7th Oct 2005 07:00
Boots Group PLC07 October 2005 For Immediate Release 7 October 2005 Not for release, publication or distribution in or into the United States, Australia, Canada or Japan PROPOSED DISPOSAL OF BOOTS HEALTHCARE INTERNATIONAL FOR £1.926 BILLION £1.43 BILLION SPECIAL DIVIDEND AND SHARE CONSOLIDATION Boots Group PLC ("Boots"), the UK's leading health and beauty company, todayannounces the proposed disposal of Boots Healthcare International ("BHI"), itsconsumer healthcare business, to Reckitt Benckiser plc (the "Disposal"). Highlights: • Aggregate consideration on a debt and cash free basis payable by Reckitt Benckiser plc ("Reckitt Benckiser") for BHI of £1.926 billion in cash • After the payment of anticipated taxation and other costs associated with the transaction, Boots intends to return, following completion of the Disposal, approximately £1.43 billion of the proceeds (equivalent to approximately 200 pence per Boots share) by way of a special dividend (the "Special Dividend") to Boots shareholders. The Special Dividend will be accompanied by a consolidation of Boots' ordinary share capital (the "Share Consolidation") • The remaining £400 million of proceeds will be retained for future investment in Boots and the proposed Alliance Boots Group • The Share Consolidation will, in effect, maintain comparability of earnings per share and share prices before and after the payment of the Special Dividend and will preserve the position of Boots optionholders who will not receive the Special Dividend • The Disposal is conditional, amongst other things, upon obtaining clearances from the European and United States anti-trust authorities and the approval of Boots shareholders at an extraordinary general meeting (the "Extraordinary General Meeting") • The Disposal is expected to close in early 2006 with the payment of the Special Dividend as soon as practicable thereafter • Pending the completion of Boots' proposed merger with Alliance UniChem Plc ("Alliance UniChem"), Boots will retain its current dividend policy Commenting on the Disposal, Richard Baker, Chief Executive of Boots, said: "BHI has performed strongly over the last three years, delivering excellentorganic growth and outperforming its market. I firmly believe that theprospects for the business remain strong and with the commitment and focus thatReckitt Benckiser will bring to the business that it will continue to thrive.The BHI team has created significant value for Boots shareholders and I amdelighted to announce the proposed return of approximately £1.43 billion toshareholders, taking to over £3 billion the total returned to Boots shareholdersover the last 3 years. Together with the announcement of the proposed merger with Alliance UniChem,this disposal allows us to focus on our plans to create a world classpharmacy-led healthcare group." This summary should be read in conjunction with the full text of thisannouncement. A circular containing further details of the Disposal, Special Dividend andShare Consolidation (the "Circular") and setting out the notice of theExtraordinary General Meeting will be sent to Boots shareholders in earlyNovember. Goldman Sachs International is acting as exclusive financial adviser to Boots onthe disposal of BHI. Enquiries: BootsChris Laud (Investor Relations) Tel: +44 (0) 115 968 7080Donal McCabe (Media) Tel: +44 (0) 115 968 7029 Goldman Sachs International Tel: +44 (0) 20 7774 1000Simon DingemansNick Harper Finsbury Tel: +44 (0) 20 7251 3801James Murgatroyd This announcement is for information purposes only and does not constitute anoffer or invitation to acquire or dispose of any securities or investment advicein any jurisdiction. Goldman Sachs International, which is authorised and regulated in the UnitedKingdom by the Financial Services Authority, is acting exclusively for Boots inrelation to the matters described in this announcement and is not advising anyother person and accordingly will not be responsible to any person other thanBoots for providing the protections afforded to the customers of Goldman SachsInternational or for providing advice in relation to the matters described inthis announcement. For Immediate Release 7 October 2005 Not for release, publication or distribution in or into the United States, Australia, Canada or Japan PROPOSED DISPOSAL OF BOOTS HEALTHCARE INTERNATIONAL FOR £1.926 BILLION £1.43 BILLION SPECIAL DIVIDEND AND SHARE CONSOLIDATION Introduction Boots Group PLC ("Boots") announces that it has entered into an agreement tosell the Boots Healthcare International business ("BHI") to Reckitt Benckiserplc ("Reckitt Benckiser"), for an aggregate consideration on a debt and cashfree basis of £1.926 billion in cash (the "Disposal"), subject to a completionworking capital adjustment. It is intended that completion of the Disposal will be followed as soon aspracticable by a return of approximately £1.43 billion (equivalent toapproximately 200 pence per Boots share) by way of a special dividend (the "Special Dividend") to Boots shareholders accompanied by a consolidation of theordinary share capital of Boots. After the payment of anticipated taxation andother costs associated with the transaction, the remaining proceeds of £400million will be retained for future investment in Boots and in the proposedAlliance Boots Group. The Disposal is conditional, amongst other things, upon obtaining clearancesfrom the European and United States anti-trust authorities and the approval ofBoots shareholders at an extraordinary general meeting (the "ExtraordinaryGeneral Meeting"). Background to and reasons for the Disposal BHI is entering the final year of a successful four year growth strategy whichhas delivered revenue growth in excess of the consumer healthcare market averageand led to a substantial increase in profits. Following a review of BHI'sstrategic objectives earlier this year, Boots concluded that the organic growthprospects of the business remained attractive and that BHI had significantpotential. Boots also concluded that the consumer healthcare market wasentering a period of consolidation in which BHI needed to participate. GivenBoots' strategic focus on its retail pharmacy business, however, Boots decidedit could not commit the required resources to lead in any consolidation processand therefore announced on 7 April 2005 its intention to sell BHI. Information on BHI BHI is a leading player in the global over-the-counter consumer healthcaremarket, focusing on analgesics, skincare, dermacosmetics and throatcare. Itmanufactures and sells three principal brands, Nurofen, Clearasil and Strepsils,which are leaders in their markets and widely recognised throughout the world.The business also includes a number of other locally recognised brands includingE45, Lutsine, Sweetex and Optrex. BHI comprises brands, their associated intellectual property, internationalsales operations and five manufacturing facilities located in Nottingham (UK),Reinbek (Germany) and Bangkok (Thailand). As at 31 March 2005, BHI employedapproximately 3,000 people. For the year ended 31 March 2005 and before any adjustments for discontinuedoperations, one-off items and the inclusion of the manufacturing assets inNottingham, BHI generated profits before interest and taxation of £87.8 millionon sales of £522.7 million. As at 31 March 2005, BHI had net assets of £453.6million and gross assets of £537.4 million. Principal terms of the Disposal Under the terms of the Business and Share Sale Agreement (the "Agreement"), theDisposal will be structured as a direct sale of shares in various UK andoverseas companies, including BHI's 51 per cent. equity interest in a jointventure in India (subject to the consent of the joint venture counterparty),together with the sale of the business assets comprising BHI's three UKmanufacturing facilities in Nottingham. The Agreement contains warranties andindemnities given by Boots and The Boots Company PLC, a wholly owned subsidiaryof Boots. The Disposal is conditional, amongst other things, upon obtaining clearancesfrom the European and United States anti-trust authorities and the approval ofBoots shareholders at the Extraordinary General Meeting. The Agreement willterminate automatically if this approval is not received (or any of the otherconditions to completion set out in the Agreement are not satisfied or waived)on or before 30 September 2006. A summary of the principal terms of theAgreement will be set out in the circular (the "Circular"). Description of the Special Dividend and Share Consolidation Subject to and following completion of the Disposal, Boots intends to retain£400 million of the proceeds for future investment and return the balance, afterdeduction of anticipated taxation and other costs associated with thetransaction, to shareholders through the Special Dividend. The Special Dividendis expected to return approximately £1.43 billion (equivalent to approximately200 pence per Boots share) to Boots shareholders. Simultaneously with thepayment of the Special Dividend, Boots proposes to implement a consolidation ofBoots' ordinary share capital (the "Share Consolidation"). The effect of the Share Consolidation will be to reduce the number of Bootsordinary shares in issue. Details of the consolidation ratio will be set out inthe Circular to be sent to shareholders seeking their approval for the Disposal. Although, following the Share Consolidation, each Boots shareholder will holdfewer Boots ordinary shares than before, his or her shareholding as a proportionof the total number of shares in issue, and therefore his or her ownership inBoots, will be the same before and immediately after the Share Consolidation,subject to adjustments to reflect fractional entitlements. The ShareConsolidation will, amongst other things, allow comparability of earnings pershare and share prices before and after the payment of the Special Dividend andwill preserve the position of Boots optionholders who will not receive theSpecial Dividend. Management and Employees Following completion of the Disposal, the existing employment rights, includingpension rights, of all management and employees of BHI will be fullysafeguarded. Reckitt Benckiser has also confirmed that a substantial operatingpresence will be maintained in Nottingham, Reinbek and Bangkok. Approvals and Consents The Disposal, Special Dividend and Share Consolidation will be subject to theapproval of Boots shareholders at the Extraordinary General Meeting. TheCircular setting out the notice of the Extraordinary General Meeting, includingthe Boots directors' recommendation to vote in favour of the Disposal and theShare Consolidation is expected to be sent to Boots shareholders in earlyNovember. The Disposal is also conditional, amongst other things, upon obtainingclearances from the European and United States anti-trust authorities. The Disposal is expected to be completed in early 2006 and the payment of theSpecial Dividend and the Share Consolidation are expected to take place as soonas practicable after completion of the Disposal. Jim Smart, Chief Financial Officer, will host a conference call for analysts at10.00 a.m. BST. Dial in number Tel: +44 (0) 20 7190 1595 Participants should quote the conference title "Boots announcement". A replayfacility will be available for seven days: Dial in number Tel: +44 (0) 20 8515 2499Access number 334133# Enquiries: BootsChris Laud (Investor Relations) Tel: +44 (0) 115 968 7080Donal McCabe (Media) Tel: +44 (0) 115 968 7029 Goldman Sachs International Tel: +44 (0) 20 7774 1000Simon DingemansNick Harper Finsbury Tel: +44 (0) 20 7251 3801James MurgatroydAlice MacAndrew This announcement is for information purposes only and does not constitute anoffer or invitation to acquire or dispose of any securities or investment advicein any jurisdiction. Goldman Sachs International, which is authorised and regulated in the UnitedKingdom by the Financial Services Authority, is acting exclusively for Boots inrelation to the matters described in this announcement and is not advising anyother person and accordingly will not be responsible to any person other thanBoots for providing the protections afforded to the customers of Goldman SachsInternational or for providing advice in relation to the matters described inthis announcement. APPENDIX I - SOURCES AND BASES OF INFORMATION In this Announcement, unless otherwise stated or the context otherwise requires,the following sources and bases of information have been used unless otherwisestated, the financial information relating to Boots has been extracted from theaudited financial statements of Boots for the relevant financial year. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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