18th Jul 2007 07:44
Imperial Tobacco Group PLC18 July 2007 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO OR FROM THE UNITEDSTATES, AUSTRALIA, CANADA, SOUTH AFRICA OR JAPAN IMPERIAL TOBACCO GROUP ANNOUNCES RECOMMENDED PROPOSED CASH OFFER FOR ALTADIS SUMMARY • Recommended proposed cash offer of €50 per Altadis share representing an enterprise value of €16.2 billion (£11.0 billion) • Represents a multiple of 14.2x Altadis' 2006 EBITDA and a premium of 32% over the Altadis closing share price on 12 March 2007 • Altadis Board confirmation that it will recommend the Proposed Offer to its shareholders, in the absence of a competing offer at a higher price • Substantial operational efficiencies of approximately €300 million per annum plus revenue benefits • Return on investment in excess of weighted average cost of capital by second full financial year of ownership • Antonio Vazquez, Chief Executive Officer of Altadis, and Jean-Dominique Comolli, Chairman, invited to join the Board of Imperial Tobacco following completion Gareth Davis, Chief Executive Officer of Imperial Tobacco, today said: "I am pleased to announce that the Altadis Board will recommend our ProposedOffer to its shareholders. "Imperial Tobacco and Altadis are a great strategic fit, which will consolidateour position as the world's fourth largest international tobacco company. Thisdeal significantly enhances our operating platform and scale with an increasedpresence in profitable mature markets and improved emerging marketopportunities. "We will have a leading position in Spain, complementing our existing leadershipposition in the UK, and will strengthen our cigarette presence in otherprofitable Western European markets including Germany, France and Italy. Thiswill be supported by enhanced cigarette positions in a number of other marketssuch as Morocco, where we will be the number one player, Russia, Poland andFinland. "We will also benefit from a stronger and more diversified brand and productportfolio, including key international cigarette brands and world leadership incigars, fine cut tobacco, papers and tubes. Altadis' prestigious cigar businesshas a major presence in the US and together with our recent acquisition ofCommonwealth Brands and our existing US papers and tubes operations, this willgive us considerable scale in this highly profitable market. "When combined with the substantial operational efficiencies we expect toachieve, we believe this represents an excellent deal for Imperial Tobacco andone that will create significant value for our shareholders." NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO OR FROM THE UNITEDSTATES, AUSTRALIA, CANADA, SOUTH AFRICA OR JAPAN IMPERIAL TOBACCO GROUP ANNOUNCES RECOMMENDED PROPOSED CASH OFFER FOR ALTADIS The Board of Imperial Tobacco Group PLC ("Imperial Tobacco") announces that theBoard of Altadis, S.A. ("Altadis") has agreed to recommend its proposed offer(the "Proposed Offer"), which is subject to the fulfilment of certainpre-conditions and conditions, at €50 per Altadis share in cash. Imperial Tobacco has now had the opportunity to meet with members of the AltadisBoard and to review certain additional information provided by Altadis. TheProposed Offer reflects the additional value Imperial Tobacco has identified,predominantly in the areas of operational efficiencies and non-core assetdivestments, with some further limited value through tax structuring. The Proposed Offer price represents: •an enterprise value for Altadis of €16.2 billion (£11.0 billion) taking into account Altadis' net debt as at 31 March 2007 and the interests of minority shareholders; •a multiple of 14.2x Altadis' EBITDA for the financial year ended 31 December 2006; and •a premium of 32% over the closing price of €37.84 per Altadis share on 12 March 2007, being the last trading day before market speculation arose in relation to Imperial Tobacco's initial approach to Altadis. In addition, since Imperial Tobacco's initial approach Altadis has paiddividends to its shareholders totalling €1.10 per share. Altadis has confirmed to Imperial Tobacco that it considers that the Offer isattractive and that, in the absence of a competing offer at a higher price beingfiled with the Comision Nacional del Mercado de Valores ("CNMV"), the Board ofAltadis will recommend the Offer to Altadis' shareholders and the directors ofAltadis intend to accept the Offer in respect of their own beneficialshareholdings. STRATEGIC RATIONALE AND FINANCIAL BENEFITS Altadis holds strategic positions in its three core businesses of cigarettes,cigars and logistics. Altadis has an attractive and highly complementaryportfolio of brands, with strong positions in its key markets. The proposedacquisition will consolidate Imperial Tobacco's number four position incigarettes globally. In addition, Altadis' cigar and logistics activities areboth strong operations in their own right, which Imperial Tobacco believes canbe further developed as part of a larger group. Imperial Tobacco believes that the combination of Altadis and Imperial Tobaccowill create significant value for its shareholders. In line with its successfulgrowth strategy, Imperial Tobacco believes that the proposed acquisition ofAltadis will: •strengthen and diversify its brand and product portfolios; •expand its scale and increase its competitiveness, cementing its position amongst the global leaders in the tobacco sector; •provide enhanced platforms to support future sales growth; •generate annual operational efficiencies of approximately €300 million by the end of the second full financial year following completion (including its evaluation of the information presented to investors by Altadis on 23 April 2007), primarily in the areas of production and purchasing, sales and marketing and corporate overheads, as well as revenue benefits. It is estimated that the one-off cash cost of achieving these savings will be approximately €470 million; •meet Imperial Tobacco's established acquisition criteria, as it is expected to deliver a post-tax return on investment (pre-amortisation of intangibles and before exceptional integration costs) in excess of Imperial Tobacco's weighted average cost of capital by the second full financial year following completion and approaching its weighted average cost of capital in the first full financial year; •be earnings enhancing in the first full financial year following completion; and •provide a more favourable return on investment than alternative uses of funds, specifically Imperial Tobacco's share buyback programme. Imperial Tobacco also expects to benefit from disposals of non-core assetsvalued by Altadis at €650 million. Once the acquisition is completed, Imperial Tobacco anticipates that its averageall in cost of debt will not differ materially from the 5.4% for its half yearto 31 March 2007. Following completion, the adjusted effective rate of tax for the enlarged groupis expected to be around 26.5%. DIVIDEND POLICY Following completion, Imperial Tobacco intends to maintain its dividend policy,increasing dividends broadly in line with underlying earnings growth with arounda 50% payout ratio. BOARD AND MANAGEMENT Once the proposed acquisition has completed, Imperial Tobacco intends to addappropriate representation from the Altadis Board to the Board of ImperialTobacco. This will include offering Antonio Vazquez an executive position on theBoard of Imperial Tobacco and an executive role as CEO of the enlarged group'scigar and logistics businesses. Imperial Tobacco will also invite Jean-DominiqueComolli to become its non-executive Deputy Chairman* and provide certainconsultancy services. In addition, the Altadis Board will be requested to submitone of its current non-executive directors so that he can be invited to join theBoard of Imperial Tobacco as a non-executive director (subject to the approvalof the Board of Imperial Tobacco's nomination committee). The headquarters of the enlarged group will be in Bristol. The headquarters ofthe cigar division will remain in Madrid, as will the headquarters of thelogistics business. The enlarged group will also maintain a substantial presencein Paris. * As previously announced, the current Vice Chairman, Mr A G L Alexander intendsto retire from the Board at the Annual General Meeting in early 2008. FINANCING The Proposed Offer will be financed through new bank facilities and anunderwritten rights issue. Citi, RBS, Lehman Brothers, Barclays and Banco Santander have entered into anagreement with Imperial Tobacco to arrange and underwrite new bank debtfacilities of £9.2 billion (€13.5 billion) for, amongst other uses, theprovision of part of the necessary funding for the proposed acquisition,including fees and expenses, and to refinance certain of Imperial Tobacco's andAltadis' current debt facilities. Since the proceeds of the rights issue will not be available on completion ofthe proposed acquisition and in order to satisfy the Spanish takeoverrequirements for bank guarantees to be issued in respect of the totalconsideration payable, an equity bridge facility of £5.4 billion (€8.0 billion)has been put in place to cover this part of the funding requirements until therights issue process is completed. ABN AMRO Hoare Govett, Morgan Stanley, Citi and Lehman Brothers have enteredinto an agreement with Imperial Tobacco to arrange and underwrite the equitybridge facility, which has been entered into expressly for the purpose ofproviding up to £5.4 billion (€8.0 billion) of bridge financing in respect ofthe proceeds of the rights issue. In addition, ABN AMRO Hoare Govett, Morgan Stanley, Citi and Lehman Brothershave entered into an underwriting agreement with Imperial Tobacco under whichthey undertake on a several basis to underwrite a rights issue by ImperialTobacco of ordinary shares to existing shareholders to raise net proceeds of upto £5.4 billion (€8.0 billion). The rights issue will be launched within the next 12 months and will be sized atthe minimum amount needed to ensure that the enlarged group continues to have aninvestment grade credit rating. LOGISTA Altadis currently has a shareholding of 59.02% in Logista, S.A. ("Logista"), aSpanish logistics company whose shares are listed on the Madrid, Barcelona,Bilbao and Valencia stock exchanges. Altadis has announced its intention to spinoff its French logistics business to Logista in consideration for the issue offurther shares in Logista to Altadis. Imperial Tobacco's acquisition of controlof Altadis will trigger a requirement under new Spanish takeover laws either tomake a tender offer to acquire the outstanding Logista shares held by minorityshareholders or to reduce the shareholding in Logista to below 30%, within threemonths. It is Imperial Tobacco's current intention to review the shareholding inLogista after completion of the proposed acquisition and only to take a finaldecision as to whether to make a tender offer or reduce the shareholding at therelevant time. The final decision in relation to Logista will be subject to allnecessary consents and approvals. CURRENT TRADING OF IMPERIAL TOBACCO Overall anticipated trading performance of the Imperial Tobacco Group for thefinancial year ending 30 September 2007 remains in line with management'sexpectations. CONDITIONS AND TIMETABLE The Proposed Offer is subject to: •receipt of approval from the shareholders of Imperial Tobacco; and •authorisation of Imperial Tobacco's Proposed Offer by the CNMV. The Proposed Offer will be subject to the fulfilment of the followingconditions: €80% of the share capital of Altadis (or such higher percentage as is permitted by Spanish law or regulation or by the CNMV) being tendered in acceptance of the Proposed Offer; and •Altadis' shareholders resolving to amend Altadis' bye-laws to remove the limitation on the number of votes that Altadis' shareholders can cast at a general meeting of shareholders and to remove any other restrictive provisions introduced into those bye-laws. The full terms and conditions of the Proposed Offer will be set out in ImperialTobacco's offer document. Imperial Tobacco will reserve the right to waive anycondition to the Proposed Offer in whole or in part. Imperial Tobacco is today filing the Proposed Offer with the CNMV and posting acircular to its shareholders convening an Extraordinary General Meeting at 2:30pm on 13 August 2007, at which the resolution to approve the transaction willbe proposed. The circular will be published on Imperial Tobacco's corporatewebsite on 19 July 2007. Further details about the expected timetable for the transaction, including theauthorisation of the Proposed Offer by the CNMV and the commencement of theoffer period, will be provided in due course. UK ANALYSTS AND INVESTORS Gareth Davis, Chief Executive of Imperial Tobacco Group, will give apresentation today for analysts and investors at 10:15am at ABN Amro HoareGovett, 250 Bishopsgate, London EC2M 4AA. Refreshments will be available from 9:45am. The presentation will be webcast live via www.imperial-tobacco.com andwww.cantos.com Gareth Davis will also host the following conference calls, in which there willbe an opportunity for questions. European Newswires at 9:15am:Dial in number: +44 (0) 20 7806 1955 (UK)Dial in number: +34 (0) 91 788 9936 (Spain)Dial in number: +33 (0) 17 099 4303 (France)Dial in number: +49 (0) 69 5007 1308 (Germany) UK Media at 12:15pm:Dial in number: +44 (0) 20 7138 0818 European Media at 2:00pm:Dial in number: +44 (0) 20 7806 1966 (UK)Dial in number: +34 (0) 91 788 9937 (Spain)Dial in number: +33 (0) 17 099 4304 (France)Dial in number: +49 (0) 69 5007 1316 (Germany) Investors conference call at 3:00pm:Dial in number: +44 (0) 20 7138 0837 NOTES TO EDITORS---------------- INFORMATION ON ALTADIS Altadis, which was formed in 1999 when the former Spanish and French state-ownedtobacco companies, Tabacalera and Seita, were merged, is a European leader inthe tobacco and logistics sectors and a world leader in the cigar sector. Altadis' principal cigarette brands include Gauloises and Fortuna. The Altadisgroup has leveraged these brands to expand internationally, and it holds thenumber two cigarette positions in France and Spain and the number one cigaretteposition in Morocco. Its cigar division has secured the number one positions incigars in the US, France and Spain. Its principal cigar brands includeMontecristo, Dutch Masters, Cohiba, Phillies, Romeo y Julieta and Partagas.Altadis has logistics positions in Spain, Portugal and Italy, via its majorityholding in Logista, as well as in France and Morocco. The logistics businessdistributes tobacco products for Altadis and other manufacturers, as well as awide range of non-tobacco products and services. For the financial year ended 31 December 2006, Altadis had economic sales of€3,970 million (2005: €4,112 million), EBITDA of €1,148 million (2005: €1,232million), net income of €453 million (2005: €577 million) and profit before taxof €751 million (2005: €966 million). As at 31 December 2006, the Altadis grouphad 27,437 employees worldwide and gross assets of €11,200 million. Altadis' group senior management committee consists of Antonio Vazquez (Chairmanof the Executive Committee and Group Chief Executive Officer); Fernando Dominguez Valdes-Hevia(Chief Operating Officer, Group Cigars Business Unit); Luis Egido (Chief Operating Officer, Group Logistics Business Unit); Bruno Germain-Thomas (Chief Operating Officer, Group Cigarettes Business Unit); Charles Lebeau (Senior Vice-President, Group Human Resources and Corporate Services); Enrique Lloves (Senior Vice President, Group Strategy and Planning); Pierre-Andre Terisse (Group Chief Financial Officer); and Jose Francisco MateuIsturiz (Senior Vice-President, Group Legal Affairs and Institutional Relations). INFORMATION ON IMPERIAL TOBACCO Imperial Tobacco is the world's fourth largest international tobacco company.The group manufactures and sells a comprehensive range of cigarettes, tobaccos,cigars, rolling papers and tubes in over 130 countries worldwide. ENQUIRIES Imperial Tobacco---------------- Alex Parsons Telephone: +44 (0)7967 467241 (Group Media Relations Manager) Simon Evans Telephone: +44 (0)7967 467684 (Group Press Officer) John Nelson-Smith Telephone: +44 (0)7919 391866 (Investor Relations Manager) Citi Telephone: +44 (0) 20 7986 4000---- (lead financial adviser to Imperial Tobacco) Ian Carnegie-BrownIan HartMark Todd Manuel Falco Telephone: +34 (0) 91 538 4411 Hoare Govett Telephone: +44 (0) 20 7678 8000------------ (joint corporate broker to Imperial Tobacco) Hugo FisherPaul Nicholls Lehman Brothers Telephone: +44 (0) 20 7102 1000--------------- (financial adviser to Imperial Tobacco) Ludovico del BalzoAdrian Fisk Morgan Stanley Telephone: +44 (0) 20 7425 5000-------------- (financial adviser and joint corporate broker to Imperial Tobacco) Gavin MacdonaldPaul Baker Banco Santander Telephone: +34 (0) 91 289 3371--------------- (financial adviser to Imperial Tobacco) Filipe Ribeiro-FerreiraGeorg Orssich Citi, Hoare Govett Limited, Lehman Brothers Europe Limited, Morgan Stanley & Co.International Limited and Banco Santander, which are authorised and regulated inthe United Kingdom by the Financial Services Authority, are acting exclusivelyfor Imperial Tobacco and no one else in relation to the matters referred to inthis announcement and will not be responsible to anyone other than ImperialTobacco for providing the protections afforded to clients of Citi, Hoare GovettLimited, Lehman Brothers Europe Limited, Morgan Stanley & Co. InternationalLimited and Banco Santander respectively nor for providing advice in relation tothese matters, the content of this announcement or any matter referred to in it. Copies of Imperial Tobacco's announcements are available on its website:www.imperial-tobacco.com The statements contained in this announcement that are not historical facts are"forward-looking" statements. These forward-looking statements are subject toa number of risks and uncertainties, many of which are beyond Imperial Tobacco'scontrol and all of which are based on the current beliefs and expectations aboutfuture events of the directors' of Imperial Tobacco. No assurance can be giventhat such future results will be achieved. Actual events or results may differmaterially as a result of risks and uncertainties facing Imperial Tobacco andits subsidiaries. Except to the extent required by applicable law, ImperialTobacco will not necessarily update any of them in light of new information orfuture events and undertakes no duty to do so. This press release is not an offer of securities for sale in the United States.The securities of Imperial Tobacco may not be offered or sold in the UnitedStates absent registration or an exemption from registration. Any publicoffering of securities to be made in the United States will be made by means ofa prospectus that will contain detailed information about the company andmanagement, as well as financial statements. Unless otherwise stated, conversion rates of £1: €1.4757 and £1: US$2.0327 havebeen applied in this announcement. APPENDIX-------- Translation of Today's Spanish Announcement IMPERIAL TOBACCO OVERSEAS HOLDINGS (3) LIMITED RELEVANT FACT COMMUNICATION Imperial Tobacco Overseas Holdings (3) Limited (the Offeror), a wholly-ownedindirectly held subsidiary of Imperial Tobacco Group PLC, in compliance with theprovisions of article 82 of the Spanish Stock Exchange Act (Ley 24/1988, de 29de julio, del Mercado de Valores), hereby communicates to the Spanish StockExchange Commission (CNMV) the following RELEVANT FACT Today, 18 July 2007, the Offeror has filed with the CNMV a takeover bid (theOffer) for 100% of the share capital of Altadis, S.A. (Altadis, the Company orthe Affected Company), that will become effective upon its approval by the CNMV. The Offer is addressed to all the shareholders of Altadis and is extended to allthe issued share capital of Altadis, that is 252,436,856 ordinary shares of€0.10 each, being 100% of the share capital of Altadis. These ordinary sharesare represented by book entries and are listed on the Stock Exchanges of Madrid,Barcelona, Bilbao, Valencia and Paris, and negotiated through the SIBE. The consideration offered amounts to 50 euros per Altadis share, that will bepaid entirely in cash. The payment of the total consideration offered has been guaranteed by means ofavales granted by Banco Santander Central Hispano S.A., Barclays Bank PLC,Sucursal en Espana, Citibank International plc, Lehman Brothers Bankhaus A.G.,The Royal Bank of Scotland plc, ABN AMRO Bank N.V. Sucursal en Espana and MorganStanley Bank International Limited. The Offer is conditional upon: 1. The acquisition of at least 201,949,484 shares of Altadis, representing 80per cent. of Altadis' share capital; 2. The general shareholders' meeting of Altadis resolving to amend Article 24 ofAltadis' bye-laws to remove the limitation on the number of votes that Altadisshareholders can cast at a general shareholders' meeting before the end of theacceptance period, and Altadis registering the amendment to the bye-laws withthe Madrid Mercantile Registry within said term; and 3. In order to comply with the regulatory requirements applicable to ImperialTobacco Group PLC, the prior approval of the Offer by the general shareholdersmeeting of Imperial Tobacco Group PLC. The said general shareholders meeting of Imperial Tobacco Group PLC will takeplace on 13 August 2007. Altadis has confirmed to Imperial Tobacco Group plc that it considers that theOffer is attractive and that, in the absence of a competing offer at a higherprice being filed with the CNMV, the board of Altadis will recommend the Offerto Altadis' shareholders and the directors of Altadis intend to accept the Offerin respect of their own beneficial shareholdings. The Offeror is a member of the group headed by Imperial Tobacco Group PLC. For the relevant purposes, it is communicated in Madrid on 18 July 2007. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Imperial Brands