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Doc re. Class 1 Circular

16th May 2007 12:00

Smiths Group PLC16 May 2007 16 May 2007 Return of cash - posting of circular Smiths Group plc ("Smiths" or the "Company") announces that it is posting acircular to its shareholders and convening an Extraordinary General Meeting, tobe held on 11 June 2007, to obtain shareholder approval for the proposed returnof £2.1 billion of cash to shareholders. On 15 January 2007 the Company announced that it had signed an agreement for thesale of Smiths Aerospace to GE Aviation UK for a total cash consideration ofUS$4.8 billion and that, following completion of the sale, it proposed to return£2.1 billion to shareholders. On 4 May 2007, the Company announced thecompletion of the sale of Smiths Aerospace to GE Aviation UK. Smiths received intotal approximately US$5.1 billion on completion, the excess over US$4.8 billionrepresenting the net indebtedness owing by Smiths Aerospace at completion andthe net effect of certain adjustments to the consideration under the terms ofthe sale agreement. The return is being made using a B share scheme which gives certain UK taxresident shareholders a choice between receiving the cash in the form of incomeor capital and, so far as possible, gives those who choose capital a choice asto when the return is made. The return will be accompanied by a shareconsolidation to maintain comparability of earnings per share and other companydata. Further details are set out below. Highlights of the return of cash: • Shareholders to receive 365 pence per existing ordinary share. • Return to be implemented by way of a B share issue which provides UK tax resident shareholders with flexibility to elect to receive cash in the form of income or capital or a combination of the two. • 2 for 3 share consolidation to seek to maintain comparability of share price, earnings per share and dividends per share. • Extraordinary General Meeting to approve the proposed return of cash on 11 June 2007. • Cheques expected to be dispatched to shareholders and CREST accounts credited on 28 June 2007. Details of the return of cash: Subject to shareholder approval and listing of both the B shares and the newordinary shares arising on the share consolidation, shareholders will receiveone B share for every existing ordinary share that they hold on 15 June 2007.Shareholders (other than those in the United States, Canada, Australia and NewZealand) will be able to elect between the following choices in respect of thoseB shares: • To receive a single dividend of 365 pence per B share for some or all of their B shares. B shares in respect of which a shareholder has chosen to receive this single dividend payment will automatically be converted into deferred shares, which will have negligible value. • To accept an offer by JPMorgan Cazenove Limited ("JPMorgan Cazenove") to sell some or all of their B shares to JPMorgan Cazenove (acting as principal) for 365 pence per B share, free of all dealing expenses and commissions, on 25 June 2007 (or such later date as the directors of the Company may decide). Further details of this offer are contained within the circular. • To retain some or all of their B shares. It is currently expected that JPMorgan Cazenove, acting as principal, will make a final purchase offer to acquire any retained B shares for 365 pence per B share, free of all dealing expenses and commissions, on or around 17 April 2008, although there can be no guarantee that such an offer will be made. The B shares will be admitted to trading on the London Stock Exchange's mainmarket for listed securities and admitted to the Official List of the UK ListingAuthority and those which are retained will pay a dividend fixed at 75 per cent.of 12 month LIBOR per annum on 365 pence per B share. Shareholders who do notelect, or who are not eligible to elect, for any of the B share alternativeswill receive the single dividend of 365 pence per B share on all of their Bshares. A share consolidation will be undertaken in conjunction with the return of cash.Existing ordinary shares will be subdivided and consolidated so thatshareholders receive 2 new ordinary shares for every 3 existing ordinary sharesheld on 15 June 2007. The intention is that, subject to market movements, theshare price of one new ordinary share immediately after listing should beapproximately equal to the share price of one existing ordinary shareimmediately beforehand. The effect of the share consolidation will be to reducethe number of issued ordinary shares to reflect the return of 365 pence perordinary share, but shareholders will own the same proportion of Smiths issuedshare capital immediately following the consolidation as they did previously(subject to fractional entitlements). The ratio used for the share consolidationhas been set by reference to Smiths market capitalisation at close of businesson 14 May 2007. New ordinary shares will be traded on the London Stock Exchange in the same wayas existing ordinary shares and will be equivalent to the existing ordinaryshares in all material respects, including their dividend, voting and otherrights. Full details of the return of cash and share consolidation are contained in thecircular. Expected timetable of principal events Latest time and date for receipt of forms of proxy for EGM 10.00 am on 9 June 2007EGM 10.00 am on 11 June 2007Record date for issue of B shares and share consolidation 5.00 pm on 15 June 2007Commencement of dealings in new ordinary shares 8.00 am on 18 June 2007Latest time for receipt of election forms for the B share choices 3.00 pm on 21 June 2007Single B share dividend declared and JPMorgan Cazenove makes initial purchase offer 25 June 2007Cheques dispatched and CREST accounts credited 28 June 2007 For further information: Smiths 020 8458 3232Investors Russell PlumleyMedia Chris Fox JPMorgan Cazenove 020 7588 2828Edmund ByersMatthew Lawrence Credit Suisse Securities (Europe) Limited 020 7888 8888James Leigh-PembertonAlex Phillips Two copies of each of the documents listed below have been submitted to TheFinancial Services Authority and will be available for inspection at theDocument Viewing Facility which is situated at: The Financial Services Authority25 The North ColonnadeCanary WharfLondon E14 5HS Documents submitted: Circular relating to the proposed return of cash to shareholders Form of proxy Election form for use by shareholders in respect of the initial repurchase offerand/or retention of B shares in relation to proposed return of cash toshareholders JPMorgan Cazenove Limited is regulated in the United Kingdom for the conduct ofinvestment business by the Financial Services Authority and is actingexclusively for Smiths and no-one else in connection with the return of cash andwill not be responsible to anyone other than Smiths for providing theprotections afforded to clients of JPMorgan Cazenove Limited nor for givingadvice in relation to the return of cash. Credit Suisse Securities (Europe) Limited ("Credit Suisse"), which is authorisedand regulated in the United Kingdom by the Financial Services Authority, isacting for Smiths and no one else in connection with the matters referred to inthis announcement and will not be responsible to any person other than Smithsfor providing the protections afforded to clients of Credit Suisse, or forproviding advice in relation to these matters. Shareholders in the United States, Canada, Australia and New Zealand willautomatically receive the single B share dividend and the other alternatives arenot being and will not be offered to shareholders in those jurisdictions. This information is provided by RNS The company news service from the London Stock Exchange

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