9th Jan 2007 07:01
Countrywide PLC09 January 2007 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN OR INTO OR FROM THE UNITEDSTATES, AUSTRALIA, CANADA, SOUTH AFRICA OR JAPAN Embargoed for release at 7.00 a.m. 9 January 2007 COUNTRYWIDE PLC ("COUNTRYWIDE") - LETTER TO SHAREHOLDERS Commenting on the Offer, Christopher Sporborg, Chairman of Countrywide, said: "The Offer from 3i has been unanimously recommended by the Independent Directorsof Countrywide, who believe the Offer is fair and reasonable and takes fullaccount of Countrywide's strengths and prospects. 3i's interest originallybecame public in September last year, and their offer is the only one which hasbeen made for Countrywide and I urge Shareholders to vote in favour of it." The following is the full text of a letter sent to Shareholders today byChristopher Sporborg: "Dear Shareholder, RECOMMENDED OFFER FOR COUNTRYWIDE PLC The Scheme Document containing details of the recommended cash and share offerfor Countrywide by Charlie Holdco 4 was posted to you on 21 December 2006. Asthe EGM and the Court Meeting are taking place on Monday 15 January 2007, I amwriting to you to urge you to return the blue and pink Forms of Proxy, as soonas possible, and in any event by no later than: Blue Forms of Proxy for the Court Meeting 10.30 a.m. on 13 January 2007 Pink Forms of Proxy for the EGM 10.40 a.m. on 13 January 2007 as set out in the Scheme Document and in Appendix I to this letter. It is very important to ensure that as many Shareholders as possible cast theirvotes in relation to the Court Meeting and the EGM, to ensure that the outcomeof the EGM and the Court Meeting fairly reflects the wishes of Shareholders andundue weight is not given to the wishes of a small minority of shareholders.Based on the Closing Price of a Rightmove Share of 400 pence on 5 January 2007,being the latest practicable Business Day prior to the date of this letter, theOffer values each Countrywide Share at 556.1 pence and the existing ordinaryshare capital of Countrywide at approximately £950.0 million. Shareholders may be aware of the public letter released by Artisan PartnersLimited Partnership ("Artisan"), a shareholder in Countrywide, on 4 January 2007setting out why they are voting against the Proposals. The letter from Artisan suggests that the Independent Directors made theirdecision to recommend the Proposals focusing on the cyclicality of Countrywide'sresults in 2004 and 2005. The Independent Directors set out carefully thebackground to and reasons for their unanimous recommendation of the offer fromCharlie Holdco 4 in the press release dated 12 December 2006 and in the SchemeDocument posted to Shareholders on 21 December 2006, making it clear that wetook into account a wide range of factors in reaching that decision. Much of the content of the letter from Artisan is information which Shareholdersand the broader stock market is fully aware of and, indeed, was fully aware ofbefore the offer approach from 3i Investments plc and which was thereforealready reflected in the market value of Countrywide. However, in relation to Artisan's comments on Realogy Corporation ("Realogy"),the Independent Directors believe that it is not an appropriate comparison forthe following reasons: - Realogy's largest segment is its Real Estate Franchise Services division ("RFG") (73 per cent. of estimated 2006 EBITDA), which derives substantially all of its revenue from franchise royalty fees under long-term (typically ten year) franchise agreements that generate stable and recurring revenues and high EBITDA margins of circa 75 per cent.; - franchise based earnings are significantly less volatile than owned-branch based earnings. Indeed, Realogy has estimated that a 5 per cent. decrease in the number of closed homesale transactions would only lead to a circa 4 per cent. decline in RFG's EBITDA, as compared with a fall into negative EBITDA in its Company Owned Real Estate Brokerage Services segment ("NRT") under the same scenario; - in contrast, circa 90 per cent. of Countrywide's estate agency branches are owned (117 of Countrywide's 1,177 estate agency branches are franchised); - the US and UK housing markets are at different points in their cycles, which makes any comparison of valuation multiples flawed. After five years of year-on-year increases in the number of US homesale transactions, 2006 has shown a significant decline with neither the National Association of Realtors nor Fannie Mae, in their December 2006 outlook reports, forecasting an improvement in transaction volumes for 2007. In contrast, UK housing market volumes have recovered from their cyclical lows in 2004 and 2005; and - the premium being offered to Realogy's undisturbed share price on 15 December 2006 is 18 per cent.; Charlie Holdco 4's offer for Countrywide represented a premium, when it was announced, of: - 31.3 per cent. to the average Closing Price of 419.2 pence per Countrywide Share over the one month period to 13 September 2006, the last Business Day prior to the announcement of a possible offer for Countrywide; and - 19.4 per cent. to the Closing Price of 461 pence per Countrywide Share on 13 September 2006, the last Business Day prior to the announcement of a possible offer for Countrywide. I would also reiterate that although the Independent Directors and theiradvisers did receive approaches from certain third parties regarding theirinterest in possibly making an offer for Countrywide (which were investigatedwith the full co-operation of the Management Team), none of them resulted in anyproposals being made and the Independent Directors are not aware of any otherparties which are currently contemplating making a competing offer. The Independent Directors note the announcement yesterday evening by Boussard &Gavaudan Asset Management Limited Partnership. The Independent Directors, who have been so advised by Hawkpoint and PanmureGordon, consider the terms of the Offer to be fair and reasonable. Accordingly,the Independent Directors unanimously recommend you to vote in favour of theresolutions proposed at the Court Meeting and the EGM required to implement theScheme, as they have irrevocably undertaken to do in respect of their ownbeneficial holdings, amounting to, in aggregate, 100,000 Countrywide Shareswhich represent approximately 0.06 per cent. of Countrywide's issued ordinaryshare capital. In providing advice to the Independent Directors, Hawkpoint andPanmure Gordon have taken into account the commercial assessments of theIndependent Directors. Hawkpoint has, and has recently had, corporate advisory relationships with 3iand certain companies in which 3i is an investor and, as a consequence, is notan independent adviser in accordance with Rule 3 of the City Code with respectto the Proposals. In compliance with Rule 27.1 of the City Code, there are no material changes inany of the information provided to Shareholders relating to Countrywide, theCountrywide Group or the opinions of the Independent Directors, except asdisclosed in Appendix III to this letter. In compliance with Rule 27.2 and Rule28.5 of the City Code, the Directors of Countrywide confirm that the profitforecast contained in the Scheme Document remains valid, and that Hawkpoint,Panmure Gordon and BDO have no objection to their reports continuing to apply. In compliance with Rule 27.1 of the City Code, there are no material changes inany of the information provided to Shareholders relating to Charlie Holdco 4,the Charlie Holdco Group, 3i, the 3i Investors or the opinions of the directorsof Charlie Holdco 4, except as disclosed in Appendix III to this letter.Further, on the basis of publicly available information, the directors ofCharlie Holdco 4 and the 3i Investment Committee (whose names are set out inparagraphs 2(b) and 2(c) respectively of Appendix VI to the Scheme Document) arenot aware of any material changes in any of the information provided toShareholders relating to Rightmove, except as disclosed in Appendix III to thisletter. Yours faithfully Christopher SporborgChairman Terms defined in the Scheme Document shall have the same meaning in this letter. The Independent Directors accept responsibility for the information contained inthis letter, save for the information relating to Realogy Corporation, and, tothe best of the knowledge and belief of the Independent Directors (who havetaken all reasonable care to ensure that such is the case), the informationcontained in this letter is in accordance with the facts and does not omitanything likely to affect the import of such information. The Independent Directors accept responsibility for the correct extraction ofthe information relating to Realogy Corporation, which has been compiled frompublicly available information (as set out in Appendix II - Bases and sources). Harry Hill, Mike Nower and Grenville Turner, being the executive directors ofCountrywide, accept responsibility for the information in this letter relatingto Countrywide given in order to comply with Rule 27.1, 27.2 and 28.5 of theCity Code (except in relation to the opinions of the Independent Directors) and,to the best of the knowledge and belief of Harry Hill, Mike Nower and GrenvilleTurner (who have taken all reasonable care to ensure that such is the case), theinformation for which they are taking responsibility is in accordance with thefacts and does not omit anything likely to affect the import of suchinformation. The directors of Charlie Holdco 4, whose names are set out in paragraph 2(b) ofAppendix VI to the Scheme Document, accept responsibility for the information inthis letter relating to Charlie Holdco 4 and the Charlie Holdco Group given inorder to comply with Rule 27.1 of the City Code and, to the best of theknowledge and belief of the directors of Charlie Holdco 4 (who have taken allreasonable care to ensure that such is the case), the information for which theyare taking responsibility is in accordance with the facts and does not omitanything likely to affect the import of such information. The 3i Investment Committee, whose names are set out in paragraph 2(c) ofAppendix VI to the Scheme Document, accept responsibility for the information inthis letter relating to 3i, the 3i Investors, Charlie Holdco 4 and the CharlieHoldco Group given in order to comply with Rule 27.1 of the City Code and, tothe best of the knowledge and belief of the 3i Investment Committee (who havetaken all reasonable care to ensure that such is the case), the information forwhich they are taking responsibility is in accordance with the facts and doesnot omit anything likely to affect the import of such information. The directors of Charlie Holdco 4 and the 3i Investment Committee, whose namesare set out in paragraphs 2(b) and 2(c) respectively of Appendix VI to theScheme Document, each take responsibility for the correct extraction of theinformation in this letter relating to Rightmove given in order to comply withRule 27.1 of the City Code, which has been compiled from publicly availableinformation. Hawkpoint, Panmure Gordon and BDO have all given and not withdrawn their consentto the issue of this letter with the references to their names in the form andcontext in which they appear. Appendix I - Action to be taken Voting at the Court meeting and the EGM The Court Meeting and the EGM will be held at the offices of Ashurst atBroadwalk House, 5 Appold Street, London EC2A 2HA at 10.30 a.m. and 10.40 a.m.respectively (or in the case of the EGM, if later, as soon as the Court Meetinghas been concluded or adjourned) on 15 January 2007. The Scheme requiresapproval at both of these meetings. You will find enclosed with the Scheme Document: - a blue Form of Proxy for use in respect of the Court Meeting; - a pink Form of Proxy for use in respect of the EGM; - attendance cards relating to the Meetings; - if you are not a CREST Shareholder, a green Form of Election for use in respect of the Rightmove Sale Election; and - a reply paid envelope for use in the United Kingdom. If you have not received all of the documents relevant to you, please contactCapita Registrars on the helpline telephone number indicated below. Whether or not you intend to attend both or either of the Meetings, pleasecomplete the Forms of Proxy enclosed with the Scheme Document and return them inaccordance with the instructions printed thereon, as soon as possible, but inany event, so as to be received by post or, during normal business hours only,by hand to Countrywide's registrars, Capita Registrars at The Registry, 34Beckenham Road, Beckenham, Kent, BR3 4TU, by no later than: Blue Forms of Proxy for the Court Meeting 10.30 a.m. on 13 January 2007 Pink Forms of Proxy for the EGM 10.40 a.m. on 13 January 2007 (or, in the case of an adjournment, not later than 48 hours before the timefixed for the holding of the adjourned Meeting). Returning the Forms of Proxy will enable your votes to be counted at theMeetings in the event of your absence. If the blue Form of Proxy for use at theCourt Meeting is not lodged by then, it may be handed to Countrywide'sregistrars at the Court Meeting before the taking of the poll. However, in thecase of the EGM, unless the pink Form of Proxy is lodged so as to be received bythe time mentioned in the instructions printed thereon, it will be invalid. Areply-paid envelope was enclosed with the Scheme Document for your convenienceif you are posting your documents in the UK. Alternatively, if you are a CRESTShareholder you may be able to use the CREST electronic proxy appointmentservices. Proxies submitted electronically must be sent as soon as is possible,and in any event so as to be received by no later than 10.30 a.m. on 13 January2007 in the case of the Court Meeting and by 10.40 a.m. on 13 January 2007 inthe case of the EGM (or in the case of any adjournment, not later than 48 hoursbefore the time fixed for the holding of the adjourned Meeting). The completionand the return of a Form of Proxy will not prevent you from attending and votingat either the Court Meeting or the EGM, or any adjournment thereof, in person ifyou wish to do so. To make an election for the Rightmove Sale Election Non-CREST Shareholders Scheme Shareholders who hold certificated Countrywide Shares and who wish toelect for the Rightmove Sale Election are requested to complete and return thegreen Form of Election using the reply paid envelope provided with the SchemeDocument (if posting is being made within the UK) to Capita Registrars,Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU assoon as possible, but in any event so as to be received by no later than 4.30p.m. on 9 February 2007. CREST Shareholders If you are a CREST Shareholder and wish to make an election for the RightmoveSale Election you must elect to do so electronically via the procedure set outin Appendix V (Notes on Completing the Form of Election) to the Scheme Document. If you fail or choose not to make an election by 4.30 p.m. on 9 February 2007 orif your Form of Election is invalid, you will, subject to the below, receive theShare Consideration due in respect of your Countrywide Shares. Except as provided below, US Persons are not eligible to receive the ShareConsideration and will be deemed to have made an election for the Rightmove SaleElection in respect of all Rightmove Shares to which they are entitled under theScheme. Scheme Shareholders wishing to receive the Share Consideration in respect oftheir Countrywide Shares do NOT need to complete the green Form of Election ormake any such election electronically. The Rightmove Sale Election is not the subject of a recommendation by theIndependent Directors and Scheme Shareholders are strongly advised to seek theirown independent financial advice before electing to participate in the RightmoveSale Election. US Persons The Rightmove Shares have not been and will not be registered under the USSecurities Act. Accordingly, Rightmove Shares will not be transferred to, orcredited to a stock account in CREST of, Countrywide Shareholders withregistered addresses in the United States, US Persons or nominees who hold (orappear to the Company to hold) Countrywide Shares on behalf of US Persons and,accordingly, such Countrywide Shareholders and nominees will be deemed to haveelected for the Rightmove Sale Election in respect of all Rightmove Shares towhich they are entitled under the Scheme unless prior to the Effective Date theycan demonstrate to the satisfaction of the Company that receipt of suchRightmove Shares by them will not breach US securities law. Any Countrywide Shareholder with a registered address in the United States orwho is a US Person or a nominee who holds Countrywide Shares on behalf of any USPerson who believes that they are, or hold on behalf of persons who are,eligible to receive Rightmove Shares under an exemption from US securities lawsshould contact Capita Registrars at +44 20 8639 2157 to determine whether andhow such persons can receive the Rightmove Shares to which they are entitledunder the Scheme. Appendix II - Bases and sources In this announcement, unless otherwise stated, or the context otherwiserequires, the following bases and sources have been used: (a) information concerning Realogy has been sourced from the Realogy Investor Presentation, dated 4 December 2006 and Form 10-12B, the registration filing of securities pursuant to section 12(b) of the Securities Exchange Act, filed by Realogy on 3 April 2006; and (b) information concerning the forecast number of US homesale transactions has been sourced from Berson's Monthly Outlook December 2006 (Fannie Mae Economic & Mortgage Market Developments), dated 20 December 2006 and the National Association of Realtors US Economic Outlook December 2006. Appendix III - Additional information Further announcement by Countrywide Since the date of the Scheme Document, Countrywide has released the followingannouncements: "22 December 2006 In conformity with the Transparency Directive's transitional provision 6 wewould like to notify the market of the following. Countrywide plc's capital consists of 179,258,321 ordinary 5p shares with votingrights of which 8,408,456 ordinary 5p shares held in Treasury. Therefore, the total number of voting rights in Countrywide plc is 170,849,865." Further announcements by Rightmove Since the date of the Scheme Document, Rightmove has released the followingannouncements: "3 January 2006 In conformity with the Transparency Directive's transitional provision 6,Rightmove plc (the "Company") would like to notify the market of the following: The Company's capital consists of 132,658,018 ordinary shares of 1 pence eachwith voting rights. The Company does not have any Treasury shares or any othernon voting shares. The above figure may be used by shareholders as the denominator for thecalculations by which they will determine if they are required to notify theirinterest in, or a change to their interest in the Company under the FSA'sDisclosure and Transparency Rules." "4 January 2007 Further to the announcement made on 12 December 2006, a detailed update oncurrent trading will now be provided on the earlier date of 9 January 2007."" Terms defined in the Scheme Document sent by the Company to Shareholders on 21December 2006 shall have the same meaning in this announcement. Enquiries Countrywide Tel: +44 (0) 783 6204 449Christopher Sporborg Hawkpoint (lead financial adviser toCountrywide) Tel: +44 (0) 20 7665 4500David Reid ScottDavid RentonJonathan Coddington Panmure Gordon (Rule 3 adviser and jointcorporate broker to Countrywide) Tel: +44 (0) 20 7459 3600Tim LinacreHugh Morgan Hoare Govett (joint corporate broker toCountrywide) Tel: +44 (0) 20 7678 8000Ranald McGregor-SmithBob CowdellJonathan Retter Brunswick Group (Countrywide PR enquiries) Tel: +44 (0) 20 7404 5959John SunnucksKate Holgate Hawkpoint, which is authorised and regulated in the United Kingdom by theFinancial Services Authority, is acting exclusively for Countrywide plc andno-one else in connection with the Proposals and will not be responsible toanyone other than Countrywide and the Independent Directors for providing theprotections afforded to clients of Hawkpoint nor for providing advice inrelation to the Proposals, the content of this announcement or any matterreferred to therein. Panmure Gordon, which is authorised and regulated in the United Kingdom by theFinancial Services Authority, is acting exclusively for Countrywide plc andno-one else in connection with the Proposals and will not be responsible toanyone other than Countrywide and the Independent Directors for providing theprotections afforded to clients of Panmure Gordon nor for providing advice inrelation to the Proposals, the content of this announcement or any matterreferred to therein. Hoare Govett, which is authorised and regulated in the United Kingdom by theFinancial Services Authority, is acting exclusively for Countrywide plc andno-one else in connection with the Proposals and will not be responsible toanyone other than Countrywide and the Independent Directors for providing theprotections afforded to clients of Hoare Govett nor for providing advice inrelation to the Proposals, the content of this announcement or any matterreferred to therein. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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