6 October 2006 will receive one ARG share and one Experian share in exchange for each GUS share they hold at that time. Holders of GUS ADRs will be entitled to receive one Experian ADR and the net proceeds of sale of their pro rata entitlement to ARG shares. The suspension of listing of and dealings in GUS shares is expected to take place at 4.30 p.m. on Friday 6 October 2006. 2. Application will be made to the FSA for the ARG shares and the Experian shares to be admitted to the Official List and will be made to the London Stock Exchange for such shares to be admitted to trading on the London Stock Exchange ("Admission"). Dealings in ARG and Experian shares are expected to commence at 8.00 a.m. on Wednesday 11 October 2006. 3. Application will be made to the London Stock Exchange to permit when issued dealings in ARG and Experian from 8.00am on 9 October until Admission. If the demerger does not occur, all conditional dealings will be of no effect and any such dealings will be at the sole risk of the parties concerned. 4. The GUS Board currently expects the Experian Offer to raiseapproximately £800m. The Experian Offer will comprise a pre-emptive offer toexisting GUS shareholders (excluding certain overseas shareholders, providedthat overseas institutional shareholders will be eligible to participate wherepermitted) on a pro rata basis and a non pre-emptive offer of up to 5% ofExperian Group's share capital to institutional investors. 5. The demerger is conditional, inter alia, upon the approval of theresolutions by a meeting of GUS shareholders convened by court order (the "CourtMeeting") to be held at 10.30 a.m. (London Time) on Tuesday 29 August 2006 andon GUS shareholder approval at an Extraordinary General Meeting ("EGM") to beheld at 10.45 a.m. (London Time) on Tuesday 29 August 2006 (together the"Shareholder Meetings"). The information in this summary should be read in conjunction with the full textof the attached announcement. This press release has been prepared by and is thesole responsibility of GUS. Copies of the circular have been submitted to the UK Listing Authority and willshortly be available for inspection at the UK Listing Authority's DocumentViewing Facility, which is situated at Financial Services Authority, 25 TheNorth Colonnade, London E14 5HS. Merrill Lynch International and UBS Limited are acting as financial advisers toGUS and as sponsors to Experian and ARG and for no-one else in connection withthe demerger and Admission and will not be responsible to anyone other than GUS,Experian and ARG for providing the protections afforded to customers of MerrillLynch International and UBS Limited nor for providing advice in relation to thedemerger or Admission, or the contents of this announcement. This announcement is not an offer of securities for sale in the United States orin any other jurisdiction. None of the securities mentioned herein are being registered under the USSecurities Act of 1933. Securities may not be offered or sold in the UnitedStates absent registration or an exemption from registration. No public offeringof securities is being made in the United States. The financial information concerning GUS, ARG and Experian contained in thisannouncement does not amount to statutory accounts within the meaning of Section240 of the Companies Act 1985. Certain statements made in this announcement are forward looking statements.Such statements are based on current expectations and are subject to a number ofrisks and uncertainties that could cause actual events or results to differmaterially from any expected future events or results referred to in theseforward looking statements. GUS plc Demerger of ARG and Experian IntroductionIn May 2004, the GUS Board (the "Board") announced that it would actively reviewall strategic options over the following two years in order to create furthervalue for shareholders. As a result of that review, in December last year, GUScompleted the demerger of GUS' interests in Burberry to GUS shareholders, andearlier this year the Board announced that it had decided to separate its tworemaining businesses, ARG and Experian. The Board considers that ARG andExperian can achieve their greatest potential and value as independentbusinesses and the separation of ARG and Experian is therefore the final stagein the transformation of GUS. The separation of the two businesses is expected to: - enhance shareholder value; - create two separate London listed companies offering discrete investment propositions, each with clear market valuations; - allow greater flexibility for ARG and Experian to manage their own resources and pursue strategies appropriate to their markets, which have different characteristics and opportunities; - sharpen management focus, helping the two businesses maximise their performance and make full use of their available resources; - align management rewards more directly with business and stock market performances, helping to attract, retain and motivate the best people; and - provide a transparent capital structure and an efficient balance sheet for each business. Information on ARG and ExperianARG is the UK's leading home and general merchandise retailer. It sells productsunder two distinctive and complementary retail brands which are household namesin the UK: - Argos - a unique retailer recognised for choice, value and convenience and the UK's leading general merchandise retailer; and - Homebase - the UK's second largest home improvement retailer recognised for choice, style and customer service. For the year ended 31 March 2006, ARG's total revenue was £5,548m and profitbefore taxation was £278m. As at 31 March 2006, ARG had combined gross assets of£5,427m and combined net assets of £2,775m. Experian is a global leader in providing information solutions to businessclients and consumers. It helps organisations to find new customers and developand manage existing relationships by providing data, decision-making solutionsand processing services. It also helps consumers to understand, manage andprotect their personal information and to help them make more informed purchasedecisions. For the year ended 31 March 2006, Experian's total revenue was US$3,084m andprofit before taxation was US$638m. As at 31 March 2006, Experian had combinedgross assets of US$7,644m and combined net assets of US$600m. Further information on ARG and Experian is set out in a circular (the "Circular"or "Shareholder Circular") being sent to GUS shareholders. Expected timetableThe notices convening the Court Meeting to take place at 10.30 a.m. on Tuesday29 August 2006 and the Extraordinary General Meeting to take place at 10.45 a.m.on Tuesday 29 August 2006 are set out in the Shareholder Circular. At thesemeetings, shareholder approval will be sought for the demerger and other relatedproposals. If approved by shareholders, it is expected that the demerger willbecome effective on Tuesday 10 October 2006 and the shares in ARG and Experianwill commence trading at 8.00 a.m. on Wednesday 11 October 2006. The suspension of listing of, and dealings in, GUS shares is expected to takeplace at 4.30 p.m. on Friday 6 October 2006. Application will be made to the London Stock Exchange to permit when issueddealings in ARG and Experian from 8.00 a.m. on Monday 9 October until Admission.If the demerger does not occur, all conditional dealings will be of no effectand any such dealings will be at the sole risk of the parties concerned. In order to participate in the demerger, shareholders need to be on the registerat 4.30 p.m. on Friday 6 October 2006. The demergerFor every one GUS share, GUS shareholders will receive one ARG share and oneExperian share, with GUS shares being cancelled. For every one GUS ADR, GUS ADRholders will receive one Experian ADR and the right to receive the US dollarproceeds (less fees, expenses and applicable withholding taxes, if any) of thesale by the depositary of one ARG share. It is proposed that the demerger will be implemented in several steps. First, anew intermediate holding company will be inserted between GUS and the rest ofthe GUS Group and there will be a preliminary reorganisation of the ARG businessin anticipation of the demerger. Second, pursuant to a scheme of arrangement(the "Scheme") and certain reductions of capital (the "Reductions of Capital"),Experian Group will become the new holding company of the GUS Group and theseparation of the ARG business and Experian business will be completed. In addition, it is proposed that the capital of both ARG Holdings and ExperianGroup are reduced in order to create distributable reserves in each of ARGHoldings and Experian Group. A detailed summary of the demerger and the steps needed to implement it are setout in the Shareholder Circular. A demerger agreement will be entered into between GUS, ARG Holdings and ExperianGroup prior to the demerger. Further details are set out in the Circular. Effect of the demergerThe demerger will create two new holding companies, ARG Holdings (which will bethe holding company for the ARG business) and Experian Group (which will be theholding company for the Experian business). The ARG shares and Experian sharesare expected to be admitted to the Official List and to trading on the LondonStock Exchange's market for listed securities. GUS shares will cease to belisted and GUS will become a subsidiary of Experian Group. It will be necessary for ARG and Experian to incur additional costs in order tooperate as independent companies and the demerger of ARG will therefore have adilutive effect on GUS' earnings. However, the GUS Board considers that ARG andExperian can achieve their greatest potential and value as independentbusinesses. Experian OfferImmediately following the demerger, it is proposed that Experian Group willissue further shares in Experian to raise new capital (the "Experian Offer").These further Experian shares will be listed at Admission. The GUS Board currently expects the Experian Offer to raise approximately £800m.The Experian Offer will comprise a pre-emptive offer to existing GUSshareholders (excluding certain overseas shareholders, provided that overseasinstitutional shareholders will be eligible to participate where permitted) on apro rata basis and a non pre-emptive offer of up to 5% of Experian Group's sharecapital to institutional investors. The offer price and number of Experianshares to be issued in the Experian Offer will be determined by GUS, ExperianGroup, Merrill Lynch International and UBS Limited on the completion of thebookbuild process. Debt allocationAs at 31 March 2006, GUS had net debt of approximately £2.0bn. As part of theproposals, ARG will be allocated net debt of approximately £200m (on a pro formabasis) in addition to its substantial leasehold obligations, and the balancewill be retained by Experian. The proceeds of the Experian Offer will be appliedto repay part of the debt owed by Experian following the demerger. Management and board continuityFollowing the demerger, GUS will cease to be a listed company and each ofExperian Group and ARG Holdings will operate as separate listed companies. Eachof the businesses will continue to be led by its existing experienced managementteams. The new boards of the two companies upon Admission will be as follows: ARG Holdings Experian Group Chairman Oliver Stocken John PeaceChief Executive Terry Duddy Don RobertFinance Director Richard Ashton Paul BrooksNon-Executive Directors John Coombe Sir Alan Rudge Andy Hornby David Tyler ARG Holdings and Experian Group intend to appoint further independentNon-Executive Directors prior to or after Admission. Following the demerger, Paul Loft will continue to be the Managing Director ofHomebase and Sara Weller will continue to be the Managing Director of Argos. Inaddition, at Experian, Chris Callero will continue to be the Chief Executive ofthe Americas and John Saunders will continue to be the Chief Executive of GlobalOperations. These executives are key individuals of ARG and Experianrespectively. Dividend policyThe final dividend of 21.9 pence per GUS share, approved at GUS' annual generalmeeting on Wednesday 19 July 2006, will be paid on Friday 4 August 2006. Theplanned demerger will not affect this dividend payment. Future dividends from ARG Holdings and Experian Group will depend on thecircumstances at the time and the dividend policy of ARG Holdings and ExperianGroup will be a matter for their respective boards following the demerger.However, it is currently anticipated that Experian Group will have a dividendcover of no less than three times and ARG Holdings will have a dividend cover ofno less than two times. Experian Group will report its results in US dollars because the majority ofExperian's profit comes from the US. Experian Group will also announce itsdividends in US dollars. However, unless shareholders elect otherwise, theirdividends will continue to be paid in pounds sterling. The amount of dividendsreceived will be calculated on the basis of an exchange rate from US dollars topounds sterling at the time the dividend is announced. Residence of Experian Group and the Income Access Share ArrangementsExperian is a global business, with the majority of its revenues being generatedoutside the UK. In formulating the proposals, the GUS Board has looked for themost appropriate structure for Experian's future international growth and hasdecided that Experian's corporate headquarters should be in Dublin. Experian'sholding company will be incorporated in Jersey and will be tax resident in theRepublic of Ireland. In order to preserve the current tax treatment of dividends paid to GUSshareholders in the UK, income access share arrangements (the "Income AccessShare Arrangements'') will be put in place after completion of the Scheme. Thepurpose of the Income Access Share Arrangements is to enable Experianshareholders to elect to receive dividends from a UK source so that the demergerdoes not make any difference to the tax treatment of dividends for shareholdersresident in the UK who make, or are deemed to make, such an election. All shareholders in Experian Group will be able to elect to receive theirdividends from Experian pursuant to these arrangements and all existing GUSshareholders who hold less than 50,000 Experian shares following the demergerwill be deemed to have elected to receive their dividends from Experian Groupvia these arrangements unless they elect in writing to Experian Group that theydo not wish to do so. The Income Access Share Arrangements may be suspended or terminated at any timeand for any reason by Experian Group, without financial recompense, for example,as a result of changes in relevant tax law. Furthermore, if it were not possibleto pay shareholders all of their dividends from UK-sourced income, then theshortfall would be made up out of dividends on Experian shares which areIrish-sourced (which could result in Irish withholding tax). The Experian Group articles of association will contain a number of importantdifferences from the existing GUS articles of association to reflect, interalia, both Jersey law and the Income Access Share Arrangements. Further details on the above arrangements are described in the ShareholderCircular. Experian will be subject to the Takeover Code and will report on compliance withthe Combined Code. It is expected that Experian will be eligible for inclusion in the FTSE, MSCIand Dow Jones indices as a UK participant. Shareholder approvalThe demerger requires the approval of GUS shareholders pursuant to the ListingRules due to the size of the transaction and also needs to be approved by GUSshareholders to satisfy certain legal requirements. The demerger is conditional, inter alia, on the approval of the resolutions by ameeting of GUS shareholders at the Court Meeting and the Extraordinary GeneralMeeting. The demerger can only be implemented if it receives sufficient support from GUSshareholders at the Shareholder Meetings. If the demerger is approved by GUS shareholders at the Court Meeting and theExtraordinary General Meeting on Tuesday 29 August 2006, prospectuses will bepublished by each of ARG Holdings and Experian Group on or about Thursday 14September 2006 in connection with each business' application for admission tothe Official List and to trading on the London Stock Exchange. The Experianprospectus will also contain details of how GUS shareholders can participate inthe Experian Offer. Court MeetingAt the Court Meeting, GUS shareholders will be asked to approve a scheme ofarrangement. The statutory majority required to approve the Scheme at the CourtMeeting is a majority in number of those GUS shareholders who are present andvote in person or by proxy, and who represent 75% or more in value of the GUSshares held by them. The Scheme will, inter alia, insert Experian Group as a new holding companybetween GUS and GUS shareholders. As part of the Scheme, ARG Holdings andcertain other members of ARG and Experian will also agree to implement certainother steps of the demerger which are described in more detail in theShareholder Circular. Extraordinary General MeetingAt the Extraordinary General Meeting, GUS shareholders will be asked to approve: (i) a special resolution approving the insertion of Experian Group as the new holding company of GUS and to assist this by making certain changes to the share capital of GUS, authorising the allotment of shares pursuant to the Scheme and making amendments to the GUS articles of association; (ii) a special resolution approving the terms of the demerger; and (iii) ordinary resolutions approving the ARG employee share plans and the Experian employee share plans. The majority required for the passing of each of the special resolutions is 75%or more in value of the votes cast. A simple majority is required for thepassing of each of the ordinary resolutions. On a show of hands each GUSshareholder present in person will have one vote and on a poll each GUSshareholder present in person or by proxy will have one vote for each GUS shareheld. In addition, the Scheme and the Reductions of Capital need to be sanctioned bythe relevant court at separate court hearings. Action to be taken in respect of the Shareholder Meetings A detailed description of the demerger is set out in the Shareholder Circularand the approval of GUS shareholders will be sought to effect the steps toenable the demerger to happen. The demerger can only be implemented if itreceives sufficient support from GUS shareholders at the two shareholdermeetings. If the demerger is implemented, all GUS shareholders will be bound byit. Shareholders who hold 800 or fewer GUS shares UK resident GUS shareholders who hold 800 or fewer GUS shares will be offered afree share sale arrangement through Lloyds TSB Registrars in respect of both theARG shares and the Experian shares they receive pursuant to the demerger. Such smaller shareholders may: (i) retain their holdings of ARG shares and Experian shares resulting from the demerger; (ii) sell their entire holding of ARG shares and/or their entire holding of Experian shares resulting from the demerger and receive the cash realised through such sale; or (iii) donate their entire holding of ARG shares and/or their entire holding of Experian shares resulting from the demerger to a GUS nominated registered charity. Further details regarding this arrangement including the forms for using it willbe sent to shareholders with the Experian prospectus. A guide to the general tax consequences of each of these elections for GUSshareholders who are ordinarily resident in the UK is set out in the ShareholderCircular. As a result of US federal securities laws, GUS shareholders and GUS ADR holdersin the United States will not be permitted to use this share sale arrangement. This information is provided by RNS The company news service from the London Stock Exchange