TIDMCPW TIDMDXNS
RNS Number : 1637H
Carphone Warehouse Group PLC
15 May 2014
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART
IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION
THE FOLLOWING ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A
PROSPECTUS AND DIXONS SHAREHOLDERS SHOULD NOT MAKE ANY INVESTMENT
DECISION IN RELATION TO THE NEW Dixons CARPHONE SHARES EXCEPT ON
THE BASIS OF THE INFORMATION IN THE SCHEME DOCUMENT AND THE DIXONS
CARPHONE PROSPECTUS WHICH ARE PROPOSED TO BE PUBLISHED IN DUE
COURSE
For immediate release
15 May 2014
RECOMMENDED ALL-SHARE MERGER OF CARPHONE WAREHOUSE GROUP PLC
AND DIXONS RETAIL PLC
Summary
-- The Boards of Carphone Warehouse Group plc and Dixons Retail
plc are pleased to announce that they have reached agreement on the
terms of a recommended all-share merger of Carphone and Dixons,
which is to be implemented by way of a scheme of arrangement of
Dixons.
-- The Merger will result in each of Dixons' and Carphone's
Shareholders holding exactly 50 per cent. of Dixons Carphone on a
fully diluted basis taking into account existing share options and
award schemes for both companies. (1) Under the terms of the
Merger, Dixons Shareholders will receive:
0.155 of a New Dixons Carphone Share in exchange for each Dixons
Share
-- The merged entity, to be called "Dixons Carphone plc", will
create a leader in European consumer electricals, mobiles,
connectivity and related services.
-- The Boards of Carphone and Dixons believe that the Merger
will deliver significant value to shareholders through a
combination of enhanced commercial opportunities and operating
synergies.
-- The Carphone Directors and Dixons Directors, having reviewed
and analysed the potential synergies of the Merger, based on their
experience of operating in the consumer electrical and mobile
retail sectors, and taking into account the factors they can
influence, believe that the Combined Group will be able to achieve
integrated mobile retailing and procurement synergies, together
with cost savings, of at least GBP80 million on a recurring basis,
which are expected to be delivered in full in the financial year
2017/18. The Boards of Carphone and Dixons expect Dixons Carphone
to deliver these synergies progressively, achieving almost half of
them in financial year 2015/16.([2])
-- The Combined Group will also have the opportunity to achieve
significant additional value from growth opportunities arising from
the Merger.
-- As from Completion, Sir Charles Dunstone, Chairman of
Carphone, will become the Chairman of Dixons Carphone. Roger
Taylor, Deputy Chairman of Carphone, and John Allan, Chairman of
Dixons will become Co-Deputy Chairmen and John Allan will also
become Senior Independent Director; Sebastian James, CEO of Dixons,
will become CEO; Andrew Harrison, CEO of Carphone, will become
Deputy CEO; Humphrey Singer, CFO of Dixons, will become CFO; Katie
Bickerstaffe, CEO of UK & Ireland Dixons, and Graham Stapleton,
CEO of UK & Ireland Carphone, will join the Dixons Carphone
Board as Executive Directors and retain their current
responsibilities. In addition, the Dixons Carphone Board will
comprise six other Non-Executive Directors. John Gildersleeve,
Baroness Morgan of Huyton and Gerry Murphy will be the
Non-Executive Directors appointed from Carphone. Tim How, Jock
Lennox and Andrea Gisle Joosen will be the Non-Executive Directors
appointed from Dixons.
-- Each of the Proposed Directors of the Dixons Carphone Board
has given a binding undertaking not to dispose of any of his or her
beneficial holdings in shares of Dixons Carphone (or any interest
therein), which he or she holds on Admission or subsequently
acquires during the lock-in period. All of the Proposed Directors
have given this undertaking for a period of 24 months following
Completion with the exception of Katie Bickerstaffe and Graham
Stapleton who have given this undertaking for a period of 12
months, in line with the undertakings expected to be received from
other senior executives.
-- Carphone and Dixons are both experienced operators with
significant knowledge and expertise. The integration of the two
businesses will be managed by a dedicated integration team,
bringing together the best relevant capabilities of both
businesses, with the aim of facilitating a smooth integration.
-- Carphone and Dixons have put in place appropriate banking
facilities to ensure that Dixons Carphone will have a strong
financial profile following Completion, which will enable the
Combined Group to retain flexibility whilst reviewing its optimal
capital structure going forward.
-- Dixons Carphone intends to adopt a dividend policy in line
with Carphone's current dividend policy of 3.0x dividend cover
based on Headline Earnings. The exchange ratio of the Merger has
been determined on the basis that no dividend will be payable by
either of Carphone or Dixons prior to Completion, other than an
ordinary course Carphone final dividend of 4 pence per Carphone
Share in respect of the financial year to 29 March 2014.
-- The Merger will be conditional on, amongst other things, the
approval of Carphone Shareholders and Dixons Shareholders, the
sanction of the Scheme by the Court and relevant anti-trust
clearances being received.
-- Carphone and Dixons have received irrevocable undertakings to
vote in favour of the Merger from those of the Carphone Directors,
their families and related trusts, and Dixons Directors, their
families and related trusts, who hold or are beneficially entitled
to Carphone Shares and/or Dixons Shares, representing in aggregate
26.7 per cent. of Carphone's ordinary share capital and 0.06 per
cent. of Dixons' ordinary share capital respectively in issue on 14
May 2014 (being the latest practicable date prior to this
Announcement).
Sir Charles Dunstone, Chairman of Carphone said:
"We are incredibly excited about the opportunity today's news
brings to our organisations, our consumers and our investors. Both
Carphone and Dixons have a huge commitment to delivering the
consumer the very best service, product and advice around the
connected world. We have a deep respect for each other and we see
the merger of these two great companies as an opportunity to bring
our skills together for the consumer and create a new retailer for
the digital age. We are also creating jobs and we see many
opportunities for further growth. This is a new chapter for both
businesses and we are energised and proud to be part of what will
be another fantastic journey for consumers and shareholders."
John Allan, CBE, Chairman of Dixons said:
"This merger will create a new, world class British retailer for
the new digital age, with new opportunities for growth and greater
scale and reach. Colleagues of both complementary businesses are
experts in their fields, with a shared passion for technology,
connectivity and brilliant service. Coming together when both
companies are flourishing, we will create a stronger business for
our customers, colleagues and shareholders - for now and the
future."
The Dixons Directors, who have been so advised by Citigroup
Global Markets Limited, consider the terms of the Merger to be fair
and reasonable. In providing its advice, Citigroup Global Markets
Limited has taken into account the commercial assessments of the
Dixons Directors. Accordingly, the Dixons Directors intend
unanimously to recommend Dixons Shareholders to vote in favour of
the Scheme at the Court Meeting and the resolutions to be proposed
at the Dixons General Meeting, as the Dixons Directors who hold or
are beneficially entitled to Dixons Shares have irrevocably
undertaken to do in respect of their own beneficial holdings of
2,149,695 Dixons Shares representing, in aggregate, approximately
0.06 per cent. of Dixons' ordinary share capital in issue on 14 May
2014 (being the latest practicable date prior to this
Announcement).
The Carphone Directors, who have been so advised by Deutsche
Bank, consider the Merger to be in the interests of Carphone
Shareholders. In providing its advice, Deutsche Bank has taken into
account the commercial assessments of the Carphone Directors.
Accordingly, the Carphone Directors intend unanimously to recommend
Carphone Shareholders to vote in favour of the resolutions to be
proposed at the Carphone General Meeting to approve the Merger and
related matters, as the Carphone Directors who hold or are
beneficially entitled to Carphone Shares have irrevocably
undertaken to do in respect of their own beneficial holdings of
153,680,206 Carphone Shares representing, in aggregate,
approximately 26.7 per cent. of Carphone's ordinary share capital
in issue on 14 May 2014 (being the latest practicable date prior to
this Announcement).
The Merger will be put to Dixons Shareholders at the Court
Meeting and at the Dixons General Meeting. In order to become
Effective, the Scheme must be approved by a majority in number of
the Dixons Shareholders voting at the Court Meeting, either in
person or by proxy, representing at least three-quarters in value
of the Dixons Shares voted at the Court Meeting. In addition,
special resolutions implementing the Scheme and approving the
related Capital Reduction must be passed by Dixons Shareholders
representing at least three-quarters of votes cast at the Dixons
General Meeting.
It is expected that the Scheme Document, containing further
information about the Merger and notices of the Court Meeting and
the Dixons General Meeting, will be posted to Dixons Shareholders
at the end of June 2014. For the purposes of Appendix 7 to the Code
and with the agreement of Dixons, the Panel has consented to these
arrangements. It is expected that the Scheme will become Effective
in the third quarter of 2014, subject to the satisfaction or waiver
of the Conditions and certain further terms set out in Appendix I
to this Announcement.
It is expected that the Dixons Carphone Prospectus, containing
information about the New Dixons Carphone Shares and the Combined
Group, will be published at or around the same time as the Scheme
Document is posted to Dixons Shareholders.
It is expected that the Carphone Circular, containing details of
the Merger and notice of the Carphone General Meeting at which
resolutions will be proposed for the approval of the Merger by
Carphone Shareholders, will be posted to Carphone Shareholders at
the same time as the Scheme Document is posted to Dixons
Shareholders.
This summary should be read in conjunction with, and is subject
to, the full text of this Announcement (including its
appendices).
The Merger will be subject to the Conditions and further terms
set out in Appendix I to this Announcement and to the full terms
and conditions which will be set out in the Scheme Document.
Appendix II contains the bases and sources of certain information
used in this summary and this Announcement. Appendix III contains
details of the irrevocable undertakings received in relation to the
Merger that are referred to in this Announcement. Appendix IV
contains details of and bases of calculation of the anticipated
quantified financial benefits of the Merger. Appendix V contains
definitions of certain terms used in this summary and this
Announcement.
There will be an investor and analyst presentation at the
Shangri-La Hotel, Shard(35th Floor), 31 St Thomas Street, London
Bridge, London, SE1 9RL at 9.00a.m. BST on 15 May 2014. There will
be a live webcast of the investor and analyst presentation
available on Carphone's website at www.cpwplc.com and on Dixons'
website at www.dixonsretail.com.
A copy of this Announcement is and will be available, subject to
certain restrictions relating to persons resident in Restricted
Jurisdictions, for inspection on Carphone's website at
www.cpwplc.com and on Dixons' website at www.dixonsretail.com by no
later than 12 noon (London time) on the day following this
Announcement. For the avoidance of doubt, the contents of those
websites are not incorporated and do not form part of this
Announcement.
Enquiries:
Carphone Warehouse Group plc Dixons Retail plc
Kate Ferry +44 77 489 33206 David Lloyd-Seed +44 17 272 05065
Investor Relations Director IR, PR & Corporate Affairs Director
Deutsche Bank (Lead financial Citigroup Global Markets Limited
adviser and corporate broker) (Lead financial adviser and corporate
broker)
Scott Bell +44 20 754 58000 Ben Story +44 20 798 64000
James Arculus Jan Skarbek
Matt Hall (Corporate Broking) Andrew Seaton (Corporate Broking)
UBS (Financial adviser and corporate Barclays (Financial adviser and
broker) corporate broker)
David James +44 20 756 78000 Mark Astaire +44 20 762 32323
Anna Richardson Brown
Jackie Lee
Citigate Dewe Rogerson (PR) Brunswick (PR)
Anthony Carlisle +44 20 763 89571 Nick Cosgrove +44 20 740 45959
Important notices
Deutsche Bank AG is authorised under German Banking Law
(competent authority: BaFIN - Federal Financial Supervisory
Authority). Deutsche Bank AG, London Branch is further authorised
by the Prudential Regulation Authority and is subject to limited
regulation by the Financial Conduct Authority and Prudential
Regulation Authority. Deutsche Bank is acting as lead financial
adviser and corporate broker to Carphone and no one else in
connection with the contents of this Announcement and will not be
responsible to anyone other than Carphone for providing the
protections afforded to its clients or for providing advice in
connection with the contents of this Announcement or any matter
referred to herein.
UBS Limited, which is authorised by the Prudential Regulation
Authority and regulated by the Financial Conduct Authority and the
Prudential Regulation Authority in the United Kingdom, is acting as
financial adviser and corporate broker to Carphone and no one else
in connection with this Announcement and will not be responsible to
anyone other than Carphone for providing the protections afforded
to clients of UBS Limited or for giving advice in relation to this
Announcement or any other matter referred to herein.
Citigroup Global Markets Limited, which is authorised and
regulated in the United Kingdom by the Financial Conduct Authority,
is acting as lead financial adviser and corporate broker to Dixons
and for no-one else in connection with the matters set out in this
Announcement and will not be responsible to anyone other than
Dixons for providing the protections afforded to its clients or for
providing advice in connection with the matters set out in this
Announcement or any matter referred to herein.
Barclays Bank PLC, acting through its Investment Bank
("Barclays"), which is authorised by the Prudential Regulation
Authority and regulated in the United Kingdom by the Prudential
Regulation Authority and the Financial Conduct Authority, is acting
as financial adviser and corporate broker to Dixons and no one else
in connection with the Merger and the other matters referred to in
this Announcement and will not be responsible to anyone other than
Dixons for providing the protections afforded to clients of
Barclays or for providing advice in connection with the Merger or
any matter or arrangement referred to herein.
Forward-looking statements
This Announcement contains statements about Carphone, Dixons and
the Combined Group that are or may be forward looking statements.
All statements other than statements of historical facts included
in this Announcement may be forward looking statements. Without
limitation, any statements preceded or followed by or that include
the words "targets", "should", "continue", "plans", "believes",
"expects", "aims", "intends", "will", "may", "anticipates",
"estimates", "projects" or words or terms of similar substance or
the negative thereof, are forward looking statements. Forward
looking statements include statements relating to the following:
(i) future capital expenditures, expenses, revenues, earnings,
synergies, economic performance, indebtedness, financial condition,
dividend policy, losses and future prospects; (ii) business and
management strategies and the expansion and growth of Carphone's,
Dixons' or the Combined Group's operations and potential synergies
resulting from the Merger; and (iii) the effects of government
regulation on Carphone's, Dixons' or the Combined Group's
business.
Such forward looking statements involve risks and uncertainties
that could significantly affect expected results and are based on
certain key assumptions. Many factors could cause actual results to
differ materially from those projected or implied in any forward
looking statements. Due to such uncertainties and risks, readers
are cautioned not to place undue reliance on such forward looking
statements, which speak only as of the date hereof. Carphone and
Dixons disclaim any obligation to update any forward looking or
other statements contained herein, except as required by applicable
law or regulation.
If you are in any doubt about the contents of this Announcement
or the action you should take, you are recommended to seek your own
independent financial advice immediately from your stockbroker,
bank manager, solicitor, accountant or independent financial
adviser duly authorised under the Financial Services and Market Act
2000 (as amended) if you are resident in the United Kingdom or, if
not, from another appropriately authorised independent financial
adviser.
No profit forecasts or estimates
No statement in this Announcement is intended as a profit
forecast or estimate for any period and no statement in this
Announcement should be interpreted to mean that earnings or
earnings per share for Carphone or Dixons, as appropriate, for the
current or future financial years would necessarily match or exceed
the historical published earnings or earnings per share for
Carphone or Dixons, as appropriate.
Opening Position and Dealing Disclosure Requirements under the
Code
Under Rule 8.3(a) of the Code, any person who is interested in 1
per cent. or more of any class of relevant securities of an offeree
company or of any securities exchange offeror (being any offeror
other than an offeror in respect of which it has been announced
that its offer is, or is likely to be, solely in cash) must make an
Opening Position Disclosure following the commencement of the offer
period and, if later, following the announcement in which any
securities exchange offeror is first identified. An Opening
Position Disclosure must contain details of the person's interests
and short positions in, and rights to subscribe for, any relevant
securities of each of (i) the offeree company and (ii) any
securities exchange offeror(s). An Opening Position Disclosure by a
person to whom Rule 8.3(a) applies must be made by no later than
3.30 pm (London time) on the 10th business day following the
commencement of the offer period and, if appropriate, by no later
than 3.30 pm (London time) on the 10th business day following the
announcement in which any securities exchange offeror is first
identified. Relevant persons who deal in the relevant securities of
the offeree company or of a securities exchange offeror prior to
the deadline for making an Opening Position Disclosure must instead
make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes,
interested in 1 per cent. or more of any class of relevant
securities of the offeree company or of any securities exchange
offeror must make a Dealing Disclosure if the person deals in any
relevant securities of the offeree company or of any securities
exchange offeror. A Dealing Disclosure must contain details of the
dealing concerned and of the person's interests and short positions
in, and rights to subscribe for, any relevant securities of each of
(i) the offeree company and (ii) any securities exchange offeror,
save to the extent that these details have previously been
disclosed under Rule 8. A Dealing Disclosure by a person to whom
Rule 8.3(b) applies must be made by no later than 3.30 pm (London
time) on the business day following the date of the relevant
dealing.
If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire or control an
interest in relevant securities of an offeree company or a
securities exchange offeror, they will be deemed to be a single
person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree
company and by any offeror and Dealing Disclosures must also be
made by the offeree company, by any offeror and by any persons
acting in concert with any of them (see Rules 8.1, 8.2 and
8.4).
Details of the offeree and offeror companies in respect of whose
relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on
the Takeover Panel's website at www.thetakeoverpanel.org.uk,
including details of the number of relevant securities in issue,
when the offer period commenced and when any offeror was first
identified. You should contact the Panel's Market Surveillance Unit
on +44 (0)20 7638 0129 if you are in any doubt as to whether you
are required to make an Opening Position Disclosure or a Dealing
Disclosure.
Further information
This Announcement is for information purposes only. It is not
intended to and does not constitute, or form part of, any offer,
invitation or the solicitation of any offer to purchase, otherwise
acquire, subscribe for, sell or otherwise dispose of any
securities, or the solicitation of any vote or approval in any
jurisdiction, pursuant to the Merger or otherwise nor shall there
be any sale, issuance or transfer of securities in any jurisdiction
in contravention of applicable law. The Merger will be effected
solely by means of the Scheme Document which, together with the
Forms of Proxy, will contain the full terms and conditions of the
Merger including details of how to vote in respect of the
Merger.
Dixons will prepare the Scheme Document to be distributed to
Dixons Shareholders and Carphone will prepare the Carphone Circular
to be distributed to Carphone Shareholders. Carphone will also
publish the Dixons Carphone Prospectus containing information about
the New Dixons Carphone Shares and the Combined Group. Dixons urges
Dixons Shareholders to read the Scheme Document and the Dixons
Carphone Prospectus when they become available because they will
contain important information in relation to the Merger, the New
Dixons Carphone Shares and the Combined Group. Carphone urges
Carphone Shareholders to read the Carphone Circular and the Dixons
Carphone Prospectus when they become available because they will
contain important information in relation to the Merger, the New
Dixons Carphone Shares and the Combined Group. Any vote in respect
of the Scheme or other response in relation to the Merger should be
made only on the basis of the information contained in the Scheme
Document and the Dixons Carphone Prospectus, or the Carphone
Circular and the Dixons Carphone Prospectus, as appropriate.
This Announcement has been prepared for the purposes of
complying with English law, the rules of the London Stock Exchange
and the City Code and the information disclosed may not be the same
as that which would have been disclosed if this Announcement had
been prepared in accordance with the laws and regulations of any
jurisdiction outside the United Kingdom.
This Announcement does not constitute a prospectus or prospectus
equivalent document.
Please be aware that addresses, electronic addresses and certain
other information provided by Dixons Shareholders, persons with
information rights and other relevant persons for the receipt of
communications from Dixons may be provided to Carphone during the
Offer Period as required under Section 4 of Appendix 4 of the
Code.
Overseas jurisdictions
The release, publication or distribution of this Announcement in
jurisdictions other than in the United Kingdom may be restricted by
law and therefore any persons who are subject to the laws of any
jurisdiction other than the United Kingdom should inform themselves
about, and observe, any applicable requirements. Any failure to
comply with applicable requirements may constitute a violation of
the laws and/or regulations of any such jurisdiction. To the
fullest extent permitted by applicable law, the companies and
persons involved in the Merger disclaim any responsibility or
liability for the violation of such requirements by any person.
The Merger relates to the acquisition of shares of a UK company
and is proposed to be effected by means of a scheme of arrangement
under the laws of England and Wales. A transaction effected by
means of a scheme of arrangement is not subject to proxy
solicitation or tender offer rules under the US Exchange Act.
Accordingly, the Scheme is subject to the disclosure requirements,
rules and practices applicable in the United Kingdom to schemes of
arrangement, which differ from the requirements of US proxy
solicitation or tender offer rules. However, if Carphone were to
elect to implement the Merger by means of a Merger Offer, such
Merger Offer will be made in compliance with all applicable laws
and regulations, including Section 14(e) of the US Exchange Act and
Regulation 14E thereunder. Such a Merger Offer would be made in the
United States by Carphone and no one else. In addition to any such
Merger Offer, Carphone, certain affiliated companies and the
nominees or brokers (acting as agents) may make certain purchases
of, or arrangements to purchase, shares in Dixons outside such
Merger Offer during the period in which such Merger Offer would
remain open for acceptance. If such purchases or arrangements to
purchase were to be made they would be made outside the United
States and would comply with applicable law, including the US
Exchange Act. Any information about such purchases will be
disclosed as required in the UK, will be reported to a Regulatory
Information Service and will be available on the London Stock
Exchange website: www.londonstockexchange.com.
The financial information included in this Announcement has been
prepared in accordance with accounting standards applicable in the
UK and thus may not be comparable to financial information of US
companies or companies whose financial statements are prepared in
accordance with generally accepted accounting principles in the
United States.
The New Dixons Carphone Shares have not been and will not be
registered under the US Securities Act or under the securities laws
of any state or other jurisdiction of the United States.
Accordingly, the New Dixons Carphone Shares may not be offered,
sold, resold, delivered, distributed or otherwise transferred,
directly or indirectly, in or into or from the United States absent
registration under the US Securities Act or an exemption therefrom.
The New Dixons Carphone Shares are expected to be issued in
reliance upon the exemption from the registration requirements of
the US Securities Act provided by Section 3(a)(10) thereof. Dixons
Shareholders (whether or not US persons) who are or will be
affiliates (within the meaning of the US Securities Act) of
Carphone or Dixons prior to, or of Carphone after, the Effective
Date will be subject to certain US transfer restrictions relating
to the New Dixons Carphone Shares received pursuant to the Scheme.
For the purposes of qualifying for the exemption from the
registration requirements of the US Securities Act afforded by
Section 3(a)(10), Dixons will advise the Court that its sanctioning
of the Scheme will be relied upon by Carphone as an approval of the
Scheme following a hearing on its fairness to Dixons
Shareholders.
The receipt of New Dixons Carphone Shares pursuant to the Merger
by a US Dixons Shareholder may be a taxable transaction for US
federal income tax purposes and under applicable state and local,
as well as foreign and other, tax laws. Each Dixons Shareholder is
urged to consult his independent professional adviser immediately
regarding the tax consequences of the Merger.
It may be difficult for US Dixons Shareholders to enforce their
rights and claims arising out of the US federal securities laws,
since Carphone and Dixons are located in countries other than the
United States, and some or all of their officers and directors may
be residents of countries other than the United States. US Dixons
Shareholders may not be able to sue a non-US company or its
officers or directors in a non-US court for violations of the US
securities laws. Further, it may be difficult to compel a non-US
company and its affiliates to subject themselves to a US court's
judgment.
None of the securities referred to in this Announcement have
been approved or disapproved by the SEC, any state securities
commission in the United States or any other US regulatory
authority, nor have such authorities passed upon or determined the
adequacy or accuracy of the information contained in this
Announcement. Any representation to the contrary is a criminal
offence in the United States.
Unless otherwise determined by Carphone or required by the Code,
and permitted by applicable law and regulation, the Merger will not
be made available, directly or indirectly, in, into or from a
Restricted Jurisdiction where to do so would violate the laws in
that jurisdiction and no person may vote in favour of the Merger by
any such use, means, instrumentality or form within a Restricted
Jurisdiction or any other jurisdiction if to do so would constitute
a violation of the laws of that jurisdiction. Accordingly, copies
of this Announcement and all documents relating to the Merger are
not being, and must not be, directly or indirectly, mailed or
otherwise forwarded, distributed or sent in, into or from a
Restricted Jurisdiction where to do so would violate the laws in
that jurisdiction, and persons receiving this Announcement and all
documents relating to the Merger (including custodians, nominees
and trustees) must not mail or otherwise distribute or send them
in, into or from such jurisdictions where to do so would violate
the laws in that jurisdiction.
The availability of New Dixons Carphone Shares under the Merger
to Dixons Shareholders who are not resident in the United Kingdom
may be affected by the laws of the relevant jurisdictions in which
they are resident. Persons who are not resident in the UK should
inform themselves of, and observe, any applicable legal or
regulatory requirements.
Copies of this Announcement and formal documentation relating to
the Merger will not be and must not be, mailed or otherwise
forwarded, distributed or sent in, into or from any jurisdiction
where to do so would violate the laws of that jurisdiction.
Publication on websites and availability of hard copies
A copy of this Announcement is and will be available, subject to
certain restrictions relating to persons resident in Restricted
Jurisdictions, for inspection on Carphone's website www.cpwplc.com
and on Dixons' website www.dixonsretail.com by no later than 12
noon (London time) on the day following this Announcement. For the
avoidance of doubt, the contents of those websites are not
incorporated and do not form part of this Announcement.
Carphone Shareholders may request a hard copy of this
Announcement by contacting Tim Morris (Carphone Company Secretary
and General Counsel) during business hours on +44 20 8617 6002 or
by submitting a request in writing to Tim Morris at Carphone's Head
Office at 1 Portal Way, London, W3 6RS. Dixons Shareholders may
request a hard copy of this Announcement by contacting Capita Asset
Services during business hours on 0871 664 0321 or by submitting a
request in writing to Capita Asset Services at the Registry, 34
Beckenham Road, Beckenham, Kent, BR3 4TU.
You may also request that all future documents, announcements
and information to be sent to you in relation to the Merger should
be in hard copy form.
Rounding
Certain figures included in this Announcement have been
subjected to rounding adjustments. Accordingly, figures shown for
the same category presented in different tables may vary slightly
and figures shown as totals in certain tables may not be an
arithmetic aggregation of the figures that precede them.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART
IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION
THE FOLLOWING ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A
PROSPECTUS AND DIXONS SHAREHOLDERS SHOULD NOT MAKE ANY INVESTMENT
DECISION IN RELATION TO THE NEW DIXONS CARPHONE SHARES EXCEPT ON
THE BASIS OF THE INFORMATION IN THE SCHEME DOCUMENT AND THE DIXONS
CARPHONE PROSPECTUS WHICH ARE PROPOSED TO BE PUBLISHED IN DUE
COURSE
For immediate release
15 May 2014
RECOMMENDED ALL-SHARE MERGER OF CARPHONE WAREHOUSE GROUP PLC
AND DIXONS RETAIL PLC
1. Introduction
Further to the announcements made by Dixons Retail plc and
Carphone Warehouse Group plc on 24 February 2014 and 24 March 2014,
the Boards of Dixons and Carphone are pleased to announce that they
have reached agreement on the terms of a recommended all-share
merger of Carphone and Dixons. It is proposed that the Merger will
be effected by way of a Court-sanctioned scheme of arrangement of
Dixons under Part 26 of the Companies Act. It is proposed that the
merged entity will be called "Dixons Carphone plc".
Dixons Carphone will create a leader in European consumer
electricals, mobiles, connectivity and related services.
2. The Merger
Under the terms of the Merger, which will be subject to the
Conditions and further terms set out below and in Appendix I to
this Announcement and to be set out in the Scheme Document, if the
Scheme becomes Effective, Dixons Shareholders will receive:
0.155 of a New Dixons Carphone Share in exchange for each Dixons
Share
The Merger will result in each of Dixons' and Carphone's
Shareholders holding exactly 50 per cent. of Dixons Carphone on a
fully diluted basis taking into account existing share options and
award schemes for both companies. ([1])
The exchange ratio has been determined on the basis that no
dividend will be payable by either of Carphone or Dixons prior to
Completion, other than an ordinary course Carphone final dividend
of 4 pence per Carphone Share in respect of the financial year to
29 March 2014.
3. Background to and reasons for the Merger
The consumer electronics and mobile phone retail landscapes have
evolved significantly over the last few years. In particular, the
growth of smartphones, tablets and speed of internet access both in
and out of the home, together with an increasing number of
connected devices, are altering the way people live their lives,
communicate and use technology. This creates a significant new
opportunity for retailers to provide a broader range of products,
connectivity, services and solutions to customers.
The Carphone Directors and the Dixons Directors ("we") believe
that the winners within this evolving landscape will need to
combine:
-- a broad range of products and connectivity solutions;
-- expert product knowledge backed up by independent, trusted advice;
-- a full range of support services;
-- multi-channel capabilities; and
-- a competitive pricing model.
The directors of both Dixons and Carphone believe therefore that
combining these two already strong businesses, with
industry-leading management teams, will provide the opportunity to
create a new retailer for the new digital age. This is underpinned
by four principal drivers:
(i) The markets in which Carphone and Dixons operate are converging
Technology developments, in particular, hardware innovation,
internet connectivity speeds, content evolution and cloud-based
storage, have been advancing rapidly. This has been particularly
prevalent following the advent of the smartphone and has been
supported by increasing consumer adoption rates. This has led to
greater convergence of both smart connected devices and the wider
markets in which both Dixons and Carphone operate. These trends are
the key building blocks for the so-called 'Internet of Things',
extending connectivity of devices, systems and services so that
they interact with themselves, with users and with their
environment - creating significant new service opportunities as
customers seek help and support in the connected world.
In light of the convergence of their respective markets,
Carphone and Dixons have become highly complementary businesses.
Carphone is one of Europe's largest independent retailers of mobile
phones, which are central to how this technology will operate and
be controlled, and Dixons is one of Europe's largest retailers of
electrical goods with a product range which includes many of the
devices that make up the Internet of Things. We believe that the
current market propositions, together with a comprehensive service
and support infrastructure, create the opportunity both for a
compelling end-to-end proposition and for developing a long-term
relationship with our customers.
(ii) The Combined Group will have improved scale and reach
The improved scale and reach in Dixons Carphone's multi-channel
offerings are expected to benefit customers, suppliers and network
operators alike.
The increased scale from combining Dixons and Carphone will
enable the Combined Group to invest more efficiently in systems,
employees and training in order to have better conversations with
our customers about their needs in a multi-channel world. These
conversations are increasingly viewed as a critical differentiator
not only by customers but also by suppliers seeking to communicate
their new technologies effectively, and the Merger is expected to
enhance further the Combined Group's relevance to its suppliers and
network partners.
The complementary store footprint in the UK will also enable the
Combined Group to offer customers increased points of presence for
services such as Click&Collect or Pay&Collect.
(iii) Significant synergies arise from the Merger
The Boards of Carphone and Dixons believe that the Merger will
deliver significant value to their shareholders through a
combination of enhanced commercial opportunities as well as
operating efficiencies. We believe that synergies arising from the
Merger will be at least GBP80 million which we expect to be
delivered in full in the financial year 2017/18.
In addition to these recurring synergies, further significant
additional value from growth opportunities is expected, as outlined
under "Synergies and integration" in paragraph 8 below.
(iv) The Merger will provide a stronger platform to create
global opportunities for growth through the provision of services
to consumers and businesses
Carphone and Dixons have already taken steps to develop their
services platform and believe that the Merger will enhance
opportunities to develop this further for consumers and businesses.
Carphone has already established contracts with "blue chip"
businesses such as Aviva, British Gas and Royal Bank of Scotland to
provide services and support, and has opened 31 Samsung stores in
seven countries and established a partnership with the Media Saturn
Group in the Netherlands. Dixons has started to provide services
such as delivering white goods on behalf of suppliers sold by third
parties and is exploring the possibilities for utilising its
sourcing operations in Hong Kong for the benefit of other
electrical retailers internationally.
We believe that the Merger will enable the Combined Group to
leverage the strong platforms, capabilities, experiences and skills
of both businesses to offer corporate and end-user customers a
significantly enhanced and broader range of profitable
services.
4. Recommendations
The Dixons Directors, who have been so advised by Citigroup
Global Markets Limited, consider the terms of the Merger to be fair
and reasonable. In providing its advice, Citigroup Global Markets
Limited has taken into account the commercial assessments of the
Dixons Directors. Accordingly, the Dixons Directors intend
unanimously to recommend Dixons Shareholders to vote in favour of
the Scheme at the Court Meeting and the Special Resolutions to be
proposed at the Dixons General Meeting, as the Dixons Directors who
hold or are beneficially entitled to Dixons Shares have irrevocably
undertaken to do in respect of their own beneficial holdings of
2,149,695 Dixons Shares, representing in aggregate approximately
0.06 per cent. of Dixons' ordinary share capital in issue on 14 May
2014 (being the latest practicable date prior to this
Announcement).
The Carphone Directors, who have been so advised by Deutsche
Bank, consider the Merger to be in the interests of Carphone
Shareholders. In providing its advice, Deutsche Bank has taken into
account the commercial assessments of the Carphone Directors.
Accordingly, the Carphone Directors intend unanimously to recommend
Carphone Shareholders to vote in favour of the resolutions to be
proposed at the Carphone General Meeting to approve the Merger and
related matters, as the Carphone Directors who hold or are
beneficially entitled to Carphone Shares have irrevocably
undertaken to do in respect of their own beneficial holdings of
153,680,206 Carphone Shares representing, in aggregate,
approximately 26.7 per cent. of Carphone's ordinary share capital
in issue on 14 May 2014 (being the latest practicable date prior to
this Announcement).
5. Information relating to Carphone
Over the last 25 years, Carphone's experienced management team
has grown the business to become one of the largest independent
telecommunications retailers in Europe, operating over 2,000 stores
across seven European countries, supported by a well-developed
online proposition. Carphone employs highly-trained consultants who
provide specialist and independent advice across the products and
services that Carphone offers, fostering long-standing
relationships with customers beyond the initial sale. Carphone also
benefits from strong relationships with the major Western European
network operators and suppliers and its management team has a
proven track record of establishing and growing successful
businesses and driving value in partnerships.
Carphone has recently created its Connected World Services
business, which aims to leverage the specialist skills, operating
processes and technology of the business to provide services to
third parties looking to develop their own connected world
solutions. Connected World Services has already established a
sizeable customer base and is actively exploring further growth
opportunities.
Carphone Shares are traded on the London Stock Exchange and the
company is a member of the FTSE 250 index.
6. Information relating to Dixons
Dixons is one of the leading specialist electrical multi-channel
retailing and services companies in Europe. It has expertise in
selling electricals and provides a broad range of products to its
customers across consumer electricals, computing and domestic
appliances, complemented by related services and accessories.
Dixons provides this through a multi-channel offering, online and
in engaging and exciting store environments, with 943 stores in
nine countries. It provides product support services as well as
added value services, such as KnowHow, Showhow, fault&fix,
flexible delivery options, installation and repair services to its
customers. Dixons also undertakes business to business sales and
services. Over the last seven years, Dixons has been significantly
streamlined to focus on its core markets and has transformed its
business by improving store environments, its online offer and
product ranges as well as the expertise of its employees. It has
established a strong business model enabling it to offer
sustainable competitive pricing in a multi-channel world. These
improvements have been reflected in record levels of customer
satisfaction scores being recorded in mystery shops and customer
exit surveys.
Dixons Shares are traded on the London Stock Exchange and the
company is a member of the FTSE 250 index.
7. Strategy of the Combined Group
The Merger will enable Dixons Carphone to provide customers with
an integrated offering across a broad range of technology,
connectivity and services beyond the point of sale, enhancing the
lifetime value of the Combined Group's customers and improving the
offering to existing and new service partners. We believe that this
will provide the opportunity to increase the value of the core
combined retail operation, the Combined Group's service proposition
and its business capability.
The directors of Carphone and Dixons believe that, in addition
to the strategy of delivering the synergies identified in paragraph
8, there are three significant additional growth opportunities that
have been identified and will be central to the overall strategy of
the Combined Group:
(i) Generating incremental value by providing a seamless
multi-channel offering throughout the retail operation, across a
comprehensive range of products and connectivity services to
benefit customers and our business partners
The directors of Carphone and Dixons believe that we have the
opportunity to create enhanced revenue opportunities, in addition
to developing an integrated mobile retailing proposition, from an
improved customer offering across multiple electrical categories,
enabled by a true multi-channel approach, including a wider and
more convenient combined footprint for customers. In the UK,
Ireland and the Nordics customers will be able to shop in store,
online or using a combination of both through Click&Collect or
Pay&Collect through our extensive store network.
In store we will cross-fertilise existing technologies and
capabilities from Dixons and Carphone to allow simplified and
improved customer journeys for multiple connected products,
enabling the Combined Group's business partners to see their
products and services presented to customers in a compelling manner
enhanced by the customer's interaction with Dixons Carphone's
highly trained staff.
These incremental capabilities and improved offerings coupled
with ever-increasing data speeds and a broadening range of
connected electrical devices will, we believe, enhance revenue
streams for the Combined Group and its business partners, suppliers
and network operators alike.
(ii) Driving significant revenue growth through incremental
service offerings whilst providing customers with a best in class
and comprehensive service proposition both in store and beyond the
point of sale
Building on our well-established service offering of KnowHow and
Geek Squad we believe that with the Merger the Combined Group will
be well placed to extend Dixons Carphone's existing service
offering even further across the entire range of connected and
electricals products. Through an end-to-end service proposition
including product set-up, delivery, ongoing peace of mind product
support and insurance, as well as repairs, accessories and
recycling, the Combined Group can extend the relationship with
customers to provide them with the full service offering they may
need anytime, anywhere and drive significant incremental lifetime
value opportunities and recurring revenue streams for the Combined
Group.
(iii) Delivering substantial value enhancement by leveraging
existing capabilities and providing Connected World Services to
global business partners
The Combined Group will aim to leverage its core systems,
services and product expertise for the benefit of both third party
customers and suppliers.
Carphone and Dixons have a shared vision for the future
opportunity that exists to exploit their respective expertise in
building additional services revenue streams. The Combined Group's
focus will be on both existing and new markets. Although this
business is relatively small, we believe that this can evolve on a
global basis, with relatively low capital expenditure, and drive
four additional revenue streams over time:
a) Connected retailing
Dixons Carphone intends to offer a full range of propositions
for multi-channel retailing for connected products and services.
Opportunities include specific consultancy services such as sales
processes, store design and customer fulfilment and loyalty, all
the way through to full scale partnerships for retailers, networks
and manufacturers.
b) Services and support
We intend to deliver technical support solutions for connected
devices using existing logistics infrastructure, insurance
expertise (including administration and claims management),
repairs, after-sales and technical support capabilities.
c) Multi-channel platform
The Combined Group intends to provide its technology platforms
and managed services to support complex transactions, connections
to service providers and customer relationship management. For
example, we intend to be able to offer an end-to-end turn-key
software and training solution for partner retailers who wish to
navigate the complexities of hardware and networks and deliver a
comprehensive mobile and connectivity offer for their
customers.
d) Global partnerships
Opportunities will include leveraging the Combined Group's scale
and commercial relationships, enabling partner retailers not only
to source hardware, own brand consumer electrical products and
accessories but also to provide network operator services.
We believe that the relationships, resources and combined skills
of Dixons Carphone will enable the development of a much stronger
business platform than were each company to pursue this strategy
individually.
8. Synergies and integration
The Carphone Directors and Dixons Directors, having reviewed and
analysed the potential benefits of the Merger, based on their
experience of operating in the consumer electrical and mobile
retail sectors, and taking into account the factors they can
influence, believe that the Combined Group will be able to achieve
integrated mobile retailing and procurement synergies, together
with cost savings, of at least GBP80 million on a recurring basis,
which are expected to be delivered in full in the financial year
2017/18. The Boards of Carphone and Dixons expect Dixons Carphone
to deliver these synergies progressively, achieving almost half of
them in financial year 2015/16.
The principal sources of quantified synergies are as
follows:
- approximately half of the identified synergies are expected to
come from integrated mobile retailing and procurement synergies.
These comprise synergies in the UK, Ireland and the Nordics
resulting from creating an integrated mobile offering in Dixons
shops, which will promote a seamless customer journey across all
technology categories, underpinned by the use of Carphone's
expertise in mobile, together with procurement benefits resulting
from the Combined Group's scale; and
- approximately half are expected to come from synergies,
including rent and other infrastructure costs, resulting from the
rationalisation of certain operational and support functions where
there is duplication, both across the UK and in the Nordic
regions.
In addition to these quantified synergies, the Carphone
Directors and the Dixons Directors believe that further value will
be created through additional growth opportunities including:
- enhanced revenue opportunities from an improved customer
offering across electrical, mobiles and connectivity, enabled by a
true multi-channel approach, including a wider and more convenient
combined footprint for customers;
- developing a world class service proposition for customers; and
- enhancement of the existing Connected World Services
opportunities for both existing and new business partners around
the globe.
It is expected that there will be significant job creation
through the rollout of the Dixons Carphone integrated retail
offering, resulting in an increase of approximately 4 per cent. of
the Combined Group's full-time equivalent employees. This is
expected to be substantially complete by the end of 2016. This
increase will be partially offset as a result of the
rationalisation of certain operational and support functions
resulting, in these functions, in a decrease of approximately 2 per
cent. of the Combined Group's full-time equivalent employees. Any
changes related to the rationalisation are unlikely to take effect
prior to 2015 and are anticipated to be implemented gradually over
the three years after Completion. Taken together with the job
creation opportunities, it is expected there will be a net increase
of approximately 2 per cent. of the Combined Group's full-time
equivalent employees as a result of the Merger. The integration of
the businesses will clearly require some roles to change but, with
more new roles being created than those that are lost, it is hoped
that there will be opportunities for many of the people involved.
Specific roles have not yet been identified, outcomes will depend
on integration planning and will, of course, be subject to
consultation with our colleagues.
It is expected that the realisation of the identified synergies
will result in one-off exceptional costs of approximately GBP55 -
60 million, largely incurred by the end of financial year 2015/16.
It is also expected that incremental capital expenditure of
approximately GBP60 - 70 million will be incurred during the period
to the end of financial year 2017/18. Aside from the integration
costs and the planned incremental capital expenditure, no material
dis-synergies are expected in connection with the Merger. The
identified synergies will accrue as a direct result of the Merger
and would not be achieved on a standalone basis.
Carphone and Dixons are establishing a full integration team,
bringing together the best relevant capabilities of both
businesses, to ensure that the synergies of the Merger are
maximised. We are confident that the integration of Carphone and
Dixons can be achieved without undue disruption to the underlying
operations of either business.
As at the date of this Announcement, an integration plan is
being developed. As soon as practicable following the Effective
Date, the Combined Group will aim to have fully validated its
initial synergy assumptions, agreed the target operating model of
the Combined Group and completed the detailed integration plan
across the Combined Group's business. The integration plan, once
finalised, will set out the scope of the integration process and
quantified objectives, proposed organisation structures and
processes to be reviewed and subsequently implemented, together
with an overall integration programme and stakeholder communication
and consultation timetable. Finalisation of the integration plan
will be subject to engagement with appropriate stakeholders,
including employee representative bodies.
These statements of estimated cost savings and synergies relate
to future actions and circumstances which, by their nature, involve
risks, uncertainties and contingencies. As a result, the cost
savings and synergies referred to may not be achieved, may be
achieved later or sooner than estimated, or those achieved could be
materially different from those estimated. For the purposes of Rule
28 of the City Code, these statements of estimated cost savings and
synergies are the responsibility of the Directors of Carphone, in
its capacity as offeror under the terms of the Merger. Appendix IV
includes reports in connection with the synergy statements from
Deloitte LLP and Deutsche Bank, as required pursuant to the City
Code. Deloitte LLP and Deutsche Bank have given and not withdrawn
their consent to the publication of their reports in the form and
context in which they are included.
These statements are not intended as a profit forecast and
should not be interpreted as such.
9. Management, employees and head office location
The Board of Dixons Carphone will be drawn equally from the
Boards of both companies and will comprise 14 Directors, including
nine Non-Executive Directors.
As from Completion, Sir Charles Dunstone, Chairman of Carphone,
will become the Chairman of Dixons Carphone. Roger Taylor, Deputy
Chairman of Carphone, and John Allan, Chairman of Dixons, will
become Co-Deputy Chairmen and John Allan will also become Senior
Independent Director; Sebastian James, CEO of Dixons, will become
CEO; Andrew Harrison, CEO of Carphone, will become Deputy CEO;
Humphrey Singer, CFO of Dixons, will become CFO; Katie
Bickerstaffe, CEO of UK & Ireland Dixons, and Graham Stapleton,
CEO of UK & Ireland Carphone, will join the Dixons Carphone
Board as Executive Directors and retain their current
responsibilities. In addition, the Dixons Carphone Board will
comprise six other Non-Executive Directors. John Gildersleeve,
Baroness Morgan of Huyton and Gerry Murphy will be the
Non-Executive Directors appointed from Carphone. Tim How, Jock
Lennox and Andrea Gisle Joosen will be the Non-Executive Directors
appointed from Dixons.
Nigel Langstaff and John Allwood will step down from the
Carphone Board upon the Scheme becoming Effective. Each of the
Carphone Directors stepping down from the Carphone Board is fully
supportive of the rationale for the Merger and of its terms and
conditions.
Dharmash Mistry and Prof. Dr. Utho Creusen will step down from
the Dixons Board upon the Scheme becoming Effective and will not
join the Dixons Carphone Board. Each of the Dixons Directors who
will not join the Board of Dixons Carphone is fully supportive of
the rationale for the Merger and of its terms and conditions.
The Boards of Carphone and Dixons recognise that in order to
achieve the expected benefits of the Merger, operational and
administrative restructuring will be required following
Completion.
The Combined Group will in due course consolidate its head
office functions within one principal location. Dixons and Carphone
are currently working on assessing the solution which best suits
the future business needs of the Combined Group.
Carphone has given assurances that following Completion the
existing employment rights of Dixons' and Carphone's employees will
be fully safeguarded.
10. Irrevocable undertakings
In aggregate, Carphone and Dixons have received irrevocable
undertakings from:
- those of the Dixons Directors and certain members of their
families who hold or are beneficially entitled to Dixons Shares to
vote in favour of the Scheme at the Court Meeting and the
resolutions to be proposed at the Dixons General Meeting, in
respect of an aggregate of 2,149,695 Dixons Shares, representing,
in aggregate, approximately 0.06 per cent. of Dixons' ordinary
share capital in issue on 14 May 2014 (being the latest practicable
date prior to this Announcement); and
- those of the Carphone Directors and certain members of their
families who hold or are beneficially entitled to Carphone Shares
to vote in favour of the resolutions to be proposed at the Carphone
General Meeting to approve the Merger and related matters, in
respect of an aggregate of 153,680,206 Carphone Shares,
representing, in aggregate, approximately 26.7 per cent. of
Carphone's ordinary share capital in issue on 14 May 2014 (being
the latest practicable date prior to this Announcement).
Further details of the irrevocable undertakings in relation to
the Merger are set out in Appendix III to this Announcement.
11. Lock-in commitments
Each of the Proposed Directors of the Dixons Carphone Board has
given a binding undertaking not to dispose of any of his or her
beneficial holdings in shares of Dixons Carphone (or any interest
therein), which he or she holds on Admission or subsequently
acquires during the lock-in period. All of the Proposed Directors
have given this undertaking for a period of 24 months following
Completion with the exception of Katie Bickerstaffe and Graham
Stapleton who have given this undertaking for a period of 12
months, in line with the undertakings expected to be received from
other senior executives.
12. Accounting considerations
The Carphone financial year ends on or around 31 March and the
Dixons financial year ends on 30 April. Dixons Carphone will look
at the merits of adopting each of these year ends but its current
intention is to adopt an end of April year end.
For accounting purposes, it is expected that Dixons will be
consolidated into Carphone's balance sheet. A fair value exercise
in respect of Dixons' assets and liabilities will be conducted
following Completion, resulting in Dixons' assets and liabilities
being included at fair value on the Combined Group's balance sheet.
Intangible assets arising will include goodwill and brands.
13. Financing
Unanimous consent has been obtained from Carphone's lending
syndicate to amend and retain its existing GBP400 million RCF and
GBP250 million term loan, both of which mature in April 2017.
Additionally, commitments have been obtained for a further RCF of
GBP250 million for the Combined Group, on substantially the same
terms as Carphone's existing RCF, and also maturing in April 2017.
Subject to approval of the Merger, Dixons' RCF will be cancelled.
Dixons has bonds in issue of GBP101 million which are due in August
2015 and bonds in issue of GBP150 million which are due in
September 2017. Completion will trigger a 60-day put option, at 101
per cent. of par plus accrued interest, for each bondholder, after
which the ability to put any outstanding bonds will end. Given that
the current trading prices of the bonds are significantly above
par, the Combined Group does not expect these put options to be
exercised, but if this did occur, the additional bank facilities
available to the Combined Group provide appropriate headroom.
The Combined Group therefore has appropriate committed banking
facilities to ensure that Dixons Carphone will have a strong
financial profile following Completion, which will enable the
Combined Group to retain flexibility whilst reviewing its optimal
capital structure going forward.
14. Dividends and dividend policy
Dixons Carphone intends to adopt a dividend policy in line with
Carphone's current dividend policy of 3.0x dividend cover based on
Headline Earnings. The exchange ratio of the Merger has been
determined on the basis that no dividend will be payable by either
of Carphone or Dixons prior to Completion, other than an ordinary
course Carphone final dividend of 4 pence per Carphone Share in
respect of the financial year to 29 March 2014.
15. Structure of the Merger
It is intended that the Merger will be implemented by way of a
Court-sanctioned scheme of arrangement between Dixons and the
Dixons Shareholders, under Part 26 of the Companies Act, under
which Carphone will acquire all of the shares in Dixons.
The purpose of the Scheme is to provide for Carphone to become
the holder of the entire issued and to be issued ordinary share
capital of Dixons. This is to be achieved by the cancellation of
the Dixons Shares held by Dixons Shareholders and the application
of the reserve arising from such cancellation in paying up in full
such number of new Dixons Shares as is equal to the number of
Dixons Shares cancelled, and issuing the same to Carphone in
consideration for which Dixons Shareholders will receive
consideration on the basis set out in paragraph 2 of this
Announcement.
The Merger is subject to the Conditions and certain further
terms referred to in Appendix I to this Announcement and to be set
out in the Scheme Document, and will only become Effective if,
among other things, the following events occur on or before 31
December2014 or such later date as Carphone and Dixons may agree
and (if required) the Court and the Panel may allow:
a) a resolution to approve the Scheme being passed by a majority
in number of the Dixons Shareholders who are present and voting at
the Court Meeting, either in person or by proxy, representing 75
per cent. or more in value of the Dixons Shares voted by those
Dixons Shareholders;
b) the Special Resolutions necessary to implement the Scheme and
to approve the related Capital Reduction being passed by the
requisite majority of Dixons Shareholders at the Dixons General
Meeting;
c) the Scheme being sanctioned (with or without modification, on
terms agreed by Carphone and Dixons) and the related Capital
Reduction being confirmed by the Court;
d) a copy of each of the Court Orders (together with the
Statement of Capital) being delivered to the Registrar of Companies
and, if so ordered by the Court, the Court Orders being registered
by the Registrar of Companies together with the Statement of
Capital;
e) relevant anti-trust approvals being received on terms
satisfactory to Carphone and Dixons (acting reasonably);
f) the resolutions to be proposed at the Carphone General
Meeting to approve, effect and implement the Merger and to grant
authority to the Carphone Directors to allot the New Dixons
Carphone Shares, being passed by the requisite majority of Carphone
Shareholders (but, for the avoidance of doubt, not the other
resolutions to be proposed at the Carphone General Meeting which
shall not be conditions to the Merger); and
g) the UK Listing Authority having acknowledged to Carphone or
its agent (and such acknowledgement not having been withdrawn) that
the application for the admission of the New Dixons Carphone Shares
to listing on the premium segment of the Official List has been
approved and (subject to satisfaction of any conditions to which
such approval is expressed) will become effective as soon as a
dealing notice has been issued by the UK Listing Authority and the
London Stock Exchange having acknowledged to Carphone or its agent
(and such acknowledgement not having been withdrawn) that the New
Dixons Carphone Shares will be admitted to trading on the London
Stock Exchange's main market for listed securities.
Upon the Scheme becoming Effective, it will be binding on all
Dixons Shareholders, irrespective of whether or not they attended
or voted at the Court Meeting or the Dixons General Meeting (and if
they attended and voted, whether or not they voted in favour), and
share certificates in respect of Dixons Shares will cease to be
valid and entitlements to Dixons Shares held within the CREST
system will be cancelled.
Dixons Shares will be acquired by Carphone pursuant to the
Scheme fully paid and free from all liens, charges, equities,
encumbrances, rights of pre-emption and any other interests of any
nature whatsoever and together with all rights attaching thereto,
including voting rights and the rights to receive and retain in
full all dividends and other distributions declared, made or paid
on or after the Effective Date, save where the record date for such
dividend or other distribution falls prior to the Effective Date or
otherwise where Carphone and Dixons agree.
The New Dixons Carphone Shares issued to Dixons Shareholders
pursuant to the Scheme will be issued credited as fully paid and
will rank pari passu in all respects with existing Carphone Shares,
including the right to receive dividends and other distributions
declared, made or paid on Carphone Shares by reference to a record
date falling after the Effective Date. The New Dixons Carphone
Shares will be issued in registered form and will trade under the
same ISIN number as the existing Carphone Shares.
Fractions of New Dixons Carphone Shares will not be allotted or
issued pursuant to the Merger and fractional entitlements will be
rounded down to the nearest whole number of New Dixons Carphone
Shares.
If the Scheme does not become Effective on or before 31 December
2014 (or such later date as Carphone and Dixons may agree with the
consent of the Panel), it will lapse and the Merger will not
proceed.
The Scheme Document will include full details of the Scheme,
together with notices of the Court Meeting and the Dixons General
Meeting. The Scheme Document will also contain the expected
timetable for the Merger, and will specify the necessary actions to
be taken by Dixons Shareholders.
The Scheme Document together with the Forms of Proxy will be
posted to Dixons Shareholders and, for information only, to persons
with information rights and to holders of options and awards
granted under the Dixons Share Schemes on or around the end of June
2014. For the purposes of Appendix 7 to the Code and with the
agreement of Dixons, the Panel has consented to these arrangements.
It is expected that the Court Meeting (subject to the approval of
the Court) will be held in July 2014. The Dixons General Meeting is
also expected to be held immediately following the conclusion (or
adjournment) of the Court Meeting. Subject to the satisfaction or
waiver of the Conditions, it is expected that the Scheme will
become Effective in the third quarter of 2014.
16. Carphone Shareholder approval
In view of the size of the transaction, the Merger will require
the approval of Carphone Shareholders. Accordingly, Carphone will
be required to seek the approval of Carphone Shareholders for the
Merger at the Carphone General Meeting. Carphone is required to
prepare and send to Carphone Shareholders a circular summarising
the background to and reasons for the Merger and which will include
a notice convening the Carphone General Meeting. The Merger is
conditional on, amongst other things, the resolutions to approve,
effect and implement the Merger, and to grant authority to the
Carphone Directors to allot the New Dixons Carphone Shares being
passed by the requisite majority of Carphone Shareholders at the
Carphone General Meeting (but not, for the avoidance of doubt, the
other resolutions to be proposed at the Carphone General Meeting
which shall not be conditions to the Merger).
The Carphone Circular containing the notice of the Carphone
General Meeting will be sent to Carphone Shareholders at the same
time as the Scheme Document is posted to Dixons Shareholders, which
is expected to be on or around the end of June 2014. It is expected
that the Carphone General Meeting will be held in July 2014.
Carphone will also be required to make the Dixons Carphone
Prospectus available to the public in accordance with the
Prospectus Rules. The Dixons Carphone Prospectus will contain
information relating to the Combined Group and the New Dixons
Carphone Shares. It is expected that the Dixons Carphone Prospectus
will be published at or around the same time as the Scheme Document
is posted to Dixons Shareholders and Carphone's Circular is posted
to Carphone Shareholders.
17. Dixons Share Schemes and Carphone Share Schemes
Dixons Share Schemes
Outstanding executive share options and PSP awards, which are
not already exercisable or vested, will vest immediately on the
sanction of the Scheme by the Court to the extent that performance
conditions are satisfied. PSP awards made in 2013 will be pro-rated
by 50 per cent.. Outstanding recruitment and retention awards will
also vest on the sanction of the Scheme by the Court. Executive
share options which are already vested will participate in the
Scheme.
Carphone will offer Sharesave participants the opportunity to
rollover Sharesave options granted in 2011, 2012 and 2013, enabling
them to exercise their options in full over shares in Dixons
Carphone at the maturity dates free of income tax, adjusted as
appropriate.
Carphone Share Schemes
Outstanding share option awards under the Carphone Share
Schemes, the first of which (apart from the Sharesave plan) are due
to vest in 2017 and 2018, will not vest as a result of the Merger
and will continue on similar terms. The parties are discussing
arrangements for Dixons employees to participate in Dixons
Carphone's share schemes.
18. Confidentiality agreement
Carphone and Dixons have entered into a mutual Confidentiality
Agreement dated 30 January 2014 pursuant to which each of Carphone
and Dixons has undertaken to keep certain information relating to
the Merger and the other party confidential and not to disclose it
to third parties (other than to permitted disclosees) unless
required by law or regulation. These confidentiality obligations
will remain in force until completion of the Merger.
19. Listing, dealings and settlement of the New Dixons Carphone Shares
Applications will be made to the UK Listing Authority for the
New Dixons Carphone Shares to be admitted to the premium listing
segment of the Official List and to the London Stock Exchange for
the New Dixons Carphone Shares to be admitted to trading on the
London Stock Exchange's main market for listed securities. It is
expected that Admission will become effective and that dealings for
normal settlement in the New Dixons Carphone Shares will commence
on the London Stock Exchange at 8.00 a.m. on or shortly after the
Effective Date.
20. De-listing of Dixons
Prior to the Scheme becoming Effective, applications will be
made to the UK Listing Authority for the cancellation of the
listing of the Dixons Shares on the Official List and to the London
Stock Exchange for the cancellation of trading of the Dixons Shares
on the London Stock Exchange's main market for listed securities,
in each case to take effect on or shortly after the Effective
Date.
On the Effective Date, Dixons will become a wholly-owned
subsidiary of Carphone and share certificates in respect of Dixons
Shares will cease to be valid and entitlements to Dixons Shares
held within the CREST system will be cancelled.
21. Disclosure of interest in relevant securities
Carphone confirms that it made an Opening Position Disclosure,
setting out the details required to be disclosed by it under Rule
8.1(a) of the Code, on 7 March 2014.
Dixons confirms that it made an Opening Position Disclosure,
setting out the details required to be disclosed by it under Rule
8.2(a) of the Code, on 7 March 2014.
22. Overseas Shareholders
The availability of New Dixons Carphone Shares under the Merger,
and the distribution of this Announcement to persons who are not
resident in the United Kingdom may be affected by the laws of the
relevant jurisdiction in which they are located. Such persons
should inform themselves of and observe any applicable legal or
regulatory requirements of their jurisdiction. Dixons Shareholders
who are in doubt regarding such matters should consult an
appropriate independent professional adviser in the relevant
jurisdiction without delay.
This Announcement does not constitute an offer for sale of any
securities or an offer or an invitation to purchase any securities.
Dixons Shareholders are advised to read carefully the Scheme
Document, the Dixons Carphone Prospectus and the Forms of Proxy
once these have been dispatched. Carphone Shareholders are advised
to read carefully the Dixons Carphone Prospectus, the Carphone
Circular and the form of proxy accompanying the Carphone Circular
once these have been dispatched.
23. Documents available on website
Copies of the following documents will published by no later
than 12 noon (London time) on the day following this Announcement
on Carphone's website at www.cpwplc.com and on Dixons' website at
www.dixonsretail.com and will be made available until the end of
the Offer Period:
-- a copy of this Announcement;
-- the irrevocable undertakings in paragraph 10 and set out in
Appendix III to this Announcement;
-- the lock-in commitments referred to in paragraph 11; and
-- the Confidentiality Agreement referred to in paragraph 18.
24. General
The Merger will be subject to the Conditions and certain further
terms set out in Appendix I and to be set out in the Scheme
Document when published.
The Scheme will be governed by English law and will be subject
to the jurisdiction of the courts of England and Wales. The Scheme
will be subject to the applicable requirements of the Code, the
Panel, the London Stock Exchange and the FCA.
The bases and sources of certain financial information contained
in this Announcement are set out in Appendix II. Certain terms used
in this Announcement are defined in Appendix V.
There will be an investor and analyst presentation at the
Shangri-La Hotel, Shard(35th Floor), 31 St Thomas Street, London
Bridge, London, SE1 9RL at 9.00a.m. BST on 15 May 2014. There will
be a live webcast of the investor and analyst presentation
available on Carphone's website at www.cpwplc.com and on Dixons'
website at www.dixonsretail.com.
A copy of this Announcement is and will be available, subject to
certain restrictions relating to persons resident in Restricted
Jurisdictions, for inspection on Carphone's website at
www.cpwplc.com and on Dixons' website at www.dixonsretail.com by no
later than 12 noon (London time) on the day following this
Announcement. For the avoidance of doubt, the contents of those
websites are not incorporated and do not form part of this
Announcement.
Enquiries:
Carphone Warehouse Group plc Dixons Retail plc
Kate Ferry +44 77 489 33206 David Lloyd-Seed +44 17 272 05065
Investor Relations Director IR, PR & Corporate Affairs Director
Deutsche Bank (Lead financial Citigroup Global Markets Limited
adviser and corporate broker) (Lead financial adviser and corporate
broker)
Scott Bell +44 20 754 58000 Ben Story +44 20 798 64000
James Arculus Jan Skarbek
Matt Hall (Corporate Broking) Andrew Seaton (Corporate Broking)
UBS (Financial adviser and corporate Barclays (Financial adviser and
broker) corporate broker)
David James +44 20 756 78000 Mark Astaire +44 20 762 32323
Anna Richardson Brown
Jackie Lee
Citigate Dewe Rogerson (PR) Brunswick (PR)
Anthony Carlisle +44 20 763 89571 Nick Cosgrove +44 20 740 45959
Important notices
Deutsche Bank AG is authorised under German Banking Law
(competent authority: BaFIN - Federal Financial Supervisory
Authority). Deutsche Bank AG, London Branch is further authorised
by the Prudential Regulation Authority and is subject to limited
regulation by the Financial Conduct Authority and Prudential
Regulation Authority. Deutsche Bank is acting as lead financial
adviser and corporate broker to Carphone and no one else in
connection with the contents of this Announcement and will not be
responsible to anyone other than Carphone for providing the
protections afforded to its clients or for providing advice in
connection with the contents of this Announcement or any matter
referred to herein.
UBS Limited, which is authorised by the Prudential Regulation
Authority and regulated by the Financial Conduct Authority and the
Prudential Regulation Authority in the United Kingdom, is acting as
financial adviser and corporate broker to Carphone and no one else
in connection with this Announcement and will not be responsible to
anyone other than Carphone for providing the protections afforded
to clients of UBS Limited or for giving advice in relation to this
Announcement or any other matter referred to herein.
Citigroup Global Markets Limited, which is authorised and
regulated in the United Kingdom by the Financial Conduct Authority,
is acting as lead financial adviser and corporate broker to Dixons
and for no-one else in connection with the matters set out in this
Announcement and will not be responsible to anyone other than
Dixons for providing the protections afforded to its clients or for
providing advice in connection with the matters set out in this
Announcement or any matter referred to herein.
Barclays Bank PLC, acting through its Investment Bank
("Barclays"), which is authorised by the Prudential Regulation
Authority and regulated in the United Kingdom by the Prudential
Regulation Authority and the Financial Conduct Authority, is acting
as financial adviser and corporate broker to Dixons and no one else
in connection with the Merger and the other matters referred to in
this Announcement and will not be responsible to anyone other than
Dixons for providing the protections afforded to clients of
Barclays or for providing advice in connection with the Merger or
any matter or arrangement referred to herein.
Forward-looking statements
This Announcement contains statements about Carphone, Dixons and
the Combined Group that are or may be forward looking statements.
All statements other than statements of historical facts included
in this Announcement may be forward looking statements. Without
limitation, any statements preceded or followed by or that include
the words "targets", "should", "continue", "plans", "believes",
"expects", "aims", "intends", "will", "may", "anticipates",
"estimates", "projects" or words or terms of similar substance or
the negative thereof, are forward looking statements. Forward
looking statements include statements relating to the following:
(i) future capital expenditures, expenses, revenues, earnings,
synergies, economic performance, indebtedness, financial condition,
dividend policy, losses and future prospects; (ii) business and
management strategies and the expansion and growth of Carphone's,
Dixons' or the Combined Group's operations and potential synergies
resulting from the Merger; and (iii) the effects of government
regulation on Carphone's, Dixons' or the Combined Group's
business.
Such forward looking statements involve risks and uncertainties
that could significantly affect expected results and are based on
certain key assumptions. Many factors could cause actual results to
differ materially from those projected or implied in any forward
looking statements. Due to such uncertainties and risks, readers
are cautioned not to place undue reliance on such forward looking
statements, which speak only as of the date hereof. Carphone and
Dixons disclaim any obligation to update any forward looking or
other statements contained herein, except as required by applicable
law or regulation.
If you are in any doubt about the contents of this Announcement
or the action you should take, you are recommended to seek your own
independent financial advice immediately from your stockbroker,
bank manager, solicitor, accountant or independent financial
adviser duly authorised under the Financial Services and Market Act
2000 (as amended) if you are resident in the United Kingdom or, if
not, from another appropriately authorised independent financial
adviser.
No profit forecasts or estimates
No statement in this Announcement is intended as a profit
forecast or estimate for any period and no statement in this
Announcement should be interpreted to mean that earnings or
earnings per share for Carphone or Dixons, as appropriate, for the
current or future financial years would necessarily match or exceed
the historical published earnings or earnings per share for
Carphone or Dixons, as appropriate.
Opening Position and Dealing Disclosure Requirements under the
Code
Under Rule 8.3(a) of the Code, any person who is interested in 1
per cent. or more of any class of relevant securities of an offeree
company or of any securities exchange offeror (being any offeror
other than an offeror in respect of which it has been announced
that its offer is, or is likely to be, solely in cash) must make an
Opening Position Disclosure following the commencement of the offer
period and, if later, following the announcement in which any
securities exchange offeror is first identified. An Opening
Position Disclosure must contain details of the person's interests
and short positions in, and rights to subscribe for, any relevant
securities of each of (i) the offeree company and (ii) any
securities exchange offeror(s). An Opening Position Disclosure by a
person to whom Rule 8.3(a) applies must be made by no later than
3.30 pm (London time) on the 10th business day following the
commencement of the offer period and, if appropriate, by no later
than 3.30 pm (London time) on the 10th business day following the
announcement in which any securities exchange offeror is first
identified. Relevant persons who deal in the relevant securities of
the offeree company or of a securities exchange offeror prior to
the deadline for making an Opening Position Disclosure must instead
make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes,
interested in 1 per cent. or more of any class of relevant
securities of the offeree company or of any securities exchange
offeror must make a Dealing Disclosure if the person deals in any
relevant securities of the offeree company or of any securities
exchange offeror. A Dealing Disclosure must contain details of the
dealing concerned and of the person's interests and short positions
in, and rights to subscribe for, any relevant securities of each of
(i) the offeree company and (ii) any securities exchange offeror,
save to the extent that these details have previously been
disclosed under Rule 8. A Dealing Disclosure by a person to whom
Rule 8.3(b) applies must be made by no later than 3.30 pm (London
time) on the business day following the date of the relevant
dealing.
If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire or control an
interest in relevant securities of an offeree company or a
securities exchange offeror, they will be deemed to be a single
person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree
company and by any offeror and Dealing Disclosures must also be
made by the offeree company, by any offeror and by any persons
acting in concert with any of them (see Rules 8.1, 8.2 and
8.4).
Details of the offeree and offeror companies in respect of whose
relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on
the Takeover Panel's website at www.takeoverpanel.org.uk, including
details of the number of relevant securities in issue, when the
offer period commenced and when any offeror was first identified.
You should contact the Panel's Market Surveillance Unit on +44
(0)20 7638 0129 if you are in any doubt as to whether you are
required to make an Opening Position Disclosure or a Dealing
Disclosure."
Further information
This Announcement is for information purposes only. It is not
intended to and does not constitute, or form part of, any offer,
invitation or the solicitation of any offer to purchase, otherwise
acquire, subscribe for, sell or otherwise dispose of any
securities, or the solicitation of any vote or approval in any
jurisdiction, pursuant to the Merger or otherwise, nor shall there
be any sale, issuance or transfer of securities in any jurisdiction
in contravention of applicable law. The Merger will be effected
solely by means of the Scheme Document which, together with the
Forms of Proxy, will contain the full terms and conditions of the
Merger including details of how to vote in respect of the
Merger.
Dixons will prepare the Scheme Document to be distributed to
Dixons Shareholders and Carphone will prepare the Carphone Circular
to be distributed to Carphone Shareholders. Carphone will also
publish the Dixons Carphone Prospectus containing information about
the New Dixons Carphone Shares and the Combined Group. Dixons urges
Dixons Shareholders to read the Scheme Document and the Dixons
Carphone Prospectus when they become available because they will
contain important information in relation to the Merger, the New
Dixons Carphone Shares and the Combined Group. Carphone urges
Carphone Shareholders to read the Carphone Circular and the Dixons
Carphone Prospectus when they become available because they will
contain important information in relation to the Merger, the New
Dixons Carphone Shares and the Combined Group. Any vote in respect
of the Scheme or other response in relation to the Merger should be
made only on the basis of the information contained in the Scheme
Document and the Dixons Carphone Prospectus, or the Carphone
Circular and the Dixons Carphone Prospectus, as appropriate.
This Announcement has been prepared for the purposes of
complying with English law, the rules of the London Stock Exchange
and the City Code and the information disclosed may not be the same
as that which would have been disclosed if this Announcement had
been prepared in accordance with the laws and regulations of any
jurisdiction outside the United Kingdom.
This Announcement does not constitute a prospectus or prospectus
equivalent document.
Please be aware that addresses, electronic addresses and certain
other information provided by Dixons Shareholders, persons with
information rights and other relevant persons for the receipt of
communications from Dixons may be provided to Carphone during the
Offer Period as required under Section 4 of Appendix 4 of the
Code.
Overseas jurisdictions
The release, publication or distribution of this Announcement in
jurisdictions other than in the United Kingdom may be restricted by
law and therefore any persons who are subject to the laws of any
jurisdiction other than the United Kingdom should inform themselves
about, and observe, any applicable requirements. Any failure to
comply with applicable requirements may constitute a violation of
the laws and/or regulations of any such jurisdiction. To the
fullest extent permitted by applicable law, the companies and
persons involved in the Merger disclaim any responsibility or
liability for the violation of such requirements by any person.
The availability of New Dixons Carphone Shares under the Merger
to Dixons Shareholders who are not resident in the United Kingdom
may be affected by the laws of the relevant jurisdictions in which
they are resident. Persons who are not resident in the UK should
inform themselves of, and observe, any applicable legal or
regulatory requirements.
The Merger relates to the acquisition of shares of a UK company
and is proposed to be effected by means of a scheme of arrangement
under the laws of England and Wales. A transaction effected by
means of a scheme of arrangement is not subject to proxy
solicitation or tender offer rules under the US Exchange Act.
Accordingly, the Scheme is subject to the disclosure requirements,
rules and practices applicable in the United Kingdom to schemes of
arrangement, which differ from the requirements of US proxy
solicitation or tender offer rules. However, if Carphone were to
elect to implement the Merger by means of a Merger Offer, such
Merger Offer will be made in compliance with all applicable laws
and regulations, including Section 14(e) of the US Exchange Act and
Regulation 14E thereunder. Such a Merger Offer would be made in the
United States by Carphone and no one else. In addition to any such
Merger Offer, Carphone, certain affiliated companies and the
nominees or brokers (acting as agents) may make certain purchases
of, or arrangements to purchase, shares in Dixons outside such
Merger Offer during the period in which such Merger Offer would
remain open for acceptance. If such purchases or arrangements to
purchase were to be made they would be made outside the United
States and would comply with applicable law, including the US
Exchange Act. Any information about such purchases will be
disclosed as required in the UK, will be reported to a Regulatory
Information Service and will be available on the London Stock
Exchange website: www.londonstockexchange.com.
The financial information included in this Announcement has been
prepared in accordance with accounting standards applicable in the
UK and thus may not be comparable to financial information of US
companies or companies whose financial statements are prepared in
accordance with generally accepted accounting principles in the
United States.
The New Dixons Carphone Shares have not been and will not be
registered under the US Securities Act or under the securities laws
of any state or other jurisdiction of the United States.
Accordingly, the New Dixons Carphone Shares may not be offered,
sold, resold, delivered, distributed or otherwise transferred,
directly or indirectly, in or into or from the United States absent
registration under the US Securities Act or an exemption therefrom.
The New Dixons Carphone Shares are expected to be issued in
reliance upon the exemption from the registration requirements of
the US Securities Act provided by Section 3(a)(10) thereof. Dixons
Shareholders (whether or not US persons) who are or will be
affiliates (within the meaning of the US Securities Act) of Dixons
or Carphone before, or of Carphone after, the Effective Date will
be subject to certain US transfer restrictions relating to the New
Dixons Carphone Shares received pursuant to the Scheme. For the
purposes of qualifying for the exemption from the registration
requirements of the US Securities Act afforded by Section 3(a)(10),
Dixons will advise the Court that its sanctioning of the Scheme
will be relied upon by Carphone as an approval of the Scheme
following a hearing on its fairness to Dixons Shareholders.
The receipt of New Dixons Carphone Shares pursuant to the Merger
by a US Dixons Shareholder may be a taxable transaction for US
federal income tax purposes and under applicable state and local,
as well as foreign and other, tax laws. Each Dixons Shareholder is
urged to consult his independent professional advisor immediately
regarding the tax consequences of the Merger.
It may be difficult for US Dixons Shareholders to enforce their
rights and claims arising out of the US federal securities laws,
since Carphone and Dixons are located in countries other than the
United States, and some or all of their officers and directors may
be residents of countries other than the United States. US Invensys
Shareholders may not be able to sue a non-US company or its
officers or directors in a non-US court for violations of the US
securities laws. Further, it may be difficult to compel a non-US
company and its affiliates to subject themselves to a US court's
judgment.
None of the securities referred to in this Announcement have
been approved or disapproved by the SEC, any state securities
commission in the United States or any other US regulatory
authority, nor have such authorities passed upon or determined the
adequacy or accuracy of the information contained in this
Announcement. Any representation to the contrary is a criminal
offence in the United States.
Unless otherwise determined by Carphone or required by the Code,
and permitted by applicable law and regulation, the Merger will not
be made available, directly or indirectly, in, into or from a
Restricted Jurisdiction where to do so would violate the laws in
that jurisdiction and no person may vote in favour of the Merger by
any such use, means, instrumentality or form within a Restricted
Jurisdiction or any other jurisdiction if to do so would constitute
a violation of the laws of that jurisdiction. Accordingly, copies
of this Announcement and all documents relating to the Merger are
not being, and must not be, directly or indirectly, mailed or
otherwise forwarded, distributed or sent in, into or from a
Restricted Jurisdiction where to do so would violate the laws in
that jurisdiction, and persons receiving this Announcement and all
documents relating to the Merger (including custodians, nominees
and trustees) must not mail or otherwise distribute or send them
in, into or from such jurisdictions where to do so would violate
the laws in that jurisdiction.
The availability of New Dixons Carphone Shares under the Merger
to Dixons Shareholders who are not resident in the United Kingdom
may be affected by the laws of the relevant jurisdictions in which
they are resident. Persons who are not resident in the UK should
inform themselves of, and observe, any applicable legal or
regulatory requirements.
Copies of this Announcement and formal documentation relating to
the Merger will not be and must not be, mailed or otherwise
forwarded, distributed or sent in, into or from any jurisdiction
where to do so would violate the laws of that jurisdiction.
Publication on websites and availability of hard copies
A copy of this Announcement will be available, subject to
certain restrictions relating to persons resident in Restricted
Jurisdictions, for inspection on Carphone's website at
www.cpwplc.com and on Dixons' website at www.dixonsretail.com by no
later than 12 noon (London time) on the day following this
Announcement. For the avoidance of doubt, the contents of those
websites are not incorporated and do not form part of this
Announcement.
Carphone Shareholders may request a hard copy of this
Announcement by contacting Tim Morris (Carphone Company Secretary
and General Counsel) during business hours on +44 20 8617 6002 or
by submitting a request in writing to Tim Morris at Carphone's Head
Office at 1 Portal Way, London, W3 6RS . Dixons Shareholders may
request a hard copy of this Announcement by contacting Capita Asset
Services during business hours on 0871 664 0321 or by submitting a
request in writing to Capita Asset Services at the Registry, 34
Beckenham Road, Beckenham, Kent, BR3 4TU.
Rounding
Certain figures included in this Announcement have been
subjected to rounding adjustments. Accordingly, figures shown for
the same category presented in different tables may vary slightly
and figures shown as totals in certain tables may not be an
arithmetic aggregation of the figures that precede them.
Appendix I
Conditions and further terms of the offer
Part a
Conditions To the Merger
1. The Merger will be conditional upon the Scheme becoming
unconditional and Effective, subject to the Code, by not later than
31 December 2014 or such later date (if any) as Carphone and Dixons
may agree and (if required) the Court and the Panel may allow.
2. The Scheme will be subject to the following conditions:
a) its approval by a majority in number of the Dixons
Shareholders representing not less than 75 per cent. in value of
the Dixons Shares voted by those Dixons Shareholders who are
present and vote, whether in person or by proxy, at the Court
Meeting or at any adjournment of that meeting on or before the 22nd
day after the date of the Court Meeting as set out in the Scheme
Document (or such later date as Dixons and Carphone may agree and
the Court may allow);
b) the resolutions required to approve and implement the Scheme
and the Capital Reduction being duly passed by the requisite
majorities of Dixons Shareholders at the Dixons General Meeting or
at any adjournment of that meeting on or before the 22nd day after
the date of the Dixons General Meeting as set out in the Scheme
Document (or such later date as Dixons and Carphone may agree and
the Court may allow); and
c) the sanction of the Scheme (with or without modification but
subject to any modification being on terms acceptable to Carphone
and Dixons) and the confirmation of the Capital Reduction by the
Court and (a) the delivery of office copies of each of the Court
Orders and the Statement of Capital to the Registrar of Companies
and (b) if so ordered by the Court, the registration of the Court
Orders and the Statement of Capital, and the Court hearing to
sanction the Scheme being held on or before the 22nd day after the
expected date of the Court sanction hearing as set out in the
Scheme Document (or such later date as Dixons and Carphone may
agree and the Court may allow).
3. In addition, subject as stated in Part B below and to the
requirements of the Panel, the Merger will be conditional upon the
following Conditions and, accordingly, the necessary actions to
make the Scheme effective will not be taken unless such Conditions
(as amended if appropriate) have been satisfied or, where relevant,
waived:
Approval of Carphone Shareholders
a) the resolutions of Carphone Shareholders required to: (i)
approve, effect and implement the Merger, and (ii) confer
authorities for the issue and allotment of the New Dixons Carphone
Shares to be issued in connection with the Merger (but excluding,
for the avoidance of doubt, the other resolutions to be proposed at
the Carphone General Meeting which shall not be conditions to the
Merger), being duly passed at the Carphone General Meeting (or at
any adjournment thereof) in each case by the requisite majority of
Carphone Shareholders;
Admission of the New Dixons Carphone Shares
b) the UK Listing Authority having acknowledged to Carphone or
its agent (and such acknowledgement not having been withdrawn) that
the application for the admission of the New Dixons Carphone Shares
to the Official List with a premium listing has been approved and
(after satisfaction of any conditions to which such approval is
expressed to be subject ("listing conditions") will become
effective as soon as a dealing notice has been issued by the UK
Listing Authority and any listing conditions having been satisfied
and (ii) the London Stock Exchange having acknowledged to Carphone
or its agent (and such acknowledgement not having been withdrawn)
that the New Dixons Carphone Shares will be admitted to trading on
the main market of the London Stock Exchange;
European Commission or National Competition Authority clearance
as appropriate
c) insofar as the Merger falls within the scope of Council
Regulation (EC) 139/2004 (the "Regulation"):
(i) the European Commission taking a decision, on terms
satisfactory to Dixons and Carphone (acting reasonably), that it
shall not initiate proceedings under Article 6(1)(c) of the
Regulation in relation to the Merger or any matter arising from or
relating to the Merger;
(ii) if the European Commission makes a referral under Article
9(1) of the Regulation to the competent authorities of a National
Competition Authority ("NCA") of any Member State other than the
UK, that NCA taking a decision on terms satisfactory to Dixons and
Carphone (acting reasonably) of equivalent effect to that set out
in sub-paragraph (i) above; and
(iii) if the European Commission makes a referral under Article
9(1) of the Regulation to the competent UK authority (being the
Competition and Markets Authority, the "CMA"), it being established
on terms satisfactory to Dixons and Carphone (acting reasonably)
that the CMA has decided not to refer the Merger or any part of it
to the CMA's chair for the constitution of a group under Schedule 4
to the Enterprise and Regulatory Reform Act 2013.
Notifications, waiting periods and authorisations
d) other than in relation to the matters referred to in
Conditions 3(a) to (c), all material notifications, filings or
applications which are necessary or reasonably considered
appropriate in connection with the Merger having been made and all
necessary waiting periods (including any extensions thereof) under
any applicable legislation or regulation of any jurisdiction having
expired, lapsed or been terminated (as appropriate) and all
statutory and regulatory obligations in any jurisdiction having
been complied with in each case in respect of the Merger and all
Authorisations deemed necessary or reasonably appropriate by
Carphone and Dixons in any jurisdiction for or in respect of the
Merger and, except pursuant to Chapter 3 of Part 28 of the
Companies Act, the acquisition or the proposed acquisition of any
shares or other securities in, or control or management of, Dixons,
by Carphone having been obtained in terms and in a form reasonably
satisfactory to Carphone and Dixons from all appropriate Third
Parties or (without prejudice to the generality of the foregoing)
from any person or bodies with whom any member of the Wider Dixons
Group or the Wider Carphone Group has entered into contractual
arrangements and all such Authorisations necessary, appropriate or
desirable to carry on the business of any member of the Wider
Dixons Group or the Wider Carphone Group in any jurisdiction having
been obtained and all such Authorisations remaining in full force
and effect at the time at which the Merger becomes otherwise wholly
unconditional and there being no notice or intimation of an
intention to revoke, suspend, restrict, modify or not to renew such
Authorisations;
General anti-trust and regulatory
e) other than in relation to the matters referred to in
Conditions 3(b) and (c), no anti-trust regulator or Third Party
having given notice of a decision to take, institute, implement or
threaten any action, proceeding, suit, investigation, inquiry or
reference (and in each case, not having withdrawn the same), or
having required any action to be taken or otherwise having done
anything, or having enacted, made or proposed any statute,
regulation, decision, order or change to published practice (and in
each case, not having withdrawn the same) and there not continuing
to be outstanding any statute, regulation, decision or order which
would or might reasonably be expected to (in any case which is
material in the context of the Merger):
i. require, prevent or materially delay or affect the
divestiture or materially prejudice the terms envisaged for such
divestiture by any member of the Wider Carphone Group or by any
member of the Wider Dixons Group of all or any material part of
their respective businesses, assets, property, shares or other
securities in Carphone or Dixons or impose any limitation on the
ability of all or any of them to conduct their businesses (or any
part thereof) or to own, control or manage any of their assets or
properties (or any part thereof) to an extent which is material in
the context of the Wider Dixons Group or Wider Carphone Group (as
the case may be) taken as a whole;
ii. except pursuant to Chapter 3 of Part 28 of the Companies
Act, require any member of the Wider Carphone Group or the Wider
Dixons Group to acquire or offer to acquire any shares, other
securities (or the equivalent) or interest in any member of the
Wider Dixons Group or the Wider Carphone Group or any asset owned
by any Third Party (other than in the implementation of the
Merger);
iii. impose any material limitation on, or result in a material
delay in, the ability of any member of the Wider Carphone Group
directly or indirectly to acquire, hold or to exercise effectively
all or any rights of ownership in respect of shares or other
securities in Dixons or on the ability of any member of the Wider
Dixons Group or any member of the Wider Carphone Group directly or
indirectly to hold or exercise effectively all or any rights of
ownership in respect of shares or other securities (or the
equivalent) in, or to exercise voting or management control over,
any member of the Wider Dixons Group or the Wider Carphone Group to
an extent which is material in the context of the Wider Dixons
Group or the Wider Carphone Group (as the case may be) taken as a
whole;
iv. otherwise adversely affect any or all of the business,
assets, financial or trading position, profits or prospects of any
member of the Wider Dixons Group or any member of the Wider
Carphone Group to an extent which is material in the context of the
Wider Dixons Group or Wider Carphone Group (as the case may be)
taken as a whole;
v. result in any member of the Wider Dixons Group or any member
of the Wider Carphone Group ceasing to be able to carry on business
under any name under which it presently carries on business;
vi. make the Merger or its implementation, or the acquisition or
proposed acquisition of any shares or other securities in, or
control or management of, Dixons by any member of the Wider
Carphone Group, void, unenforceable and/or illegal under the laws
of any relevant jurisdiction, or otherwise, directly or indirectly,
materially prevent or prohibit, restrict, restrain, or delay the
same or to a material extent or otherwise materially interfere with
the Merger or its implementation, or impose material additional
conditions or obligations with respect to, or otherwise materially
challenge, impede, interfere or require material amendment of the
Merger or the acquisition or proposed acquisition of any shares or
other securities in, or control or management of, Dixons by any
member of the Wider Carphone Group to an extent which is material
in the context of the Merger;
vii. require, prevent or materially delay a divestiture by any
member of the Wider Carphone Group or the Wider Dixons Group of any
shares or other securities (or the equivalent) in any member of the
Wider Dixons Group or any member of the Wider Carphone Group to an
extent which is material in the context of the Wider Dixons Group
or Wider Carphone Group (as the case may be) taken as a whole;
or
viii. impose any material limitation on the ability of any
member of the Wider Carphone Group or any member of the Wider
Dixons Group to conduct, integrate or co-ordinate all or any part
of its business with all or any part of the business of any other
member of the Wider Carphone Group and/or the Wider Dixons Group to
an extent which is material in the context of the Wider Dixons
Group or Wider Carphone Group (as the case may be) taken as a
whole,
and all applicable waiting and other time periods (including any
extensions thereof) during which any such anti-trust regulator or
Third Party could decide to take, institute, implement or threaten
any such action, proceeding, suit, investigation, enquiry or
reference or take any other step under the laws of any jurisdiction
in respect of the Merger having expired, lapsed or been
terminated;
Certain matters arising as a result of any arrangement,
agreement, etc.
f) except as Disclosed, there being no provision of any
arrangement, agreement, lease, licence, franchise, permit or other
instrument to which any member of the Wider Dixons Group or the
Wider Carphone Group is a party or by or to which any such member
or any of its assets is or may be bound, entitled or subject or any
event or circumstance which, as a consequence of the Merger or
because of a change in the control of Dixons or any other member of
the Wider Dixons Group, could or might reasonably be expected to
result in (in any case to an extent which is or would be material
in the context of the Wider Dixons Group or the Wider Carphone
Group taken as a whole):
i. any monies borrowed by, or any other indebtedness, actual or
contingent, of, or any grant available to, any member of the Wider
Dixons Group or the Wider Carphone Group being or becoming
repayable, or capable of being declared repayable, immediately or
prior to its or their stated maturity date or repayment date, or
the ability of any such member to borrow monies or incur any
indebtedness being withdrawn or inhibited or being capable of
becoming or being withdrawn or inhibited;
ii. the creation or enforcement of any mortgage, charge or other
security interest over the whole or any part of the business,
property or assets of any member of the Wider Dixons Group or the
Wider Carphone Group or any such mortgage, charge or other security
interest (whenever created, arising or having arisen) becoming
enforceable;
iii. any such arrangement, agreement, lease, licence, franchise,
permit or other instrument being terminated or the rights,
liabilities, obligations or interests of any member of the Wider
Dixons Group or the Wider Carphone Group therein being adversely
modified or adversely affected or any obligation or liability
arising or any adverse action being taken or arising
thereunder;
iv. any liability of any member of the Wider Dixons Group or the
Wider Carphone Group to make any severance, termination, bonus or
other payment to any of its directors or other officers;
v. the rights, liabilities, obligations, interests or business
of any member of the Wider Dixons Group or the Wider Carphone Group
under any such arrangement, agreement, lease, licence, franchise,
permit or other instrument, or the interests or business of any
member of the Wider Dixons Group or the Wider Carphone Group in or
with any other person, body, firm or company (or any agreement or
arrangement relating to any such interests or business) being or
becoming capable of being terminated, or adversely modified or
affected or any onerous obligation or liability arising or any
adverse action being taken thereunder;
vi. any member of the Wider Dixons Group or the Wider Carphone
Group ceasing to be able to carry on business under any name under
which it presently carries on business;
vii. the value of, or the financial or trading position or
prospects of, any member of the Wider Dixons Group or the Wider
Carphone Group being prejudiced or adversely affected; or
viii. the creation or acceleration of any liability (actual or
contingent) by any member of the Wider Dixons Group or the Wider
Carphone Group other than trade creditors or other liabilities
incurred in the ordinary course of business,
and no event having occurred which, under any provision of any
arrangement, agreement, lease, licence, franchise, permit or other
instrument to which any member of the Wider Dixons Group or the
Wider Carphone Group is a party or by or to which any such member
or any of its assets are bound, entitled or subject, would be
expected to result in any of the events or circumstances as are
referred to in Conditions (f)(i) to (viii) (in each case to an
extent which is material in the context of the Wider Dixons Group
or the Wider Carphone Group taken as a whole);
Certain events occurring since publication of half-year
results
g) except as Disclosed and except, where relevant, as between
Dixons and wholly owned subsidiaries of Dixons, or as between
Carphone and wholly owned subsidiaries of Carphone, or between the
wholly owned subsidiaries of Dixons, or between the wholly owned
subsidiaries of Carphone, no member of the Wider Dixons Group or
the Wider Carphone Group having, since in the case of Carphone, 28
September 2013, or, in the case of Dixons, 31 October 2013:
i. issued or agreed to issue or authorised or proposed or
announced its intention to authorise or propose the issue, of
additional shares of any class, or securities or securities
convertible into, or exchangeable for, or rights, warrants or
options to subscribe for or acquire, any such shares, securities or
convertible securities or transferred or sold or agreed to transfer
or sell or authorised or proposed the transfer or sale of Dixons
Shares out of treasury or Carphone Shares out of treasury (except
for the issue or transfer out of treasury of Dixons Shares on the
exercise of employee share options or vesting of employee share
awards in the ordinary course under the Dixons Share Schemes, and
except for the issue or transfer out of treasury of Carphone Shares
on the exercise of employee share options or vesting of employee
share awards in the ordinary course under the Carphone Share
Schemes);
ii. except for an ordinary course final dividend of 4 pence per
Carphone Share to be declared to Carphone Shareholders prior to the
Effective Date, recommended, declared, paid or made or proposed to
recommend, declare, pay or make any bonus, dividend or other
distribution (whether payable in cash or otherwise);
iii. other than pursuant to the Merger (and except for
transactions in the ordinary course of business) implemented,
effected, authorised or proposed or announced its intention to
implement, effect, authorise or propose any merger, demerger,
reconstruction, amalgamation, scheme, commitment or acquisition or
disposal of assets or shares or loan capital (or the equivalent
thereof) in any undertaking or undertakings in any such case to an
extent which is material in the context of the Wider Dixons Group
or the Wider Carphone Group taken as a whole;
iv. except for transactions in the ordinary course of business
disposed of, or transferred, mortgaged or created any security
interest over any material asset or any right, title or interest in
any material asset or authorised, proposed or announced any
intention to do so;
v. issued, authorised or proposed or announced an intention to
authorise or propose, the issue of or made any change in or to the
terms of any debentures or become subject to any contingent
liability or incurred or increased any indebtedness which is
material in the context of the Wider Dixons Group or the Wider
Carphone Group as a whole;
vi. entered into or varied or authorised, proposed or announced
its intention to enter into or vary any material contract,
arrangement, agreement, transaction or commitment (whether in
respect of capital expenditure or otherwise) except in the ordinary
course of business which is of a long-term, unusual or onerous
nature or magnitude or which is or which involves or could involve
an obligation of a nature or magnitude which is reasonably likely
to be materially restrictive on the business of any member of the
Wider Dixons Group or the Wider Carphone Group which, taken
together with any other such material transaction, arrangement,
agreement, contract or commitment, is material in the context of
the Wider Dixons Group or the Wider Carphone Group as a whole;
vii. entered into or varied the terms of, or made any offer
(which remains open for acceptance) to enter into or vary to a
material extent the terms of any contract, service agreement,
commitment or arrangement with any director or, except for salary
increases, bonuses or variations of terms in the ordinary course,
senior executive of any member of the Wider Dixons Group or the
Wider Carphone Group;
viii. proposed, agreed to provide or modified the terms of any
share option scheme, incentive scheme or other benefit relating to
the employment or termination of employment of any employee of the
Wider Dixons Group or the Wider Carphone Group which are material
in the context of the Wider Dixons Group or the Wider Carphone
Group taken as a whole;
ix. purchased, redeemed or repaid or announced any proposal to
purchase, redeem or repay any of its own shares or other securities
or reduced or, except in respect of the matters mentioned in
sub-paragraph (i) above, made any other change to any part of its
share capital;
x. except in the ordinary course of business, waived,
compromised or settled any claim which is material in the context
of the Wider Dixons Group or the Wider Carphone Group as a
whole;
xi. terminated or varied the terms of any agreement or
arrangement between any member of the Wider Dixons Group or the
Wider Carphone Group and any other person in a manner which would
or might reasonably be expected to have a material adverse effect
on the financial position of the Wider Dixons Group or the Wider
Carphone Group taken as a whole;
xii. made any material alteration to its memorandum or articles
of association or other incorporation documents;
xiii. except in relation to changes made or agreed as a result
of, or arising from, changes to legislation, made or agreed or
consented to any significant change to:
a) the terms of the trust deeds and rules constituting the
pension scheme(s) established by any member of the Wider Dixons
Group or the Wider Carphone Group for its directors, employees or
their dependants;
b) the contributions payable to any such scheme(s) or to the
benefits which accrue, or to the pensions which are payable,
thereunder;
c) the basis on which qualification for, or accrual or
entitlement to, such benefits or pensions are calculated or
determined; or
d) the basis upon which the liabilities (including pensions) of
such pension schemes are funded, valued, made, agreed or consented
to,
to an extent which is in any such case material in the context
of the Wider Dixons Group or the Wider Carphone Group;
xiv. been unable, or admitted in writing that it is unable, to
pay its debts or commenced negotiations with one or more of its
creditors with a view to rescheduling or restructuring any of its
indebtedness, or having stopped or suspended (or threatened to stop
or suspend) payment of its debts generally or ceased or threatened
to cease carrying on all or a substantial part of its business
which is material in the context of the Wider Dixons Group or the
Wider Carphone Group taken as a whole;
xv. (other than in respect of a member of the Wider Dixons Group
or the Wider Carphone Group which is dormant and was solvent at the
relevant time) taken or proposed any steps, corporate action or had
any legal proceedings instituted or threatened against it in
relation to the suspension of payments, a moratorium of any
indebtedness, its winding-up (voluntary or otherwise), dissolution,
reorganisation or for the appointment of a receiver, administrator,
manager, administrative receiver, trustee or similar officer of all
or any material part of its assets or revenues or any analogous or
equivalent steps or proceedings in any jurisdiction or appointed
any analogous person in any jurisdiction or had any such person
appointed;
xvi. made, authorised, proposed or announced an intention to
propose any change in its loan capital;
xvii. entered into, implemented or authorised the entry into,
any joint venture, asset or profit sharing arrangement, partnership
or merger of business or corporate entities; or
xviii. entered into any agreement, arrangement, commitment or
contract or passed any resolution or made any offer (which remains
open for acceptance) with respect to or announced an intention to,
or to propose to, effect any of the transactions, matters or events
referred to in this Condition 3(g);
No adverse change, litigation, regulatory enquiry or similar
h) except as Disclosed, since, in the case of Carphone, 28
September 2013, or, in the case of Dixons, 31 October 2013, there
having been:
i. no adverse change and no circumstance having arisen which
would or might be expected to result in any adverse change in, the
business, assets, financial or trading position or profits or
prospects or operational performance of any member of the Wider
Dixons Group or the Wider Carphone Group which is material in the
context of the Wider Dixons Group or the Wider Carphone Group;
ii. no litigation, arbitration proceedings, prosecution or other
legal proceedings having been threatened, announced or instituted
by or against or remaining outstanding against or in respect of,
any member of the Wider Dixons Group or the Wider Carphone Group or
to which any member of the Wider Dixons Group or the Wider Carphone
Group is or may become a party (whether as claimant, defendant or
otherwise) having been threatened, announced, instituted or
remaining outstanding by, against or in respect of, any member of
the Wider Dixons Group or the Wider Carphone Group, in each case
which might reasonably be expected to have a material adverse
effect on the Wider Dixons Group or the Wider Carphone Group taken
as a whole;
iii. no enquiry, review or investigation by, or complaint or
reference to, any Third Party against or in respect of any member
of the Wider Dixons Group or the Wider Carphone Group having been
threatened, announced or instituted or remaining outstanding by,
against or in respect of any member of the Wider Dixons Group or
the Wider Carphone Group, in each case which might reasonably be
expected to have a material adverse effect on the Wider Dixons
Group or the Wider Carphone Group taken as a whole;
iv. no contingent or other liability having arisen or become
apparent to Carphone or Dixons or increased other than in the
ordinary course of business which is reasonably likely to affect
adversely the business, assets, financial or trading position or
profits or prospects of any member of the Wider Dixons Group or the
Wider Carphone Group to an extent which is material in the context
of the Wider Dixons Group or the Wider Carphone Group taken as a
whole; and
v. no steps having been taken and no omissions having been made
which are reasonably likely to result in the withdrawal,
cancellation, termination or modification of any licence held by
any member of the Wider Dixons Group or the Wider Carphone Group
which is necessary for the proper carrying on of its business and
the withdrawal, cancellation, termination or modification of which
might reasonably be expected to have a material adverse effect on
the Wider Dixons Group or the Wider Carphone Group taken as a
whole;
No discovery of certain matters regarding information,
liabilities and environmental issues
i) except as Disclosed, Carphone not having discovered in
relation to the Wider Dixons Group and Dixons not having discovered
in relation to the Wider Carphone Group:
i. that any financial, business or other information concerning
the Wider Dixons Group or the Wider Carphone Group publicly
announced prior to the date of this Announcement or disclosed at
any time to any member of the Wider Carphone Group or to any of
their advisers by or on behalf of any member of the Wider Dixons
Group, or to any member of the Wider Dixons Group or to any of
their advisers by or on behalf of any member of the Wider Carphone
Group, prior to the date of this Announcement is misleading,
contains a material misrepresentation of any fact, or omits to
state a fact necessary to make that information not misleading, to
an extent which in any such case is material in the context of the
Wider Dixons Group or the Wider Carphone Group taken as a
whole;
ii. that any member of the Wider Dixons Group or the Wider
Carphone Group or any partnership, company or other entity in which
any member of the Wider Dixons Group or the Wider Carphone Group
has a significant economic interest and which is not a subsidiary
undertaking of Dixons or Carphone is, otherwise than in the
ordinary course of business, subject to any liability, contingent
or otherwise and which is material in the context of the Wider
Dixons Group or the Wider Carphone Group taken as a whole or in the
context of the Merger;
iii. that any past or present member of the Wider Dixons Group
or the Wider Carphone Group has not complied in any material
respect with all applicable legislation, regulations or other
requirements of any jurisdiction or any Authorisations relating to
the use, treatment, storage, carriage, disposal, discharge,
spillage, release, leak or emission of any waste or hazardous
substance or any substance likely to impair the environment
(including any property) or harm human or animal health or
otherwise relating to environmental matters or the health and
safety of humans, which non-compliance would be likely to give rise
to any material liability including any penalty for non-compliance
(whether actual or contingent) on the part of any member of the
Wider Dixons Group or the Wider Carphone Group which in any case is
material in the context of the Wider Dixons Group or the Wider
Carphone Group taken as a whole;
iv. that there has been a material disposal, discharge,
spillage, accumulation, release, leak, emission or the migration,
production, supply, treatment, storage, transport or use of any
waste or hazardous substance or any substance likely to impair the
environment (including any property) or harm human or animal health
which (whether or not giving rise to non-compliance with any law or
regulation), would be likely to give rise to any material liability
(whether actual or contingent) on the part of any member of the
Wider Dixons Group or the Wider Carphone Group which in any case is
material in the context of the Wider Dixons Group or the Wider
Carphone Group taken as a whole;
v. that there is or is reasonably likely to be any material
obligation or liability (whether actual or contingent) or
requirement to make good, remediate, repair, reinstate or clean up
any property, asset or any controlled waters currently or
previously owned, occupied, operated or made use of or controlled
by any past or present member of the Wider Dixons Group or the
Wider Carphone Group (or on its behalf), or in which any such
member may have or previously have had or be deemed to have had an
interest, under any environmental legislation, common law,
regulation, notice, circular, Authorisation or order of any Third
Party in any jurisdiction or to contribute to the cost thereof or
associated therewith or indemnify any person in relation thereto
which in any case is material in the context of the Wider Dixons
Group or the Wider Carphone Group taken as a whole;
vi. that circumstances exist (whether as a result of making the
Merger or otherwise) which would be reasonably likely to lead to
any Third Party instituting (or whereby any member of the Wider
Dixons Group or the Wider Carphone Group would be likely to be
required to institute) an environmental audit or take any steps
which would in any such case be reasonably likely to result in any
actual or contingent liability to improve or install new plant or
equipment or to make good, repair, reinstate or clean up any
property of any description or any asset now or previously owned,
occupied or made use of by any past or present member of the Wider
Dixons Group or the Wider Carphone Group (or on its behalf) or by
any person for which a member of the Wider Dixons Group or the
Wider Carphone Group is or has been responsible, or in which any
such member may have or previously have had or be deemed to have
had an interest, which in any case is material in the context of
the Wider Dixons Group or the Wider Carphone Group taken as a
whole; or
vii. that circumstances exist whereby a person or class of
persons have or is reasonably likely to have any legitimate claim
or claims in respect of any product or process, or materials used
therein, now or previously manufactured, sold, supplied or carried
out by any past or present member of the Wider Dixons Group or the
Wider Carphone Group which in each case is material in the context
of the Wider Dixons Group or the Wider Carphone Group taken as a
whole.
B. CERTAIN FURTHER TERMS OF THE SCHEME AND THE MERGER
1. Subject to the requirements of the Panel, Carphone reserves
the right to waive, in whole or in part, Conditions 3(d) to (i)
(inclusive), so far as they relate to Dixons, the Wider Dixons
Group or any part thereof.
2. Subject to the requirements of the Panel, Dixons reserves the
right to waive, in whole or in part, Conditions 3(d) to (i)
(inclusive), so far as they relate to Carphone, the Wider Carphone
Group or any part thereof.
3. The Scheme will not become Effective unless the Conditions
have been fulfilled or (if capable of waiver) waived or, where
appropriate, have been determined by Carphone and Dixons to be or
remain satisfied by no later than the date referred to in Condition
1 (or such later date as Carphone and Dixons may agree and (if
required) the Panel and the Court may allow).
4. Neither Carphone nor Dixons shall be under any obligation to
waive (if capable of waiver), to determine to be or remain
satisfied or to treat as fulfilled any of Conditions 3(d) to (i)
(inclusive) (insofar as they apply to each of them) by a date
earlier than the latest date for the fulfilment of that Condition
notwithstanding that the other Conditions of the Merger may at such
earlier date have been waived or fulfilled and that there are at
such earlier date no circumstances indicating that any of such
Conditions may not be capable of fulfilment.
5. Carphone reserves the right to elect, with the consent of the
Panel and with Dixons' prior written consent (such consent, for the
avoidance of doubt, to also be required in the case of any offer to
be made by Carphone in the event Condition 3(d) is not satisfied),
to implement the merger by way of a Merger Offer. In such event,
the merger will be implemented on substantially the same terms
subject to appropriate amendments (including, without limitation,
an acceptance condition set at 90 per cent. (or such other
percentage being more than 50 per cent. as Carphone and Dixons may
agree) of the shares to which the Merger Offer relates and of the
voting rights carried by those shares), so far as applicable, as
those which would apply to the Scheme.
6. The Merger will lapse if:
(a) in so far as the Merger or any matter arising from the
Scheme or Merger constitutes a concentration with a Community
dimension within the scope of the Regulation, the European
Commission either initiates proceedings under Article 6(1)(c) of
the Regulation or makes a referral to a competent authority of the
United Kingdom under Article 9(1) of the Regulation and there is
then a reference to the Competition and Markets Authority; or
(b) in so far as the Merger or any matter arising from the
Scheme or Merger does not constitute a concentration with a
Community dimension within the scope of the Regulation, the Scheme
or Merger or any part of it becomes subject to a CMA Phase 2
Reference,
in each case, before the date of the Court Meeting.
7. The availability of the Merger to persons not resident in the
United Kingdom may be affected by the laws of the relevant
jurisdictions. Persons who are not resident in the United Kingdom
should inform themselves about and observe any applicable
requirements.
8. The Merger is not being made, directly or indirectly, in,
into or from, or by use of the mails of, or by any means of
instrumentality (including, but not limited to, facsimile, e-mail
or other electronic transmission, telex or telephone) of interstate
or foreign commerce of, or of any facility of a national, state or
other securities exchange of, any jurisdiction where to do so would
violate the laws of that jurisdiction.
9. Fractions of New Dixons Carphone Shares will not be allotted
or issued to Dixons Shareholders pursuant to the Scheme. Fractional
entitlements to New Dixons Carphone Shares will be rounded down to
the nearest whole number of New Dixons Carphone Shares.
10. If the Scheme becomes Effective, the new Dixons shares to be
issued pursuant to the Scheme will be acquired by Carphone fully
paid and free from all liens, charges, equitable interests,
encumbrances, rights of pre-emption and any other rights and
interests of any nature whatsoever and together with all rights now
and hereafter attaching thereto, including voting rights and, save
as referred to below, the right to receive and retain in full all
dividends and other distributions (if any) declared, made or paid
on or after the Effective Date.
11. The Merger and the Scheme will be governed by the law of
England and Wales and will be subject to the jurisdiction of the
English courts and to the Conditions and further terms set out in
this Appendix 1 and to be set out in the Scheme Document. The
Scheme will be subject to applicable requirements of the Code, the
Panel, the London Stock Exchange, the FCA and the UK Listing
Authority.
12. Each of the Conditions shall be regarded as a separate
Condition and shall not be limited by reference to any other
Condition.
APPENDIX II
BASES AND SOURCES OF INFORMATION
1. As at the close of business on 14 May 2014 (being the latest
practicable date prior to this Announcement), there were
3,661,153,393 Dixons Shares in issue. The International Securities
Identification Number for Dixons Shares is GB0000472455.
2. The maximum number of Dixons Shares that will be exchanged
for Dixons Carphone Shares, will be 3,716, 566,252 following
settlement of those options and awards over Dixons shares which
will vest as a result of the Merger.
3. As at the close of business on 14 May 2014 (being the latest
practicable date prior to this Announcement), there were
576,067,769 Carphone Shares in issue. The International Securities
Identification Number for Carphone Shares is GB00B4Y7R145.
APPENDIX III
Details of DIRECTORS' Irrevocable undertakingS
Irrevocable undertakings in respect of Dixons Shares
The following persons have given irrevocable undertakings to
vote in favour of the Scheme at the Court Meeting and the related
resolutions to be proposed at the Dixons General Meeting in
relation to the following Dixons Shares:
-------------------------------------------------------------------------------
Name of shareholder giving Total number of Dixons Percentage of issued
irrevocable undertaking Shares in respect ordinary share capital
of which undertaking of Dixons
given
---------------------------- ----------------------- ------------------------
Dixons Directors:
John Allan CBE 1,180,818 0.032%
Sebastian James 109,072 0.003%
Humphrey Singer 92,495 0.003%
Katie Bickerstaffe 208,657 0.006%
Tim How 80,000 0.002%
Jock Lennox 75,000 0.002%
Dharmash Mistry 267,382 0.007%
Prof. Dr. Utho Creusen 97,071 0.003%
Andrea Gisle Joosen 39,200 0.001%
Total 2,149,695 0.059%
---------------------------- ----------------------- ------------------------
Irrevocable undertakings in respect of Carphone Shares
The following persons have given irrevocable undertakings to
vote in favour of the resolutions to be proposed at the Carphone
General Meeting to approve the Merger and related resolutions
to be proposed at the Carphone General Meeting in relation to
the following Carphone Shares:
---------------------------------------------------------------------------------
Name of shareholder giving Total number of Carphone Percentage of issued
irrevocable undertaking Shares in respect ordinary share capital
of which undertaking of Carphone
given
---------------------------- ------------------------- ------------------------
Carphone Directors:
---------------------------- ------------------------- ------------------------
Sir Charles Dunstone 135,083,481 23.45%
Roger Taylor 9,808,554 1.70%
Andrew Harrison 5,000,000 0.87%
Nigel Langstaff 3,654,180 0.63%
John Gildersleeve 123,000 0.02%
John Allwood 10,000 0.00%
Baroness Sally Morgan 991 0.00%
Total 153,680,206 26.68%
---------------------------- ------------------------- ------------------------
The irrevocable undertakings from the Carphone Directors and
the Dixons Directors shall each lapse if the Scheme Document,
Carphone Circular and Dixons Carphone Prospectus are not published
by the end of June 2014 (or such later date as Dixons and Carphone
may agree), or if the Scheme does not become effective or lapses
in accordance with its terms or is withdrawn, or any competing
offer for either Dixons or Carphone is made which is declared
wholly unconditional or otherwise becomes effective.
APPENDIX IV
QUANTIFIED FINANCIAL BENEFITS STATEMENT
Part A
Paragraph 8 of this Announcement (Synergies and integration)
includes statements of estimated cost savings and synergies arising
from the Merger (together, the "Quantified Financial Benefits
Statement").
A copy of the Quantified Financial Benefits Statement is set out
below:
"The Carphone Directors and Dixons Directors, having reviewed
and analysed the potential benefits of the Merger, based on their
experience of operating in the consumer electrical and mobile
retail sectors, and taking into account the factors they can
influence, believe that the Combined Group will be able to achieve
integrated mobile retailing and procurement synergies, together
with cost savings, of at least GBP80 million on a recurring basis,
which are expected to be delivered in full in the financial year
2017/18. The Boards of Carphone and Dixons expect Dixons Carphone
to deliver these synergies progressively, achieving almost half of
them in financial year 2015/16.
The principal sources of quantified synergies are as
follows:
- approximately half of the identified synergies are expected to
come from integrated mobile retailing and procurement synergies.
These comprise synergies in the UK, Ireland and the Nordics
resulting from creating an integrated mobile offering in Dixons
shops, which will promote a seamless customer journey across all
technology categories, underpinned by the use of Carphone's
expertise in mobile, together with procurement benefits resulting
from the Combined Group's scale; and
- approximately half are expected to come from synergies,
including rent and other infrastructure costs, resulting from the
rationalisation of certain operational and support functions where
there is duplication, both across the UK and in the Nordic
regions.
In addition to these quantified synergies, the Carphone
Directors and the Dixons Directors believe that further value will
be created through additional growth opportunities including:
- enhanced revenue opportunities from an improved customer
offering across electrical, mobiles and connectivity, enabled by a
true multi-channel approach, including a wider and more convenient
combined footprint for customers;
- developing a world class service proposition for customers; and
- enhancement of the existing Connected World Services
opportunities for both existing and new business partners around
the globe.
It is expected that there will be significant job creation
through the rollout of the Dixons Carphone integrated retail
offering, resulting in an increase of approximately 4 per cent. of
the Combined Group's full-time equivalent employees. This is
expected to be substantially complete by the end of 2016. This
increase will be partially offset as a result of the
rationalisation of certain operational and support functions
resulting, in these functions, in a decrease of approximately 2 per
cent. of the Combined Group's full-time equivalent employees. Any
changes related to the rationalisation are unlikely to take effect
prior to 2015 and are anticipated to be implemented gradually over
the three years after Completion. Taken together with the job
creation opportunities, it is expected there will be a net increase
of approximately 2 per cent. of the Combined Group's full-time
equivalent employees as a result of the Merger. The integration of
the businesses will clearly require some roles to change but, with
more new roles being created than those that are lost, it is hoped
that there will be opportunities for many of the people involved.
Specific roles have not yet been identified, outcomes will depend
on integration planning and will, of course, be subject to
consultation with our colleagues.
It is expected that the realisation of the identified synergies
will result in one-off exceptional costs of approximately GBP55 -
60 million, largely incurred by the end of financial year 2015/16.
It is also expected that incremental capital expenditure of
approximately GBP60 - 70 million will be incurred during the period
to the end of financial year 2017/18. Aside from the integration
costs and the planned incremental capital expenditure, no material
dis-synergies are expected in connection with the Merger. The
identified synergies will accrue as a direct result of the Merger
and would not be achieved on a standalone basis."
Further information on the bases of belief supporting the
Quantified Financial Benefits Statement, including the principal
assumptions and sources of information, is set out below.
Bases of belief
Following initial discussions regarding the Merger in February
2014, Carphone and Dixons established a joint synergy development
team to evaluate and assess the potential synergies available for
the integration and undertake an initial planning exercise.
The team, which comprised senior strategy and financial
personnel from both Carphone and Dixons, has worked collaboratively
during the last three months to identify and quantify potential
synergies as well as estimate any associated costs.
The team has engaged with the relevant functional heads and
other personnel to provide input into the development process and
to agree on the nature and quantum of the identified synergy
initiatives.
In preparing the Quantified Financial Benefits Statement, both
Carphone and Dixons have shared certain operating and financial
information to facilitate a detailed analysis in support of
evaluating the potential synergies available from the Merger. In
circumstances where data has been limited for commercial or other
reasons, the team has made estimates and assumptions to aid its
development of individual synergy initiatives.
Reports
As required by Rule 28.1(a) of the Code, Deloitte LLP, as
reporting accountants to Carphone, have provided a report stating
that, in their opinion, the Quantified Financial Benefits Statement
has been properly compiled on the basis stated. In addition
Deutsche Bank, as financial adviser to Carphone, has provided a
report stating that, in its opinion, the Quantified Financial
Benefits Statement has been prepared with due care and
consideration.
Copies of these reports are included in Parts B and C of this
Appendix IV.Deloitte LLP and Deutsche Bank have given and not
withdrawn their consent to the publication of their reports in the
form and context in which they are included.
Notes
1. The statements of estimated cost savings and synergies relate
to future actions and circumstances which, by their nature, involve
risks, uncertainties and contingencies. As a result, the cost
savings and synergies referred to may not be achieved, or may be
achieved later or sooner than estimated, or those achieved could be
materially different from those estimated. No statement in the
Quantified Financial Benefits Statement, or this Announcement
generally, should be construed as a profit forecast or interpreted
to mean that the Combined Group's earnings in the first full year
following the Merger, or in any subsequent period, would
necessarily match or be greater than or be less than those of
Carphone and/or Dixons for the relevant preceding financial period
or any other period.
2. Due to the scale of the Combined Group, there may be
additional changes to the Combined Group's operations. As a result,
and given the fact that the changes relate to the future, the
resulting cost savings may be materially greater or less than those
estimated.
3. In arriving at the estimate of synergies set out in this
Announcement, the Carphone Directors and the Dixons Directors have
assumed that there will be no significant impact on the underlying
operations of either business.
Part B
Report from Deloitte LLP
The Board of Directors
on behalf of Carphone Warehouse Group plc
1 Portal Way
London
W3 6RS
Deutsche Bank AG, London Branch
1 Great Winchester Street
London
EC2N 2DB
15 May 2014
Dear Sirs,
Recommended all-share merger of Carphone Warehouse Group plc
("Carphone") and Dixons Retail plc ("Dixons")
We report on the statement made by the directors of Carphone
(the "Directors") and the directors of Dixons (the "Dixons
Directors") of synergy benefits set out in Paragraph 8 of the
announcement (the "Announcement") issued jointly by Carphone and
Dixons (the "Quantified Financial Benefits Statement" or the
"Statement").
The Statement has been made in the context of the disclosures
within Paragraph 8 and Part A of Appendix IV of the Announcement
setting out, inter alia, the basis of the Directors' and the Dixons
Directors' belief (identifying the principal assumptions and
sources of information) supporting the Statement and their
analysis, explanation and quantification of the constituent
elements. This report is required by Rule 28.1(a)(i) of the City
Code on Takeovers and Mergers (the "Code") and is given for the
purpose of complying with that requirement and for no other
purpose.
Responsibilities
It is the responsibility of the Directors to prepare the
Statement in accordance with Rule 28 of the Code.
It is our responsibility to form our opinion, as required by
Rule 28.1(a) of the Code, as to whether the Statement has been
properly compiled on the basis stated.
Save for any responsibility which we may have to those persons
to whom this report is expressly addressed or to the Shareholders
of Carphone as a result of the inclusion of this report in the
Announcement, to the fullest extent permitted by law we do not
assume any responsibility and will not accept any liability to any
other person for any loss suffered by any such other person as a
result of, arising out of, or in connection with this report,
required by and given solely for the purposes of complying with
Rule 28.1(a)(i) of the Code, or our statement consenting to its
inclusion in the Announcement.
Basis of opinion
We conducted our work in accordance with the Standards for
Investment Reporting issued by the Auditing Practices Board in the
United Kingdom.
Our work included considering whether the Statement has been
accurately computed based upon the disclosed bases of belief
(including the principal assumptions). Whilst the bases of belief
(and the principal assumptions) upon which the Statement is based
are solely the responsibility of the Directors, we considered
whether anything came to our attention to indicate that any of the
bases of belief (or principal assumptions) adopted by the Directors
which, in our opinion, are necessary for a proper understanding of
the Statement have not been disclosed or if any bases of belief (or
principal assumptions) made by the Directors appears to us to be
unrealistic. Our work did not involve any independent examination
of any of the financial or other information underlying the
Statement.
We planned and performed our work so as to obtain the
information and explanations we considered necessary in order to
provide us with reasonable assurance that the Quantified Financial
Benefits Statement has been properly compiled on the basis
stated.
Since the Statement (and the principal assumptions on which it
is based) relates to the future, the actual synergy benefits
achieved are likely to be different from those anticipated in the
Statement and the differences may be material. Accordingly, we can
express no opinion as to the achievability of the synergy benefits
identified by the Directors in the Statement.
Our work has not been carried out in accordance with auditing or
other standards and practices generally accepted in jurisdictions
outside the United Kingdom, including the United States of America,
and accordingly should not be relied upon as if it had been carried
out in accordance with those standards and practices.
Opinion
In our opinion, based on the foregoing, the Quantified Financial
Benefits Statement has been properly compiled on the basis
stated.
Yours faithfully
Deloitte LLP
Chartered Accountants
Deloitte LLP is a limited liability partnership registered in
England and Wales with registered number OC303675 and its
registered office at 2 New Street Square, London EC4A 3BZ, United
Kingdom. Deloitte LLP is the United Kingdom member firm of Deloitte
Touche Tohmatsu Limited ("DTTL"), a UK private company limited by
guarantee, whose member firms are legally separate and independent
entities. Please see www.deloitte.co.uk/about for a detailed
description of the legal structure of DTTL and its member
firms.
Part C
Report from Deutsche Bank
The Directors
Carphone Warehouse Group plc
1 Portal Way
London
W3 6RS
15 May 2014
Dear Sirs,
Recommended all-share merger of Carphone Warehouse Group plc
("Carphone") and Dixons Retail plc ("Dixons")
We refer to the Quantified Financial Benefits Statement, the
bases of belief thereof and the notes thereto (together, the
"Statement") as set out in Part A of Appendix IV of this
Announcement, for which the Directors of Carphone are solely
responsible under Rule 28 of the Code.
We have discussed the Statement (including the assumptions and
sources of information referred to therein), with the Directors of
Carphone and those officers and employees of Carphone who developed
the underlying plans. The Statement is subject to uncertainty as
described in this Announcement and our work did not involve an
independent examination of any of the financial or other
information underlying the Statement.
We have relied upon the accuracy and completeness of all the
financial and other information provided to us by Carphone, or
otherwise discussed with us, and we have assumed such accuracy and
completeness for the purposes of providing this letter.
We do not express any opinion as to the achievability of the
quantified financial benefits identified by the Directors of
Carphone.
We have also reviewed the work carried out by Deloitte LLP and
have discussed with them the opinion set out in Part B of Appendix
IV of this Announcement addressed to yourselves and ourselves on
this matter.
This letter is provided to you solely in connection with Rule
28.1(a) (ii) of the City Code on Takeovers and Mergers and for no
other purpose. No person other than the Directors of Carphone can
rely on the contents of this letter and to the fullest extent
permitted by law, we exclude all liability to any other person, in
respect of this letter or the work undertaken in connection with
this letter.
On the basis of the foregoing, we consider that the Statement,
for which you, as Directors of Carphone are solely responsible, has
been compiled with due care and consideration.
Yours faithfully,
Deutsche Bank AG, London Branch
APPENDIX V
DEFINITIONS
The following definitions apply throughout this Announcement
unless the context otherwise requires:
GBP, GBP, Sterling, the lawful currency of the UK
pence or p
----------------------- ---------------------------------------------------------------
Admission the New Dixons Carphone Shares being admitted
to listing on the premium listing segment of
the Official List and to trading on the London
Stock Exchange's main market for listed securities
----------------------- ---------------------------------------------------------------
Announcement this announcement made pursuant to Rule 2.7 of
the City Code
----------------------- ---------------------------------------------------------------
Authorisations material authorisations, orders, recognitions,
grants, consents, clearances, confirmations,
certificates, licences, permissions and approvals
----------------------- ---------------------------------------------------------------
business day a day, not being a public holiday, Saturday or
Sunday, on which banks in the City of London
are open for normal business
----------------------- ---------------------------------------------------------------
Capital Reduction the proposed reduction of Dixons' share capital
under Chapter 10 of Part 17 of the Companies
Act, pursuant to the Scheme
----------------------- ---------------------------------------------------------------
Carphone Carphone Warehouse Group plc
----------------------- ---------------------------------------------------------------
Carphone Circular the circular to be sent to Carphone Shareholders
in connection with the Merger
----------------------- ---------------------------------------------------------------
Carphone Directors the Board of directors of Carphone or the Board
or Directors of of Carphone at the date of this Announcement
Carphone or Carphone
Board or Board
of Carphone
----------------------- ---------------------------------------------------------------
Carphone General the general meeting of Carphone to be convened
Meeting in connection with the Merger, notice of which
will be set out in the Carphone Circular (including
any adjournment thereof)
----------------------- ---------------------------------------------------------------
Carphone Group Carphone and its subsidiary undertakings and
associated undertakings
----------------------- ---------------------------------------------------------------
Carphone Shareholders holders of Carphone Shares
----------------------- ---------------------------------------------------------------
Carphone Shares fully paid-up ordinary shares of 0.1 pence each
in the capital of Carphone
----------------------- ---------------------------------------------------------------
Carphone Share the share option and incentive schemes operated
Schemes by the Carphone Group, further details of which
will be set out in the Dixons Carphone Prospectus
----------------------- ---------------------------------------------------------------
City Code or Code the City Code on Takeovers and Mergers in the
United Kingdom
----------------------- ---------------------------------------------------------------
Closing Price the closing middle market price of a Dixons Share
or a Carphone Share as derived from the Daily
Official List
----------------------- ---------------------------------------------------------------
CMA Phase 2 Reference a reference of the Merger to the chair of the
Competition and Markets Authority for the constitution
of a group under Schedule 4 to the Enterprise
and Regulatory Reform Act 2013
----------------------- ---------------------------------------------------------------
Companies Act the Companies Act 2006 (as amended)
----------------------- ---------------------------------------------------------------
Combined Group the combined Carphone Group and Dixons Group
following Completion of the Merger
----------------------- ---------------------------------------------------------------
Competition and a UK statutory body established under the Enterprise
Markets Authority and Regulatory Reform Act 2013
or CMA
----------------------- ---------------------------------------------------------------
Conditions the conditions to the implementation of the Merger
(including the Scheme) as set out in Appendix
I to this Announcement and to be set out in the
Scheme Document
----------------------- ---------------------------------------------------------------
Confidentiality the mutual confidentiality agreement entered
Agreement into by Dixons and Carphone on 30 January 2014
----------------------- ---------------------------------------------------------------
Court the High Court of Justice in England and Wales
----------------------- ---------------------------------------------------------------
Court Meeting the meeting(s) of the Dixons Shareholders to
be convened by order of the Court pursuant to
section 896 of the Companies Act, notice of which
will be set out in Scheme Document, for the purpose
of approving the Scheme, including any adjournment
thereof
----------------------- ---------------------------------------------------------------
Court Orders the order of the Court sanctioning the Scheme
and the order of the Court confirming the Capital
Reduction
----------------------- ---------------------------------------------------------------
CREST the relevant system (as defined in the Uncertificated
Securities Regulations 2001 (SI 2001/3755)) in
respect of which Euroclear UK & Ireland Limited
is the operator (as defined in such Regulations)
in accordance with which securities may be held
and transferred in uncertificated form
----------------------- ---------------------------------------------------------------
Daily Official the daily official list of the London Stock Exchange
List
----------------------- ---------------------------------------------------------------
Dealing Disclosure has the same meaning as in Rule 8 of the City
Code
----------------------- ---------------------------------------------------------------
Deutsche Bank Deutsche Bank AG, London Branch
----------------------- ---------------------------------------------------------------
Disclosed the information which has been fairly disclosed
by Dixons or Carphone (as the case may be): (a)
in writing prior to the date of this Announcement
by them or on their behalf or by their respective
financial, accounting, tax or legal advisers
(specifically as advisers in relation to the
Merger); (b) in their published annual and/or
half year report and accounts for the relevant
financial period or periods referred to in the
relevant Condition; (c) in a public announcement
made in accordance with the Disclosure and Transparency
Rules of the FCA prior to the date of this Announcement;
or (d) in this Announcement
----------------------- ---------------------------------------------------------------
Dixons Dixons Retail plc
----------------------- ---------------------------------------------------------------
Dixons Carphone the parent company of the Combined Group from
the Effective Date (being Carphone Group plc,
proposed to be renamed "Dixons Carphone plc")
----------------------- ---------------------------------------------------------------
Dixons Carphone the proposed Board of directors of Dixons Carphone,
Directors or Dixons further details of which are set out in this
Carphone Board Announcement
or Proposed Directors
----------------------- ---------------------------------------------------------------
Dixons Carphone the prospectus to be published by Carphone in
Prospectus connection with the issue of the New Dixons Carphone
Shares
----------------------- ---------------------------------------------------------------
Dixons Directors the Board of directors of Dixons or the Board
or Directors of of Dixons at the date of this Announcement
Dixons or Dixons
Board or Board
of Dixons
----------------------- ---------------------------------------------------------------
Dixons General the general meeting of Dixons to be convened
Meeting in connection with the Scheme and the Capital
Reduction, notice of which will be set out in
the Scheme Document, including any adjournment
thereof
----------------------- ---------------------------------------------------------------
Dixons Group Dixons and its subsidiary undertakings and associated
undertakings
----------------------- ---------------------------------------------------------------
Dixons Shareholders holders of Dixons Shares
----------------------- ---------------------------------------------------------------
Dixons Shares fully paid-up ordinary shares of 2.5 pence each
in the capital of Dixons:
(a) in issue as at the date of this Announcement;
(b) (if any) issued after the date of this Announcement
and prior to the Scheme Voting Record Time; and
(c) (if any) issued at or after the Scheme Voting
Record Time and on or before the Scheme Record
Time on terms that the holder thereof shall be
bound by the Scheme or in respect of which the
original or any subsequent holders thereof shall
have agreed in writing to be bound by the Scheme
----------------------- ---------------------------------------------------------------
Dixons Share Schemes the share option and incentive schemes operated
by the Dixons Group, further details of which
will be set out in the Scheme Document
----------------------- ---------------------------------------------------------------
EBIT Earnings Before Interest and Tax
----------------------- ---------------------------------------------------------------
Effective the Scheme having become effective pursuant to
its terms, or if the Merger is implemented by
way of a Merger Offer, the Merger Offer having
been declared unconditional in all respects in
accordance with the requirements of the City
Code
----------------------- ---------------------------------------------------------------
Effective Date the date upon which the Merger becomes Effective
or Completion
----------------------- ---------------------------------------------------------------
FCA the UK Financial Conduct Authority
----------------------- ---------------------------------------------------------------
Forms of Proxy the form of proxy in connection with each of
the Court Meeting and the Dixons General Meeting,
which shall accompany the Scheme Document
----------------------- ---------------------------------------------------------------
FSMA the Financial Services and Markets Act 2000,
as amended
----------------------- ---------------------------------------------------------------
Headline Earnings headline earnings are stated before the amortisation
of acquisition intangibles, exceptional items
and the results of discontinued operations and
businesses in the process of closure
----------------------- ---------------------------------------------------------------
Listing Rules the rules and regulations made by the UK Listing
Authority under Part VI of the FSMA, and contained
in the UK Listing Authority's publication of
the same name (as amended from time to time)
----------------------- ---------------------------------------------------------------
London Stock Exchange the London Stock Exchange plc
----------------------- ---------------------------------------------------------------
Merger the merger of Dixons and Carphone to be implemented
by way of the Scheme or otherwise by way of a
Merger Offer
----------------------- ---------------------------------------------------------------
Merger Offer the implementation of the Merger by means of
a takeover offer under section 974 of the Companies
Act, rather than by means of the Scheme
----------------------- ---------------------------------------------------------------
New Dixons Carphone the new ordinary shares of 0.1 pence each in
Shares the capital of Dixons Carphone to be issued and
credited as fully paid to Dixons Shareholders
pursuant to the Merger
----------------------- ---------------------------------------------------------------
Offer Period as defined in the City Code
----------------------- ---------------------------------------------------------------
Opening Position has the same meaning as in Rule 8 of the City
Disclosure Code
----------------------- ---------------------------------------------------------------
Overseas Shareholders Dixons Shareholders whose registered addresses
are outside of the UK or who are citizens, nationals
or residents of countries other than the UK
----------------------- ---------------------------------------------------------------
Panel the Panel on Takeovers and Mergers
----------------------- ---------------------------------------------------------------
PSP Performance Share Plans
----------------------- ---------------------------------------------------------------
Prospectus Rules the prospectus rules made by the FCA under Part
VI of the FSMA
----------------------- ---------------------------------------------------------------
Quantified Financial as defined in Part A of Appendix IV to this Announcement
Benefits Statement
----------------------- ---------------------------------------------------------------
RCF Revolving Credit Facility
----------------------- ---------------------------------------------------------------
Regulatory Authority any government or governmental, quasi-governmental,
supranational, statutory or regulatory body,
or any court, institution, investigative body,
association, trade agency or professional or
environmental body or (without prejudice to the
generality of the foregoing) any other person
or body in any jurisdiction
----------------------- ---------------------------------------------------------------
Regulatory Information any of the services set out in Appendix III to
Service the Listing Rules
----------------------- ---------------------------------------------------------------
Restricted Jurisdiction any jurisdiction where local laws or regulations
may result in significant risk of civil, regulatory
or criminal exposure if information concerning
the Merger is sent or made available to Dixons
Shareholders in that jurisdiction (in accordance
with Rule 30.3 of the City Code)
----------------------- ---------------------------------------------------------------
Scheme the proposed scheme of arrangement under Part
26 of the Companies Act between Dixons and the
Dixons Shareholders in connection with the Merger,
with or subject to any modification, addition
or condition approved or imposed by the Court
and agreed to by Carphone and Dixons
----------------------- ---------------------------------------------------------------
Scheme Document the document to be sent to Dixons Shareholders
containing and setting out, among other things,
the full terms and conditions of the Scheme and
containing the notices convening the Court Meeting
and the Dixons General Meeting
----------------------- ---------------------------------------------------------------
Scheme Record the time and date specified in the Scheme Document,
Time expected to be 6.00 p.m. on the business day
immediately prior to the date of the hearing
by the Court to sanction the Scheme
----------------------- ---------------------------------------------------------------
Scheme Voting the time and date specified in the Scheme Document
Record Time by reference to which entitlement to vote on
the Scheme will be determined
----------------------- ---------------------------------------------------------------
Significant Interest in relation to an undertaking, a direct or indirect
interest of 20 per cent. or more of the total
voting rights conferred by the equity share capital
(as defined in section 548 of the Companies Act)
of such undertaking
----------------------- ---------------------------------------------------------------
Special Resolutions the special resolutions to be proposed by Dixons
at the Dixons General Meeting in connection with,
among other things, the approval of the Scheme
and confirmation of the Capital Reduction, the
alteration of Dixons' articles of association
and such other matters as may be necessary to
implement the Scheme and the delisting of the
Dixons Shares
----------------------- ---------------------------------------------------------------
Statement of Capital the statement of capital (approved by the Court)
showing, with respect to Dixons' share capital
as altered by the Court Order, the information
required by section 649 of the Companies Act
----------------------- ---------------------------------------------------------------
Third Party a central bank, government or governmental, quasi-governmental,
supranational, statutory, regulatory, environmental
or investigative body or authority, court, trade
agency, professional association, institution,
employee representative body or any other body
or person whatsoever in any jurisdiction
----------------------- ---------------------------------------------------------------
UK or United Kingdom United Kingdom of Great Britain and Northern
Ireland
----------------------- ---------------------------------------------------------------
UK Listing Authority the FCA acting for the purposes of Part VI of
the FSMA
----------------------- ---------------------------------------------------------------
US or United States United States of America, its territories and
possessions, any State of the United States of
America and the District of Columbia
----------------------- ---------------------------------------------------------------
US person as defined in Regulation S promulgated under
the US Securities Act
----------------------- ---------------------------------------------------------------
US Exchange Act the US Securities Exchange Act of 1934, as amended
----------------------- ---------------------------------------------------------------
US Securities the US Securities Act of 1933, as amended
Act
----------------------- ---------------------------------------------------------------
Wider Carphone Carphone and associated undertakings and any
Group other body corporate, partnership, joint venture
or person in which Carphone and all such undertakings
(aggregating their interests) have a Significant
Interest
----------------------- ---------------------------------------------------------------
Wider Dixons Group Dixons and associated undertakings and any other
body corporate, partnership, joint venture or
person in which Dixons and all such undertakings
(aggregating their interests) have a Significant
Interest
----------------------- ---------------------------------------------------------------
For the purposes of this Announcement, "subsidiary", "subsidiary
undertaking", "undertaking" and "associated undertaking" have the
respective meanings given by the Companies Act.
References to an enactment include references to that enactment
as amended, replaced, consolidated or re-enacted by or under any
other enactment before or after the date of this Announcement. All
references to time in this Announcement are to London time unless
otherwise stated.
[1] Please see Appendix II to this Announcement for further details
[2] For the purposes of Rule 28 of the City Code, these
statements are the responsibility of the Directors of Carphone, in
its capacity as offeror under the terms of the Merger. These
statements are not intended as a profit forecast and should not be
interpreted as such. These statements of estimated cost savings,
synergies and expected value enhancement relate to future actions
and circumstances which, by their nature, involve risks,
uncertainties and contingencies. As a result, the cost savings,
synergies and expected value enhancement referred to may not be
achieved, or may be achieved later or sooner than estimated, or
those achieved could be materially different from those estimated.
Neither these statements nor any other statement in this
Announcement should be construed as a profit forecast or
interpreted to mean that the Combined Group's earnings in the first
full year following the Merger, or in any subsequent period, would
necessarily match or be greater than or be less than those of
Carphone and/or Dixons for the relevant preceding financial period
or any other period. For further details of the statements of
estimated cost savings and synergies refer to Appendix IV to this
Announcement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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