GBP 700 MILL DEAL - Recommended cash offer for Quintain
29 JULY 2015
RECOMMENDED CASH OFFER
for
QUINTAIN ESTATES AND DEVELOPMENT PLC
by
BAILEY ACQUISITIONS LIMITED
Summary
· The boards of directors of Bailey Acquisitions Limited (Bidco) and Quintain Estates and Development PLC (Quintain) are pleased to announce that they have reached agreement on the terms of a recommended cash offer for Quintain by Bidco, an investment vehicle indirectly controlled by Lone Star Real Estate Fund IV, pursuant to which Bidco will acquire the entire issued and to be issued share capital of Quintain (the Offer).
· Under the terms of the Offer, Quintain Shareholders will receive 131 pence in cash for each Quintain Share, which values the entire issued, and to be issued, share capital of Quintain on a fully diluted basis at approximately £700 million.
· The Offer provides an attractive opportunity for Quintain Shareholders to realise, in cash at a premium, their investment in Quintain. The Offer represents a premium of approximately:
- 22.4 per cent. to the Closing Price of 107 pence per Quintain Share on 28 July 2015, being the last Business Day before the date of this announcement;
- 29.9 per cent. to the volume weighted average price of 101 pence per Quintain Share over the six month period to 28 July 2015, being the last Business Day before the date of this announcement; and
- 7.4 per cent. to Quintain's EPRA NAV as at 31 March 2015 of 122 pence per Quintain Share.
· The Quintain Directors, who have been so advised by J.P. Morgan Cazenove and Lazard, consider the financial terms of the Offer to be fair and reasonable. In providing advice to the Quintain Directors, J.P. Morgan Cazenove and Lazard have taken into account the commercial assessments of the Quintain Directors. J.P. Morgan Cazenove is providing independent financial advice to the Quintain Directors for the purposes of Rule 3 of the Code.
· Accordingly, the Quintain Directors intend unanimously to recommend that the Quintain Shareholders accept the Offer.
· Bidco has received irrevocable undertakings to accept (or procure acceptance of) the Offer from each of the Quintain Directors that holds Quintain Shares in respect of his or her own beneficial holdings totalling 1,564,613 Quintain Shares (representing approximately 0.3 per cent. of the issued share capital of Quintain as at close of business on 28 July 2015 (being the latest Business Day before the date of this announcement)).
· Bidco is an investment vehicle indirectly controlled by Lone Star Real Estate Fund IV. Lone Star Real Estate Fund IV is a real estate fund sponsored by the principals of Lone Star Funds (Lone Star). Lone Star is a leading private equity firm that invests globally in real estate, equity, credit and other financial assets. Lone Star has considerable experience of investing in, and acquiring, urban residential developments both in Europe and the United States. Lone Star was established in 1995, and has since organised fifteen private equity funds (the LS Funds) with aggregate capital commitments totalling approximately $60 billion. The LS Funds are structured as closed-end, private-equity limited partnerships, the limited partners of which include corporate and public pension funds, sovereign wealth funds, university endowments, foundations, funds of funds and high net worth individuals. Lone Star Real Estate Fund IV is the current commercial real estate fund sponsored by the principals of Lone Star. Lone Star Real Estate Fund IV held their first and final closings in April 2015 and raised approximately $5.8 billion in combined capital commitments.
· Bidco intends to finance the Offer through a mixture of funding provided by Lone Star Real Estate Fund IV and debt funding from third party providers of debt finance.
· Bidco reserves the right, subject to the consent of the Panel, to effect the Proposed Transaction by way of a Court-sanctioned scheme of arrangement under Part 26 of the UK Companies Act.
· The Offer Document will include full details of the Offer and will specify the actions to be taken by Quintain Shareholders. It is expected that the Offer Document will be posted to Quintain Shareholders as soon as practicable.
· Commenting on the Offer, Angus Dodd, of Lone Star Europe Acquisitions LLP (an advisor to Lone Star Real Estate Fund IV), said:
"The proposed acquisition represents a unique opportunity for Lone Star to gain further exposure to residential and commercial assets in London. Wembley Park is one of the largest and most exciting urban renewal projects in Europe and complements our experience in this segment of the market. We intend to contribute significant additional financial resources to help Quintain in its next phase of growth: to accelerate delivery at Wembley Park, building more homes more quickly and continuing the creation of a cohesive and exciting new community. We very much look forward to working with the Quintain team on Wembley and the rest of the portfolio."
· Commenting on the Offer, William Rucker, Chairman of Quintain, said:
"The offer by Bidco delivers an attractive opportunity to unlock future value from the Wembley Park development at an early stage through the certainty of a cash offer priced at a premium to net asset value and the current share price. Bidco's offer enables our shareholders to accelerate and de-risk the realisation of value and recognises the transformation of Quintain over the last six years."
· Commenting on the Offer, Maxwell James, Chief Executive of Quintain, said:
"Since 2012, Quintain has undergone a major transformation which has seen the business dispose of non-core assets, progressively rebalance the business to focus on London and materially de-gear the balance sheet, creating a strong platform for growth. The Offer from Bidco crystallises value for shareholders at an early stage whilst enabling Quintain's vision for Wembley Park to be accelerated through the addition of significant financial resources, creating more mainstream homes in the Capital more quickly than would otherwise be possible."
· J.P. Morgan Cazenove and Lazard are acting as financial advisers to Quintain in relation to the Offer. J.P. Morgan Cazenove is acting as the independent financial adviser to Quintain for the purposes of Rule 3 of the Code and as corporate broker to Quintain in relation to the Offer. Barclays is acting as corporate broker to Quintain in relation to the Offer.
· Morgan Stanley is acting as exclusive financial adviser to Bidco in respect of the Offer.
This summary should be read in conjunction with, and is subject to, the full text of this announcement (including the Appendices). The Offer will be subject to the Conditions and further terms set out in Appendix 1 to this announcement and to the full terms and conditions which will be set out in the Offer Document. Appendix 2 contains the bases and sources of certain information used in this summary and this announcement. Appendix 3 contains details of the irrevocable undertakings received by Bidco in relation to the Offer that are referred to in this announcement. Appendix 4 contains definitions of certain terms used in this summary and this announcement.