SEK 4.4 BN DEAL - ZF announces a recommended public cash offer to the shareholders of Haldex
ZF Friedrichshafen AG: ZF announces a recommended public cash offer to the shareholders of Haldex
This press release is not and must not, directly or indirectly, be distributed or made public in or into Australia, Canada, Hong Kong, Japan, New Zealand or South Africa. The offer is not being made to, nor will any tender of shares be accepted from, holders in such jurisdictions or elsewhere where their participation requires further documentation, filings or other measures in addition to those required by Swedish law. This is a translation of the original Swedish language press release. In the event of a dispute, the original Swedish wording shall prevail.
4 August 2016 at 07:00 am CET
ZF Friedrichshafen AG (“ZF Friedrichshafen”, and together with its fully consolidated subsidiaries, “ZF Group”), through its wholly-owned subsidiary ZF International B.V. (“ZF”), announces a recommended public cash offer to the shareholders of Haldex Aktiebolag (publ) (“Haldex” and, together with its fully consolidated subsidiaries, “Haldex Group”) to tender all their shares to ZF (the “Offer”). The shares in Haldex are listed on Nasdaq Stockholm, Mid Cap (“Nasdaq Stockholm”).
Summary of the Offer:
· ZF offers SEK 100.00 in cash per share in
Haldex.[1] (http://undefined/#_ftn1) The total value of the Offer amounts to approximately SEK 4,411 million.
· The Offer exceeds the unsolicited offer announced by SAF-Holland GmbH on 14 July 2016 by SEK 5.58 per share.
· The Offer represents a premium of:
· 34.4 percent per share compared to the volume-weighted average price for the Haldex share on Nasdaq Stockholm during the three months prior to the announcement of SAF-Holland GmbH’s offer on 14 July 2016 (14.9 percent per share compared to the volume-weighted average price during the three months prior to 4 August 2016);
· 43.7 percent per share compared to the volume-weighted average price for the Haldex share on Nasdaq Stockholm during the six months prior to the announcement of SAF-Holland GmbH’s offer on 14 July 2016 (29.5 percent per share compared to the volume-weighted average price during the six months prior to 4 August 2016); and
· 17.3 percent per share compared to the closing price of SEK 85.25 for the Haldex share on Nasdaq Stockholm on 13 July 2016, which was the last trading day prior to the announcement of SAF-Holland GmbH’s offer (the Offer represents a 4.1 percent per share discount compared to the closing price (which, in ZF’s opinion has been affected by the offer announcement of SAF-Holland GmbH) of SEK 104.25 for the Haldex share on Nasdaq Stockholm on 3 August 2016, which was the last trading day prior to the announcement of the Offer).
· The Offer is higher than the research analyst target price range of SEK 80.00 to 92.00 for the Haldex share stated on FactSet on 13 July 2016.
· The Board of Directors of Haldex has unanimously decided to recommend to the shareholders of Haldex to accept the Offer.
ZF has obtained an undertaking to accept the Offer from Göran Carlson, the Chairman of the Board of Directors of Haldex, being the largest shareholder of Haldex, representing 2,506,356 shares corresponding to 5.7 percent of the total number of shares and votes in Haldex. More information on the undertaking is set out in section “Undertakings from shareholders” below.
An offer document detailing the Offer is expected to be distributed to the shareholders of Haldex on or around 22 August 2016 and the acceptance period is expected to commence on or around 22 August 2016 and end on or around 30 September 2016.
Dr. Stefan Sommer, CEO of ZF Group said:
“A business combination of Haldex and ZF represents an outstanding opportunity for both companies to jointly expand our value to the customer in the supply for commercial vehicles in the field of drivetrain, chassis including brake and air suspension solutions as well as for future megatrends in mobility. We are confident that we will be able to continue to develop Haldex’s market position under ZF ownership thanks to ZF’s technological leadership, global reach and customer access combined with Haldex’s technological competence, management skills and employees.”
Mr. Magnus Johansson, Board member and spokesperson of the Board of Haldex, said:
“ZF’s strong capabilities within electronics and software development as well as global reach and customer access offer an excellent opportunity to further develop Haldex, thereby allowing Haldex to continue its development of future braking systems and expansion of its current product portfolio.
The offer provides Haldex shareholders with an opportunity to realise value from their investment immediately at both high multiples and significant premium to recently traded prices of Haldex’s shares as well as a premium to the SAF -Holland offer.”
Background and reasons for the Offer
ZF is of the opinion that a business combination of Haldex and ZF represents an outstanding opportunity for both companies to jointly expand their value to the customer in the supply for commercial vehicles in the field of drivetrain and chassis, including brake and air suspension solutions as well as for future megatrends in mobility as outlined in ZF Group’s Strategy 2025. ZF believes that it will be able to continue to develop Haldex’s market position and technological capabilities under ZF ownership due to ZF Group’s technological leadership, global reach and customer access, combined with Haldex’s technological competence, management and employees, and intends to invest significant funds and resources into Haldex.
The complementary portfolio of Haldex constitutes a valuable enhancement to ZF Group's portfolio and will sustainably contribute to ZF Group’s strategy. With Haldex’s brake systems for commercial vehicles, ZF Group would be able to cover the whole functional chain of commercial vehicles in line with "See-Think-Act" (the aim of ZF Group’s technology is to enable vehicles to see, think, and act autonomously) and transfer fuel efficiency, autonomous driving and safety systems technologies known from passenger cars to commercial vehicles. This will result in more safety for all traffic participants.
ZF holds the Haldex management in high regard and intends to preserve the good employee relations and culture that exist at Haldex. On the basis of ZF’s knowledge of Haldex, its strategy and current market conditions, it is ZF’s intention to work with the existing management team and employees to develop and expand Haldex technologically and regionally as part of the worldwide activities of ZF Group, especially in its commercial vehicles business. ZF Group is convinced that there will be attractive career and development opportunities for Haldex employees within the global ZF Group organisation and given the technology orientation of ZF Group. No decisions have been made on the integration of Haldex within ZF Group, including as regards changes to employees or management (including as regards terms of employment) or in respect of employment or the places where Haldex Group conducts its business.
The Offer
ZF offers SEK 100.00 in cash per share in Haldex.[2] (http://undefined/#_ftn2)
The Offer represents a premium of:
· 34.4 percent per share compared to the volume-weighted average price for the Haldex share on Nasdaq Stockholm during the three months prior to the announcement of SAF-Holland GmbH’s offer on 14 July 2016 (14.9 percent per share compared to the volume-weighted average price during the three months prior to 4 August 2016);
· 43.7 percent per share compared to the volume-weighted average price for the Haldex share on Nasdaq Stockholm during the six months prior to the announcement of SAF-Holland GmbH’s offer on 14 July 2016 (29.5 percent per share compared to the volume-weighted average price during the six months prior to 4 August 2016); and
· 17.3 percent per share compared to the closing price of SEK 85.25 for the Haldex share on Nasdaq Stockholm on 13 July 2016, which was the last trading day prior to the announcement of SAF-Holland’s offer (the Offer represents a 4.1 percent per share discount compared to the closing price (which, in ZF’s opinion has been affected by the offer announcement of SAF-Holland GmbH) of SEK 104.25 for the Haldex share on Nasdaq Stockholm on 3 August 2016, which was the last trading day prior to the announcement of the Offer).
· The Offer is higher than the research analyst target price range of SEK 80.00 to 92.00 for the Haldex share stated on FactSet on 13 July 2016.
The total value of the Offer amounts to approximately SEK 4,411 million based on a number of 44,113,970 shares (which corresponds to the total number of 44,215,970 shares issued in Haldex reduced by
102,000[3] (http://undefined/#_ftn3) shares which are held in treasury by Haldex).
No commission will be charged to those who tender shares in Haldex in connection with the Offer.
Certain closely related parties
As a result of Göran Carlson having undertaken to accept the Offer subject to certain conditions, Göran Carlson has not participated in the decision by the Board of Directors of Haldex regarding the statement on the Offer. See further section “Undertakings from shareholders”. Magnus Johansson has been appointed as acting chairman of the Board of Directors of Haldex for the purpose of handling the Board’s decision regarding the statement on the Offer.
ZF’s shareholding in Haldex
Neither ZF nor ZF Friedrichshafen currently hold or otherwise control any shares in Haldex or other financial instruments which give ZF or ZF Friedrichshafen financial exposure equivalent to a shareholding in Haldex. Nor has ZF or ZF Friedrichshafen acquired or agreed to acquire any shares in Haldex, or other financial instruments that give a financial exposure equivalent to a shareholding in Haldex, during the six month-period preceding the announcement of the Offer, other than entering into such undertaking as set out in section “Undertakings from shareholders”.
ZF or ZF Friedrichshafen may acquire, or enter into arrangements to acquire, shares in Haldex outside the Offer. Any such purchases made or arranged will be in accordance with applicable law, including but not limited to Swedish law and the Takeover Rules issued by Nasdaq Stockholm and will be disclosed in accordance with applicable rules.
Undertakings from shareholders
ZF has obtained an undertaking to accept the Offer from Göran Carlson, the Chairman of the Board of Directors of Haldex being the largest shareholder of Haldex, representing 2,506,356 shares corresponding to 5.7 percent of the total number of shares and votes in Haldex. The undertaking is conditional upon no other party announcing a competing offer for all outstanding shares in Haldex with an offer value in excess of the Offer and ZF resolving not to match such competing offer within two Swedish banking days (the “Right to Match”). The Right to Match applies to any and all competing offers. The undertaking is further conditional upon the Offer being declared unconditional no later than 30 November 2016.
Recommendation by the Board of Directors of Haldex
The Board of Directors of Haldex has unanimously decided to recommend to the shareholders of Haldex to accept the Offer, which is announced by Haldex today in a press release.
Conditions to completion of the Offer
The Offer is subject to the following conditions:
1. that shareholders of Haldex accept the Offer to such an extent that ZF becomes the owner of shares in Haldex representing more than 90 percent of the total number of shares in Haldex (on a fully diluted basis);
2. that no third party announces a public offer for the shares in Haldex on conditions that are more favourable for the shareholders of Haldex than the Offer;
3. with respect of the Offer and the acquisition of Haldex, the receipt of all necessary regulatory, governmental or similar clearances, approvals and decisions, including from competition authorities, in each case on terms which, in ZF’s opinion, are acceptable;
4. that no event occurs which is outside the control of ZF, which will, or can reasonably be expected to, materially adversely affect the sales, result, liquidity, profit or general financial position of Haldex;
5. that before the announcement of completion of the Offer, the Offer is not, in whole or in part, made impossible, made materially more difficult or negatively affected to a considerable extent by legislation, decisions of the courts, decisions by public authorities or other circumstances outside the control of ZF in Sweden or in another country;
6. that the Board of Directors of Haldex does not take any measure which would normally be likely to have a negative impact on the prerequisites for the making of the Offer or its implementation; and
7. that ZF does not, prior to the announcement of the completion of the Offer, receive any indication that information published by Haldex is in any material part incorrect or misleading, or that any material information that Haldex has been required to publish has not been published by Haldex.
ZF reserves the right to withdraw the Offer in the event it becomes clear that either of the above conditions is not satisfied or cannot be satisfied. The Offer may however only be withdrawn with reference to the conditions 2-7 above if the non-satisfaction of such condition is of material importance to ZF’s acquisition of the shares in Haldex.
ZF reserves the right to waive, in whole or in part, one or more of the conditions to the Offer and, with respect to condition 1 above, to complete the Offer at a lower level of acceptance.
Rights under Haldex’s incentive programs
The Offer does not include any rights granted by Haldex to its employees under any incentive program implemented by Haldex. ZF intends to procure fair treatment in connection with the transaction for participants in such programs.
Financing
ZF will finance the Offer through its existing cash resources and Intercompany Loans provided by ZF Friedrichshafen. ZF Friedrichshafen has irrevocably undertaken to provide ZF with the necessary funds to finance the Offer. ZF Friedrichshafen has sufficient cash resources and - if needed - available credit facilities in the amount of more than EUR 2.5 billion undrawn credit facilities. The conditions to drawdown under such credit facilities are customary for facilities of this type and are under the control of ZF.
Brief description of ZF and ZF Group
ZF International B.V. (“ZF”) is a limited liability company (Besloten Vennootschap) established under the laws of the Netherlands and registered in the Netherlands Chamber of Commerce for Den Haag under number 16089797 and with registered address (and head office at) Distributieweg 7, 2645 EG, Delfgauw, the Netherlands. ZF is a holding company with three employees with the sole purpose of holding assets in other entities.
ZF is a wholly-owned subsidiary of ZF Friedrichshafen AG (“ZF Friedrichshafen”) which is a corporation (Aktiengesellschaft) established under the laws of the Federal Republic of Germany, registered with the commercial register in Ulm under HRB 630206 with registered office at Friedrichshafen, Baden-Württemberg, Germany and its corporate headquarters at Graf-von-Soden-Platz 1, 88046 Friedrichshafen, Germany. ZF Friedrichshafen is owned to 93.8 percent by the Zeppelin Foundation and to 6.2 percent by the Dr. Jürgen and Irmgard Ulderup Foundation.
The Zeppelin Foundation is a charitable foundation that does not have legal personality of its own under German law – it is an unincorporated, local foundation. The Zeppelin Foundation’s assets belong to the City of Friedrichshafen, as trustee. In practice, the Zeppelin Foundation is a pool of assets owned and administered by the City of Friedrichshafen, as trustee, with the funds held as a special pool of assets that is segregated and kept separately from other municipal assets, in accordance with German law.
The Dr. Jürgen and Irmgard Ulderup Foundation is also a charitable foundation organized under the laws of Germany. It has legal capacity under German law.
ZF Group is a global supplier focusing on driveline, chassis, electronics and safety technology for passenger cars and commercial vehicles as well as a range of industrial applications with a wide product portfolio and global reach. As of 31 December 2015, ZF Group’s workforce worldwide comprised approximately 138,000 employees in 40 countries. ZF Group reported sales of € 29.2 billion in 2015. For further information on ZF Group, please refer to its website (www.zf.com).
Brief description of Haldex
Haldex Group develops and provides brake products and air suspension systems for heavy vehicles. Haldex Group is headquartered in Landskrona, Sweden with offices in 18 countries and production facilities in Sweden, Germany, Hungary, China, India, Brazil, Mexico and the US. More than half of Haldex Group’s sales are generated in North America, one-third in Europe and the remainder in Asia and South America. During 2015, Haldex Group had approximately 2,140 employees. Haldex Group generated sales in the amount of SEK 4,777 million during 2015. For further information on Haldex, please refer to its website (www.haldex.com).
Due diligence
ZF has performed a limited confirmatory due diligence review of Haldex in relation to the preparation of the Offer, and has in connection therewith met with Haldex’s management team. Haldex has informed ZF that no information has been disclosed to ZF during the due diligence process which has not previously been disclosed and which is reasonably expected to affect the price of the shares in Haldex.
Indicative timetable
The acceptance period for the Offer is expected to commence on or around 22 August 2016 and end on or around 30 September 2016. The offer document detailing the Offer is expected to be made public shortly before the commencement of the acceptance period. Assuming that the Offer is declared unconditional no later than around 5 October 2016, settlement is expected to commence on or around 7 October 2016.
ZF reserves the right to, one or several times, extend the acceptance period for the Offer and to postpone the settlement date. ZF will announce any extension(s) of the acceptance period and/or postponement(s) of the settlement date by press release in accordance with applicable laws and regulations.
The acquisition of Haldex is subject to approval from competition authorities. ZF will file the transaction with relevant authorises shortly after this announcement of the Offer and relevant clearances are expected to be obtained prior to the end of the acceptance period.
Compulsory acquisition and delisting
In the event that ZF (whether in connection with the Offer or otherwise) becomes the owner of shares representing more than 90 percent of the outstanding shares in Haldex, ZF intends to commence the procedure for compulsory acquisition of the remaining outstanding shares in Haldex in accordance with the Swedish Companies Act (Sw. aktiebolagslagen (2005:551)). In connection thereto, ZF also intends to act to have the shares in Haldex delisted from Nasdaq Stockholm.
Commitment and disputes
The Offer as well as the agreements to be entered into between ZF and the shareholders of Haldex shall be governed and construed in accordance with substantive Swedish law. Any dispute in connection with or arising out of the Offer shall be settled exclusively by Swedish courts applying substantive Swedish law, with the city court of Stockholm (Sw. Stockholms tingsrätt) as the court of first instance.
The Takeover Rules issued by Nasdaq Stockholm, and the Swedish Securities Council’s (Sw. Aktiemarknadsnämnden) rulings regarding the interpretation and application of the Takeover Rules, apply in relation to the Offer. In accordance with the Swedish Takeover Act (Sw. lag (2006:451) om offentliga uppköpserbjudanden på aktiemarknaden), ZF has undertaken towards Nasdaq Stockholm to comply with the Takeover Rules and to submit to any sanctions imposed by Nasdaq Stockholm upon breach of the Takeover Rules.
Advisors
Citigroup Global Markets Deutschland AG (“Citi”) is acting as financial advisor to ZF Friedrichshafen and Linklaters is acting as legal advisor to ZF and ZF Friedrichshafen in connection with the Offer.
Tender Agent
Svenska Handelsbanken AB is acting as tender agent in connection with the Offer.