EUR 570 M DEAL - MOTHERSON SUMI SYSTEMS LIMITED LAUNCHES A VOLUNTARY RECOMMENDED PUBLIC TENDER OFFER FOR ALL SHARES AND STOCK OPTIONS IN PKC GROUP PLC
MOTHERSON SUMI SYSTEMS LIMITED LAUNCHES A VOLUNTARY RECOMMENDED PUBLIC TENDER OFFER FOR ALL SHARES AND STOCK OPTIONS IN PKC GROUP PLC
Nasdaq Helsinki Ltd
Announcement from the exchange
MOTHERSON SUMI SYSTEMS LIMITED LAUNCHES A VOLUNTARY RECOMMENDED PUBLIC TENDER
OFFER FOR ALL SHARES AND STOCK OPTIONS IN PKC GROUP PLC
THIS RELEASE MAY NOT BE RELEASED, PUBLISHED OR OTHERWISE DISTRIBUTED, IN WHOLE
OR IN PART, IN OR INTO, DIRECTLY OR INDIRECTLY, THE UNITED STATES, CANADA,
JAPAN, AUSTRALIA, SOUTH AFRICA OR HONG KONG OR IN ANY OTHER JURISDICTION IN
WHICH THE TENDER OFFER WOULD BE PROHIBITED BY APPLICABLE LAW.
MOTHERSON SUMI SYSTEMS LIMITED LAUNCHES A VOLUNTARY RECOMMENDED PUBLIC TENDER
OFFER FOR ALL SHARES AND STOCK OPTIONS IN PKC GROUP PLC
Motherson Sumi Systems Limited (“MSSL”) and PKC Group Plc (“PKC”) have on
January 19, 2017 entered into a combination agreement under which they agree to
combine the wiring harness businesses of MSSL and PKC (the “Combination
Agreement”). In order to effect the combination MSSL will, through a directly
or indirectly wholly-owned subsidiary (the “Offeror”), make a voluntary
recommended public tender offer to purchase all the issued and outstanding
shares and stock options in PKC that are not owned by PKC or any of its
subsidiaries (the “Tender Offer”). In the Tender Offer, PKC shareholders are
being offered a cash consideration of EUR 23.55 for each share in PKC and
holders of stock options are being offered a cash consideration of EUR 23.55
minus the applicable subscription price for each outstanding stock option in
PKC representing an aggregate equity purchase price of approximately EUR 571
million. Combining the two companies will create a leading supplier of wiring
systems and components for the worldwide transportation industry.
Summary of the Tender Offer
-- The offer price is EUR 23.55 in cash for each share in PKC (the “Share
Offer Price”);
-- The Share Offer Price represents a premium of:
-- 51.1 percent to the closing price of PKC share on Nasdaq Helsinki Ltd
(“Nasdaq Helsinki”) on January 19, 2017, i.e. the last day of trading
before the announcement of the Tender Offer; and
-- 53.1 percent to the three month volume-weighted average price on Nasdaq
Helsinki up to and including January 19, 2017;
-- The offer price is EUR 6.90 in cash for each outstanding 2012B stock option
and EUR 0.27 in cash for each outstanding 2012C stock option;
-- The Board of Directors of PKC has unanimously decided to recommend the
shareholders and the holders of the stock options to accept the Tender
Offer;
-- The Tender Offer is subject to approvals by the relevant regulatory
authorities, such as competition authorities, and the Offeror gaining
control of more than 90 percent of the PKC shares and outstanding stock
options, in the aggregate;
-- The Offeror will, on or about February 6, 2017, publish a tender offer
document with detailed information on the Tender Offer;
-- The offer period under the Tender Offer is expected to commence on or about
February 6, 2017 and to run until March 21, 2017. The Offeror reserves the
right to extend the offer period from time to time in accordance with the
terms and conditions of the Tender Offer.
“MSSL's offer is an attractive premium to the share price of PKC and reflects
the strategic value of the business. The combination with MSSL will also
strengthen further the competitive position of PKC through greater scale and
breadth of capability to service its customers while providing management and
employees with enhanced opportunities across the larger combined group. As
such, the Board of PKC is unanimously recommending PKC shareholders vote in
favor of the transaction”, says Mr. Matti Ruotsala, Chairman of the board of
directors of PKC.
“Wiring harnesses are ever more important to the products of our customers and
hold a special place within our hearts at MSSL, because it is our company's
genesis”, said Vivek Chaand Sehgal, MSSL’s Chairman. “The prospect of two
global teams coming together and the synergies that will be brought about, is
very exciting to us. It will allow us to create huge value for our customers
and to service our customers in additional locations in the world”, says Mr.
Vivek Chaand Sehgal, MSSL’s Chairman.
Background and strategic rationale
MSSL is a leading specialized automotive component solutions provider for all
major global auto manufacturers. At present, MSSL has a global manufacturing
base with over 145 plants spread across 26 countries. MSSL is one of the
established manufacturers of wiring harnesses, rear-view mirrors, IP modules,
door trims and bumpers for automotive manufacturers.
PKC is a global partner in the designing, manufacturing and integrating of
electrical distribution systems, electronics and related architecture
components for the commercial vehicle industry, rolling stock manufacturers and
other selected segments. PKC has a market leading presence in the wiring
harness for commercial vehicles in the North America and Europe markets. Apart
from these geographies, PKC has a significant presence in Brazil and, through
two joint venture companies, a growing presence in China. PKC has identified
growth opportunities from both geographical expansion into the Asia Pacific
commercial vehicle market as well as expansion into the rolling stock,
agriculture and construction equipment markets.
MSSL believes it can help PKC in achieving its expansion opportunities given
MSSL’s strong market position in the Asia Pacific region. Based on the analysis
of MSSL, all of the leading global commercial vehicle manufacturers and
component suppliers are increasingly focused on establishing a presence and
gaining market share in the Asian transportation market, a direction that PKC
is also pursuing. Leveraging this opportunity and the capabilities of the
combined company are expected to accelerate growth and profitability
improvement of the combination.
While supporting PKC to accomplish its expansion opportunities, the combination
between PKC and MSSL also supports MSSL in achieving its goal as a preferred
solutions provider for the transportation industry globally. The combination is
expected to be highly synergistic as there is minimal overlap between their
existing operations in terms of both geographical presence and product segment.
There are also inherent advantages with customers and suppliers in offering a
larger product portfolio as well as enhanced capabilities and scale.
“Wiring harnesses are an integral part of our work at MSSL and we are
continuously investing and extending our geographical presence, to be a
globally preferred solutions provider to our customers”, says Pankaj Mital. “We
are very excited by PKC’s unique ability to manage complexity, its customer
focus and product portfolio in the commercial vehicle and rolling stock
segments that is very complementary to that of MSSL. We believe we can together
create tremendous growth opportunities and that we can strengthen the value
proposition to our combined customer base around the world”, says Pankaj Mital,
COO at MSSL.
“The combination of PKC's market leadership and unique expertise in managing
complexity with MSSL's greater scale, global reach and breadth of capability is
highly complementary. Together we will be stronger and well placed to serve our
customers and we look forward to working with our new colleagues. It is an
exciting development for our company and employees, offering us all new
opportunities to learn and become even better", says Mr. Matti Hyytiäinen,
President and CEO of PKC.
The Tender Offer will preserve the identity, the management structure, the
business operations and the assets of PKC.
The successful completion of the Tender Offer would create unique opportunities
for existing management and employees of PKC to offer a superior value
proposition to their customers, by combining synergies between the two
organisations.
Upon a successful completion of the Tender Offer, the business of PKC will
become a significant part of the wiring harness division of a larger listed
company, MSSL.
Tender Offer
For the purpose of the combination, MSSL and PKC have on January 19, 2017
entered into the Combination Agreement, according to which the Offeror will
make a public tender offer to purchase all issued and outstanding shares and
stock options in PKC. For a brief description of the Combination Agreement,
please see Appendix “Summary of the Combination Agreement” below.
Pursuant to the Combination Agreement, the Offeror is to acquire all issued and
outstanding shares amounting to 24,125,387 shares, and all issued and
outstanding stock options amounting to 457,300 stock options in PKC. Should
such number of shares be tendered in the Tender Offer that MSSL obtains more
than 90 percent of all shares and voting rights in PKC, the Offeror intends to
initiate mandatory redemption procedure for the remaining of the shares and
stock options and thereafter apply for delisting of the shares of PKC from
Nasdaq Helsinki.
On the date of the announcement of the Tender Offer, MSSL does not hold any
shares or voting rights in PKC.
The Offeror and PKC have undertaken to comply with the recommendation regarding
the procedures to be complied with in Finnish tender offers (the “Helsinki
Takeover Code”) issued by the Finnish Securities Market Association.
The Offeror reserves the right to buy shares of PKC before, during and/or after
the offer period in public trading on Nasdaq Helsinki or otherwise.
Recommendation by the Board of Directors of PKC
The Board of Directors of PKC has unanimously decided to recommend the
shareholders and the holders of the stock options to accept the Tender Offer
and considers that the terms and conditions of the Tender Offer are fair to the
shareholders and the holders of the stock options. The Board of Directors of
PKC has received a fairness opinion from its financial adviser BofA Merrill
Lynch that, subject to the assumptions and limitations set out therein, the
consideration to be offered to the shareholders in the Tender Offer is fair
from a financial point of view, to such holders. The Board of Directors will
issue its formal written statement on the Tender Offer in accordance with the
Finnish Securities Market Act after having received a copy of the tender offer
document approved by the Finnish Financial Supervisory Authority (the “FFSA”)
and in any event no later than the second (2nd) banking day after the
commencement of the offer period.
Merrill Lynch International (“BofA Merrill Lynch”), a subsidiary of Bank of
America Corporation, is acting exclusively for PKC in connection with the
Tender Offer and for no one else and will not be responsible to anyone other
than PKC for providing the protections afforded to its clients or for providing
advice in relation to the Tender Offer.
Conditions for the completion of the Tender Offer
The completion of the Tender Offer is conditional on, among other things, the
following conditions being met or the Offeror waiving the fulfilment thereof on
or by the date on which the Offeror announces the final outcome of the Tender
Offer:
1. the valid tender of outstanding shares representing, together with any
shares otherwise held or acquired by the Offeror, over ninety percent (90
percent) of PKC shares and outstanding stock options, in the aggregate;
1. PKC not having paid out any dividend or distributed any funds, and PKC not
having made any resolutions (other than as permitted by the Combination
Agreement), by the shareholders or the board of directors (by virtue of an
authorization), to distribute any dividend or funds of PKC;
1. the Offeror having obtained all permits, consents and approvals from all
applicable competition and other regulatory authorities as may be required
in connection with the transactions contemplated by the Combination
Agreement;
1. no law, regulation or regulatory decision having been issued or pending
preventing, postponing or materially challenging the consummation of the
Tender Offer by any court or public authority of competent jurisdiction;
1. the board of directors of PKC having issued a recommendation to the
shareholders of PKC and the holders of stock options to accept the Tender
Offer and such recommendation remaining in force and not having been
materially modified or amended, provided that the Offeror may not refer to
this condition if the board of directors of PKC has modified or amended the
recommendation due to a material breach of the Combination Agreement by the
Offeror;
1. no fact or circumstance having occurred after the date of the Combination
Agreement that has resulted in or constituted, or that can reasonably be
expected to result in or constitute, a Material Adverse Change (as defined
below);
1. no information made public by PKC or disclosed by PKC to the Offeror being
materially inaccurate, incomplete, or misleading, and PKC not having failed
to make public any information that should have been made public by it
under applicable laws and regulations; and
1. the Combination Agreement still being in force.
Offer period
The offer period for the Tender Offer is expected to commence on or about
February 6, 2017 and initially to expire on March 21, 2017.
The Offeror reserves the right to extend the offer period from time to time in
accordance with the terms and conditions of the Tender Offer.
The detailed terms and conditions of the Tender Offer as well as instructions
on how to accept the Tender Offer will be included in the tender offer
document, which the Offeror expects to publish on or about February 6, 2017.
Offer price
The offer price is EUR 23.55 in cash for each issued and outstanding share in
PKC. The Share Offer Price represents a premium of:
-- 51.1 percent to the closing price of PKC share on Nasdaq Helsinki on
January 19, 2017, i.e. the last day of trading before the announcement of
the Tender Offer; and
-- 53.1 percent to the three month volume-weighted average price on Nasdaq
Helsinki up to and including January 19, 2017.
The offer price is EUR 6.90 in cash for each 2012B stock option and EUR 0.27 in
cash for each 2012C stock option.
Financing
According to the Combination Agreement, the Offeror has sufficient financing
for the Tender Offer through cash and draw down facilities not being subject
to any availability or draw down conditions. Such financing will remain
available for the Offer Period, including any extension. The Offeror may,
however, at its discretion also use new facilities for financing the actual
settlement of the Tender Offer. The completion of the Tender Offer is not
conditional upon obtaining financing for the Tender Offer.
Authority approvals
MSSL will make all necessary filings to obtain regulatory approvals, including
from the relevant competition authorities, as soon as possible after this
announcement of the Tender Offer.
According to information currently available, it is not certain that all
necessary authority approvals can be obtained by the end of the initial offer
period. In case all necessary approvals have not been obtained by the end of
the initial offer period, the Offeror will extend the offer period in order to
receive the necessary approvals to be able to complete the Tender Offer. The
Offeror currently estimates that the competition clearances can be obtained
prior to the expiry of the initial offer period.
Advisers
MSSL has appointed Nordea Corporate & Investment Banking and Motilal Oswal
Investment Advisors as financial advisers and White & Case LLP as legal adviser
in connection with the Tender Offer.
Mr. Vivek Chaand Sehgal
Chairman, MSSL
Mr. Pankaj Mital,
COO, MSSL
Further information
M r. G. N. Gauba
CFO, MSSL
Telephone: +91-120-6679500
This email address is being protected from spambots. You need JavaScript enabled to view it.
News conference:
Time: January 20, 2017, at 10.00 EET.
Place: Hotel Kämp, Pohjoisesplanadi 29, 00100 Helsinki, Finland
The news conference will be webcasted live on
http://qsb.webcast.fi/c/customers/customers_2017_0120_pkc_group/#/webcast
The recorded webcast will be available at the same address after the event.
News conference material can be loaded at the same place after the conference.
MSSL in brief:
MSSL, the flagship company of the Samvardhana Motherson Group was established
in 1986 in joint partnership with Sumitomo Wiring Systems (Japan).
MSSL including its subsidiaries and JVs is one of the leading manufacturer of
automotive wiring harnesses and mirrors for passenger cars and a leading
supplier of plastic components and modules to the automotive industry.
Its broad product portfolio includes wiring harnesses, mirrors for passenger
car, injection moulded products, modules including dashboards, door trims,
bumpers, blow moulded components, liquid silicone rubber moulded components,
injection moulding tools, extruded rubber products, precision machined metal
components and waste recycling systems.
Over the years MSSL has successfully collaborated with global technology
leaders to further enhance its competency to create technologically sound
products in state-of-art facilities and infrastructure to ensure superior
efficiencies and total customer satisfaction.
http://www.motherson.com/
PKC in brief:
PKC established its first wiring harness factory in 1969, and is a trusted and
acknowledged partner in the global commercial vehicle industry. PKC designs,
manufactures and integrates tailored electrical distribution systems and
related architecture components, vehicle electronics, wires and cables
especially for trucks and buses, light and recreational vehicles, construction
equipment and agricultural and forestry equipment. In addition, PKC designs and
manufactures electrical cabinets, power packs and electrical distribution
systems for leading rolling stock manufacturers. PKC´s strengths, mass
customisation and the excellent skill to integrate into the customer´s
operating environment, provide a unique competitive advantage in the market.
Product design and effective supply chain management are carried out in close
cooperation with customers and in accordance with their requirements.
PKC has a market leading presence in the wiring harnesses for commercial
vehicles in the North America and Europe markets. Apart from these geographies,
PKC has a significant presence in Brazil and, a growing presence in China. PKC
had 21,764 employees as on December 31, 2015 and reported total revenue from
continuing operations of approximately €847.3 million for the 12 months ended
December 31, 2015.
http://www.pkcgroup.com/
on Tuesday, 24 January 2017.
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