23rd May 2005 07:02
British Land Co PLC23 May 2005 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR INTO OR FROM CANADA, AUSTRALIA OR JAPAN. FOR IMMEDIATE RELEASE 23 May 2005 RECOMMENDED ACQUISITION by THE BRITISH LAND COMPANY PLC for all the issued and to be issued share capital of PILLAR PROPERTY PLC to be effected by means of a Scheme of Arrangement under section 425 of the Companies Act 1985 Summary • The boards of The British Land Company PLC ("British Land") and PillarProperty PLC ("Pillar") are pleased to announce the terms of recommendedProposals under which British Land will acquire the entire issued and to beissued ordinary share capital of Pillar. The Proposals • It is intended that the Acquisition is to be implemented by way of a Courtsanctioned Scheme of Arrangement under section 425 of the Companies Act. • The terms of the Acquisition will enable all Pillar Shareholders to receive855 pence in cash in respect of each Pillar Share held by them, valuing theentire issued and to be issued ordinary share capital of Pillar at approximately£811.0 million. There will be no final dividend paid. • The Acquisition price represents a premium of: - 9.6 per cent. to the fully diluted net asset value of 780 pence perPillar share as at 31 March 2005; - 7.5 per cent. to the closing price of 795 pence per Pillar Share as of19 May 2005, the day prior to announcement that Pillar was in discussions with apossible offeror. • The Pillar Directors, who have been so advised by Credit Suisse First Bostonand JPMorgan Cazenove, consider the terms of the Acquisition to be fair andreasonable. In providing advice to the Pillar Directors, Credit Suisse FirstBoston and JPMorgan Cazenove have taken into account the commercial assessmentsof the Pillar Directors. The Pillar Directors are unanimously recommendingPillar Shareholders to vote in favour of the Scheme as they intend to do inrespect of their own holdings of Pillar Shares. • The Acquisition of Pillar is consistent with British Land's strategicevolution, to be more fully presented with its preliminary results for the yearended 31 March 2005 on Wednesday, 25 May. This builds on the bedrock of BritishLand's existing focus on UK real estate offering growth, quality and security.The aim is to further intensify British Land's asset management and itsportfolio management, as well as to build and renew its talent base. Theprincipal benefits of the transaction include: The transaction, together with existing assets, gives British Land a unique anddistinctive leadership position in the highest performing retail asset class.Pillar (directly and indirectly) owns approximately £1.3 billion of high qualityproperty assets and manages an attractive portfolio of some of the largest outof town retail parks in the UK valued at approximately £2.7 billion. Retailwarehousing has been and is expected to remain one of the most attractive assetclasses with strong prospects. Following the Acquisition, British Land will ownor manage in excess of £10 billion of retail assets. This is expected to createmanagement synergies and further strategic options if UK REITs are successfullyimplemented. The acquisition of Pillar's fund management operations creates an additionalrevenue stream which is expected to grow. This is a logical and attractiveextension of British Land's distinctive track record in property partnershipswith third parties. Additionally, this fund management expertise may be usefulin considering future options around British Land's existing assets. British Land will also welcome Pillar's high quality management team, which hasa track record of generating growth from active property management with astrong performance orientation. They will intensify and add to the propertymanagement skills of British Land's existing team. • British Land has today acquired from GE Pension Trust its holding of19,335,710 Pillar shares representing approximately 21.5 per cent. of theexisting issued ordinary share capital of Pillar. • Irrevocable undertakings to vote in favour of the Scheme have beenreceived from the Pillar Directors in respect of a total of 4,093,617 PillarShares representing approximately 4.5 per cent. of the existing issued ordinaryshare capital of Pillar. These irrevocable undertakings will only cease to bebinding in the event that the Scheme lapses or is withdrawn. • An irrevocable undertaking has also been received from the trustee ofthe Employee Share Option Trust (ESOT) in respect of a total of 1,166,762 PillarShares representing approximately 1.3 per cent. of the existing issued ordinaryshare capital of Pillar. This irrevocable undertaking will only cease to bebinding in the event that the Scheme lapses or is withdrawn. Morgan Stanley & Co. Limited and UBS Investment Bank are acting as jointfinancial advisers and corporate brokers to British Land in relation to theAcquisition. Credit Suisse First Boston and JPMorgan Cazenove are acting asjoint financial advisers to Pillar and JPMorgan Cazenove is acting as solecorporate broker to Pillar. Commenting on the Acquisition, Stephen Hester, Chief Executive of British Land,said: "The acquisition of Pillar provides British Land with an attractive opportunityto accelerate our stated strategy. We are reshaping the portfolio towardsgrowth assets and intensifying property asset management activity. By addingover £3 billion of fund assets under management, a valuable new avenue of incomegrowth also opens up." Commenting on the Acquisition, Raymond Mould, Chairman of Pillar, said: "Since its flotation, Pillar has generated high returns for its shareholders.The Board of Pillar believes that British Land will be a good steward for thepreservation and development of the existing funds and that the totalAcquisition value of 855 pence per share provides ordinary shareholders with anattractive exit price." This summary should be read in conjunction with the full text of the attachedannouncement. British Land will be holding an analysts' presentation today, Monday 23 May 2005at 11am at the Conference Centre of UBS, 1 Finsbury Avenue, London EC2M 2PP. A live conference call will be available through the following dial-ins: +44 800 018 0769 and +44 20 7950 1252. Passcode: British Land The details will be on the company's website www.britishland.com. An archivecopy will then be available at the same address later today. ENQUIRIES: The British Land Company PLCStephen Hester +44 20 7467 3503John Weston Smith +44 20 7467 2899 UBS Investment Bank-Joint Financial Adviser and Corporate Broker to British LandSimon Warshaw +44 20 7568 1000Tim Guest +44 20 7568 1000Mihiri Jayaweera +44 20 7568 1000 Morgan Stanley & Co. Limited-Joint Financial Adviser and Corporate Broker toBritish LandJonathan Lane +44 20 7425 5000Mark Warham +44 20 7425 5000Paul Baker +44 20 7425 5000 Finsbury-Public relations adviser to British LandEdward Orlebar +44 20 7251 3801 Pillar Property PLCRaymond Mould +44 20 7915 8000Patrick Vaughan +44 20 7915 8000 Credit Suisse First Boston-Financial Adviser to PillarAndrew Christie +44 20 7888 8888Ian Marcus +44 20 7888 8888Ian Brown +44 20 7888 8888 JPMorgan Cazenove-Financial Adviser and Corporate Broker to PillarRichard Cotton +44 20 7588 2828Bronson Albery +44 20 7588 2828Roger Clarke +44 20 7588 2828 Gavin Anderson-Public relations adviser to PillarCharlotte Stone +44 20 7554 1400Richard Constant +44 20 7554 1400 Morgan Stanley & Co. Limited and UBS Investment Bank are acting for British Landand no one else in relation to the Acquisition and the matters referred to inthis announcement and will not be responsible to any person other than BritishLand for providing the protections afforded to clients of Morgan Stanley & Co.Limited and UBS Investment Bank nor for providing advice in relation to theAcquisition or any other matters referred to in this announcement. Credit Suisse First Boston and JPMorgan Cazenove are acting for Pillar and noone else in connection with the Acquisition and the matters referred to hereinand will not be responsible to any other person for providing the protectionsoffered to clients of Credit Suisse First Boston and JPMorgan Cazenove or forproviding advice in relation to the Acquisition or any other matters referred toin this announcement. The distribution of this announcement in jurisdictions other than the UK may berestricted by law and therefore any persons who are subject to the laws of anyjurisdiction other than the UK should inform themselves about, and observe, anyapplicable requirements. This announcement has been prepared for the purpose ofcomplying with English law and the City Code and the information disclosed maynot be the same as that which would have been disclosed if this announcement hadbeen prepared in accordance with the laws of jurisdictions outside the UK. The Proposals will not be made, directly or indirectly, in, into or from or bythe use of mail or any means or instrumentality (including, without limitation,telephone, facsimile or other forms of electronic transmission) of interstate orforeign commerce of, or any facility of a national, state or other securitiesexchange of Canada, Australia or Japan. Accordingly, neither this announcementnor the Scheme Document or accompanying documents (or any copy thereof) isbeing, and must not be, mailed or otherwise forwarded, distributed or sent in,into or from Canada, Australia or Japan. All Shareholders or other persons(including nominees, trustees and custodians) who would otherwise intend to, ormay have a contractual or legal obligation to, forward this announcement or theScheme Document and accompanying documents to any jurisdiction outside theUnited Kingdom should refrain from doing so and seek appropriate professionaladvice before taking any action. The Loan Notes to be issued pursuant to the Loan Note Alternative have not been,and will not be, registered under the Securities Act 1933 or under any relevantsecurities laws of any states or other jurisdiction of the United States, norhave the relevant clearances been, nor will they be, obtained from thesecurities law of any province or territory of Canada, nor has a prospectus inrelation to the Loan Notes been, nor will one be, lodged with or registered bythe Australian Securities and Investments Commission nor have any steps beentaken, nor will any steps be taken, to enable the Loan Notes to be offered incompliance with applicable securities law of Japan. Accordingly, unless anexception under the Securities Act 1933 or such securities laws is available,the Loan Note Alternative is not being made available in, and the Loan Notes maynot be offered, sold, resold or delivered, directly or indirectly, in, into orfrom, the United States, Canada, Australia or Japan, or any other jurisdictionin which an offer of Loan Notes would constitute a violation of relevant laws orrequire registration thereof, or to or for the account or benefit of any USPerson or resident of Canada, Australia or Japan. The Directors of British Land accept responsibility for the informationcontained in this announcement, other than that relating to Pillar, the PillarGroup, the Directors of Pillar and members of their immediate families, relatedtrusts and persons connected with them (within the meaning of Section 346 of theCompanies Act) and information relating to the recommendation of voting infavour of the Proposals and the recommendation itself. To the best of theknowledge and belief of the Directors of British Land (who have taken allreasonable care to ensure that such is the case), the information contained inthis announcement for which they are responsible is in accordance with the factsand does not omit anything likely to affect the import of such information. The Directors of Pillar accept responsibility for the information contained inthis announcement relating to Pillar, the Pillar Group, the Directors of Pillarand members of their immediate families, related trusts and persons connectedwith them (within the meaning of Section 346 of the Companies Act) andinformation relating to the recommendation of voting in favour of the Proposalsand the recommendation itself. To the best of the knowledge and belief of theDirectors of Pillar (who have taken all reasonable care to ensure that such isthe case), the information contained in this announcement for which they areresponsible is in accordance with the facts and does not omit anything likely toaffect the import of such information. This announcement does not constitute an offer to sell or the solicitation of anoffer to subscribe for or buy any security, nor a solicitation of any vote orapproval in any jurisdiction, nor shall there be any sale, issuance or transferof the securities referred to in this announcement in any jurisdiction incontravention of applicable law. Any person who, alone or acting together with any other person(s) pursuant to anagreement or understanding (whether formal or informal) to acquire or controlsecurities of Pillar, owns or controls, or becomes the owner or controller,directly or indirectly, of one per cent. or more of any class of securities ofPillar is generally required under the provisions of Rule 8 of the City Code tonotify a Regulatory Information Service and the Panel by not later than 12.00noon (London time) on the business day following the date of the relevanttransaction in such securities during the period from the date of thisannouncement to the date of the Meetings. Please consult your independentfinancial adviser authorised under the Financial Services and Markets Act 2000immediately if you believe this Rule may be applicable to you or consult thePanel's website at www.thetakeoverpanel.org.uk or contact the Panel on +44 (0)207638 0129. NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR INTO OR FROM CANADA, AUSTRALIA OR JAPAN. FOR IMMEDIATE RELEASE 23 May 2005 RECOMMENDED ACQUISITION by THE BRITISH LAND COMPANY PLC for all the issued and to be issued share capital of PILLAR PROPERTY PLC to be effected by means of a Scheme of Arrangement under section 425 of the Companies Act 1985 1. Introduction The boards of British Land and Pillar are pleased to announce they have reachedagreement on the terms of the recommended Proposals under which British Landwill acquire the entire issued and to be issued ordinary share capital ofPillar. The Pillar Directors, who have been so advised by Credit Suisse First Boston andJPMorgan Cazenove, consider the terms of the Acquisition to be fair andreasonable. In providing advice to the Pillar Directors, Credit Suisse FirstBoston and JPMorgan Cazenove have taken into account the commercial assessmentsof the Pillar Directors. 2. The Acquisition It is intended that the Acquisition is to be implemented by way of a Courtsanctioned Scheme of Arrangement under section 425 of the Companies Act, whichwill be subject to the conditions and further terms set out in Appendix I tothis announcement and to the further terms to be set out in the Scheme Document.Pillar Shareholders other than those who validly elect for the Loan NoteAlternative will receive: for each Pillar Share 855 pence in cash The Acquisition values the entire issued and to be issued ordinary share capitalof Pillar at approximately £811.0 million. • The Acquisition price represents a premium of: - 9.6 per cent. to the fully diluted net asset value of 780 pence perPillar share as at 31 March 2005; - 7.5 per cent. to the closing price of 795 pence per Pillar Share as of19 May 2005, the day prior to announcement that Pillar was in discussions with apossible offeror. The Acquisition will be made by British Land or, at its option, a wholly ownedsubsidiary of British Land. Definitions of certain expressions used in this announcement are contained inAppendix III. 3. Loan Note Alternative Pillar Shareholders (other than certain Overseas Persons) may elect to receiveLoan Notes to be issued by British Land (or a wholly owned subsidiary of BritishLand) as an alternative to receiving any or all of the cash consideration whichthey would otherwise receive under the Acquisition on the following basis: For every £1 of cash consideration under the Scheme, £1 nominal value of LoanNotes. The Loan Notes will be unsecured obligations of British Land (or, if relevant,the wholly owned subsidiary of British Land) and will be issued, credited asfully paid, in amounts and integral multiples of £1 in nominal value. Theobligation to pay the principal sum under the Loan Notes will be irrevocably andunconditionally guaranteed for three years from the date of the instrumentcreating the Loan Notes. The Loan Notes will not be transferable other than incertain limited circumstances. All fractional entitlements will be disregardedand not paid. The Loan Notes will be governed by English Law. The Loan Notes will bear interest (from the date of issue) payable to therelevant holder of Loan Notes (subject to any requirement to deduct tax thereon)semi-annually in arrears on 31 December and 30 June at the rate of 0.55 percent. below LIBOR. The first interest payment will be made on 31 December 2005in respect of the period from and including the date of issue of the relevantLoan Notes up to (but excluding) that date. The Loan Note Alternative will be conditional upon the Scheme becoming effectiveand valid elections having been received by such time for at least £5 million innominal value of Loan Notes. The Loan Notes will have a term of 10 years andholders of Loan Notes will have the opportunity to redeem them on each interestpayment date falling on or after 30 September 2006, provided that any Loan Notesissued after 30 September 2005 will be redeemable only from the first interestpayment date falling after the first anniversary of the issue of such LoanNotes. British Land will be entitled to redeem all outstanding Loan Notes if theaggregate nominal value of outstanding Loan Notes is below £5 million at anytime during their term. The aggregate principal amount of the Loan Note is limited to £200 million. Ifvalid elections are received from holders of Scheme Shares in excess of thisamount, elections will be scaled back on a pro-rata basis so that the aggregateprincipal amount of Loan Notes issued shall not exceed £200 million. Further details of the Loan Note Alternative will be set out in the SchemeDocument. 4. Recommendation, irrevocable undertakings and share purchase The Pillar Directors, who have been so advised by Credit Suisse First Boston andJPMorgan Cazenove, consider the terms of the Proposals to be fair andreasonable. In providing advice to the Pillar Directors, Credit Suisse FirstBoston and JPMorgan Cazenove have taken into account the commercial assessmentsof the Pillar Directors. The Pillar Directors are unanimously recommending Pillar Shareholders to vote infavour of the Scheme. The Directors of Pillar have irrevocably undertaken tovote in favour of the Proposals in respect of a total of 4,093,617 Pillar Sharesrepresenting, approximately 4.5 per cent. of the existing issued ordinary sharecapital of Pillar. These irrevocable undertakings will only cease to be bindingin the event that the Scheme lapses or is withdrawn. An irrevocable undertaking has also been received from the trustee of theEmployee Share Option Trust (ESOT) in respect of a total of 1,166,762 PillarShares representing approximately 1.3 per cent. of the existing issued ordinaryshare capital of Pillar. This irrevocable undertaking will only cease to bebinding in the event that the Scheme lapses or is withdrawn. British Land has today acquired from GE Pension Trust its holding of 19,335,710Pillar shares representing approximately 21.5 per cent. of the existing issuedordinary share capital of Pillar. 5. Background to and reasons for the Acquisition The Acquisition of Pillar is consistent with British Land's strategic evolution,to be more fully presented with its preliminary results for the year ended 31March 2005 on Wednesday, 25 May 2005. This builds on the bedrock of BritishLand's existing focus on UK real estate offering growth, quality and security.The aim is to further intensify British Land's asset management and itsportfolio management, as well as to build and renew its talent base. Theprincipal benefits of the transaction include: The transaction, together with existing assets, gives British Land a unique anddistinctive leadership position in the highest performing retail asset class.Pillar (directly and indirectly) owns approximately £1.3 billion of high qualityproperty assets and manages an attractive portfolio of some of the largest outof town retail parks in the UK valued at approximately £2.7 billion. Retailwarehousing has been and is expected to remain one of the most attractive assetclasses with strong prospects. British Land believes that retail warehousingcontinues to be an attractive asset class and British Land expects demand tocontinue to grow, while restrictions on planning consents are expected to limitfurther supply of this asset class. With approximately 77 per cent. of theHercules Unit Trust ("HUT") portfolio consisting of retail parks with open A1consent, Pillar offers a unique opportunity to obtain exposure to such a highquality portfolio of this type and of such a large size. Through a 36.4 percent. ownership in PREF, this transaction will also give British Land exposureto a high quality growth market in Continental Europe-which fits well with thecore UK competencies of the combined company following the Acquisition. Following the Acquisition, British Land will own or manage in excess of £10billion in retail assets. This is expected to create management synergies andfurther strategic options if UK REITs are successfully implemented. The acquisition of Pillar's fund management operation creates an additionalrevenue stream which is expected to grow. This is a logical and attractiveextension of British Land's distinctive track record in property partnershipswith third parties. Additionally, this fund management expertise may be usefulin considering future options around British Land's existing assets. British Land will also welcome Pillar's high quality management team which has atrack record of generating growth from active property management with a strongperformance orientation. They will intensify and add to the property managementskills of British Land's existing team. 6. Financial effects of the Acquisition From an earnings and total return perspective, Pillar will primarily bereflected in British Land's accounts from the second half of the 2005/6financial year. British Land expects attractive growth in total returns fromPillar to make the acquisition value enhancing for British Land. Inter alia,Pillar's profits are expected to benefit from strong rental reversions, ongoingrental increases, significant interest and administration cost savings onintegration and the revised fee arrangements expected to be agreed with HUT unitholders at the HUT EGM. Additionally there remain attractive prospectivedevelopment profits in the Pillar portfolio for realisation over the next threeyears. The timing of these effects will determine whether or not there will beany modest initial cash earnings dilution. British Land also believes that there may be additional attractive synergies inthe Group as a whole from management of the combined retail portfolio andperformance of the enlarged property management team. On a pro-forma basis, the acquisition of Pillar would have increased BritishLand's Loan to Value Ratio by approximately 5 percentage points. British Land'sfinancial position remains strong with interest payments well covered by income. The enlarged asset portfolio enjoys a unique and substantial level of incomesecurity (long leases, low voids) and a secure debt structure. 7. Information on British Land British Land is the largest UK property investment company by assets and aprominent constituent of the FTSE 100 Index. The company invests in, managesand develops prime, modern properties principally in the Retail and LondonOffice Sectors. Properties under management at 30 September 2004 totalled £12.3billion: the majority is directly owned; the balance is held in joint venturesand partnerships, of which British Land's share was valued at £1.2 billion. British Land's investment approach is biased towards high quality, long leaseassets with strong long-term income growth in prospect. A key criterion is aproperty's enduring attraction to occupiers because of its business suitability,location and efficiency. The portfolio focuses on areas where the trends of supply and demand arefavourable over the long term. Approximately 55 per cent. is invested in retailproperties (37 per cent. out-of-town), including Meadowhall Shopping Centre (oneof only six regional centres in the UK), 71 superstores, 40 retail warehouseparks and 39 prime department stores. A further 37 per cent. is invested inCentral London offices, including Broadgate, the premier City office estate. The company blends its leasing, development, asset and liability managementskills in a single integrated approach. Efficient capital structures and strongrisk management disciplines are an integral part of that approach. British Land's management of its high quality properties, balanced portfolio andefficient capital structure has produced total returns of 10.1 per cent. perannum for shareholders over the 10 years to 31 March 2004 plus 9.1 per cent.during the 6 months to the last reported results at 30 September 2004. British Land generated profit before tax of £80.1 million for the six monthsended 30 September 2004 (£186.0 million for the year ended 31 March 2004), Groupgross rental income of £252.1 million for the six months ended 30 September 2004(£486.7m for the year ended 31 March 2004). Net assets were £5,265.0 million at30 September 2004 (£4,669.4 million at 31 March 2004) and adjusted diluted netasset value per share was 1,049 pence at 30 September 2004 (966 pence at 31March 2004). Net debt was £4,936.4 million at 30 September 2004 (£4,866.8million at 31 March 2004) with a Loan to Value ratio of 46 per cent. (48 percent. at 31 March 2004). British Land aims to manage its business and assets to achieve a Loan to Valuerange of 45-55 per cent. This process also underlines British Land's commitmentto improving shareholder returns through active portfolio management. 8. Information on Pillar Pillar is a listed property company active in both UK and European commercialproperty markets. Its principal investments are focussed on UK retail parks andCity of London offices. In addition as property adviser to both HUT, the largest retail park unit trustinvesting in the UK, and City of London Office Unit Trust ("CLOUT"), whichspecialises in City of London offices, Pillar Retail Europark Fund ("PREF"), aEuropean retail park fund and Hercules Income Fund ("HIF"), a UK smaller retailparks fund, Pillar manages property with a gross value of over £3 billion.Pillar receives management fees on the trust portfolios and performance feesdependent upon trust investment performance exceeding certain benchmarks. Inaddition, Pillar develops retail schemes which will be offered to HUT. New feearrangements have recently been put to the unit holders of HUT which would, ifapproved, provide an increase in base management fees and a revised HUTperformance fee for the future. The majority of Pillar's investments are in the form of units in HUT and CLOUT.As at 28 April 2005, HUT had a gross property value of £2.5 billion of whichPillar owned 34.4 per cent. and CLOUT had a gross property value of £582 millionof which Pillar owned 35.9 per cent. HUT was created in September 2000 as aclosed-ended Jersey property unit trust to invest in properties in majorwarehouse or shopping park locations in the United Kingdom. The objective of HUTis to creatively and actively manage the retail park assets to achieve rentaland capital growth above benchmarked targets whilst not exposing itself tospeculative risk. Pillar had Net Assets of £720.9 million at 31 March 2005 compared with £655.6million as at 31 March 2004. Pillar generated profit before tax of £21.7millionfor the year ended 31 March 2005 compared with £20.9 million for the year ended31 March 2004. 9. The Structure of the Acquisition The Proposals will be effected by means of a Scheme of Arrangement betweenPillar and Scheme Shareholders under section 425 of the Companies Act. TheAcquisition by British Land of the whole of the issued and to be issued sharecapital of Pillar is to be achieved by the cancellation of the CancellationShares and the application of the reserve arising from such cancellation inpaying up in full a number of New Pillar Shares (which is equal to the number ofCancellation Shares) and issuing the same to British Land and/or its nominees inconsideration for which holders of Cancellation Shares will receiveconsideration on the basis set out in the introduction and in paragraph 2 ofthis announcement. Scheme Shares acquired under the Loan Note Alternative will be transferred toBritish Land in exchange for the issue of the Loan Notes to holders of SchemeShares who elect for the Loan Note Alternative. It is expected that the Scheme Document will be posted in June and that theScheme will become effective in August 2005, subject to the satisfaction orwaiver of all the Conditions set out in Appendix I to this announcement. The Scheme requires approval of the Pillar Shareholders (other than the BritishLand Shareholder) by passing a resolution at the Court Meeting. In order tobecome effective, the Scheme must be approved by a majority in numberrepresenting at least 75 per cent. in value of the Pillar Shares that are votedat the Court Meeting. In addition, a special resolution approving any alterationof Pillar's articles of association and sanctioning the related CapitalReduction must be passed by Pillar Shareholders representing 75 per cent. of thevotes cast at the Extraordinary General Meeting. Following the Meetings, the Scheme and the related Capital Reduction must besanctioned and confirmed by the Court and will only become effective on deliveryto and registration by the Registrar of Companies of: (i) a copy of the Court Order sanctioning the Scheme and approving the Capital Reduction ; and (ii) a copy of the Scheme Document. The British Land Shareholder will give an undertaking to the Court to be boundby the Scheme. If the Scheme becomes effective, it will be binding on all Pillar Shareholders,irrespective of whether or not they attended or voted at the Court Meeting orthe Extraordinary General Meeting. The Scheme will (subject to the passing of the resolution at the ExtraordinaryGeneral Meeting) extend to any Pillar Shares issued under the Pillar ShareSchemes or otherwise before the record date for the Scheme. The Scheme will notextend to Pillar Shares issued after that date. Further details of the Scheme will be contained in the Scheme Document. 10. Implementation Agreement Pillar and British Land have entered into the Implementation Agreement whichgoverns their relationship during the period until the Scheme becomes effectiveor the Proposals lapse. Amongst other things, the parties have agreed tocooperate with regard to the process to implement the Scheme and Pillar hasundertaken to conduct the business in the ordinary course prior to the date theScheme becomes effective. Under the Implementation Agreement British Land hasreserved the right to effect the Acquisition by way of a takeover offer forPillar. Pillar has agreed to pay an inducement fee to British Land of £3.1 million if: (a) the Acquisition subsequently lapses or is withdrawn or (with the consent ofthe Panel) is not made and before this time an Independent Competing Offer forPillar is announced (whether or not on a pre-conditional basis), and thatIndependent Competing Offer or other Independent Competing Offer subsequentlybecomes or is declared unconditional in all respects or is otherwise completed;or (b) the Pillar Directors (or any committee of the board) withdraw or adverselymodify for whatever reason their recommendation of the Proposals or agree toresolve to recommend an Independent Competing Offer. (c) the Panel allows British Land to withdraw its support for the Scheme byreason of a breach of any of the conditions (other than those set out inparagraphs 2(a)-(e) and 2(g) where such breach arose as a result of an act oromission of Pillar) or because the Implementation Agreement is terminated forbreach of certain covenants relating to the conduct of Pillar's business priorto the Effective Date of the Acquisition and obligations to be performed byPillar if the circumstances are of such material significance to British Landthat the Panel permits the Scheme to be withdrawn, provided that (if the breachis remediable within the timeframe contemplated for effecting the Scheme) Pillarhas been given such period as is reasonable in the light of that timetable (notexceeding 15 days) to remedy the same and has not so remedied it within suchtime. Pillar has further agreed that it shall not (i) solicit, initiate or otherwiseseek to procure any Independent Competing Offer or (ii) enter into or continueany discussions, negotiations, correspondence or arrangement relating to anyIndependent Competing Offer other than in accordance with obligations imposedunder the terms of the City Code and (save to the extent that the PillarDirectors (having taken appropriate legal advice) reasonably consider that theywould be in breach of their fiduciary duties not to do so). Pillar has also agreed to notify British Land if it receives a serious approachfrom a third party and an Independent Competing Offer is capable of beingimplemented. Save insofar as is not consistent with Pillar's Directors fiduciary duties orduties owed to the Court with regard to the process relating to the Scheme, ifan Independent Competing Offer is announced for Pillar, Pillar has undertakenthat it will not withdraw the Scheme for a period of 72 hours from the time ofthat announcement and if, within that time, British Land communicates to Pillara revision to the terms of the Acquisition, so that the terms of theAcquisition, as so revised, provide for a price in cash per Pillar Share at notless than 5 per cent. more than the price per Pillar Share offered under theIndependent Competing Offer, the Pillar Directors will continue to recommend theScheme and withdraw any recommendation of the Independent Competing Offer. 11. Financing of the Acquisition The cash consideration payable by British Land to Pillar Shareholders under theterms of the Scheme will be provided by British Land from existing resources. 12. Management and employees The British Land Directors have given assurances to Pillar that, if the Schemebecomes effective, the existing employment rights, including pension rights, ofall Pillar management and employees will be fully safeguarded. If the Scheme becomes effective, British Land will be pleased to welcome keymembers of Pillar's executive management team to important roles in the combinedcompany at closing. It is intended that Patrick Vaughan will join British Land as an ExecutiveDirector for a transitional period expected to be around one year to oversee thesmooth integration of Pillar and the successful continuance of the fundmanagement business. Andrew Jones will join British Land's Executive Committeeas Co-Head of Asset Management, together with Tim Roberts, currently Joint Headof Asset Management at British Land, who is being promoted into the same role.The two of them represent the talented younger generation of property managersthat British Land is committed to promoting. The other key senior members ofPillar's property team will continue in their existing roles. British Land is committed to the expansion of Pillar's fund management businessto the benefit of all unit holders. Additionally as a sign of its commitment,British Land expects to remain the largest unit holder overall. To ensurecontinuity of management, it is anticipated that the fund management businesswithin the combined group will appoint Andrew Jones as its managing director.Stephen Hester, Chief Executive of British Land, will chair the fund managementboard and its other Directors will include Valentine Beresford and MarkStirling. 13. Pillar Employee Share Schemes Appropriate proposals will be made to participants in the Pillar Employee ShareSchemes in due course. Details of these proposals will be set out in the SchemeDocument. 14. Delisting and Cancellation of trading It is intended that application will be made to the UK Listing Authority for thelisting of the Pillar Shares to be cancelled and to the London Stock Exchangefor them to cease to be admitted to trading with effect from the Effective Date. 15. General The Acquisition will be subject to the applicable requirements of the City Code.The Scheme Document containing the full terms and conditions of the Acquisitionwill be posted to Pillar Shareholders (other than to any Pillar Shareholderswith addresses in Canada, Australia or Japan) in due course. In deciding whether or not to vote in favour of the Scheme in respect of theirPillar Shares, Pillar Shareholders should rely on the information contained in,and follow the procedures described in, the Scheme Document and accompanyingdocuments. Save in respect of the irrevocable undertakings and the purchase of the GE stakereferred to in paragraph 4 above neither British Land nor any of the BritishLand Directors, nor, so far as British Land is aware, any party acting inconcert with it, owns or controls any Pillar Shares or holds any options topurchase Pillar Shares or has entered into any derivative referenced tosecurities of Pillar which remain outstanding. British Land reserves the right to change the structure of making theAcquisition to a takeover offer. ENQUIRIES: The British Land Company PLCStephen Hester +44 20 7467 3503John Weston Smith +44 20 7467 2899 UBS Investment Bank-Joint Financial Adviser and Corporate Broker to British LandSimon Warshaw +44 20 7568 1000Tim Guest +44 20 7568 1000Mihiri Jayaweera +44 20 7568 1000 Morgan Stanley & Co. Limited-Joint Financial Adviser and Corporate Broker toBritish LandJonathan Lane +44 20 7425 5000Mark Warham +44 20 7425 5000Paul Baker +44 20 7425 5000 Finsbury-Public relations adviser to British LandEdward Orlebar +44 20 7251 3801 Pillar Property PLCRaymond Mould +44 20 7915 8000Patrick Vaughan +44 20 7915 8000 Credit Suisse First Boston-Financial Adviser to PillarAndrew Christie +44 20 7888 8888Ian Marcus +44 20 7888 8888Ian Brown +44 20 7888 8888 JPMorgan Cazenove-Financial Adviser and Corporate Broker to PillarRichard Cotton +44 20 7588 2828Bronson Albery +44 20 7588 2828Roger Clarke +44 20 7588 2828 Gavin Anderson-Public relations adviser to PillarCharlotte Stone +44 20 7554 1400Richard Constant +44 20 7554 1400 UBS Investment Bank and Morgan Stanley & Co. Limited are acting for British Landand no one else in relation to the Acquisition and the matters referred to inthis announcement and will not be responsible to any person other than BritishLand for providing the protections afforded to customers of UBS Investment Bankand Morgan Stanley & Co. Limited nor for providing advice in relation to theAcquisition or any other matters referred to in this announcement. Credit Suisse First Boston and JPMorgan are acting for Pillar and no one else inconnection with the Acquisition and the matters referred to herein and will notbe responsible to any other person for providing the protections offered toclients of Credit Suisse First Boston and JPMorgan Cazenove or for providingadvice in relation to the Acquisition or any other matters referred to in thisannouncement. The distribution of this announcement in jurisdictions other than the UK may berestricted by law and therefore any persons who are subject to the laws of anyjurisdiction other than the UK should inform themselves about, and observe, anyapplicable requirements. This announcement has been prepared for the purpose ofcomplying with English law and the City Code and the information disclosed maynot be the same as that which would have been disclosed if this announcement hadbeen prepared in accordance with the laws of jurisdictions outside the UK. The Proposals will not be made, directly or indirectly, in, into or from or bythe use of mail or any means or instrumentality (including, without limitation,telephone, facsimile or other forms of electronic transmission) of interstate orforeign commerce of, or any facility of a national, state or other securitiesexchange of Canada, Australia or Japan. Accordingly, neither this announcement nor the Scheme Document or accompanyingdocuments (or any copy thereof) is being, and must not be, mailed or otherwiseforwarded, distributed or sent in, into or from Canada, Australia or Japan. AllShareholders or other persons (including nominees, trustees and custodians) whowould otherwise intend to, or may have a contractual or legal obligation to,forward this announcement or the Scheme Document and accompanying documents toany jurisdiction outside the United Kingdom should refrain from doing so andseek appropriate professional advice before taking any action. The Loan Notes to be issued pursuant to the Loan Note Alternative have not been,and will not be, registered under the Securities Act 1933 or under any relevantsecurities laws of any states or other jurisdiction of the United States, norhave the relevant clearances been, nor will they be, obtained from thesecurities law of any province or territory of Canada, nor has a prospectus inrelation to the Loan Notes been, nor will one be, lodged with or registered bythe Australian Securities and Investments Commission nor have any steps beentaken, nor will any steps be taken, to enable the Loan Notes to be offered incompliance with applicable securities law of Japan. Accordingly, unless anexception under the Securities Act 1933 or such securities laws is available,the Loan Note Alternative is not being made available in, and the Loan Notes maynot be offered, sold, resold or delivered, directly or indirectly, in, into orfrom, the United States, Canada, Australia or Japan, or any other jurisdictionin which an offer of Loan Notes would constitute a violation of relevant laws orrequire registration thereof, or to or for the account or benefit of any USPerson or resident of Canada, Australia or Japan. The Directors of British Land accept responsibility for the informationcontained in this announcement, other than that relating to Pillar, the PillarGroup, the Directors of Pillar and members of their immediate families, relatedtrusts and persons connected with them (within the meaning of Section 346 of theCompanies Act) and information relating to the recommendation of voting infavour of the Proposals and the recommendation itself. To the best of theknowledge and belief of the Directors of British Land (who have taken allreasonable care to ensure that such is the case), the information contained inthis announcement for which they are responsible is in accordance with the factsand does not omit anything likely to affect the import of such information. The Directors of Pillar accept responsibility for the information contained inthis announcement relating to Pillar, the Pillar Group, the Directors of Pillarand members of their immediate families, related trusts and persons connectedwith them (within the meaning of Section 346 of the Companies Act) andinformation relating to the recommendation of voting in favour of the Proposalsand the recommendation itself. To the best of the knowledge and belief of theDirectors of Pillar (who have taken all reasonable care to ensure that such isthe case), the information contained in this announcement for which they areresponsible is in accordance with the facts and does not omit anything likely toaffect the import of such information. This announcement does not constitute an offer to sell or the solicitation of anoffer to subscribe for or buy any security, nor a solicitation of any vote orapproval in any jurisdiction, nor shall there be any sale, issuance or transferof the securities referred to in this announcement in any jurisdiction incontravention of applicable law. Any person who, alone or acting together with any other person(s) pursuant to anagreement or understanding (whether formal or informal) to acquire or controlsecurities of Pillar, owns or controls, or becomes the owner or controller,directly or indirectly, of one per cent. or more of any class of securities ofPillar is generally required under the provisions of Rule 8 of the City Code tonotify a Regulatory Information Service and the Panel by not later than 12.00noon (London time) on the business day following the date of the relevanttransaction in such securities during the period from the date of thisannouncement to the date of the Meetings. Please consult your independentfinancial adviser authorised under the Financial Services and Markets Act 2000immediately if you believe this Rule may be applicable to you or consult thePanel's website at www.thetakeoverpanel.org.uk or contact the Panel on +44 (0)20 7638 0129. Appendix I CONDITIONS OF THE SCHEME The Scheme will comply with the rules and regulations of the UK ListingAuthority, the London Stock Exchange and the City Code. The Scheme will begoverned by English law and will be subject to the jurisdiction of the Englishcourts and to the terms and conditions set out below and to the further termsset out in the Scheme Document. (1) The Proposals will be conditional upon the Scheme becomingunconditional and becoming effective by no later than 31 October 2005 or suchlater date (if any) as British Land and Pillar may agree and (if required) theCourt shall approve. (2) The Scheme is conditional upon: (a) approval of the Scheme by a majority in number representing 75 percent. or more in value of Pillar Shareholders (other than the British LandShareholder) present and voting, either in person or by proxy, at the CourtMeeting or at any adjournment of that meeting; (b) the resolution(s) in connection with or required to approve andimplement the Scheme being duly passed by the requisite majority at theExtraordinary General Meeting or at any adjournment of that meeting; (c) the sanction of the Scheme and the confirmation of the CapitalReduction involved therein by the Court (in either case, with or withoutmodifications on terms acceptable to Pillar and British Land) and the deliveryof an office copy of the Court Order and the minute of such reduction attachedthereto to the Registrar of Companies in England and Wales and the registration,in relation to the Capital Reduction, of such Court Order by him. (d) the earlier of: i. the Financial Services Authority (FSA)notifying British Land of its approval, being given on terms reasonablysatisfactory to British Land, of the proposed acquisition by British Land ofcontrol of each Pillar entity regulated by it; or ii. the expiry of a period of three monthsbeginning with the date on which the FSA received the notice of control (asdefined in section 178(5) of the Financial Services and Markets Act 2000 (FSMA))relating to the proposed acquisition by British Land of control of each Pillarentity regulated by it, in circumstances where the FSA has neither: (i) approved the acquisition by BritishLand of such control; nor (ii) served a warning notice on BritishLand pursuant to sub-sections 183(3) or 185(3) of FSMA, (e) the Luxembourg Commission de Surveillance du Secteur Financiernotifying British Land of its approval, being given on terms reasonablysatisfactory to British Land, of the proposed acquisition by British Land ofcontrol of Pillar and each Pillar entity regulated by it; (f) no Third Party having intervened and there not continuing to beoutstanding any statute, regulation or order of any Third Party in each casewhich is or is likely to be material in the context of the Pillar Group andwhich would or might reasonably be expected to: (i) make the Scheme, its implementation or the acquisitionor proposed acquisition by British Land or any member of the Wider British LandGroup of any shares or other securities in, or control or management of, Pillaror any member of the Wider Pillar Group void, illegal or unenforceable in anyrelevant jurisdiction, or otherwise directly or indirectly restrain, prevent,prohibit, restrict or delay the same or impose additional adverse conditions orobligations with respect to the Scheme or such acquisition, or otherwise impede,challenge or interfere with the Scheme or such acquisition, or require materialamendment to the terms of the Scheme or the acquisition or proposed acquisitionof any Pillar Shares or the acquisition of control or management of Pillar orthe Wider Pillar Group by British Land or any member of the British Land Group; (ii) impose any material limitations on, or result in a material delayin the ability of any member of the British Land Group or any member of theWider Pillar Group to acquire or to hold or to exercise effectively, directly orindirectly, all or any rights of ownership in respect of shares or othersecurities in, or to exercise voting or management control over, any member ofthe Wider Pillar Group or any member of the British Land Group; (iii) require, prevent or delay the divestiture or alter the termsenvisaged for any proposed divestiture by any member of the Wider British LandGroup or by any member of the Wider Pillar Group of all or any portion of theirrespective businesses, assets or properties or limit the ability of any of themto conduct any of their respective businesses or to own or control any of theirrespective assets or properties or any part thereof; (iv) require any member of the British Land Group or of the Wider PillarGroup to acquire, or offer to acquire, any shares or other securities (or theequivalent) in any member of either Group owned by any third party (other thanin the implementation of the Proposals); (v) impose any material limitation on the ability of any member of theWider British Land Group or of the Wider Pillar Group to conduct or integrate orco-ordinate its business, or any part of it, with the businesses or any part ofthe businesses of any other member of the Wider British Land Group or of theWider Pillar Group; (vi) result in any member of the Wider Pillar Group or the Wider BritishLand Group ceasing to be able to carry on business under any name under which itpresently does so; or (vii) otherwise adversely affect any or all of the business, assets,profits, financial or trading position of any member of the Wider Pillar Group, and all applicable waiting and other time periods during which any Third Partycould intervene under the laws of any relevant jurisdiction having expired,lapsed or been terminated; (g) without limitation to condition (f) above: (i) the Office of Fair Trading havingindicated, in terms satisfactory to British Land, that the Office of FairTrading does not intend to refer the proposed acquisition of Pillar by BritishLand, or any matters arising from that proposed acquisition, to the CompetitionCommission; and (ii) all appropriate time periods(including any extensions of such time periods) for any person to apply for areview of any decision taken by the Office of Fair Trading under paragraph (g)(i) having expired or lapsed (as appropriate) without any such application forreview having been made; (h) all notifications and filings which are necessary or are reasonablyconsidered appropriate by British Land having been made, all appropriate waitingand other time periods (including any extensions of such waiting and otherperiods) under any applicable legislation or regulation of any relevantjurisdiction having expired, lapsed or been terminated (as appropriate) and allnecessary statutory or regulatory obligations in any relevant jurisdictionhaving been complied with in each case in connection with the Scheme or theacquisition or proposed acquisition of any shares or other securities in, orcontrol or management of, Pillar or any other member of the Wider Pillar Groupby any member of the Wider British Land Group or the carrying on by any memberof the Wider Pillar Group of its business; (i) all Authorisations which are necessary or are reasonably considerednecessary or appropriate by British Land in any relevant jurisdiction for or inrespect of the Scheme or the acquisition or proposed acquisition of any sharesor other securities in, or control or management of, Pillar or any other memberof the Wider Pillar Group by any member of the Wider British Land Group or thecarrying on by any member of the Wider Pillar Group of its business having beenobtained, in terms and in a form reasonably satisfactory to British Land, fromall appropriate Third Parties or from any persons or bodies with whom any memberof the Wider Pillar Group has entered into contractual arrangements in each casewhere the absence of such Authorisation would have a material adverse effect onthe Pillar Group taken as a whole and all such Authorisations remaining in fullforce and effect and there being no notice or intimation of any intention torevoke, suspend, restrict, modify or not to renew any of the same; (j) since 31 March 2004 and except as disclosed in Pillar's annual reportand accounts for the year then ended or Pillar's interim results for the periodending 30 September 2004 or Pillar's preliminary results for the year ending 31March 2005 or as publicly announced by Pillar prior to 23 May 2005 (by thedelivery of an announcement to a Regulatory Information Service) or as fairlydisclosed prior to 23 May 2005 in writing to British Land by or on behalf ofPillar in the course of negotiations, there being no provision of anyarrangement, agreement, licence, permit, franchise or other instrument to whichany member of the Wider Pillar Group is a party, or by or to which any suchmember or any of its assets is or are or may be bound, entitled or subject orany circumstance, which, in each case as a consequence of the Scheme or theacquisition or proposed acquisition of any shares or other securities in, orcontrol of, Pillar or any other member of the Wider Pillar Group by any memberof the Wider British Land Group or otherwise, could or might reasonably beexpected to result in, (in any case to an extent which is or would be materialin the context of the Wider Pillar Group taken as a whole): (i) any monies borrowed by or any other indebtedness orliabilities (actual or contingent) of, or any grant available to, any member ofthe Wider Pillar Group being or becoming repayable or capable of being declaredrepayable immediately or prior to its stated repayment date or the ability ofany member of the Wider Pillar Group to borrow monies or incur any indebtednessbeing withdrawn or inhibited or becoming capable of being withdrawn orinhibited; (ii) the creation or enforcement of any mortgage, charge or othersecurity interest over the whole or any part of the business, property, assetsor interests of any member of the Wider Pillar Group or any such mortgage,charge or other security interest (wherever created, arising or having arisen)becoming enforceable;Related Shares:
British Land