GBP 690 M DEAL - RECOMMENDED CASH OFFER for Premier Farnell plc ("Premier Farnell") by Avnet, Inc. ("Avnet")

FOR IMMEDIATE RELEASE

28 July 2016

RECOMMENDED CASH OFFER

for

Premier Farnell plc ("Premier Farnell")

by

Avnet, Inc. ("Avnet")

or a wholly owned subsidiary of Avnet

to be effected by means of a scheme of arrangement under
Part 26 of the Companies Act 2006

Summary

·    The Boards of Avnet and Premier Farnell are pleased to announce that they have reached agreement on the terms of a recommended offer for the entire issued and to be issued share capital of Premier Farnell by Avnet or a wholly owned subsidiary of Avnet.

·    Under the terms of the Transaction, each Premier Farnell Shareholder will be entitled to receive:

for each Premier Farnell Share:      185 pence in cash (the "Cash Consideration").

·    The Transaction values the entire issued and to be issued share capital of Premier Farnell at approximately £691 million and represents a premium of approximately:

·    12.1 per cent. to the Datwyler offer of 165 pence per Premier Farnell Share, announced on 14 June; and

·    69.3 per cent. to the Closing Price of 109.25 pence per Premier Farnell Share on 13 June 2016, being the last Business Day before the date upon which Datwyler announced a firm intention to make its offer.

·    The Cash Consideration implies an enterprise value¹ of £868 million.

·    Avnet believes the combination of Avnet and Premier Farnell represents a strong strategic fit and is highly attractive. Both companies share very similar strategic values and are highly complementary in terms of product range, distribution channels and geographic footprint.

·    Due to the changing preferences of Avnet's design engineering customers to do technical research online, and increased pressure on distributors as upstream consolidation of component suppliers accelerates, Avnet believes having deep digital technical content and ability to service customers earlier in the design process will be increasingly important.  A combination with Premier Farnell would dramatically accelerate Avnet's digital capabilities, affording it pure play offerings in both the broad-line and high value space.   Avnet also believes there are significant synergies between its business and that of Premier Farnell that can accelerate the growth of the Combined Group.

·    The Transaction would create a leading high-service global electronic components distributor and the combined platform will enable the Combined Group to realise additional economies of scale.

·    The enhanced offerings brought about by a combination of the two businesses is expected to generate revenue synergies from cross-selling and line-fill effects, as well as utilizing the strength of the Combined Group's procurement position.

·    The Transaction is expected to be EPS accretive immediately from completion, even before considering further positive effects from any synergies realised. In addition, the Combined Group is expected to have a conservative capital structure.

·    The Premier Farnell Directors, who have been so advised by Lazard, consider the financial terms of the Transaction to be fair and reasonable. In providing its advice, Lazard has taken into account the commercial assessments of the Premier Farnell Directors.

·    Accordingly, the Premier Farnell Directors intend to recommend unanimously that Premier Farnell Shareholders vote in favour of the resolutions relating to the Transaction at the Meetings (or, if the Transaction is implemented as an Offer, to accept such Offer).

·    In light of the Premier Farnell Directors' intention to recommend the Transaction, Premier Farnell has today announced that it has withdrawn its recommendation of the Datwyler Offer and that it proposes to adjourn the Premier Farnell shareholder meetings convened for 29 July 2016 to consider the Datwyler Offer.

·    Avnet has received an undertaking to vote in favour of the Resolutions (or, if the Transaction is implemented as an Offer, to accept such Offer) from M&G in respect of 30,313,769 Premier Farnell Shares, representing approximately 8.2 per cent. of the share capital of Premier Farnell in issue as at close of business on 27 July 2016 (being the last Business Day before the date of this Announcement).  The terms of these undertakings are summarised in paragraph 12 and Appendix 2 of this Announcement.

·    Avnet has received further undertakings from persons who have entered into contracts for difference in relation to Premier Farnell Shares to direct, to the extent the provider of the undertaking is able under the relevant contracts for difference, that the underlying holder of the Premier Farnell Shares either votes in favour of the Resolutions (or, if the Transaction is implemented as an Offer, to accept such Offer) or closes out the contracts for difference to enable the provider of the undertaking so to vote. These further undertakings have been received from P. Schoenfeld Asset Management, Pine River and Sand Grove in respect of, in aggregate, 25,575,000 Premier Farnell Shares, representing approximately 6.9 per cent. of the share capital of Premier Farnell in issue as at close of business on 27 July 2016 (being the last Business Day before the date of this Announcement).  The terms of these undertakings are summarised in paragraph 12 and Appendix 2 of this Announcement.

·    Therefore, in aggregate, Avnet has received undertakings representing 15.0 per cent. of the share capital of Premier Farnell in issue as at the close of business on 27 July 2016.

·    It is currently intended that the Transaction will be effected by means of a court-sanctioned scheme of arrangement under Part 26 of the Companies Act 2006.

·    The Transaction is subject to the satisfaction or waiver of the Conditions, and to the further terms that are set out in Appendix 1 to this Announcement and will be set out in the Scheme Document. The Conditions include the approval of the Scheme by Premier Farnell Shareholders and the Court, the receipt of anti-trust consents in the EU, Israel and the US and other customary conditions.

·    The Scheme Document, which will contain further information about the Transaction, including the Scheme, is expected to be published as soon as practicable and, in any event, within 28 days of the date of this Announcement (unless Avnet andPremier Farnell otherwise agree, and the Panel consents, to a later date). The Scheme Document will also contain notices of the Court Meeting and the Premier Farnell General Meeting and the expected timetable of the Transaction, and will specify the action to be taken by Scheme Shareholders.

·    Commenting on today's Announcement, Bill Amelio, Avnet's interim chief executive officer commented "This acquisition will significantly strengthen Avnet's digital footprint worldwide. The convergence of Premier Farnell's innovative online services with Avnet's world class supply chain will create customer service unparalleled in the industry. The talented team of people at Premier Farnell will allow Avnet to enhance our customer experience and accelerate our global growth."

·    Gerry Fay, president of Avnet Electronics Marketing, worldwide, added "Premier Farnell will bolster our strategy to provide a differentiated digital experience from product ideation through its lifecycle. Premier Farnell's customers gain access to an extensive suite of supply chain services allowing them to ramp new products to production volumes. Our customers will be able to do more technical research online through the services provided by Premier Farnell.  In addition to deepening our customer base, this acquisition will enhance our go-to-market strategy as we target the industrial Internet of Things with edge-to-enterprise products and solutions."

·    Commenting on today's Announcement, Valerie Gooding, the Chairman of Premier Farnell said "The Board of Premier Farnell is pleased to recommend Avnet's cash offer for the Group which is at a 12.1% premium to the Datwyler proposal and provides our shareholders with significant value in cash for their shares. The combination of Premier Farnell and Avnet would create a leading high-service global electronic components distributor and represents a strong strategic fit.  Both companies are highly complementary in terms of product range, distribution channels and geographic footprint."

¹     Based on Premier Farnell’s total net debt of £243.3 million, net cash proceeds arising from the sale of Akron Brass Holding Corp of £124.8 million and a pension deficit of £58.2 million as set out in Premier Farnell’s most recent consolidated audited balance sheet dated 31 January 2016 and Premier Farnell’s Class 1 circular pursuant to the sale of Akron Brass Holding Corp dated 29 February 2016.

This summary should be read in conjunction with, and is subject to, the full text of this Announcement (including the Appendices). The Transaction will be subject to the Conditions and further terms set out in Appendix 1 and to the full terms and conditions which will be set out in the Scheme Document. Appendix 2 contains a summary of the irrevocable undertakings received in relation to the Transaction. Appendix 3 to this Announcement contains the sources of information and bases of calculation of certain information contained in this Announcement and Appendix 4 contains definitions of certain terms used in this Announcement.

A copy of this Announcement is available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, for inspection on Avnet's website at www.ir.avnet.com and Premier Farnell's website at www.premierfarnell.com.

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on Monday, 01 August 2016. Posted in Event Driven News