1st Feb 2006 07:08
UNITED UTILITIES ANNOUNCES THE SALE OF YOUR COMMUNICATIONS TO THUS United Utilities has reached agreement on the terms of a proposal to sell YourCommunications, its telecommunications business, to THUS Group plc (THUS).United Utilities will receive 391,532,852 new ordinary shares in THUS, asinitial consideration for the sale of Your Communications and a possible futurefurther allotment of ordinary shares, contingent on the share price performanceof the enlarged group. Taking into account the tax consequences of the disposaland following the adjustment to the carrying value of Your Communications madein the interim results announced on 1 December 2005, the sale is expected toresult in a broadly neutral impact on United Utilities' income statement.On completion, United Utilities will hold approximately 22.5 per cent of theordinary issued share capital of THUS (21.7 per cent following THUS' placing tofund the acquisition of Legend Communications PLC). Additionally, there will bea possible future further allotment of ordinary shares, of up to 120,010,069shares, such that United Utilities will hold a maximum of 27.5 per cent of theenlarged group's issued share capital (26.5 per cent following the placing).This further allotment will be dependent upon whether the enlarged group'sshare price reaches between 19 and 27 pence at any time on or before 31December 2007.United Utilities has agreed to hold the new ordinary shares issued to it for aperiod of 12 months from completion of the deal. Simon Batey, Group FinanceDirector of United Utilities, will be appointed as a non-executive Director ofthe Board of the enlarged group, subject to United Utilities' shareholding inTHUS not falling below 20 per cent.The intention is to complete the sale by the end of February 2006 and isconditional, among other things, on the approval from THUS shareholders.United Utilities has maintained for some time that Your Communications is notcore to its strategy and that its interests would best be served byparticipation in the consolidation process in its industry. This transactionserves to achieve that objective.The sale will accelerate THUS' existing business plan to create a leadingnationwide alternative carrier for business customers. The enlarged group willbenefit from an expanded customer base and product offering, which shouldenable it to open up new growth opportunities by presenting an extended productrange to customers of both companies.As a measure of United Utilities' confidence in the combined business, THUS hastoday been appointed the preferred supplier of telecoms services to UnitedUtilities and has formed a strategic partnership with its business processoutsourcing services subsidiary Vertex.Philip Rogerson, Chairman of THUS, said:"The acquisition of Your Communications will add scale to our business, bringnew customers and create significant operational synergies. The acquisition ispart of a trend towards consolidation in our industry that, we believe, offersthe potential to create a more sustainable industry structure and improvereturns. The trend towards consolidation coincides with a decline in demand fortraditional telecommunication services and an increase in demand for moreinnovative, next-generation services. Ahead of our peers, THUS already has anext-generation network and service capability in place allowing the EnlargedGroup to move forward and build its position in the market with confidence. Welook forward to welcoming our new customers."Chief Executive of United Utilities, John Roberts, said:"We believe that this transaction represents an attractive opportunity for YourCommunications to participate in the ongoing consolidation process taking placein the UK fixed line telecommunications industry. I believe that thistransaction achieves that objective.This deal will provide the enlarged group with greater scale and marketpresence and creates a strong platform for future growth which will be mutuallybeneficial to both parties."United Utilities' Contacts:For further information please contact:John Roberts, Chief Executive +44 (0) 1925 237000 Simon Batey, Finance Director +44 (0) 1925 237000 Darren Jameson, Investor Relations Manager +44 (0) 1925 237033 Evelyn Brodie, Head of Corporate and Financial +44 (0) 20 7307 0309 Communications Ernst & Young, Financial Adviser to United Utilities Robin Jowitt +44 (0) 20 7951 2000 Justin Prichard +44 (0) 20 7951 2000 NotesYour Communications was acquired by United Utilities in 1995 through the mergerof North West Water and Norweb (its then parent). In 2000, Intercell, a mobilereselling business, was acquired which provided mobile capability. The telecomsbusiness was renamed Your Communications in April 2001. Its customer base wassignificantly extended when Eurocall was acquired in 2004. Your Communicationsoperates from five geographical locations in Manchester, Bolton, Birmingham,Sheffield and London. It owns and operates a 4,200km national network, with thegreatest fibre density in the North West, and is managed through three businessdivisions: business communications, wholesale and mobile.THUS Group plc was founded in 1994 as Scottish Telecom, a subsidiary company ofScottishPower. Following the purchase of Demon Internet in 1998 and asubsequent strategic review of the business, Scottish Telecom was rebranded asThus plc in October 1999, and refocused as a national provider oftelecommunication services to businesses. After an initial listing of Thus plcshares on the London Stock Exchange in November 1999, Thus plc was fullydemerged from ScottishPower in March 2002 to create THUS Group plc. Thebusiness has a comprehensive product portfolio which covers four key areas:voice, data, Internet and hosting.United Utilities' ordinary trade on the London Stock Exchange and its ADRs,each equal to two ordinary shares, trade on the New York Stock Exchange underthe Trading Symbol "UU".ENDUNITED UTILITIES PLCRelated Shares:
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