GBP 1.4 BN DEAL - VINE ACQUISITIONS LIMITED ANNOUNCES RECOMMENDED FINAL CASH OFFER FOR PUNCH TAVERNS PLC AND ASSOCIATED DISPOSAL OF THE PUNCH A GROUP
VINE ACQUISITIONS LIMITED ANNOUNCES
RECOMMENDED FINAL CASH OFFER FOR PUNCH TAVERNS PLC
AND ASSOCIATED DISPOSAL OF THE PUNCH A GROUP
Summary
· The boards of Vine Acquisitions Limited ("Bidco"), a newly incorporated company formed at the direction of Patron Fund V, and Punch Taverns plc ("Punch"), are pleased to announce that they have agreed the terms of a recommended final cash offer (the "Offer") to be made by Bidco for the entire issued and to be issued ordinary share capital of Punch, and the associated disposal (the "Disposal") of the Punch A Group to Heineken UK Limited ("Heineken") (the Offer and the Disposal together comprising the "Transaction").
· The Offer has received the support of Punch's top three shareholders (Glenview Capital, Avenue Capital and Warwick Capital Partners) and of the Punch Directors, representing in aggregate 52.3 per cent. of the existing issued ordinary share capital of Punch. The aforementioned shareholders and the Punch Directors who hold or are beneficially entitled to Punch Shares have each executed irrevocable undertakings as further described in paragraph 14 and Appendix 3.
· Under the Offer, each Punch Shareholder shall be entitled to receive:
|
For each Punch Share held |
180 pence in cash |
· The Offer represents a premium of approximately:
· 40.1 per cent. to the Closing Price of 128.5 pence per Punch Share on 13 December 2016 (being the last Business Day prior to the start of the Offer Period);
· 100.6 per cent. to the Closing Price of 89.8 pence per Punch Share on 7 July 2016 (being the last Business Day prior to the first joint offer letter submitted by Patron Capital and Heineken N.V. to the Punch Board); and
· 74.6 per cent. to the volume weighted average Closing Price of 103.1 pence per Punch Share for the six months ended 13 December 2016 (being the last Business Day prior to the start of the Offer Period).
· The Offer values the entire issued and to be issued ordinary share capital of Punch at approximately £402.7 million.
· In addition, including Punch's total net leverage as at 20 August 2016 of £1,372.9 million (including swap value of £169.7 million), the Offer implies an enterprise value of £1,775.6 million and represents a multiple of approximately 10 times Punch's EBITDA for the 52 weeks ended 20 August 2016.
· The Offer is final and will not be increased, except that Bidco reserves the right to increase the Offer Consideration if there is, on or after the date of this announcement, (i) an announcement of a firm intention to make an offer for Punch by a third party offeror; (ii) an announcement of a possible offer for Punch by a third party potential offeror (other than Emerald Investment Partners Limited ("Emerald")); or (iii) an announcement by Punch identifying a third party potential offeror for Punch (other than Emerald).
· It is currently envisaged that the Offer will be effected by way of a court‑sanctioned scheme of arrangement of Punch under Part 26 of the 2006 Act.
· In connection with the Transaction, Bidco has entered into the SPA with Heineken pursuant to which Bidco will, subject only to the Scheme becoming Effective, procure:
· the sale of the Punch A Group (including Punch A and all entities currently held, directly or indirectly, by Punch A) and certain pubs to Heineken; and
· the refinancing, assignment, transfer or otherwise of the rights and benefits of the Punch Intercompany Loans to Heineken,
for an aggregate consideration of £305,030,201 in cash (the "Disposal Proceeds"), subject to any post-completion adjustment. The existing external debt of the Punch A Group will remain in place.
· Bidco will fund part of the aggregate Offer Consideration using the Disposal Proceeds.
· The Offer will be conditional, among other things, on: (i) approval by the requisite majorities of Punch Shareholders at the Meetings; and (ii) the requisite European Commission and/or CMA antitrust clearances being obtained in order to effect the Disposal.
· The Punch Directors, who have been so advised by Goldman Sachs International as to the financial terms of the Offer, consider the terms of the Offer to be fair and reasonable. In providing advice to the Punch Directors, Goldman Sachs International has taken into account the commercial assessments of the Punch Directors.
· The Punch Directors intend unanimously to recommend that Punch Shareholders vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the Punch General Meeting (or, if Bidco, subject to the consent of the Panel and the terms of the Co-operation Agreement, exercises its right to implement the Offer by way of a takeover offer, to accept, or procure acceptances of, such takeover offer). The Punch Directors who hold or are beneficially entitled to Punch Shares have irrevocably undertaken to vote, or procure to be voted, in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the Punch General Meeting, in respect of their own beneficial holdings of Punch Shares (excluding any Punch Shares held on their behalf by the trustee of the Punch Share Bonus Plan) amounting to, in aggregate, 89,637 Punch Shares, representing approximately 0.04 per cent. of the existing issued ordinary share capital of Punch in issue on 14 December 2016 (being the last Business Day prior to the date of the publication of this announcement).
· Bidco and Heineken have also received irrevocable undertakings from Glenview Capital, Avenue Capital and Warwick Capital Partners to vote, or procure votes, in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the Punch General Meeting (or, if Bidco, subject to the consent of the Panel and the terms of the Co-operation Agreement, exercises its right to implement the Offer by way of a takeover offer, to accept, or procure acceptances of, such takeover offer) in respect of, in aggregate, 116,094,847 Punch Shares, representing approximately 52.3 per cent. of the existing issued ordinary share capital of Punch.
· The Offer will be put to Punch Shareholders at the Court Meeting and the Punch General Meeting. To become Effective, the Scheme requires, among other things, the approval of a majority in number representing not less than 75 per cent. in value of the relevant Punch Shareholders present and voting in person or by proxy at the Court Meeting, which is convened by order of the Court, and the passing of the resolutions necessary to implement the Offer at the Punch General Meeting. The Scheme must also be sanctioned by the Court.
· The Offer will be on the terms and subject to the Conditions set out in Appendix 1 to this announcement. Full details of the Transaction will be set out in the Scheme Document. It is expected that the Scheme Document and the forms of proxy accompanying the Scheme Document will be published in January 2017 and Meetings will be held in the first quarter of 2017, and that the Scheme will become Effective in the first half of 2017 subject to the satisfaction or waiver of the Conditions and certain further terms set out in Appendix 1 to this announcement.
Stephen Green, Senior Partner of Patron Capital, said: "Our offer creates an exciting opportunity for Punch as a more focused business. Under private ownership, with strong financial backing, and a commitment to continued investment, pubs and publicans will have our full support to deal with changing market dynamics and provide their customers with the best possible offer. These are high quality pubs with excellent future potential."
Stefan Orlowski, Regional President Europe for Heineken N.V., said: "This transaction is a significant step forward in our strategy to unlock value in the UK pub market. The performance of our Star Pubs & Bars business clearly shows that well invested pubs, in the hands of skilled and ambitious independent operators can outperform. Leveraging our extensive experience will enable us to realise increased potential from the pubs we are acquiring and deliver positive returns to our shareholders."
David Forde, Managing Director of Heineken UK, added: "Today's announcement is a huge vote of confidence in the Great British Pub. Our proven track record of success demonstrates that well invested and well run pubs in the leased and tenanted sector can thrive. Today's development is good news for pub-goers across the UK who will see the benefit of better pubs in their communities. We look forward to welcoming new licensees in to Star Pubs & Bars, and to working with them to grow their businesses."
Stephen Billingham, Chairman of Punch, said: "The Punch Board and management team have positioned Punch to drive long term value for shareholders and our recent performance has demonstrated the successful execution of this strategy reflecting the hard work and quality of the whole Punch team. While the Board did not solicit this offer for the company, we believe this is a good outcome for shareholders as the offer provides cash certainty at a significant premium."
This summary should be read in conjunction with the following announcement and the Appendices. The Offer will be on the terms and subject to the Conditions set out inAppendix 1. Full details of the Transaction will be set out in the Scheme Document. The bases and sources for certain financial information contained in this announcement are set out in Appendix 2. Details of the irrevocable undertakings received by Bidco and Heineken are set out in Appendix 3. Certain definitions and terms used in this announcement are set out in Appendix 4.