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NPN - Naspers Limited - Recommended Cash Offer For Tradus Plc

Release Date: 18/12/2007 09:00
Code(s): NPN
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NPN - Naspers Limited - Recommended Cash Offer For Tradus Plc Naspers Limited (Incorporated in the Republic of South Africa) (Registration number 1925/001431/06) JSE share code: NPN ISIN: ZAE000015889 LSE ADS code: NPSN ISIN: US 6315121003 Not for release, publication or distribution, in whole or in part, in or into the United States, Canada, Australia or Japan or any other jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction. Recommended cash offer for Tradus plc 1. Introduction Naspers Limited ("Naspers" or "the Group") and Tradus plc (formerly QXL ricardo plc) ("Tradus") have reached agreement on the terms of a recommended cash offer to be made by Myriad International Holdings B.V. ("MIH"), a wholly owned offshore subsidiary of Naspers, for the entire issued and to be issued share capital of Tradus. 2. The Offer Naspers has offered to acquire all the issued and to be issued share capital of Tradus for GBP18,00 per share (the "Offer"). It is intended that the Offer will be implemented by way of a court approved scheme of arrangement under section 425 of the Companies Act 1985 of the United Kingdom (the "Scheme"). The Offer values the existing and to be issued ordinary share capital of Tradus at approximately GBP946 million (R13.2 billion) and represents a premium of: - 19% to the mid-market closing price of 1,510 pence per Tradus share on 6 November 2007, being the last business day prior to the announcement by Tradus that it had received a preliminary approach regarding a potential offer for Tradus. - 37% to the average mid-market closing price of 1,317 pence per Tradus share for the period 18 October 2007 to 6 November 2007, being the period from the Tradus announcement of its results for the half year ended 30 September 2007 to the announcement by Tradus that it had received a preliminary approach regarding a potential offer for Tradus. The directors of Tradus consider the terms of the Offer to be fair and reasonable and intend unanimously to recommend Tradus shareholders to vote in favour of the Scheme and the resolutions at the court meeting and at the extraordinary general meeting ("EGM") of Tradus shareholders convened to consider the Offer, as they have irrevocably undertaken to do in respect of their own beneficial shareholdings. 3. Rationale Naspers began investing in the nascent internet segment as early as 1997. Since then, the internet has developed into one of the faster growing areas of the media industry. In its own strategy Naspers has prioritised the internet sector for expansion. Success has been achieved in the sub-segments offering users communications, social networking and community platforms. In pursuit of this strategy, Naspers today has various internet investments on the African continent through M-WEB. In China the group has a roughly one third interest in Tencent, which has established itself as a leader in its market. In Russia, the group has a broadly similar stake in Mail.ru, which is developing into a market leader. In India an internet business focusing on the youth community and local search is being developed organically. With these investments the group has established a strong presence in the major emerging markets. Central and Eastern Europe have also been identified as attractive emerging markets and the group is presently finalising a controlling stake in Gadu Gadu, a young internet business there. The proposed acquisition of Tradus will consolidate the group`s presence in Poland and provide a platform to extend its reach to the other central European and eastern European markets. Apart from the investment in Tencent and Kalahari (an African e-tailer), other Naspers platforms have not yet generated transaction income. Our existing internet services rely on the generation of revenue mainly through advertising and value-added communication services. The intention is that an investment in the Tradus transaction platform will allow the group to diversify its internet revenue streams to include transaction income. 4. Irrevocable undertakings Naspers has received irrevocable undertakings to vote in favour of the Scheme and the associated resolutions at the Court Meeting and the EGM from the directors of Tradus who hold Tradus Shares (holding 258,855 Tradus Shares) and from shareholders, Novator Equities Limited (holding 4,947,590 Tradus Shares) and Wouwer Investeringen B.V. (holding 3,073,548 Tradus Shares) (together "Shareholders") in respect of their beneficial holdings of Tradus Shares representing, in aggregate, 17.9 per cent. of Tradus` issued share capital. The undertakings from the directors of Tradus will remain binding even in the event of a competing offer being made for Tradus. The undertakings from Shareholders will remain binding so long as there is no competing bid announced at a price of more than 2,175 pence per Tradus Share. 5. Information on Tradus Tradus is a publicly traded company with its shares listed on the London Stock Exchange. It provides online consumer trading platforms and related internet services in 12 European countries that connect buyers and sellers. A selection of merchandise and services are available on the company`s website, ranging from consumer electronics and collectibles to lifestyle products, cars and real estate. Its most substantial market is Poland. Other Eastern European operations are in Bulgaria, the Czech Republic, Hungary, Romania, Russia, Slovakia and the Ukraine. Most are emerging markets with reasonable or high growth. In Western Europe Tradus has operations in the more mature markets of Denmark, Norway and Switzerland, but not all are well-established. Tradus reported pro forma turnover for the financial year to 31 March 2007 of GBP46 million (R615 million), generating a trading profit of GBP15 million (R201 million) and had net assets of GBP60 million (R857 million) at that date. 6. Structure of the Offer It is intended that the Offer will be implemented by means of a scheme of arrangement between Tradus and the Scheme shareholders under section 425 of the UK Companies Act 1985. The procedure involves an application by Tradus to the court to sanction the Scheme and to confirm the cancellation of the Scheme shares. To become effective, the Scheme requires, amongst other things, the approval of a majority in number of the Scheme shareholders present and voting in person or by proxy at the court meeting, representing not less than 75% in value of the Scheme shares held by such Scheme shareholders, together with the sanction of the court and the passing of the resolutions necessary to implement the Scheme at the EGM. The Scheme is expected to become effective by early March 2008. Naspers reserves the right to elect to implement the Offer by making a takeover offer for the entire issued and to be issued share capital of Tradus. If Naspers elects to implement the Offer by a takeover offer, that offer will be implemented on the same terms, so far as applicable, as those that would apply to the Scheme. Furthermore, if sufficient acceptances of such offer are received and/or sufficient Tradus Shares are otherwise acquired, it is the intention of Naspers to acquire any outstanding Tradus shares to which such offer relates. It is intended that, following the Offer becoming effective and subject to applicable requirements of the London Stock Exchange and the UK Listing Authority, MIH will procure that Tradus will apply to the London Stock Exchange and the UK Listing Authority for cancellations, respectively, of the admission to trading of the Tradus shares on the London Stock Exchange`s market for listed securities and of the listing of the Tradus shares on the Official List. 7. Funding The cash consideration of GBP946 million, excluding costs, payable by Naspers under the terms of the Offer will be funded using a combination of existing resources and bridge funding of GBP700 million arranged by Citi for the purposes of the Offer. Following the completion of the Offer, the bridge funding will be refinanced by a combination of cash, debt and equity funding. Citi, financial adviser to Naspers, is satisfied that the group has sufficient resources to satisfy the full cash consideration payable to Tradus shareholders under the terms of the Offer. The Offer and its financing do not require Naspers shareholders` approval. 8. Implementation agreement MIH and Tradus have entered into an implementation agreement which sets out, amongst other things, various matters in relation to the implementation of the Offer, the conduct of Tradus`s business prior to the effective date of the Scheme or lapse of the Offer and contains certain assurances and confirmations between the parties, including to implement the Offer as soon as is reasonably practicable. The implementation agreement will terminate in certain circumstances including if: - the Tradus shareholders do not approve the Scheme at the court meeting or do not pass the relevant resolutions at the EGM or the court does not sanction the Scheme (in each case, unless MIH elects to effect the acquisition by way of an Offer) - any of the conditions is (or become) incapable of being satisfied, or - the effective date of the Scheme has not occurred by 18 June 2008. 9. Pro forma financial effects of the acquisition on Naspers The table below sets out the unaudited pro forma financial effects of the transaction and is based on the published reviewed results of Naspers for the six months ended 30 September 2007. The unaudited pro forma financial effects, for which the Naspers board is responsible, are presented for illustrative purposes only and may not give a fair reflection of the financial position and results of operations post the implementation of the transaction. The pro forma financial effects do not take into account any transaction expenses as these can only be accurately determined on finalisation of the refinancing of the bridge funding. Before After acquisition(a) acquisition(b) Change Per share (cents) (cents) EPS EPS (cents) 422 356 (16) HEPS (cents) 461 390 (15) Fully diluted EPS EPS (cents) 411 347 (16) HEPS (cents) 448 381 (15) Core HEPS (cents) 506 431 (15) NAV (cents)(c) 6,257 7,457 19 NTAV (cents)(c) 5,713 3,677 (36) Net number of shares in issue (`000)(b) 348 527 390 824 12 Weighted average number of shares in issue (`000)(b) 344 632 386 929 12 Fully diluted weighted average number of shares in issue (`000)(b) 354 111 396 408 12 Assumptions: (a) The information "Before Acquisition" is based on the published reviewed results for the six months ended 30 September 2007. (b) The information "After Acquisition" is based on the following assumptions: (i) the acquisition was effective from 1 April 2007 (ii) the funding of the acquisition was as follows: - existing cash resources of approximately R3,5 billion - debt of approximately R2,3 billion at Libor plus 2% pre-tax, and - the issuance of 42,3 million Naspers N shares at R173 per share (iii) the average pre-tax interest rate on the cash balance applied was 6,8% (iv) an effective tax rate of 29% was used (v) the income statement information was converted at R14,22: GBP1, being the average rate for the six months ended 30 September 2007, and (vi) the balance sheet information was converted at R14,03: GBP1, being the closing rate on 30 September 2007. (c) The NAV and NTAV per ordinary share "After Acquisition" is based on the assumption that the transaction was implemented on 30 September 2007. (d) The purchase accounting for the transaction has not yet been completed and the excess over the NAV was allocated to goodwill. Any increase in the value of intangible assets resulting from the purchase accounting will result in future amortisation charges in the income statement. This will have no effect on core headline earnings. (e) The financial information for Tradus was extracted from its unaudited interim results for the six months ended 30 September 2007. (f) Bridge funding will be used for a period not exceeding 30 days, whereafter the proceeds of the proposed equity offer amounting to approximately R7.3 billion and debt financing of approximately R2.3 billion will be utilised to settle the funding. 10. The proposed timetable The anticipated timetable is as follows: Event Expected Timing Court meeting early February 2008 EGM of Tradus shareholders early February 2008 Court hearing to sanction the Scheme and related arrangements early March 2008 Effective date of the Scheme (if sanction and confirmation of the court is received) early March 2008 Payment to Tradus shareholders March 2008 All dates are subject to the approval of the court and to the conditions being satisfied. 11. Effective date The effective date of the transaction will be on fulfilment of the conditions precedent indicated below. 12. Conditions precedent The Offer is subject to a number of conditions precedent including, inter alia, the obtaining of relevant regulatory approvals (in particular Polish competition authority clearance), approval by Tradus shareholders and the sanction of the scheme of arrangement by the court. 13. Categorisation The acquisition is a category 2 transaction in terms of the Listings Requirements of the JSE Limited. 14. Other Shareholders are also referred to Naspers` website: (www.naspers.com) where a copy of the announcement released under the Rules of the UK Panel on Takeovers and Mergers is located. Cape Town 18 December 2007 Sponsor Investec Bank Limited (Registration number 1969/004763/06) Financial adviser for the transaction CITI SA legal advisers Webber Wentzel Bowens Date: 18/12/2007 09:00:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. 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