TIDMBVS TIDMGFRD
RNS Number : 6125S
Bovis Homes Group PLC
07 November 2019
THIS ANNOUNCEMENT (INCLUDING THE APPIX) AND THE INFORMATION
CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION
OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN,
INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR SOUTH
AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION
OR DISTRIBUTION WOULD BE UNLAWFUL.
THE FOLLOWING ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A
PROSPECTUS OR A PROSPECTUS EXEMPTED DOCUMENT. THE COMPANY EXPECTS
TO PUBLISH LATER TODAY THE CIRCULAR IN CONNECTION WITH THE
ACQUISITION AND THE PROSPECTUS IN CONNECTION WITH THE ADMISSION OF
THE CONSIDERATION SHARES. ANY VOTING DECISION BY SHAREHOLDERS IN
CONNECTION WITH THE ACQUISITION SHOULD BE MADE ON THE BASIS OF THE
INFORMATION CONTAINED IN THE CIRCULAR.
PLEASE SEE THE IMPORTANT NOTICE AT THE OF THIS ANNOUNCEMENT.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.
7 November 2019
For immediate release
Bovis Homes Group PLC
Proposed acquisition of the Linden Homes and Partnerships &
Regeneration businesses of Galliford Try plc, Placing and Bonus
Issue
Bovis Homes Group PLC ("Bovis Homes") today announces that it
has agreed to acquire Galliford Try plc's ("Galliford Try") Linden
Homes and Partnerships & Regeneration businesses (the "Target
Businesses") for consideration of GBP1.075 billion[1] (the
"Acquisition").
The consideration is comprised of a combination of shares in
Bovis Homes (the "Consideration Shares") and cash resulting in
Galliford Try Shareholders receiving a stake of 29.3 per cent. in
the Enlarged Group upon Completion (after implementation of the
Placing and the Bonus Issue described below).
Bovis Homes also announced today a non pre-emptive placing of up
to 13,472,591 new ordinary shares of GBP0.50 each in the capital of
the Company (the "Placing Shares") representing approximately 9.99
per cent. of Bovis Homes' existing issued share capital (the
"Placing"), which is expected to raise gross proceeds of up to
GBP157 million[2]. Bovis Homes proposes to use the net proceeds of
the Placing to part fund the cash component of the Acquisition
consideration.
Acquisition highlights
-- An excellent and unique opportunity for Bovis Homes to
acquire a top UK housebuilder and a leading partnerships business,
expected to transform the Group and deliver the following key
benefits:
o Creates a top five national housebuilder with the capacity to
deliver more than 12,000 homes per year over the medium term,
enabling the Enlarged Group to compete more effectively against the
established major housebuilders;
o Gives Bovis Homes a leading position in the high-growth, more
resilient partnerships market with Galliford Try Partnerships being
one of the leading and most established businesses in this
area;
o Opportunity to shift Partnerships' revenue mix towards higher
margin land-led development;
o Highly complementary geographic footprints strengthening core
areas for Bovis Homes and providing the opportunity to expand into
attractive regions; and
o Brings together two high-quality, well recognised
housebuilding brands of Bovis Homes and Linden Homes enabling dual
branding opportunities increasing overall production and sales.
-- The Bovis Homes management team is uniquely positioned to
integrate the businesses successfully with strong leadership across
all business areas.
-- The Board believes that the Enlarged Group will achieve
estimated recurring run-rate pre-tax cost synergies of at least
GBP35 million per annum by the end of the second full financial
year following Completion
-- It is anticipated that the Acquisition will be low
double-digit EPS enhancing in the first full financial year
post-Completion with further significant EPS enhancement in the
second full financial year post-Completion
-- The transaction is structured to ensure a robust balance sheet post Completion
-- Total consideration of GBP1.075 billion[3] comprising:
o The issue to Galliford Try shareholders of 63,739,385
Consideration Shares valued at GBP675 million based on Bovis Homes'
closing share price on 9 September 2019[4]
o cash of GBP300 million to be financed by:
-- 9.99% Accelerated Bookbuild (gross proceeds of up to
GBP157m);
-- GBP100m New Term Loan; and
-- utilisation of the Company's balance sheet resources;
o the novation from Galliford Try to Bovis Homes of Galliford
Try's GBP100 million 4.03% senior unsecured notes due February
2027.
The Acquisition is a 'Class 1 transaction' for Bovis Homes under
the Listing Rules and accordingly requires the approval of
Shareholders.
Bonus Issue and second interim dividend
As included in the announcement dated 10 September 2019, Bovis
Homes today announces that, conditional upon completion of the
Acquisition ("Completion"), rather than pay the expected special
dividend of GBP60 million, it will return value to shareholders by
way of a bonus issue (the "Bonus Issue") settled at Completion
through the issue of 5,665,723 ordinary shares of GBP0.50 each in
the capital of the Company ("Shares") to shareholders on the
Company's register of members as at 6.00 p.m. on 2 January 2020.
This will include holders of the Placing Shares but exclude
recipients of the Consideration Shares.
As at the Latest Practicable Date, the Bonus Issue is expected
to be for an amount up to GBP66 million (calculated using a share
price of GBP11.63, being the closing share price on the Latest
Practicable Date) through the issuance of up to 5,665,723 Shares
settled at Completion.
Bovis Homes also announces today that it expects to pay a cash
dividend of up to 41 pence per Share in May 2020 (the "Second
Interim Dividend") to shareholders on the Company's register of
members as at 6.00 p.m. on 27 December 2019 which shall include
holders of the Placing Shares but exclude recipients of the
Consideration Shares.
The Second Interim Dividend will be in lieu of the Bovis Homes
2019 final dividend and the payment date of the Second Interim
Dividend is in line with the normal final dividend payment
timetable.
Next Steps
-- Bovis Homes expects to post a shareholder circular (the
"Circular") later today to convene a General Meeting for approval
of the Acquisition, the Bonus Issue and certain related matters on
2 December 2019.
-- Bovis Homes also expects to publish a prospectus (the
"Prospectus") later today relating to the Consideration Shares and
the application for admitting new shares to the premium segment of
the Official List and to trading on the London Stock Exchange's
Main Market for listed securities.
-- The Circular and the Prospectus have been submitted to the
FCA for approval and are expected to be made available later today
at www.bovishomesgroup.co.uk. A copy of each of the Circular and
the Prospectus will be submitted to the National Storage Mechanism
and will shortly be available for viewing at
www.morningstar.co.uk/uk/nsm.
-- Bovis Homes also expects that a Scheme Document in relation
to the Acquisition will be sent or made available by Galliford Try
to Galliford Try Shareholders on 8(th) November 2019. The Scheme
Document contains, amongst other things, notices convening a
meeting of the Galliford Try Shareholders convened at the direction
of the Court (the "Galliford Try Court Meeting") and a general
meeting of Galliford Try Shareholders (the "Galliford Try General
Meeting"). The Galliford Try Court Meeting and the Galliford Try
General Meeting will take place on 29 November 2019. It is expected
that the Scheme Document will be made available on the Galliford
Try website: www.gallifordtry.co.uk.
-- Completion is anticipated to occur on 3 January 2020.
Greg Fitzgerald, CEO of Bovis Homes said:
"This is an exciting and transformational opportunity to create
a leading UK housebuilder with an enhanced customer proposition and
the ability to increase delivery to more than 12,000 new homes per
year.
The combination with Galliford Try Partnerships gives Bovis
Homes a market leading position in the high growth, more resilient
partnerships market, with significant potential to increase revenue
and profit while delivering more affordable homes at a time when
they are needed more than ever.
I am very focused on successfully integrating these businesses
in early 2020 with strong management across all business areas, and
on delivering the clear benefits from the combination including at
least GBP35 million of synergies as quickly as possible.
Over the past few years we have worked hard to ensure the
customer is central to everything we do. As a combined business,
this commitment to delivering high levels of build quality and
customer satisfaction will remain a core objective."
Presentation for analysts and investors
A presentation for analysts and investors will be held this
morning at 8.00 a.m. at Lazard & Co., Limited, 50 Stratton
Street, London, W1J 8LL.
The presentation will also be accessible via a live audiocast
available at www.bovishomesgroup.co.uk.
The person responsible for making this announcement on behalf of
Bovis Homes is Earl Sibley, Group Finance Director.
For further information please contact:
Bovis Homes Group PLC
Earl Sibley, Group Finance Director
Susie Bell, Head of Investor Relations 01732 280272
Lazard & Co., Limited (Sponsor and Joint Financial
Adviser to Bovis Homes)
William Rucker
Vasco Litchfield
Patrick Long
Louise Campbell 020 7187 2000
Numis Securities Limited (Joint Financial Adviser,
Sole Bookrunner and Sole Broker to Bovis Homes)
Heraclis Economides
Richard Thomas
Ben Stoop
Alasdair Abram 020 7260 1000
Powerscourt (PR Adviser to Bovis Homes)
Justin Griffiths
Nick Dibden 020 7250 1446
IMPORTANT NOTICE
IMPORTANT NOTICE RELATED TO FINANCIAL ADVISERS
Lazard & Co., Limited ("Lazard") is authorised and regulated
by the Financial Conduct Authority in the United Kingdom. Numis
Securities Limited ("Numis") is authorised and regulated by the
Financial Conduct Authority in the United Kingdom. Lazard and Numis
are acting exclusively for the Company and are acting for no one
else in connection with the Acquisition. They will not regard any
other person as a client in relation to the Acquisition and will
not be responsible to anyone other than the Company for providing
the protections afforded to their respective clients, nor for
providing advice in connection with the Acquisition or any other
matter, transaction or arrangement referred to in this
Announcement.
Lazard, Numis and their respective affiliates may have engaged
in transactions with, and provided various investment banking,
financial advisory and other services to the Company and its
affiliates, for which they received customary fees. Lazard, Numis
and their respective affiliates may provide such services to Bovis
Homes and its affiliates in the future.
Shareholders and prospective investors in the Shares (including
the Consideration Shares) will be deemed to have acknowledged that
they have not relied on Lazard, Numis or any person affiliated with
them in connection with any investigation of the accuracy of any
information contained in this Announcement for their investment
decision.
Apart from the responsibilities and liabilities, if any, which
may be imposed on Lazard and Numis by the FSMA or the regulatory
regime established thereunder, neither Lazard nor Numis nor any of
their respective affiliates accept any responsibility or liability
whatsoever for the contents of this Announcement, including its
accuracy, completeness or verification, or for any other statement
made or purported to be made by it, or on its behalf, in connection
with the Group, the Enlarged Group, the Acquisition, Admission or
the Consideration Shares, and nothing in this Announcement is, or
shall be relied upon as, a promise or representation in this
respect, whether or not to the past or future. Lazard, Numis and
their respective affiliates accordingly disclaim all and any duty,
liability or responsibility whatsoever (whether direct or indirect
and whether arising in tort, contract, under statute or otherwise
(save as referred to above)) which it might otherwise have in
respect of this Announcement or any such statement.
FORWARD-LOOKING STATEMENTS
This Announcement may include certain forward-looking
statements, beliefs or opinions, including statements with respect
to the Group's, Target Businesses' or the Enlarged Group's
business, financial condition and results of operations. These
forward-looking statements can be identified by the use of
forward-looking terminology, including the terms "believes",
"estimates", "plans", "anticipates", "targets", "aims",
"continues", "expects", "intends", "hopes", "may", "will", "would",
"could" or "should" or, in each case, their negative or other
various or comparable terminology or by discussions of strategy,
plans, objectives, goals, future events or intentions. These
statements are made by the Directors in good faith based on the
information available to them at the date of this Announcement and
reflect the Directors' beliefs and expectations. By their nature,
these statements involve risk and uncertainty because they relate
to events and depend on circumstances that may or may not occur in
the future. A number of factors could cause actual results and
developments to differ materially from those expressed or implied
by the forward-looking statements, including, without limitation,
developments in the global economy, changes in regulation and
government policies, spending and procurement methodologies,
currency fluctuations, a failure in the Group's, Target Businesses'
or the Enlarged Group's health, safety or environmental policies
and other factors discussed in the Prospectus and the Circular.
No representation or warranty is made that any of these
statements or forecasts will come to pass or that any forecast
results will be achieved. Forward-looking statements may, and often
do, differ materially from actual results. Any forward-looking
statements in this Announcement speak only as of their respective
dates, reflect the Directors' current view with respect to future
events and are subject to risks relating to future events and other
risks, uncertainties and assumptions relating to the Group's,
Target Businesses' or the Enlarged Group's operations and growth
strategy. You should specifically consider the factors identified
in this Announcement which could cause actual results to differ
before making any decision in relation to the Acquisition. Subject
to the requirements of the FCA, the London Stock Exchange, the
Listing Rules and the Disclosure Guidance and Transparency Rules
(and/or any regulatory requirements) or applicable law, the
Company, Lazard and Numis explicitly disclaim any obligation or
undertaking publicly to release the result of any revisions to any
forward-looking statements in this Announcement that may occur due
to any change in the Company's expectations or to reflect events or
circumstances after the date of this Announcement.
No statement in this Announcement (including any statement of
estimated cost savings or synergies) is or is intended to be a
profit forecast or estimate for any period and no statement in this
Announcement should be interpreted to mean that earnings of the
Group or the Target Businesses, as appropriate, for the current or
future financial years will necessarily match or exceed the
historical or published earnings or earnings per share or dividend
per share for the Group or the Target Businesses, as
appropriate.
Any information contained in this Announcement on the price at
which shares or other securities in the Company have been bought or
sold in the past, or on the yield on such shares or other
securities, should not be relied upon as a guide to future
performance.
FURTHER INFORMATION
This Announcement is for information purposes only and is not
intended to and does not constitute or form part of any offer,
invitation or solicitation to purchase, otherwise acquire,
subscribe for, sell, otherwise dispose of or issue of any
securities or the solicitation of any vote or approval in
connection with the Acquisition or otherwise, in any jurisdiction
in which such offer, invitation or solicitation is unlawful.
Bovis Homes expects to publish and make available the Circular
and the Prospectus containing information on the Consideration
Shares and the Enlarged Group later today. Bovis Homes urges
Shareholders to read the Prospectus and the Circular once published
carefully because they contain important information in relation to
the Acquisition, the Consideration Shares and the Enlarged
Group.
Bovis Homes understands that Galliford Try expects to publish
its Scheme Document in due course and that Galliford Try urges
Galliford Try Shareholders to read the Scheme Document and the
Prospectus carefully because they contain important information in
relation to the Scheme, the Consideration Shares and the Enlarged
Group.
Any vote in respect of resolutions to be proposed at the General
Meeting to approve the Acquisition and related matters should be
made only on the basis of the information contained in the
Prospectus and the Circular.
This Announcement is not a prospectus or prospectus equivalent
documents.
The Acquisition will be subject to the applicable requirements
of the London Stock Exchange and the FCA.
OVERSEAS SHAREHOLDERS
The Consideration Shares have not been, and will not be,
registered under the applicable securities laws of any jurisdiction
outside the United Kingdom. Accordingly, the Consideration Shares
may not be offered, sold, delivered or otherwise transferred,
directly or indirectly, in, into or from any such jurisdiction, or
to, or for, the account or benefit of citizens or residents of any
such jurisdiction, except pursuant to an applicable exemption from,
or in a transaction not subject to, applicable securities laws of
those jurisdictions, or otherwise permitted under applicable
securities laws of those jurisdictions. Shareholders outside the
United Kingdom are required by the Company to inform themselves
about and observe any restrictions on the offer, sale or transfer
of the Consideration Shares.
No action has been taken by the Company or the Banks to obtain
any approval, authorisation or exemption to permit the allotment or
issue of the Consideration Shares or the possession or distribution
of this Announcement (or any other publicity material relating to
the Consideration Shares) in any jurisdiction other than the United
Kingdom.
Unless otherwise determined by the Company or required by and
permitted by applicable law and regulation, the Acquisition will
not be implemented and documentation relating to the Acquisition
shall not be made available, directly or indirectly, in, into or
from an excluded territory where to do so would violate the laws of
that jurisdiction (an "Excluded Territory") and no person may vote
their Shares with respect to the Acquisition at the General
Meeting, or to execute and deliver Forms of Proxy appointing
another to vote at the General Meeting on their behalf) by any use,
means, instrumentality or form within an Excluded Territory or any
other jurisdiction if to do so would constitute a violation of the
laws of that jurisdiction.
It is the responsibility of each person to satisfy themselves as
to the full observance of the laws and regulations of the relevant
jurisdiction in connection with the issuance of the Consideration
Shares and the implementation of the Acquisition and to obtain any
governmental, exchange control or other consents which may be
required, to comply with other formalities which are required to be
observed and to pay any issue, transfer or other taxes due in such
jurisdiction. To the fullest extent permitted by applicable law,
the Company, the Board, the proposed members of the Board for the
Enlarged Group, the Banks and all other persons involved in the
Acquisition disclaim any responsibility or liability for the
failure to satisfy any such laws, regulations or requirements by
any person.
ADDITIONAL INFORMATION FOR US SHAREHOLDERS
The Shares have not been, and the Consideration Shares will not
be registered under the US Securities Act or under the securities
laws of any state or other jurisdiction of the United States and
may not be offered or sold within the United States, except
pursuant to an applicable exemption from, or in a transaction not
subject to, the registration requirements of the US Securities Act
and in compliance with any applicable securities laws of any state
or other jurisdiction of the United States. The Consideration
Shares to be issued to New Topco Shareholders pursuant to the
Acquisition are expected to be issued in reliance upon an exemption
from the registration requirements of the US Securities Act
afforded by section 3(a)(10) thereof and exemptions from
registration and qualification under applicable state securities
laws. New Topco Shareholders who will be affiliates (within the
meaning of the US Securities Act) of Galliford Try or Bovis Homes
before, or of Bovis Homes after, the Scheme Effective Date will be
subject to certain US transfer restrictions relating to the
Consideration Shares received in connection with the Scheme.
The Shares have not been, and the Consideration Shares will not
be, approved or disapproved by the US Securities and Exchange
Commission, any state securities commission in the United States or
any other US regulatory authority, nor have any of the foregoing
authorities passed upon or endorsed the merits of the offering of
the Consideration Shares or the accuracy or adequacy of this
Announcement. Any representation to the contrary is a criminal
offence in the United States.
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 Markets
Act 2000 (as amended) if you are resident in the United Kingdom or,
if not, from another appropriately authorised independent financial
adviser.
Bovis Homes Group PLC - Proposed Acquisition of Galliford Try's
Linden Homes
and Partnerships & Regeneration businesses
1 Introduction
Bovis Homes Group PLC ("Bovis Homes") today announces that it
had entered into an agreement with Galliford Try plc ("Galliford
Try") regarding a combination of Bovis Homes and Galliford Try's
Linden Homes and Partnerships & Regeneration businesses (the
"Target Businesses") for consideration of GBP1.075 billion[5]
(subject to certain customary completion adjustments linked to
Linden Homes' and Partnerships & Regeneration's asset value).
Linden Homes was valued as a multiple of TGAV[6] and Partnerships
& Regeneration was valued as a multiple of earnings.[7]
The consideration will consist of:
(i) the issue to Galliford Try Shareholders in respect of their
shareholding in New Topco of 63,739,385 new ordinary shares of
GBP0.50 each in the capital of the Company (the "Shares") (valued
at GBP675 million based on Bovis Homes' closing share price on 9
September 2019) (the "Consideration Shares"); plus
(ii) the payment of GBP300 million in cash (the "Cash Consideration") to Galliford Try; and
(iii) the novation from Galliford Try to Bovis Homes of
Galliford Try's GBP100 million 4.03% senior unsecured notes due
February 2027 (the "Private Placement Bond").
At Completion, Bovis Homes will also assume Galliford Try's
rights and obligations under two of Galliford Try's pension
schemes.
As a result, the Galliford Try Shareholders are expected to hold
in aggregate 29.3 per cent. of the Enlarged Group at Completion
(after implementation of the Placing and the Bonus Issue described
below).
Bovis Homes also today announced a non pre-emptive placing of up
to 13,472,591 new Shares representing approximately 9.99 per cent.
of Bovis Homes' existing issued share capital (the "Placing"),
which is expected to raise gross proceeds of up to GBP157 million.
Bovis Homes proposes to use the net proceeds of the Placing and
funds to be drawn down at Completion from the new debt financing
(details of which are set out in paragraph 10) to fund the Cash
Consideration.
The Acquisition, because of its size in relation to the Company,
is a Class 1 transaction for the Company under the Listing Rules
and will therefore require the approval of Shareholders. A General
Meeting has been convened for 11.00 a.m. on 2 December 2019 (or any
adjournment thereof) at the Spa Hotel, Mount Ephraim, Royal
Tunbridge Wells, Kent TN4 8XJ for Shareholders to consider and, if
thought fit, approve the Resolutions.
The Acquisition relates solely to a combination of Bovis Homes
and the Target Businesses and does not relate to a merger with
Galliford Try. The Acquisition envisages Galliford Try remaining a
UK-listed construction-focused group owned entirely by the
Galliford Try Shareholders.
2 Background to and reasons for the Acquisition
The Acquisition presents an excellent and unique opportunity for
Bovis Homes to acquire both (i) a top UK housebuilder, Linden
Homes; and (ii) a leading partnerships business, Galliford Try
Partnerships. The Enlarged Group will be firmly positioned as one
of the UK's top housebuilders (across both private and affordable
housing), and more importantly the Acquisition will establish the
Enlarged Group as one of the leaders in the highly attractive, high
growth partnerships business.
Over the last two and a half years, Bovis Homes has delivered an
impressive turnaround, including a dramatic improvement in build
quality and customer satisfaction, the successful launch of a new
housing range and the investment in and upgrade of people, systems
and infrastructure. As a standalone business, Bovis Homes is
approaching its target capacity of delivering 4,000 units per year
from its existing housebuilding operating structure. It is from
this position of strength, both operationally and financially, that
the Group has decided to undertake this Acquisition as it believes
it has the required people and capabilities to successfully
integrate the Target Businesses.
The Acquisition is expected to deliver the following key
benefits for Bovis Homes:
Creates a top five national housebuilder
The combination of the Group and the Target Businesses will
create one of the leading UK national housebuilders with the
capacity to deliver more than 12,000 new units per year over the
medium term. The Enlarged Group will have an enhanced national
customer proposition and coverage enabling it to compete more
effectively against the major players in the UK private and
affordable housebuilding sector. Combined, the Enlarged Group will
have a total consented land bank of over 33,000 owned plots and a
valuable pipeline of strategic land totalling c. 33,000 plots.
Accelerates Bovis Homes' move into the high-growth partnerships
and regeneration sector
The Acquisition will significantly accelerate the Group's move
into partnerships housing. The Group announced the launch of its
own partnerships business in early 2019, identifying partnerships
housing as a key sustainable growth area less connected to the
housing market cycle with more resilient earnings across the cycle.
In particular, the Group's diversification into partnerships
housing reduces risk.
Galliford Try Partnerships is one of the leading and most
established national brands in this area and with a very strong
track record of growth, is a partner of choice for housing
associations, local authorities and government agencies. There
remains a fundamental housing shortage in the UK, and government
support to increase housing supply is strong with a significant
increase in investment from housing associations in particular.
Galliford Try Partnerships has a hybrid business model with
revenues and profits generated from a mix of contracting and
development. Bovis Homes sees real opportunity to significantly
grow the combined partnerships business, specifically increasing
the proportion of revenue from higher margin land-led development.
The strength of the Enlarged Group's balance sheet is expected to
support new land investment for the partnerships business including
a strong pipeline of strategic land pull-though. This is consistent
with the strategic direction of Bovis Homes' nascent partnerships
business which, since launch, has established seven land-led
developments in partnership with housing associations where the
gross margin is at a similar level to the Bovis Homes housing
business's gross margin. The Directors believe that there is the
potential to grow Galliford Try Partnerships to a business
generating revenue over GBP1 billion and an operating margin in
excess of 10 per cent.
Enhanced geographic footprint with growth potential
The Acquisition provides the opportunity for growth nationally.
The geographic reach of the Target Businesses is highly
complementary to Bovis Homes' geographic footprint such that the
Acquisition is expected to both strengthen core areas for Bovis
Homes, such as the South Coast, and provide the opportunity to
expand into attractive regions, such as Yorkshire.
In addition, synergy opportunities are expected to be realised
from the significant geographic overlap between Bovis Homes and the
Target Businesses. For housebuilding, Bovis Homes expects the
optimal structure to be 12 to 14 housebuilding operating regions as
compared to the 17 regions which will exist at Completion. Each
housebuilding operating region will have an optimum size of c. 550
to 625 units completed p.a. providing opportunity for the combined
housebuilding business to grow and deliver more than 8,000 units
p.a. This compares to pro forma completions of 7,055 for the 12
months ended 30 June 2019.
Galliford Try Partnerships is well served by its existing
operating structure of ten operating regions working alongside
housebuilding. Following Completion, Bovis Homes' nascent
partnerships business will be fully integrated with Galliford Try
Partnerships and the Board believes that the Enlarged Group's
partnerships business presents a significant opportunity to shift
the business mix to more land-led, higher margin developments
supported by the strength of the Enlarged Group's balance
sheet.
Two leading housebuilding brands
Bovis Homes and Linden Homes bring together two high quality,
well-recognised housebuilding brands. In order to leverage these
brands, the Enlarged Group will look to maximise the opportunities
from dual-branding, where each brand will be re-positioned to
ensure that it has the greatest appeal to its specific and
differentiated target market. This model is successfully
implemented by other larger UK housebuilders and Bovis Homes and
Linden Homes are already successfully selling alongside each other
on six developments with the immediate opportunity to dual-brand a
further c.15 developments.
When acquiring land, the Enlarged Group will be able to select
the best-positioned brand for the new housing development which
meets customers' needs and will maximise demand. On larger sites,
particularly those pulled through from the strategic land bank, the
Enlarged Group will be able to promote both brands on a single
development site in order to increase overall production, demand
and sales rates, and drive higher returns on capital employed.
The Enlarged Group's partnerships business will also leverage
the Linden Homes and Bovis Homes brands for its mixed tenure
developments, alongside the Drew Smith brand which is the regional
branch of Galliford Try Partnerships for the South of England.
High quality combined land bank
The Enlarged Group is expected to have a high quality total
consented land bank of more than 33,000 owned plots and c. 33,000
plots of strategic land.
The Enlarged Group is expected to capitalise on future land
opportunities through its ability to compete more competitively in
the land sector. With a dual-branded housebuilding business and a
focus on significantly increasing partnership revenues from
land-led development, the Enlarged Group is expected to be much
better positioned to acquire larger sites and in particular higher
margin strategic opportunities.
Strengthens the senior management team
Greg Fitzgerald, CEO of the Group, is uniquely positioned to
successfully integrate Bovis Homes and the Target Businesses,
having formerly been CEO and then Executive Chairman of Galliford
Try plc for 11 years until 2016. Greg has been in housebuilding for
35 years and knows the Target Businesses well, having overseen the
acquisition of Linden Homes by Galliford Try in 2007 and the launch
of Galliford Try Partnerships in 2012.
There is strong leadership across the Target Businesses with the
Acquisition bringing the best from each business into the Enlarged
Group. In addition to the strength of the business leadership, the
continuity of management across the Enlarged Group following the
Acquisition will help mitigate risks arising through the
integration process.
Enhances shareholder value with attractive financial returns
The Directors believe that the Acquisition will enhance
shareholder value. It is anticipated that the Acquisition will be
low double digit EPS enhancing in the first full financial year
post-Completion with further significant EPS enhancement in the
second full financial year post-Completion.
The Directors expect the Acquisition to result in estimated
recurring run-rate pre-tax cost synergies of at least GBP35 million
per annum by the end of the second full financial year following
Completion of which the in-year EBIT impact in the first full
financial year following Completion is estimated to be c. GBP12m.
The Directors believe that the Acquisition represents a significant
opportunity to deliver potential cost synergies across the
following areas:
-- streamlining the regional and divisional operating models of
the combined business (approximately 55 per cent. of the estimated
recurring run-rate pre-tax cost synergies); and
-- procurement-related synergies (approximately 45 per cent. of
the estimated recurring run-rate pre-tax cost synergies).
The Directors expect that the realisation of these cost
synergies will require one-off implementation costs of
approximately GBP35 million. These are expected to be phased across
a two-year period following Completion. Detailed integration
planning will take place after Completion at which time
restructuring and redundancy proposals will be subject to
engagement with relevant stakeholders (including consultation with
employee representative bodies where required by law).
The Directors believe that synergies will accrue from overhead
savings, procurement savings and geographic overlap. The Directors
have considered dis-synergies as a result of the transaction and do
not believe that there are any material dis-synergies.
Basis of belief
In developing the synergy benefits, the Board has undertaken a
rigorous process covering the following steps:
-- the Board has worked to evaluate and assess the potential
synergies available from the Acquisition;
-- the assessment and quantification of the potential synergies
has been informed by the Board's extensive industry experience,
knowledge of Bovis Homes and the Target Businesses, as well as
information gathered during the due diligence process in respect of
the Target Businesses;
-- the cost synergies have been assessed relative to the
pre-Acquisition cost base of the carved out Target Businesses for
the year ended 30 June 2019 (FY19) and of the Group for the LTM
period ended 30 June 2019. The Directors have sought to normalise
costs to reflect a more typical cost position, including adjusting
overhead costs to reflect current forecast unit volumes and
normalised staff costs; and
-- key assumptions have been discussed with the Target
Businesses' operational management team.
The cost synergies indicated above are contingent on Completion
and could not be achieved independently of the Acquisition. The
Directors confirm that the cost synergies reflect both beneficial
elements and relevant costs associated with achieving these cost
synergies.
Nothing in this document, including any statement of estimated
costs savings or synergies, is intended as a profit forecast.
3 Integration
In the period leading up to Completion, Bovis Homes and
Galliford Try will work together to develop a detailed integration
plan.
It is expected that the Enlarged Group will assume a new
corporate name. This corporate name will be used for both the
Enlarged Group's housebuilding and partnerships businesses.
The Enlarged Group's housebuilding business will operate with
both the Bovis Homes and Linden Homes brands, maximising the
opportunities from dual-branding. Each of the housebuilding
operating regions will develop both Bovis Homes and Linden Homes
units. The Enlarged Group's partnerships business will use the
Bovis Homes and Linden Homes brands alongside its own Drew Smith
brand in the South of England, for its mixed tenure
development.
During 2020, the intention is to steady state both Bovis Homes
and Linden Homes revenues as the Group focuses on a successful
integration of the two businesses.
4 Information on Bovis Homes
Bovis Homes is a top 10 UK housebuilder operating across the
south of England, excluding London, developing high-quality private
and affordable housing. The Group purchases land in targeted prime
locations, typically on the edge of towns or villages, with over 90
per cent. on greenfield sites. It has specialist buyers in each of
its operating regions who work with land vendors including local
authorities to identify high quality land opportunities that at
least meet its minimum hurdle rates and enable it to create
sustainable places for its customers to live. The Group uses its
own well-designed, contemporary standard housing range on the
majority of its developments and employs local suppliers and
sub-contractors. A key priority of the Group is to deliver high
levels of customer satisfaction throughout the customers' entire
Bovis Homes journey delivered by it its own team of trained
customer service and sales advisors.
Bovis Homes has two divisions: the West and East, which comprise
seven operating regions, each with a regional head office
well-located for its developments. These include Kings Hill in
Kent, which is also Bovis Homes' headquarters, Basingstoke, Exeter,
Bishops Cleeve near Cheltenham, Stafford, Coleshill near Birmingham
and Milton Keynes. It directly employs c.1,300 employees.
Bovis Homes announced the launch of its partnerships business in
early 2019, identifying partnerships housing as a key sustainable
growth area less connected to the housing market cycle with more
resilient earnings across the cycle.
For the financial year ending 31 December 2018, Bovis Homes
completed 3,759 units, of which 2,567 were private housing and
1,192 were affordable housing, with an average selling price of
GBP273,200. At 30 June 2019, Bovis Homes had a land bank of 16,215
plots representing around 3.7 years' supply, with an average gross
margin of 24.9 per cent., and a strategic land portfolio comprising
19,745 plots.
As at 30 June 2019, the gross assets of Bovis Homes were
GBP1,565.3 million. Bovis Homes' operating profit for the year
ended 31 December 2018 was GBP174.2 million.
The table below summarises the results of Bovis Homes for the
three years ended 31 December 2016, 31 December 2017 and 31
December 2018.
Year ended 31 Dec 2016 Year ended 31 Dec 2017 Year ended 31 Dec 2018
GBPm GBPm GBPm
Group revenue 1,054.8 1,028.2 1,061.4
Profit from operations before exceptional
items 160.0 128.0 174.2
5 Information on the Target Businesses
5.1 Linden Homes
Linden Homes develops high quality private and affordable
housing in prime locations with a commitment to providing excellent
customer service, primarily for first-time buyers and families. It
has 10 divisions with a strong presence in the South and East of
England and a growing presence in other regions of the UK. Linden
Homes acquires prime sites with good transport links and local
amenities, where it can create communities that people aspire to
live in.
For the financial year ended 30 June 2019, Linden Homes
completed 3,229 units, of which 2,227 were private housing and
1,002 were affordable housing, with an average selling price of
GBP284,000. At September 2019, Linden Homes had a land bank of
12,600 plots representing around 3.5 years' supply, with an average
gross margin of 24.4 per cent., and a strategic land portfolio
comprising 2,850 acres, sufficient to generate 13,240 plots.
Linden Homes' operating profit (including share of joint
ventures profit before interest and tax, but excluding
amortisation) for the year ended 30 June 2019 was GBP160.5
million.
The table below summarises the results of Linden Homes for the
three years ended 30 June 2017, 30 June 2018 and 30 June 2019.
Year ended 30 June 2017 Year ended 30 June 2018 Year ended 30 June 2019
GBPm GBPm GBPm
Group revenue and share of joint
ventures' revenue excluding part
exchange revenue 937.4 947.3 820.4
Profit from operations including share
of joint ventures' profit 170.3 184.4 160.5
5.2 Partnerships & Regeneration
Partnerships & Regeneration is Galliford Try's specialist
affordable housing and regeneration business. Partnerships &
Regeneration delivers mixed-tenure solutions working with housing
association, local authority and private sector partners, combining
contracting, land-led contracting and mixed-tenure development with
a proven track record of delivery and quality. During the financial
year ended 30 June 2019, Partnerships & Regeneration completed
1,178 units at an average selling price of GBP217,000. Notable
recent project wins include partnerships with:
-- Homes England to deliver 885 homes across the UK under the
delivery partner panel;
-- Enfield Council to build the first 725 homes at the GBP6.0
billion Meridian Water development in the Lea Valley; and
-- Ealing Council to create a new mixed-use scheme, including 470 homes.
Partnerships & Regeneration's operating profit (including
share of joint ventures profit before interest and tax, but
excluding amortisation) for the year ended 30 June 2019 was GBP34.8
million.
The table below summarises the results of Partnerships &
Regeneration for the three years ended 30 June 2017, 30 June 2018
and 30 June 2019.
Year ended 30 June 2017 Year ended 30 June 2018 Year ended 30 June 2019
GBPm GBPm GBPm
Group revenue and share of joint
ventures' revenue excluding part
exchange revenue 330.2 475.2 623.2
Profit from operations including share
of joint ventures' profit 14.9 23.6 34.8
As at 30 June 2019, the combined gross assets of Linden Homes
and Partnerships & Regeneration were GBP1,633.0 million.
5.3 Partnerships & Regeneration's previous acquisitions
Drew Smith
On 12 May 2017, Partnerships & Regeneration acquired the
Drew Smith business from its owners for a final price of GBP30.5
million (after applying the earn-out provisions and additional
payments). The acquisition was of the entire share capital of Drew
Smith Limited and Drew Smith Homes Limited.
Drew Smith is a mixed-tenure developer which has relationships
with the registered provider and regeneration sector. It has
operations in Hampshire, Dorset, Surrey, Sussex and Berkshire, with
strong contracting, housebuilding and land acquisition
capabilities. The business has a strong contracting order book and
a number of land assets in planning as well as approximately 84
employees. The acquisition of Drew Smith was consistent with
Galliford Try's stated strategy of national footprint growth
through expansion into new geographies and margin improvement
through leveraging mixed-tenure expertise. The transaction
accelerated Partnerships & Regeneration's growth in the
southern region where mixed-tenure housing demand is generally
high.
The goodwill of GBP24.8 million arising from the acquisition is
attributable to the acquired workforce of Drew Smith. None of the
goodwill recognised is expected to be deductible for income tax
purposes.
Strategic Team Group
On 1 July 2019, Partnerships & Regeneration acquired the
entire share capital and control of Strategic Team Group Limited
("STG") and its trading subsidiary Strategic Team Maintenance Co.
Limited for approximately GBP11.0 million (of which GBP2.0 million
is deferred, GBP1.0 million for 12 months and GBP1.0 million for 24
months) (the "STG Transaction"), delivering a mature operating
platform in Yorkshire and expanding Partnerships &
Regeneration's presence in Cheshire. STG is a well-established
regional business with 120 employees and a revenue in its last full
year of c. GBP60 million.
Pursuant to the acquisition documentation of the STG
Transaction, there is an obligation on Partnerships &
Regeneration to pay any outstanding deferred consideration within
20 Business Days of a change of control event occurring. Change of
control is defined specifically by reference to Partnerships &
Regeneration ceasing to be part of the Galliford Try Group.
Assuming no waiver is obtained on or before the Acquisition, Bovis
Homes will have to pay just over GBP1.8 million in deferred
consideration to the sellers of STG within 20 Business Days of
Completion.
STG operates a new homes contracting business and a maintenance
and minor works business. The profile and geographical split of its
order book provides an excellent strategic fit with a client base
known to Galliford Try Partnerships. STG is on the Homes England
delivery partner panel.
6 Current trading and prospects
6.1 The Group
The Group has traded well during the second half of 2019 to date
maintaining an average sales rate per outlet per week of 0.6. The
Group is fully sold for its targeted FY 2019 completions and
expects to deliver another controlled and disciplined period end in
December.
Uncertainty surrounding Brexit in recent weeks has resulted in
some increased pressure on pricing and for the second half to date
the Group has seen a c. 1-2 per cent. reduction in underlying sales
prices.
This has been offset by a reduction in build cost inflation and
the Group's own build cost saving and margin initiatives.
Customer satisfaction remains a top priority and the Group is
delighted that its customer satisfaction score continues to reflect
this, trending at a 5-star HBF customer satisfaction rating (above
90 per cent.) for the year from 1 October 2018.
The Group has made further progress with its partnerships
business, entering into two land led partnerships with LiveWest in
the second half of 2019. The 50:50 JV arrangements are for
developments at Exeter (Alphington) and Taunton (Comeytrowe).
Looking to 2020, the Group has all the land it requires, has
already secured more than 20 per cent. of private sales, a higher
proportion than in previous years, and all of its affordable
units.
6.2 Galliford Try
On 11 September 2019, Galliford Try announced its annual results
for the year ended 30 June 2019.
Since 11 September 2019, there has continued to be political and
macroeconomic uncertainty affecting the markets in which Galliford
Try's businesses operate, particularly Linden Homes and
Construction.
The Galliford Try Board remains confident in achieving the
Galliford Try Group's full year expectations, but anticipates that
the result will be more weighted to the second half of the year
than in previous years.
Galliford Try is continuing its negotiations with Transport
Scotland in relation to the Aberdeen Western Peripheral Route
claim, and separately its GBP54 million claim for three contracts
with a single client remains ongoing.
7 Board and management of the Enlarged Group
It is proposed that, upon Completion:
-- Greg Fitzgerald and Earl Sibley, currently the Chief
Executive Officer and Group Finance Director of the Company,
respectively, will retain their positions in the Enlarged
Group;
-- Graham Prothero, who is currently the Chief Executive Officer
of Galliford Try, will become the Chief Operating Officer of the
Enlarged Group; and
-- the six Non-Executive Directors of the Company (including Ian
Tyler in his role as independent Chairman), will retain their
independent positions in the Enlarged Group.
The current Senior Managers of the Company are Martin Palmer,
James Watson, Darrell White and Keith Carnegie.
Following Completion, it is proposed that Stephen Teagle will be
appointed as the Chief Executive of Partnerships of the Enlarged
Group.
8 Bonus Issue, dividends and dividend policy
The Group dividend policy strategy has been, and will continue
to be, to maintain a robust and efficient balance sheet and to
deliver sustainable dividends to Shareholders.
In September 2017, the Group announced its intention that
surplus capital resulting from its balance sheet optimisation
initiatives totalling GBP180 million, would be returned to
Shareholders in the three years to 2020. The first GBP60 million
was paid as a special dividend to Shareholders in November
2018.
The Company's intention was to pay a further GBP60 million to
Shareholders by way of special dividend in November 2019. As
included in the announcement dated 10 September 2019, the Company
has agreed that, conditional upon Completion, rather than pay the
expected special dividend of GBP60 million, it will return value to
Shareholders by way of a bonus issue (the "Bonus Issue") settled at
Completion through the issue of 5,665,723 Shares (the "Bonus Issue
Shares") to Shareholders on the Company's register of members as at
6.00 p.m. on 2 January 2020, being the last date on which transfers
will be accepted for registration to participate in the Bonus Issue
(which, for the avoidance of doubt, shall include holders of the
Placing Shares but exclude recipients of the Consideration Shares)
(the "Bonus Issue Record Time").
The Company is expected to capitalise a sum of up to
GBP2,832,861.50 from its retained profits to pay up in full
5,665,723 Shares. If calculated as at the Latest Practicable Date
assuming that the maximum number of Placing Shares is issued,
Shareholders are expected to receive:
for every 1 Share held at the Bonus Issue Record Time, 0.03819
Bonus Issue Shares[8]
As at the Latest Practicable Date, the Bonus Issue was expected
to be for an amount up to GBP66 million (calculated using a share
price of GBP11.63 being the closing share price on the Latest
Practicable Date) through the issuance of up to 5,665,723 Shares
payable as at Completion.
Combining the Bonus Issue with the GBP60 million paid as a
special dividend in November 2018, the Company expects to pay up to
GBP126 million of the initially proposed GBP180 million by way of
capital return. Reflecting the Group's new strategy driven by the
Acquisition, the Company does not expect to pay any further special
dividend payments in relation to the GBP180 million capital return
initiative as set out in September 2017. Details of the proposed
dividend policy for the Enlarged Group are set out below.
Instead of paying the Bovis Homes 2019 final dividend, the
Company expects to pay a cash dividend of up to 41 pence per Share
in May 2020 to Shareholders on the Company's register of members as
at 6.00 p.m. on 27 December 2019 (the "Second Interim Dividend"),
whereby the relevant Shareholders (which, for the avoidance of
doubt, shall include holders of the Placing Shares but exclude
recipients of Consideration Shares and Bonus Issue Shares) shall be
entitled to receive their pro rata entitlements to the Second
Interim Dividend. The payment date of the Second Interim Dividend
is in line with the normal final dividend payment timetable.
Dividend policy for the Enlarged Group
For 2020, the Enlarged Group's focus will be on the successful
integration of Bovis Homes and the Target Businesses and best
positioning the Enlarged Group for the future with the reduction of
indebtedness being a key priority.
Going forwards, the Enlarged Group expects to maximise
sustainable dividends to Shareholders through ordinary dividend
cover of 2 times moving towards a cover of 1.75 times following a
period of integration and deleveraging. The Group will also
consider the prevailing strength of the balance sheet and general
economic circumstances, with particular regard to the cyclicality
of the industry.
The "Dividend Reinvestment Plan" is intended to continue
following Completion giving Shareholders the opportunity to
reinvest their dividends to buy Shares through a special dealing
arrangement.
9 Summary of the key terms of the Acquisition
The Acquisition relates solely to the acquisition by Bovis Homes
of the Target Businesses (consisting of Galliford Try's Linden
Homes and Partnerships & Regeneration businesses) and does not
entail a merger with Galliford Try. It is envisaged that New
Galliford Try, a newly incorporated public limited company which
will be the holding company of the Galliford Try Continuing Group,
will remain a UK-listed construction-focused group owned entirely
by the Galliford Try Shareholders.
Galliford Try will undertake a corporate restructuring (the
"Restructuring") so that all Galliford Try Shareholders can receive
the benefit of the Acquisition whilst simultaneously ensuring that
Galliford Try receives the relevant cash proceeds to support the
Galliford Try Continuing Group after Completion.
9.1 Sale and Purchase Agreement (the "SPA")
On 7 November 2019, the Company, Galliford Try and New Topco, a
newly-incorporated Jersey-registered company which will be inserted
as the holding company of Galliford Try pursuant to the Scheme,
entered into a SPA in connection with the Acquisition.
Pursuant to the terms of the SPA, the consideration will be
settled through:
-- the issue by the Company to Galliford Try Shareholders of the
Consideration Shares in consideration for the acquisition of New
Topco Shares held by them following the Restructuring;
-- the novation of the Private Placement Bond from Galliford Try
to Bovis Homes in part consideration for the acquisition of the
Partnerships & Regeneration Shares; and
-- the payment of the Cash Consideration to Galliford Try in
part consideration for the acquisition of the Partnerships &
Regeneration Shares.
The consideration payable by Bovis Homes for the Target
Businesses is subject to customary completion adjustment mechanisms
linked to the TGAV of the Target Businesses on the date of
Completion.
The novation of the Private Placement Bond entails the effective
transfer of all rights and obligations under the Private Placement
Bond from Galliford Try to Bovis Homes upon Completion. At
Completion, Galliford Try will automatically be relieved of its
debt obligations under the Private Placement Bond and Bovis Homes
will immediately and automatically assume all such obligations.
In addition, it is agreed that at Completion, Bovis Homes will
assume Galliford Try's rights and obligations under two of
Galliford Try's pension schemes, being the Galliford Try Final
Salary Pension Scheme and the Galliford Try (Holdings) Limited
Pension & Assurance Scheme. ("Transferring Pension Schemes").
The Transferring Pension Schemes have a combined membership of
approximately 2,059 individuals and have combined assets of
approximately GBP244.8 million. The remaining pension scheme, being
the Galliford Try Special Scheme will remain with Galliford Try.
The Galliford Try Special Scheme currently only has five members
and is in the process of being wound up. Further details are set
out at paragraph 13.
The Acquisition is conditional upon satisfaction (or waiver in
accordance with the terms of the SPA) of the following conditions,
or their satisfaction subject only to Completion:
-- the Restructuring having been effected in accordance with the
Restructuring Plan, including the completion of the Reorganisation,
the Scheme becoming effective in accordance with its terms, the
Reduction of Capital being confirmed by the Jersey Financial
Services Commission and the Demerger having been completed;
-- the passing of the Galliford Try Resolutions at the Galliford
Try General Meeting by the requisite majorities;
-- the passing of the Resolutions at the General Meeting by the requisite majorities;
-- the Company having raised proceeds of not less than 9.99% of
its existing issued share capital (calculated as at the Latest
Practicable Date) pursuant to the Placing (the "Equity Raise
Condition");
-- subject only to Completion having occurred, the Admission of
the Consideration Shares becoming effective; and
-- the Deed of Novation having become wholly unconditional in accordance with its terms.
The Acquisition will not proceed, and the SPA will be
terminated, if the conditions have not been satisfied or waived on
or before 7.00 p.m. on 3 January 2020 or in the case of the Equity
Raise Condition, 7.00 p.m. on 7 November 2019 (or such other time
and date as may be agreed between the Company and Galliford
Try).
The Acquisition is not conditional on CMA clearance and Bovis
Homes and Galliford Try will jointly submit a briefing paper to the
CMA explaining why the Acquisition does not raise any competition
concerns.
9.2 Restructuring
It is intended that the Restructuring will be implemented by way
of the process summarised below.
9.2.1 Scheme
Galliford Try will implement a scheme of arrangement pursuant to
which New Topco, a new Jersey-registered company will be inserted
as the new holding company of Galliford Try (the "Scheme"). Under
the terms of the Scheme, all existing Galliford Try Shares will be
cancelled and Galliford Try Shareholders will receive one New Topco
A Share for every Galliford Try Share that they hold.
Upon the Scheme becoming effective, Galliford Try will transfer
the Linden Homes business to New Topco by way of a distribution in
specie such that Linden Homes becomes a subsidiary of New Topco and
a sister company of Galliford Try. Galliford Try will retain the
Linden Homes Special Share, which has been newly issued by Linden
Homes, in order to facilitate the payment of the Linden Homes TGAV
Adjustment Amount.
New Topco will undertake a bonus issue of shares to Galliford
Try Shareholders such that each Galliford Try Shareholder will
receive one New Topco B Share for each New Topco A Share that they
hold. The New Topco B Shares are to be issued to facilitate the
Demerger, as described in paragraph 9.2.2. The New Topco A Shares
will carry an entitlement to the returns in New Topco attributable
to Linden Homes. The New Topco B Shares will carry an entitlement
to the returns attributable to the Galliford Try Continuing Group,
and to Partnerships & Regeneration.
9.2.2 Reduction of Capital and Demerger
Upon the Scheme becoming effective, New Topco will undertake a
reduction of capital (the "Reduction of Capital") pursuant to which
each of the New Topco B Shares will be cancelled. The reduction of
capital will be satisfied by the transfer of the entire issued
share capital of Galliford Try (including Partnerships &
Regeneration and Galliford Try's construction business) to New
Galliford Try. New Galliford Try is a company which has been
incorporated for the purposes of holding the Galliford Try
Continuing Group after Completion and which will be owned entirely
by Galliford Try Shareholders. In exchange for the shares in
Galliford Try, New Galliford Try will issue New Galliford Try
Shares to Galliford Try Shareholders on the basis of one New
Galliford Try Share for every New Topco B Share held by that
Galliford Try Shareholder (the "Demerger"). Application will be
made for the entire issued share capital of New Galliford Try to be
admitted to listing on the premium segment of the Official List and
to the London Stock Exchange's Main Market for listed securities
with effect from 8.00 a.m. on 3 January 2020.
Following completion of the Reduction of Capital and the
Demerger, New Galliford Try will be the sole beneficial owner of
Galliford Try (including the Partnerships & Regeneration
business).
New Topco will remain the sole beneficial owner of the Linden
Homes business.
9.3 Acquisition of Linden Homes business
Immediately following the Reduction of Capital and Demerger
becoming effective, the entire issued share capital of New Topco
(being the New Topco A Shares following cancellation of the New
Topco B Shares) which will then be held by the Galliford Try
Shareholders, will be transferred to the Company pursuant to the
mandatory transfer provisions in the articles of association of New
Topco (the "New Topco Articles"), in consideration for the issue of
the Consideration Shares to the Galliford Try Shareholders in
accordance with the terms of the SPA. As a result, Bovis Homes will
own the Linden Homes business indirectly through holding the entire
issued share capital of its sole parent company, New Topco.
The transfer will be effected by means of a form of transfer or
other instrument or instruction of transfer, or by means of CREST,
and, to give effect to such transfer, any person may be appointed
by the Company as agent and attorney for each shareholder of New
Topco to transfer their shares in New Topco.
9.4 Acquisition of Partnerships & Regeneration business
Simultaneously with completion of the acquisition of the Linden
Homes business (by way of acquiring New Topco pursuant to the
mandatory transfer provisions in the New Topco Articles), the
Company will acquire the Partnerships & Regeneration business
from Galliford Try by way of share sale in consideration of the
payment of the Cash Consideration to Galliford Try and the
novation, from Galliford Try to Bovis Homes, of the Private
Placement Bond.
9.5 Timing
Subject to the satisfaction or waiver of the conditions under
the SPA, the Company anticipates that each of the steps of the
Restructuring (including the Scheme) will be implemented and become
effective after the close of trading on the London Stock Exchange
on 2 January 2019. Completion and Admission of the Consideration
Shares is expected to occur not later than 8.00 a.m. on 3 January
2020. Following Completion, the Target Businesses will be
wholly-owned subsidiaries of the Company.
10 Financing the Acquisition
The Acquisition will be funded through a combination of (i) the
Placing, (ii) the Term Loan, (iii) existing cash on the Group's
balance sheet and (iv) the issuance of the Consideration
Shares.
10.1 Cash Consideration
The Company proposes to finance the Cash Consideration payable
by Bovis Homes for the Target Businesses of GBP300 million
using:
10.1.1 up to GBP157 million from the expected gross proceeds of the Placing;
10.1.2 approximately GBP100 million to be drawn down at Completion from the Term Loan; and
10.1.3 Bovis Homes' existing balance sheet cash resources, which
includes an additional amount of cash (approximately GBP60 million)
available as a result of paying the expected special dividend to
Shareholders by way of a Bonus Issue instead.
Placing
Bovis Homes has announced today a Placing to institutional
investors on a non pre-emptive basis of up to 13,472,591 new
ordinary shares of GBP0.50 each in the capital of the Company (the
"Placing Shares"), which represents approximately 9.99 per cent. of
the Company's existing issued ordinary share capital.
The issue of the Placing Shares is to be effected by way of a
cash box placing. The Company will allot and issue the Placing
Shares on a non pre-emptive basis to the placees in consideration
for Numis transferring its holdings of ordinary shares and
redeemable preference shares in Project Finch Finance (Jersey)
Limited to the Company ("Finch Jersey Limited"). Accordingly,
instead of receiving cash as consideration for the issue of Placing
Shares, at the conclusion of the Placing the Company will own the
entire issued share capital of Finch Jersey Limited whose only
asset will be its cash reserves, which will represent an amount
approximately equal to the net proceeds of the Placing.
The Placing Shares will be issued pursuant to the allotment
authority that Shareholders granted to the Company at its annual
general meeting on 22 May 2019.
The Placing is being conducted, subject to the satisfaction of
certain conditions, through an accelerated bookbuild that was
launched immediately following the announcement of the Placing on 7
November 2019. Ahead of the Placing, the Company consulted with a
number of its leading Shareholders to gauge their feedback as to
the Acquisition. Feedback from this consultation was supportive
overall and as a result the Board chose to proceed with the Placing
to part finance the Acquisition. The Placing has been structured as
an accelerated bookbuild to minimise execution and market risk.
The Placing is expected to raise gross proceeds of up to GBP157
million. The net proceeds of the Placing will be placed on deposit
pending Completion. If Completion does not occur, the Acquisition
will not proceed but Bovis Homes will be in receipt of the net
proceeds of the Placing. In such circumstances, Bovis Homes will
consider how best to return the Placing proceeds to its
Shareholders.
New Facilities Agreement
Barclays Bank PLC, National Westminster Bank plc, HSBC UK Bank
plc and Lloyds Bank plc, each in their capacities as original
lenders, have provided debt financing commitments in respect
of:
-- a GBP100 million term loan facility (the "Term Loan"); and
-- a GBP375 million revolving credit facility (the "New RCF")
split into two tranches of (i) GBP355,000,000 (the "New RCF Tranche
1") and (ii) GBP20,000,000 ("New RCF Tranche 2"), with an accordion
option for an additional GBP25 million in respect of the New RCF
Tranche 1,
pursuant to a new GBP475 million term loan and revolving credit
facilities agreement to be put in place at the time of signing the
Acquisition Agreements (the "New Facilities Agreement").
The Term Loan will be used to part-fund the Cash Consideration.
The New RCF is intended to first refinance the existing Bovis Homes
Limited revolving credit facility, and thereafter to be available
for general corporate and working capital purposes.
10.2 Consideration Shares
Pursuant to the terms of the SPA, 63,739,385 Consideration
Shares will be issued in connection with the Acquisition. Bovis
Homes will publish today a prospectus in relation to the Admission
of the Consideration Shares (the "Prospectus") which will be filed
with the FCA and made available to the public in accordance with
Rule 3.2 of the Prospectus Regulation Rules.
Applications will be made to the FCA and to the London Stock
Exchange for Admission of the Consideration Shares. It is currently
expected that Admission of the Consideration Shares will become
effective at 8.00 a.m. on 3 January 2020.
The Consideration Shares will be issued and credited as fully
paid up and will rank pari passu in all respects with the Shares
then in issue, including, as further outlined below, the right to
receive and retain in full all dividends or other distributions
made, paid or declared in respect of the Shares by reference to a
record date falling after to the date of issue of the Consideration
Shares. The Consideration Shares will be issued in registered form
and will be capable of being held in certificated and
uncertificated form. Irrespective of the date on which the
Consideration Shares are issued, Galliford Try Shareholders who
receive Consideration Shares in respect of their shareholding in
New Topco shall not be entitled to receive any dividend declared,
made or paid by the Company by reference to a record date falling
prior to the date of issue of the Consideration Shares, which for
the avoidance of doubt shall include the Second Interim Dividend
and the Bonus Issue.
11 Fractional entitlements
11.1 Consideration Shares
The fractional entitlements of Galliford Try Shareholders (in
respect of their shareholding in New Topco Shares) at Completion to
Consideration Shares shall be aggregated and Bovis Homes shall
procure that the maximum whole number of Consideration Shares
resulting therefrom shall be allotted and issued to a person
appointed by Bovis Homes to hold such Consideration Shares on
behalf of the relevant Galliford Try Shareholders. Bovis Homes
shall procure that such Consideration Shares are sold in the market
as soon as practicable after Completion and that the net proceeds
of sale (after the deduction of all commissions and expenses
incurred in connection with such sale, including any value added
tax payable on the proceeds of sale) shall be paid in due
proportion to the relevant Galliford Try Shareholders (rounded down
to the nearest penny), by way of cheque or credit to the relevant
CREST account. However, fractional entitlements to amounts (after
the deduction of all commissions and expenses incurred in
connection with such sale, including any value added tax payable on
the proceeds of sale) of GBP5.00 or less shall not be paid to the
relevant Galliford Try Shareholders who would otherwise be entitled
to them under the Acquisition due to the administrative costs
incurred in doing so, but shall be retained for the benefit of the
Company.
11.2 Bonus Issue Shares
The fractional entitlements of Shareholders at Completion to
Bonus Issue Shares shall be aggregated and Bovis Homes shall
procure that the maximum whole number of Bonus Issue Shares
resulting therefrom shall be allotted and issued to a person
appointed by Bovis Homes to hold such Bonus Issue Shares on behalf
of the relevant Shareholders. Bovis Homes shall procure that such
Bonus Issue Shares are sold in the market as soon as practicable
after Completion and that the net proceeds of sale (after the
deduction of all commissions and expenses incurred in connection
with such sale, including any value added tax payable on the
proceeds of sale) shall be paid in due proportion to the relevant
Shareholders (rounded down to the nearest penny), by way of cheque
or credit to the relevant CREST account. However, fractional
entitlements to amounts (after the deduction of all commissions and
expenses incurred in connection with such sale, including any value
added tax payable on the proceeds of sale) of GBP5.00 or less shall
not be paid to the relevant Galliford Try Shareholders who would
otherwise be entitled to them under the Bonus Issue due to the
administrative costs incurred in doing so, but shall be retained
for the benefit of the Company.
12 Dilution
Bovis Homes proposes to issue up to 13,472,591 Shares in
connection with the Placing, 63,739,385 Consideration Shares in
connection with the Acquisition and 5,665,723 Shares in connection
with the Bonus Issue. Subject to Completion, the Company's issued
ordinary share capital will increase by up to 61.5 per cent,
relative to the number of Shares in issue as at the Latest
Practicable Date.
Immediately following Completion, assuming that (i) up to
13,472,591 Placing Shares are issued (ii) 63,739,385 Consideration
Shares are issued and (iii) 5,665,723 Bonus Issue Shares are issued
in connection with the Acquisition, existing Shareholders at the
Latest Practicable Date will, together, own up to approximately
70.7 per cent. of the ordinary share capital of the Enlarged Group
and the Galliford Try Shareholders will hold in aggregate up to
29.3 per cent. of the ordinary share capital of the Enlarged
Group.
13 Pensions
Bovis Homes will assume Galliford Try's rights and obligations
in relation to the Transferring Pensions Schemes and will become
the sole statutory employer and principal employer of the
Transferring Pension Schemes. Galliford Try will be discharged from
all future obligations in relation to the Transferring Pension
Schemes and will cease participation in the Transferring Pension
Schemes on or around Completion.
The transfer of all of Galliford Try's current and future
obligations in relation to the Transferring Pension Schemes will be
effected by means of two flexible apportionment agreements in
respect of each Transferring Pension Scheme, each entered into
before Completion between the trustee of the applicable
Transferring Pension Scheme, Galliford Try and Bovis Homes and each
taking effect as at the date of Completion, with the actual
apportionment of liabilities occurring within three days after
Completion (following other technical steps). Further, on
Completion, the current guarantee from Galliford Try plc in favour
of the Galliford Try Final Salary Pension Scheme guaranteeing the
full liabilities of the scheme will be released and replaced with a
materially similar guarantee from Bovis Homes.
Certain employees of the Galliford Try Continuing Group who will
not transfer to Bovis Homes as part of the Acquisition currently
have enhanced benefits by virtue of being "active" members at the
date the Galliford Try Final Salary Pension Scheme Closed to
accrual. These benefits will not automatically continue post
Completion, but Bovis Homes, Galliford Try and the trustee of that
scheme will enter into an agreement effective Completion, that such
individuals will have their benefits in the scheme augmented at
leaving Service or retirement, as applicable, to the level that
would have been payable but Galliford Try Employment Limited
ceasing, but such augmentation is subject to Galliford Try
agreement to pay, in each individual case, an amount equal to the
value of such augmentation.
The Galliford Try Special Scheme is currently in the process of
winding up and will remain within the Galliford Try Group.
Updated valuations under International Accounting Standard
("IAS") 19 for the Transferring Pension Schemes as at 30 June 2019
value the schemes' assets at GBP244.8 million and liabilities at
GBP238.7 million. This leaves a gross surplus in the schemes of
GBP6.1 million which, when subjected to related deferred tax at 19
per cent., results in a net pension asset under IAS 19 of GBP4.9
million. The value of this surplus which under IAS 19 is recognised
in Galliford Try's balance sheet is dependent on some critical
assumptions including mortality rates and investment returns and is
likely to vary from year to year. Triennial actuarial valuations of
Galliford Try's defined benefit pension schemes are carried
out.
14 New remuneration policy and share plan
In anticipation of the Acquisition, the Remuneration Committee
of the Board has considered the impact on the Company's current
Directors' remuneration policy given the increased company size and
market positioning that would result, and has proposed that a new
Directors' remuneration policy which is reflective of the increased
responsibility and scope that the executive Director roles will
entail should be put to Shareholders at the General Meeting.
It is also proposed that Bovis Homes will adopt the New Bovis
Homes LTIP to complement the New Policy. This incentive plan will
be a replacement of the Bovis Homes Long Term Incentive Plan 2010
and will be used to incentivise, attract and retain employees.
15 Change of name of Bovis Homes
Bovis Homes has agreed that the name of the Company will be
changed following Completion as part of the integration process of
the Target Businesses. It is intended that the new corporate name
will be decided by the employees of the Enlarged Group by way of a
competition, to be organised prior to Completion. The change of
name will not impact upon Bovis Homes' and the Target Businesses'
housebuilding brands, Bovis Homes and Linden Homes, which will
continue to be used following Completion.
As such, the following resolutions have been proposed at the
General Meeting:
-- firstly, to amend the Company's Articles of Association (the
"Amended Articles") such that a change of name of the Company may
be effected by the Directors by way of a board resolution, if so
authorised to do so by a special resolution of the Shareholders;
and
-- subsequently, to authorise the Directors to change the name
of the Company once within six months from Completion in accordance
with the Amended Articles.
16 Publication of a Shareholder Circular and General Meeting
It is expected that the Circular will be published later today
including a notice of General Meeting to be held at 11.00 a.m. on 2
December 2019 at The Spa Hotel, Mount Ephraim, Royal Tunbridge
Wells, Kent TN4 8XJ.
Due to its size, the Acquisition is classified as a Class 1
transaction for Bovis Homes under the Listing Rules and accordingly
requires the approval of Shareholders. If the Resolutions are not
passed, the Acquisition will not complete.
17 Publication of Prospectus
It is expected that the Prospectus will be published later
today.
RISK FACTORS
MATERIAL RISKS RELATED TO THE ACQUISITION AND MATERIAL RISKS TO
THE GROUP, THE TARGET BUSINESSES OR THE ENLARGED GROUP AS A RESULT
OF THE ACQUISITION
-- Completion is subject to a number of conditions which may not
be satisfied or waived or which may be satisfied subject to
conditions imposed by regulatory bodies or other third parties and
may result in Completion being delayed or the Acquisition not
completing
-- The Acquisition subjects Bovis Homes, the Target Businesses
and the Enlarged Group and their investors to potential significant
risks as a result of the integration process and unanticipated
liabilities which may result in a material adverse effect on the
business, results of operations, financial condition and prospects
of Bovis Homes, the Target Businesses and the Enlarged Group and
the market price of the Shares
-- There may be pre-closing changes to the Target Businesses
-- The Enlarged Group may fail to realise, or it may take longer
than expected to realise, the expected benefits of the
Acquisition
-- The value of the Target Businesses may be less than the consideration paid
-- Following Completion, the indebtedness and financial leverage
of the Enlarged Group will increase
-- The risks of executing the Acquisition could cause the market
price of the Shares to decline
-- Change of control provisions in the Target Businesses'
agreements may be triggered upon Completion and may lead to adverse
consequences
-- There may be an adverse impact on Bovis Homes' reputation if
the Acquisition does not complete
-- Acquisition-related costs may exceed Bovis Homes' expectations
-- Bovis Homes and the Target Businesses rely, and the Enlarged
Group is expected to rely, on its senior management team and may be
unable to attract and/or retain key managers or a highly skilled
and experienced workforce
-- Bovis Homes, the Target Businesses and the Enlarged Group may
not be able to access debt financing on favourable terms and/or
restrictions in the terms of Bovis Homes' or the Target Businesses'
borrowings may restrict Bovis Homes', the Target Businesses' or,
following Completion, the Enlarged Group's activities or business
plans and adversely affect Bovis Homes', the Target Businesses' or
the Enlarged Group's ability to finance ongoing operations,
strategic acquisitions and investments
-- The pro forma results included herein may not necessarily be
indicative of the future performance of the Enlarged Group
-- The issue of Consideration Shares, Placing Shares and any
future issue of Shares, including in connection with an offering,
any future acquisitions, any share incentive or share option plan
or otherwise, may have a dilutive effect on the holdings of
Shareholders
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
The dates and times given in the table below in connection with
the Acquisition are indicative only and are based on the Company's
current expectations and are subject to change. If any dates and/or
times in this expected timetable change, the revised dates and/or
times will be notified to Shareholders by announcement through a
Regulatory Information Service. All times shown are London
times.
EVENT TIME AND/OR DATE
Announcement of the Acquisition 7.00 a.m. on 7 November 2019
and the Placing
--------------------------------
Publication of the Prospectus 7 November 2019
and posting of the Circular
--------------------------------
Admission and commencement of by 8.00 a.m. on 11 November
dealings in the Placing Shares 2019
on the premium segment of the
Official List and the Main Market
of the London Stock Exchange
--------------------------------
Latest time and date for lodging 11.00 a.m. on 28 November 2019
Forms of Proxy (or appointing
a proxy electronically or submitting
a proxy via CREST) for the General
Meeting
--------------------------------
Voting Record Time(1) 8.00 p.m. on 28 November 2019
--------------------------------
Galliford Try Court Meeting 10.00 a.m. on 29 November 2019
--------------------------------
Galliford Try General Meeting 10.15 a.m. on 29 November 2019
--------------------------------
General Meeting 11.00 a.m. on 2 December 2019
--------------------------------
Ex-dividend date for the Second 8.00 a.m. on 24 December 2019
Interim Dividend
--------------------------------
Second Interim Dividend Record 6.00 p.m. on 27 December 2019
Time
--------------------------------
Scheme Effective Date 2 January 2020
--------------------------------
Consideration Share Record Time 6.00 p.m. on 2 January 2020
--------------------------------
Bonus Issue Record Time 6.00 p.m. on 2 January 2020
--------------------------------
Ex-dividend date for the Bonus 8.00 a.m. on 3 January 2020
Issue Shares
--------------------------------
Expected Completion Date 3 January 2020
--------------------------------
Admission and commencement of by 8.00 a.m. on 3 January 2020
dealings in the Consideration
Shares and Bonus Shares on the
premium segment of the Official
List and the Main Market of
the London Stock Exchange
--------------------------------
CREST accounts of Galliford on or soon after 8.00 a.m. on
Try Shareholders holding in 3 January 2020
uncertificated form credited
with Consideration Shares
--------------------------------
CREST accounts of Shareholders on or soon after 8.00 a.m. on
holding in uncertificated form 3 January 2020
credited with Bonus Issue Shares
--------------------------------
Despatch of share certificates: on or soon after 8.00 a.m. on
(a) for Consideration Shares 3 January 2020
to Galliford Try Shareholders
holding in certificated form
and (b) for Bonus Issue Shares
--------------------------------
CREST accounts credited with within 14 days after Completion
any cash due in relation to
the sale of fractional entitlements
--------------------------------
Despatch of cheques for any within 14 days after Completion
cash in relation to the sale
of fractional entitlements for
those Galliford Try Shareholders
who do not hold their Galliford
Try Shares in CREST
--------------------------------
Second Interim Dividend paid May 2020
to Shareholders
--------------------------------
Note:
(1) To be entitled to attend, speak and vote at the General
Meeting (and for the purpose of the determination by the Company
of the votes they may cast), members must be registered on
the register of members of the Company at 8.00 p.m. on 28
November 2019 (or, in the event of any adjournment, at 8.00
p.m. on the date which is two days before the time of the
adjourned meeting). Changes to the register of members of
the Company after the relevant deadline shall be disregarded
in determining the rights of any person to attend and vote
at the General Meeting
APPIX - DEFINITIONS
The following words and expressions shall have the following
meanings in this announcement unless the context otherwise
requires:
Acquisition the proposed acquisition of
the Linden Homes and Partnerships
& Regeneration businesses of
Galliford Try by the Company
effected by way of the Acquisition
Agreements
Acquisition Agreements the Sale and Purchase Agreement,
Tax Indemnity, Transitional
Services Agreement and the Deed
of Novation, as further described
in the Circular
Admission the admission of the Consideration
Shares to listing on the premium
listing segment of the UK Official
List in accordance with the
UK Listing Rules and to trading
on the London Stock Exchange's
main market for listed securities
in accordance with the UK Admission
and Disclosure Standards
Amended Articles the amended articles of association
of Bovis Homes;
Articles of Association the articles of association
of Bovis Homes adopted by special
resolution passed on 6 May 2010
and amended by special resolution
passed on 16 May 2013
Banks Lazard and Numis
Bonus Issue return of capital to Shareholders
on the Company's register of
members at the Bonus Issue Record
Time by issuing the Bonus Issue
Shares at Completion
Bonus Issue Record Time 6.00 p.m. on 2 January 2020
Bonus Issue Shares 5,665,723 ordinary shares of
GBP0.50 each in the capital
of the Company
Bovis Homes or Company Bovis Homes Group PLC, a public
limited company incorporated
in England and Wales with registered
number 00306718, whose registered
office is 11 Tower View, Kings
Hill, West Malling, Kent, United
Kingdom ME19 4UY
Business Day a day, other than a Saturday
or a Sunday or public holiday
or bank holiday, on which banks
are generally open for business
in the City of London
Cash Consideration the payment by Bovis Homes of
GBP300 million in cash to Galliford
Try (adjusted according to the
TGAV of the Target Businesses),
pursuant to the terms of the
Sale and Purchase Agreement
Circular the circular to be published
by Bovis Homes in connection
with the Acquisition, containing
the Notice of General Meeting
Companies Act the UK Companies Act 2006, as
amended from time to time
Completion completion of the Acquisition
in accordance with the Sale
and Purchase Agreement in accordance
with its terms (and references
to "complete" shall be construed
accordingly)
Consideration Shares 63,739,385 ordinary shares in
the share capital of the Company
with a nominal value of GBP0.50
each, to be issued to Galliford
Try Shareholders (in respect
of their shareholding in New
Topco) as consideration for
Bovis Homes' acquisition of
shares in New Topco
Court the High Court of Justice in
England and Wales
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
Deed of Novation the novation from Galliford
Try to Bovis Homes of the Private
Placement Bond pursuant to the
Deed of Novation
Demerger the demerger of Galliford Try
including the Partnerships &
Regeneration division (but excluding
the Linden Homes division) to
be effected by New Topco to
New Galliford Try in accordance
with the Restructuring Plan
Directors or Board the board comprising the executive
directors and non-Executive
directors of the Company as
at the date of this document
Disclosure Guidance and Transparency the disclosure guidance and
Rules transparency rules made by the
FCA under Part VI of the FSMA,
as amended
EPS earnings per share
Enlarged Group the Group following Completion
or if the Acquisition does not
complete, the Group (as the
context requires)
Equity Raise Condition the Company having raised proceeds
of not less than 9.99 per cent.
of its existing issued share
capital (calculated as at the
Latest Practicable Date) pursuant
to the Placing
Euroclear Euroclear UK and Ireland Limited,
incorporated in England and
Wales with registered number
02878738
FCA the UK Financial Conduct Authority
acting in its capacity as the
competent authority for the
purposes of Part VI of the FSMA
Finch Jersey Limited Project Finch Finance (Jersey)
Limited, a private limited company
incorporated in Jersey with
registered number 130166, whose
registered office is 47 Esplanade,
St Helier Jersey, JE1 OBD
Galliford Try Galliford Try plc, a public
limited company incorporated
in England and Wales with registered
number 00836539, whose registered
office is Cowley Business Park,
Cowley, Uxbridge, Middlesex
UB8 2AL
Galliford Try Continuing Group Galliford Try, its subsidiaries
and subsidiary undertakings
(and, for the avoidance of doubt,
excluding the Target Businesses),
being the continuing businesses
of Galliford Try following Completion
Galliford Try Court Meeting the meeting of the Galliford
Try Shareholders to be convened
by order of the Court pursuant
to section 896 of the Companies
Act to consider, and if thought
fit, approve the Scheme, including
any adjournment thereof
Galliford Try General Meeting the general meeting of Galliford
Try to be held at CMS Cameron
McKenna Nabarro Olswang LLP
on 29 November 2019 at 10.15
a.m. (or any adjournment thereof)
Galliford Try Group Galliford Try and its holding
companies and subsidiaries and
any subsidiary of any such holding
company from time to time, but
excluding the Target Businesses
Galliford Try Resolutions the resolutions to approve and
provide all necessary authorities
in order to implement the Restructuring
(amongst other things) to be
proposed at the Galliford Try
General Meeting
Galliford Try Shareholders the holders of the Galliford
Try Shares, and following the
Restructuring and prior to Completion,
holders of the New Topco Shares;
Galliford Try Shares the ordinary shares of GBP0.50
each in the share capital of
Galliford Try
General Meeting the general meeting of the Company
to be held at The Spa Hotel,
Mount Ephraim, Royal Tunbridge
Wells, Kent TN4 8XJ on 2 December
2019 at 11.00 a.m. (or any adjournment
thereof), notice of which is
set out at the end of the Circular
Group the Company and its subsidiary
undertakings and, where the
context requires, its associated
undertakings
IAS International Accounting Standard
Latest Practicable Date 6 November 2019, being the latest
practicable date before publication
of the Circular
Lazard Lazard & Co., Limited
Linden Homes Galliford Try Homes Limited,
a private limited company incorporated
in England and Wales with registered
number 03158857, whose registered
office is Cowley Business Park,
Cowley, Uxbridge, Middlesex
UB8 2AL
Listing Rules the rules and regulations made
by the FCA in its capacity as
the UK Listing Authority under
the FSMA (as amended), and contained
in the UK Listing Authority's
publication of the same name
Linden Homes Shares the 171,000 ordinary shares
of GBP1.00 each, the 72,675
A management shares of GBP1.00
each and the 21,472 MHL management
shares of GBP0.01 each, being
the entire issued shared capital
of Linden Homes (other than
the Linden Homes Special Share),
and "Linden Homes Shares" means
any one of them
Linden Homes Special Share the special share of GBP1.00
in the share capital of Linden
Homes to be issued in accordance
with the Restructuring Plan
and having the rights set out
in the articles of association
of Linden Homes
Linden Homes TGAV Adjustment a payment made to Galliford
Amount Try if the TGAV of Linden Homes
is above a specified amount,
or the payment to Bovis Homes
by Galliford Try if the TGAV
is below that specified amount
Main Market the main market of the London
Stock Exchange
New Bovis Homes LTIP the Bovis Homes Long Term Share
Incentive Plan 2020
New Facilities Agreement the new GBP475 million term
loan and revolving credit facilities
agreement entered into between,
amongst others, Bovis Homes
Limited, the original lenders
named in it and Barclays Bank
PLC as agent dated 7 November
2019
New Galliford Try Galliford Try Holdings PLC,
a public limited company incorporated
in England and Wales with registered
number 12216008, whose registered
office is Cowley Business Park,
Cowley, Uxbridge, Middlesex
UB8 2AL
New Galliford Try Shares the ordinary shares of GBP0.50
each in the capital of New Galliford
Try
New Policy the proposed remuneration policy
for the Directors of Bovis Homes
New RCF a GBP375 million revolving credit
facility to be provided to Bovis
Homes pursuant to the terms
of the New Facilities Agreement
New RCF Tranche 1 a subset of the New RCF, being
the GBP355 million revolving
credit facility to be provided
to Bovis Homes pursuant to the
terms of the New Facilities
Agreement
New RCF Tranche 2 a subset of the New RCF, being
the GBP20 million revolving
credit facility to be provided
to Bovis Homes pursuant to the
terms of the New Facilities
Agreement
New Topco New Topco, a private limited
company incorporated in Jersey
with registered number 130175,
whose registered office is at
47 Esplanade, St Helier, Jersey
JE1 OBD
New Topco A Shares A ordinary shares of GBP0.50
each in the capital of New Topco
New Topco B Shares B ordinary shares of GBP0.50
each in the capital of New Topco
New Topco Articles the articles of association
of New Topco
New Topco Shares the entire issued and to be
issued share capital of New
Topco immediately prior to Completion
(and excluding for the avoidance
of doubt, any New Topco B Shares
cancelled pursuant to the Reduction
of Capital)
Notice of General Meeting the notice set out at the end
of the Circular giving Shareholders
notice of the General Meeting
Numis Numis Securities Limited
Official List the official list of the FCA
Partnerships & Regeneration Galliford Try Partnerships Limited,
a private limited company incorporated
in England and Wales with registered
number 00800384, whose registered
office is Cowley Business Park,
Cowley, Uxbridge, Middlesex
UB8 2AL
Partnerships & Regeneration the 98,900 ordinary shares of
Shares GBP1.00 each and the 1,100 deferred
shares of GBP1.00 each, being
the entire issued share capital
of Partnerships & Regeneration
Placing the placing of up to 13,472,591
new Shares in the capital of
the Company, representing approximately
9.99 per cent. of Bovis Homes'
existing issued share capital,
to raise gross proceeds of up
to GBP157 million
Placing Shares the Shares issued pursuant to
the Placing
Private Placement Bond the GBP100 million 4.03 per
cent. senior unsecured notes
due February 2027 and originally
issued by Galliford Try to certain
institutional investors in February
2017
Prospectus the prospectus prepared by the
Company in relation to the Consideration
Shares for the purposes of the
Admission, and in accordance
with the Prospectus Regulation
Rules
Prospectus Regulation Rules the prospectus rules published
by the FCA under section 73A
of FSMA, as amended
Reduction of Capital the reduction of capital to
be undertaken by New Topco by
way of solvency statement in
accordance with the Restructuring
Plan
Regulatory Information Service any of the services authorised
by the FCA from time to time
for the purpose of disseminating
regulatory announcements
Reorganisation the reorganisation of the Target
Businesses and Galliford Try
to be undertaken prior to Completion
in accordance with the Restructuring
Plan
Resolutions the resolutions to approve inter
alia the Acquisition as set
out in the Notice of General
Meeting at the end of the Circular
Restructuring the Reorganisation, the Scheme,
the Reduction of Capital and
the Demerger
Restructuring Plan the detailed steps plan in respect
of the Restructuring in the
agreed terms
Sale and Purchase Agreement the sale and purchase agreement
or SPA entered into by the Company,
Galliford Try and New Topco
in respect of the acquisition
of the Target Businesses from
Galliford Try, consisting of
the Linden Homes Shares, the
Partnerships & Regeneration
Shares and the Linden Homes
Special Share, dated 7 November
2019
Scheme or Scheme of Arrangement the scheme of arrangement proposed
to be made under Part 26 of
the Companies Act between Galliford
Try and New Topco shareholders,
with or subject to any modification,
addition or condition approved
or imposed by the Court and
agreed to by the Company to
be effected prior to Completion
Scheme Effective Date the time and date at which the
Scheme becomes effective in
accordance with its terms, expected
to be 2 January 2020
Second Interim Dividend the cash dividend of up to 41
pence per Share expected to
be paid in May 2020 to Shareholders
on the Company's register of
members as at the Second Interim
Dividend Record Time
Second Interim Dividend Record 6.00 pm on 27 December 2019
Time
Shares the ordinary shares of GBP0.50
each in the capital of the Company
Shareholders the holders of the Shares in
the capital of the Company
STG Strategic Team Group Limited
Target Businesses the Linden Homes and Partnerships
& Regeneration businesses of
Galliford Try
Term Loan the GBP100 million term loan
to be provided to Bovis Homes
pursuant to the terms of the
New Facilities Agreement
TGAV total net assets, excluding
cash, debt, goodwill and intangible
assets
Transferring Pension Schemes the Galliford Try Final Salary
Pension Scheme and the Galliford
Try (Holdings) Limited Pension
& Assurance Scheme
UK Listing Authority the FCA acting in its capacity
as the competent authority for
the purposes of Part 6 of the
Financial Services and Markets
Act 2000.
United Kingdom or UK the United Kingdom of Great
Britain and Northern Ireland
United States or US the United States of America,
its territories and possessions,
any state of the United States
and the District of Columbia
US Securities Act the US Securities Act of 1933,
and the rules and regulations
promulgated thereunder
Voting Record Time 8.00 p.m. on 28 November 2019,
or, if the General Meeting is
adjourned, at 8.00 p.m. on the
day which is two days before
the date of such adjourned meeting
[1] Calculated using the Company's closing share price of
GBP10.59 as at 9 September 2019. Total consideration is subject to
a customary completion mechanism linked to Linden Homes' and
Partnerships & Regeneration' assets position.
[2] Based on the closing share price on 6 November 2019 of
GBP11.63.
[3] Calculated using the Company's closing share price of
GBP10.59 as at 9 September 2019. Total consideration is subject to
a customary completion mechanism linked to Linden Homes' and
Partnerships & Regeneration' assets position.
[4] The valuation of the Consideration Shares based on the
closing share price on 6 November 2019 is GBP741 million.
[5] Calculated using the Company's closing share price of
GBP10.59 as at 9 September 2019. Total consideration is subject to
a customary completion mechanism linked to Linden Homes' and
Partnerships & Regeneration' assets position.
[6] Based on Linden Homes' TGAV as at June 19 of GBP728.1
million - the difference between this and Linden Homes' last
reported TGAV of GBP759.2m is a GBP31.1 million intercompany
balance between Linden Homes and Galliford Try plc (which sits in
Linden Homes' working capital/receivable balances) and will be
settled prior to completion. This is why it has been excluded from
the TGAV calculation.
[7] Based on Partnerships' EBIT as at June 19 of GBP34.8
million.
[8] The proportional entitlement of Shareholders to Bonus Issue
Shares will be adjusted so as to reflect any new Shares issued
after the Latest Practicable Date and prior to the Bonus Issue
Record Date.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
ACQGLBDBIDGBGCR
(END) Dow Jones Newswires
November 07, 2019 02:01 ET (07:01 GMT)
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