Wrap Text
Recommended merger of Capital & Counties Properties plc and Shaftesbury plc by Scheme of arrangement
CAPITAL & COUNTIES PROPERTIES PLC
(Incorporated and registered in the United Kingdom
and Wales with registration Number 07145041 and
registered in South Africa as an external company
with Registration Number 2010/003387/10)
JSE code: CCO ISIN: GB00B62G9D36
LEI: 549300TTXXZ1SHUI0D54
RECOMMENDED ALL-SHARE MERGER OF CAPITAL & COUNTIES PROPERTIES PLC AND SHAFTESBURY PLC
TO BE EFFECTED BY MEANS OF A SCHEME OF ARRANGEMENT OF SHAFTESBURY PLC UNDER PART 26
OF THE COMPANIES ACT 2006
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.
THE FOLLOWING ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS OR
PROSPECTUS EQUIVALENT DOCUMENT AND INVESTORS SHOULD NOT MAKE ANY
INVESTMENT DECISION IN RELATION TO THE MERGER AND NEW CAPCO SHARES EXCEPT ON
THE BASIS OF THE INFORMATION IN THE SCHEME DOCUMENT, THE PROSPECTUS AND THE
CIRCULAR WHICH ARE PROPOSED TO BE PUBLISHED IN DUE COURSE.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.
This summary should be read in conjunction with, and is subject to, the full text of this
Announcement, including its Appendices and the definitions set out in Appendix 6.
Summary
- The Boards of Capital & Counties Properties PLC ("Capco") and Shaftesbury PLC
("Shaftesbury") are pleased to announce that they have reached agreement on the terms
of a recommended all-share merger (the "Merger") to form the "Combined Group". It is
intended that the Merger will be implemented by way of a scheme of arrangement of
Shaftesbury under Part 26 of the Companies Act, which, together with the Existing Capco
Shareholding, will result in the Capco Group owning 100% of the issued and to be issued
share capital of Shaftesbury on Completion.
Key terms
- Under the terms of the Merger, the Scheme Shareholders shall be entitled to receive:
3.356 New Capco Shares for each Shaftesbury Share held (the "Exchange Ratio")
- As a result of the Merger, Shaftesbury Shareholders (other than the holders of the Existing
Capco Shareholding) will own 53% of the Combined Group and Capco Shareholders will
own 47% of the Combined Group.
- The Exchange Ratio has been agreed between the Boards of each of Capco and
Shaftesbury taking into account the relative EPRA NTA and market capitalisations of both
companies.
- The Capco Group already holds 96,971,003 Shaftesbury Shares, representing
approximately 25.2% of Shaftesbury's issued share capital, as at close of business on the
Last Practicable Date.
- It is intended that the Combined Group will be called Shaftesbury Capital PLC on Completion.
- The Merger is supported by Norges Bank (the Central Bank of Norway) ("Norges Bank"), a
substantial shareholder of Capco and Shaftesbury, which has irrevocably undertaken to vote
in favour of the Merger, and Madison International Realty Holdings, LLC ("Madison
International Realty"), a shareholder of Capco, which has provided a letter of intent to vote
in favour of the Capco Resolutions.
- When taken together with the irrevocable undertakings provided by Shaftesbury's Directors
and Capco's Directors, this represents total support in aggregate of:
- 35.3% of the total votes which could be cast at the Court Meeting by Scheme
Shareholders who are entitled to vote (based on Shaftesbury's issued share capital
as at close of business on the Last Practicable Date); and
- 19.2% of the total votes which could be cast on the Capco Resolutions (other than
the Related Party Transaction) as at close of business on the Last Practicable Date.
Background to and reasons for the Merger
- The Merger will bring together two respected real estate companies, located in some of the
most iconic parts of London's West End, to create a leading mixed-use central London REIT,
with the Combined Group's portfolio valued at approximately GBP5.0 billion, Annualised Gross
Income of approximately GBP165.5 million and an estimated rental value ("ERV") of
approximately GBP218.0 million as at 31 March 2022.
- The Combined Group's portfolio will comprise approximately 670 predominantly freehold
buildings with approximately 2.9 million square feet of lettable space across approximately
2,000 commercial and residential units (excluding the Longmartin Joint Venture and Lillie
Square Joint Venture). At 31 March 2022, the Combined Group's portfolio comprised:
- retail: 35% (approximately GBP1.7 billion) of the portfolio value;
- hospitality and leisure: 34% (approximately GBP1.7 billion) of the portfolio value; and
- offices and residential: 31% (approximately GBP1.6 billion) of the portfolio value (split
as 14% residential and 17% offices).
- The Combined Group's portfolio is located in a number of vibrant, high-profile and
high-footfall destinations across London's West End, including Covent Garden, Carnaby,
Chinatown and Soho, close to its major cultural and entertainment attractions, employment
locations and transport hubs. Their popularity provides a seven-days-a-week trading
environment and exposure to an extensive and diverse local, domestic and international
customer base which has proven to be resilient throughout economic cycles.
- The Combined Group will provide a rare opportunity in the listed real estate sector to invest
in an exceptional mixed-use portfolio in the heart of central London. The Combined Group
will have a strong balance sheet, improved trading liquidity and an enhanced profile in the
capital markets, providing an opportunity to improve its equity rating over time.
- By combining both companies' strengths, cultures and values as well as their proven
operating and investment models, the Combined Group's management team will take a "best
of both" approach to operations with the aim of delivering long-term economic and social
value for all stakeholders. The Combined Group will place its occupiers and consumers at
the heart of the business, offering best-in-class service and focusing on providing lively,
differentiated experiences for visitors, local workers and residents. The management team
will bring its creative, hands-on, entrepreneurial approach to managing, improving and re-
purposing assets with the intention of generating long-term income and value growth.
- Capco and Shaftesbury are both committed to delivering positive environmental and social
outcomes through long-term responsible stewardship, sustainable use of heritage and period
properties, and engagement with residents and other local stakeholders.
- The Combined Group has a shared commitment to becoming Net Zero Carbon by 2030.
The objective is to become a UK leader in sustainability for heritage and period properties.
Harnessing the skillsets of both teams, the Combined Group will continue to adopt the
existing approach to focus on re-using, improving and re-purposing buildings to extend their
useful lives and enhance their energy performance credentials.
- The Boards of Capco and Shaftesbury, each having taken independent financial advice,
unanimously believe that the Merger is in the best interests of their respective company's
shareholders as a whole.
Financial impact of the Merger
- The Combined Group has an estimated EPRA NTA of approximately GBP3.8 billion and EPRA
NTA per share of approximately 207 pence as at 31 March 2022.
- There is significant revenue growth potential over time for the Combined Group as shown by
the difference between Annualised Gross Income of approximately GBP165.5 million and ERV
of approximately GBP218.0 million as at 31 March 2022.
- The Merger is expected to generate significant benefits over the long term. Following
Completion, incremental asset management opportunities, delivery of a dynamic leasing and
marketing strategy across the Combined Group's portfolio, enhanced connectivity of its
adjacent locations, and synergies are anticipated to create the opportunity for long-term
income, earnings and value growth for shareholders.
- Efficiencies in the Combined Group's operating structure are expected to generate
approximately GBP12 million of pre-tax recurring cost synergies on an annual run-rate basis by
the end of the second full year following Completion.
- For Capco Shareholders, the Merger is expected to be earnings accretive immediately and
modestly EPRA NTA dilutive, taking into account the Exchange Ratio, estimated transaction
costs and the consolidation of the Existing Capco Shareholding into the Combined Group's
EPRA NTA.
- For Shaftesbury Shareholders, the Merger is expected to be immediately EPRA NTA
accretive and modestly earnings dilutive for the first two full years after Completion while the
synergies are being realised. Thereafter, the impact on earnings will depend on a number of
factors including the extent and timing of the realisation of benefits from the Merger and the
future cost of financing.
- The Combined Group will have a strong capital structure with resilience, financial flexibility,
efficient access to capital and significant liquidity, with an estimated loan-to-value ("LTV") of
approximately 29% as at 31 March 2022. The Combined Group is expected to have
approximately GBP500 million of available liquidity immediately following Completion.
- Capco has entered into a GBP576 million loan ("Loan Facility Agreement") to provide funding
certainty in the event that the Shaftesbury Mortgage Bond holders exercise their redemption
right following Completion. Based on current market conditions, any drawdown of the Loan
Facility Agreement, or restructuring or refinancing of the Shaftesbury Mortgage Bonds is
expected to result in increased financing costs for the Combined Group. The Combined
Group would seek to mitigate such increased finance costs by capitalising on the increased
strength of the Combined Group's balance sheet following Completion.
- The Combined Group will retain a tax-efficient REIT structure and as such, will be required
to distribute a minimum of 90% of rental profits, calculated by reference to tax rather than
accounting rules, as a Property Income Distribution ("PID"). Notwithstanding this, the
Combined Group will adopt a progressive dividend policy with the intention to deliver long-
term sustainable total returns to shareholders. Dividend payments will be determined having
regard to, inter alia, growth trends in both underlying and cash earnings, which are expected
to be delivered through income growth and cost discipline. To the extent that dividends
exceed the amount available to distribute as a PID, the balance will be paid as ordinary
dividends.
Governance and Leadership
- The Combined Group will have a strong governance and leadership structure, led by
Jonathan Nicholls as non-executive Chairman and Ian Hawksworth as Chief Executive. Situl
Jobanputra will be the Chief Financial Officer and Chris Ward will be the Chief Operating
Officer.
- The Board of the Combined Group will contain strong non-executive representation from
both companies, with four current Shaftesbury Directors, being Richard Akers (as the Senior
Independent Director), Jennelle Tilling, Ruth Anderson CVO and Helena Coles joining the
Board of the Combined Group and two current Capco Directors, being Charlotte Boyle and
Anthony Steains, remaining in place.
- An Executive Committee, which will be responsible for the day-to-day management and
operation of the Combined Group, will be established comprising six members. The Chief
Executive, Chief Financial Officer and Chief Operating Officer will be joined by Capco's
Michelle McGrath, responsible for the enlarged Covent Garden portfolio including Capco's
Covent Garden assets as well as Shaftesbury's assets in Seven Dials, Opera Quarter and
Coliseum; Shaftesbury's Andrew Price responsible for the Carnaby, Chinatown, Soho and
Fitzrovia portfolios; and Shaftesbury's Samantha Bain-Mollison responsible for the
Combined Group's leasing.
- After 36 years at Shaftesbury, including 11 years as Chief Executive, Brian Bickell will retire
on Completion. Executive directors Simon Quayle and Tom Welton, who have been with
Shaftesbury for 35 and 33 years respectively, will also leave the business on Completion.
- Henry Staunton, Capco's Chairman who has served on the Capco Board for 12 years, will
retire on Completion. Jonathan Lane OBE, Non-executive Director, who has served on the
Capco Board for three years since March 2019 and previously had been Chief Executive
and Chairman of Shaftesbury for 30 years in total from 1986 to 2016, will also retire from
Capco's Board on Completion.
Listing
- Following Completion, the Combined Group will retain Capco's listing on the London Stock
Exchange as well as its secondary listing on the JSE.
Recommendations, irrevocable undertakings and letter of intent
- The Shaftesbury Board, which has been so advised by Evercore and Blackdown as to the
financial terms of the Merger, considers the terms of the Merger to be fair and reasonable.
In providing their financial advice to the Shaftesbury Board, Evercore and Blackdown have
taken into account the commercial assessments of the Shaftesbury Board. Evercore is
providing independent financial advice to the Shaftesbury Board for the purposes of Rule 3
of the Code.
- The Shaftesbury Board believes that the terms of the Merger are in the best interests of
Shaftesbury Shareholders as a whole and intends unanimously to recommend that
Shaftesbury Shareholders vote in favour of the Scheme at the Court Meeting and the
resolutions to be proposed at the Shaftesbury General Meeting which are to be convened to
approve the Merger, as the Shaftesbury Directors have irrevocably undertaken to do in
respect of the 2,519,849 Shaftesbury Shares currently registered or beneficially held in
aggregate by them, as well as any further Shaftesbury Shares which they may become the
registered or beneficial owner of (save for any Shaftesbury Shares which they acquire
pursuant to the exercise of options under the Shaftesbury Sharesave Scheme), representing
in aggregate approximately 0.88% of the total votes which could be cast at the Court Meeting
by Scheme Shareholders who are entitled to vote based on Shaftesbury's issued share
capital as at close of business on the Last Practicable Date.
- The Merger constitutes a reverse takeover by Capco of Shaftesbury for the purposes of the
Code. The Capco Board, which has been so advised by Rothschild & Co, UBS and Jefferies
as to the financial terms of the Merger, considers the terms of the Merger to be fair and
reasonable. In providing each of its financial advice to the Capco Board, each of Rothschild
& Co, UBS and Jefferies has taken into account the commercial assessments of the Capco
Board. Rothschild & Co is providing independent financial advice to the Capco Board for the
purposes of Rule 3 of the Code.
- The Merger constitutes a Class 1 Transaction and a Related Party Transaction for Capco for
the purposes of the Listing Rules and accordingly, Capco will be required to seek the
approval of Capco Shareholders for the Merger at the Capco General Meeting. The Capco
Board believes that the terms of the Merger are in the best interests of Capco Shareholders
as a whole and intends unanimously to recommend that Capco Shareholders vote in favour
of the Capco Resolutions to be proposed at the Capco General Meeting which is to be
convened to approve the Merger, as the Capco Directors have irrevocably undertaken to do
in respect of the 952,777 Capco Shares currently registered or beneficially held in aggregate
by them, as well as any further Capco Shares which they may become the registered or
beneficial owner of, representing in aggregate approximately 0.11% of Capco's issued share
capital as at close of business on the Last Practicable Date.
- Shaftesbury has received an irrevocable undertaking from Norges Bank in respect of
98,925,310 Shaftesbury Shares (as well as any further Shaftesbury Shares which they may
become the registered or beneficial owner of or otherwise interested in), to vote in favour of
the Scheme at the Court Meeting and the resolutions to be proposed at the Shaftesbury
General Meeting. When taken together with the irrevocable undertakings provided by
Shaftesbury's Directors, this represents total support in aggregate of 101,445,159
Shaftesbury Shares, representing in aggregate approximately 35.3% of the total votes which
could be cast at the Court Meeting by Scheme Shareholders who are entitled to vote based
on Shaftesbury's issued share capital as at close of business on the Last Practicable Date.
- Capco has received an irrevocable undertaking from Norges Bank in respect of 127,656,465
Capco Shares (as well as any further Capco Shares which they may become the registered
or beneficial owner of or otherwise interested in), and a letter of intent from Madison
International Realty in respect of 34,783,462 Capco Shares, to vote in favour of the Capco
Resolutions to be proposed at the Capco General Meeting. When taken together with the
irrevocable undertakings provided by Capco's Directors, this represents total support in
aggregate of 163,392,704 Capco Shares, representing in aggregate approximately 19.2%
of Capco's issued share capital as at close of business on the Last Practicable Date entitled
to vote on the Capco Resolutions other than the Related Party Transaction.
Pre-Completion Dividends
- Capco and Shaftesbury have agreed that they will be entitled to pay certain permitted
dividends to their respective shareholders prior to the Effective Date in respect of the period
up to 30 September 2022, without any adjustment to the Exchange Ratio, further details of
which are set out in the full text of this Announcement.
- If Completion occurs after 31 December 2022, Capco and Shaftesbury expect to put in place
additional arrangements to facilitate the ongoing payment of ordinary course dividends to
both sets of shareholders in the period up to Completion.
- Following Completion, the Combined Group will move onto Capco's existing dividend
timetable, with the first dividend expected to be in respect of the period from 1 October 2022
to 31 December 2022.
Information on Capco
- Capco is one of the largest listed property investment companies in central London and is a
constituent of the FTSE-250 Index.
- Capco's landmark Covent Garden estate, which comprises over 1.0 million square feet of
lettable space, across 380 lettable units, is a leading retail and dining destination in the heart
of central London. The area is home to a wide variety of British, global and independent
brands including Apple, Chanel, Tom Ford, Strathberry, Ave Mario, Balthazar and
SUSHISAMBA, with upcoming openings from Peloton and Reformation. As at the date of
this Announcement, Capco owns 25.2% of the existing share capital of Shaftesbury. Capco
is a Real Estate Investment Trust and its shares are listed on the London Stock Exchange
with a secondary listing on the JSE.
- As at 31 March 2022, Capco had approximately GBP1.8 billion of gross property assets, and its
50% share of gross property assets held in the Lillie Square Joint Venture and related assets
were valued at approximately GBP85 million. On an adjusted basis, updating the 31 December
2021 audited net assets for (i) the 31 March 2022 external valuations and (ii) the market
value of the Existing Capco Shareholding in Shaftesbury as at 31 March 2022, Capco's
unaudited net assets were approximately GBP1.8 billion and its unaudited EPRA NTA per
Capco Share was approximately 217 pence. The external valuations by CBRE for properties
owned by the Capco Group and by JLL for properties owned by the Lillie Square Joint
Venture, each as at 31 March 2022, are contained in Appendix 5 to this Announcement.
Capco trading update
- As at 31 March 2022, the external property valuation of Capco's Covent Garden estate was
approximately GBP1.8 billion, representing a like-for-like increase of 2.1% in the first quarter of
the year. The movement was driven by an increase of 1.0% in ERV on a like-for-like basis
to approximately GBP77.1 million as well as a reduction in the equivalent yield of 5 basis points
on a like-for-like basis to 3.83% reflecting positive leasing activity and high occupancy levels
across all uses.
- Up to June 2022, 23 new leases and renewals representing GBP3.6 million of rental income
have completed on average 10% ahead of December 2021 ERV. Annualised Gross Income
at 31 March 2022 was GBP58.3 million.
- On the estate, footfall continues to trend towards pre-pandemic levels and customer sales in
aggregate are ahead of 2019, reflecting the continued recovery of London's West End and
the appeal of Covent Garden.
- 10 new brands have recently opened, further strengthening the occupier line-up. These
include TAG Heuer, Rails and The Chestnut Bakery. Empresa has opened on Henrietta
Street whilst e&e jewellery and Sacred Gold have both opened within the Market Building.
Luxury watch brand Tudor, active wear brand Vuori and luxury perfume house Parfums de
Marly will open in the coming months, alongside Peloton's European Studio and Watchhouse
Coffee adding to the vibrant and rich mix at Covent Garden.
Information on Shaftesbury
- Shaftesbury is a REIT which invests exclusively in the heart of London's West End and is a
constituent of the FTSE-250 Index. Focused on hospitality, retail and leisure, its portfolio is
mainly in Carnaby, Seven Dials and Chinatown, but also includes substantial ownerships in
Opera Quarter and Coliseum, Soho and Fitzrovia.
- Extending to approximately 16.5 acres, following the purchase of a property at 92-104
Berwick Street which completed after 31 March 2022, and comprising approximately 1.9
million square feet of space, across 1,556 units, the portfolio comprises over 600 restaurants,
cafes, pubs and shops (across approximately 1.1 million square feet), approximately 0.4
million square feet of offices and 631 apartments. All of Shaftesbury's properties are close
to the main West End Underground stations, and within ten minutes' walk of the two West
End transport hubs for the Elizabeth Line, at Tottenham Court Road and Bond Street.
- In addition, Shaftesbury has a 50% interest in the Longmartin Joint Venture, which has a
long leasehold interest, extending to approximately 1.9 acres, at the junction of Long Acre
and Upper St Martin's Lane near Seven Dials.
- As at 31 March 2022, Shaftesbury had approximately GBP3.3 billion of gross property assets,
and its 50% share of gross property assets held in the Longmartin Joint Venture was valued
at approximately GBP172.8 million. Shaftesbury's unaudited net assets were approximately
GBP2.6 billion and its unaudited EPRA NTA per Shaftesbury Share was approximately 679
pence. The external valuations by Cushman & Wakefield for properties owned by the
Shaftesbury Group and by Knight Frank for properties owned by the Longmartin Joint
Venture, each as at 31 March 2022, are contained in Appendix 5 to this Announcement.
Timetable and Conditions
- It is intended that the Merger will be implemented by way of a scheme of arrangement of
Shaftesbury under Part 26 of the Companies Act, further details of which are contained in
the full text of this Announcement. Capco reserves the right to implement the Merger by way
of a Takeover Offer, subject to the Panel's consent and the terms of the Co-operation
Agreement.
- As a result of its size, the Merger constitutes a Class 1 Transaction for Capco for the
purposes of the Listing Rules. Accordingly, Capco will be required to seek the approval of
Capco Shareholders for the Merger at the Capco General Meeting.
- The issue of New Capco Shares to Norges Bank as part of the Merger will constitute a
Related Party Transaction between Capco and Norges Bank for the purposes of the Listing
Rules. Accordingly, Capco will also be required to seek the approval of Capco Shareholders
(excluding Norges Bank) at the Capco General Meeting.
- The Merger is subject to the satisfaction or, where applicable, waiver of the Conditions and
certain further terms set out in Appendix 1 to this Announcement and to the full terms and
conditions which will be set out in the Scheme Document. These Conditions include,
amongst others:
- the approval of the Scheme by the Scheme Shareholders (or the relevant class or
classes thereof, if applicable, unless all members of any such class have consented
to be bound by the Scheme) present and voting, either in person or by proxy, at the
Court Meeting (or at any separate class meeting which may be required by the
Court) and the approval of the requisite majority of Shaftesbury Shareholders at the
Shaftesbury General Meeting;
- the approval of the Capco Resolutions at the Capco General Meeting;
- the CMA issuing a decision that it is not the CMA's intention to make a Phase 2 CMA
Reference, with such a decision being issued on an unconditional basis or else
conditional on the CMA's acceptance of undertakings which are reasonably
satisfactory to Capco and Shaftesbury (or the applicable time period having expired
without a Phase 2 CMA Reference) (the "CMA Condition");
- the sanction of the Scheme by the Court; and
- Admission.
- The Scheme Document will contain full details of the Merger and the Scheme, together with
notices of the Court Meeting and Shaftesbury General Meeting and will specify the action to
be taken by Scheme Shareholders. It is expected that the Scheme Document will be
dispatched to Shaftesbury Shareholders (together with the forms of proxy) within 28 days of
this Announcement (unless otherwise agreed by the Panel, Capco and Shaftesbury).
- Capco will prepare and send to Capco Shareholders the Circular summarising the
background to and reasons for the Merger which will include a notice convening the Capco
General Meeting. It is expected that the Circular will be posted to Capco Shareholders
(together with the form of proxy) at the same time as the Scheme Document, with the Capco
General Meeting being held at or around the same time as the Shaftesbury General Meeting
and the Court Meeting.
- Capco will also be required to produce a Prospectus in connection with Admission. It is
expected that the Prospectus, containing information about the New Capco Shares, will be
published at or around the same time as the Circular is posted to Capco Shareholders and
the Scheme Document is posted to Shaftesbury Shareholders.
- The Scheme is expected to become effective by the end of 2022, subject to the satisfaction
or, where applicable, waiver of the Conditions and certain further terms set out in Appendix 1
to this Announcement and to the full terms and conditions to be set out in the Scheme Document.
- An expected timetable of the key events of the Merger will be set out in the Scheme
Document.
Commenting on the Merger, Henry Staunton, Chairman of Capco, said:
"As the retiring Chairman of Capco, I am delighted by the prospects offered by the proposed merger
with Shaftesbury to shareholders as London's West End continues its recovery. I have every
confidence in the ability of the combined management and Board of Shaftesbury Capital to deliver
sustainable value growth for shareholders and benefits for broader stakeholders from its unique
portfolio of properties."
Commenting on the Merger, Jonathan Nicholls, Chairman of Shaftesbury, said:
"The merger of Shaftesbury and Capco unites two complementary and adjacent real estate portfolios
under single ownership. Shaftesbury Capital will own a first-class portfolio in some of the most iconic
destinations across London's vibrant West End. The experienced leadership team, with their
impressive track record of innovation and curation, should ensure a sustainable and prosperous
future for our destinations, the communities they serve and our wider stakeholders. With cost and
operational synergies, a strong corporate governance framework, increased scale and greater equity
market liquidity, the combination also provides a firm foundation for future value creation for our
shareholders.
On behalf of the Shaftesbury Board, I would like to thank Brian Bickell, Simon Quayle and Tom
Welton for their truly extraordinary commitment to Shaftesbury over many decades. Their
contribution to its success has been beyond measure and they will be leaving the business in a
strong position for their successors."
Commenting on the Merger, Ian Hawksworth, Chief Executive of Capco, said:
"The proposed merger is an exciting opportunity to bring together two exceptional property portfolios
in London's vibrant and thriving West End. By combining the creativity and knowledge of our talented
and experienced management teams to deliver sustained income and value growth Shaftesbury
Capital aims to become a leading central London mixed-use REIT.
I am very much looking forward to working with my new and existing colleagues as we continue to
curate wonderful places and experiences for our occupiers, visitors, local workers and residents in
the heart of one of the world's greatest cities."
Commenting on the Merger, Brian Bickell, Chief Executive of Shaftesbury, said:
"Over the last 36 years, Shaftesbury has built a portfolio of the highest quality and it has been an
honour to lead the company as Chief Executive for the last 11 years. As we emerge from the
disruption of the pandemic, we are seeing increased confidence and growth once again,
demonstrating the resilience of the West End and our locations. The merged business will have an
exceptional portfolio, located in popular and busy parts of London's vibrant West End, and an
experienced and innovative team drawn from both businesses. I am confident that Shaftesbury
Capital will continue to be a major contributor to the success of London's West End as well as an
attractive proposition for investors."
This summary should be read in conjunction with, and is subject to, the full text of this
Announcement, including its Appendices.
The Merger is subject to the satisfaction or, where applicable, waiver of the Conditions and
certain further terms of the Merger set out in Appendix 1 to this Announcement and to the full
terms and conditions to be set out in the Scheme Document. Appendix 2 to this
Announcement contains the sources and bases of certain information contained in this
summary and this Announcement. Appendix 3 to this Announcement contains details of the
irrevocable undertakings and letter of intent received by Capco and by Shaftesbury.
Appendix 4 to this Announcement contains the Quantified Financial Benefits Statement,
together with the reports from KPMG, as reporting accountants to Capco and the Proposed
Directors for the purposes of the Quantified Financial Benefits Statement, and Rothschild &
Co, as financial adviser to Capco and the Proposed Directors for the purposes of the
Quantified Financial Benefits Statement, as required under Rule 28.1(a) of the Code. Each of
KPMG and Rothschild & Co has given and not withdrawn its consent to the publication of its
report in this Announcement in the form and context in which it is included.
For the purposes of Rule 28 of the Code, the Quantified Financial Benefits Statement
contained in Appendix 4 to this Announcement is the responsibility of Capco, the Capco
Directors and the Proposed Directors, and not of the Shaftesbury Directors.
Any statement of intention, belief or expectation for the Combined Group following the
Effective Date is an intention, belief or expectation of the Capco Directors and the Proposed Directors.
Appendix 5 to this Announcement contains property valuations supported by valuation
reports for each of Capco and Shaftesbury as at 31 March 2022 pursuant to the requirements
of Rule 29 of the Code. These property valuation reports will, subject to the requirements of
the Code, be reproduced in the Scheme Document and the Prospectus. Each of CBRE, JLL,
Cushman & Wakefield and Knight Frank has given and not withdrawn its consent to the
publication of its valuation report in this Announcement in the form and context in which it is included.
Appendix 6 to this Announcement contains the definitions of certain terms used in this
summary and Announcement.
Analyst and investor presentation
Capco and Shaftesbury will host an in-person briefing, live conference call and webcast for investors
and analysts at 8:30am (UK time) today (16th June 2022) to discuss the Merger.
In-person briefing
To register to attend the in-person briefing, which will take place at 8:30am at the offices of UBS,
5 Broadgate, London, EC2M 2QS, please contact Hudson Sandler/RMS Partners/MHP
Communications at Rachel.farrington@mhpc.com or by telephone on 07801 894577.
Conference call dial in details
If you are unable to attend the briefing in person, please use the following details to participate in the
conference call:
Audience Conference call:
United Kingdom 0800 640 6441
United Kingdom (Local) 020 3936 2999
All other locations +44 20 3936 2999
Access code: 156693
Webcast details
To watch via webcast, please register and log in at the following:
https://www.investis-live.com/capitalandcounties/62a7050ee862e512003c1234/capw
Enquiries:
Capco +44 (0)20 3214 9150
Ian Hawksworth, Chief Executive
Situl Jobanputra, Chief Financial Officer
Sarah Corbett, Director of Commercial Finance and Investor Relations
Rothschild & Co (Lead Financial Adviser and UK Sponsor to Capco) +44 (0)20 7280 5000
Alex Midgen
Peter Everest
UBS (Joint Financial Adviser and Corporate Broker to Capco) +44 (0)20 7567 8000
Hew Glyn Davies
Jonathan Retter
Jefferies (Joint Financial Adviser and Corporate Broker to Capco) +44 (0)20 7029 8000
Philip Noblet
Ed Matthews
Peel Hunt (Joint Corporate Broker to Capco) +44 (0)20 7418 8900
Carl Gough
Capel Irwin
Hudson Sandler (PR Adviser to Capco) +44 (0)20 7796 4133
Michael Sandler
Instinctif Partners (PR Adviser to Capco) +27 (0)11 447 3030
Frederic Cornet
Shaftesbury +44 (0)20 7333 8118
Brian Bickell, Chief Executive
Chris Ward, Chief Financial Officer
Evercore (Joint Lead Financial Adviser to Shaftesbury) +44 (0)20 7653 6000
Ed Banks
Wladimir Wallaert
Blackdown Partners (Joint Lead Financial Adviser to Shaftesbury) +44 (0)20 3807 8484
Peter Tracey
Tom Fyson
Liberum Capital (Joint Financial Adviser and Corporate Broker to +44 (0)20 3100 2000
Shaftesbury)
Richard Crawley
Jamie Richards
J.P. Morgan Cazenove (Joint Financial Adviser and Corporate Broker +44 (0)20 7742 4000
to Shaftesbury)
Paul Pulze
Saul Leisegang
RMS Partners (PR Adviser to Shaftesbury) +44 (0)7958 754 273
Simon Courtenay
MHP Communications (PR Adviser to Shaftesbury) +44 (0)20 3128 8613
Oliver Hughes
Barclays, BNP Paribas and HSBC are original lenders under the Loan Facility Agreement and have
provided financial advice to Capco in relation to the Merger. Java Capital is acting as South African
sponsor to Capco.
Herbert Smith Freehills LLP is acting as legal adviser to Capco in connection with the Merger.
Hogan Lovells International LLP is acting as legal adviser to Shaftesbury in connection with the Merger.
Further information
This Announcement is for information purposes only and is not intended to and does not constitute,
or form part of, any offer to sell or issue, or any solicitation of an offer to purchase, subscribe for or
otherwise acquire, or the solicitation of any offer to dispose of, any securities or the solicitation of any
vote or approval in any jurisdiction pursuant to the Merger or otherwise, nor shall there be any sale,
issuance or transfer of securities of Capco or Shaftesbury pursuant to the Merger in any jurisdiction
in contravention of applicable laws. The Merger will be implemented solely pursuant to the terms of
the Scheme Document (or, in the event that the Merger is to be implemented by means of a Takeover
Offer, the Offer Document), which, together with the forms of proxy, will contain the full terms and
conditions of the Scheme, including details of how to vote in respect of the Merger. Any decision in
respect of, or other response to, the Merger by Shaftesbury Shareholders (including any vote in
respect of the Shaftesbury Resolutions to approve the Merger, the Scheme or related matters) should
be made only on the basis of the information contained in the Scheme Document (or, in the event
that the Merger is to be implemented by means of a Takeover Offer, the Offer Document).
This Announcement has been prepared for the purpose of complying with English law and the Code
and the information disclosed may not be the same as that which would have been disclosed if this
Announcement had been prepared in accordance with the laws and regulations of jurisdictions
outside the United Kingdom.
This Announcement does not constitute a prospectus or a prospectus equivalent document.
This Announcement contains inside information for the purposes of Article 7 of the Market Abuse
Regulation in respect of each of Capco and Shaftesbury. The person responsible for arranging for
the release of this Announcement on behalf of Capco is Ruth Pavey, Company Secretary, and on
behalf of Shaftesbury is Desna Martin, Company Secretary.
The Merger will be subject to the applicable requirements of the Code, the Panel, the London Stock
Exchange and the FCA.
Shaftesbury will prepare the Scheme Document to be distributed to the Shaftesbury Shareholders.
Capco will prepare the Circular to be distributed to Capco Shareholders and will also publish the
Prospectus containing information about the New Capco Shares and the Combined Group. Capco
and Shaftesbury urge Shaftesbury Shareholders to read the Scheme Document and the Prospectus
carefully when they become available because they will contain important information in relation to
the Merger, the New Capco Shares and the Combined Group. Capco urges Capco Shareholders to
read the Circular and the Prospectus carefully when they become available because they will contain
important information in relation to the Merger and the New Capco Shares.
Any vote in respect of the resolutions to be proposed at the Court Meeting, the Shaftesbury General
Meeting or the Capco General Meeting to approve the Merger, the Scheme or related matters, should
be made only on the basis of the information contained in the Scheme Document in the case of
Shaftesbury Shareholders, and, in the case of Capco Shareholders, the Circular.
Information Relating to Shaftesbury Shareholders
Please be aware that addresses, electronic addresses and certain other information provided by
Shaftesbury Shareholders, persons with information rights and other relevant persons in connection
with the receipt of communications from Shaftesbury may be provided to Capco during the offer
period as required under Section 4 of Appendix 4 to the Code to comply with Rule 2.11(c) of the Code.
Important Notices Relating to the Financial Advisers and Corporate Brokers
Rothschild & Co, which is authorised and regulated by the FCA in the United Kingdom, is acting
exclusively for Capco and no one else in connection with the Merger and will not be responsible to
any other person for providing the protections afforded to its clients or for providing advice in
connection with Merger, the contents of this Announcement or any other matter referred to herein.
Neither Rothschild & Co nor any of its affiliates (nor their respective directors, officers, employees or
agents) owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect,
whether in contract, in tort, under statute or otherwise) to any person who is not a client of Rothschild
& Co in connection with this Announcement, any statement contained herein, the Merger or
otherwise. No representation or warranty, express or implied, is made by Rothschild & Co as to the
contents of this Announcement.
UBS AG London Branch ("UBS" or "UBS Investment Bank") is authorised and regulated by the
Financial Market Supervisory Authority in Switzerland. It is authorised by the Prudential Regulation
Authority (the "PRA") and subject to regulation by the FCA and limited regulation by the PRA in the
United Kingdom. UBS is acting as financial adviser and corporate broker to Capco and no one else
in connection with the Merger. In connection with such matters, UBS, its affiliates, and its or their
respective directors, officers, employees and agents will not regard any other person as its client,
nor will it be responsible to any other person for providing the protections afforded to its clients or for
providing advice in relation to the contents of this Announcement or any other matter referred to herein.
Jefferies International Limited ("Jefferies"), which is authorised and regulated by the FCA in the
United Kingdom, is acting exclusively for Capco and no one else in connection with the Merger and
will not be responsible to anyone other than Capco for providing the protections afforded to clients
of Jefferies nor for providing advice in relation to the Merger or any other matters referred to in this
Announcement. Neither Jefferies nor any of its affiliates (nor their respective directors, officers,
employees or agents) owes or accepts any duty, liability or responsibility whatsoever (whether direct
or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client
of Jefferies in connection with this Announcement, any statement contained herein, the Merger or otherwise.
Peel Hunt LLP ("Peel Hunt"), which is authorised and regulated by the FCA in the United Kingdom,
is acting exclusively for Capco and no one else in connection with the Merger and will not be
responsible to anyone other than Capco for providing the protections afforded to clients of Peel Hunt
or for providing advice in connection with the subject matter of this Announcement.
Barclays Bank PLC, acting through its Investment Bank ("Barclays"), which is authorised by the
Prudential Regulation Authority ("PRA") and regulated in the United Kingdom by the Financial
Conduct Authority ("FCA") and the PRA, is acting exclusively for Capco and no one else in connection
with the Merger and will not be responsible to anyone other than Capco for providing the protections
afforded to clients of Barclays nor for providing advice in relation to the Merger or any other matter
referred to in this announcement.
In accordance with the Code, normal United Kingdom market practice and Rule 14e-5(b) of the US
Securities Exchange Act of 1934, Barclays and its affiliates will continue to act as exempt principal
trader in Shaftesbury and Capco securities on the London Stock Exchange. These purchases and
activities by exempt principal traders which are required to be made public in the United Kingdom
pursuant to the Code will be reported to a Regulatory Information Service and will be available on
the London Stock Exchange website at www.londonstockexchange.com. This information will also
be publicly disclosed in the United States to the extent that such information is made public in the
United Kingdom.
HSBC Bank plc ("HSBC"), which is authorised by the Prudential Regulation Authority and regulated
in the United Kingdom by the Financial Conduct Authority and the Prudential Regulation Authority,
is acting as financial adviser to Capco and no one else in connection with the matters described in
this announcement and will not be responsible to anyone other than Capco for providing the
protections afforded to clients of HSBC, or for providing advice in connection with the matters referred
to herein. Neither HSBC nor any of its group undertakings or affiliates owes or accepts any duty,
liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under
statute or otherwise) to any person who is not a client of HSBC in connection with this announcement
or any matter referred to herein.
BNP Paribas SA is authorised and regulated by the European Central Bank and the Autorite de
Controle Prudentiel et de Resolution. In the UK, BNP Paribas London Branch ("BNP Paribas" or
"BNP Paribas London Branch") is deemed authorised by the PRA with deemed variation of
permission, and is subject to regulation by the FCA and limited regulation by the PRA. Details of the
Temporary Permissions Regime, which allows EEA based firms to operate in the UK for a limited
period while seeking full authorisation, are available on the FCA's website. BNP Paribas London
Branch is registered in the UK under number FC13447 and UK establishment number BR000170,
and its UK establishment office address is 10 Harewood Avenue, London NW1 6AA. BNP Paribas
is acting as financial adviser exclusively for Capco and no one else in connection with the matters
described in this Announcement and will not be responsible to anyone other than Capco for providing
the protections afforded to clients of BNP Paribas or for providing advice in relation to the matters
described in this Announcement or any transaction or arrangement referred to herein.
Java Capital Trustees and Sponsors Proprietary Limited ("Java Capital"), which is regulated by the
JSE, which is licensed as a securities exchange and is regulated by the Financial Sector Conduct
Authority and the Prudential Authority of South Africa, is acting as JSE sponsor exclusively for Capco
and no one else in connection with the Merger and will not be responsible to anyone other than
Capco for providing the protections afforded to the clients of Java Capital, nor for providing advice in
relation to the Merger from a JSE perspective or any other matter or arrangement referred to in this
Announcement.
Evercore Partners International LLP ("Evercore"), which is authorised and regulated by the Financial
Conduct Authority in the UK, is acting exclusively as financial adviser to Shaftesbury and no one else
in connection with the matters described in this Announcement and will not be responsible to anyone
other than Shaftesbury for providing the protections afforded to clients of Evercore nor for providing
advice in connection with the matters referred to herein. Neither Evercore nor any of its subsidiaries,
branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct
or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client
of Evercore in connection with this Announcement, any statement contained herein, any offer or
otherwise. Apart from the responsibilities and liabilities, if any, which may be imposed on Evercore
by FSMA, or the regulatory regime established thereunder, or under the regulatory regime of any
jurisdiction where exclusion of liability under the relevant regulatory regime would be illegal, void or
unenforceable, neither Evercore nor any of its affiliates accepts any responsibility or liability
whatsoever for the contents of this Announcement, and no representation, express or implied, is
made by it, or purported to be made on its behalf, in relation to the contents of this Announcement,
including its accuracy, completeness or verification of any other statement made or purported to be
made by it, or on its behalf, in connection with Shaftesbury or the matters described in this document.
To the fullest extent permitted by applicable law, Evercore and its affiliates accordingly disclaim all
and any responsibility or liability whether arising in tort, contract or otherwise (save as referred to
above) which they might otherwise have in respect of this Announcement or any statement contained herein.
Blackdown Partners Limited ("Blackdown"), which is authorised and regulated by the Financial
Conduct Authority in the UK, is acting exclusively as financial adviser to Shaftesbury and no one else
in connection with the matters described in this Announcement and will not be responsible to anyone
other than Shaftesbury for providing the protections afforded to clients of Blackdown nor for providing
advice in connection with the matters referred to herein. Neither Blackdown nor any of its
subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever
(whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who
is not a client of Blackdown in connection with this Announcement, any statement contained herein,
any offer or otherwise. Apart from the responsibilities and liabilities, if any, which may be imposed on
Blackdown by FSMA, or the regulatory regime established thereunder, or under the regulatory
regime of any jurisdiction where exclusion of liability under the relevant regulatory regime would be
illegal, void or unenforceable, neither Blackdown nor any of its affiliates accepts any responsibility or
liability whatsoever for the contents of this Announcement, and no representation, express or implied,
is made by it, or purported to be made on its behalf, in relation to the contents of this Announcement,
including its accuracy, completeness or verification of any other statement made or purported to be
made by it, or on its behalf, in connection with Shaftesbury or the matters described in this document.
To the fullest extent permitted by applicable law, Blackdown and its affiliates accordingly disclaim all
and any responsibility or liability whether arising in tort, contract or otherwise (save as referred to
above) which they might otherwise have in respect of this Announcement or any statement contained herein.
Liberum Capital Limited ("Liberum"), which is authorised and regulated in the United Kingdom by the
FCA, is acting exclusively for Shaftesbury and no one else in connection with the matters described
in this Announcement. Liberum will not regard any other person (whether or not a recipient of this
Announcement) as its client in relation to the matters described in this Announcement and will not
be responsible to anyone other than Shaftesbury for providing the protections afforded to its clients
or for providing any advice in relation to matters or arrangements referred to herein.
J.P. Morgan Securities PLC, which conducts its UK investment banking business as J.P. Morgan
Cazenove ("J.P. Morgan Cazenove"), which is authorised and regulated in the United Kingdom by
the FCA, is acting exclusively for Shaftesbury and no one else in connection with the matters
described in this Announcement. J.P. Morgan Cazenove will not regard any other person (whether
or not a recipient of this Announcement) as its client in relation to the matters described in this
Announcement and will not be responsible to anyone other than Shaftesbury for providing the
protections afforded to its clients or for providing any advice in relation to matters or arrangements
referred to herein. J.P. Morgan Cazenove has given and has not withdrawn its consent to the
publication of this Announcement with the inclusion herein of the references to its names in the form
and context in which it appears.
Overseas jurisdictions
The availability of the New Capco Shares in, and the release, publication or distribution of this
Announcement in or into, jurisdictions other than the United Kingdom may be restricted by law and
therefore persons into whose possession this Announcement comes who are subject to the laws of
any jurisdiction other than the United Kingdom should inform themselves about, and observe, any
applicable legal or regulatory requirements or restrictions. In particular, the ability of persons who are
not resident in the United Kingdom to vote their Shaftesbury Shares with respect to the Scheme at
the Court Meeting, or to execute and deliver forms of proxy appointing another to vote at the Court
Meeting on their behalf, may be affected by the laws of the relevant jurisdictions in which they are
located. Any failure to comply with the applicable restrictions may constitute a violation of the
securities laws of any such jurisdiction. To the fullest extent permitted by applicable law the
companies and persons involved in the Merger disclaim any responsibility or liability for the violation
of such restrictions by any person. Shaftesbury Shareholders who are in any doubt regarding such
matters should consult an appropriate independent adviser in the relevant jurisdiction without delay.
This Announcement has been prepared for the purposes of complying with English law, the Code,
the Market Abuse Regulation and the Disclosure Guidance and Transparency Rules and the
information disclosed may not be the same as that which would have been disclosed if this
Announcement had been prepared in accordance with the laws of jurisdictions outside the United Kingdom.
Unless otherwise determined by Capco or required by the Code, and permitted by applicable law
and regulation, the New Capco Shares to be issued pursuant to the Merger to Shaftesbury
Shareholders will not be made available, directly or indirectly, in, into or from a Restricted Jurisdiction
where to do so would violate the laws in that jurisdiction and no person may vote in favour of the
Merger by any such use, means, instrumentality or form (including, without limitation, facsimile, email
or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or any
facility of a national, state or other securities exchange of, any Restricted Jurisdiction or any other
jurisdiction if to do so would constitute a violation of the laws of that jurisdiction. Accordingly, copies
of this Announcement and any formal documentation relating to the Merger are not being, and must
not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any
Restricted Jurisdiction or any other jurisdiction where to do so would constitute a violation of the laws
of that jurisdiction, and persons receiving such documents (including custodians, nominees and
trustees) must not mail or otherwise forward, distribute or send such documents in or into or from
any Restricted Jurisdiction. Doing so may render invalid any related purported vote in respect of the
Merger. If the Merger is implemented by way of a Takeover Offer (unless otherwise permitted by
applicable law and regulation), the Takeover Offer may not be made directly or indirectly, in or into,
or by the use of mails or any means or instrumentality (including, but not limited to, facsimile, e-mail
or other electronic transmission or telephone) of interstate or foreign commerce of, or of any facility
of a national, state or other securities exchange of any Restricted Jurisdiction and the Merger will not
be capable of acceptance by any such use, means, instrumentality or facilities or from within any
Restricted Jurisdiction.
The availability of New Capco Shares pursuant to the Merger to Shaftesbury Shareholders who are
not resident in the United Kingdom or the ability of those persons to hold such shares may be affected
by the laws or regulatory requirements of the relevant jurisdictions in which they are resident. Persons
who are not resident in the United Kingdom should inform themselves of, and observe, any applicable
legal or regulatory requirements. Shaftesbury Shareholders who are in doubt about such matters
should consult an appropriate independent professional adviser in the relevant jurisdiction without delay.
Further details in relation to Shaftesbury Shareholders in overseas jurisdictions will be contained in
the Scheme Document.
Additional Information for US Investors
Shareholders in the United States should note that the Merger relates to the shares of an English
company and is proposed to be made by means of a scheme of arrangement provided for under,
and governed by, the law of England and Wales. Neither the proxy solicitation nor the tender offer
rules under the US Securities Exchange Act of 1934, as amended, (the "US Exchange Act") will
apply to the Scheme. Moreover the Scheme will be subject to the disclosure requirements and
practices applicable in the UK to schemes of arrangement, which differ from the disclosure
requirements of the US proxy solicitation rules and tender offer rules. However, if Capco were to
elect to implement the Merger by means of a Takeover Offer, such Takeover Offer would be made
in compliance with all applicable laws and regulations, including Section 14(e) of the US Exchange
Act and Regulation 14E thereunder. Any such Takeover Offer would be made in the United States
by Capco and no one else. In addition to any such Takeover Offer, Capco, certain affiliated
companies and the nominees or brokers (acting as agents) may make certain purchases of, or
arrangements to purchase, shares in Shaftesbury outside any such Takeover Offer during the period
in which such Takeover Offer would remain open for acceptance. If such purchases or arrangements
to purchase were to be made they would be made outside the United States and would comply with
applicable law, including the US Exchange Act. Any information about any such purchases would be
disclosed as required in the UK and, if relevant, would be reported to a Regulatory Information
Service and would be available on the London Stock Exchange website at
https://www.londonstockexchange.com/.
Financial information included in this Announcement, the Scheme Document, the Prospectus and
the Circular has been or will be prepared in accordance with accounting standards under UK-adopted
international accounting standards and in accordance with International Financial Reporting
Standards ("IFRS") and thus may not be comparable to financial information of US companies or
companies whose financial statements are prepared in accordance with generally accepted
accounting principles in the United States. If Capco were to implement the Merger by way of a
Takeover Offer in accordance with the terms of the Co-operation Agreement or otherwise in a manner
that is not exempt from the registration requirements of the US Securities Act (as defined below) and
were to extend the offer into the United States, then any such offer would be made in compliance
with applicable United States securities laws and regulations.
Capco and Shaftesbury are each organised under the laws of England and Wales. All of the officers
and directors of Capco and Shaftesbury are residents of countries other than the United States. It
may therefore be difficult for US investors to enforce their rights and any claim arising out of US
securities law. It may not be possible to sue Capco and Shaftesbury (or their officers and directors)
in a non-US court for violations of US securities laws. It may be difficult to compel Capco, Shaftesbury
and their respective affiliates to subject themselves to the jurisdiction and judgment of a US court.
The receipt of New Capco Shares by a US holder of Shaftesbury Shares as consideration for the
transfer of its Scheme Shares pursuant to the Scheme may be a taxable transaction for United States
federal income tax purposes and under applicable United States state and local income, franchise
or transfer, as well as foreign and other, tax laws. Each Shaftesbury Shareholder (including US
holders) is urged to consult its independent professional adviser immediately regarding the tax
consequences of the Merger applicable to them.
This Announcement does not constitute or form a part of any offer to sell or issue, or any solicitation
of any offer to purchase, subscribe for or otherwise acquire, any securities in the United States.
Neither the US Securities and Exchange Commission nor any securities commission of any state or
other jurisdiction of the United States has approved the Merger, passed upon the fairness of the
Merger, or passed upon the adequacy or accuracy of this document. Any representation to the
contrary is a criminal offence in the United States.
Notes regarding New Capco Shares
The New Capco Shares to be issued pursuant to the Scheme have not been and will not be registered
under the US Securities Act of 1933 (as amended) (the "US Securities Act") or under the relevant
securities laws of any state or other jurisdiction of the United States or the relevant securities laws of
Japan and the relevant clearances have not been, and will not be, obtained from the securities
commission of any province of Canada. No prospectus in relation to the New Capco Shares has
been, or will be, lodged with, or registered by, the Australian Securities and Investments Commission.
Accordingly, the New Capco Shares are not being, and may not be, offered, sold, resold, delivered
or distributed, directly or indirectly into or within the United States, Canada, Australia or Japan or any
other jurisdiction if to do so would constitute a violation of relevant laws of, or require registration
thereof in, such jurisdiction (except pursuant to an exemption, if available, from any applicable
registration requirements and otherwise in compliance with all applicable laws).
The New Capco Shares have not been and will not be registered under the US Securities Act, or
under the securities laws of any state or other jurisdiction of the United States, and may not be offered
or sold in the United States absent registration under the US Securities Act, or pursuant to an
exemption from, or in a transaction not subject to, such registration requirements and in compliance
with any applicable securities laws of any state or other jurisdiction of the United States. It is expected
that the New Capco Shares will be issued in reliance upon the exemption from the registration
requirements of the US Securities Act provided by Section 3(a)(10) thereof. For the purpose of
qualifying for the exemption provided by Section 3(a)(10) of the US Securities Act, Capco will advise
the Court that its sanctioning of the Scheme will be relied on by Capco for purposes of a Section 3(a)(10)
exemption following a hearing on the fairness of the Scheme to Shaftesbury Shareholders.
Rule 2.9 information
In accordance with Rule 2.9 of the Code, Capco confirms that, as at close of business on the Last
Practicable Date, it has 851,274,235 ordinary shares of GBP0.25 each in issue and admitted to trading
on the London Stock Exchange and the JSE. The ISIN for the shares is GB00B62G9D36 and the
LEI for the shares is 549300TTXXZ1SHUI0D54. Capco currently holds no ordinary shares in treasury.
In accordance with Rule 2.9 of the Code, Shaftesbury confirms that, as at close of business on the
Last Practicable Date, it has 384,214,860 ordinary shares of GBP0.25 each in issue and admitted to
trading on the London Stock Exchange. The ISIN for the shares is GB0007990962 and the LEI for
the shares is 213800N7LHKFNTDKAT98. Shaftesbury currently holds no ordinary shares in treasury.
Disclosure requirements
Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant
securities of an offeree company or of any securities exchange offeror (being any offeror other than
an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash)
must make an Opening Position Disclosure following the commencement of the offer period and, if
later, following the Announcement in which any securities exchange offeror is first identified. An
Opening Position Disclosure must contain details of the person's interests and short positions in, and
rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities
exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must
be made by no later than 3.30 p.m. (London time) on the 10th Business Day following the
commencement of the offer period and, if appropriate, by no later than 3.30 p.m. (London time) on
the 10th Business Day following the announcement in which any securities exchange offeror is first
identified. Relevant persons who deal in the relevant securities of the offeree company or of a
securities exchange offeror prior to the deadline for making an Opening Position Disclosure must
instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class
of relevant securities of the offeree company or of any securities exchange offeror must make a
Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any
securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and
of the person's interests and short positions in, and rights to subscribe for, any relevant securities of
each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that
these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to
whom Rule 8.3(b) applies must be made by no later than 3.30 p.m. (London time) on the Business
Day following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or understanding, whether formal or
informal, to acquire or control an interest in relevant securities of an offeree company or a securities
exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and by any offeror and
Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons
acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant securities Opening Position
Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the
Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of
relevant securities in issue, when the offer period commenced and when any offeror was first
identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you
are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.
Cautionary note regarding forward-looking statements
This Announcement (including information incorporated by reference in this Announcement), oral
statements made regarding the Merger and other information published by Capco and Shaftesbury
contain statements which are, or may be deemed to be, "forward-looking statements". These forward
looking statements can be identified by the fact that they do not relate only to historical or current
facts. Forward-looking statements are prospective in nature and are not based on historical facts,
but rather on current expectations and projections of the management of Capco and Shaftesbury
about future events, and are therefore subject to risks and uncertainties which could cause actual
results to differ materially from the future results expressed or implied by the forward-looking
statements. The forward-looking statements contained in this Announcement may include
statements relating to the expected effects of the Merger on Capco and Shaftesbury, the expected
timing of the Merger and other statements other than historical facts. Often, but not always, forward-
looking statements can be identified by the use of forward-looking words such as "plans", "expects"
or "does not expect", "is expected", "is subject to", "budget", "scheduled", "estimates", "targets",
"hopes", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of
such words and phrases of similar meaning or statements that certain actions, events or results
"may", "could", "should", "would", "might" or "will" be taken, occur or be achieved. These statements
are based on assumptions and assessments made by Shaftesbury, and/or Capco in light of their
experience and their perception of historical trends, current conditions, future developments and
other factors they believe appropriate. Although Capco and Shaftesbury believe that the expectations
reflected in such forward-looking statements are reasonable, Capco and Shaftesbury can give no
assurance that such expectations will prove to be correct. By their nature, forward-looking statements
involve risk and uncertainty because they relate to events and depend on circumstances that will
occur in the future. There are a number of factors which could cause actual results and developments
to differ materially from those expressed or implied by such forward looking statements, including,
among others the enactment of legislation or regulation that may impose costs or restrict activities;
the re-negotiation of contracts or licences; fluctuations in demand and pricing in the commercial
property industry; changes in government policy and taxations; changes in political conditions,
economies and markets in which Capco and Shaftesbury operate; changes in the markets from which
Capco and Shaftesbury raise finance; the impact of legal or other proceedings; changes in
accounting practices and interpretation of accounting standards under IFRS; changes in interest and
exchange rates; industrial disputes; war and terrorism. These forward-looking statements speak only
as at the date of this document.
Other unknown or unpredictable factors could cause actual results to differ materially from those in
the forward-looking statements. Such forward-looking statements should therefore be construed in
the light of such factors. Neither Capco nor Shaftesbury, nor any of their respective associates or
directors, officers or advisers, provides any representation, assurance or guarantee that the
occurrence of the events expressed or implied in any forward-looking statements in this
Announcement will actually occur. You are cautioned not to place undue reliance on these forward-
looking statements. Other than in accordance with their legal or regulatory obligations (including
under the Listing Rules and the Disclosure Guidance and Transparency Rules of the FCA), neither
Capco or Shaftesbury is under any obligation, and Capco and Shaftesbury expressly disclaim any
intention or obligation, to update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise.
Rounding
Certain figures included in this Announcement have been subjected to rounding adjustments.
Accordingly, figures shown for the same category presented in different tables may vary slightly and
figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that
precede them.
No Profit Forecasts or Estimates
No statement in this Announcement (including any statement of estimated synergies) is intended as
a profit forecast or estimate for any period and no statement in this Announcement should be
interpreted to mean that earnings or earnings per share or dividend per share for Capco, Shaftesbury
or the Combined Group, as appropriate, for the current or future financial years would necessarily
match or exceed the historical published earnings or earnings per share or dividend per share for
Capco, Shaftesbury or the Combined Group as appropriate.
Quantified Financial Benefits Statement
The statements in the Quantified Financial Benefits Statement relate to future actions and
circumstances which, by their nature, involve risks, uncertainties and contingencies and which may
in some cases be subject to consultation with employees or their representatives. The synergies and
cost savings referred to may not be achieved, or may be achieved later or sooner than estimated, or
those achieved could be materially different from those estimated. For the purposes of Rule 28 of
the Code, the Quantified Financial Benefits Statement contained in this Announcement is the
responsibility of Capco, the Capco Directors and the Proposed Directors, and not of the Shaftesbury Directors.
Publication of this Announcement
A copy of this Announcement will be available subject to certain restrictions relating to persons
resident in Restricted Jurisdictions on Capco's website at
https://www.capitalandcounties.com/investors/investor-information/possible-merger-shaftesbury-plc and Shaftesbury's website
at https://www.shaftesbury.co.uk/en/investor-relations/possible-all-share-merger-with-capco/disclaimer.html
by no later than 12 noon (London time) on 17 June 2022 (being the first Business Day following the day of this Announcement).
For the avoidance of doubt, the contents of Capco's website and Shaftesbury's website are not
incorporated into and do not form part of this Announcement.
Requesting hard copy documents
In accordance with Rule 30.3 of the Code, Capco Shareholders may request a hard copy of this
Announcement by contacting Capco during business hours on 020 3214 9170 (or, in the case of
shareholders resident in South Africa, Java Capital during business hours on +27 081 011 5571).
If you have received this Announcement in electronic form, copies of this Announcement and any
document or information incorporated by reference into this document will not be provided unless
such a request is made. Capco Shareholders may also request that all future documents,
announcements and information to be sent to them in relation to the Merger should be in hard copy form.
In accordance with Rule 30.3 of the Code, Shaftesbury Shareholders may request a hard copy of
this Announcement by contacting Desna Martin (Company Secretary) at
companysecretary@shaftesbury.co.uk or by calling +44 (0)20 7333 8118. If you have received this
Announcement in electronic form, copies of this Announcement and any document or information
incorporated by reference into this document will not be provided unless such a request is made.
Shaftesbury Shareholders may also request that all future documents, announcements and
information to be sent to them in relation to the Merger should be in hard copy form.
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 FSMA if
you are resident in the United Kingdom or, if not, from another appropriately authorised independent
financial adviser.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY
OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.
THE FOLLOWING ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS OR
PROSPECTUS EQUIVALENT DOCUMENT AND INVESTORS SHOULD NOT MAKE ANY
INVESTMENT DECISION IN RELATION TO THE MERGER AND NEW CAPCO SHARES EXCEPT
ON THE BASIS OF THE INFORMATION IN THE SCHEME DOCUMENT, THE PROSPECTUS AND
THE CIRCULAR WHICH ARE PROPOSED TO BE PUBLISHED IN DUE COURSE.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.
FOR IMMEDIATE RELEASE
16 June 2022
Recommended all-share merger of
Capital & Counties Properties PLC and Shaftesbury PLC
to be effected by means of a Scheme of Arrangement of Shaftesbury PLC
under Part 26 of the Companies Act 2006
1. Introduction
The Boards of Capital & Counties Properties PLC ("Capco") and Shaftesbury PLC ("Shaftesbury")
are pleased to announce that they have reached agreement on the terms of a recommended
all-share merger (the "Merger") to form the "Combined Group". It is intended that the Merger will
be implemented by way of a scheme of arrangement of Shaftesbury under Part 26 of the Companies
Act, which, together with the Existing Capco Shareholding, will result in the Capco Group owning
100% of the issued and to be issued share capital of Shaftesbury on Completion.
As a result of the Merger, Shaftesbury Shareholders (other than the holders of the Existing Capco
Shareholding) will own 53% of the Combined Group and Capco Shareholders will own 47% of the
Combined Group.
The Merger will bring together two respected real estate companies, located in some of the most
iconic parts of London's West End, to create a leading mixed-use central London REIT, with the
Combined Group's portfolio valued at approximately GBP5.0 billion, Annualised Gross Income of
approximately GBP165.5 million and an estimated rental value ("ERV") of approximately GBP218.0 million
as at 31 March 2022.
The Combined Group's portfolio will comprise approximately 670 predominantly freehold buildings
with approximately 2.9 million square feet of lettable space across approximately 2,000 commercial
and residential units (excluding the Longmartin Joint Venture and Lillie Square Joint Venture). At 31 March 2022,
the Combined Group's portfolio comprised:
Annualised Gross
Portfolio value Income ERV
(approximate) (approximate) (approximate)
Retail 35% 35% 35%
(GBP1.7 billion) (GBP58.4 million) (GBP76.2 million)
Hospitality and leisure 34% 37% 34%
(GBP1.7 billion) (GBP61.0 million) (GBP73.4 million)
Offices and residential 31% 28% 31%
(GBP1.6 billion) (GBP46.0 million) (GBP68.4 million)
(split as 14% (split as 11% (split as 10%
residential and 17% residential and 17% residential and 21%
offices) offices) offices)
The Combined Group's portfolio is located in a number of vibrant, high profile and high footfall
destinations across London's West End, including Covent Garden, Carnaby, Chinatown and Soho,
close to its major cultural and entertainment attractions, employment locations and transport hubs.
Their popularity provides a seven-days-a-week trading environment and exposure to an extensive
and diverse local, domestic and international customer base which has proven to be resilient
throughout economic cycles.
The Combined Group will provide a rare opportunity in the listed real estate sector to invest in an
exceptional mixed-use portfolio in the heart of central London. The Combined Group will have a
strong balance sheet, improved trading liquidity and an enhanced profile in the capital markets,
providing an opportunity to improve its equity rating over time.
The Merger is expected to generate significant benefits over the long term. Following Completion,
incremental asset management opportunities, delivery of a dynamic leasing and marketing strategy
across the Combined Group's portfolio, enhanced connectivity of its adjacent locations, and
synergies are anticipated to create the opportunity for long-term income, earnings and value growth
for shareholders.
In addition, efficiencies in the Combined Group's operating structure are expected to generate
approximately GBP12 million of pre-tax recurring cost synergies on an annual run-rate basis by the end
of the second full year following Completion.
By combining both companies' strengths, cultures and values as well as their talented teams and
proven operating and investment models, the Combined Group's management team will take a "best
of both" approach to operations with the aim to deliver long-term economic and social value for all
stakeholders. The Combined Group will place its occupiers and consumers at the heart of the
business, offering best-in-class service and focusing on providing lively, differentiated experiences
for visitors, local workers and residents. The management team will bring its creative, hands-on,
entrepreneurial approach to managing, improving and re-purposing assets to generate long-term
income and value growth.
Capco and Shaftesbury intend to build on the passion they share for the West End and are both
committed to delivering positive environmental and social outcomes through long-term responsible
stewardship, sustainable use of heritage and period properties, and engagement with residents and
other local stakeholders.
The Combined Group has a shared commitment to becoming Net Zero Carbon by 2030. The
objective is to become a UK leader in sustainability for heritage and period properties. Harnessing
the skillsets of both teams, the Combined Group will continue to adopt the existing approach to focus
on re-using, improving and re-purposing buildings to extend their useful lives and enhance their
energy performance credentials. The Boards of Capco and Shaftesbury, each having taken
independent financial advice, unanimously believe that the Merger is in the best interests of their
respective company's shareholders as a whole.
2. The Merger
Under the terms of the Merger, which will be conditional on the Conditions and certain further terms
set out in Appendix 1 to this Announcement, and subject to the full terms and conditions which will
be set out in the Scheme Document, Scheme Shareholders will be entitled to receive:
3.356 New Capco Shares for each Shaftesbury Share held (the "Exchange Ratio").
The Exchange Ratio has been agreed between the Boards of each of Capco and Shaftesbury taking
into account the relative EPRA NTA and market capitalisations of both companies.
As a result of the Merger, Shaftesbury Shareholders (other than the holders of the Existing Capco
Shareholding) will own 53% of the Combined Group and Capco Shareholders will own 47% of the
Combined Group.
The Capco Group already holds 96,971,003 Shaftesbury Shares, representing approximately 25.2%
of Shaftesbury's issued share capital, as at close of business on the Last Practicable Date. Further
details of the Existing Capco Shareholding are contained in paragraph 13 below. It is intended that
the Merger will be implemented by means of a court-sanctioned scheme of arrangement of
Shaftesbury under Part 26 of the Companies Act, further details of which are contained in paragraph 16 below.
The New Capco Shares will be issued credited as fully paid and will rank pari passu in all respects
with the Capco Shares in issue at the time the New Capco Shares are issued pursuant to the Merger,
including the right to receive and retain dividends and other distributions declared, made or paid by
reference to a record date falling after the Scheme Record Time. Applications will be made to the
FCA and the London Stock Exchange for the New Capco Shares to be admitted to the premium
segment of the Official List and to trading on the Main Market. Application will also be made for the
New Capco Shares to be admitted to trading, as a secondary (inward) listing, on the Main Board of the JSE.
The Scheme Shares will be acquired pursuant to the Merger fully paid and free from all liens,
equitable interests, charges, encumbrances, rights of pre-emption and other third party rights of any
nature whatsoever and together with all rights attaching to them as at the date of this Announcement
or subsequently attaching or accruing to them, save for the Permitted Shaftesbury Dividends.
In addition to the New Capco Shares received by Scheme Shareholders in connection with the
Merger, the Shaftesbury Board will be entitled to pay certain agreed ordinary course Shaftesbury
dividends to Shaftesbury Shareholders prior to the Completion without any adjustment to the
Exchange Ratio under the terms of the Merger, on the basis set out in paragraph 12 below.
3. Background to and reasons for the Merger
Long-term resilience and enduring appeal of London's West End
- London is a leading global city, attracting talent and investment from around the world. It is
a major financial and commercial centre, an important hub for creative industries, a globally
recognised education and research location, and is home to world-class performing arts
facilities and a renowned variety of heritage and cultural attractions. At the heart of the city,
the West End is a world-class, high footfall destination for shopping, dining, leisure,
entertainment and culture, attracting an estimated 200 million visits annually from domestic
and international visitors, its large working population and residents.
- Since summer 2021, footfall, trading and occupier demand across the West End have seen
a strong and sustained recovery from the disruption caused by Covid-19 and are now largely
back to pre-pandemic levels.
- The Elizabeth Line, which opened on 24 May 2022 and is expected to be fully operational by
spring 2023, will significantly improve the West End's already strong connectivity and
accessibility, adding around 10% to central London's rail network capacity. The Combined
Group's portfolio is well-placed to benefit from its proximity to the West End's major new
stations at Tottenham Court Road and Bond Street. The changing travel and footfall patterns
they will bring over time are expected to benefit a number of the Combined Group's streets
and locations and create valuable medium-term asset management opportunities.
Diverse mixed-use property portfolio in prime central London
- The Merger will create an attractive and adaptable mixed-use combined portfolio with
diversified income streams from its approximately 1.7 million square feet of hospitality,
leisure and retail space, together with approximately 0.6 million square feet of offices and
828 rental apartments. In the West End these uses have a long history of sustained occupier
demand, resulting in resilience and high occupancy levels, underpinning long-term prospects
for rental growth.
- The Combined Group's portfolio will contain a broad range of unit sizes and rental tones
appealing to a wide variety of occupiers. There is limited overlap between Capco and
Shaftesbury's existing occupiers, providing the Combined Group with a more diversified mix.
- The West End is an attractive office and residential location, with occupiers drawn by its wide
range of local amenities, and particularly its retail and hospitality offerings together with its
cultural and heritage attractions. The combination of Capco's and Shaftesbury's office and
residential portfolios creates the opportunity to provide a consistent, high-quality service to
occupiers, whilst benefiting from economies of scale.
- Comprehensive ownership, a hands-on approach and the Combined Group's extensive
knowledge of the local occupational market as well as its collaborative approach is expected
to create additional expansion and growth opportunities.
Enhanced asset management and value-creation opportunities
- The combination brings together the experience and forensic knowledge of the West End
and asset management skills of two highly respected teams to drive sustained long-term
returns through growth in net rental income and capital values.
- The Combined Group intends to drive occupational demand by placing its occupiers at the
heart of the business, targeting best-in-class service, providing differentiated destinations,
curating an offer of complementary brands and uses and enhancing the public realm to foster
vibrant and thriving places for visitors, workers, residents, businesses and communities,
appropriate for each of its locations.
- The greater scale resulting from the combination will provide enhanced opportunities to
evolve the occupier mix over time through comprehensive leasing strategies, alongside
strategic consumer marketing.
- The combination will enhance access to valuable data and insights. The Combined Group
will place particular emphasis on collecting and interpreting data to better understand key
visitor, consumer and occupier trends and expectations, to inform its strategies through
broader and deeper insights from its greater reach. Strong brand recognition of each of its
locations, together with leveraging data, occupier insight and a strong social media
presence, will have particular value in supporting occupiers to maximise the trading and
profitability potential of their businesses.
- Over the long term, Capco and Shaftesbury believe that the Combined Group will have
greater opportunity to create value from its complementary ownerships through innovative
asset management, careful curation of the retail and hospitality offering, enhanced
connectivity, cross-location promotion, and refurbishment and development activities.
- The Combined Group will continue to use the proven skills of each team to identify and invest
in high quality public realm schemes, including pedestrianisation, traffic reduction and
calming measures, outdoor amenities, greening and lighting. This is expected to encourage
further footfall by improving the experience and overall appeal for visitors, local workers,
residents and the Combined Group's portfolio's high-profile locations. The footprint of the
Combined Group's portfolio potentially enhances the value-creation opportunities from these
initiatives.
Shared commitment to positive environmental and social outcomes
- Capco and Shaftesbury have a shared vision to deliver positive environmental and social
outcomes through long-term responsible stewardship and sustainable use of heritage and
period buildings in historically important parts of London.
- Taking the best of the skillsets of both teams in managing and improving often heritage or
period buildings, the Combined Group will continue to adopt the existing approach of both
companies to focus on the re-use, re-purposing and ambitious improvement of existing
buildings rather than large scale redevelopment. Preserving and adapting existing structures
to extend the useful economic lives of properties is an important aspect of minimising the
environmental and carbon impact of the Combined Group's business and its exposure to
high costs and risks arising from redevelopment.
- The combination will facilitate a broader relationship with the local community, and other key
stakeholders, including occupiers, investors, residents and local authorities.
- Through collaboration with stakeholders, adjoining owners and estates and local authorities,
the Combined Group will continue to support the communities both in the areas in which it
operates and the wider West End.
Strong governance and entrepreneurial management team
- The Combined Group will maintain the highest standards of corporate governance
transparency and stewardship, with a clear articulation of its purpose, culture and values,
which will be embedded in the business. A commitment to a responsible culture will be an
important factor in the selection of occupiers, suppliers and advisers.
- By combining both companies' strengths, culture and values as well as their proven operating
and investment models, the combined management team will take a "best of both" approach
with the aim of delivering long-term returns to stakeholders.
- The combined management team has a strong track record and a wealth of experience in
improving and managing heritage and period properties in the West End. The team will bring
its creative, hands-on, entrepreneurial approach to improving and re-positioning buildings
and locations to maximise their income and value potential.
- A key focus of the management team will be the integration and development of the
companies' talented teams, embracing an inclusive, innovative and entrepreneurial culture
in which employees can thrive, providing greater career development opportunities over time.
Rare opportunity in the listed real estate sector with enhanced global profile
- The Combined Group will have a strong capital structure with resilience, financial flexibility,
efficient access to capital and significant liquidity. The Combined Group's portfolio has a total
property value of approximately GBP5.0 billion as at 31 March 2022.
- The Merger is expected to unlock significant long-term benefits across a range of areas,
including the opportunity to enhance the connectivity of Capco's and Shaftesbury's adjacent
portfolios. Capco and Shaftesbury believe the Combined Group will be well-positioned to
deliver long-term growth in net rental income, capital values and dividends through
comprehensive, long-term management of its exceptional portfolio.
- The Combined Group will retain a tax-efficient REIT structure and as such, will be required
to distribute a minimum of 90% of rental profits, calculated by reference to tax rather than
accounting rules, as a Property Income Distribution ("PID"). Notwithstanding this, the
Combined Group will adopt a progressive dividend policy with the intention to deliver long-
term sustainable total returns to shareholders. Dividend payments will be determined having
regard to, inter alia, growth trends in both underlying and cash earnings, which are expected
to be delivered through income growth and cost discipline. To the extent that dividends
exceed the amount available to distribute as a PID, the balance will be paid as ordinary
dividends.
- The Combined Group will also benefit from enhanced access to capital in the global equity
and debt capital markets to fund value-accretive acquisition, selective development and
asset management opportunities, a substantial free float and weighting in relevant
benchmark indices.
Financial impact of the Merger
- The Combined Group has an estimated EPRA NTA of approximately GBP3.8 billion and EPRA
NTA per share of approximately 207 pence as at 31 March 2022.
- There is significant revenue growth potential over time for the Combined Group as shown by
the difference between Annualised Gross Income of approximately GBP165.5 million and ERV
of approximately GBP218.0 million as at 31 March 2022.
- The Merger is expected to generate significant benefits over the long term. Following
Completion, incremental asset management opportunities, delivery of a dynamic leasing and
marketing strategy across the Combined Group's portfolio, enhanced connectivity of its
adjacent locations, and synergies are anticipated to create the opportunity for long-term
income, earnings and value growth for shareholders.
- Efficiencies in the Combined Group's operating structure are expected to generate
approximately GBP12 million of pre-tax recurring cost synergies on an annual run-rate basis by
the end of the second full year following Completion.
- For Capco Shareholders, the Merger is expected to be earnings accretive immediately and
modestly EPRA NTA dilutive, taking into account the Exchange Ratio, estimated transaction
costs and the consolidation of the Existing Capco Shareholding into the Combined Group's
EPRA NTA.
- For Shaftesbury Shareholders, the Merger is expected to be immediately EPRA NTA
accretive and modestly earnings dilutive for the first two full years after Completion while the
synergies are being realised. Thereafter, the impact on earnings will depend on a number of
factors including the extent and timing of the realisation of benefits from the Merger and the
future cost of financing.
- The Combined Group will have a strong capital structure with resilience, financial flexibility,
efficient access to capital and significant liquidity, with an estimated loan-to-value ("LTV") of
approximately 29% as at 31 March 2022. The Combined Group is expected to have
approximately GBP500 million of available liquidity immediately following Completion.
- Capco has entered into a GBP576 million Loan Facility Agreement to provide funding certainty
in the event that the Shaftesbury Mortgage Bond holders exercise their redemption right
following Completion. Based on current market conditions, any drawdown of the Loan Facility
Agreement, or restructuring or refinancing of the Shaftesbury Mortgage Bonds is expected
to result in increased financing costs for the Combined Group. The Combined Group would
seek to mitigate such increased finance costs by capitalising on the increased strength of
the Combined Group's balance sheet following Completion.
4. Synergies
The Capco Directors and the Proposed Directors having reviewed and analysed the potential cost
synergies of the Merger and, taking into account the factors they can influence, believe that the
Combined Group can deliver approximately GBP12 million of pre-tax recurring cost synergies on an
annual run-rate basis.
The run-rate at the end of the first full year following the Effective Date is expected to be
approximately 50% with the full run-rate achieved by the end of the second full year following the
Effective Date.
The quantified cost synergies, which are expected to originate from the cost bases of both Capco
and Shaftesbury, are expected to be realised primarily from:
(a) rationalisation of board, senior management and duplicated group functions and public
company costs (expected to contribute approximately 50% of the full run-rate pre-tax cost
synergies);
(b) consolidation of support and property management functions, including third party costs
(expected to contribute approximately 44% of the full run-rate pre-tax cost synergies); and
(c) reduced financing costs, in respect of existing facilities, relating to commitment, agency
and trustee security fees following termination of a duplicate undrawn revolving credit
facility in the Combined Group (expected to contribute approximately 6% of the full run-rate
pre-tax cost synergies).
The Capco Directors and the Proposed Directors estimate that the realisation of the quantified cost
synergies will result in one-off costs to achieve of approximately GBP11.4 million, with around 49%
incurred in the first full year following Completion and the remainder by the end of the second full
year following Completion.
Potential areas of dis-synergy expected to arise in connection with the Merger have been considered
and were determined by the Capco Directors and the Proposed Directors to be immaterial for the
analysis.
The identified cost synergies will accrue as a direct result of the Merger and would not be achieved
by either Capco or Shaftesbury as standalone businesses. The identified cost synergies reflect both
the beneficial elements and relevant costs.
These statements of identified synergies and estimated savings relate to future actions and
circumstances which by their nature involve risks, uncertainties and contingencies. As a
consequence, the identified synergies and estimated savings referred to may not be achieved, may
be achieved later or sooner than estimated, or those achieved could be materially different from
those estimated.
The combination may also create the opportunity to unlock further, future strategic, financial and
operating efficiencies which could lead to additional cost savings. These savings could be realised
across a number of areas including asset and portfolio level value and income generation,
procurement savings given increased scale and the potential to source more flexible and efficient
financing, reducing the Combined Group interest costs.
Further information on the bases of belief supporting the Quantified Financial Benefits Statement,
including the principal assumptions and sources of information, is set out in Part A of Appendix 4 to
this Announcement. These estimated synergies have been reported on under the Code by KPMG,
and by Rothschild & Co. Copies of their letters are included in Part B and Part C of Appendix 4.
References in this Announcement to those estimated synergies should be read in conjunction with
those parts of Appendix 4. For the purposes of Rule 28 of the Code, the Quantified Financial Benefits
Statement contained in Appendix 4 to this Announcement is the responsibility of Capco, the Capco
Directors and the Proposed Directors, and not of the Shaftesbury Directors.
5. Shaftesbury Board recommendation
The Merger is conditional on the approval of the Scheme at the Court Meeting by Scheme
Shareholders who are present and vote (and who are entitled to vote).
Background to, and reasons for, the Shaftesbury Board recommendation
Shaftesbury is a REIT which invests exclusively in the heart of London's West End and is a
constituent of the FTSE-250 Index. Shaftesbury has assembled an exceptional 16.5-acre property
portfolio over 35 years. Since summer 2021, footfall, trading and occupier demand across the core
West End has seen a strong and sustained recovery from the short-term disruption caused by Covid-
19. The Shaftesbury Board believes the global appeal of the West End will continue to generate
superior growth over the long term and that the prospects for Shaftesbury's locations remain strong.
The Shaftesbury Board recognises that there are some differences between the property portfolios
and current management strategies of the two companies but believes that the Merger represents
an opportunity for its shareholders to benefit from a "best of both" approach as well as greater scale,
efficiencies and investor appeal that a combination of Shaftesbury and Capco could bring over time.
In addition, the Shaftesbury Directors believe that the Merger benefits could be a catalyst for both
Shaftesbury Shareholders and Capco Shareholders to benefit from an improvement in the equity
market rating of the Combined Group relative to its EPRA NTA.
The Merger is expected to be immediately EPRA NTA accretive and modestly earnings dilutive for
Shaftesbury Shareholders for the first two full years after Completion while the synergies are being
realised. Thereafter, the impact on earnings will depend on a number of factors including the extent
and timing of the realisation of benefits from the Merger and the future cost of financing.
Shaftesbury's Chairman and its four non-executive directors will join the Board of the Combined
Group to support the management team in delivering a successful integration of Shaftesbury and
Capco and the expected benefits from the Merger. Chris Ward, Shaftesbury's Chief Financial Officer,
will join the Board of the Combined Group as the Chief Operating Officer. The Executive Committee
will have an equal weighting from former Shaftesbury and Capco personnel, including Andrew Price
and Samantha Bain-Mollison, who have been with Shaftesbury for 21 and 10 years, respectively,
and who have long been part of Shaftesbury's succession planning.
The Shaftesbury Directors are confident that the Combined Group will benefit from strong Board
governance and oversight, a balanced leadership team and the combination of talented and
experienced Shaftesbury and Capco employees. Together, this should facilitate the integration of the
two businesses and the implementation of best practices from both companies.
In considering the merits of a combination of the two businesses, the Shaftesbury Board has taken
into account the strategic and financial implications as set out above as well as the views of its major
shareholders, Norges Bank and Capco, who together account for approximately 51% of its issued shares.
The Board of Shaftesbury would like to thank Brian Bickell, Simon Quayle and Tom Welton who will
be leaving on Completion. All three have worked at Shaftesbury for over 30 years and have been
fundamental to its long-term success. They have worked closely over many years with the
Shaftesbury members of the Combined Group's Executive Committee and the wider Shaftesbury
team enabling the Shaftesbury team that will be transferring to the Combined Group to benefit from
their invaluable knowledge and experience.
Shaftesbury Board recommendation
The Shaftesbury Board, which has been so advised by Evercore and Blackdown as to the financial
terms of the Merger, considers the terms of the Merger to be fair and reasonable. In providing their
financial advice to the Shaftesbury Board, Evercore and Blackdown have taken into account the
commercial assessments of the Shaftesbury Board. Evercore is providing independent financial
advice to the Shaftesbury Board for the purposes of Rule 3 of the Code.
The Shaftesbury Board believes that the terms of the Merger are in the best interests of Shaftesbury
Shareholders as a whole and intends unanimously to recommend that Shaftesbury Shareholders
vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the
Shaftesbury General Meeting which are to be convened to approve the Merger, as the Shaftesbury
Directors have irrevocably undertaken to do in respect of the 2,519,849 Shaftesbury Shares currently
registered or beneficially held in aggregate by them, as well as any further Shaftesbury Shares which
they may become the registered or beneficial owner of (save for any Shaftesbury Shares which they
acquire pursuant to the exercise of options under the Shaftesbury Sharesave Scheme), representing
in aggregate approximately 0.88% of the total votes which could be cast at the Court Meeting by
Scheme Shareholders who are entitled to vote based on Shaftesbury's issued share capital as at
close of business on the Last Practicable Date. Further details of the irrevocable undertakings are
set out in Appendix 3 to this Announcement.
Each of Evercore and Blackdown has given and not withdrawn its consent to the inclusion in this
Announcement of reference to its advice to the Shaftesbury Directors in the form and context in which
it appears.
6. Capco Board recommendation
The Merger constitutes a reverse takeover by Capco of Shaftesbury for the purposes of the Code.
The Capco Board, which has been so advised by Rothschild & Co, UBS and Jefferies as to the
financial terms of the Merger, considers the terms of the Merger to be fair and reasonable. In
providing each of its financial advice to the Capco Board, each of Rothschild & Co, UBS and Jefferies
has taken into account the commercial assessments of the Capco Board. Rothschild & Co is
providing independent financial advice to the Capco Board for the purposes of Rule 3 of the Code.
The Merger constitutes a Class 1 Transaction and a Related Party Transaction for Capco for the
purposes of the Listing Rules and accordingly, Capco will be required to seek the approval of Capco
Shareholders for the Merger at the Capco General Meeting. The Capco Board believes that the terms
of the Merger are in the best interests of Capco Shareholders as a whole and intends unanimously
to recommend that Capco Shareholders vote in favour of the Capco Resolutions to be proposed at
the Capco General Meeting which is to be convened to approve the Merger, as the Capco Directors
have irrevocably undertaken to do in respect of the 952,777 Capco Shares currently registered or
beneficially held in aggregate by them, as well as any further Capco Shares which they may become
the registered or beneficial owner of, representing in aggregate approximately 0.11% of Capco's
issued share capital as at close of the business of the Last Practicable Date. Further details of the
irrevocable undertakings are set out in Appendix 3 to this Announcement.
Each of Rothschild & Co, UBS and Jefferies has given and not withdrawn its consent to the inclusion
in this Announcement of reference to its advice to the Capco Directors in the form and context in
which it appears.
7. Financing
The Combined Group will have a diverse funding structure combining term debt and revolving credit
facilities. Capco's existing GBP475 million of private placements and GBP300 million revolving credit facility
(currently undrawn), which both sit within the Covent Garden unsecured group, will remain in place
as will the GBP275 million exchangeable bonds issued by Capco. Further detail on the impact of Capco's
exchangeable bonds on the structure of the Merger is set out at paragraph 13. Shaftesbury's term
loans with Aviva and Canada Life will also remain in place, whilst it is expected that its GBP100 million
revolving credit facility will be retired as this will no longer be required given the other sources of
liquidity in the Combined Group.
Shaftesbury also has two mortgage bonds totalling GBP575 million: (i) GBP290 million 2.348% guaranteed
first mortgage bonds due 2027 and (ii) GBP285 million 2.487% guaranteed first mortgage bonds due
2031, (the "Shaftesbury Mortgage Bonds"). The Shaftesbury Mortgage Bonds contain a change
of control provision which will be triggered by the Merger. This will permit the holders of Shaftesbury's
Mortgage Bonds to put their relevant Shaftesbury Mortgage Bonds back to Shaftesbury following
Completion at par value plus accrued interest up to the date of redemption. If all holders of
Shaftesbury's Mortgage Bonds exercised such put right, this would require the Combined Group to
fund GBP575 million in redemptions plus any interest accrued thereon up to the date of redemption.
Shaftesbury intends to enter into discussions with the holders of the Shaftesbury Mortgage Bonds
following this Announcement to seek consent to make amendments to the terms of the bonds to
facilitate that such bonds remain in place following Completion. Based on current market conditions,
any drawdown of the Loan Facility Agreement, or restructuring or refinancing of the Shaftesbury
Mortgage Bonds is expected to result in increased financing costs for the Combined Group. The
Combined Group would seek to mitigate such increased finance costs by capitalising on the
increased strength of the Combined Group's balance sheet following Completion.
Capco has entered into a GBP576 million Loan Facility Agreement provided by Barclays Bank PLC,
BNP Paribas SA and HSBC Bank plc dated 16 June 2022 to support the redemption of all or part of
the Shaftesbury Mortgage Bonds together with related costs, should the holders of those bonds
exercise their put option as a result of the Merger.
The facility has an initial term of 24 months from the date of the Loan Facility Agreement (being
16 June 2022). The interest rate under the Loan Facility Agreement is SONIA plus the applicable margin
- being 0.75% per annum initially and increasing to 1.50% per annum for the period from (and
including) the earlier of Completion and 31 December 2022 to (and excluding) the date falling
12 months after the date of the Loan Facility Agreement. Thereafter, if the facility has not been
refinanced or repaid before the date falling 24 months after the date of the Loan Facility Agreement,
the margin increases in six monthly increments up to a maximum of 2.00% per annum. The term of
the facility may be extended for a further six months (at a margin of 2.75%) at the option of Capco
subject to the satisfaction of the extension requirements as outlined in the Loan Facility Agreement
(including the payment of certain extension fees). There is subsequently a further six month
extension option available (at a margin of 3.25%) which requires the approval of each lender in
respect of its respective participation in the loans.
The Loan Facility Agreement contains customary representations and warranties, affirmative and
negative covenants (including covenants in respect of financial indebtedness, disposals, security,
acquisitions), indemnities and events of default, each with appropriate carve-outs and materiality
thresholds (where relevant) applicable to the Combined Group. The facility also contains mandatory
cancellation and prepayment provisions linked to certain disposals, debt and equity issuances.
Further details of the Loan Facility Agreement and these financing arrangements will be included in
the Circular, the Prospectus and in the Scheme Document.
It is a condition precedent to the utilisation of the facility that all outstanding amounts under the
GBP125,000,000 secured loan (the "Secured Loan") originally entered into on 22 December 2020
between, among others, Capco Investment London (No.3) Limited and Capco Investment London
(No.4) Limited as borrowers, HSBC Bank Plc and BNP Paribas SA, London Branch as original
lenders and HSBC Bank Plc as facility agent be repaid in full. Capco plans to prepay the Secured
Loan in full promptly following the date of this Announcement.
8. Information on Capco
Capco is one of the largest listed property investment companies in central London and is a
constituent of the FTSE-250 Index.
Capco's landmark Covent Garden estate, which comprises over 1.0 million square feet of lettable
space, across 380 lettable units, is a leading retail and dining destination in the heart of central
London. The area is home to a wide variety of British, global and independent brands including Apple,
Chanel, Tom Ford, Strathberry, Ave Mario, Balthazar and SUSHISAMBA, with upcoming openings
from Peloton and Reformation. As at the date of this Announcement, Capco owns 25.2% of the
existing share capital of Shaftesbury. Capco is a Real Estate Investment Trust and its shares are
listed on the London Stock Exchange with a secondary listing on the JSE.
As at 31 March 2022, Capco had approximately GBP1.8 billion of gross property assets, and its 50%
share of gross property assets held in the Lillie Square Joint Venture and related assets were valued
at approximately GBP85 million. On an adjusted basis, updating the 31 December 2021 audited net
assets for (i) the 31 March 2022 external valuations and (ii) the market value of the Existing Capco
Shareholding in Shaftesbury as at 31 March 2022, Capco's unaudited net assets were approximately
GBP1.8 billion and its unaudited EPRA NTA per Capco Share was approximately 217 pence. The
external valuations by CBRE for properties owned by the Capco Group and by JLL for properties
owned by the Lillie Square Joint Venture, each as at 31 March 2022, are contained in Appendix 5 to
this Announcement.
Capco trading update
As at 31 March 2022, the external property valuation of Capco's Covent Garden estate was
approximately GBP1.8 billion, representing a like-for-like increase of 2.1% in the first quarter of the year.
The movement was driven by an increase of 1.0% in ERV on a like-for-like basis to approximately
GBP77.1 million as well as a reduction in the equivalent yield of 5 basis points on a like-for-like basis to
3.83% reflecting positive leasing activity and high occupancy levels across all uses.
Up to June 2022, 23 new leases and renewals representing GBP3.6 million of rental income have
completed on average 10% ahead of December 2021 ERV. Annualised Gross Income at 31 March 2022 was GBP58.3 million.
On the estate, footfall continues to trend towards pre-pandemic levels and customer sales in
aggregate are ahead of 2019, reflecting the continued recovery of London's West End and the appeal
of Covent Garden.
10 new brands have recently opened, further strengthening the customer line-up. These include TAG
Heuer, Rails and The Chestnut Bakery. Empresa has opened on Henrietta Street whilst e&e jewellery
and Sacred Gold have both opened within the Market Building. Luxury watch brand Tudor, active
wear brand Vuori and luxury perfume house Parfums de Marly will open in the coming months,
alongside Peloton's European Studio and Watchhouse Coffee adding to the vibrant and rich mix at
Covent Garden.
9. Information on Shaftesbury
Shaftesbury is a REIT which invests exclusively in the heart of London's West End and is a
constituent of the FTSE-250 Index. Focused on hospitality, retail and leisure, its portfolio is mainly in
Carnaby, Seven Dials and Chinatown, but also includes substantial ownerships in Opera Quarter
and Coliseum, Soho and Fitzrovia.
Extending to approximately 16.5 acres, following the purchase of a property at 92-104 Berwick Street
which completed after 31 March 2022, and comprising approximately 1.9 million square feet of space,
across 1,556 units, the portfolio comprises over 600 restaurants, cafes, pubs and shops (across
approximately 1.1 million square feet), approximately 0.4 million square feet of offices and 631
apartments. All of Shaftesbury's properties are close to the main West End Underground stations,
and within ten minutes' walk of the two West End transport hubs for the Elizabeth Line, at Tottenham
Court Road and Bond Street.
In addition, Shaftesbury has a 50% interest in the Longmartin Joint Venture, which has a long
leasehold interest, extending to approximately 1.9 acres, at the junction of Long Acre and
Upper St Martin's Lane near Seven Dials. There are change of control provisions in the Longmartin Joint
Venture documentation which will be triggered by the Merger and may result in Shaftesbury being
required to sell its shares in the Longmartin Joint Venture.
As at 31 March 2022, Shaftesbury had approximately GBP3.3 billion of gross property assets, and its
50% share of gross property assets held in the Longmartin Joint Venture was valued at approximately
GBP172.8 million. Shaftesbury's unaudited net assets were approximately GBP2.6 billion and its unaudited
EPRA NTA per Shaftesbury Share was approximately 679 pence. The external valuations by
Cushman & Wakefield for properties owned by the Shaftesbury Group and by Knight Frank for
properties owned by the Longmartin Joint Venture, each as at 31 March 2022, are contained in
Appendix 5 to this Announcement.
10. Directors, management, employees and head office
Change of name
It is intended that the Combined Group will be called "Shaftesbury Capital PLC". A resolution to
change the name of Capco to "Shaftesbury Capital PLC", to take effect on Completion, will be put to
Capco Shareholders at the Capco General Meeting.
Board of the Combined Group
The Combined Group will have a strong governance and leadership structure, with the Board of the
Combined Group comprising:
- Jonathan Nicholls, the non-executive Chairman of Shaftesbury, who will become the non-
executive Chairman of the Combined Group;
- Ian Hawksworth, Chief Executive of Capco, who will become Chief Executive of the
Combined Group;
- Situl Jobanputra, Chief Financial Officer of Capco, who will become Chief Financial Officer
of the Combined Group;
- Chris Ward, Chief Financial Officer of Shaftesbury, who will become Chief Operating Officer
of the Combined Group;
- Richard Akers, the Senior Independent Director of Shaftesbury, who will become Senior
Independent Director of the Combined Group;
- all three of Shaftesbury's other non-executive Directors, being Jennelle Tilling, Ruth
Anderson CVO and Helena Coles, who will join the Board of the Combined Group as non-
executive Directors; and
- two current Capco non-executive Directors, being Charlotte Boyle and Anthony Steains, who
will remain on the Board of the Combined Group as non-executive directors.
An Executive Committee, which will be responsible for the day-to-day management and operation of
the Combined Group, will be established and comprising six members. Each of the Chief Executive,
Chief Financial Officer and Chief Operating Officer will be members of the Executive Committee and
will be joined by three further members, being Capco's Michelle McGrath, responsible for the
enlarged Covent Garden portfolio including Capco's Covent Garden assets as well as Shaftesbury's
assets in Seven Dials, Opera Quarter and Coliseum; Shaftesbury's Andrew Price, responsible for
the Carnaby, Chinatown, Soho and Fitzrovia portfolios; and Shaftesbury's Samantha Bain-Mollison,
responsible for the Combined Group's leasing.
After 36 years at Shaftesbury, including 11 years as Chief Executive, Brian Bickell will retire on
Completion. Executive directors Simon Quayle and Tom Welton, who have been with Shaftesbury
for 35 and 33 years respectively, will also leave the business on Completion.
Henry Staunton, Capco's Chairman who has served on the Capco Board for 12 years, will retire on
Completion. Jonathan Lane OBE, Non-executive Director, who has served on the Capco Board for
three years since March 2019 and previously had been Chief Executive and Chairman of Shaftesbury
for 30 years in total from 1986 to 2016, will also retire from Capco's Board on Completion.
The composition of the Board of the Combined Group is expected to comply with the UK Corporate
Governance Code and the Board of the Combined Group is expected to have an effective balance
of experience and diversity to guide the Combined Group to respond effectively to external market dynamics.
Management, employees and head office
Details of the proposed Board of the Combined Group are set out above.
The Combined Group expects employees across both companies to benefit from the greater
opportunities arising from being part of the larger Combined Group following Completion.
Shaftesbury and Capco recognise that the combination of the skills and experience of the two
companies' management and employee teams will be key to optimising the benefits of the Merger
for shareholders and stakeholders, and to ensuring the long-term success of the Combined Group.
The Combined Group will aim to retain the best talent of Capco and Shaftesbury across the
Combined Group and does not intend to change the overall balance of skills and functions of
employees and management across the Combined Group.
Across the Combined Group, there will be duplicated costs and functions. The Combined Group
therefore intends to seek operating cost benefits from the rationalisation of the Board and overlapping
group functions, together with consolidation of support and property management functions and the
removal of duplicated costs. In order to achieve the full potential benefits of the Merger, the Combined
Group will undertake a detailed business, operational and administrative review of the Combined
Group to assess how it can work most effectively and efficiently. This review is expected to take
12 months following Completion. This could lead to a reduction of approximately 30% in headcount
across the Combined Group, the full extent of which will be dependent on the outcome of this detailed
review, including an assessment of the options available to rationalise outsourced services across
the businesses. At this stage, the specific proposals have not yet been determined, but the Board of
the Combined Group will aim to retain the best talent from both of Capco and Shaftesbury, and any
such proposals will be carried out through a fair and transparent process in accordance with
applicable legal requirements.
The Combined Group intends to safeguard existing statutory and contractual employment rights
following Completion and Capco does not intend to make any material changes in the conditions of
employment of the Shaftesbury employees in the period of 12 months following Completion.
Neither Shaftesbury nor Capco have an existing defined benefits pension scheme.
The Combined Group intends to consolidate the head office functions of Capco and Shaftesbury so
that they can operate from a single location, subject to any obligations to inform and consult with
affected employees. No long-term decision has been taken as to the location of the headquarters of
the Combined Group, but, immediately following Completion, the Combined Group intends to use
Capco's office in Covent Garden as the primary headquarters, with functions continuing to operate
from the Shaftesbury premises for a period of up to two years following Completion. The Combined
Group does not otherwise intend for any redeployment of Shaftesbury's fixed asset base. Owing to
the nature of its business, Shaftesbury has no research and development function.
Listing
Following Completion, the Combined Group will retain Capco's listing on the London Stock Exchange
as well as its secondary listing on the JSE.
REIT Status
Both Capco and Shaftesbury fall within the UK REIT regime and benefit from the tax efficiencies
provided by that regime. The Combined Group is expected to fall within the UK REIT regime and the
relevant tax measures will continue to apply to the Combined Group.
Post-offer undertakings
None of the statements in this paragraph 10 are "post-offer undertakings" for the purposes of
Rule 19.5 of the Code.
Views of the Shaftesbury Board
In considering the intention to recommend the Merger to Shaftesbury Shareholders, the Shaftesbury
Board has given due consideration to the intentions of the Combined Group for management and employees.
The Shaftesbury Board notes that the Combined Group intends to seek operating cost benefits
primarily derived from the rationalisation of the board and duplicated group functions and costs,
including those related to being a public company, and that this will lead to headcount reductions.
The Shaftesbury Board agrees that, in order for the Combined Group to achieve the potential synergy
benefits stated in this Announcement, such headcount reductions will be necessary. Importantly, the
Combined Group will aim to retain the best talent from both companies and will continue to benefit
from the skills and experience of a number of the senior management team from Shaftesbury, who
will have important positions in the Combined Group.
The Shaftesbury Board is pleased that, other than as a result of anticipated headcount reductions,
the Combined Group has no plans to change the balance of skills and functions of employees and
management across the Combined Group or to make any material changes to the conditions of
employment of the Shaftesbury employees in the period of 12 months following Completion. It also
welcomes the Combined Group's intention to safeguard the existing statutory and contractual
employments rights of Shaftesbury employees and management following Completion.
The Shaftesbury Board notes the Combined Group's intentions with regards to combining the head
office functions of Capco and Shaftesbury and the proposed plan to use Capco's office in Covent
Garden as the primary headquarters immediately following Completion. Whilst certain functions will
continue to operate from the Shaftesbury premises for a period of up to two years following
Completion, the Shaftesbury Board agrees that it is important for the Combined Group's head office
functions to operate from a single location in close proximity to the Combined Group's portfolio.
11. Capco and Shaftesbury Share Plans
Each of Capco and Shaftesbury has established share plans which provide for the grant of awards
to employees, including executive directors, of the Capco Group and the Shaftesbury Group,
respectively.
The Merger constitutes a reverse takeover by Capco of Shaftesbury for the purposes of the Code,
which will bring together employees from each company.
In determining the appropriate treatment of share awards under the Capco Share Plan and the
Shaftesbury Share Plans, the Remuneration Committees of the Boards of Capco and Shaftesbury
took their respective decisions based on the scope of each company's shareholder-approved
directors' remuneration policy and the applicable share plan rules in order to provide employees,
including executive directors, with an outcome that each considered appropriate and equitable as a
result of the Merger.
Awards and options granted under each of the plans will vest or become exercisable prior to or upon
sanction of the Scheme (as permitted by the rules of the relevant share plan, including the time
apportionment provisions, and by applying performance conditions, where applicable, and with post-
vesting holding of shares by the directors of the Combined Group). Participants in the Shaftesbury
Share Plans and the Capco Share Plan will be contacted regarding the effect of the Merger on their
share options and awards (which for Shaftesbury participants will take the form of appropriate
proposals under Rule 15 of the Code, where applicable, in due course) and further details shall be
set out in the Scheme Document and in the Prospectus and Circular.
The options and awards that will vest, and potential shares that may be issued under the Shaftesbury
Share Plans and the Capco Share Plan as set out below have been taken into account by the parties
in finalising the Exchange Ratio.
Shaftesbury Share Plans
Of the 3,328,379 Shaftesbury Shares under subsisting options and awards which have been granted
under the Shaftesbury 2016 Long-Term Incentive Plan and the Shaftesbury 2016 Deferred Share
Bonus Plan as at the date of this Announcement, the Shaftesbury Remuneration Committee has
determined (in accordance with the rules of the relevant Shaftesbury Share Plan, including the time
apportionment provisions and by applying performance conditions where applicable) that options
and awards over up to 1,587,054 Shaftesbury Shares (equivalent to approximately 5,326,153 New
Capco Shares at the Exchange Ratio) may vest or be exercisable upon or prior to sanction of the
Scheme. Unvested or unexercised options and awards will lapse no more than one month after the
Court Order sanctioning the Scheme. In addition, Shaftesbury proposes to grant further options over
Shaftesbury Shares with a value of up to GBP2,529,468 under the Shaftesbury 2016 Deferred Share
Bonus Plan to those employees who would have been granted such options in December 2021 in
the ordinary course of business but for dealing restrictions relating to the Merger precluding such
grants. These options will also vest and become exercisable upon sanction of the Scheme.
For certain restricted share awards granted under the Shaftesbury 2016 Long-Term Incentive Plan,
it is intended that, as such awards will not vest in full (and will lapse to the extent not vested), cash
bonuses will, subject to leaver provisions, be paid in July 2023 to the award holders in an amount
equal to the value of the Shaftesbury Shares to which the unvested portion of the award related,
together with cash dividend equivalents. For this purpose, the value of Shaftesbury Shares shall be
based on the one month average share price for Shaftesbury Shares prior to the Effective Date.
Options under the Shaftesbury Sharesave Scheme become exercisable upon sanction of the
Scheme, but would lose the tax advantages offered by the legislation governing the Shaftesbury
Sharesave Scheme if exercised. Capco has therefore agreed to offer participants the opportunity to
exchange their existing options over Shaftesbury Shares for equivalent options over Capco Shares
in order to protect those tax advantages.
The Scheme will extend to any Shaftesbury Shares which are unconditionally allotted and issued
before the Scheme Record Time (and which are not otherwise excluded from the definition of
Scheme Shares), including those allotted and issued or transferred to satisfy the vesting or exercise
of awards or options granted under the Shaftesbury Share Plans.
The Scheme will not extend to Shaftesbury Shares issued after the Scheme Record Time (which will
not, for the avoidance of doubt, constitute Scheme Shares). However, it is proposed that
Shaftesbury's articles of association shall be amended at the Shaftesbury General Meeting to provide
that, if the Merger becomes Effective, any Shaftesbury Shares issued to any person (other than to
Capco, any subsidiary of Capco and/or any of their nominees) on or after the Scheme Record Time
(including in satisfaction of an option exercised under one of the Shaftesbury Share Plans) will be
automatically transferred to Capco in consideration for the issue of Capco Shares in accordance with
the Exchange Ratio.
Capco Share Plans
Of the 11,224,241 Capco Shares under subsisting options and awards which have been granted
under the Capco Share Plan, the Capco Remuneration Committee has determined (in accordance
with the rules of the Capco Share Plan, including the time apportionment provisions and by applying
performance conditions where applicable) that options and awards over up to 6,410,625 Capco
Shares may vest or be exercisable upon sanction of the Scheme. In addition, participants holding
options granted under the schedule to the Capco Share Plan which provides for market-value options
will be offered the opportunity of releasing their options for a cash payment equivalent to the market
value of one-third of Capco Shares under such options which vest (on the same basis as the other
corresponding Capco Share Plan awards) on sanction of the Scheme. Unvested, unexercised or
unreleased options and awards will lapse no more than one month after the Court Order sanctioning
the Scheme.
12. Pre-Completion Dividends
The Scheme Shares will be acquired pursuant to the Merger fully paid and free from all liens,
equitable interests, charges, encumbrances, rights of pre-emption and other third-party rights of any
nature whatsoever and together with all rights attaching to them as at the date of this Announcement
or subsequently attaching or accruing to them, save for the Permitted Shaftesbury Dividends.
Permitted Shaftesbury Dividends
In addition to the New Capco Shares that Scheme Shareholders will be entitled to receive in
connection with the Merger, the Capco Board has agreed that the Shaftesbury Board will be entitled
to pay the Shaftesbury Interim Dividend (as defined below), the Shaftesbury Full Year Dividend (as
defined below) and a Shaftesbury Equalisation Dividend (as defined below), as applicable (together,
the "Permitted Shaftesbury Dividends"), if and to the extent declared and paid in accordance with
the terms set out in this Announcement, in each case without any adjustment to the Exchange Ratio
under the terms of the Merger.
The Shaftesbury Board will be entitled to pay the interim dividend of 4.8 pence per Shaftesbury Share
to Shaftesbury Shareholders in respect of the six months ended 31 March 2022 declared by
Shaftesbury on 24 May 2022 (the "Shaftesbury Interim Dividend") and expected to be paid on 1 July 2022.
In addition to the Shaftesbury Interim Dividend, the Shaftesbury Board may declare and pay a
dividend in respect of the year ending 30 September 2022 of up to 5.4 pence per Shaftesbury Share
(the "Shaftesbury Full Year Dividend"). The Shaftesbury Full Year Dividend would be paid on the
earlier date of: (i) the normal payment date for Shaftesbury's year-end dividend expected to be in
February 2023 and (ii) a date within 30 Business Days after the Effective Date.
The Shaftesbury Full Year Dividend is to be declared and paid before the Capco Pro Rata Second
Interim Dividend (as defined below) is declared and paid to allow for the dividend amount received
by Capco in respect of the Shaftesbury Shares held by Capco on the record date to be included in
the Capco Pro Rata Second Interim Dividend paid to Capco Shareholders.
Shaftesbury Shareholders on the register of members as at close of business on 10 June 2022 will
be entitled to receive the Shaftesbury Interim Dividend. Shaftesbury Shareholders on the register of
members as at close of business on the earlier of (i) the normal record date for Shaftesbury's full
year-end dividend, expected to be in January 2023 and (ii) the Business Day prior to the Effective
Date, will be entitled to receive the Shaftesbury Full Year Dividend.
If any dividend and/or other distribution and/or other return of capital or value (a "Return of Value")
is announced, declared, made, payable or paid in respect of the Shaftesbury Shares on or after the
date of this Announcement and on or prior to the Effective Date and which has a record date on or
prior to the Effective Date, other than, or in excess of, the Permitted Shaftesbury Dividends (an
"Excess Shaftesbury Dividend"), Capco reserves the right to put Capco Shareholders and
Shaftesbury Shareholders (other than the holders of the Existing Capco Shareholding) in the same
economic position as they would have been if any such Excess Shaftesbury Dividend had not been
paid. This is expected to be achieved by Capco paying the Capco Shareholders on the register of
members as at close of business on the Business Day prior to the Effective Date an equalisation
dividend per Capco Share equal to (i) the amount of the relevant Excess Shaftesbury Dividend
(expressed on a pence per Shaftesbury Share basis) divided by (ii) the Exchange Ratio (a "Capco
Equalisation Dividend"). The Capco Equalisation Dividend, to the extent paid, will be inclusive of
Capco's share of the Excess Shaftesbury Dividend and no further payment to Capco Shareholders
in respect of Capco's share of the Excess Shaftesbury Dividend will be made. A Capco Equalisation
Dividend will, if applicable, also constitute a Permitted Capco Dividend (as defined below).
Permitted Capco Dividends
The Shaftesbury Board has agreed that the Capco Board will be entitled to pay the Capco FY21
Final Dividend (as defined below), the Capco First Interim Dividend (as defined below), the Capco
Pro Rata Second Interim Dividend (as defined below) and a Capco Equalisation Dividend, as
applicable (together, the "Permitted Capco Dividends"), if and to the extent declared and paid in
accordance with the terms set out in this Announcement, in each case without any adjustment to the
Exchange Ratio under the terms of the Merger.
The Board of Capco shall be entitled to pay a final dividend of 1.0 pence per Capco Share to Capco
Shareholders in respect of the year ended 31 December 2021 declared by Capco on 23 February
2022 (the "Capco FY21 Final Dividend") and expected to be paid on 8 July 2022.
In addition to the Capco FY21 Final Dividend, the Capco Board may declare and pay the following
dividends:
- an interim dividend in respect of the six months ending 30 June 2022 of up to 0.8 pence per
Capco Share (the "Capco First Interim Dividend"), expected to be paid in September 2022.
The Capco First Interim Dividend will include the pass through of dividends received by
Capco in respect of the 96,971,003 Shaftesbury Shares held by Capco as at close of
business on the Last Practicable Date; and
- a dividend of up to 1.0 pence per Capco Share in respect of the period from 1 July 2022 to
30 September 2022 (the "Capco Pro Rata Second Interim Dividend"). The Capco Pro
Rata Second Interim Dividend would be paid within 30 Business Days after the Effective
Date. The Capco Pro Rata Second Interim Dividend will include the pass through of the
Shaftesbury Full Year Dividend received by Capco in respect of the 96,971,003 Shaftesbury
Shares held by Capco as at close of business on the Last Practicable Date.
Capco Shareholders on the register of members as at close of business on 10 June 2022 will be
entitled to receive Capco FY21 Final Dividend. Capco Shareholders on the register of members as
at close of business on the normal record date for Capco's interim dividend expected to be in August 2022
will be entitled to receive the Capco First Interim Dividend. Capco Shareholders on the register
of members as at close of business on the Business Day prior to the Effective Date will be entitled
to receive the Capco Pro Rata Second Interim Dividend.
If any Return of Value is announced, declared, made, payable or paid in respect of the Capco Shares
on or after the date of this Announcement and on or prior to the Effective Date and which has a
record date on or prior to the Effective Date, other than, or in excess of, the Permitted Capco
Dividends (an "Excess Capco Dividend"), Shaftesbury reserves the right to put Shaftesbury
Shareholders (other than the holders of the Existing Capco Shareholding) and Capco Shareholders
in the same economic position as they would have been if any such Excess Capco Dividend had not
been paid. This is expected to be achieved by Shaftesbury paying the Shaftesbury Shareholders on
the register of members as at close of business on the Business Day prior to the Effective Date an
equalisation dividend per Shaftesbury Share equal to (i) the amount of the relevant Excess Capco
Dividend (expressed on a pence per Capco Share basis) multiplied by (ii) the Exchange Ratio (a
"Shaftesbury Equalisation Dividend"). To the extent that a Shaftesbury Equalisation Dividend is
declared or paid, the Capco Board will not declare or pay the applicable pass through of the
Shaftesbury Equalisation Dividend paid to Capco Shareholders by way of dividend or other
distribution until after Completion.
In the event that Completion does not occur by the end of Q4 2022, the Boards of Capco and
Shaftesbury expect to put in place additional arrangements to facilitate the ongoing payment of
ordinary course dividends to both sets of shareholders in the period up to Completion.
The proposed procedure and timings for declaring and paying the dividends set out in this
Announcement are indicative only and are expected to be set out in detail in the Scheme Document.
13. Shaftesbury Shares owned by the Capco Group and Capco's Exchangeable Bonds
The Capco Group holds 96,971,003 Shaftesbury Shares as at the date of this Announcement,
representing approximately 25.2% of Shaftesbury's issued share capital at close of business on the
Last Practicable Date. As at close of business on the Last Practicable Date, 38,008,138 Shaftesbury
Shares, representing approximately 9.9% of Shaftesbury's issued share capital at close of business
on the Last Practicable Date, are secured pursuant to the terms and conditions of Capco's
Exchangeable Bonds (such number of shares which are so secured from time to time being the
"Secured Existing Capco Shareholding"). The remaining 58,962,865 Shaftesbury Shares held by
the Capco Group, representing approximately 15.3% of Shaftesbury's issued share capital at close
of business on the Last Practicable Date, are not secured pursuant to the terms and conditions of
Capco's Exchangeable Bonds (such number of shares which are not so secured from time to time
being the "Unsecured Existing Capco Shareholding").
The Merger will be structured to comply with the terms and conditions of Capco's Exchangeable
Bonds. The number of Shaftesbury Shares held by the Capco Group which are secured pursuant to
the terms and conditions of Capco's Exchangeable Bonds can vary depending on the amount of
dividends declared by Shaftesbury in accordance with the terms and conditions of Capco's
Exchangeable Bonds. It is anticipated that the Secured Existing Capco Shareholding as at the
Scheme Record Time will be acquired by Capco under the terms of the Scheme and New Capco
Shares will be issued to replace the Secured Existing Capco Shareholding as the Exchange Property
in accordance with the terms of the Scheme and the terms and conditions of Capco's Exchangeable
Bonds. Such New Capco Shares which will form the Exchange Property (the "Secured New Capco
Shares") will be held by an entity or entities controlled by the Combined Group. This does not impact
the Exchange Ratio, which is calculated disregarding the Secured Existing Capco Shareholding and
the Unsecured Existing Capco Shareholding.
Following Completion, the implied exchange price per New Capco Share in respect of Capco's
Exchangeable Bonds will be calculated by reference to the number of New Capco Shares that
replace the Shaftesbury Shares comprising the Exchange Property at Completion in accordance with
the terms and conditions of Capco's Exchangeable Bonds. The number of Shaftesbury Shares
comprising the Exchange Property at Completion will be impacted by the dividends declared by
Shaftesbury in the period prior to Completion. Illustratively, if the number of Shaftesbury Shares
comprising the Exchange Property at Completion remains the same number as comprising the
Exchange Property as at 31 March 2022 (being 38,008,138 Shaftesbury Shares), when replaced
with New Capco Shares at the Exchange Ratio the implied exchange price per New Capco Share
immediately following Completion will be 216p per New Capco Share.
The dividends received per share, earnings per share and EPRA NTA per share for shareholders of
the Combined Group (other than the holders of the Secured New Capco Shares) will not currently
be affected on a consolidated basis by the Secured New Capco Shares. To ensure compliance with
the terms and conditions of Capco's Exchangeable Bonds, it is intended that dividends will be paid
on the Secured New Capco Shares on the same basis as all other shares in the Combined Group.
Whilst Capco Shares are held as Exchange Property, the Combined Group has agreed not to
exercise the voting rights attaching to such shares. If bondholders elect to exercise their exchange
right where the exchange price is met, the Combined Group will have the ability to deliver Capco
Shares or cash to the bondholder; following delivery of the Capco Shares, such shares would
become voting in the hands of the bondholder and, as a consequence, the number of shares voting
in the Combined Group would increase.
As noted in paragraph 14 below, it is expected that the entities within the Capco Group which hold
the Secured Existing Capco Shareholding shall form their own class for the purposes of the Scheme
but that a separate class meeting shall not be required, as those entities will irrevocably consent to
be bound by the terms of the Scheme.
It is anticipated that the Unsecured Existing Capco Shareholding as at the Scheme Record Time will
not be subject to the terms of the Scheme and will continue to be held by subsidiaries of Capco. The
entities within the Capco Group which hold the Unsecured Existing Capco Shareholding are not
required to vote at the Court Meeting or the Shaftesbury General Meeting to approve the Scheme.
14. Irrevocable undertakings and letter of intent to vote in favour of the Merger
Shaftesbury Directors
Capco and Shaftesbury have received irrevocable undertakings from the Shaftesbury Directors to
vote (or to procure the vote) in favour of the Scheme at the Court Meeting and the resolutions
proposed at the Shaftesbury General Meeting in respect of the 2,519,849 Shaftesbury Shares
currently registered or beneficially held in aggregate by them as well as any further Shaftesbury
Shares which they may become the registered or beneficial owner of (save for any Shaftesbury
Shares which they acquire pursuant to the exercise of options under the Shaftesbury Sharesave
Scheme), representing in aggregate approximately 0.88% of the total votes which could be cast at
the Court Meeting by Scheme Shareholders who are entitled to vote based on Shaftesbury's issued
share capital as at close of business on the Last Practicable Date.
These irrevocable undertakings remain binding if a competing offer for Shaftesbury is made but will
cease to be binding on the date on which the Merger is withdrawn or lapses in accordance with its terms.
Shaftesbury Shareholders
Shaftesbury has received an irrevocable undertaking from Norges Bank in respect of 98,925,310
Shaftesbury Shares (as well as any further Shaftesbury Shares which they may become the
registered or beneficial owner of or otherwise interested in), to vote in favour of the Scheme at the
Court Meeting and the resolutions to be proposed at the Shaftesbury General Meeting. When taken
together with the irrevocable undertakings provided by the Shaftesbury Directors, this represents
total support in aggregate of 101,445,159 Shaftesbury Shares, representing in aggregate
approximately 35.3% of the total votes which could be cast at the Court Meeting by Scheme
Shareholders who are entitled to vote based on Shaftesbury's issued share capital as at close of
business on the Last Practicable Date.
This irrevocable undertaking remains binding if a competing offer for Shaftesbury is made but will
cease to be binding on the date on which the Merger is withdrawn or lapses in accordance with its terms.
The entities within the Capco Group which hold the Secured Existing Capco Shareholding, which
form part of the Scheme Shares, have irrevocably consented to be bound by the terms of the
Scheme, and have undertaken to procure that any transferee of such Shaftesbury Shares which is
controlled by entities within the Capco Group also irrevocably consents to be bound by the terms of
the Scheme. It is expected that the entities within the Capco Group which hold the Secured Existing
Capco Shareholding shall form their own class for the purposes of the Scheme but that a separate
class meeting shall not be required, as such entities will irrevocably consent to be bound by the terms
of the Scheme.
Capco Directors
Capco and Shaftesbury have received irrevocable undertakings from the Capco Directors to vote (or
to procure the vote) in favour of the Capco Resolutions to be proposed at the Capco General Meeting
in respect of the 952,777 Capco Shares currently registered or beneficially held in aggregate by them
as well as any further Capco Shares which they may become the registered or beneficial owner of,
representing in aggregate approximately 0.11% of Capco's issued share capital as at close of
business on the Last Practicable Date.
These irrevocable undertakings remain binding if a competing offer for Shaftesbury or Capco is made
but will cease to be binding on the date on which the Merger is withdrawn or lapses in accordance
with its terms.
Capco Shareholders
Capco has also received an irrevocable undertaking from Norges Bank to vote in favour of the Capco
Resolutions to be proposed at the Capco General Meeting on which they are entitled to vote in
respect of their entire legal and/or beneficial holdings of 127,656,465 Capco Shares (as well as any
further Capco Shares which they may become the registered or beneficial owner of or otherwise
interested in), representing in aggregate approximately 15.0% of Capco's issued share capital as at
close of business on the Last Practicable Date, representing the shares in respect of which votes
can be cast in favour of the Capco Resolutions excluding the Related Party Transaction.
This irrevocable undertaking remains binding if a competing offer for Shaftesbury is made but will
cease to be binding on the date on which the Merger is withdrawn or lapses in accordance with its terms.
In addition, Capco has received a non-binding, revocable letter of intent to vote in favour of the
resolutions proposed at the Capco General Meeting from Madison International Realty in respect of
34,783,462 Capco Shares, representing approximately 4.1% of Capco's issued share capital as at
close of business on the Last Practicable Date, representing the shares in respect of which votes
can be cast in favour of all of the Capco Resolutions.
Further details of these irrevocable undertakings and letter of intent are set out in Appendix 3 to this Announcement.
15. Offer-related arrangements and other arrangements
Confidentiality Agreement
Capco and Shaftesbury have entered into the Confidentiality Agreement pursuant to which each of
Capco and Shaftesbury has undertaken, amongst other things: (a) to keep information relating to the
Merger and to the other party confidential and not to disclose it to third parties save where expressly
permitted, including if required by law or regulation, or where such information is already in the public
domain or lawfully in the receiving party's possession; and (b) to use the confidential information for
the sole purpose of considering, evaluating, advising on or furthering the Merger. These
confidentiality obligations will remain in force following Completion. The agreement also contains
certain provisions pursuant to which each party has agreed not to solicit key employees, customers
or suppliers of the other party, subject to customary carve-outs, for a period of 12 months from the
date of the Confidentiality Agreement.
Co-operation Agreement
Capco and Shaftesbury have entered into the Co-operation Agreement, pursuant to which Capco
has agreed to co-operate with Shaftesbury and to take all steps as are reasonably necessary to
satisfy the Conditions and to implement the Merger. Capco and Shaftesbury have also agreed to use
all reasonable endeavours to secure the clearances necessary to satisfy the Conditions as soon as
reasonably practicable, and in any event by the Long Stop Date.
Capco and Shaftesbury have agreed to certain undertakings to co-operate and provide each other
with reasonable information and assistance in relation to any filing, submission and notification to be
made in relation to such regulatory clearances and authorisations. Capco has also agreed to provide
Shaftesbury with reasonable information, assistance and access for the preparation of the key
shareholder documentation to be prepared by Shaftesbury.
The Co-operation Agreement shall be terminated with immediate effect if: (i) Capco and Shaftesbury
so agree in writing, prior to the Scheme becoming effective; (ii) the Scheme is withdrawn or lapses;
or (iii) the Scheme has not become effective in accordance with its terms by the Long Stop Date, in
the case of (ii) and (iii) other than as a result of Capco exercising its right to proceed by way of a
Takeover Offer or a person acting in concert with Capco implementing the Merger by a different
takeover offer or scheme on substantially the same or improved terms in favour of the Shaftesbury Shareholders.
Capco has the right to terminate the Co-operation Agreement, inter alia, if: (i) a competing proposal
for Shaftesbury completes, becomes effective or is declared or becomes unconditional in all
respects; (ii) any condition to the Merger (a) which has not been waived is or has become incapable
of satisfaction by the Long Stop Date and Capco will not waive such condition, or (b) which is
incapable of waiver has become incapable of satisfaction by the Long Stop Date is, with the
permission of the Panel, invoked or determined to be incapable of satisfaction; (iii) except in certain
limited circumstances, the Scheme Document (including the Shaftesbury Recommendation) is not
posted by the date agreed by Capco and Shaftesbury and consented to by the Panel; (iv) the Court
Meeting and the Shaftesbury General Meeting are not held on or before the 22nd day after the
expected date of the Court Meeting (or such later date as may be agreed by Capco and Shaftesbury
with the consent of the Panel and, if required, the Court); (v) the Shaftesbury Board withdraws,
adversely modifies or adversely qualifies its recommendation of the Scheme; (vi) the Capco
Resolutions are not passed at the Capco General Meeting; (vii) the Shaftesbury Resolutions are not
passed at the Shaftesbury General Meeting; (viii) the Scheme Court Hearing is not held on or before
the later of (a) the 22nd day after the expected date of such hearing as set out in the Scheme
Document or (b) 30 days after all conditions to the Merger have been satisfied or waived, or such
later date as Capco and Shaftesbury agree; (ix) the Court refuses to sanction the Scheme; or (x) the
Scheme is not approved by the requisite majority of Scheme Shareholders at the Court Meeting.
Shaftesbury has the right to terminate the Co-operation Agreement, inter alia, if: (i) a competing
proposal for Capco (a) completes, becomes effective or is declared or becomes unconditional in all
respects, or (b) is recommended in whole or in part by the Capco Board; (ii) the Capco Board
withdraws, adversely modifies or adversely qualifies its recommendation of the Merger; (iii) the
Capco Resolutions are not passed at the Capco General Meeting; (iv) the Shaftesbury Resolutions
are not passed at the Shaftesbury General Meeting; (v) the Court refuses to sanction the Scheme;
or (vi) the Scheme is not approved by the requisite majority of Scheme Shareholders at the Court Meeting.
The Co-operation Agreement records Capco's and Shaftesbury's intention to implement the Merger
by way of the Scheme, subject to the ability of Capco to proceed by way of a Takeover Offer.
The Co-operation Agreement also contains provisions that will apply in respect of or otherwise relate
to the Shaftesbury Share Plans, the Capco Share Plan and certain other employee incentive arrangements.
Norges Bank Side Deed
Capco and Norges Bank have entered into a side deed ("Norges Bank Side Deed") which sets out
the terms upon which Capco and Norges Bank will co-operate and take all steps as are reasonably
necessary to obtain the CMA clearance necessary for the implementation of the Merger ("Merger
Control Clearance").
Capco and Norges Bank have agreed to certain undertakings to co-operate and provide each other
with reasonable information and assistance as either party may require in order to obtain Merger
Control Clearance or to make a submission or filing to the CMA.
Capco has the right to terminate the Norges Bank Side Deed, inter alia, if: (i) the Scheme is not
approved by the requisite majority of Scheme Shareholders at the Court Meeting; (ii) the Capco
Resolutions are not passed at the Capco General Meeting; (iii) the Shaftesbury Resolutions are not
passed at the Shaftesbury General Meeting; (iv) the Court refuses to sanction the Scheme; or (v) a
competing proposal for Shaftesbury completes, becomes effective or is declared or becomes
unconditional in all respects.
The Norges Bank Side Deed terminates: (i) if agreed in writing by the parties at any time prior to the
Scheme becoming effective; or (ii) upon notice by either party if the irrevocable undertaking given by
Norges Bank to Capco terminates in accordance with its terms.
16. Structure of the Merger and Scheme of Arrangement
It is intended that the Merger will be implemented by means of a court-sanctioned scheme of
arrangement of Shaftesbury under Part 26 of the Companies Act.
It is expected that the Scheme Document will be posted to Shaftesbury Shareholders as soon as
reasonably practicable and in any event within 28 days of this Announcement.
The purpose of the Scheme is to provide for Capco to become the owner of the entire issued and to
be issued share capital of Shaftesbury. In order to achieve this, the Scheme Shares will be
transferred to Capco under the Scheme. In consideration for this transfer, the Scheme Shareholders
will receive New Capco Shares on the basis set out in paragraph 2 above. The transfer to Capco of
the Scheme Shares will result in Shaftesbury becoming a wholly owned subsidiary of Capco.
The Scheme requires approval by Scheme Shareholders who are present and vote (and who are
entitled to vote) by the passing of a resolution at the Court Meeting. This resolution must be approved
by a majority in number of the Scheme Shareholders (or the relevant class or classes thereof, if
applicable, unless all members of any such class have consented to be bound by the Scheme)
present and voting, either in person or by proxy, at the Court Meeting, (or at any separate class
meeting which may be required by the Court) representing not less than 75% in value of the Scheme
Shares (or the relevant class or classes thereof, if applicable) voted. In addition, special resolutions
to amend the articles of association of Shaftesbury in connection with the implementation of the
Scheme and to deal with certain ancillary matters must be passed at the Shaftesbury General
Meeting, requiring the approval of Shaftesbury Shareholders representing at least 75% of the votes
cast at the Shaftesbury General Meeting, either in person or by proxy. The Shaftesbury General
Meeting will be held immediately after the Court Meeting. It is intended that the Court Meeting and
the Shaftesbury General Meeting will be held at or around the same time as the Capco General Meeting.
Following the Court Meeting and the Shaftesbury General Meeting, the Scheme must be sanctioned
by the Court. Any Shaftesbury Shareholder is entitled to attend the Scheme Court Hearing in person
or through counsel to support or oppose the sanctioning of the Scheme. The Scheme will only
become Effective upon delivery to the Registrar of Companies of a copy of the Court Order.
The Scheme will also be subject to certain Conditions and certain further terms referred to in
Appendix 1 to this Announcement and to be set out in the Scheme Document.
Once the Scheme becomes Effective: (i) it will be binding on all Scheme Shareholders, whether or
not they voted at the Court Meeting and the Shaftesbury General Meeting and, if they did vote,
whether or not they voted in favour of or against the resolutions proposed at those meetings; and (ii)
share certificates in respect of Shaftesbury Shares will cease to be valid and entitlements to
Shaftesbury Shares held within the CREST system will be cancelled.
The terms of the Scheme will provide that the Scheme Shares will be acquired under the Scheme
fully paid and free from all liens, equitable interests, charges, encumbrances, options, rights of pre-
emption and any other third party rights or interests of any nature whatsoever and together with all
rights attaching thereto, including the right to receive and retain all dividends and other distributions
and returns of value declared, paid or made with a record date after the Scheme Record Time, save
for the Permitted Shaftesbury Dividends.
Subject to the need to take their own tax advice in relation their particular circumstances, Scheme
Shareholders are generally expected to be able to roll-over any chargeable gain in respect of their
Scheme Shares into their New Capco Shares for UK capital gains tax purposes. In relation to that
exchange, clearance has been received from HM Revenue & Customs under the UK capital gains
tax legislation that HM Revenue & Customs is satisfied that the Scheme is being effected for bona
fide commercial reasons and is not part of any scheme or arrangement of which a main purpose is
avoidance of liability to UK capital gains tax or corporation tax.
Capco reserves the right, subject to the prior consent of the Panel and the terms of the Co-operation
Agreement, to elect to implement the acquisition of the Shaftesbury Shares by way of a Takeover
Offer. In such event, such Takeover Offer will be implemented on the same terms (subject to
appropriate amendments as described in Part 3 of Appendix 1 to this Announcement), so far as
applicable, as those which would apply to the Scheme. Furthermore, if such Takeover Offer is made
and sufficient acceptances of such Takeover Offer are received, when aggregated with Shaftesbury
Shares otherwise acquired by Capco, it is the intention of Capco to apply the provisions of section
979 of the Companies Act to acquire compulsorily any outstanding Shaftesbury Shares to which such
offer relates.
Further details of the Scheme, including an expected timetable for the implementation of the Merger
will be set out in the Scheme Document which is expected to be despatched to Shaftesbury
Shareholders as soon as reasonably practicable and in any event within 28 days of this
Announcement.
17. Conditions
The Merger will be subject to the Conditions and the further terms set out below and in Appendix 1
to this Announcement and to the full terms and conditions to be set out in the Scheme Document,
including, amongst other things:
(a) the approval by a majority in number of the Scheme Shareholders (or the relevant class or
classes thereof, if applicable, unless all members of any such class have consented to be
bound by the Scheme) present and voting, either in person or by proxy, at the Court Meeting
(or at any separate class meeting which may be required by the Court) representing not less
than 75% in value of the Scheme Shares (or the relevant class or classes thereof, if
applicable) voted;
(b) the passing of all resolutions required to approve and implement the Scheme, including,
without limitation, to approve the amendment to the articles of association of Shaftesbury in
connection with the implementation of the Scheme and to approve certain related matters
by the requisite majority of Shaftesbury Shareholders at the Shaftesbury General Meeting;
(c) the sanction of the Scheme by the Court (with or without modification but subject to any
modification being on terms acceptable to Capco and Shaftesbury);
(d) the delivery of the Court Order to the Registrar of Companies;
(e) the passing of all resolutions required to approve and implement the Merger, including the
Merger as a Class 1 Transaction, the issue of the New Capco Shares and the Related Party
Transaction, by the requisite majority of Capco Shareholders at the Capco General Meeting;
(f) the Court Meeting and the Shaftesbury General Meeting being held on or before the 22 day
after the expected date of the Court Meeting, which will be set out in the Scheme Document
in due course (or such later date as may be agreed by Capco and Shaftesbury with the
consent of the Panel and, if required, the Court);
(g) the CMA issuing a decision that it is not the CMA's intention to make a Phase 2 CMA
Reference, with such a decision being issued on an unconditional basis or else conditional
on the CMA's acceptance of undertakings which are reasonably satisfactory to Capco and
Shaftesbury (or the applicable time period having expired without a Phase 2 CMA Reference)
(the "CMA Condition").
(h) the Scheme Court Hearing being held on or before the later of (i) the 22nd day after the
expected date of the hearing, which will be set out in the Scheme Document in due course;
and (ii) 30 days after all conditions to the Merger have been satisfied or waived (or such later
date as may be agreed by Capco and Shaftesbury with the consent of the Panel and, if
required, the Court);
(i) the Scheme becoming Effective by 11:59pm on the Long Stop Date (or such later time and
date as may be agreed by Capco and Shaftesbury with the consent of the Panel and, if
required, the Court); and
(j) Admission.
CMA Condition
The Merger is conditional on the CMA Condition and Capco and Shaftesbury do not intend to
implement the Merger without CMA Phase 1 clearance, such approval being provided either
unconditionally or subject to such conditions as are reasonably satisfactory to Capco and Shaftesbury.
The CMA Condition, which has been included following specific negotiation between the parties,
could be invoked by Capco with the consent of the Panel if the CMA refers the Merger to a Phase 2
investigation or in the event that remedies offered by Capco which are satisfactory to both Capco
and Shaftesbury, with the aim of securing Phase 1 clearance, are not accepted as sufficient by the CMA.
Shareholders should note that Capco intends to seek the Panel's consent to invoke the CMA
Condition if the CMA would only be satisfied by the parties undertaking remedies in the form of
disposals which are unacceptable to or not deliverable by the parties, as the integrity of the proposed
Merger structure and Combined Group's portfolio is an essential part of the strategic and economic
rationale for the Merger.
In addition, Capco intends to seek the Panel's consent to invoke the CMA condition if the CMA refers
the Merger to a Phase 2 investigation, because the delays to Completion that would necessarily arise
would result in prolonged uncertainty and cost for both companies.
Capco's intentions in this regard have been discussed with Shaftesbury, which shares Capco's views
of the material impact of such circumstances. Shaftesbury considers the CMA Condition to be a
material term of the Merger from the perspective of the Shaftesbury Shareholders and, accordingly,
Shaftesbury does not intend to implement the Scheme unless the CMA Condition has been satisfied.
Shaftesbury further intends to support any request by Capco to seek the consent of the Panel to
invoke the CMA Condition should the aforementioned circumstances arise.
A decision by the Panel whether to permit Capco to invoke a condition to the offer would be judged
by the Panel by reference to the facts at the time that the relevant circumstances arise, including the
views of the board of Shaftesbury at the time.
18. Capco Shareholder approval and Prospectus
As a result of its size, the Merger constitutes a Class 1 Transaction for Capco for the purposes of the
Listing Rules. Accordingly Capco will be required to seek the approval of Capco Shareholders for the
Merger at the Capco General Meeting. The Merger will also be conditional on the approval of Capco
Shareholders of the issuance of the New Capco Shares at the Capco General Meeting.
The issue of New Capco Shares to Norges Bank as part of the Merger will also constitute a Related
Party Transaction between Capco and Norges Bank for the purposes of the Listing Rules.
Accordingly, the Merger will also be conditional on the approval of the Capco Shareholders, excluding
Norges Bank, of the Related Party Transaction at the Capco General Meeting.
The Capco Directors intend unanimously to recommend Capco Shareholders vote in favour of the
Capco Resolutions, as all Capco Directors who hold Capco Shares have irrevocably undertaken to
do in respect of their own holdings of, in aggregate, 952,777 Capco Shares (representing
approximately 0.11% of the issued share capital of Capco as at close of business on the Last
Practicable Date) and in respect of which votes can be cast in favour of all of the Capco Resolutions.
Capco will prepare and send to Capco Shareholders the Circular summarising the background to
and reasons for the Merger which will include a notice convening the Capco General Meeting. It is
expected that the Circular will be posted to Capco Shareholders (together with the form of proxy) at
the same time as the Scheme Document, with the Capco General Meeting being held at or around
the same time as the Shaftesbury General Meeting and the Court Meeting.
The Merger is conditional on, among other things, the Capco Resolutions being passed by the
requisite majority of Capco Shareholders at the Capco General Meeting.
Capco will also be required to produce a Prospectus in connection with Admission. It is expected
that the Prospectus, containing information about the New Capco Shares, will be published at or
around the same time as the Circular is posted to Capco Shareholders and the Scheme Document
is posted to Shaftesbury Shareholders.
19. De-listing and re-registration
Applications will be made to the FCA for the cancellation of the listing of the Shaftesbury Shares on
the Official List and to the London Stock Exchange for the cancellation of the admission to trading of
Shaftesbury Shares on the Main Market. It is expected that such delisting and cancellation of
admission to trading would take effect on the Business Day after the Effective Date. It is intended
that the last day of dealings in, and for registration of transfers of, Shaftesbury Shares (other than
the registration of the transfer of the Scheme Shares to Capco pursuant to the Scheme) will be the
last Business Day prior to the Effective Date, following which all Shaftesbury Shares will be
suspended from the Official List and from trading on the Main Market, and Shaftesbury Shares will
be disabled in CREST and no transfers shall be registered after this time.
On the Effective Date, entitlements to Shaftesbury Shares in CREST will be cancelled and such
entitlements rematerialised and all share certificates in respect of Shaftesbury will cease to be valid
and should be destroyed.
If the Scheme is sanctioned, any Shaftesbury Shares held in treasury will be cancelled prior to the
Scheme becoming Effective.
It is anticipated that the Combined Group will, as soon as reasonably practicable following the
Effective Date, re-register Shaftesbury as a private company under the relevant provisions of the
Companies Act.
20. Settlement, listing and dealing of New Capco Shares
Once the Scheme has become Effective, New Capco Shares will be allotted to Scheme Shareholders.
It is intended that applications will be made to: (i) the FCA and to the London Stock Exchange for the
New Capco Shares to be admitted to the premium segment of the Official List and to trading on the
London Stock Exchange's Main Market for listed securities; and (ii) the JSE for the secondary
(inward) listing and admission to trading of the New Capco Shares on the Main Board of the JSE. It
is expected that Admission will become effective, and that dealings for normal settlement in the New
Capco Shares will commence on the London Stock Exchange, at 8.00 a.m. (London time) and on
the JSE at 9.00 a.m. (Johannesburg time) on the first Business Day after the Effective Date.
The existing Capco Shares are admitted to CREST and Strate. It is expected that all of the New
Capco Shares, when issued and fully paid, will be capable of being held and transferred by means
of CREST or the Strate system. It is expected that the New Capco Shares will trade under ISIN GB00B62G9D36.
Further details on listing, dealing and settlement will be included in the Scheme Document.
Fractions of New Capco Shares will not be allotted or issued pursuant to the Merger, but entitlements
of Scheme Shareholders will be rounded down to the nearest whole number of New Capco Shares
and all fractions of New Capco Shares will be aggregated and sold in the market as soon as
practicable after the Effective Date. The net proceeds of such sale (after deduction of all expenses
and commissions incurred in connection with the sale) will be distributed in due proportions to the
Scheme Shareholders who would otherwise have been entitled to such fractions (rounded down to
the nearest penny), save that individual entitlements to amounts of less than GBP5 will be retained for
the benefit of the Combined Group.
21. Overseas Shareholders
The availability of the New Capco Shares under the terms of the Merger to persons not resident in
or citizens of the United Kingdom ("Overseas Shareholders") or the ability of those persons to hold
such shares may be affected by the laws and regulations of the relevant jurisdiction in which they
are resident. Such persons should inform themselves about and observe any applicable legal and
regulatory requirements of their jurisdiction. Shaftesbury Shareholders who are in doubt about such
matters should consult an appropriate independent professional adviser in the relevant jurisdiction
without delay. Further details in relation to Overseas Shareholders will be contained in the Scheme Document.
This Announcement does not constitute an offer to sell or issue, or the solicitation of any offer to
purchase, subscribe for or otherwise acquire, any securities in any jurisdiction.
22. Valuations
For the purposes of Rule 29.5 of the Code, the Capco Directors confirm that CBRE has confirmed to
them that the valuation of the Capco Group's investment properties (other than its interest in the Lillie
Square Joint Venture) as at the date of this Announcement would not be materially different to the
valuation provided by CBRE as at 31 March 2022 and contained in CBRE's valuation report set out
in Appendix 5.
For the purposes of Rule 29.5 of the Code, the Capco Directors confirm that JLL has confirmed to
them that the valuation of the Lillie Square Joint Venture's investment properties as at the date of
this Announcement would not be materially different to the valuation provided by JLL as at 31 March 2022
and contained in JLL's valuation report set out in Appendix 5.
For the purposes of Rule 29.5 of the Code, the Shaftesbury Directors confirm that Cushman &
Wakefield have confirmed to them that the valuation of the Shaftesbury Group's investment
properties (other than its interest in the Longmartin Joint Venture) as at the date of this
Announcement would not be materially different to the valuation provided by Cushman & Wakefield
as at 31 March 2022 and contained in Cushman & Wakefield's valuation report set out in Appendix 5.
For the purposes of Rule 29.5 of the Code, the Shaftesbury Directors confirm that Knight Frank have
confirmed to them that the valuation of the Longmartin Joint Venture's investment properties as at
the date of this Announcement would not be materially different from the valuation provided by Knight
Frank as at 31 March 2022 and contained in Knight Frank's valuation report set out in Appendix 5.
For the purposes of Rule 29.6 of the Code, the Shaftesbury Directors confirm that in the event that
the Shaftesbury Group's investment properties (other than its interest in the Longmartin Joint
Venture) were sold at an amount represented by the valuation as at 31 March 2022, any gains arising
from the disposal of investment properties used for the purposes of the Shaftesbury Group's property
rental business would not be chargeable to tax under UK REIT legislation. Any disposal gains on
assets not connected with the Shaftesbury Group's rental business would be chargeable to
corporation tax but would be fully offset by available brought forward tax losses so no tax liability
would arise.
For the purposes of Rule 29.6 of the Code, the Shaftesbury Directors would expect an immaterial
tax liability to arise on the sale of the Shaftesbury Group's investment in the Longmartin Joint Venture
at the carrying value of that investment in the Shaftesbury Group's balance sheet as at 31 March
2022. This tax liability would be fully offset by available brought forward tax losses such that no tax
liability would arise. In accordance with IFRS, the Longmartin Joint Venture's balance sheet as at 31
March 2022 includes a provision for deferred tax that would crystallise only on a disposal of the
Longmartin properties. As a result, the net asset value of the interest in the Longmartin Joint Venture
reported in the Shaftesbury Group's financial statements as at 31 March 2022 includes a provision
for the estimated tax liability should a disposal of the Longmartin properties occur.
For the purposes of Rule 29.6 of the Code, the Capco Directors confirm that in the event that the
Capco Group's investment properties (other than its interest in the Lillie Square Joint Venture) were
sold at an amount represented by the valuations contained in the valuation reports set out in
Appendix 5, any gains arising from the disposal of investment properties used for the purposes of
the Capco Group's property rental business would not be chargeable to tax under UK REIT
legislation. Although any disposal gains on assets not connected with the Capco Group's property
rental business would be chargeable to corporation tax, the Capco Group's only material investment
properties not connected with its rental business are its interest in the Lillie Square Joint Venture
and, for the purposes of Rule 29.6 of the Code, the Capco Directors would not expect a tax liability
to arise on the sale of that interest (including by way of a sale of the underlying properties held by
the Lillie Square Joint Venture) based on the valuation of the investment in the Lillie Square Joint
Venture in the valuation reports as set out in Appendix 5 and brought forward trading losses.
23. Disclosure of interests in Shaftesbury Shares
As at close of business on the Last Practicable Date:
- 96,971,003 Shaftesbury Shares in aggregate are held by or on behalf of certain members of
the Capco Group, which represents approximately 25.2% of Shaftesbury's issued share
capital as at close of business on the Last Practicable Date;
- 4,879 Shaftesbury Shares in aggregate are held by or on behalf of Jonathan Lane, his close
relatives and related trusts, who are deemed to be acting in concert with Capco for the
purposes of the Merger;
- 373,169 Shaftesbury Shares in aggregate are held by or on behalf of certain members of
HSBC's group, which represents approximately 0.097% of Shaftesbury's issued share
capital as at close of business on the Last Practicable Date;
- Save as set out above, none of the Capco Directors or any other member of the Capco
Group, nor, so far as the Capco Directors are aware, any person acting in concert with Capco
for the purposes of the Merger had any interest in, right to subscribe for, or had borrowed or
lent any Shaftesbury Shares or securities convertible or exchangeable into Shaftesbury
Shares, nor did any such person have any short position (whether conditional or absolute
and whether in the money or otherwise), including any short position under a derivative, any
agreement to sell or any delivery obligation or right to require another person to take delivery,
or any dealing arrangement of the kind referred to in Note 11 to the definition of acting in
concert in the Code, in relation to Shaftesbury Shares or in relation to any securities
convertible or exchangeable into Shaftesbury Shares.
24. Documents available on website
Copies of the following documents will shortly be available on Capco's website at
https://www.capitalandcounties.com/investors/investor-information/possible-merger-shaftesbury-plc
and on Shaftesbury's website at https://www.shaftesbury.co.uk/en/investor-relations/possible-all-
share-merger-with-capco/disclaimer.html until the Scheme has become Effective or has lapsed or
been withdrawn:
(a) this Announcement;
(b) the irrevocable undertakings and letter of intent listed in Appendix 3 to this Announcement;
(c) the CBRE, JLL, Cushman & Wakefield and Knight Frank valuation reports listed in
Appendix 5 to this Announcement;
(d) the Loan Facility Agreement;
(e) the joint investor presentation, dated the same date as this Announcement, prepared by
Capco and Shaftesbury in connection with the announcement of the Merger;
(f) the Confidentiality Agreement, the Co-operation Agreement and the Norges Bank Side Deed
referred to in paragraph 15 above; and
(g) consent letters from each of KPMG, CBRE, JLL, Cushman & Wakefield, Knight Frank,
Rothschild & Co, Evercore, Blackdown, J.P. Morgan Cazenove, Liberum, UBS, Jefferies,
Peel Hunt, HSBC, Barclays, BNP Paribas and Java Capital.
25. General
The Merger will be subject to the satisfaction or, where applicable, waiver of the Conditions
and on the terms contained in Appendix 1 to this Announcement and on the further terms and
Conditions to be set out in the Scheme Document. The Scheme will be governed by English
law and subject to the applicable rules and regulations of the London Stock Exchange, the
Panel and the FCA.
Appendix 2 to this Announcement contains the sources and bases of certain information
contained in this summary and this Announcement. Appendix 3 to this Announcement
contains details of the irrevocable undertakings and letter of intent received by Capco and by Shaftesbury.
Appendix 4 to this Announcement contains the Quantified Financial Benefits Statement,
together with the reports from KPMG, as reporting accountants to Capco and the Proposed
Directors for the purposes of the Quantified Financial Benefits Statement, and Rothschild &
Co, as financial adviser to Capco and the Proposed Directors for the purposes of the
Quantified Financial Benefits Statement, as required under Rule 28.1(a) of the Code. Each of
KPMG and Rothschild & Co has given and not withdrawn its consent to the publication of its
report in this Announcement in the form and context in which it is included.
For the purposes of Rule 28 of the Code, the Quantified Financial Benefits Statement
contained in Appendix 4 to this Announcement is the responsibility of Capco, the Capco
Directors and the Proposed Directors, and not of the Shaftesbury Directors.
Any statement of intention, belief or expectation for the Combined Group following the
Effective Date is an intention, belief or expectation of the Capco Directors and the Proposed Directors.
Appendix 5 to this Announcement contains property valuations supported by valuation
reports for each of Capco and Shaftesbury as at 31 March 2022 pursuant to the requirements
of Rule 29 of the Code. These property valuation reports will, subject to the requirements of
the Code, be reproduced in the Scheme Document. Each of CBRE, JLL, Cushman & Wakefield
and Knight Frank has given and not withdrawn its consent to the publication of its valuation
report in this Announcement in the form and context in which it is included.
Appendix 6 to this Announcement contains the definitions of certain terms used in this
summary and Announcement.
Further information
This Announcement is for information purposes only and is not intended to and does not constitute,
or form part of, any offer to sell or issue, or any solicitation of an offer to purchase, subscribe for or
otherwise acquire, or the solicitation of any offer to dispose of, any securities or the solicitation of any
vote or approval in any jurisdiction pursuant to the Merger or otherwise, nor shall there be any sale,
issuance or transfer of securities of Capco or Shaftesbury pursuant to the Merger in any jurisdiction
in contravention of applicable laws. The Merger will be implemented solely pursuant to the terms of
the Scheme Document (or, in the event that the Merger is to be implemented by means of a Takeover
Offer, the Offer Document), which, together with the forms of proxy, will contain the full terms and
conditions of the Scheme, including details of how to vote in respect of the Merger. Any decision in
respect of, or other response to, the Merger by Shaftesbury Shareholders (including any vote in
respect of the Shaftesbury Resolutions to approve the Merger, the Scheme or related matters) should
be made only on the basis of the information contained in the Scheme Document (or, in the event
that the Merger is to be implemented by means of a Takeover Offer, the Offer Document).
This Announcement has been prepared for the purpose of complying with English law and the Code
and the information disclosed may not be the same as that which would have been disclosed if this
Announcement had been prepared in accordance with the laws and regulations of jurisdictions
outside the United Kingdom.
This Announcement does not constitute a prospectus or a prospectus equivalent document.
This Announcement contains inside information for the purposes of Article 7 of the Market Abuse
Regulation in respect of each of Capco and Shaftesbury. The person responsible for arranging for
the release of this Announcement on behalf of Capco is Ruth Pavey, Company Secretary, and on
behalf of Shaftesbury is Desna Martin, Company Secretary.
The Merger will be subject to the applicable requirements of the Code, the Panel, the London Stock
Exchange and the FCA.
Shaftesbury will prepare the Scheme Document to be distributed to the Shaftesbury Shareholders.
Capco will prepare the Circular to be distributed to Capco Shareholders and will also publish the
Prospectus containing information about the New Capco Shares and the Combined Group. Capco
and Shaftesbury urge Shaftesbury Shareholders to read the Scheme Document and the Prospectus
carefully when they become available because they will contain important information in relation to
the Merger, the New Capco Shares and the Combined Group. Capco urges Capco Shareholders to
read the Circular and the Prospectus carefully when they become available because they will contain
important information in relation to the Merger and the New Capco Shares.
Any vote in respect of the resolutions to be proposed at the Court Meeting, the Shaftesbury General
Meeting or the Capco General Meeting to approve the Merger, the Scheme or related matters, should
be made only on the basis of the information contained in the Scheme Document in the case of
Shaftesbury Shareholders, and, in the case of Capco Shareholders, the Circular.
Information Relating to Shaftesbury Shareholders
Please be aware that addresses, electronic addresses and certain other information provided by
Shaftesbury Shareholders, persons with information rights and other relevant persons in connection
with the receipt of communications from Shaftesbury may be provided to Capco during the offer
period as required under Section 4 of Appendix 4 to the Code to comply with Rule 2.11(c) of the Code.
Important Notices Relating to the Financial Advisers and Corporate Brokers
Rothschild & Co, which is authorised and regulated by the FCA in the United Kingdom, is acting
exclusively for Capco and no one else in connection with the Merger and will not be responsible to
any other person for providing the protections afforded to its clients or for providing advice in
connection with Merger, the contents of this Announcement or any other matter referred to herein.
Neither Rothschild & Co nor any of its affiliates (nor their respective directors, officers, employees or
agents) owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect,
whether in contract, in tort, under statute or otherwise) to any person who is not a client of Rothschild
& Co in connection with this Announcement, any statement contained herein, the Merger or
otherwise. No representation or warranty, express or implied, is made by Rothschild & Co as to the
contents of this Announcement.
UBS AG London Branch ("UBS" or "UBS Investment Bank") is authorised and regulated by the
Financial Market Supervisory Authority in Switzerland. It is authorised by the Prudential Regulation
Authority (the "PRA") and subject to regulation by the FCA and limited regulation by the PRA in the
United Kingdom. UBS is acting as financial adviser and corporate broker to Capco and no one else
in connection with the Merger. In connection with such matters, UBS, its affiliates, and its or their
respective directors, officers, employees and agents will not regard any other person as its client,
nor will it be responsible to any other person for providing the protections afforded to its clients or for
providing advice in relation to the contents of this Announcement or any other matter referred to herein.
Jefferies International Limited ("Jefferies"), which is authorised and regulated by the FCA in the
United Kingdom, is acting exclusively for Capco and no one else in connection with the Merger and
will not be responsible to anyone other than Capco for providing the protections afforded to clients
of Jefferies nor for providing advice in relation to the Merger or any other matters referred to in this
Announcement. Neither Jefferies nor any of its affiliates (nor their respective directors, officers,
employees or agents) owes or accepts any duty, liability or responsibility whatsoever (whether direct
or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client
of Jefferies in connection with this Announcement, any statement contained herein, the Merger or otherwise.
Peel Hunt LLP ("Peel Hunt"), which is authorised and regulated by the FCA in the United Kingdom,
is acting exclusively for Capco and no one else in connection with the Merger and will not be
responsible to anyone other than Capco for providing the protections afforded to clients of Peel Hunt
or for providing advice in connection with the subject matter of this Announcement.
Barclays Bank PLC, acting through its Investment Bank ("Barclays"), which is authorised by the
Prudential Regulation Authority ("PRA") and regulated in the United Kingdom by the Financial
Conduct Authority ("FCA") and the PRA, is acting exclusively for Capco and no one else in connection
with the Merger and will not be responsible to anyone other than Capco for providing the protections
afforded to clients of Barclays nor for providing advice in relation to the Merger or any other matter
referred to in this announcement.
In accordance with the Code, normal United Kingdom market practice and Rule 14e-5(b) of the US
Securities Exchange Act of 1934, Barclays and its affiliates will continue to act as exempt principal
trader in Shaftesbury and Capco securities on the London Stock Exchange. These purchases and
activities by exempt principal traders which are required to be made public in the United Kingdom
pursuant to the Code will be reported to a Regulatory Information Service and will be available on
the London Stock Exchange website at www.londonstockexchange.com. This information will also
be publicly disclosed in the United States to the extent that such information is made public in the
United Kingdom.
HSBC Bank plc ("HSBC"), which is authorised by the Prudential Regulation Authority and regulated
in the United Kingdom by the Financial Conduct Authority and the Prudential Regulation Authority,
is acting as financial adviser to Capco and no one else in connection with the matters described in
this announcement and will not be responsible to anyone other than Capco for providing the
protections afforded to clients of HSBC, or for providing advice in connection with the matters referred
to herein. Neither HSBC nor any of its group undertakings or affiliates owes or accepts any duty,
liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under
statute or otherwise) to any person who is not a client of HSBC in connection with this announcement
or any matter referred to herein.
BNP Paribas SA is authorised and regulated by the European Central Bank and the Autorite de
Controle Prudentiel et de Resolution. In the UK, BNP Paribas London Branch ("BNP Paribas" or
"BNP Paribas London Branch") is deemed authorised by the PRA with deemed variation of
permission, and is subject to regulation by the FCA and limited regulation by the PRA. Details of the
Temporary Permissions Regime, which allows EEA based firms to operate in the UK for a limited
period while seeking full authorisation, are available on the FCA's website. BNP Paribas London
Branch is registered in the UK under number FC13447 and UK establishment number BR000170,
and its UK establishment office address is 10 Harewood Avenue, London NW1 6AA. BNP Paribas
is acting as financial adviser exclusively for Capco and no one else in connection with the matters
described in this announcement and will not be responsible to anyone other than Capco for providing
the protections afforded to clients of BNP Paribas or for providing advice in relation to the matters
described in this announcement or any transaction or arrangement referred to herein.
Java Capital Trustees and Sponsors Proprietary Limited ("Java Capital"), which is regulated by the
JSE, which is licensed as a securities exchange and is regulated by the Financial Sector Conduct
Authority and the Prudential Authority of South Africa, is acting as JSE sponsor exclusively for Capco
and no one else in connection with the Merger and will not be responsible to anyone other than
Capco for providing the protections afforded to the clients of Java Capital, nor for providing advice in
relation to the Merger from a JSE perspective or any other matter or arrangement referred to in this Announcement.
Evercore Partners International LLP ("Evercore"), which is authorised and regulated by the Financial
Conduct Authority in the UK, is acting exclusively as financial adviser to Shaftesbury and no one else
in connection with the matters described in this Announcement and will not be responsible to anyone
other than Shaftesbury for providing the protections afforded to clients of Evercore nor for providing
advice in connection with the matters referred to herein. Neither Evercore nor any of its subsidiaries,
branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct
or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client
of Evercore in connection with this Announcement, any statement contained herein, any offer or
otherwise. Apart from the responsibilities and liabilities, if any, which may be imposed on Evercore
by FSMA, or the regulatory regime established thereunder, or under the regulatory regime of any
jurisdiction where exclusion of liability under the relevant regulatory regime would be illegal, void or
unenforceable, neither Evercore nor any of its affiliates accepts any responsibility or liability
whatsoever for the contents of this Announcement, and no representation, express or implied, is
made by it, or purported to be made on its behalf, in relation to the contents of this Announcement,
including its accuracy, completeness or verification of any other statement made or purported to be
made by it, or on its behalf, in connection with Shaftesbury or the matters described in this document.
To the fullest extent permitted by applicable law, Evercore and its affiliates accordingly disclaim all
and any responsibility or liability whether arising in tort, contract or otherwise (save as referred to
above) which they might otherwise have in respect of this Announcement or any statement contained herein.
Blackdown Partners Limited ("Blackdown"), which is authorised and regulated by the Financial
Conduct Authority in the UK, is acting exclusively as financial adviser to Shaftesbury and no one else
in connection with the matters described in this Announcement and will not be responsible to anyone
other than Shaftesbury for providing the protections afforded to clients of Blackdown nor for providing
advice in connection with the matters referred to herein. Neither Blackdown nor any of its
subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever
(whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who
is not a client of Blackdown in connection with this Announcement, any statement contained herein,
any offer or otherwise. Apart from the responsibilities and liabilities, if any, which may be imposed on
Blackdown by FSMA, or the regulatory regime established thereunder, or under the regulatory
regime of any jurisdiction where exclusion of liability under the relevant regulatory regime would be
illegal, void or unenforceable, neither Blackdown nor any of its affiliates accepts any responsibility or
liability whatsoever for the contents of this Announcement, and no representation, express or implied,
is made by it, or purported to be made on its behalf, in relation to the contents of this Announcement,
including its accuracy, completeness or verification of any other statement made or purported to be
made by it, or on its behalf, in connection with Shaftesbury or the matters described in this document.
To the fullest extent permitted by applicable law, Blackdown and its affiliates accordingly disclaim all
and any responsibility or liability whether arising in tort, contract or otherwise (save as referred to
above) which they might otherwise have in respect of this Announcement or any statement contained herein.
Liberum Capital Limited ("Liberum"), which is authorised and regulated in the United Kingdom by the
FCA, is acting exclusively for Shaftesbury and no one else in connection with the matters described
in this Announcement. Liberum will not regard any other person (whether or not a recipient of this
Announcement) as its client in relation to the matters described in this Announcement and will not
be responsible to anyone other than Shaftesbury for providing the protections afforded to its clients
or for providing any advice in relation to matters or arrangements referred to herein.
J.P. Morgan Securities PLC, which conducts its UK investment banking business as J.P. Morgan
Cazenove ("J.P. Morgan Cazenove"), which is authorised and regulated in the United Kingdom by
the FCA, is acting exclusively for Shaftesbury and no one else in connection with the matters
described in this Announcement. J.P. Morgan Cazenove will not regard any other person (whether
or not a recipient of this Announcement) as its client in relation to the matters described in this
Announcement and will not be responsible to anyone other than Shaftesbury for providing the
protections afforded to its clients or for providing any advice in relation to matters or arrangements
referred to herein. J.P. Morgan Cazenove has given and has not withdrawn its consent to the
publication of this Announcement with the inclusion herein of the references to its names in the form
and context in which it appears.
Overseas jurisdictions
The availability of the New Capco Shares in, and the release, publication or distribution of this
Announcement in or into, jurisdictions other than the United Kingdom may be restricted by law and
therefore persons into whose possession this Announcement comes who are subject to the laws of
any jurisdiction other than the United Kingdom should inform themselves about, and observe, any
applicable legal or regulatory requirements or restrictions. In particular, the ability of persons who are
not resident in the United Kingdom to vote their Shaftesbury Shares with respect to the Scheme at
the Court Meeting, or to execute and deliver forms of proxy appointing another to vote at the Court
Meeting on their behalf, may be affected by the laws of the relevant jurisdictions in which they are
located. Any failure to comply with the applicable restrictions may constitute a violation of the
securities laws of any such jurisdiction. To the fullest extent permitted by applicable law the
companies and persons involved in the Merger disclaim any responsibility or liability for the violation
of such restrictions by any person. Shaftesbury Shareholders who are in any doubt regarding such
matters should consult an appropriate independent adviser in the relevant jurisdiction without delay.
This Announcement has been prepared for the purposes of complying with English law, the Code,
the Market Abuse Regulation and the Disclosure Guidance and Transparency Rules and the
information disclosed may not be the same as that which would have been disclosed if this
Announcement had been prepared in accordance with the laws of jurisdictions outside the United Kingdom.
Unless otherwise determined by Capco or required by the Code, and permitted by applicable law
and regulation, the New Capco Shares to be issued pursuant to the Merger to Shaftesbury
Shareholders will not be made available, directly or indirectly, in, into or from a Restricted Jurisdiction
where to do so would violate the laws in that jurisdiction and no person may vote in favour of the
Merger by any such use, means, instrumentality or form (including, without limitation, facsimile, email
or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or any
facility of a national, state or other securities exchange of, any Restricted Jurisdiction or any other
jurisdiction if to do so would constitute a violation of the laws of that jurisdiction. Accordingly, copies
of this Announcement and any formal documentation relating to the Merger are not being, and must
not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any
Restricted Jurisdiction or any other jurisdiction where to do so would constitute a violation of the laws
of that jurisdiction, and persons receiving such documents (including custodians, nominees and
trustees) must not mail or otherwise forward, distribute or send such documents in or into or from
any Restricted Jurisdiction. Doing so may render invalid any related purported vote in respect of the
Merger. If the Merger is implemented by way of a Takeover Offer (unless otherwise permitted by
applicable law and regulation), the Takeover Offer may not be made directly or indirectly, in or into,
or by the use of mails or any means or instrumentality (including, but not limited to, facsimile, e-mail
or other electronic transmission or telephone) of interstate or foreign commerce of, or of any facility
of a national, state or other securities exchange of any Restricted Jurisdiction and the Merger will not
be capable of acceptance by any such use, means, instrumentality or facilities or from within any
Restricted Jurisdiction.
The availability of New Capco Shares pursuant to the Merger to Shaftesbury Shareholders who are
not resident in the United Kingdom or the ability of those persons to hold such shares may be affected
by the laws or regulatory requirements of the relevant jurisdictions in which they are resident. Persons
who are not resident in the United Kingdom should inform themselves of, and observe, any applicable
legal or regulatory requirements. Shaftesbury Shareholders who are in doubt about such matters
should consult an appropriate independent professional adviser in the relevant jurisdiction without delay.
Further details in relation to Shaftesbury Shareholders in overseas jurisdictions will be contained in
the Scheme Document.
Additional Information for US Investors
Shareholders in the United States should note that the Merger relates to the shares of an English
company and is proposed to be made by means of a scheme of arrangement provided for under,
and governed by, the law of England and Wales. Neither the proxy solicitation nor the tender offer
rules under the US Exchange Act will apply to the Scheme. Moreover the Scheme will be subject to
the disclosure requirements and practices applicable in the UK to schemes of arrangement, which
differ from the disclosure requirements of the US proxy solicitation rules and tender offer rules.
However, if Capco were to elect to implement the Merger by means of a Takeover Offer, such
Takeover Offer would be made in compliance with all applicable laws and regulations, including
Section 14(e) of the US Exchange Act and Regulation 14E thereunder. Any such Takeover Offer
would be made in the United States by Capco and no one else. In addition to any such Takeover
Offer, Capco, certain affiliated companies and the nominees or brokers (acting as agents) may make
certain purchases of, or arrangements to purchase, shares in Shaftesbury outside any such
Takeover Offer during the period in which such Takeover Offer would remain open for acceptance.
If such purchases or arrangements to purchase were to be made they would be made outside the
United States and would comply with applicable law, including the US Exchange Act. Any information
about any such purchases would be disclosed as required in the UK and, if relevant, would be
reported to a Regulatory Information Service and would be available on the London Stock Exchange
website at https://www.londonstockexchange.com/.
Financial information included in this Announcement, the Scheme Document, the Prospectus and
the Circular has been or will be prepared in accordance with accounting standards under UK-adopted
international accounting standards and in accordance with International Financial Reporting
Standards ("IFRS") and thus may not be comparable to financial information of US companies or
companies whose financial statements are prepared in accordance with generally accepted
accounting principles in the United States. If Capco were to implement the Merger by way of a
Takeover Offer in accordance with the terms of the Co-operation Agreement or otherwise in a manner
that is not exempt from the registration requirements of the US Securities Act (as defined below) and
were to extend the offer into the United States, then any such offer would be made in compliance
with applicable United States securities laws and regulations.
Capco and Shaftesbury are each organised under the laws of England and Wales. All of the officers
and directors of Capco and Shaftesbury are residents of countries other than the United States. It
may therefore be difficult for US investors to enforce their rights and any claim arising out of US
securities law. It may not be possible to sue Capco and Shaftesbury (or their officers and directors)
in a non-US court for violations of US securities laws. It may be difficult to compel Capco, Shaftesbury
and their respective affiliates to subject themselves to the jurisdiction and judgment of a US court.
The receipt of New Capco Shares by a US holder of Shaftesbury Shares as consideration for the
transfer of its Scheme Shares pursuant to the Scheme may be a taxable transaction for United States
federal income tax purposes and under applicable United States state and local income, franchise
or transfer, as well as foreign and other, tax laws. Each Shaftesbury Shareholder (including US
holders) is urged to consult its independent professional adviser immediately regarding the tax
consequences of the Merger applicable to them.
This Announcement does not constitute or form a part of any offer to sell or issue, or any solicitation
of any offer to purchase, subscribe for or otherwise acquire, any securities in the United States.
Neither the US Securities and Exchange Commission nor any securities commission of any state or
other jurisdiction of the United States has approved the Merger, passed upon the fairness of the
Merger, or passed upon the adequacy or accuracy of this document. Any representation to the
contrary is a criminal offence in the United States.
Notes regarding New Capco Shares
The New Capco Shares to be issued pursuant to the Scheme have not been and will not be registered
under the US Securities Act or under the relevant securities laws of any state or other jurisdiction of
the United States or the relevant securities laws of Japan and the relevant clearances have not been,
and will not be, obtained from the securities commission of any province of Canada. No prospectus
in relation to the New Capco Shares has been, or will be, lodged with, or registered by, the Australian
Securities and Investments Commission. Accordingly, the New Capco Shares are not being, and
may not be, offered, sold, resold, delivered or distributed, directly or indirectly into or within the United
States, Canada, Australia or Japan or any other jurisdiction if to do so would constitute a violation of
relevant laws of, or require registration thereof in, such jurisdiction (except pursuant to an exemption,
if available, from any applicable registration requirements and otherwise in compliance with all
applicable laws).
The New Capco Shares have not been and will not be registered under the US Securities Act, or
under the securities laws of any state or other jurisdiction of the United States, and may not be offered
or sold in the United States absent registration under the US Securities Act, or pursuant to an
exemption from, or in a transaction not subject to, such registration requirements and in compliance
with any applicable securities laws of any state or other jurisdiction of the United States. It is expected
that the New Capco Shares will be issued in reliance upon the exemption from the registration
requirements of the US Securities Act provided by Section 3(a)(10) thereof. For the purpose of
qualifying for the exemption provided by Section 3(a)(10) of the US Securities Act, Capco will advise
the Court that its sanctioning of the Scheme will be relied on by Capco for purposes of a Section
3(a)(10) exemption following a hearing on the fairness of the Scheme to Shaftesbury Shareholders.
Rule 2.9 information
In accordance with Rule 2.9 of the Code, Capco confirms that, as at close of business on the Last
Practicable Date, it has 851,274,235 ordinary shares of GBP0.25 each in issue and admitted to trading
on the London Stock Exchange and the JSE. The ISIN for the shares is GB00B62G9D36 and the
LEI for the shares is 549300TTXXZ1SHUI0D54. Capco currently holds no ordinary shares in treasury.
In accordance with Rule 2.9 of the Code, Shaftesbury confirms that, as at close of business on the
Last Practicable Date, it has 384,214,860 ordinary shares of GBP0.25 each in issue and admitted to
trading on the London Stock Exchange. The ISIN for the shares is GB0007990962 and the LEI for
the shares is 213800N7LHKFNTDKAT98. Shaftesbury currently holds no ordinary shares in treasury.
Disclosure requirements
Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant
securities of an offeree company or of any securities exchange offeror (being any offeror other than
an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash)
must make an Opening Position Disclosure following the commencement of the offer period and, if
later, following the Announcement in which any securities exchange offeror is first identified. An
Opening Position Disclosure must contain details of the person's interests and short positions in, and
rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities
exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must
be made by no later than 3.30 p.m. (London time) on the 10th Business Day following the
commencement of the offer period and, if appropriate, by no later than 3.30 p.m. (London time) on
the 10th Business Day following the announcement in which any securities exchange offeror is first
identified. Relevant persons who deal in the relevant securities of the offeree company or of a
securities exchange offeror prior to the deadline for making an Opening Position Disclosure must
instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class
of relevant securities of the offeree company or of any securities exchange offeror must make a
Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any
securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and
of the person's interests and short positions in, and rights to subscribe for, any relevant securities of
each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that
these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to
whom Rule 8.3(b) applies must be made by no later than 3.30 p.m. (London time) on the Business
Day following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or understanding, whether formal or
informal, to acquire or control an interest in relevant securities of an offeree company or a securities
exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and by any offeror and
Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons
acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant securities Opening Position
Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the
Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of
relevant securities in issue, when the offer period commenced and when any offeror was first
identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you
are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.
Cautionary note regarding forward-looking statements
This Announcement (including information incorporated by reference in this Announcement), oral
statements made regarding the Merger and other information published by Capco and Shaftesbury
contain statements which are, or may be deemed to be, "forward-looking statements". These forward
looking statements can be identified by the fact that they do not relate only to historical or current
facts. Forward-looking statements are prospective in nature and are not based on historical facts,
but rather on current expectations and projections of the management of Capco and Shaftesbury
about future events, and are therefore subject to risks and uncertainties which could cause actual
results to differ materially from the future results expressed or implied by the forward-looking
statements. The forward-looking statements contained in this Announcement may include
statements relating to the expected effects of the Merger on Capco and Shaftesbury, the expected
timing of the Merger and other statements other than historical facts. Often, but not always, forward-
looking statements can be identified by the use of forward-looking words such as "plans", "expects"
or "does not expect", "is expected", "is subject to", "budget", "scheduled", "estimates", "targets",
"hopes", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of
such words and phrases of similar meaning or statements that certain actions, events or results
"may", "could", "should", "would", "might" or "will" be taken, occur or be achieved. These statements
are based on assumptions and assessments made by Shaftesbury, and/or Capco in light of their
experience and their perception of historical trends, current conditions, future developments and
other factors they believe appropriate. Although Capco and Shaftesbury believe that the expectations
reflected in such forward-looking statements are reasonable, Capco and Shaftesbury can give no
assurance that such expectations will prove to be correct. By their nature, forward-looking statements
involve risk and uncertainty because they relate to events and depend on circumstances that will
occur in the future. There are a number of factors which could cause actual results and developments
to differ materially from those expressed or implied by such forward looking statements, including,
among others the enactment of legislation or regulation that may impose costs or restrict activities;
the re-negotiation of contracts or licences; fluctuations in demand and pricing in the commercial
property industry; changes in government policy and taxations; changes in political conditions,
economies and markets in which Capco and Shaftesbury operate; changes in the markets from which
Capco and Shaftesbury raise finance; the impact of legal or other proceedings; changes in
accounting practices and interpretation of accounting standards under IFRS; changes in interest and
exchange rates; industrial disputes; war and terrorism. These forward-looking statements speak only
as at the date of this document.
Other unknown or unpredictable factors could cause actual results to differ materially from those in
the forward-looking statements. Such forward-looking statements should therefore be construed in
the light of such factors. Neither Capco nor Shaftesbury, nor any of their respective associates or
directors, officers or advisers, provides any representation, assurance or guarantee that the
occurrence of the events expressed or implied in any forward-looking statements in this
Announcement will actually occur. You are cautioned not to place undue reliance on these forward-
looking statements. Other than in accordance with their legal or regulatory obligations (including
under the Listing Rules and the Disclosure Guidance and Transparency Rules of the FCA), neither
Capco or Shaftesbury is under any obligation, and Capco and Shaftesbury expressly disclaim any
intention or obligation, to update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise.
Rounding
Certain figures included in this Announcement have been subjected to rounding adjustments.
Accordingly, figures shown for the same category presented in different tables may vary slightly and
figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that
precede them.
No Profit Forecasts or Estimates
No statement in this Announcement (including any statement of estimated synergies) is intended as
a profit forecast or estimate for any period and no statement in this Announcement should be
interpreted to mean that earnings or earnings per share or dividend per share for Capco, Shaftesbury
or the Combined Group, as appropriate, for the current or future financial years would necessarily
match or exceed the historical published earnings or earnings per share or dividend per share for
Capco, Shaftesbury or the Combined Group as appropriate.
Quantified Financial Benefits Statement
The statements in the Quantified Financial Benefits Statement relate to future actions and
circumstances which, by their nature, involve risks, uncertainties and contingencies and which may
in some cases be subject to consultation with employees or their representatives. The synergies and
cost savings referred to may not be achieved, or may be achieved later or sooner than estimated, or
those achieved could be materially different from those estimated. For the purposes of Rule 28 of
the Code, the Quantified Financial Benefits Statement contained in this Announcement is the
responsibility of Capco, the Capco Directors and the Proposed Directors, and not the Shaftesbury Directors.
Publication of this Announcement
A copy of this Announcement will be available subject to certain restrictions relating to persons
resident in Restricted Jurisdictions on Capco's website at
https://www.capitalandcounties.com/investors/investor-information/possible-merger-shaftesbury-plc
and Shaftesbury's website at https://www.shaftesbury.co.uk/en/investor-relations/possible-all-share-
merger-with-capco/disclaimer.html by no later than 12 noon (London time) on 17 June 2022 (being
the first Business Day following the day of this Announcement).
For the avoidance of doubt, the contents of Capco's website and Shaftesbury's website are not
incorporated into and do not form part of this Announcement.
Requesting hard copy documents
In accordance with Rule 30.3 of the Code, Capco Shareholders may request a hard copy of this
Announcement by contacting Capco during business hours on 020 3214 9170 (or, in the case of
shareholders resident in South Africa, Java Capital during business hours on +27 081 011 5571). If
you have received this Announcement in electronic form, copies of this Announcement and any
document or information incorporated by reference into this document will not be provided unless
such a request is made. Capco Shareholders may also request that all future documents,
announcements and information to be sent to them in relation to the Merger should be in hard copy form.
In accordance with Rule 30.3 of the Code, Shaftesbury Shareholders may request a hard copy of
this Announcement by contacting Desna Martin (Company Secretary) at
companysecretary@shaftesbury.co.uk or by calling +44 (0)20 7333 8118. If you have received this
Announcement in electronic form, copies of this Announcement and any document or information
incorporated by reference into this document will not be provided unless such a request is made.
Shaftesbury Shareholders may also request that all future documents, announcements and
information to be sent to them in relation to the Merger should be in hard copy form.
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 FSMA if
you are resident in the United Kingdom or, if not, from another appropriately authorised independent
financial adviser.
APPENDIX 1
CONDITIONS AND CERTAIN FURTHER TERMS OF THE MERGER
Part 1: Conditions of the Merger and the Scheme
Scheme approval
1. The Merger will be conditional upon: the Scheme becoming unconditional and becoming
Effective, subject to the provisions of the Code, on or before 11.59 p.m. on the Long Stop
Date or such later date (if any) as Capco and Shaftesbury may agree and (if required) the
Court may allow.
2. The Scheme will be conditional on:
(a)
(i) its approval by a majority in number of the Scheme Shareholders (or the
relevant class or classes thereof, if applicable, unless all members of any
such class have consented to be bound by the Scheme) on the register of
members at the Voting Record Time present and voting, either in person
or by proxy, at the Court Meeting (or at any separate class meeting which
may be required by the Court), or at any adjournment thereof, representing
not less than 75% in value of the Scheme Shares (or the relevant class or
classes thereof, if applicable) voted by such Scheme Shareholders; and
(ii) the Court Meeting and any separate class meeting which may be required
by the Court or any adjournment of any such meeting being held on or
before the 22nd day after the expected date of the Court Meeting to be set
out in the Scheme Document in due course (or such later date (if any) as
Capco and Shaftesbury may, with the consent of the Panel, agree and, if
required, the Court may allow);
(b)
(i) all resolutions required to approve and implement the Scheme, including a
special resolution to amend the articles of association of Shaftesbury to
provide that (among other things), if the Merger becomes Effective, any
Shaftesbury Shares issued to any person on or after the Scheme Record
Time (including in satisfaction of an option exercised under one of the
Shaftesbury Share Plans) will be automatically transferred to Capco in
consideration for the issue of Capco Shares in accordance with the
Exchange Ratio as if those Shaftesbury Shares had been Scheme Shares,
being duly passed by the requisite majority or majorities of the Shaftesbury
Shareholders at the Shaftesbury General Meeting, or at any adjournment
thereof; and
(ii) the Shaftesbury General Meeting being held on or before the 22nd day
after the expected date of such meetings to be set out in the Scheme
Document in due course (or such later date (if any) as Capco and
Shaftesbury may, with the consent of the Panel, agree and the Court may
approve, if such approval is required);
(c)
(i) the sanction of the Scheme by the Court (with or without modifications, on
terms reasonably acceptable to Capco and Shaftesbury) and an office
copy of the Court Order being delivered for registration to the Registrar of
Companies; and
(ii) the Scheme Court Hearing being held on or before the 22nd day after the
expected date to be set out in the Scheme Document in due course (or
such later date (if any) as Capco and Shaftesbury may, with the consent
of the Panel, agree and the Court may approve, if such approval is
required);
Additional Conditions to the Scheme
3. Subject to the requirements of the Panel, the Merger will also be conditional on the following
Conditions having been satisfied or, where applicable, waived and accordingly the necessary
actions to make the Scheme effective will not be taken unless such Conditions (as amended
if relevant) have been so satisfied or, where applicable, waived:
Admission of New Capco Shares
(a) (i) the FCA having acknowledged to Capco or its agent (and such
acknowledgement not having been withdrawn) that the application for the
admission of the New Capco Shares to the Official List with a premium
listing has been approved and (after satisfaction of any conditions to which
such approval is expressed to be subject (for the purpose of this
paragraph, "listing conditions")) will become effective as soon as a dealing
notice has been issued by the FCA and any listing conditions having been
satisfied; and
(ii) the London Stock Exchange having acknowledged to Capco or its agent
(and such acknowledgement not having been withdrawn) that the New
Capco Shares will be admitted to trading on the London Stock Exchange's
Main Market for listed securities;
(b) Capco or its agent having received confirmation from the JSE (and such
confirmation not having been withdrawn) that: (i) the application for the secondary
listing of the New Capco Shares on the Main Board of the JSE has been approved,
subject to the satisfaction of any conditions customary to transactions of this nature
to which such approval is expressed to be subject (for the purpose of this
paragraph, "JSE listing conditions"); and (ii) that the New Capco Shares will,
subject to the satisfaction of the JSE listing conditions, be admitted to trading on
the Main Board of the JSE on or shortly after the Effective Date;
Capco Shareholder approval
(c) the passing at the Capco General Meeting (or at any adjournment thereof) of the
Capco Resolutions by the requisite majority of Capco Shareholders (which, in
respect of the Related Party Transaction, shall exclude Norges Bank), such
resolutions to include (but not being limited to) resolutions to authorise the
allotment of New Capco Shares pursuant to the Merger, approve the Merger as a
Class 1 Transaction under the Listing Rules and approve the Related Party
Transaction (such resolutions to be set out in full in the Circular in due course);
CMA Phase 1 clearance
(d) The CMA issuing a decision that it is not the CMA's intention to make a Phase 2
CMA Reference, with such a decision being issued on an unconditional basis or
else conditional on the CMA's acceptance of undertakings in lieu under Section 73
EA2002 which are reasonably satisfactory to Capco and Shaftesbury (or the
applicable time period for the CMA to issue such a decision having expired without
it having done so and without it having made a Phase 2 CMA Reference);
Regulatory clearances and third party clearances
(e) no Third Party having decided to take, instituted, implemented or threatened any
action, proceedings, suit, investigation, enquiry or reference, or made, proposed or
enacted any statute, regulation, order or decision or taken any other steps (and in
each case, not having withdrawn the same) (in each case which would be material
in the context of the Wider Shaftesbury Group or the Wider Capco Group in each
case taken as a whole) and there not continuing to be outstanding any statute,
regulation, order or decision, which would or might reasonably be expected to:
(i) make the Merger or the acquisition of the Shaftesbury Shares, or control
of Shaftesbury by Capco void, illegal or unenforceable under the laws of
any relevant jurisdiction or otherwise restrict, restrain, prohibit or delay to
a material extent or otherwise materially interfere with the implementation
thereof, or impose material additional conditions or obligations with respect
thereto, or require material amendment thereof or otherwise challenge or
interfere therewith the Merger or the acquisition of any of the Shaftesbury
Shares, or control of Shaftesbury by Capco;
(ii) require or prevent the divestiture by any member of the Wider Shaftesbury
Group or by any member of the Wider Capco Group of all or any material
portion of their respective businesses, assets or property or impose any
limitation on the ability of any of them to conduct their respective
businesses or own any of their assets or property (in any case to an extent
which is material in the context of the Wider Shaftesbury Group or the
Wider Capco Group, as the case may be, taken as a whole);
(iii) impose any material limitation on or result in a material delay in the ability
of any member of the Wider Shaftesbury Group or the Wider Capco Group
to acquire or to hold or to exercise effectively any rights of ownership of
shares or loans or securities convertible into shares in any member of the
Wider Shaftesbury Group or of the Wider Capco Group held or owned by
it or to exercise management control over any member of the Wider
Shaftesbury Group or of the Wider Capco Group, in each case to an extent
which is material in the context of the Wider Shaftesbury Group or the
Wider Capco Group, as the case may be, taken as a whole;
(iv) except pursuant to Chapter 3 of Part 28 of the Companies Act, require any
member of the Wider Capco Group or the Wider Shaftesbury Group to
acquire or offer to acquire any shares or other securities in any member of
the Wider Shaftesbury Group (other than in connection with the
implementation of the Merger); or
(v) otherwise materially and adversely affect the assets, business, profits or
prospects of any member of the Wider Capco Group or of any member of
the Wider Shaftesbury Group (in any case to an extent which is material in
the context of the Wider Shaftesbury Group or the Wider Capco Group, as
the case may be, taken as a whole);
and all applicable waiting and other time periods (including extensions thereof)
during which any such antitrust regulator or Third Party could decide to take,
institute, implement or threaten any such action, proceeding, suit, investigation,
enquiry or reference having expired, lapsed or been terminated;
Notifications, waiting periods and Authorisations
(f) all notifications, filings or applications which are reasonably considered necessary
by both Capco and Shaftesbury having been made, all applicable waiting periods
(including any extensions thereof) under any applicable legislation or regulations
of any jurisdiction having expired, lapsed or been terminated, in each case in
respect of the Merger and the acquisition of any Shaftesbury Shares, or of control
of Shaftesbury, by Capco, and all Authorisations reasonably considered necessary
by both Capco and Shaftesbury in any jurisdiction for, or in respect of, the Merger
and the proposed acquisition of any Shaftesbury Shares, or of control of
Shaftesbury, by Capco and to carry on the business of any member of the Wider
Capco Group or of the Wider Shaftesbury Group having been obtained, in terms
and in a form satisfactory to Capco and Shaftesbury, from all appropriate Third
Parties and from any persons or bodies with whom any member of the Wider
Capco Group or the Wider Shaftesbury Group has entered into contractual
arrangements and all such Authorisations remaining in full force and effect at the
time at which the Merger becomes Effective and Capco having no knowledge of
an intention or proposal to revoke, suspend or modify or not to renew any of the
same and all necessary statutory or regulatory obligations in any jurisdiction having
been complied with where, in each case absence of such Authorisation would have
a material adverse effect on the Wider Shaftesbury Group or the Wider Capco
Group in each case taken as a whole;
Certain matters arising as a result of any arrangement, agreement, etc.
(g) except as Disclosed, there being no provision of any arrangement, agreement,
licence, permit or other instrument to which any member of the Wider Shaftesbury
Group is a party or by or to which any such member or any of their assets is or may
be bound, entitled or be subject to and which, in consequence of the Merger or the
acquisition or proposed acquisition of any Shaftesbury Shares, or control of
Shaftesbury, by Capco or otherwise, would or might reasonably be expected to
result in, to an extent in any such case which is material in the context of the Wider
Shaftesbury Group taken as a whole:
(i) any monies borrowed by, or other indebtedness actual or contingent of,
any such member of the Wider Shaftesbury Group being or becoming
repayable or being capable of being declared immediately or prior to its or
their stated maturity or the ability of any such member to borrow monies or
incur any indebtedness being inhibited or becoming capable of being
withdrawn;
(ii) the creation, save in the ordinary course of business, or enforcement of
any mortgage, charge or other security interest over the whole or any part
of the business, property or assets of any such member or any such
security (whenever arising or having arisen) being enforced or becoming
enforceable;
(iii) any such arrangement, agreement, licence or instrument being terminated
or adversely modified or any action being taken of an adverse nature or
any obligation or liability arising thereunder;
(iv) any assets of any such member being disposed of or charged, or right
arising under which any such asset could be required to be disposed of or
charged, other than in the ordinary course of business;
(v) the interest or business of any such member of the Wider Shaftesbury
Group in or with any firm or body or person, or any agreements or
arrangements relating to such interest or business, being terminated or
adversely modified or affected;
(vi) any such member ceasing to be able to carry on business under any name
under which it presently does so;
(vii) the creation of liabilities (actual or contingent) by any such member other
than trade creditors or other liabilities incurred in the ordinary course of
business; or
(viii) the financial or trading position of any such member being prejudiced or
adversely affected,
and no event having occurred which, under any provision of any arrangement,
agreement, licence or other instrument to which any member of the Wider
Shaftesbury Group is a party, or to which any such member or any of its assets
may be bound, entitled or subject, could result in any of the events or
circumstances as are referred to in (i) to (viii) of this Condition (g);
Certain events occurring since 31 March 2022
(h) except as Disclosed, no member of the Wider Shaftesbury Group having, since the
31 March 2022:
(i) issued, agreed to issue or authorised the issue of additional shares or
securities of any class, or securities convertible into, or exchangeable for
or rights, warrants or options to subscribe for or acquire, any such shares,
securities or convertible securities (save as between Shaftesbury and
wholly-owned subsidiaries of Shaftesbury and save for options, awards or
Shaftesbury Shares granted (in each case in the ordinary course), and for
any Shaftesbury Shares allotted or issued upon exercise of options or
vesting of awards granted under the Shaftesbury Share Plans, or
redeemed, purchased or reduced any part of its share capital;
(ii) sold or transferred or agreed to sell or transfer any Treasury Shares;
(iii) recommended, declared, paid or made or proposed to recommend,
declare, pay or make any bonus, dividend or other distribution other than
to Shaftesbury or a wholly-owned subsidiary of Shaftesbury (other than the
Permitted Shaftesbury Dividends);
(iv) save for intra-Shaftesbury Group transactions or pursuant to the Merger,
agreed, authorised, proposed or announced its intention to propose any
merger or demerger or acquisition or disposal of assets or shares which
are material in the context of the Wider Shaftesbury Group taken as a
whole (other than in the ordinary course of trading) or to any material
change in its share or loan capital;
(v) save for intra-Shaftesbury Group transactions, issued, authorised or
proposed the issue of any debentures or incurred any indebtedness or
contingent liability which is material in the context of the Wider Shaftesbury
Group taken as a whole;
(vi) save for intra-Shaftesbury Group transactions acquired or disposed of or
transferred, mortgaged or encumbered any asset or any right, title or
interest in any asset (other than in the ordinary course of trading) in a
manner which is material in the context of the Wider Shaftesbury Group
taken as a whole;
(vii) entered into or varied or announced its intention to enter into or vary any
contract, arrangement or commitment (whether in respect of capital
expenditure or otherwise) which is of a long-term or unusual nature or
involves or could involve an obligation of a nature or magnitude, and in
either case which is material in the context of the Wider Shaftesbury Group
taken as a whole;
(viii) (other than in respect of a member of the Wider Shaftesbury Group which
is dormant and was solvent at the time) entered into or proposed or
announced its intention to enter into any reconstruction, amalgamation,
transaction or arrangement (otherwise than in the ordinary course of
business) which is material in the context of the Wider Shaftesbury Group
taken as a whole;
(ix) (other than in respect of a member of the Wider Shaftesbury Group which
is dormant and was solvent at the time) taken any action nor having had
any steps taken or legal proceedings started or threatened against it for its
winding-up or dissolution or for it to enter into any arrangement or
composition for the benefit of its creditors, or for the appointment of a
receiver, administrator, trustee or similar officer of it or any of its assets (or
any analogous proceedings or appointment in any overseas jurisdiction);
(x) been unable, or admitted in writing that it is unable, to pay its debts or
having stopped or suspended (or threatened to stop or suspend) payment
of its debts generally or ceased or threatened to cease carrying on all or a
substantial part of its business;
(xi) entered into or varied or made any offer to enter into or vary the terms of
any service agreement or arrangement with any of the directors of
Shaftesbury otherwise than in the ordinary course of business and
consistent with past practice and Shaftesbury's remuneration policy;
(xii) waived, compromised or settled any claim which is material in the context
of the Wider Shaftesbury Group taken as a whole; or
(xiii) entered into or made an offer (which remains open for acceptance) to enter
into any agreement, arrangement or commitment or passed any resolution
with respect to any of the transactions or events referred to in this Condition (h);
No material adverse change
(i) since 31 March 2022, except as Disclosed:
(i) there having been no adverse change in the business, assets, financial or
trading position or profits or prospects of any member of the Wider
Shaftesbury Group or the Wider Capco Group which, in any such case, is
material in the context of the Wider Shaftesbury Group taken as a whole
or the Wider Capco Group taken as a whole and no circumstances have
arisen which would or might reasonably be expected to result in any such
adverse change;
(ii) no litigation, arbitration proceedings, prosecution or other legal
proceedings having been instituted, announced or threatened by or against
or remaining outstanding against any member of the Wider Shaftesbury
Group or Wider Capco Group and no enquiry or investigation by or
complaint or reference to any Third Party against or in respect of any
member of the Wider Shaftesbury Group or the Wider Capco Group having
been threatened, announced or instituted or remaining outstanding in
respect of any member of the Wider Shaftesbury Group or the Wider
Capco Group which in any such case, has, had or might reasonably be
expected to have an adverse effect that is material in the context of the
Wider Shaftesbury Group taken as a whole or the Wider Capco Group
taken as a whole; and
(iii) no contingent or other liability in respect of any member of the Wider
Shaftesbury Group or the Wider Capco Group having arisen or been
incurred which might reasonably be expected to adversely affect any
member of the Wider Shaftesbury Group or the Wider Capco Group in a
manner which is material in the context of the Wider Shaftesbury Group
taken as a whole or the Wider Capco Group taken as a whole;
No discovery of certain matters regarding information, liabilities and environmental issues
(j) Capco not having discovered that, save as Disclosed:
(i) the financial, business or other information concerning the Wider
Shaftesbury Group which has been disclosed at any time by or on behalf
of any member of the Wider Shaftesbury Group whether publicly (by the
delivery of an announcement to a Regulatory Information Service) or to
Capco or its professional advisers, either contains a material
misrepresentation of fact or omits to state a fact necessary to make the
information contained therein not misleading;
(ii) any member of the Wider Shaftesbury Group is subject to any liability,
contingent or otherwise which is material in the context of the Wider
Shaftesbury Group taken as a whole;
(iii) any past or present member of the Wider Shaftesbury Group has not
complied with all applicable legislation or regulations of any jurisdiction or
any notice or requirement of any Third Party with regard to the storage,
disposal, discharge, spillage, leak or emission of any waste or hazardous
substance or any substance likely to impair the environment or harm
human health which non-compliance would be likely to give rise to any
liability (whether actual or contingent) on the part of any member of the
Wider Shaftesbury Group in each case to an extent which is material in the
context of the Wider Shaftesbury Group taken as a whole;
(iv) there has been a disposal, spillage, emission, discharge or leak of waste
or hazardous substance or any substance likely to impair the environment
or harm human health on, or from, any land or other asset now or
previously owned, occupied or made use of by any past or present member
of the Wider Shaftesbury Group, or in which any such member may now
or previously have had an interest, which would be likely to give rise to any
liability (whether actual or contingent) on the part of any member of the
Wider Shaftesbury Group in each case to an extent which is material in the
context of the Wider Shaftesbury Group taken as a whole; or
(v) there is or is likely to be any obligation or liability (whether actual or
contingent) to make good, repair, reinstate or clean up any property now
or previously owned, occupied or made use of by any past or present
member of the Wider Shaftesbury Group or in which any such member
may now or previously have had an interest under any environmental
legislation or regulation or notice, circular or order of any Third Party in any
jurisdiction in each case to an extent which is material in the context of the
Wider Shaftesbury Group taken as a whole.
Part 2: Waiver and invocation of Conditions
1. The Conditions contained in paragraphs 1 to 3 inclusive above, and the full terms and
conditions which will be set out in the Scheme Document, must be fulfilled, be determined
by Capco to be or remain satisfied or (if capable of waiver) be waived by Capco by 11.59
p.m. on the date immediately preceding the Scheme Court Hearing, failing which the Scheme
shall lapse.
2. To the extent permitted by law and subject to the requirements of the Panel, Capco reserves
the right to waive, in whole or in part, all or any of the Conditions above and to proceed with
the Scheme Court Hearing prior to the fulfilment, satisfaction or waiver of any of the
Conditions above, except for (i) Conditions 1, 2(a)(i), 2(b)(i), 2(c)(i), and 3(a) - 3(c) (inclusive)
which cannot be waived and (ii) Condition 3(d) which can only be waived with the consent of
Capco and Shaftesbury. If any of Conditions 2(a)(ii), 2(b)(ii) or 2(c)(ii) is not satisfied by the
relevant deadline specified in the relevant Condition, Capco shall make an announcement
by 8.00 am on the Business Day following such deadline confirming whether it has invoked
or waived the relevant Condition, waived the relevant deadlines or agreed with Shaftesbury
to extend the deadline in relation to the relevant Condition.
3. Neither Capco nor Shaftesbury shall be under any obligation to waive or treat as fulfilled any
of the Conditions capable of waiver by a date earlier than the latest date specified for the
fulfilment thereof, notwithstanding that the other Conditions of the Merger may at such earlier
date have been waived or fulfilled and that there are at such earlier date no circumstances
indicating that any of such Conditions may not be capable of fulfilment.
4. Under Rule 13.5(a) of the Code, Capco may only invoke a Condition to the Merger so as to
cause the Merger not to proceed, to lapse or to be withdrawn with the consent of the Panel.
The Panel will normally only give its consent if the circumstances which give rise to the right
to invoke the Condition are of material significance to Capco in the context of the Merger.
This will be judged by reference to the facts of each case at the time that the relevant
circumstances arise.
5. Any Condition that is subject to Rule 13.5(a) of the Code may be waived by Capco.
6. The Conditions set out in paragraph 1 (subject to Rule 12) and paragraph 2 of Part 1 of
Appendix 1 (and, if applicable, any offer acceptance condition adopted on the basis specified
in paragraph 1 of Part 3 below if the Merger is implemented by way of a Takeover Offer) are
not subject to Rule 13.5(a) of the Code.
Part 3: Implementation by way of a Takeover Offer
1. Capco reserves the right to elect to implement the Merger by way of a Takeover Offer,
subject to the Panel's consent and the terms of the Co-operation Agreement as an alternative
to the Scheme. In such event, such offer will (unless otherwise determined by Capco and
subject to the consent of the Panel) be implemented on the same terms and conditions, so
far as applicable and subject to the terms of the Co-operation Agreement, as those which
would apply to the Scheme subject to appropriate amendments to reflect the change in
method of effecting the Merger, which may include (without limitation and subject to the
consent of the Panel and subject and without prejudice to the terms of the Co-operation
Agreement for so long as it is continuing) an acceptance condition that is set at 90% (or such
lesser percentage as Capco may decide after, to the extent necessary, consultation with the
Panel, being in any case more than 50%) of the voting rights then exercisable at a general
meeting of Shaftesbury, including, for this purpose, any such voting rights attaching to
Shaftesbury Shares that are unconditionally allotted or issued before the Takeover Offer
becomes or is declared unconditional as to acceptances, and to any Treasury Shares which
are unconditionally transferred or sold by Shaftesbury, before the Takeover Offer becomes
or is declared unconditional as to acceptances, whether pursuant to the exercise of any
outstanding subscription or conversion rights or otherwise. Further, if sufficient acceptances
of such offer are received and/or sufficient Shaftesbury Shares are otherwise acquired, it is
the intention of Capco to apply the provisions of the Companies Act to acquire compulsorily
any outstanding Shaftesbury Shares to which such offer relates.
2. In the event that the Merger is implemented by way of a Takeover Offer, the Shaftesbury
Shares acquired shall be acquired with full title guarantee, fully paid and free from all liens,
equities, charges, encumbrances, options, rights of pre-emption and any other third party
rights and interests of any nature and together with all rights nor or hereafter attaching or
accruing to them, save for the Permitted Shaftesbury Dividends.
Part 4: Certain further terms of the Merger
1. Each of the Conditions shall be regarded as a separate Condition and shall not be limited by
reference to any other Condition.
2. If Capco is required by the Panel to make an offer for Shaftesbury Shares under the
provisions of Rule 9 of the Code, Capco may make such alterations to any of the above
conditions as are necessary to comply with the provisions of that Rule.
3. The Scheme and the Merger and any dispute or claim arising out of, or in connection with,
them (whether contractual or non-contractual in nature) will be governed by English law and
will be subject to the jurisdiction of the Courts of England. The Merger will be made on and
subject to the Conditions and further terms set out in this Appendix 1 and to the full terms
and conditions which will be set out in the Scheme Document. The Merger will be subject to
the applicable requirements of the Code, the Panel, the London Stock Exchange and the FCA.
4. The Shaftesbury Shares will be acquired under the Merger fully paid and free from all liens,
equitable interests, charges, encumbrances, options, rights of pre-emption and any other
third party rights or interests of any nature whatsoever and together with all rights attaching
thereto, including the right to receive and retain all dividends and other distributions and
returns of value declared, paid or made with a record date after the Scheme Record Time,
save for the Permitted Shaftesbury Dividends.
5. The availability of the New Capco Shares to persons not resident in the United Kingdom may
be affected by the laws of the relevant jurisdictions. Persons who are not resident in the
United Kingdom should inform themselves about and observe any applicable requirements.
6. The New Capco Shares to be issued under the Scheme will be issued credited as fully paid
and will rank pari passu with the issued ordinary shares in Capco, including the right to
receive in full all dividends and other distributions, if any, declared, made or paid with a record
date after the Scheme Record Time (other than Permitted Shaftesbury Dividends).
Applications will be made to: (i) the FCA for the New Capco Shares to be admitted to the
Official List with a premium listing and to the London Stock Exchange for the New Capco
Shares to be admitted to trading on the Main Market; and (ii) the JSE for the secondary listing
and admission to trading of the New Capco Shares on the Main Board of the JSE.
7. The Merger is not being made, directly or indirectly, in, into or from, or by use of the mails of,
or by any means of instrumentality (including, but not limited to, facsimile, e-mail or other
electronic transmission, telex or telephone) of interstate or foreign commerce of, or of any
facility of a national, state or other securities exchange of, any jurisdiction where to do so
would violate the laws of that jurisdiction.
8. Fractions of New Capco Shares will not be allotted or issued pursuant to the Merger, but
entitlements of Scheme Shareholders will be rounded down to the nearest whole number of
New Capco Shares and all fractions of New Capco Shares will be aggregated and sold in
the market as soon as practicable after the Effective Date. The net proceeds of such sale
(after deduction of all expenses and commissions incurred in connection with the sale) will
be distributed in due proportions to the Scheme Shareholders who would otherwise have
been entitled to such fractions (rounded down to the nearest penny) save that individual
entitlements to amounts of less than GBP5 will be retained for the benefit of the Combined Group.
APPENDIX 2
SOURCES OF INFORMATION AND BASES OF CALCULATION
In this Announcement, unless otherwise stated or as the context otherwise requires, the following
bases and sources have been used:
1. The issued and to be issued share capital of Capco (being 857,684,860 Capco Shares) is
calculated as at the Last Practicable Date on the basis of:
a. 851,274,235 Capco Shares in issue as at the Last Practicable Date; and
b. 6,410,625 Capco Shares which are expected to be issued after the date of this
Announcement on the exercise of options or vesting of awards under the Capco
Share Plan (as calculated on the Last Practicable Date), but excluding awards under
the schedule to the Capco Share Plan which provides for market-value options as
participants will be offered the opportunity of releasing their options for a cash
payment equivalent to the market value of one-third of Capco Shares under such
options which vest.
2. The issued and to be issued share capital of Shaftesbury (being 385,205,187 Shaftesbury
Shares) is calculated as at the Last Practicable Date on the basis of:
a. 384,214,860 Shaftesbury Shares in issue as at the Last Practicable Date; and
b. 990,327 Shaftesbury Shares which are expected to be issued after the date of this
Announcement on the exercise of options or vesting of awards under the
Shaftesbury Share Plans (as calculated on the Last Practicable Date), but excluding
awards under the Shaftesbury Sharesave Scheme as an exchange for equivalent
Capco awards will be offered and, for the avoidance of doubt, excluding options
granted under the Shaftesbury 2016 Deferred Share Bonus Plan which will be
settled using existing shares held or to be acquired by Shaftesbury's employee
benefit trust.
3. The estimated total issued share capital of the Combined Group of 1,824,998,781 Capco
Shares (excluding the New Capco Shares which will be issued to replace the Secured
Existing Capco Shareholding, being 38,008,138 Shaftesbury Shares, at the Last Practicable
Date, as the Exchange Property under Capco's Exchangeable Bonds) is calculated as at the
Latest Practicable Date as: (i) the Shaftesbury issued and to be issued share capital of
385,205,187 Shaftesbury Shares, less the 96,971,003 Shaftesbury Shares owned by Capco,
multiplied by (ii) the Exchange Ratio, plus (iii) the issued and to be issued share capital of
Capco being 857,684,860 Capco Shares.
4. The estimated total number of shares which are expected to be issued after the date of this
Announcement (excluding for the avoidance of doubt the New Capco Shares to be issued
on the Merger) consists of the 6,410,625 Capco Shares referred to in 1(b) above (Capco
Share Plan) and the 990,327 Shaftesbury Shares (equivalent to 3,323,537 New Capco
Shares at the Exchange Ratio) referred to in 2(b) above (Shaftesbury Share Plans).
5. The financial information relating to Capco, unless otherwise stated, has been extracted or
derived (without any adjustment) from audited consolidated financial statements of Capco
for the year ended 31 December 2021 or the trading update for the period to 31 March 2022,
as announced on 16 June 2022.
6. The financial information relating to Shaftesbury, unless otherwise stated, has been
extracted or derived (without any adjustment) from:
a. audited consolidated financial statements of Shaftesbury for the year ended 30
September 2021; and
b. unaudited consolidated interim financial statements contained in the interim results
of Shaftesbury for the six months ended 31 March 2022.
7. The synergy numbers are unaudited. Further information underlying the Quantified Financial
Benefits Statement contained in this Announcement is provided in Appendix 4.
8. Property portfolio and valuation information relating to Capco is extracted from the valuation
reports produced by CBRE and JLL as set out in Appendix 5 to this Announcement.
9. Property portfolio and valuation information relating to Shaftesbury is extracted from the
valuation reports produced by Cushman & Wakefield and Knight Frank as set out in
Appendix 5 to this Announcement.
10. For the purposes of Rule 29.1(d) of the Code, an updated valuation of Capco's property
portfolio has been obtained. This has been used to calculate Capco's adjusted net assets
and Capco's adjusted and unaudited EPRA NTA per Capco Share as at 31 March 2022:
Adjustment for Estimated
Audited Existing Capco Adjustment for unaudited
GBPm unless stated financials Shareholding as Capco's valuation financials as at
31-Dec-21 at 31-Mar-22(2) as at 31-Mar-22(4) 31-Mar-22
Investment, development & trading properties(1) 1,694.5 37.2 1,731.7
Joint venture 0.3 0.3
Equity Investment(3) 596.4 2.4 598.8
Net debt (622.0) (622.0)
Other net assets 117.2 117.2
Net assets 1,786.4 2.4 37.2 1,826.0
EPRA adjustments(5) 23.3 23.3
EPRA NTA 1,809.7 2.4 37.2 1,849.3
Total shares (million)(6) 851.9 851.9
EPRA NTA per share (pence) 212.4 217.1
1) Investment property includes a GBP42 million deduction in respect of tenant lease incentives and GBP6.1 million
addition for fixed head leases
2) Represents the increase in the market value of Capco's 25.2% shareholding in Shaftesbury between
31 December 2021 and 31 March 2022
3) Capco's stake in Shaftesbury adjusted for the market value as at 31 March 2022. This is based on a closing
Shaftesbury share price on 31 March 2022 of 618 pence
4) Represents the revaluation gains following the Valuation per the Rule 29 valuation reports as at 31 March 2022
5) Adjustments with respect to: (i) fair value of derivative financial instruments (ii) fair value of exchangeable
bond option (iii) unrecognised surplus on trading property and (iv) deferred tax
6) Total diluted shares as at 31 December 2021
11. For the purposes of Rule 29.1(d) of the Code, an up to date valuation of Shaftesbury's
property portfolio has been obtained. This has been used to calculate Shaftesbury's net
assets and Shaftesbury's EPRA NTA per Shaftesbury Share as at 31 March 2022 as
reported in the interim results of Shaftesbury for the six months ended 31 March 2022:
GBPm unless stated 31 March 2022
Investment properties(1) 3,216.6
Investment in joint venture(2) 90.9
Net debt (755.9)
Other net assets 53.2
Net assets 2,604.8
EPRA adjustments(3) 11.1
EPRA NTA 2,615.9
Total shares (million) 385.4
EPRA NTA per share (pence) 679
(1) Adjustments made to the fair value of the Shaftesbury Group's investment properties to arrive at the
book value of GBP3,216.6 million are set out in note 5 of the interim results of Shaftesbury for the six
months ended 31 March 2022
(2) The net asset value of the Shaftesbury Group's investment in the Longmartin Joint Venture of GBP90.9
million is set out in note 7 of the interim results of Shaftesbury for the six months ended 31 March 2022.
Adjustments made to the fair value of the Longmartin Joint Venture's investment properties to arrive at
the book value at 31 March 2022 are also set out in note 7 of the interim results of Shaftesbury for the
six months ended 31 March 2022.
(3) Adjustments with respect to (i) dilutive effect of share options of GBP0.7 million and (ii) deferred tax of
GBP10.4 million
12. The Combined Group's EPRA NTA of approximately GBP3.8 billion is calculated by the addition
of the Capco's estimated and unaudited 31 March 2022 EPRA NTA and Shaftesbury's
unaudited 31 March 2022 Interim EPRA NTA less the value of Capco's shareholding in
Shaftesbury and less the estimated transaction costs of the Merger.
13. The Combined Group's EPRA NTA per share of approximately 207 pence per share is equal
to the Combined Group's EPRA NTA of approximately GBP3.8 billion divided by the estimated
total issued share capital of the Combined Group of 1,824,998,781 Capco Shares.
14. The Combined Group's estimated net debt of approximately GBP1.5 billion is calculated as the
Capco 31 March 2022 net debt of approximately GBP622 million plus the Shaftesbury 31 March
2022 net debt of approximately GBP756 million (after allowing for estimated transaction costs).
15. LTV is calculated as the Combined Group's estimated net debt of approximately GBP1.5 billion
divided by the 31 March 2022 market value of the Combined Group's property portfolio.
16. The Combined Group portfolio value represents the market value of the wholly owned Capco
and Shaftesbury assets as at 31 March 2022, excluding Capco and Shaftesbury's share of
joint venture assets.
17. Transaction costs to be incurred by Capco and Shaftesbury in connection with the Merger
are currently estimated to amount to approximately 1.6% to 1.7% of the Combined Group's
portfolio value. Further details will be set out in the Scheme Document and Prospectus.
18. Certain figures included in this Announcement have been subject to rounding adjustments.
APPENDIX 3
IRREVOCABLE UNDERTAKINGS AND LETTER OF INTENT
(A) Shaftesbury Directors and Shaftesbury Shareholders
a. Irrevocable undertakings from Shaftesbury Directors
The following Shaftesbury Directors have given irrevocable undertakings to, amongst other things,
vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the
Shaftesbury General Meeting in relation to the following Shaftesbury Shares currently registered or
beneficially held by them as well as any further Shaftesbury Shares which they may become the
registered or beneficial owner of, save for any Shaftesbury Shares which they acquire pursuant to
the exercise of options under the Shaftesbury Sharesave Scheme (to the extent applicable):
Name Number of Shaftesbury Percentage of issued share
Shares capital of Shaftesbury (%)
Richard Akers 14,896 0.004%
Ruth Anderson CVO 5,000 0.001%
Brian Bickell 836,539 0.218%
Jonathan Nicholls 57,500 0.015%
Simon Quayle 1,154,139 0.300%
Jennelle Tilling 12,500 0.003%
Christopher Ward 127,104 0.033%
Thomas Welton 312,171 0.081%
TOTAL 2,519,849 0.656%
The obligations of the Shaftesbury Directors under the irrevocable undertakings they have given shall
lapse and cease to have effect if:
- the Scheme (or Takeover Offer, as applicable) lapses or is withdrawn and no new
replacement scheme or Takeover Offer is announced by Capco in accordance with Rule 2.7
of the Code at the same time;
- the Scheme Document (or Offer Document, as applicable) is not posted to Shaftesbury
Shareholders within 28 days after the release of this Announcement (or within such longer
period as Capco and Shaftesbury may agree, with the consent of the Panel);
- the Scheme (or Takeover Offer, as applicable) has not been declared unconditional in all
respects or otherwise become effective prior to the Long Stop Date;
- Capco publicly announces, with the consent of the Panel, that it does not intend to proceed
with the Merger and no new replacement scheme or Takeover Offer is announced by Capco
in accordance with Rule 2.7 of the Code at the same time; or
- a competing offer is made for Shaftesbury and such competing offer is declared
unconditional in all respects or otherwise becomes effective.
b. Irrevocable undertaking in respect of the Secured Existing Capco Shareholding
Capco has undertaken to procure that the members of the Capco Group which hold the Secured
Existing Capco Shareholding and which shall constitute a separate class of Shaftesbury
Shareholders for the purposes of the Scheme shall irrevocably undertake to Shaftesbury and shall
undertake to the Court to be bound by the terms of the Scheme, to be set out in the Scheme
Document in due course, and to procure that any transferee of the Secured Existing Capco
Shareholding who is a member of the Capco Group shall also so undertake to Shaftesbury and the Court.
c. Irrevocable undertaking from other Shaftesbury Shareholders
The following holders, controllers or beneficial owners of Shaftesbury shares have given an
irrevocable undertaking that they shall or shall procure that the registered holder of such Shaftesbury
shares shall, amongst other things, vote in favour of the Scheme at the Court Meeting and the
resolutions to be proposed at the Shaftesbury General Meeting (or in the event that the Merger is
implemented by way of a Takeover Offer, to accept or procure acceptance of such Takeover Offer)
in relation to the following Shaftesbury Shares as well as any further Shaftesbury Shares which the
relevant holders, controllers or beneficial owners or their subsidiaries become the registered or
beneficial owner of or become otherwise interested in:
Name Number of Shaftesbury Percentage of issued share
Shares capital of Shaftesbury (%)
Norges Bank 98,925,310 25.75%
TOTAL 98,925,310 25.75%
The obligations of Norges Bank under the irrevocable undertaking it has given shall lapse and cease
to have effect if, inter alia:
- the Scheme lapses or is withdrawn and no new replacement Scheme (to which the
undertakings apply) has been publicly announced in accordance with Rule 2.7 of the Code
at the same time, or does not become effective on or before the Long Stop Date, provided
that the reason is not because Capco has elected to proceed by way of a Takeover Offer
rather than by way of a Scheme; or
- Capco announces, with the consent of the Panel, that it does not intend to make or proceed
with the Merger and no new replacement scheme or Takeover Offer (to which the relevant
undertakings apply) is announced by Capco at the same time.
Additionally, the irrevocable undertaking from Norges Bank will terminate if (i) the board of either
party withdraws, adversely modifies or adversely qualifies its recommendation or announces that it
is considering doing so; or (ii) the CMA refers the Merger to a Phase 2 investigation.
(B) Capco Directors and Capco Shareholders
a. Irrevocable undertakings from Capco Directors
The following Capco Directors have given irrevocable undertakings to, amongst other things, vote in
favour of the resolutions to be proposed at the Capco General Meeting in relation to the following
Capco Shares currently registered or beneficially held by them as well as any further Capco Shares
they may become the registered or beneficial owner of:
Name Number of Capco Percentage of issued share
Shares capital of Capco (%)
Henry Staunton - -
Ian Hawksworth 811,575 0.095%
Situl Jobanputra 62,500 0.007%
Michelle McGrath 40,000 0.005%
Anthony Steains - -
Charlotte Boyle 15,052 0.002%
Jonathan Lane OBE 23,650 0.003%
TOTAL 952,777 0.112%
The obligations of the Capco Directors under the irrevocable undertakings they have given shall
lapse and cease to have effect if:
- the Circular is not despatched to Capco Shareholders on or before the date agreed by Capco
and Shaftesbury or such later time as agreed by the Panel, save that, if Capco subsequently
elects to proceed by way of a Takeover Offer, then the deadline for despatching the Circular
shall be 28 days after the date of an announcement by Capco announcing the change in
structure;
- the Scheme (or Takeover Offer, as applicable) has not been declared unconditional in all
respects or otherwise become effective prior to the Long Stop Date;
- Capco publicly announces with the consent of the Panel that it does not intend to proceed
with the Merger and no new replacement scheme or Takeover Offer is announced by Capco
in accordance with Rule 2.7 of the Code at the same time; or
- a competing offer is made for Shaftesbury and such competing offer is declared
unconditional in all respects or otherwise becomes effective.
b. Irrevocable undertaking from other Capco Shareholders
The following holders, controllers or beneficial owners of Capco Shares have given an irrevocable
undertaking that they shall or shall procure that the registered holder of such Capco Shares shall,
amongst other things, vote in favour of the resolutions to be proposed at the Capco General Meeting
in respect of which they are entitled to vote in relation to the following Capco Shares as well as any
further Capco Shares which the relevant holders, controllers or beneficial owners or their subsidiaries
become the registered or beneficial owner of:
Name Number of Capco Percentage of issued share
Shares capital of Capco (%)
Norges Bank 127,656,465 15.00%
TOTAL 127,656,465 15.00%
The obligations of Norges Bank under the irrevocable undertaking it has given shall lapse and cease
to have effect if, inter alia:
- the Scheme lapses or is withdrawn and no new replacement Scheme (to which the
undertakings apply) has been publicly announced in accordance with Rule 2.7 of the Code
at the same time, or does not become effective on or before the Long Stop Date, provided
that the reason is not because Capco has elected to proceed by way of a Takeover Offer
rather than by way of a Scheme; or
- Capco announces, with the consent of the Panel, that it does not intend to make or proceed
with the Merger and no new replacement scheme or Takeover Offer (to which the relevant
undertakings apply) is announced by Capco at the same time.
Additionally, the irrevocable undertaking from Norges Bank will terminate if (i) the board of either
party withdraws, adversely modifies or adversely qualifies its recommendation or announces that it
is considering doing so; or (ii) the CMA refers the Merger to a Phase 2 investigation.
c. Letter of Intent from Capco Shareholders
The following holders, controllers or beneficial owners of Capco Shares have delivered to Capco a
non-binding and revocable letter of intent to, amongst other things, vote in favour of the resolutions
to be proposed at the Capco General Meeting in relation to the Capco Shares to which they currently
hold the voting rights as well as any further Capco Shares in respect of which they become entitled
to exercise the voting rights.
Name Number of Capco Percentage of issued share
Shares capital of Capco (%)
Madison International Realty 34,783,462 4.1%
TOTAL 34,783,462 4.1%
APPENDIX 4
PART A
QUANTIFIED FINANCIAL BENEFITS STATEMENT
Paragraph 4 of this Announcement includes statements of estimated cost synergies arising from the
Merger (the "Quantified Financial Benefits Statement").
A copy of the Quantified Financial Benefits Statement is set out below:
Quantified Financial Benefits Statement
The Capco Directors and the Proposed Directors, having reviewed and analysed the potential cost
synergies of the Merger, and taking into account the factors they can influence, believe that the
Combined Group can deliver approximately GBP12 million of pre-tax recurring cost synergies on an
annual run-rate basis.
The run-rate at the end of the first full year following the Effective Date is expected to be
approximately 50% with the full run-rate achieved by the end of the second full year following
Completion.
The quantified cost synergies, which are expected to originate from the cost bases of both Capco
and Shaftesbury, are expected to be realised primarily from:
(a) rationalisation of board, senior management and duplicated group functions and public
company costs (expected to contribute approximately 50% of the full run-rate pre-tax cost
synergies);
(b) consolidation of support and property management functions, including third party costs
(expected to contribute approximately 44% of the full run-rate pre-tax cost synergies); and
(c) reduced financing costs relating to commitment, agency and trustee security fees following
termination of a duplicate undrawn revolving credit facility in the Combined Group
(expected to contribute approximately 6% of the full run-rate pre-tax cost synergies).
The Capco Directors and the Proposed Directors estimate that the realisation of the quantified cost
synergies will result in one-off costs to achieve of approximately GBP11.4 million, with around 49%
incurred in the first full year following Completion and the remainder by the end of the second full
year following Completion.
Potential areas of dis-synergy expected to arise in connection with the Merger have been considered
and were determined by the Capco Directors and the Proposed Directors to be immaterial for the analysis.
The identified cost synergies will accrue as a direct result of the Merger and would not be achieved
on a standalone basis. The identified cost synergies reflect both the beneficial elements and relevant costs.
Bases of Belief
Following initial discussion regarding the Merger, Capco and Shaftesbury management teams have
worked collaboratively to identify, challenge and quantify potential synergies as well as the potential
costs to achieving, and timing of, such synergies. The assessment and quantification of potential
synergies have been informed by Capco and Shaftesbury management team's industry expertise
and knowledge.
In preparing the Quantified Financial Benefits Statement, Capco and Shaftesbury have shared
certain operational and financial information to facilitate the analysis in support of evaluation the
potential synergies expected to arise from the Merger. In circumstances where the scope of data
exchanged or the individuals having access to it has been limited for commercial reasons,
confidentiality considerations, legal or regulatory restrictions, or other reasons, Capco and
Shaftesbury have made estimates and assumptions to aid its development of individual synergy initiatives.
The Merger is subject to CMA approval. It is not possible to predict with certainty the outcome of the
CMA approval process and therefore any potential impact has not been quantified.
The synergy assumptions have been risk adjusted.
The costs bases used as the basis for the quantified financial benefits exercise are the Capco FY21
(for the financial year ended 31 December 2021) and Shaftesbury FY21 (for the financial year ended
30 September 2021) actual financial results (with adjustments made to reflect non-recurring items
and expected future changes in certain costs) and manpower costs and headcount data as at 1 April
2022 relating to both companies (with adjustments made to reflect expected future changes relating
to certain costs).
The Capco Directors and the Proposed Directors have, in addition, made the following assumptions:
- The Combined Group will remain a UK premium listed company on the London Stock
Exchange and with a secondary listing on the JSE and will retain its status as a UK-REIT.
- There will be no material impact on the underlying operations of either Capco or Shaftesbury
of their ability to continue to conduct their businesses, including as a result of, or in
connection with, the integration of Shaftesbury and Capco.
- The estimate of one-off costs does not include any assumptions relating to potential interest
costs that may be associated with the Loan Facility Agreement.
- The Quantified Financial Benefits Statement does not take into account any change to
macroeconomic, political, regulatory or legal conditions in the markets or regions, including
inflation, COVID-19 or business disruptions, in which Capco and Shaftesbury operate that
will materially impact on the implementation or costs to achieve the proposed cost savings.
- There will be no change in tax legislation or tax rates or other legislation in the UK that could
materially impact the ability to achieve any benefits.
- There will be no material divestments from either the Capco or Shaftesbury existing
businesses.
Reports
As required by Rule 28.1(a) of the Code, KPMG, as reporting accountants to Capco and the
Proposed Directors for the purposes of the Quantified Financial Benefits Statement, has provided a
report stating that, in their opinion, the Quantified Financial Benefits Statement has been properly
compiled on the basis stated. In addition, Rothschild & Co as financial adviser to Capco and the
Proposed Directors for the purposes of the Quantified Financial Benefits Statement has provided a
report stating that, in its opinion, the Quantified Financial Benefits Statement has been prepared with
due care and consideration. Copies of these reports are included in Part B and Part C of this Appendix 4.
Each of KPMG and Rothschild & Co has given and not withdrawn its consent to the publication of its
reports in the form and context in which they it is included.
Notes
1. The statements of estimated synergies relate to future actions and circumstances which, by
their nature, involve risks, uncertainties and contingencies. As a result, the synergies referred
to may not be achieved, or may be achieved later or sooner than estimated, or those
achieved could be materially different from those estimated.
2. Due to the scale of the Combined Group, there may be additional changes to the Combined
Group's operations. As a result, and given the fact that the changes relate to the future, the
resulting synergies may be materially greater or less than those estimated.
3. No statement should be construed as a profit forecast or interpreted to mean that the
Combined Group's earnings in the first full year following implementation of the Merger, or
in any subsequent period, would necessarily match or be greater than or be less than those
of Capco and / or Shaftesbury for the relevant preceding financial period or any other period.
4. For the purposes of Rule 28 of the Code, the Quantified Financial Benefits Statement is the
responsibility of Capco, the Capco Directors and the Proposed Directors, and not of the
Shaftesbury Directors.
PART B
REPORT FROM KPMG
Dear Directors and Proposed Directors
We report on the statement ('the Statement') made by the directors of Capital & Counties Properties
PLC and the proposed directors of the enlarged group (together 'the Directors') in Part A of Appendix 4
to the Rule 2.7 Announcement entitled ('the Announcement') to the effect that:
The Capco Directors and the Proposed Directors, having reviewed and analysed the
potential cost synergies of the Merger, and taking into account the factors they can influence,
believe that the Combined Group can deliver approximately GBP12 million of pre-tax recurring
cost synergies on an annual run-rate basis.
The run-rate at the end of the first full year following the Effective Date is expected to be
approximately 50% with the full run-rate achieved by the end of the second full year following
Completion.
The quantified cost synergies, which are expected to originate from the cost bases of both
Capco and Shaftesbury, are expected to be realised primarily from:
(a) rationalisation of board, senior management and duplicated group functions and
public company costs (expected to contribute approximately 50% of the full run-rate
pre-tax cost synergies);
(b) consolidation of support and property management functions, including third party
costs (expected to contribute approximately 44% of the full run-rate pre-tax cost
synergies); and
(c) reduced financing costs relating to commitment, agency and trustee security fees
following termination of a duplicate undrawn revolving credit facility in the Combined
Group (expected to contribute approximately 6% of the full run-rate pre-tax cost synergies).
The Capco Directors and the Proposed Directors estimate that the realisation of the
quantified cost synergies will result in one-off costs to achieve of approximately GBP11.4 million,
with around 49% incurred in the first full year following Completion and the remainder by the
end of the second full year following Completion.
Potential areas of dis-synergy expected to arise in connection with the Merger have been
considered and were determined by the Capco Directors and the Proposed Directors to be
immaterial for the analysis.
The identified cost synergies will accrue as a direct result of the Merger and would not be
achieved on a standalone basis. The identified cost synergies reflect both the beneficial
elements and relevant costs.
This report is required by Rule 28.1(a) of the City Code on Takeovers and Mergers ('the City Code')
and is given for the purpose of complying with that requirement and for no other purpose.
Opinion
In our opinion, the Statement has been properly compiled on the basis stated.
The Statement has been made in the context of the disclosures in Appendix 4 to the Announcement
setting out, inter alia, the basis of the Directors' belief (including the principal assumptions and
sources of information) supporting the Statement and their analysis and explanation of the underlying
constituent elements.
Responsibilities
It is the responsibility of the Directors to prepare the Statement in accordance with the requirements
of the City Code.
It is our responsibility to form an opinion, as required by Rule 28.1(a) of the City Code as to whether
the Statement has been properly compiled on the basis stated and to report that opinion to you.
Save for any responsibility which we may have to those persons to whom this report is expressly
addressed, to the fullest extent permitted by law we do not assume any responsibility and will not
accept any liability to any other person for any loss suffered by any such other person as a result of,
arising out of, or in connection with this report or our statement, required by and given solely for the
purposes of complying with Rule 23.2 of the City Code, consenting to its inclusion in the Announcement.
Basis of preparation of the Statement
The Statement has been prepared on the basis stated in Part A of Appendix 4 of the Announcement.
Basis of opinion
We conducted our work in accordance with Standards for Investment Reporting issued by the
Financial Reporting Council in the United Kingdom (the 'FRC'). We are independent, and have
fulfilled our other ethical responsibilities, in accordance with the relevant ethical requirements of the
FRC's Ethical Standard as applied to Investment Circular Reporting Engagements.
We have discussed the Statement, together with the underlying plans, with the Directors and
Rothschild & Co. Our work did not involve any independent examination of any of the financial or
other information underlying the Statement.
1 We planned and performed our work so as to obtain the information and explanations we
considered necessary in order to provide us with reasonable assurance that the Statement has been
properly compiled on the basis stated.
2 Our work has not been carried out in accordance with auditing or other standards and practices
generally accepted in the United States of America and accordingly should not be relied upon as if it
had been carried out in accordance with those standards and practices.
We do not express any opinion as to the achievability of the benefits identified by the Directors in the
Statement. The Statement is subject to uncertainty as described in the Appendix to the
Announcement. Since the Statement relates to the future and may therefore be affected by
unforeseen events, we express no opinion as to whether the actual benefits achieved will correspond
to those anticipated in the Statement and the differences may be material.
Yours faithfully
KPMG LLP
PART C
REPORT FROM ROTHSCHILD & CO
Dear Capco Directors and Proposed Directors
We refer to the Quantified Financial Benefits Statement, the bases of belief thereof and the notes
thereto (together, the "Statement") as set out in Part A of Appendix 4 to this Announcement, for
which the Capco Directors and the Proposed Directors are solely responsible under Rule 28 of the
City Code on Takeovers and Mergers (the "Code").
We have discussed the Statement (including the assumptions and sources of information referred to
therein), with the Capco Directors and those officers and employees of Capco who developed the
underlying plans, as well as with KPMG. The Statement is subject to uncertainty as described in this
Announcement and our work did not involve an independent examination of any of the financial or
other information underlying the Statement.
We have relied upon the accuracy and completeness of all the financial and other information
provided to us by, or on behalf of, Capco, or otherwise discussed with or reviewed by us, and we
have assumed such accuracy and completeness for the purposes of providing this letter.
We do not express any opinion as to the achievability of the quantified financial benefits identified by
the Capco Directors and the Proposed Directors.
We have also reviewed the work carried out by KPMG and have discussed with them the opinion set
out in Part B of Appendix 4 to this Announcement addressed to yourselves on this matter.
This letter is provided to you solely in connection with Rule 28.1(a)(ii) of the Code and for no other
purpose. We accept no responsibility to Capco or its shareholders or any person other than the
Capco Directors and the Proposed Directors in respect of the contents of this letter. We are acting
as financial advisers to Capco and no one else in connection with the Merger and it was for the
purpose of complying with Rule 28.1(a)(ii) of the Code that Capco requested us to prepare this report
on the Statement. No person other than the Capco Directors and the Proposed Directors can rely on
the contents of this letter, and to the fullest extent permitted by law, we exclude all liability (whether
in contract, tort or otherwise) to any other person, in respect of this letter, its results, or the work
undertaken in connection with this letter, or any of the results that can be derived from this letter or
any written or oral information provided in connection with this letter, and any such liability is
expressly disclaimed except to the extent that such liability cannot be excluded by law.
On the basis of the foregoing, we consider that the Statement, for which you as the Capco Directors
and the Proposed Directors are solely responsible, has been prepared with due care and
consideration.
Yours faithfully,
N.M. Rothschild & Sons Limited
APPENDIX 5 - VALUATION REPORTS
VALUATION REPORT
Valuation Date: 31st March 2022
In respect of:
Capco's Covent Garden Portfolio
On behalf of:
The Addressees as stated below
CONDENSED VALUATION REPORT
Introduction
Report Date 16 June 2022
Valuation Date 31st March 2022
Addressees The Directors (as set out below)
Capital & Counties Properties PLC
Regal House
14 James Street
London WC2E 8BU
(hereinafter referred to as the "Company")
and
The Directors
Shaftesbury PLC
22 Ganton Street
Carnaby
London W1F 7FD
(hereinafter referred to as "Shaftesbury")
N.M. Rothschild & Sons Limited
New Court
St. Swithin's Lane
London EC4N 8AL
(in their capacity as Sponsor to the Company)
(hereinafter referred to as "Rothschild")
Evercore Partners International LLP
15 Stanhope Gate
London W1K 1LN
(in their capacity as Rule 3 Advisor to Shaftesbury)
(hereinafter referred to as "Evercore")
(together, the "Addressees")
The Properties The properties held by the Company as listed in the Schedule of Assets below (the
"Properties").
Instruction To value the unencumbered freehold, heritable and leasehold interests (as applicable)
in the Properties on the basis of Market Value as at the Valuation Date in accordance
with the terms of engagement entered into between CBRE and the Addressees dated
14 June 2022.
Status of Valuer You have instructed us to act as an External Valuer as defined in the current version
of the RICS Valuation - Global Standards.
Please note that the Valuation may be investigated by the RICS for the purposes of
the administration of the Institution's conduct and disciplinary regulations in order to
ensure compliance with the Valuation Standards.
Purpose and Basis The Valuation has been prepared for a Regulated Purpose as defined in the RICS
of Valuation Valuation - Global Standards and the UK national supplement current as at the
Valuation Date (the "Red Book").
We understand that our valuation report and the Appendices to it (together the
"Valuation Report") are required for inclusion in a Rule 2.7 announcement to be
published by the Company in connection with the all-share merger of Capco and
Shaftesbury in accordance with the City Code on Takeovers and Mergers (the "Code")
and the JSE Listing Requirements and Takeover Regulations (the "Transaction") (the
"Announcement").
The effective date of valuation is 31st March 2022.
In accordance with the Red Book we have made certain disclosures in connection with
this valuation instruction and our relationship with the Addressees.
Market Value GBP1,769,130,000 (One Billion, Seven Hundred and Sixty-Nine Million, One Hundred
and Thirty Thousand Pounds) exclusive of purchaser's costs VAT, as shown in
Appendix A below.
As set out in Appendix B to this Valuation Report, there are four properties in the
portfolio which, individually, have a value of more than 5% of the aggregate of the
individual market values. Two of these properties are considered commercially
sensitive and their individual values have therefore not been included.
We are required to show the split of values between freehold and leasehold property.
All the properties are held for investment.
Value of Freehold
Properties held for 56 977,770,000 0 977,770,000
Investment
Value of Long
Leasehold Properties 14 0 791,360,000 791,360,000
held for Investment
Portfolio Total 70 977,770,000 791,360,000 1,769,130,000
* In excess to 50 years' unexpired term
Portfolios and We have valued the Properties individually and no account has been taken of any
Aggregation discount or premium that may be negotiated in the market if all or part of the portfolio
was to be marketed simultaneously, either in lots or as a whole.
Report Format Appendix A of this Valuation Report provides the Property Details and Market Value of
the Portfolio lotted by location. Appendix B provides relevant details of those
properties which have an individual Market Value in excess of 5% of the total aggregate
Market Value of the Portfolio. Appendix C provides a table of information provided to
CBRE by the Company.
Compliance with The Valuation and the Valuation Report have been prepared in accordance with the
Valuation Standards and latest version of the RICS Valuation - Global Standards (incorporating the International
the Code Valuation Standards) and the UK national supplement (the "Red Book") current as the
Valuation Date.
The valuations are compliant with the International Valuation Standards and Rule 29
of the Code.
The Financial Conduct Authority published technical note 'Primary Market TN 619.1' to
replace and incorporate the ESMA update (ESMA/2011/81) of the Committee of
European Securities Regulators' (CESR) recommendations for the consistent
implementation of the European Commission regulation (EC) n. 809/2004 into UK law
("TN 619.1") and, although this does not form part of the UK's EU Retained Law, the Financial
Conduct Authority expects Issuers to apply the provisions to the extent relevant. Accordingly,
this valuation reports is also be compliant with paragraph 53 of TN 619.1 (with the exception
of individual valuation dates).
The Properties have been valued by a valuer who is qualified for the purpose of the
Valuation in accordance with the Red Book. We confirm that we have sufficient local
and national knowledge of the particular property market involved and have the skills
and understanding to undertake the Valuation competently.
Where the knowledge and skill requirements of the Red Book have been met in
aggregate by more than one valuer within CBRE, we confirm that a list of those valuers
has been retained within the working papers, together with confirmation that each
named valuer complies with the requirements of the Red Book.
This Valuation is a professional opinion and is expressly not intended to serve as a
warranty, assurance or guarantee of any particular value of the subject Properties.
Other valuers may reach different conclusions as to the value of the subject Properties.
This Valuation is for the sole purpose of providing the intended user with the valuer's
independent professional opinion of the value of the subject Properties as at the
Valuation Date.
Sustainability Wherever appropriate, sustainability and environmental matters are an integral part of
Considerations the valuation approach. 'Sustainability' is taken to mean the consideration of such
matters as environment and climate change, health and well-being and corporate
responsibility that can or do impact on the valuation of an asset. In a valuation context,
sustainability encompasses a wide range of physical, social, environmental, and
economic factors that can affect value. The range of issues includes key environmental
risks, such as flooding, energy efficiency and climate, as well as matters of design,
configuration, accessibility, legislation, management, and fiscal considerations - and
current and historic land use.
Sustainability has an impact on the value of an asset, even if not explicitly recognised.
Valuers reflect markets, they do not lead them. Where we recognise the value impacts
of sustainability, we are reflecting our understanding of how market participants include
sustainability requirements in their bids and the impact on market valuations.
Climate Risk Legislation The UK Government is currently producing legislation which enforces the transition to
net zero by 2050, and the stated 78% reduction of greenhouse gases by 2035 (based
on a 1990 baseline).
We understand this to include an update to the Minimum Energy Efficiency Standards,
stated to increase the minimum requirements from an E (since 2018) to a B in 2030.
The government also intends to introduce an operational rating. It is not yet clear how
this will be legislated, but fossil fuels used in building, such as natural gas for heating,
are incompatible with the UK's commitment to be Net Zero Carbon by 2050.
This upcoming legislation could have a potential impact to future asset value.
We also note that the UK's introduction of mandatory climate related disclosures
(reporting climate risks and opportunities consistent with recommendations by the
"Task Force for Climate Related Financial Disclosure" (TCFD)), including the
assessment of so-called physical and transition climate risks, will potentially have an
impact on how the market views such risks and incorporates them into the sale of
letting of assets.
The European Union's "Sustainable Finance Disclosure Regulations" (SFDR) may
impact on UK asset values due to the requirements in reporting to European investors.
Assumptions The Property Details on which each Valuation is based are as set out in this report.
We have made various assumptions as to tenure, letting, taxation, town planning, and
the condition and repair of buildings and sites - including ground and groundwater
contamination - as set out below.
If any of the information or assumptions on which the Valuation is based are
subsequently found to be incorrect, the Valuation figures may also be incorrect and
should be reconsidered.
Variations and/or None.
Departures from
Standard Assumptions
TN 619.1 Paragraph 53 TN 619.1 Paragraph 53 requires us to comment on any differences between the
valuation figure in this Valuation Report and the valuation figure included in the
Company's latest published annual accounts, which were as 31 December 2021.
Differences between the published valuation figure as at 31 December 2021 and the
present valuation are attributable to a number of factors, including but not limited to:
- There have been no acquisitions or disposals in the period.
- Tenancy changes (e.g. new lettings, lease renewals, lease expiries) , other rental
income changes (e.g. rent reviews, expiry of rent-free periods) and occupancy
levels, in particular five new leases/renewals within the Market Building, significant
activity within the food and beverage sector and positive office lettings.
- Capital expenditure and improvements (e.g. refurbishments), in particular the
former Burberry unit on King Street and the office refurbishment at 5 -6 Henrietta
Street.
- No planning permissions of note have been granted in the period.
Independence The total fees, including the fee for this assignment, earned by CBRE Ltd (or other
companies forming part of the same group of companies within the UK) from the
Company (or other companies forming part of the same group of companies) is less
than 5.0% of the total UK revenues.
It is not anticipated this situation will vary in the financial year to 31 December 2022.
We confirm that we do not have any material interest in the Company or the Properties.
Previous Involvement We confirm that we have previously valued all the properties on behalf of the Company
and Conflicts of Interest for financial reporting purposes on a bi-annual basis since their acquisition (the first
being in 2007).
CBRE Ltd has carried out Valuation, Agency and Professional services on behalf of
Capital & Counties for in excess of 20 years.
CBRE provide asset management service and agency advice to Shaftesbury.
Copies of our conflict of interest checks have been retained within the working papers.
We confirm that: (i) we are not aware of any reason why we would not satisfy the
requirements of Rule 29.3(a)(ii) and (iii) of the Code; and (ii) during the term of the
engagement, we shall not do anything that could reasonably be expected to cause us
not to satisfy the requirements of Rule 29.3(a)(ii) and (iii) of the Code.
Disclosure The principal signatory of this report has continuously been the signatory of valuations
for the Company and for financial reporting purposes since 2019.
CBRE Ltd has continuously been carrying out valuation instructions for the Company
since 2007.
Responsibility For the purposes of the Code, we are responsible for this Valuation Report and accept
responsibility for the information contained in this Valuation Report and confirm that to
the best of our knowledge (having taken all reasonable care to ensure that such is the
case), the information contained in this Valuation Report is in accordance with the facts
and contains no omissions likely to affect its import.
Save for any responsibility arising under the Takeover Code to any person as and to
the extent there provided, to the fullest extent permitted by law we do not assume any
responsibility and will not accept any liability to any other person for any loss suffered
by any such other person as a result of, arising out of, or in accordance with this
Valuation Report or our statement above."
Reliance This report is for the use only of the parties to whom it is addressed for the specific
purpose set out herein and no responsibility is accepted to any third party for the whole
or any part of its contents save as set out in "Responsibility" above.
No reliance may be placed upon the contents of this Valuation Report by any party for
any purpose other than in connection with the Purpose of Valuation.
Publication Neither the whole nor any part of our report nor any references thereto may be included
in any published document, circular or statement nor published in any way without our
prior written approval of the form and context in which it will appear.
Such publication of, or reference to this report will not be permitted unless it contains
a sufficient contemporaneous reference to any departure from the Red Book or the
incorporation of any special assumptions referred to herein.
Yours faithfully Yours faithfully
David Methuen Guy Schiess
BA (Hons) MRICS LLM MRICS
Senior Director Senior Director
RICS Registered Valuer RICS Registered Valuer
For and on behalf of CBRE Limited For and on behalf of CBRE Limited
+44 207 182 2528 +44 20 7182 2528
David.Methuen@cbre.com Guy.Schiess@cbre.com
CBRE Limited
Henrietta House
Henrietta Place
London
W1G 0RE
SCHEDULE OF ASSETS
Address Town/City Postcode Tenure
7 Garrick Street London WC2 Freehold
10-14 Bedford Street London WC2 Freehold
10-13 King Street London WC2 Leasehold
14 King Street London WC2 Freehold
15 King Street London WC2 Freehold
16-18 King Street & 28 Bedford Street London WC2 Freehold
33 King Street London WC2 Freehold
34 King Street London WC2 Freehold
Royal Opera House Retail London WC2 Leasehold
Sussex Mansions, Maiden Lane London WC2 Freehold
28 Maiden Lane London WC2 Freehold
23-24 Henrietta Street London WC2 Freehold
25-29 Henrietta Street London WC2 Leasehold
30-33 Henrietta Street London WC2 Freehold
34 Henrietta Street London WC2 Freehold
Covent Garden Market London WC2 Leasehold
Flat 1, 20 The Piazza London WC2 Leasehold
20 The Piazza London WC2 Leasehold
11-12 Russell Street London WC2 Freehold
10 Russell Street London WC2 Freehold
9 Russell Street London WC2 Freehold
8 Russell Street London WC2 Freehold
49 Wellington Street London WC2 Leasehold
4-7 Russell St/45-49 Wellington Street London WC2 Leasehold
41-43 Wellington Street London WC2 Freehold
33-35 Wellington Street London WC2 Freehold
London Transport Museum London WC2 Freehold
Jubilee Hall London WC2 Leasehold
1a Henrietta Street London WC2 Freehold
3 Henrietta Street London WC2 Freehold
4 Henrietta Street London WC2 Freehold
5-6 Henrietta Street London WC2 Freehold
7-8 Henrietta Street London WC2 Freehold
9-10 Henrietta Street London WC2 Freehold
11 Henrietta Street & 33 Maiden Lane London WC2 Freehold
14,15 Henrietta Street & 29 Maiden Lane London WC2 Freehold
17-18 Henrietta Street London WC2 Freehold
30 Maiden Lane London WC2 Freehold
40-41 Maiden Lane London WC2 Freehold
42-43 Maiden Lane London WC2 Freehold
44 Maiden Lane London WC2 Freehold
Tower House London WC2 Freehold
Bedford Chambers London WC2 Leasehold
40-43 King Street London WC2 Freehold
11-12 Floral Street London WC2 Freehold
9-10 Floral Street London WC2 Freehold
22-23 James Street London WC2 Freehold
21 James Street London WC2 Freehold
11 James Street London WC2 Freehold
Regal House London WC2 Freehold
37 King Street London WC2 Freehold
8 King Street London WC2 Freehold
9 King Street London WC2 Freehold
7 King Street London WC2 Freehold
13-14 Floral Street London WC2 Freehold
Floral Court London WC2 Freehold
26 King Street London WC2 Freehold
35 King Street and 17-18 Floral Street London WC2 Freehold
38 King Street and 15-16 Floral Street London WC2 Leasehold
16 Henrietta Street London WC2 Freehold
19 Henrietta Street & 35 Bedford Street London WC2 Freehold
37 Bedford Street London WC2 Freehold
39-40 Bedford Street London WC2 Freehold
39 Floral Street London WC2 Freehold
37 Floral Street London WC2 Freehold
Floral Place London WC2 Leasehold
15-17 Long Acre London WC2 Leasehold
14 Garrick Street London WC2 Freehold
Walter House London WC2 Leasehold
158-159 Drury Lane London WC2 Freehold
Source of Information and Scope of Works
Sources of We have carried out our work based upon information supplied to us by the Company, as
Information set out within this report, which we have assumed to be correct and comprehensive.
We have included a schedule in Appendix C of the various due diligence items provided
to us by the Company and their advisors, for the purposes of our initial valuation as at
December 2007 and thereafter on additional properties entering the portfolio.
The Properties Our report contains a brief summary of the Property details on which our Valuation has
been based.
Inspection We have previously inspected all the properties within the scope of our instructions from
the Company to carry out valuations for financial reporting purposes, under which we
carry out external inspections of the properties every year and all properties are subject
to internal re-inspection over a three-year period.
In accordance with your instructions, we have not re-inspected the Properties for the
purposes of this valuation, except where properties had not been inspected within twelve
months of the valuation date.
The Company has confirmed that they are not aware of any material changes to the
physical attributes of these properties, since the last inspection. We have assumed this
advice to be correct.
Where properties have not been reinspected, the valuer will not carry out the usual range
of enquiries performed during a full inspection of these properties and will make the
appropriate assumptions based on the information provided or available that, without a
full inspection, cannot be verified. The instructing parties acknowledge and accept the
heightened and inherent uncertainty and risks relying upon a valuation prepared on a
desktop basis.
Areas We have not measured the Properties but have relied upon the floor areas provided to us
by the Company or their professional advisors, which we have assumed to be correct and
comprehensive, and which the Company has advised us have been calculated using the:
Gross Internal Area (GIA), Net Internal Area (NIA) or International Property Measurement
Standard (IPMS) 3 - Office, measurement methodology as set out in the latest edition of
the RICS Property Measurement Standards.
Environmental We have not been instructed to make any investigations in relation to the presence or
Considerations potential presence of contamination in land or buildings or the potential presence of other
environmental risk factors and to assume that if investigations were made to an
appropriate extent then nothing would be discovered sufficient to affect value.
We have not carried out investigation into past uses, either of the property or of any
adjacent lands, to establish whether there is any potential for contamination from such
uses or sites, or other environmental risk factors and have therefore assumed that none
exists.
Services and We understand that the Properties are located in an area served by mains gas, electricity,
Amenities water and drainage.
None of the services have been tested by us.
Enquiries regarding the availability of utilities/services to any proposed developments are
outside the scope of our report.
Repair and Condition We have not carried out building surveys, tested services, made independent site
investigations, inspected woodwork, exposed parts of the structure which were covered,
unexposed or inaccessible, nor arranged for any investigations to be carried out to
determine whether or not any deleterious or hazardous materials or techniques have
been used, or are present, in any part of the Properties. We are unable, therefore, to give
any assurance that the Properties are free from defect.
Town Planning We have not undertaken planning enquiries.
Titles, Tenures and Details of title/tenure under which the Properties are held and of lettings to which it is
Lettings subject are as supplied to us. We have not generally examined nor had access to all the
deeds, leases or other documents relating thereto. Where information from deeds, leases
or other documents is recorded in this report, it represents our understanding of the
relevant documents. We should emphasise, however, that the interpretation of the
documents of title (including relevant deeds, leases and planning consents) is the
responsibility of your legal adviser.
We have not conducted credit enquiries on the financial status of any tenants. We have,
however, reflected our general understanding of purchasers' likely perceptions of the
financial status of tenants.
Valuation Assumptions
Introduction An Assumption is defined in the Red Book Glossary and VPS 4 to be a "supposition taken
to be true" (an "Assumption").
Assumptions are facts, conditions or situations affecting the subject of, or approach to, a
valuation that it has been agreed need not be verified by the valuer as part of the valuation
process. Assumptions are made when it is reasonable for the valuer to accept that
something is true without the need for specific investigation.
The Company has confirmed and we confirm that our Assumptions are correct as far as
the Company and we, respectively, are aware. In the event that any of these Assumptions
prove to be incorrect then our valuations should be reviewed. The principal Assumptions
which we have made are stated within this Valuation Report.
For the avoidance of doubt, the Assumptions made do not affect compliance with the
approach to Market Value under the Red Book.
Capital Values Each valuation has been prepared on the basis of "Market Value"), which is defined in the
Red Book as:
"The estimated amount for which an asset or liability should exchange on the Valuation
Date between a willing buyer and a willing seller in an arm's length transaction, after
proper marketing and where the parties had each acted knowledgeably, prudently and
without compulsion."
The Valuation represents the figure that would appear in a hypothetical contract of sale
at the Valuation Date. No adjustment has been made to this figure for any expenses of
acquisition or realisation - nor for taxation which might arise in the event of a disposal.
No account has been taken of any inter-company leases or arrangements, nor of any
mortgages, debentures or other charge.
No account has been taken of the availability or otherwise of capital based Government
or European Community grants.
Taxation, Costs and As stated above, no allowances have been made for any expenses of realisation nor for
Realisation Costs taxation which might arise in the event of a disposal.
Our valuations reflect purchasers' statutory and other normal acquisition costs.
VAT We have not been advised whether the properties are elected for VAT.
All rents and capital values stated in this report are exclusive of VAT.
Passing Rent Passing rents quoted in this report are the rents which are currently payable under the
terms of the leases. Passing rents exclude service charges and VAT and are prior to
deduction of any non-recoverable costs.
Net Annual Rent Net annual rent is defined for the purposes of this transaction as "the current income or
income estimated by the valuer:
(i) ignoring any special receipts or deduction arising from the property;
(ii) excluding Value Added Tax and before taxation (including tax on profits and any
allowances for interest on capital or loans); and
(iii) after making deductions for superior rents (but not for amortisation), and any
disbursements including, if appropriate, expenses of managing the property and
allowances to maintain it in a condition to command its rent".
Estimated Net Annual The estimated net annual rental value is based on the current rental value of each of the
Rental Value Properties. The rental value reflects the terms of the leases where the Properties, or
parts thereof, are let at the date of valuation. Where the Properties, or parts thereof, are
vacant at the date of valuation, the rental value reflects the rent we consider would be
obtainable on an open market letting as at the date of valuation.
Rental Values Unless stated otherwise rental values indicated in our report are those which have been
adopted by us as appropriate in assessing the capital value and are not necessarily
appropriate for other purposes, nor do they necessarily accord with the definition of
Market Rent in the Red Book, which is as follows:
"The estimated amount for which an interest in real property should be leased on the
Valuation Date between a willing lessor and a willing lessee on appropriate lease terms
in an arm's length transaction, after proper marketing and where the parties had each
acted knowledgeably, prudently and without compulsion."
Fixtures, Fittings Where appropriate we have regarded the shop fronts of retail and showroom
and Equipment accommodation as forming an integral part of the building.
Landlord's fixtures such as lifts, escalators, central heating and other normal service
installations have been treated as an integral part of the building and are included within
our Valuations.
Process plant and machinery, tenants' fixtures and specialist trade fittings have been
excluded from our Valuations.
All measurements, areas and ages quoted in our report are approximate.
Environmental In the absence of any information to the contrary, we have assumed that:
Matters
a) the Properties are not contaminated and is not adversely affected by any existing
or proposed environmental law;
b) any processes which are carried out on the Properties which are regulated by
environmental legislation are properly licensed by the appropriate authorities;
c) in England and Wales, the Properties possesses current Energy Performance
Certificates (EPCs) as required under the Government's Energy Performance of
Buildings Directive - and that they have an energy efficient standard of 'E', or
better. We would draw your attention to the fact that under the Energy Efficiency
(Private Rented Property) (England and Wales) Regulations 2015 it became
unlawful for landlords to rent out a business premise from 1st April 2018 - unless
the site has reached a minimum EPC rating of an 'E', or secured a relevant
exemption. In Scotland, we have assumed that the Properties possesses current
EPCs as required under the Scottish Government's Energy Performance of
Buildings (Scotland) Regulations - and that they meet energy standards
equivalent to those introduced by the 2002 building regulations. We would draw
your attention to the fact the Assessment of Energy Performance of Non-Domestic
Buildings (Scotland) Regulations 2016 came into force on 1st September 2016.
From this date, building owners are required to commission an
EPC and Action Plan for sale or new rental of non-domestic buildings bigger than
1,000 sq m that do not meet 2002 building regulations energy standards. Action
Plans contain building improvement measures that must be implemented within
3.5 years, subject to certain exemptions;
d) In January 2021 the Government closed the consultation period that focused on
its latest proposals in England and Wales for 'improving the energy performance
of privately rented homes'. The key tenets of the proposals are to; reduce
emissions; tackle fuel poverty; improve asset quality; reduce energy bills;
enhance energy security; and support associated employment. The proposals
are wide ranging and they introduce new demands on residential landlords
through Energy Performance Certificates ('EPCs'). Existing PRS Regulations set
a minimum standard of EPC Band E for residential units to be lettable. The
Government proposals see this threshold being raised to EPC Band C for all new
tenancies created from 01 April 2025 and for all existing tenancies by 01 April
2028. The principle for relevant building works is to be 'fabric first' meaning
maximisation of components and materials that make up the building fabric to
enhance, for example, insulation, ventilation and air-tightness. The proposals
also cite; compliance measures and penalties for landlords, letting agents and
local authorities; and affordability support for carrying out necessary works. The
implication is (as with the existing EPC Band E requirement) that private rented
units may effectively be rendered unlettable if they fail to meet or exceed the
minimum EPC requirement. It is expected that the Government will respond to
the consultation process in Q2/Q3 2021 with any new regulations taking effect in
Q3/Q4 2021. At present it is not clear how the market would respond to these
proposals were they to be implemented as currently drafted; neither do we have
any visibility of changes that may be made to the proposals following the
consultation process. Our Valuation reflects market conditions and regulations
effective at the Valuation date; we make no additional allowances for any future
works that may be required in order to ensure that the subject assets would
remain lettable under revised regulations;
e) the Properties are either not subject to flooding risk or, if it is, that sufficient flood
defences are in place and that appropriate building insurance could be obtained
at a cost that would not materially affect the capital value; and
f) invasive species such as Japanese Knotweed are not present on the Properties.
High voltage electrical supply equipment may exist within, or in close proximity of, the
Properties. The National Radiological Protection Board (NRPB) has advised that there
may be a risk, in specified circumstances, to the health of certain categories of people.
Public perception may, therefore, affect marketability and future value of the Properties.
Our Valuation reflects our current understanding of the market and we have not made a
discount to reflect the presence of this equipment.
Repair and Condition In the absence of any information to the contrary, we have assumed that:
a) there are no abnormal ground conditions, nor archaeological remains, present
which might adversely affect the current or future occupation, development or
value of the Properties;
b) the Properties are free from rot, infestation, structural or latent defect;
c) no currently known deleterious or hazardous materials or suspect techniques,
including but not limited to Composite Panelling, ACM Cladding, High Alumina
Cement (HAC), Asbestos, have been used in the construction of, or subsequent
alterations or additions to, the Properties; and
d) the services, and any associated controls or software, are in working order and
free from defect.
We have otherwise had regard to the age and apparent general condition of the
Properties. Comments made in the property details do not purport to express an opinion
about, or advise upon, the condition of uninspected parts and should not be taken as
making an implied representation or statement about such parts.
Title, Tenure, Unless stated otherwise within this report, and in the absence of any information to the
Lettings, Planning, contrary, we have assumed that:
Taxation and
Statutory & Local a) the Properties possesses a good and marketable title free from any onerous or
Authority hampering restrictions or conditions;
Requirements
b) the building has been erected either prior to planning control, or in accordance
with planning permissions, and has the benefit of permanent planning consents
or existing use rights for their current use;
c) the Properties is not adversely affected by town planning or road proposals;
d) the building complies with all statutory and local authority requirements including
building, fire and health and safety regulations, and that a fire risk assessment
and emergency plan are in place;
e) only minor or inconsequential costs will be incurred if any modifications or
alterations are necessary in order for occupiers of the Properties to comply with
the provisions of the Disability Discrimination Act 1995 (in Northern Ireland) or
the Equality Act 2010 (in the rest of the UK);
f) all rent reviews are upward only and are to be assessed by reference to full
current market rents;
g) there are no tenant's improvements that will materially affect our opinion of the
rent that would be obtained on review or renewal;
h) tenants will meet their obligations under their leases, and are responsible for
insurance, payment of business rates, and all repairs, whether directly or by
means of a service charge;
i) there are no user restrictions or other restrictive covenants in leases which would
adversely affect value;
j) where more than 50% of the floorspace of the Properties is in residential use, the
Landlord and Tenant Act 1987 (the "Act") gives certain rights to defined residential
tenants to acquire the freehold/head leasehold interest in the Properties. Where
this is applicable, we have assumed that necessary notices have been given to
the residential tenants under the provisions of the Act, and that such tenants have
elected not to acquire the freehold/head leasehold interest. Disposal on the open
market is therefore unrestricted;
k) where appropriate, permission to assign the interest being valued herein would
not be withheld by the landlord where required;
l) vacant possession can be given of all accommodation which is unlet or is let on
a service occupancy; and
m) Land Transfer Tax (or the local equivalent) will apply at the rate currently
applicable.
In the UK, Stamp Duty Land Tax (SDLT) in England and Northern Ireland, Land
and Buildings Transaction Tax (LABTT) in Scotland or Land Transaction Tax (LTT)
in Wales, will apply at the rate currently applicable.
Appendix A: Properties Details
Property Details: Properties Lotted by retail pitch
SUB-PORTFOLIO DESCRIPTION, AGE AND TENURE TENANCY MARKET VALUE
1 Centred around Floral Court, a commercial and residential Retail typically let on GBP523,600,000
scheme completed in 2018 comprising 9 retail units, 2 five year terms to a
restaurants and 45 residential units linking Floral Street and mixture of national
King Street. Floral Place links Long Acre and Floral Court and international
which will be anchored by Uniqlo who will occupy units retailers. The
fronting both streets. The upper parts of the Long Acre restaurants typically
properties comprise offices while on other properties there is let on terms of at
a mix of offices and residential. least ten years and
the offices five,
Floral Place and 15-17 Long Acre are geared long leasehold frequently with a
interests whilst the majority of the remaining units are held break after three
freehold. The residential units (29) fronting Floral Street years. The residential
within Floral Court have been sold off on a long leasehold is typically let on an
basis. AST basis or to a
serviced provider
2 Comprising The Market Building, Royal Opera House Shops, Retail typically let on GBP692,550,000
Bedford Chambers and James Street retail. The Market terms between five
Building, Royal Opera House shops and Bedford Chambers and ten years with
are all listed period buildings. Ground floor uses exclusively restaurants on at
retail and food and beverage with some office space above least ten years.
the retail on James Street. The Royal Opera House shops are
held long leasehold with a 5% pay away. The remaining
properties are held freehold albeit the Market Building and
Bedford Chambers are subject to an intermediary long
leasehold interest to the Covent Garden Area Authority with
an RPI linked ground rent
3 The Southern part of the Estate comprising Henrietta Street, The London Transport GBP552,980,000
Maiden Lane, Bedford Steet, Southampton Street, Wellington Museum is let on a
Street and part of The Piazza including the London Transport long term. The
Museum and Jubilee Hall. There is a concentration of restaurants are
restaurants around the Piazza and on Henrietta Street and typically let on terms
Maiden Lane of at least ten years.
The majority of The
All properties held freehold with the exception of Walter Jubilee Hall is subject
House on Bedford Street/Strand which is held on a virtual to a long leasehold at
freehold basis a nominal rent
Appendix B: Properties Exceeding 5% of Aggregate Market Value of Portfolio
PROPERTY ADDRESS DESCRIPTION, AGE AND TENURE TENANCY MARKET VALUE
The Market Covent Garden Market is the Grade II* Listed The Market is let to a total of GBP286,000,000
Covent Garden, former covered fruit and vegetable market 47 tenants on a variety of
London WC2 dating from circa 1830. It now comprises a lease terms expiring between
mixture of retail and restaurant 2022 and 2042
accommodation comprising a total of
approximately 6,540 sq m (70,400 sq ft) There are also a number of
arranged over basement, ground and first 'non-leased' sources of
floor levels. The units are split into four income comprising market
parallel arcades fronting the North Hall, stalls and promotional events
Central Avenue and South Hall and provide
double frontages throughout. The open areas
between the arcades, in the North and South
Halls, provide additional space for outside
seating and stall holders.
The Market and the surface of the Piazza are
both held freehold, subject to a long leasehold
interest to the Covent Garden Area Trust
(CGAT). The property is sub-let back to the
freeholder, subject to a ground rent payment
rising annually in line with RPI. The current
ground rent passing is GBP54,463.
Royal Opera The property comprises the retail units The Royal Opera House Retail Confidential
House Retail, surrounding the Grade I listed Royal Opera is let to 13 separate tenants
Covent Garden, House either side of the entrance to the Opera on a variety of lease terms
London WC2 House off the Piazza. The units were created expiring between 2026 and 2034.
during the substantial reconstruction of the
Royal Opera House during the 1990s. The
property provides 21 units on ground with
some having basement trading and ancillary
areas. The units facing the Piazza face into an
arcade, whilst those on James Street and
Russell Street open directly onto the Street.
Long leasehold expiring in 2241. Head rent
geared to 5% of passing rents subject to a
minimum of GBP270,000 per annum
Floral Court, Floral Court is a mixed use development The commercial element is let GBP98,150,000
Covent Garden, between King Street and Floral Street and is to 8 tenants on a variety of
London WC2 arranged around a pedestrian route and terms expiring between 2028
courtyard between the two streets. The and 2037
development completed in 2018 and
comprises 9 retail units, 2 restaurants and The residential is single let
45 apartments.
The property is held freehold. The 29
residential units on Floral Street have been
sold off on a long leasehold basis.
Bedford Grade II listed building redeveloped in 2009. Single let Apple Retail UK until 2034 Confidential
Chambers, 1-7 Located on the western corner of James Street
The Piazza, and the Piazza. The mixed retail and office
London WC2 property is arranged over basement, ground,
mezzanine and four upper floors.
Total floor area is approximately 3,795 sq. m.
(40,852 sq. ft.)
Freehold, subject to a long leasehold interest
to the Covent Garden Area Trust. Sub-let back
to freeholder, subject to a ground rent
payment rising annually in line with RPI.
Appendix C: Information Received
Legal Due Tenancy Technical Due Environmental Due Measured
Address Diligence Information* Diligence Diligence Survey
All Properties x x x x x
* Tenancy information includes leases, tenancy schedules and rent review memoranda as appropriate
The Directors and Proposed Directors Jones Lang LaSalle Ltd
Capital and Counties Properties PLC ("Capco") 30 Warwick Street London W1B 5NH
Regal House +44 (0)20 7493 4933
14 James Street
London WC2E 8BU jll.co.uk
Our ref CQS/435003
The Directors 16th June 2022
Shaftesbury PLC ("Shaftesbury")
22 Ganton Street
Carnaby
London W1F 7FD
N.M. Rothschild & Sons Limited
New Court
St. Swithin's Lane
London EC4N 8AL
Evercore Partners International LLP
15 Stanhope Gate
London W1K 1LN
(together, the "Addressees")
Dear Sirs
Terms of Reference
Portfolio Lillie Square Developments Limited
Lillie Square
GP Limited
Lillie Square LP Limited
The Properties We attach at Appendix 1 a schedule of the properties within the portfolio.
Tenure Freehold and Leasehold
Valuation Date 31st March 2022
Instruction Date 28th March 2022
Instruction and Purpose Our valuation report (the "Valuation Report") of the
of Valuation properties within the Portfolio is for the following purpose
(the "Purpose"): the announcement of the all share merger
of Capco and Shaftesbury (the "Proposed Transaction")
pursuant to Rule 2.7 of the City Code on Takeovers and
Mergers (the "Code") (the "Rule 2.7 Announcement").
Basis of Valuation We confirm that our valuations and report has been
prepared in accordance with the current RICS Valuation
- Global Standards, incorporating the International
Valuation Standards, and the RICS Valuation - Global
Standards 2017 - UK national supplement published by the
Royal Institution of Chartered Surveyors (the "RICS Red
Book" as applicable) on the basis of the Market Value.
We further confirm our valuations and report are compliant with the
Code, including, without limitation, Rule 29.
The report is subject to, and should be read in conjunction with, the
General Principles Adopted in the Preparation of Valuations and
Reports.
No allowance has been made for any expenses of realisation, or for
taxation (including VAT) which might arise in the event of a disposal
and the property has been considered free and clear of all mortgages
or other charges which may be secured thereon.
We have assumed that in the event of a sale of the properties, they
would be marketed in an orderly manner and would not all be placed
on the market at the same time.
Inspection The properties have been inspected during 2021.
Conflicts of Intere We confirm that we have previously valued, and are currently instructed
to value, the properties on behalf of the Client, on a bi-annual basis
for financial reporting purposes.
We do not consider that any of the above provides a conflict of
interest preventing us from preparing the valuations.
We confirm that: (i) we are not aware of any reason why we would
not satisfy the requirements of Rule 29.3(a) of the Code; and (ii)
during the term of the engagement, we shall not do anything that
could reasonably be expected to cause us not to satisfy the
requirements of Rule 29.3(a) of the Code.
Disclosures In our firm's preceding financial year the proportion of total fees
payable by the Client commissioning this valuation was less than
5 per cent. of the firm's total fee income.
It is not anticipated there will be a material increase in the proportion
of fees payable to the firm by the client commissioning this
Valuation Report since the end of the last financial year or in the next
financial year.
Personnel The valuation has been prepared by Chris Strathon FRICS, Director
and Nick Carter, Director, MRICS and Liam Hall, Surveyor MRICS.
Status In preparing this valuation, we have acted as External Valuers as
defined in the RICS Red Book, subject to any disclosures made to you.
Assumptions As detailed in our General Principles, we have made a
number of assumptions, including:
We have assumed that a good and marketable title is held and that
there are no encumbrances, restrictions, easements or other
outgoings of an onerous nature, which would have a material effect
on the value of the interests under consideration.
We have assumed that all leases are drawn on standard terms with
no unusual or onerous clauses that would impact on value.
We have not undertaken planning enquiries and have assumed that
the properties comply with all relevant regulations and
legislation.
We have assumed that the properties are structurally sound and
that there are no structural, latent or other material defects.
We have assumed that the properties are not affected by environmental
contamination.
We have assumed that mains water, gas and electricity are connected
to the properties, and that they drain into the public sewer.
We have made no "Special Assumptions".
Sources of Information We have not carried out any building surveys or environmental risk
assessments. We have not measured the properties and have relied
upon areas provided. We have not been supplied with Certificates
of Title and assumed that the correct legal title is held.
We have relied on all the scheme drawings, floor areas, build costs
and infrastructure costs provided by the Client in relation to the
development site at Lillie Square.
We have been provided with up to date tenancy schedules and
have relied on these for the purpose of the valuations.
Valuation Approach For the development site we have undertaken residual development
appraisals where we have assessed an estimated gross development
value based on what can be built on the site in terms of density
and size less estimated construction costs, infrastructure costs,
contingency, professional fees, section 106 costs, planning fees,
finance and profit on cost for this type of development to arrive
at a residual land value. We have also made deductions for other
relevant costs, such as overage payments and planning risk where
appropriate.
For the commercial investment properties we have applied the
investment method whereby the income is capitalised at an
appropriate investment yield based on comparable transactions in the
market place.
For the residential properties, we have used both the investment
method if the flats or houses are let and the comparative method.
Market Value Lillie Square GP Limited GBP158,805,000
Capco 50% of Lillie Square GP Limited GBP79,402,500
Lillie Square LP Limited GBP2,070,000
Lillie Square Developments Limited GBP7,520,000
Capco 50% of Lillie Square Developments GBP3,760,000
Total GBP168,395,000
Capco Share GBP85,232,500
Freehold GBP167,435,000
Leasehold GBP960,000
Purchaser's Costs We have allowed for Stamp Duty Land Tax for the land and commercial
properties as follows: Market Value of up to GBP150,000, zero; next
GBP100,000 (the portion from GBP150,001 to GBP250,000), 2.00 per cent.;
remaining amount (the portion above GBP250,000), 5.00 per cent.
We have also allowed for agents' and legal fees plus VAT at standard
market rates which amounts to 1.80 per cent.
Responsibility For the purposes of the Code, we are responsible for this Valuation
Report and accept responsibility for the information contained in
this Valuation Report and confirm that to the best of our knowledge
(having taken all reasonable care to ensure that such is the case), the
information contained in this Valuation Report is in accordance with
the facts and contains no omissions likely to affect its import. This
Report complies with, and is prepared in accordance with, and on
the basis of, Rule 29 of the Code. We authorise its content for the
purposes of Rule 29 of the Code.
Reliance Our report shall be addressed to the Addressees only. We
acknowledge that the shareholders or prospective shareholders of
the Client may rely on the Valuation Report in the form that is
incorporated into the Rule 2.7 Announcement for the purposes of
enabling them to make an informed assessment of the assets and
liabilities, financial position, profits, losses and prospects of the Client
and the rights attaching to the ordinary shares of the Client.
We further acknowledge that the shareholders or prospective
shareholders of Shaftesbury may rely on the Valuation Report in the
form that is incorporated into the Rule 2.7 Announcement.
Restrictions on use This Valuation Report has been prepared for inclusion in the Rule
2.7 Announcement. Neither the whole of the Valuation Report, nor any
part, nor references thereto, may be published in any document,
statement, circular or prospectus, nor in any communication with third
parties without our prior written approval of the form and context in
which it will appear.
JLL has given, and has not withdrawn its consent, for the Valuation
Report to be included in the Rule 2.7 Announcement.
ng included on a website as required by the Code.
Difference in valuation figures For the purposes of Rule 29.5 of the Code, we confirm that in our opinion
the current valuation of the properties as at the date of this Valuation
Report would not be materially different from the valuation of the
properties as at the Valuation Date.
Yours faithfully
Chris Strathon FRICS
Director
For and on behalf of Jones Lang LaSalle Limited
Nick Carter MRICS
Director
For and on behalf of Jones Lang LaSalle Limited
Appendix 1
Lillie Square Developments Limited: Lillie Square, London
PROPERTY REF ADDRESS TENURE
1 3 Rickett Street, London SW6 Freehold
The former Bolding Estate comprising 2-12 Rickett Street,
5-9 Rickett Street, 5-6 Roxby Place and 2b-3c Seagrave Road,
2 London SW6 Freehold
Lillie Square GP Limited: Lillie Square, London
PROPERTY REF ADDRESS TENURE AND TENANCIES
3 Lillie Square, London SW6 (Includes Roxby Place and former
Network Rail land) Freehold
4 The Atlas Public House, Seagrave Road, London SW6 Freehold
Both properties held
5 19 Seagrave Road, London SW6 Freehold
19A Seagrave Road, London SW6
6 1-5 Lillie Road, London SW6 Freehold
7 17 Lillie Road, London SW6 Freehold
Lillie Square LP Limited: Lillie Square, London
PROPERTY REF ADDRESS TENURE AND TENANCIES
8 4a and 4b Seagrave Road, London SW6 Leasehold
9 6a and 6b Seagrave Road, London SW6 Freehold
Portfolio Valuation
Prepared for:
Shaftesbury PLC
Valuation Date:
31 March 2022
Cushman & Wakefield
43-45 Portman Square
London W1H 6LY
Tel +44 (0) 20 3296 3000
www.cushmanwakefield.com
Strictly Confidential - For Addressee Only
VALUATION RECORD
To: The Directors of Shaftesbury PLC ("Shaftesbury")
(the "Company" or "you")
22 Ganton Street
Carnaby
London W1F 7FD
The Directors and Proposed Directors of Capital & Counties
Properties PLC ("Capco")
Regal House
14 James Street
London WC2E 8BU
Evercore Partners International LLP
15 Stanhope Gate
LONDON W1K 1LN
(in its capacity as financial adviser to the Company)
N.M. Rothschild & Sons Limited
New Court
St Swithin's Lane
London EC4N 8AL
(collectively referred to as the "Addressees")
Property: A portfolio of investment properties, the address, tenure and property
type of which is included in Appendix A (the "Properties" and each a "Property").
Report date: 16 June 2022
Valuation date: 31 March 2022 ("Valuation Date")
1. Instructions
1.1. Appointment
We are pleased to submit our report and valuation (the "Valuation Report"), which has been
prepared in accordance with the engagement letter entered into between us dated 23 May 2022
(the "Engagement Letter"). This Engagement Letter and the terms set out therein, together with
our Terms of Business, which were sent to you with our Engagement Letter, constitute the
"Engagement", which forms an integral part of this Valuation Report.
Included in the Engagement Letter is the Valuation Services Schedule, which is included as
Appendix A ("VSS"). It is essential to understand that the contents of this Valuation Report are
subject to the various matters we have assumed, which are referred to and confirmed as
Assumptions in the Valuation Services Schedule (which forms part of the Engagement). Where
Assumptions detailed in the Valuation Services Schedule are also referred to within this Valuation
Report they are referred to as an "assumption" or "assumptions". Unless otherwise defined, all
capitalised terms herein shall be as defined in the Engagement.
You have informed us that the Properties are categorised as investments.
We have valued the property interests in the above Property as at the Valuation Date. A list of the
addresses of each of the properties in the portfolio, together with a note of their tenure, is included
in Appendix 1 in the VSS.
1.2. Compliance with RICS Valuation - Global Standards
We confirm that the valuation and Valuation Report have been prepared in accordance with the
RICS Valuation - Global Standards, which incorporate the International Valuation Standards ("IVS")
and the RICS UK national supplement (the "RICS Red Book"), edition current at the Valuation
Date. It follows that the valuations are compliant with IVS.
1.3. Compliance with the City Code on Takeovers and Mergers (the "Code")
The valuation and the Valuation Report comply with Rule 29 of the Code.
1.4. Status of Valuer and Conflicts of Interest
We confirm that all valuers who have contributed to the valuation have complied with the
requirements of PS1 of the RICS Red Book. We confirm that we have sufficient current knowledge
of the relevant markets, and the skills and understanding to undertake the valuation competently.
The Valuation is the responsibility of Charles Smith MRICS, who is a member of the RICS Valuer
Registration Scheme and is in a position to provide an objective and unbiased Valuation, and who
will act as "External Valuer" (as defined in the RICS Red Book) qualified for the Purpose of Valuation.
C&W have current involvement with the Properties in that they are the incumbent valuers to the
Company and provide biannual valuations for inclusion in the Company's accounts. C&W undertake
various instructions in providing property advice to the Company. We therefore confirm that C&W
have current, anticipated and previous recent involvement with the Properties. The advice includes
regular valuations of the Properties for accounts purposes as well as ongoing agency, development
and other advice in respect of the Properties. We refer to paragraph 1.6 regarding the level of fees
received from the Company.
In September 2020, we undertook a valuation of the Properties on behalf of the Company for
inclusion in a combined prospectus and circular in connection with a proposed firm placing, placing
and open offer and offer for subscription of new ordinary shares of the Company.
C&W acted on behalf of the vendor of the property at 47-49 Charing Cross Road when the Company
acquired the property in 2017 and have also acted for Longmartin Properties Limited, a joint venture
company owned in equal shares by Shaftesbury PLC and the Mercers' Company. C&W are
currently instructed as retail letting agents by the Company in respect of all its retail properties.
This involvement has been discussed with the C&W compliance officer and the Company, who
have provided written confirmation that, and notwithstanding our previous involvement, we may
proceed with the Valuation.
Accordingly, we confirm that: (i) we are not aware of any reason why we would not satisfy the
requirements of Rule 29.3(a)(i) of the Code; and (ii) during the term of the Engagement, we shall
not do anything that could reasonably be expected to cause us not to satisfy the requirements of
Rule 29.3(a)(i) of the Code.
1.5. Purpose of Valuation
The purpose of the Valuation Report ("Purpose of Valuation") is:
a) for inclusion in the announcement of the all-share merger of Capco and Shaftesbury
(the "Proposed Transaction") pursuant to Rule 2.7 of the Code (the "Announcement"); and
b) to establish whether a material change has occurred in the Valuation of the Properties
since the Valuation Date and the date of the relevant Transaction Document.
Therefore, in accordance with PS 2.5 and UK VPS 3, we have made certain disclosures in
connection with this valuation instruction and our relationship with you. These are included in item
1.6 below.
For the purposes of this Valuation Report, the Announcement shall be referred to as the
"Transaction Documentation" and "Transaction Document" shall mean any such document.
1.6. Disclosures required under the provisions of PS 2.5 and UK VPS 3
Signatories
Charles Smith MRICS has been the signatory of Valuation Reports provided to the Company in
respect of the Properties for the purpose of inclusion in the Company's report and accounts, for a
continuous period since 2013. This is the first time that Adam Patterson has been a signatory to a
report addressed to the Company.
C&W endorses the RICS view that it is good practice to rotate the valuer responsible for Regulated
Purpose Valuations at intervals not exceeding seven years. C&W's policy in this regard is explained
in the Engagement.
Fee income from the Client
C&W's financial year end is 31 December. We confirm that the proportion of fees payable by the
Client to C&W in the financial year to 2021 was less than 5%. We anticipate that the proportion of
fees for the financial year to 31 December 2022 will remain at less than 5%.
C&W's relationship with the Company and involvement in the Properties
C&W has been undertaking various instructions for the Company for a number of years and we
confirm that we have current, anticipated and previous recent involvement with certain of the
Properties. We confirm that this factor has been discussed with the Company who has agreed for
C&W to act in such capacities.
C&W have not received an introductory fee or negotiated a purchase of any of the Properties within
the last 12 months.
1.7. Inspection
The Properties were subject to internal or external inspection, by Chartered Surveyors who are
qualified for the purposes of this instruction, between 1 April 2021 and 31 March 2022. We
undertake a rolling inspection programme whereby each Property is subject to internal inspection
at least once every five years.
The Properties have been revalued for the purpose of this Report without internal inspection of the
majority of the Properties.
The Company has confirmed that no material changes to the physical attributes of the Properties
or the nature of their location have occurred since our inspection, our valuation as at the Valuation
Date and the date of this Report.
1.8. Departures
We have made no Departures from the RICS Red Book.
1.9. Limitations
The valuation is not subject to any limitations.
1.10. Floor Areas
Unless specified otherwise, floor areas and analysis in this report are based on the following bases
of measurement, as defined in RICS Property Measurement and RICS Code of Measuring Practice
(the edition current at the Valuation Date):
Retail NIA
Restaurant GIA
Office NIA
Residential GIA
1.11. Measurement
We have adopted floor areas as provided to us by the Company.
1.12. Accommodation
Source of Floor Areas
The Company or its advisers have provided us with the floor areas of the Properties that are
relevant to our valuation. As instructed, we have relied on these areas and have not checked
them on site. We have made an Assumption that the floor areas supplied to us have been
calculated in accordance with the RICS Property Measurement (the edition current at the
Valuation Date).
1.13. Sustainability and ESG
Sustainability is an increasingly important factor in the UK real estate market. The UK has
committed to net zero carbon by 2050, with legislation already in place to reduce CO2 emissions
from buildings. We consider it likely that further legislation and regulations will be introduced in
coming years. Alongside this, occupiers and investors in some sectors are becoming more
particular in the sustainability aspects of the buildings they choose to occupy or purchase.
The existence of a green premium for the more sustainable buildings is a matter of ongoing market
monitoring, investigation and debate. Appropriate levels of market evidence have yet to be
established to demonstrate fully whether additional value can be ascribed to such buildings.
However, it should be noted that the market is evolving due to the focus from both occupiers and
investors on a property's sustainability credentials. We expect that awareness of sustainability
matters will increase throughout all sectors of the property market.
1.14. Sources of Information
In addition to information established by us, we have relied on the information obtained from you
and others listed in this Valuation Report, and in particular in Appendix B, Sources of Information.
Having taken reasonable care to ensure that, in our professional opinion, the information provided
is likely to be reliable, we have made the Assumption that the information provided by you and your
respective professional advisers in respect of the Properties we have valued is both full and correct.
We have made the further Assumption that details of all matters relevant to value within your and
their collective knowledge, such as prospective lettings, rent reviews, outstanding requirements
under legislation and planning decisions, have been made available to us, and that such information
is up to date.
We confirm that the valuation has been undertaken bringing the required levels of independence
and objectivity to bear on the instruction, applying professional scepticism to information and data
where it is provided and relied on as evidence.
1.15. General Comment
A high proportion of the total value of the Properties is accounted for by properties situated in
adjacent and/or adjoining locations in four specific areas of the West End of London: Carnaby Street
and its environs, Chinatown and the adjoining area immediately west of Wardour Street (south of
its junction with Shaftesbury Avenue), and the areas around Seven Dials in the western part of
Covent Garden and a block of properties to the east of the Central Covent Garden Piazza with its
main frontage to Wellington Street. These areas are all dominated by retail and restaurant uses.
In our opinion, at the Valuation Date, this particular unusual confluence of ownership and use
characteristics may cause some prospective purchasers to regard parts of the portfolio when
combined as having a greater value than the aggregate of the individual values of the combined
properties which make up those parts.
All valuations are professional opinions on a stated basis, coupled with any appropriate
assumptions or Special Assumptions. A valuation is not a fact, it is an estimate. The degree of
subjectivity involved will inevitably vary from case to case, as will the degree of certainty, or
probability, that the valuer's opinion of value would exactly coincide with the price achieved were
there an actual sale at the Valuation Date.
Property values can change substantially, even over short periods of time, and so our opinion of
value could differ significantly if the date of valuation were to change. If you wish to rely on our
valuation as being valid on any other date you should consult us first.
Should you contemplate a sale, we strongly recommend that the Properties are given proper
exposure to the market.
A copy of this Valuation Report should be provided to your solicitors and they should be asked to
inform us if they are aware of any aspect which is different, or in addition, to that we have set out;
in which case we will be pleased to reconsider our opinion of value in the light of their advice and /
or opinions.
2. Taxation and costs
The opinion of value which C&W will attribute to the Properties will be the figure C&W considers
would appear in a contract for sale, subject to the appropriate assumptions for the Basis of Value
reported. Costs associated with the transaction, including any taxes, legal fees and other expenses,
would be payable by the purchaser in addition to the figure reported.
No adjustment will be made by C&W to reflect any liability to taxation that may arise on disposal, or
development, of the Properties, nor for any costs associated with disposal incurred by the owner.
Furthermore, no allowance will be made by C&W to reflect any liability to repay any government or
other grants, taxation allowance or lottery funding that may arise on disposal.
C&W's valuation figure for the Properties will be that receivable by a willing seller excluding VAT, if
applicable.
3. VAT
The valuations and rents included in this Valuation Report are net of value added tax at the
prevailing rate.
4. Property Information
4.1. Enquiries
We have undertaken and completed the various matters referred to in the "Scope of Services"
section of the VSS in Appendix A. Save as referred to below, the results of our enquiries and
inspections do not contradict the Assumptions which we have made and are referred to in the
Engagement.
5. Basis of Valuation
The basis of value for this Valuation Report as required by the Code is Market Value. These
valuations have, therefore, been prepared on a Market Value basis.
Market Value
The value of the Properties has been assessed in accordance with the relevant parts of the current
RICS Red Book. In particular, we have assessed Market Value as referred to in VPS4, Item 4 of
the current edition of the RICS Valuation - Global Standards which incorporate the International
Valuation Standards ("IVS") and the RICS UK national supplement (the "RICS Red Book"), and
applying the conceptual framework which is set out in IVS104:
"The estimated amount for which an asset or liability should exchange on the valuation date
between a willing buyer and a willing seller in an arm's length transaction, after proper marketing
and where the parties had each acted knowledgeably, prudently and without compulsion."
The Code requires that the basis of valuation should be Market Value. Our valuation as at 31 March 2022,
addressed to the Company for financial reporting purposes, was on the basis of Fair Value - IFRS
(the definition of which is reproduced in Appendix 2 to the Valuation Services Schedule
attached at Appendix A). However, the references in the IFRS 13 definition to market participants
and a sale make it clear that, for most practical purposes, the concept of Fair Value is consistent
with that of Market Value, and so there would be no difference between them in terms of the
valuation figure reported.
Our Valuation has been undertaken in accordance with the relevant provisions of the Code and has
been undertaken by us as External Valuers as defined in the RICS Valuation Standards (being
independent experts for the purposes of the Code). The Properties are held as investments and we
have, therefore, used the appropriate property investment valuation methodology to calculate the
Market Values.
In accordance with the requirements of the Code, we have also reported the Estimated Net Annual
Rent Receivable which represents the total income receivable from all tenancies and licences,
(including deemed income on outstanding rent reviews and any deemed income on tenancies that
are holding over), less any non-recoverable revenue costs. The deemed income on outstanding
rent reviews is our opinion of rental value assessed in accordance with our understanding of the
terms of the occupational lease review provisions. Non-recoverable revenue costs include, but are
not limited to, such items as any non-recoverable service charge, empty rates, insurance, marketing
contribution or ground rent payable by the landlord.
6. Assumptions and Special Assumptions
The Glossary in the RICS Red Book refers to an Assumption as a "supposition taken to be true".
In this context, Assumptions are facts, conditions or situations affecting the subject of, or approach
to, a valuation that, by agreement, need not be verified by a valuer as part of the valuation process.
A Special Assumption is referred to in the Glossary in the RICS Red Book as an Assumption that
"either assumes facts that differ from the actual facts existing at the valuation date, or that would
not be made by a typical market participant in a transaction on the valuation date". We confirm that
no special assumptions have been made in undertaking our valuation.
7. Valuation Approach and Reasoning
Our opinion of the Market Value of the Property has been primarily derived using comparable recent
rental and investment market transactions on arm's length terms. We have adopted an investment
method of valuation based on an income approach and adopted a suitable market capitalisation rate.
For a property in the course of refurbishment/reconfiguration, the Market Value will reflect the
investment value of the completed property, assuming that it had been completed at the valuation
date, less the anticipated costs to complete.
Other than as stated below, each Property has been valued individually and we have excluded any
addition or deduction that might arise if a sale as a portfolio were contemplated. We have assumed
that each of the Properties had been marketed in an orderly way and not placed on the market at
the same time.
In accordance with VPS1 Item 3.2 d) and VPGA 9 of the current edition of the RICS Valuation -
Global Standards, in undertaking our valuations we have lotted together certain individual
properties to form a separate property (each referred to as a "Property", collectively as the
"Properties") in the manner we consider to be most likely to be adopted in the case of an actual
sale. We consider that lotting the properties together on the basis reflected in our valuations would
allow a purchaser to capitalise on the estate management advantages and opportunities available
from such comprehensive ownership.
8. Valuation
Having regard to the foregoing, we are of the opinion that the aggregate of the Market Values
("Aggregate Value"), as at the Valuation Date, of the freehold and leasehold interests in the
Properties owned by the Company, subject to the Assumptions and comments in our Valuation
Report and the Appendices, was:
Valuation
Total Aggregate GBP3,261,650,000 (Three billion, two hundred and sixty-one
million, six hundred and fifty thousand pounds)
The apportioned values, as at the Valuation Date, of the freehold, long leasehold and part
freehold/leasehold elements were as follows:
Freehold GBP742,850,000 (Seven hundred and forty-two million, eight hundred
and fifty thousand pounds)
Part freehold, GBP2,485,700,000* (Two billion, four hundred and eighty-five million,
part long seven hundred thousand pounds)
leasehold
Long GBP33,100,000** (Thirty-three million, one hundred thousand pounds)
Leasehold
Total GBP3,261,650,000 (Three billion, two hundred and sixty-one million,
six hundred and fifty thousand pounds)
* Within this sum are five properties (each a "Lotted Property") which are the result of the
lotting together of several smaller properties. The majority of each Lotted Property is held
freehold but includes properties which are held on long leases. Also included is 23/27 New
Row which is held part freehold and part leasehold, the majority of the value being in the
leasehold element. For details of the tenure of each property, please refer to the Property
Schedule in Appendix 1 to Appendix A. We have undertaken a notional apportionment of
the Fair Value between the freehold and long leasehold elements of each Lotted Property
below. The individual freehold and long leasehold figures above do not themselves
represent the Fair Value of the two elements.
** Long leasehold is defined as an interest with an unexpired term of more than 50 years.
Property Freehold Long Leasehold Total
Carnaby GBP1,165,750,000 GBP24,650,000 GBP1,190,400,000
Main Block
(One billion, one hundred and (Twenty-four million, (One billion, one hundred
sixty-five million, seven hundred six hundred and fifty and ninety million, four
and fifty thousand pounds) thousand pounds) hundred thousand pounds)
Chinatown GBP383,700,000 GBP119,150,000 GBP502,850,000
Central
(Three hundred and eighty-three (One hundred and (Five hundred and two
million, seven hundred thousand pounds) nineteen million, million, eight hundred and
one hundred and fifty fifty thousand pounds)
thousand pounds)
Chinatown GBP213,700,000 GBP9,250,000 GBP222,950,000
Western
(Two hundred and thirteen million, (Nine million, two (Two hundred and twenty-two
seven hundred thousand pounds) hundred and fifty million, nine hundred
thousand pounds) and fifty thousand pounds)
Soho - GBP120,975,000 GBP8,675,000 GBP129,650,000
Berwick
Street Lot (One hundred and twenty million, (Eight million, six (One hundred and twenty-nine
nine hundred and seventy-five hundred and seventy-five million, six hundred
thousand pounds) thousand pounds) and fifty thousand pounds)
Covent GBP421,330,000 GBP13,770,000 GBP435,100,000
Garden -
Single Lot (Four hundred and twenty-one (Thirteen million, seven (Four hundred and thirty-five
million, three hundred and thirty hundred and seventy million, one hundred thousand pounds)
thousand pounds) thousand pounds)
23/27 New Row GBP900,000 GBP3,850,000 GBP4,750,000
(Nine hundred thousand pounds) (Three million, eight (Four million, seven hundred and
hundred and fifty pounds) fifty thousand thousand pounds)
Total GBP2,306,355,000 GBP179,345,000 GBP2,485,700,000
(Two billion, three hundred and (One hundred and (Two billion, four hundred
six million, three hundred and seventy-nine million, and eighty-five million,
fifty-five thousand pounds) three hundred and seven hundred thousand pounds)
forty-five thousand pounds)
The figures quoted above are aggregated figures of the individual Market Values for each property
interest in the portfolio. If the portfolio were to be sold as a single lot or in groups of properties, the
total values could differ significantly.
In arriving at our opinion of Market Value of the aggregate of the interests of the above Properties,
we have valued each property individually. We have assumed that the Properties would be
marketed in an orderly way and not all placed on the market at the same time.
Estimated Net Annual Rent Receivable
The Estimated Net Annual Rent Receivable, which represents the total income receivable from all
tenancies and licences, (including deemed income on outstanding rent reviews and any deemed
income on tenancies that are holding over), less any non-recoverable revenue costs as at the
Valuation Date, was:
GBP101,131,173 per annum (One hundred and one million, one hundred and thirty-one thousand,
one hundred and seventy-three pounds per annum)
Properties with an individual value of more than 5% of the Company's total aggregate valuation
We have set out below the Properties included in the Aggregate Value where the Company owns
a property with a value of more than 5% of the Company's total aggregate valuation.
Property Description, Age and Tenure Terms of Existing Tenancies Market Value
Covent Garden Primarily centered around The commercial GBP435,100,000
Single Lot, London the Seven Dials Monument elements of the
in Covent Garden the property are subject to
"Single Lot" comprises a around 120 commercial
mix of retail, restaurant, leases, the majority of
office and residential which are on effective
accommodation. The full repairing and
single lot comprises insuring terms. Lease
buildings of various size terms vary; typically
and ages, including the they are for terms of five
recently refurbished years for retail and
Thomas Neals Centre. The office premises and up
bulk of the properties are to 10 years for restaurants.
situated on Earlham Street, The majority of the
Monmouth Street, Neal residential flats in the
Street and in Neals Yard. upper parts are let on
The Single Lot is Assured Shorthold Tenancies
predominantly held freehold for periods of three years.
albeit there are six commercial
long leasehold elements.
Carnaby Estate, A primarily retail and The commercial GBP1,190,400,000
Main Block, London restaurant mixed use elements of the
W1 estate located in London's property are subject to
West End comprising around 275 leases, the
approximately 685,000 sq ft. majority of which are on
The property is centred effective full repairing
on Carnaby Street and its and insuring terms.
surrounding streets. We Lease terms vary;
understand that the typically they are for
buildings in the block terms of five years for
predominantly date from retail and office
the 18th to 20th centuries. premises and up to 25
The majority of the property years for restaurants.
is freehold with five long The majority of the
leasehold elements on long residential flats in the
leases at an aggregate of upper parts are let on
GBP23 per annum Assured Shorthold
Tenancies for periods
of three years.
Central Chinatown Centred on Gerrard Street The commercial GBP502,850,000
Block, London W1 and its neighbouring elements of the
streets to the east of property are subject to
Wardour Street, the around 90 leases, the
property comprises a majority of which are on
mixed use block of effective full repairing
approximately 215,000 sq and insuring terms.
ft, primarily in restaurant Lease terms vary;
and retail uses. We typically they are for
understand that the terms of five years for
buildings in the block retail and office
predominantly date from premises and up to 25
the 18th to 20th centuries. years for restaurants.
The majority of the property The majority of the
is freehold; there are 15 residential flats in the
leasehold interests (11 of upper parts are let on
which relate to residential Assured Shorthold
flats) at aggregate ground Tenancies for periods
rents of GBP110 per annum. of three years.
Western Chinatown Centred on the west side of The commercial GBP222,950,000
Block, London W1 Wardour Street and its elements of the
neighbouring streets, the property are subject to
property omprises a around 45 leases, the
mixed use block of majority of which are on
approximately 130,000 sq effective full repairing
ft, primarily in restaurant and insuring terms.
and retail uses. The Lease terms vary;
property is freehold. We typically they are for
understand that the terms of five years for
buildings in the block retail and office
predominantly date from premises and up to 25
the 18th to 20th centuries. years for restaurants.
The majority of the
residential flats in the
upper parts are let on
Assured Shorthold
Tenancies for periods
of three years.
Property Disposals
There have been no property disposals since the Valuation Date.
9. Disclosures in accordance with the Code
It is confirmed that the Valuation Report is issued solely for (i) inclusion in the Announcement and
(ii) for publication on the websites as required by the Code.
Material Difference
For the purposes of Rule 29.5 of the Code, we confirm that, in our opinion, there is no material
difference between the values stated in this Valuation Report and the values that would be stated
were the Valuation Date the date of the Announcement.
Consent
C&W has given and has not withdrawn its consent to the inclusion of this Valuation Report in the
Announcement in the form and context in which it is included.
Responsibility
For the purposes of the Code, we are responsible for this Valuation Report and accept responsibility
for the information contained in this Valuation Report and confirm that, to the best of our knowledge,
(having taken all reasonable care to ensure that such is the case), the information contained in this
Valuation Report is in accordance with the facts and contains no omissions likely to affect its import.
This Report complies with, and is prepared in accordance with, and on the basis of, the Code. We
authorise its content for the purposes of Rule 29 of the Code.
10. Disclosure
Except in connection with the Purpose of the Valuation set out above, or as expressly contemplated
in the Engagement Letter, you must not disclose the contents of this Valuation Report to a third
party in any way, including where we are not referred to by name or if the Valuation Report is to be
combined with other reports, documents or information, without first obtaining our written approval
to the form and context of the proposed disclosure in accordance with the terms of the Engagement.
We will not approve any disclosure that does not refer adequately to the terms of the Engagement
and any Special Assumptions or Departures that we have made.
This Valuation Report or any part of it may not be modified, altered (including altering the context
in which the Valuation Report is displayed) or reproduced without our prior written consent. To the
extent permitted by law, we hereby exclude all liability arising from use of and/or reliance on this
Valuation Report by any person or persons except as otherwise set out in the terms of the Engagement.
We consent to the publication and reproduction of this Valuation Report as required by Rules 26 and
29 of the Code, as issued by The Takeover Panel.
11. Reliance
No reliance may be placed upon the contents of this Valuation Report by any party for any purpose,
other than in connection with the Purpose of Valuation.
Save for any responsibility to any person arising under the Code, and to the fullest extent permitted
by law, we do not assume any responsibility and will not accept any liability to any person other
than the Addressees (save as otherwise provided for in the terms of the Engagement) for any loss
suffered by any such other person as a result of, arising out of, or in connection with this Valuation
Report or our statement, required by and given solely for the purposes of complying with Rule 29
of the Code.
This Valuation Report may be relied upon only in connection with the Purpose of Valuation stated
and only by:
(i) the Addressees;
(ii) the shareholders and prospective shareholders of the Company; and
(iii) by such other parties who have signed a Reliance Letter.
Signed for and on behalf of Cushman & Wakefield Debenham Tie Leung Limited
Charles Smith MRICS Adam Patterson MRICS
International Partner Partner
RICS Registered Valuer RICS Registered Valuer
+44 (0)207 152 5215 +44 (0)207 152 5454
charles.h.smith@cushwake.com adam.patterson@cushwake.com
APPEN DIX A: ENGAGEMENT
Services Schedule - Valuation & Advisory
1. Property Details
Appendix 1 includes the address, tenure and property type of each of the properties ("Properties", and each
a "Property") to be valued ("Property Schedule").
The Properties are held by various subsidiary companies of Shaftesbury PLC (Shaftesbury PLC and its
subsidiary companies are collectively referred to as the "Client").
It is important to note that, where the Company holds a proportion of the ownership in an individual property
via a shareholding in a separate holding vehicle, our valuation will be of the 100% legal property interest held
by the holding vehicle. In respect of the properties held in joint ventures or by associates, the Valuation Report
will include apportionments of the Market Values of the property interests based on the Company's share of
the proportionate interests in the joint ventures or associates.
2. Client
Shaftesbury PLC ("Client"). For the avoidance of doubt, Evercore Partners International LLP, N.M. Rothschild
& Sons Limited and Capital & Counties Properties PLC will not constitute a "Client" for the purposes of the
Terms of Business.
3. Addressees
The Valuation Report will be addressed to the directors of Shaftesbury PLC, to the directors and proposed
directors of Capital & Counties Properties PLC ("Capco"), Evercore Partners International LLP (in its
capacity as financial adviser and Rule 3 adviser to the Client) ("Evercore") and to N.M. Rothschild &
Sons Limited ("Rothschild & Co") in its role as UK sponsor to Capco (together, the "Addressees"), and
will also be publicly available when included in the Announcement.
The Addressees shall be entitled to rely on and enforce the terms of the Engagement as set out in the
Engagement Letter and on the Valuation Report subject in each case to the terms of the Engagement.
By relying on the Valuation Report, Evercore shall be deemed to acknowledge and agree that C&W's duties
and obligations to Evercore under and in connection with the Valuation Report shall be no different or greater
and of no longer duration than the duties and obligations which C&W owes to the Client under the Engagement.
C&W shall have no greater liability to the Addressees by virtue of such reliance, either in nature, extent, or in
time, than C&W has to the Client under the Engagement and C&W shall be entitled to rely on any limitation in
the Engagement and to raise the equivalent rights in defence of liability or indemnity to the Addressees (both
jointly and severally) as are available to C&W against the Client under the Engagement.
C&W's limit of liability under this Engagement represents the maximum total liability to Evercore and to all
other parties permitted to rely on the Valuation Report in the aggregate.
Nothing in this Agreement excludes or limits C&W's liability to the extent that such liability may not be excluded
or limited as a matter of applicable law or the requirements of the Financial Conduct Authority or the London
Stock Exchange.
4. Client Instructions
The Client has instructed C&W to:
a. undertake a valuation of the legal interests in the Properties described in the Property Schedule
("Valuation") as at 31 March 2022 (the "Valuation Date");
b. provide a valuation report in the format referred to in the 'Scope of Services' section below ("Valuation
Report") for the following purposes of valuation ("Purposes of Valuation"). For inclusion in:
1. the announcement of the all share merger of Capco and Shaftesbury (the "Proposed
Transaction") made by Capco pursuant to Rule 2.7 of the City Code on Takeovers and Mergers
(the "Code") (the "Announcement"); and
2. for publication on any websites as required pursuant to the Code.
For the purposes of this letter, the Announcement shall be referred to as the "Transaction
Documentation" and "Transaction Document" shall mean any such document;
c. Establish whether a material change has occurred in the Valuation of the Properties since the
Valuation Date and the date of the relevant Transaction Document;
d. Provide a consent letter, among other things, consenting to the inclusion of the Valuation Report in
the Transaction Documentation;
e. Provide a correct extraction letter in relation to information included in any Transaction Document
extracted from the Valuation Report; and
f. Provide a bring down comfort letter dated the date of publication and/or release of the relevant
Transaction Document.
5. Timetable
C&W will provide: (a) a preliminary draft Valuation Report; and (b) a final Valuation Report.
A timetable covering the delivery of the draft and final Valuation Report will be drawn up and agreed with the
Client prior to the commencement of the work.
C&W's work will be dependent upon receiving full co-operation from the Client and timely disclosure of all
information, as we may need for the purposes of our work.
6. Basis of Valuation
The basis of valuation for the Valuation Report as required by the Code is Market Value and therefore the
valuations have been prepared on a Market Value basis.
In accordance with the Client's instructions, C&W will undertake the Valuation on the following basis:
6.1 Market Value
Market Value as referred to in VPS4, Item 4 of the current edition of the RICS Valuation - Global Standards
which incorporate the International Valuation Standards ("IVS") and the RICS UK national supplement (the
"RICS Red Book"), and applying the conceptual framework which is set out in IVS104:
"The estimated amount for which an asset or liability should exchange on the valuation date between a willing
buyer and a willing seller in an arm's length transaction, after proper marketing and where the parties had each
acted knowledgeably, prudently and without compulsion"
6.2 Special Assumptions
The Glossary of the RICS Red Book states that an Assumption "that either assumes facts that differ from the
actual facts existing at the valuation date, or that would not be made by a typical market participant in a
transaction on the valuation date" is a "Special Assumption".
As instructed, we will not make any Special Assumptions.
7. Scope of Services
Included in the Services are:
7.1 Valuation Report
Providing a Valuation Report that will be prepared in English. C&W will provide one electronic copy of the
Valuation Report and, if requested, one signed hard copy. Where the Valuation Report is required to contain
site plans these will be based on extracts of the Ordnance Survey or other maps showing, for identification
purposes only, C&W's understanding of the extent of title based on site inspections or copy title plans supplied
to C&W. The Client should not rely on C&W's plans to define boundaries.
As agreed, C&W will not provide full details of the valuation approach and reasoning in the Valuation Report.
We will provide a summary property schedule for Properties with a value of over 5% of the aggregate valuation.
7.2 Currency
Providing a Valuation in UK Pounds Sterling (GBP).
7.3 Inspections
Inspections are undertaken in accordance with the Valuers Brief, set out in the letter of appointment from the
Company to C&W in respect of undertaking the biannual valuations for inclusion in Company Accounts.
7.4 Floor Areas
Adopting floor areas provided to C&W for the purpose of the Valuation, (subject to the provisions of section
12.2 of the Assumptions).
7.5 Tenancies & Leasing
Relying on tenancy information provided by the Client, subject to the provisions of section 12.3 of the
Assumptions. For the avoidance of doubt, C&W will not read copy leases.
7.6 Environmental Matters (including Flooding)
Reviewing the relevant Local Authority websites regarding environmental matters, including contamination and
flooding and reviewing (subject to the provisions of section 0 of the Assumptions). For the avoidance of doubt,
C&W will not undertake an environmental assessment or prepare a land quality statement, which would be
the responsibility of an environmental consultant or chartered environmental surveyor. In this respect, C&W
will have regard to any environmental reports provided to C&W (subject to the provisions of section 12.4 of the
Assumptions).
7.7 Title
Reading a Certificate of Title where this is provided to C&W and C&W will reflect its contents in the Valuation
(subject to the provisions of section 12.6 of the Assumptions).
C&W will not inspect the title deeds of the Properties.
Unless agreed in writing in advance with the Client, C&W will not obtain information from the Land Registry.
7.8 Condition of Structure & Services, Deleterious Materials and Ground Conditions
Taking into account the general condition of each Property as observed from the inspections undertaken for
the purposes of the valuations for accounts purposes as at 31 March 2022 (subject to section 12.7 of the
Assumptions). Where a separate condition or structural survey has been undertaken and made available to
C&W, C&W will reflect the contents of the survey or condition report in the Valuation Report, but may need to
discuss the survey or condition report with the originating surveyor.
7.9 Statutory Requirements and Planning
As previously instructed by the Client, C&W will not make enquiries of the relevant planning authorities in
respect of each Property. C&W will make verbal enquiries of the Client's planning advisers as appropriate as
to the possibility of highway proposals, comprehensive development schemes and other ancillary planning
matters that could affect property values. C&W will also seek to ascertain whether any outstanding planning
applications exist which may affect any Property, and whether any Property is listed or included in a
Conservation Area. C&W will also attempt to verify the existing permitted use of each Property, and endeavour
to have sight of any copies of planning permissions. For the avoidance of doubt, C&W will not undertake
formal searches.
7.10 Exclusion
Where C&W is engaged to prepare a Valuation Report in connection with a proposed transaction in respect of
the Properties, expressly excluded from the Services is the provision of any recommendation or otherwise by
C&W as to whether to proceed with such a proposed transaction. Accordingly, the Client must not in any
circumstances construe the Valuation Report as a recommendation whether or not to proceed with such a
proposed transaction.
8. Basis of Appointment
C&W confirms that:
1. The Valuation and Valuation Report will be undertaken in accordance with the appropriate sections
of the current edition of the RICS Valuation - Global Standards which incorporate the International
Valuation Standards ("IVS") and the RICS UK national supplement (the "RICS Red Book"). In this
context "current edition" means the version in force at the Valuation Date.
2. The Valuation Report will comply with the requirements of Rule 29 of the Code.
The Valuation will be the responsibility of Charles Smith MRICS, who is a member of the RICS Valuer
Registration Scheme and is in a position to provide an objective and unbiased Valuation. The Valuation will
be undertaken by suitably qualified valuers, who have the knowledge, skills and understanding to undertake
the Valuation competently and who will act as "External Valuers " (as defined in the RICS Red Book) qualified
for the Purpose of Valuation.
C&W does not (and any affiliates of C&W do not) act as external valuers as defined under the Alternative
Investment Fund Manager's Directive ("AIFMD") legislation, or its equivalent under local law. C&W expressly
disclaims any responsibility or obligations under AIFMD and/or its equivalent unless expressly agreed in writing
in advance by C&W. C&W have current involvement with the Properties in that they are the incumbent valuers
to the Company and provide biannual valuations for inclusion in the Company's accounts. C&W undertake
various instructions in providing property advice to the Company. We therefore confirm that C&W have current,
anticipated and previous recent involvement with the Properties. The advice includes regular valuations of the
Properties for accounts purposes as well as ongoing agency, development and other advice.
Most recently, in September 2020, we undertook a valuation for inclusion in a combined prospectus and
circular in connection with a proposed firm placing, placing and open offer and offer for subscription of new
ordinary shares of the Company.
C&W acted on behalf of the vendor of the property at 47-49 Charing Cross Road and have also acted for
Longmartin Properties Limited, a joint venture company owned in equal shares by Shaftesbury PLC and the
Mercers' Company. C&W are currently instructed as retail letting agents by the Client.
This involvement has been discussed with the C&W compliance officer and the Company, who have provided
written confirmation that, and notwithstanding our previous involvement, we may proceed with the Valuation.
C&W confirms that we have had no previous material interest in the Company or material connection or
involvement with any of the Properties other than as set out above, and that copies of our conflict of interest
checks have been retained within the working papers.
Accordingly, we confirm that: (i) we are not aware of any reason why we would not satisfy the
requirements of Rule 29.3(a)(i) of the Code; and (ii) during the term of the Engagement, we shall not do
anything that could reasonably be expected to cause us not to satisfy the requirements of Rule 29.3(a)(i)
of the Code.
The proposed Valuation is a "Regulated Purpose Valuation" (as defined in RICS UK national supplement
("UKNS") UK VPS 3. C&W confirms that the Properties do not include any interests which have been acquired
by the Client within the 12 months preceding the Valuation Date and in respect of which C&W has either
received an introductory fee or negotiated that purchase on behalf of the Client.
In accordance with the provisions of UK VPS 3.1, in terms of any future acquisitions, C&W would be unable
to undertake a valuation of a property acquired by a C&W client within the twelve months preceding the
Valuation Date if, in relation to that property, C&W received an introductory fee or negotiated the purchase on
behalf of that client unless another firm, unconnected with C&W, has provided a valuation of that property for
the client at the time of or since the transaction was agreed.
In accordance with PS 2.5 of the RICS Red Book and UK VPS 3, the Valuation Report will set out the length
of time Charles Smith MRICS has been the signatory to valuations provided to the Client for the same purpose
as the Valuation Report, the length of time C&W has continuously been carrying out that valuation instruction
for the Client, the extent and duration of C&W's relationship with the Client and the proportion of C&W's total
fee income made up by the fees payable by the Client (to the nearest five percentage points). C&W will require
these disclosures to be made in any published references to the Valuation Report.
C&W must seek to ensure there will be no potential conflicts of interest arising not only from C&W's
involvement with the Properties and with the Client but also any related parties to the Client. Accordingly, the
Client must advise C&W of any relevant parties connected to the Client's organisation.
In accordance with PS 2 5 of the RICS Red Book, C&W confirm our policy on rotation of the valuer accepting
responsibility for Regulated Purpose Valuations and a statement of the quality control procedures that C&W
has in place, as follows:
"C&W endorses the RICS view that it is good practice to rotate the valuer responsible for Regulated Purpose
Valuations at intervals of not more than seven years, unless there are overriding circumstances to the contrary.
C&W discusses the method of rotation of the signatory to Regulated Purpose Valuation reports with its clients.
C&W operates internal quality control procedures throughout its valuation practice including a system whereby
the valuation of property meeting certain criteria requires the approval of an internal Value Committee."
9. Inclusion in the Transaction Documentation
The Valuation Report is required for inclusion in the Announcement.
C&W will, therefore, provide a final copy of the Valuation Report to be incorporated into the Announcement,
together with a consent letter addressed to each of the Addressees by which C&W consents to:
1. the inclusion of the Valuation Report within the Announcement in the form and context in which it is
included in the Announcement; and
2. the Valuation Report being published on any websites as required pursuant to the Code, provided that:
(i) C&W has first approved the form in which the Valuation Report is to appear within the Announcement; and
(ii) the consent letter is factually correct.
In addition, upon the date of publication of the Announcement, to the extent that the Valuation Report is dated
prior to the date of publication of any such document, C&W will deliver a letter to the Addressees and address
it to the Addressees and any person who we have allowed to rely on the Valuation Report for the Purpose of
the Valuation (excluding members of the general public).
C&W will include the following confirmations in the Valuation Report in compliance with the requirements of
the Code:
1. "For the purposes of Rule 29.5 of the Code there is no material difference between the values stated
in this Valuation Report and the values that would be stated were the Valuation Date the date of
Announcement."
2. "C&W has given and has not withdrawn its consent to the inclusion of this Valuation Report in the
Announcement published by Shaftesbury dated 16 June 2022 in the form and context in which it is
included."
3. "For the purposes of the Code, we are responsible for this Valuation Report and accept responsibility
for the information contained in this Valuation Report and confirm that to the best of our knowledge
(having taken all reasonable care to ensure that such is the case), the information contained in this
Valuation Report is in accordance with the facts and contains no omissions likely to affect its import.
This Report complies with the Code. We authorise its content for the purposes of Rule 29 of the
Takeover Code."
If C&W is unable to make such a statement(s), C&W shall produce a valuation report with an effective valuation
date as at the date of the Announcement.
In addition to reproduction of the full text, the Announcement may contain certain information extracted or
derived from the Valuation Report. If so, C&W will confirm in a letter, addressed to each of the Addressees
and dated the date of publication of the Announcement, whether such information has been properly and
accurately extracted or computed from the Valuation Report.
Additionally, in accordance with Rule 29.4 of the Takeover Code, the Valuation Report will state the effective
date at which the assets were valued and the professional qualifications and address of the valuer.
C&W also understands that the Client intends to distribute and publish announcements, presentations and
other documents in connection with the Announcement, both before and after the publication of the final
Transaction Documentation, which may include information extracted from the Valuation Report. Accordingly,
we confirm that such information may be included in such announcements, presentations and other documents
without our prior written consent, save that, where such announcements, presentation or other documents
refers to C&W, the information may be included only with C&W's prior written consent (which may be by way
of email) and with agreed non reliance disclaimer, which consent will not be unreasonably withheld or delayed.
C&W will, where requested: (i) circulate drafts of our Valuation Report and comfort letters, and liaise with the
Addressees and their respective legal advisers, (ii) provide comments and mark-ups to the draft Transaction
Documentation in relation to the property valuation sections and (iii) discuss with the Client, the Addressees
and their respective legal advisers, any matters and issues relating to the Valuation as they arise prior to
issuing the final form Valuation Report.
C&W acknowledges that Shaftesbury shareholders or prospective shareholders may, inter alia, rely on the
Valuation Report in the form that it is included in any Transaction Document.
Except for any responsibility arising under Rule 29 of the Code, to the fullest extent permitted by law, we do
not assume any responsibility and will not accept any liability to any other person (save as otherwise set out
in this Engagement Letter) for any loss suffered by any such other person as a result of, arising out of, or in
accordance with the Valuation Report or our statements set out above required by and given solely for the
purposes of complying with Rule 29 of the Code.
10. Special and Additional Terms
10.1 Use of Valuation Report
The Valuation Report may be used only for the Purpose of Valuation referred to in item (b) of 'Client
Instructions' in this Services Schedule.
10.2 Areas
The areas C&W report will be appropriate for the Purpose of the Valuation, but should not be relied upon for
any other purpose.
10.3 Group of Properties / Lotting
Unless C&W has confirmed otherwise in this Services Schedule, each property will be valued individually; in
the case of a portfolio, C&W will assume that each of the Properties would be marketed in an orderly way and
not placed on the market at the same time.
In accordance with VPS1 Item 3 d) and VPGA 9 of the current edition of the RICS Valuation - Global
Standards, in undertaking our valuations we will lot together certain individual properties to form a separate
property in the manner we consider to be most likely to be adopted in the case of an actual sale. We consider
that lotting the properties together on the basis reflected in our valuations would allow a purchaser to capitalise
on the estate management advantages and opportunities available from such comprehensive ownership.
10.4 Limitations
There are no limitations.
10.5 Form of the Valuation Report
The Valuation Report will be drawn up to comply with mandatory requirements of the RICS Red Book, the
requirements of the relevant provisions of the rules made by the Code (in particular Rule 29).
10.6 Disclosure
We acknowledge that the Valuation Report will be published on a website in accordance with Rule 26 of the
Code. C&W will not consent to publication or disclosure of the Valuation Report unless, where relevant, it
incorporates adequate reference to the Special Assumptions and/or Departures from the RICS Red Book
referred to in this Services Schedule. Where adequate reference to such Special Assumptions and/or
Departures are made, such consent will not be unreasonably withheld or delayed
C&W acknowledges that the Valuation Report may be included in the Transaction Documentation and also in
draft versions of the Transaction Documentation in accordance with section 10 above.
In addition, C&W agrees to the Client and Addressees disclosing the Valuation Report, strictly on a non-
reliance and no-duty basis:
1. to each of their affiliates; and its, and their respective affiliates, professional advisers, insurers,
auditors or bankers;
2. where required by law, order, rule (including the rules of any applicable stock exchange or any other
applicable supervisory or regulatory authority having jurisdiction over it or any of its affiliates) or
regulation, or a court of competent jurisdiction;
3. in seeking to establish any defence in any legal or regulatory proceeding or investigation relating to
the matters set out herein; or
4. in connection with any actual or potential dispute or claim to which it may be a party and which relates
to the matters set out herein
10.7 Age of Building
If C&W states the age of a building in the Valuation Report, this will be an estimate and for guidance only.
10.8 Condition of Structure, Foundations, Soil & Services
It is a condition of C&W or any related entity, or any qualified employee, providing advice and opinions as to
value, that the Client and/or third parties (whether notified to C&W or not) accept that the Valuation Report in
no way relates to, or gives warranties as to, the condition of the structure, foundations, soil and services.
10.9 Plant & Machinery
No allowance will be made by C&W for any items of plant or machinery not forming part of the service
installations of the buildings. C&W will specifically exclude all items of plant, machinery and equipment
installed wholly or primarily in connection with any of the occupants' businesses. C&W will also exclude
furniture and furnishings, fixtures, fittings, vehicles, stock and loose tools, except where such items would
ordinarily transfer to a prospective purchaser in the sale of a trading business as a going concern.
10.10 Goodwill
No account will be taken by C&W in the Valuation of any business goodwill that may arise from the present
occupation of the Properties, except where such business goodwill (excluding any personal goodwill) would
ordinarily transfer to a prospective purchaser in the sale of a trading business as a going concern.
10.11 Statutory Requirements & Planning
Please note the fact that employees of town planning departments now always give information on the basis
that it should not be relied upon and that formal searches should be made if more certain information is
required. Where a Client needs to rely upon the information given about town planning matters, the Client's
legal advisers must be instructed to institute such formal searches. C&W recommends that the Client requests
C&W to review its comments and Valuation in light of any resultant findings.
10.12 Defective Premises Act 1972
No allowance will be made by C&W for rights, obligations or liabilities arising under the Defective Premises
Act 1972.
10.13 Legal Issues
Legal issues, and in particular the interpretation of matters relating to title and leases, may have a significant
bearing on the value of an interest in property. No responsibility or liability will be accepted by C&W for the
true interpretation of the legal position of the Client or any other parties in respect of the Valuation. Where
C&W expresses an opinion on legal issues affecting the Valuation, then such opinion is subject to verification
by the Client with a suitable qualified legal adviser.
10.14 Deduction of Notional Purchaser's Costs
The opinion of value which C&W will attribute to the Property will be the figure C&W considers would appear
in a contract for sale, subject to the appropriate assumptions for the Basis of Value reported. Costs associated
with the transaction, including any taxes, legal fees and other expenses, would be payable by the purchaser
in addition to the figure reported.
Furthermore, the Client's attention is drawn to the fact that when assessing Market Value, for balance sheet
purposes, C&W will not include directly attributable acquisition or disposal costs in the Valuation. Where C&W
is requested to reflect these costs, they will be stated separately.
10.15 Taxation & Disposal Costs
No adjustment will be made by C&W to reflect any liability to taxation that may arise on disposal, or
development of the Property nor for any costs associated with disposal incurred by the owner. Furthermore,
no allowance will be made by C&W to reflect any liability to repay any government or other grants, taxation
allowance or lottery funding that may arise on disposal.
C&W's valuation figure for the Property will be that receivable by a willing seller excluding VAT, if applicable.
10.16 Monitoring
The compliance of the valuations undertaken in accordance with the RICS Red Book may be subject to
monitoring by the RICS under its conduct and disciplinary regulations.
10.17 Valuation Components
The components of C&W's valuation calculations (such as future rental values, cost allowances, or void
periods) may only be appropriate as part of the valuation calculations and should not be taken as a forecast
or prediction of a future outcome. The Client should not rely on any component of the valuation calculations
for any other purpose.
10.18 Properties to be Developed or in the Course of Development or Requiring Repair/Refurbishment and
Recently Completed Developments
Unless specifically agreed in writing to the contrary, C&W's fee assumes that C&W will be provided with
information relating to construction and associated costs in respect of both the work completed and the work
necessary for completion, together with a completion date. Normally such figures will be provided by the
Client's professional advisers involved in the construction programme. Unless specifically instructed to the
contrary in writing, C&W will rely on such figures, dates and information and the Client should make this fact
known to such advisers. Alternatively, on request, C&W can arrange for independent quantity surveyors to
provide an assessment of costs and dates at an additional fee charge.
11. Assumptions
The RICS Red Book contains a glossary that defines various terms used in the RICS Red Book that have a
special or restricted meaning. One such term is an assumption which is defined as "A supposition taken to be
true" ("Assumption"). Accordingly in this context, C&W will make certain Assumptions in relation to facts,
conditions or situations affecting the subject of, or approach to, the Valuation that C&W will not verify as part
of the valuation process but rather, in accordance with the definition in the RICS Red Book, will treat as true
because it is agreed that specific investigation by C&W is not required. In the event that any of these
Assumptions prove to be incorrect then the Valuation will need to be reviewed.
11.1 Confirmation of Assumptions
The Client's counter-signature of the Engagement Letter represents confirmation that all of the Assumptions,
referenced within the Assumptions section, are correct.
The Client must promptly notify C&W in writing if any of the Assumptions are incorrect. Should any amendment
to the Assumptions set out in the Services Schedule result in an increase in the scope of the Engagement this
may result in an appropriate increase in C&W's fees and expenses due under the Engagement.
Where the Properties are subject to a revaluation without re-inspection, unless the Client advises C&W in
writing in advance, C&W will make an Assumption that no material changes to the physical attributes of the
Properties and the areas in which the Properties are situated have occurred since the Properties were last
inspected by C&W.
11.2 Areas
Where C&W is provided with floor areas, C&W will make an Assumption that the areas have been measured
and calculated in accordance with the current edition of RICS Professional Statement RICS Property
Measurement.
11.3 Tenancies and Leasing
C&W's opinion of the Market Value will be subject to existing leases of which the Client or its advisors have
made C&W aware but otherwise will reflect an Assumption of vacant possession. Where C&W has undertaken
to read the leases and related documents provided to it, C&W will make an Assumption that copies of all
relevant documents will be sent to C&W and that they are complete and up to date.
Where C&W relies on tenancy and lease information provided to it, unless such information reveals otherwise,
C&W will make the Assumption that all occupational leases are on full repairing and insuring terms, with no
unusual or onerous provisions or covenants that would affect value.
C&W will make an Assumption that vacant possession can be given of all accommodation which is unlet or
occupied by the entity or its employees on service tenancies. C&W will not take account of any leases between
subsidiaries unless C&W states otherwise in the Services Schedule.
C&W will not undertake investigations into the financial strength of any tenants unless otherwise referred to in
the Valuation Report. Unless C&W has become aware by general knowledge, or has been specifically advised
to the contrary, C&W will make an Assumption that:
a. where a Property is occupied under leases, then the tenants are financially in a position to meet their
obligations, and
b. there are no material arrears of rent or service charges, breaches of covenant, current or anticipated
tenant disputes.
However, the Valuation will reflect a potential purchaser's likely opinion of the credit worthiness of the type of
tenants actually in occupation, or responsible for meeting lease commitments, or likely to be in occupation.
C&W will take into account any information the Client or its advisors provide concerning tenants'
improvements. Otherwise, if the extent of tenants' alterations or improvements cannot be confirmed, C&W will
make an Assumption that the relevant Property was let with all alterations and improvements evident during
C&W's inspection (or, in the case of a Valuation without internal inspection, as described within the information
provided by the Client).
C&W will also make an Assumption that wherever rent reviews or lease renewals are pending or impending,
with anticipated reversionary changes, all notices have been served validly within the appropriate time limits.
11.4 Environmental Matters
If C&W's enquiries or any reports supplied to C&W indicate the existence of environmental problems without
providing method statements and costings for remedial works, then C&W may not be able to issue a Valuation
Report except on the Special Assumption that the Properties are assumed NOT to be affected by such
environmental matters. In certain circumstances, the making of such a Special Assumption may be unrealistic
and may be a Departure from the requirements of the RICS Red Book. In these circumstances, the Valuation
Report may include a recommendation that an investigation should be undertaken to quantify the costs and
that subsequently the Valuation should be reviewed.
Where C&W's enquiries lead C&W to believe that the Properties are unaffected by contamination or other
adverse environmental problems, including but not limited to the risk of flooding, mining or quarrying, radon
gas, and the proximity of high voltage electrical equipment then, unless the Client instructs C&W otherwise,
the Valuation will be based on an Assumption that no contamination or other adverse environmental matters
exist in relation to the Properties sufficient to affect value.
If any of the Properties lie within or close to a flood plain, or have a history of flooding, C&W will make the
Assumption that building insurance is in place and available to be renewed to the current or any subsequent
owner of the relevant Property, without payment of an excessive premium or excess.
In the absence of any information to the contrary, C&W will make the assumption that invasive species such
as Japanese Knotweed are not present at the Properties.
Depending on the nature of the investigations made and the information revealed, the Valuation Report may
include a statement that, in practice, a purchaser might undertake further investigations and that if these
revealed contamination or other adverse environmental problems, then this might reduce the value reported.
11.5 Mineral Rights
C&W will make an Assumption that any mineral rights are excluded from the Properties.
11.6 Title
Save as disclosed either in any Certificate of Title, or unless specifically advised to the contrary by the Client
or its legal advisers and as referred to in the Valuation Report, C&W will make the Assumption that there is
good and marketable title in all cases and that the Properties are free from rights of way or easements,
restrictive covenants, disputes or onerous or unusual outgoings. C&W will also make an assumption that the
Properties are free from mortgages, charges or other encumbrances.
If verification of the accuracy of any site plans contained in the Valuation Report is required, the matter must
be referred to the Client's legal advisers.
C&W will make the Assumption that roads and sewers serving the Properties have been adopted and that the
Properties have all necessary rights of access over common estate roads, paths, corridors and stairways, and
rights to use common parking areas, loading areas and other facilities.
11.7 Condition of Structure and Services, Deleterious Materials and Ground Conditions
Due regard will be paid by C&W to the apparent general state of repair and condition of each Property, but a
condition or structural survey will not be undertaken, nor will woodwork or other parts of the structure which
are covered, unexposed or inaccessible, be inspected. Therefore, C&W will be unable to report that each
Property is structurally sound or is free from any defects. C&W will make an Assumption that each Property
is free from any rot, infestation, adverse toxic chemical treatments, and structural, design or any other defects
other than such as may be mentioned in the Valuation Report.
The current versions of the BRE publication "List of excluded materials - a change in practice" and British
Council for Offices publication "Good Practice in the Selection of Construction Materials" make
recommendations for good building practice and whether construction materials are considered to be
deleterious, hazardous or harmful ("Prohibited Materials"). C&W will not arrange for investigations to be made
to determine whether any Prohibited Materials have been used in the construction or any alterations of the
Properties. C&W will not be able to confirm that each Property is free from risk to health and safety or the
fitness for purpose (suitability and durability) of any construction works, nor will C&W be able to confirm that
the nature or application of any materials do not contravene any relevant British Standard or EU equivalent.
For the purposes of the Valuation, C&W will make an Assumption that each Property has been constructed in
accordance with good building practice and any investigation of each of the Properties by a Chartered Building
Surveyor would not reveal the presence of Prohibited Materials in any adverse condition.
C&W will not carry out an asbestos inspection and will not act as an asbestos inspector in completing the
valuation inspection of each Property that may fall within the Control of the Asbestos at Work Regulations
2012. C&W will not make an enquiry of the duty holder (as defined in the Control of Asbestos of Work
Regulations 2012), of an existence of an Asbestos Register or of any plan for the management of asbestos to
be made. Where relevant, C&W will make an Assumption that there is a duty holder, as defined in the Control
of Asbestos of Work Regulations 2012 and that a Register of Asbestos and Effective Management Plan is in
place, which does not require any immediate expenditure, or pose a significant risk to health, or breach the
HSE regulations. C&W recommends that such enquiries be undertaken by the Client's legal advisers during
normal pre-contract or pre-loan enquiries.
No mining, geological or other investigations will be undertaken by C&W to certify that the sites are free from
any defect as to foundations. C&W will make an Assumption that all buildings have been constructed having
appropriate regard to existing ground conditions or that these would have no unusual or adverse effect on
building costs, property values or viability of any development or existing buildings.
C&W will make the Assumptions that there are no services on, or crossing, the site in a position which would
inhibit development or make it unduly expensive, and that the site has no archaeological significance, which
might adversely affect the present or future occupation, development or value of each Property.
No tests will be carried out by C&W as to electrical, electronic, heating, plant and machinery equipment or any
other services nor will the drains be tested. However, C&W will make an Assumption that all building services
(including, but not limited to lifts, electrical, electronic, gas, plumbing, heating, drainage, sprinklers, ventilation,
air conditioning and security systems) and property services (such as incoming mains, waste, drains, utility
supplies etc.) are in good working order and without any defect whatsoever.
11.8 Statutory Requirements and Planning
Save as disclosed in a Certificate of Title, or unless otherwise advised, C&W shall make the Assumption that
all of the buildings have been constructed in full compliance with valid town planning and building regulations
approvals and that where necessary, they have the benefit of current Fire Risk Assessments compliant with
the requirements of the Regulatory Reform (Fire Safety) Order 2005. Similarly, C&W shall also make the
Assumption that the Properties are not subject to any outstanding statutory notices as to construction, use or
occupation and that all existing uses of the Properties are duly authorised or established and that no adverse
planning conditions or restrictions apply.
C&W shall make the Assumption that the Properties comply with all relevant statutory requirements.
Energy Performance Certificates ("EPC") must be made available for all properties, when bought or sold,
subject to certain exemptions. If the Properties are not exempt from the requirements of this Directive C&W
shall make an Assumption that an EPC is made available, free of charge, to a purchaser of all the interests
which are the subject of the Valuation.
In addition, in England and Wales the Minimum Energy Efficiency Standards Regulations are effective from 1
April 2018. The regulations prohibit the granting of a new tenancy or lease renewal of privately rented
residential or business premises which do not have an EPC rating of 'E' or above. C&W will ask the Client or
its advisors for information relating to the EPC ratings of the Properties if the Properties are not exempt from
these requirements. In any instance where C&W is not provided with an up to date EPC rating C&W will make
the Assumption that the Properties meet the minimum requirements to enable it to be let.
In any instance where C&W is to value Properties with the benefit of a recently granted planning consent, or
on the Special Assumption that planning consent is granted, C&W will make an Assumption that it will not be
challenged under Judicial Review. Such a challenge can be brought by anyone (even those with only a
tenuous connection with the Properties, or the area in which it is located) within a period of three months of
the granting of a planning consent. When a planning consent is granted subject to a Section 106 Agreement,
the three month period commences when the Section 106 Agreement is signed by all parties.
If a planning consent is subject to Judicial Review, the Client must inform C&W and request C&W to reconsider
its opinion of value. Advice would be required from the Client's legal advisers and a town planner, to obtain
their opinion of the potential outcomes of such a Judicial Review, which C&W will reflect in its reconsideration
of value.
If a planning consent is subject to Judicial Review, the Client must inform C&W and request C&W to reconsider
its opinion of value. Advice would be required from the Client's legal advisers and a town planner, to obtain
their opinion of the potential outcomes of such a Judicial Review, which C&W will reflect in its reconsideration
of value.
11.9 Information
Notwithstanding the Terms of Business, C&W will make an Assumption that the information provided by the
Client and/or its professional advisers in respect of each Property to be valued is both full and correct. C&W
will make an Assumption that details of all matters relevant to value within their collective knowledge, including
but not limited to matters such as prospective lettings, rent reviews, outstanding requirements under legislation
and planning decisions, have been made available to it, and that such information is up to date.
If the Valuation is required for the purpose of purchase, loan security or other financial transaction, the Client
accepts that full investigation of the legal title and any leases is the responsibility of its legal advisers.
Where comparable evidence is included in the Valuation Report, this information is often based on C&W's
verbal enquiries and its accuracy cannot always be assured, or may be subject to undertakings as to
confidentiality. However, such information would only be referred to where C&W had reason to believe its
general accuracy or where it was in accordance with expectation. It is unlikely that C&W will have inspected
comparable properties.
11.10 Landlord and Tenant Act 1987
The Landlord and Tenant Act 1987 (the "Act") gives certain rights to defined residential tenants to acquire the
freehold/head leasehold interest in a building where more than 50% of the floor space is in residential use.
Where this is applicable, C&W will make an Assumption that necessary notices have been given to the
residential tenants under the provisions of the Act, and that such tenants have elected not to acquire the
freehold or head leasehold interest, and therefore disposal into the open market is unrestricted.
11.11 Leasehold Reform Housing and Urban Development Act 1993 and Leasehold Reform Act 1967
If C&W value the freehold or leasehold interest in either blocks of flats or in houses, the following
will apply. The Leasehold Reform Housing and Urban Development Act 1993, as amended by the Commonhold and
Leasehold Reform Act 2002, or The Leasehold Reform Act 1967 (collectively the "Act") give certain rights to
residential tenants to acquire either the freehold/leasehold interest in any building which qualifies under the
Act, or the right to lease extension. If this is applicable, C&W shall make an Assumption that no residential
tenants have elected under the provisions of that Act to acquire the freehold or head leasehold interests, nor
have they elected to acquire a lease extension, unless the Client and/or its advisers specifically inform C&W
to the contrary.
11.12 Properties to be developed or in the course of development or requiring repair/refurbishment and
recently completed developments
Where C&W undertake a Valuation of the completed Properties this will be based on an Assumption that all
works of construction have been satisfactorily carried out in accordance with the building contract and
specification, current British Standards and any relevant codes of practice. C&W will also make an Assumption
that a duty of care and all appropriate warranties will be available from the professional team and contractors,
which will be assignable to third parties.
12. Information requested from Client
Please provide the following information:
- Tenancy schedules
- Service charge details
- Irrecoverable outgoings information
- Details of current negotiations such as rent reviews / lettings / lease renewals / dilapidation claims
- Development costs to be expended/dates of practical completion/ specifications
- Any available information regarding potential EPC capital expenditure
C&W believes that reliance on this information will not render our Valuation Report unreliable.
Appendix 1 - Property Schedule
(all properties have been inspected externally between 31 March 2021 and 31 March 2022 and internally in accordance with the rolling
programme referred to in 7.3 above)
PROPERTY INTEREST PROPERTY TYPE
CARNABY
The Carnaby Estate Main Block which comprises the All properties are freehold Investment
following: South Block, Carnaby Estate, London W1: 44-57 except where marked with an
Carnaby Street; 1-17 Kingly Street; 15-23 (odd) Ganton asterisk (within 23-43 Foubert's
Street; 17-25 (odd) Beak Street and Kingly Court; Place, 23-27 Foubert's Place
are held leasehold)
North Block, Carnaby Estate, London W1: 32-43 Carnaby
Street, 6-22 Foubert's Place (even), 19-30 Kingly Street,
14-22 Ganton Street and 26 Ganton Street;
Foubert's Place East, Carnaby Estate, London W1: 23-43
(odd) Foubert's Place * and 30/31 Great Marlborough Street;
37/39 Great Marlborough Street, Carnaby Estate, London
W1 & 31-35 (odd numbers) Beak Street and 2-4 (inclusive)
Carnaby Street, 37, 41*, 43*, 45*, 47 Beak Street, 61-69
Broadwick Street, 5-7 (inclusive) 5a, 8, 9, 10-20 Carnaby
Street & 74 Broadwick Street*, 21, 22, 23, 24, 25, 26-27,
28-28a, 29, 30, 31 Carnaby Street, 9-11 (odd numbers), 13-15
(odd numbers), 17, 19, 21, 30-32 (even numbers) Fouberts
Place, 2, 4-6 (even numbers), 8, 10, 12, 13, Ganton Street,
27/28 & 35/36 Great Marlborough Street, Lasenby House,
Kingly Street, 31 Kingly Street (inc 5 and 7 Fouberts Place),
2 Lowndes Court (inc 12a Newburgh Street), 3 Lowndes
Court, 1, 2 Marlborough Court, 33, 34, 35, 36, 37, 47, 49, 51
Marshall Street, 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12 Newburgh
Street, 13-15 (inclusive) Newburgh Street (inc 3, 4
Marlborough Court, 5, 6 Lowndes Court), 16, 17 Newburgh
Street, London W1.
20 Beak Street & 6 Upper John Street, London, W1 Freehold Investment
46-48 Beak Street, London W1 Freehold Investment
61-63 Beak Street, London W1 Freehold Investment
1 & 2 Marshall Street, London W1 Freehold Investment
57 Broadwick Street, London W1 Freehold Investment
37-38 Golden Square, 5-6 Upper James Street & 36 Beak Leasehold Investment
Street, London W1
SOHO
The Berwick Street Single Lot which comprises the following: Freehold with the exception Investment
1-4 Berwick Street & 4 Peter Street*, 8, 11, 12, 17, 18, 19, of properties marked with an
20, 22, 24, 26, 27-29 (inclusive), 30 Berwick Street & 13 asterisk
Wardour Mews, 32, 36, 37, 40, 45, 46 Berwick Street & 6a
Noel Street, 52, 60, 61, 68, 75, 79, 80, 81, 90 Berwick Street,
18 Broadwick Street, 29 D'Arblay Street, London W1*
15/35 Brewer Street, London W1 Freehold Investment
26/28 Brewer Street, London W1 Freehold Investment
49 Brewer Street, London W1* Leasehold Investment
58 Brewer Street, London W1 Freehold Investment
60 Brewer Street, London W1 Freehold Investment
8-12 Broadwick Street, London W1 Freehold Investment
19-25 Broadwick Street, London W1 Freehold Investment
46 Broadwick Street, London W1 Freehold Investment
103 Charing Cross Road, London WC2 Freehold Investment
2/4 Denman Street, London W1 Freehold Investment
12/14 Denman Street. Freehold Investment
15 Denman Street, London W1 Freehold Investment
50 Frith Street, London W1 Freehold Investment
41 Lexington Street, London W1 Freehold Investment
48 Lexington Street, London W1 Freehold Investment
49 Lexington Street, London W1 Freehold Investment
53 Lexington Street, London W1 Freehold Investment
14/14a Old Compton Street, London W1 Freehold Investment
16 Old Compton Street, London W1 Freehold Investment
61 Old Compton Street, London W1 Freehold Investment
23 Romilly Street, London W1 Freehold Investment
1-2 Silver Place and Flat 3, London W1 Freehold Investment
CHINATOWN
The Central Chinatown Block, which comprises the following: Freehold with the exception Investment
64-92 (even nos.) 96 & 98 Shaftesbury Avenue and of properties marked with an asterisk
Macclesfield Chambers, 3, 4, 5, 6, 7-11, 13-23, 36, 37, 38,
39 & 48 Gerrard Street, 1/2a Gerrard Place, 1/3, 4 & 8 Horse
& Dolphin Yard, 32-32A, 34 & 36 Wardour Street, 2-7
Dansey Place and 2-5, 12 & 13 Macclesfield Street, London
W1, 14, 15, 18, 19, 20, 21, 26/27* & 28-30 Lisle Street, 1 &
11-13 Newport Place, 7, 8, 9, 12-13 & 15 Little Newport
Street, 21-24a Newport Court, London WC2; Parts of 100-
124 Shaftesbury Avenue, London W1* which comprise the
following: at ground floor and basement level 100, 102, 104
(no basement), 108, 110, 112, 114, 118, 120 and 124
Shaftesbury Avenue. 7 and 8 Egmont House on the first floor
of 116 Shaftesbury Avenue and 5 Egmont House on the
second floor. 5 and 7 Nassau House on the first floor and 8
Nassau House on the second floor of 122 Shaftesbury
Avenue. Flats 1, 3, 4, 5, 6 and 8 Exeter Mansions on the
first, second and fourth floors of 106 Shaftesbury Avenue.
Flats 1, 2, 3 and 4 Egmont House on the third and fourth
floors of 116 Shaftesbury Avenue. Flat 3 on the fourth floor
of Nassau House, 122 Shaftesbury Avenue, London W1; 47-
49 Charing Cross Road, London WC2; Central Cross,
London WC2* which comprises 51-59 (odd) Charing Cross
Road, 28-35 Newport Court and 10-18 (even) Newport Place.
The Western Chinatown Block, which comprises properties All properties are freehold Investment
at 9, 11, 20, 21, 22/22A & 24, 25, 27, 31, 33/37 & 39 Wardour with the exception of 5 Lisle Street
Street; 29 Wardour Street & 1-4 Rupert Court; 5-8 Rupert
Court; 13/21 Wardour Street & 14/16 Rupert Street; 16a, 20,
24, 26, 28, 30, 34, 36/40 & 42 Rupert Street; 50/56, 58/60 &
62 Shaftesbury Avenue; 5 Lisle Street*, London W1
4 Leicester Street, London W1 Freehold Investment
FITZROVIA
8 Charlotte Street, London W1 Freehold Investment
10 Charlotte Street, London W1 Freehold Investment
11/13 Charlotte Street, London W1 Freehold Investment
18 Charlotte Street, London W1 Freehold Investment
19/23 Charlotte Street, London W1 Freehold Investment
22 Charlotte Street, London W1 Freehold Investment
28 Charlotte Street, London W1* Leasehold Investment
30 Charlotte Street, London W1 Freehold Investment
1 Charlotte Place, London W1 Freehold Investment
2 Charlotte Place, London W1 Freehold Investment
5 Charlotte Place, London W1 Freehold Investment
6 Rathbone Place, London W1 Freehold Investment
25 Rathbone Place, London W1 Freehold Investment
29/30/31 Rathbone Place, London W1 Freehold Investment
47 Rathbone Street, London W1 Freehold Investment
23 Rathbone Street, London W1 Freehold Investment
36-39 Newman Street, London W1* Leasehold Investment
48 Newman Street, London W1 Freehold Investment
22 Goodge Street, London W1 Freehold Investment
27 Goodge Street, London W1 Freehold Investment
32/34 Goodge Street, London W1 Freehold Investment
43 Goodge Street, London W1 Freehold Investment
47 Goodge Street, London W1 Freehold Investment
49 Goodge Street, London W1 Freehold Investment
62/64 Goodge Street, London W1 Freehold Investment
62/63 Tottenham Court Road, 1-7 & 11-13 Goodge Street* Leasehold Investment
OPERA QUARTER
The Opera Quarter, which comprises properties at 20/26a, Freehold Investment
30/40 & 44 Wellington Street, 1-3 Russell Street, 15/17 &
21/33 Catherine Street and 13/21 & 34/42 Tavistock Street,
London WC2
Bow Street, London WC2 Freehold Investment
SEVEN DIALS
The Covent Garden Single Lot which comprises the Freehold (except 7/7A Neals Investment
following: 1/1A, 3, 5, 7, 8, 9, 10,15-23, 36, 38/39 & 43 Yard, 8 & 36/38 Earlham
Earlham Street, 1/1A, 3, 4, 14-18, 23, 29-39, 42, 44, 46, 48, Street and Flat 5, 148
50/52, 53, 55, 57/59, 61, 63, 65/67, 69/71 & 73 Monmouth Shaftesbury Avenue which
Street, 5/7, 9-11, 13-16, 20-23 Shorts Gardens, 148, 150, are Leasehold)
154/6, 178, 180, 184, 186/8 Shaftesbury Avenue, 22, 25A,
27/27A, 29, 30-32, 31, 33, 35/7, 39, 41/45, 47-51, 50, 52,
53A, 54, 55-59, 56, 58, 62, 64, 66, 68-70, 72 & 74 Neal
Street, 1-2/2A, 3-7, 8/10, 11/13, 14/15, 16 & 17 Neals Yard,
21 Tower Street,1, 5, 11-13, 15/17, 19 & 25 Shelton Street,
33-34 Mercer Street, Thomas Neals Centre, London WC2
140 Cambridge Circus WC2 Freehold Investment
15/21 Endell Street & 45 Shelton Street, London WC2 Freehold Investment
18 Endell Street, London WC2 Freehold Investment
31 Endell Street, London, WC2 Freehold Investment
37 Endell Street, London, WC2 Freehold Investment
24 Litchfield Street, London WC2 Freehold Investment
25 Litchfield Street, London, WC2 Freehold Investment
27/29 Shorts Gardens, London WC2 Leasehold Investment
4-10 Tower Street, London WC2 Freehold Investment
2-4 Upper St Martins Lane, London WC2 Freehold Investment
7a Upper St Martins Lane, London WC2 Freehold Investment
36/38 West Street & 142 Shaftesbury Avenue, London, London WC2 Freehold Investment
COLISEUM
4 Bedfordbury, London, WC2 Freehold Investment
60/61 Chandos Place, London WC2 Freehold Investment
William IV Street & Chandos Place Lot, London WC2 Freehold Investment
32/34 Cranbourn Street & 77 St Martins Lane, London WC2 Freehold Investment
44a & 44b Floral Street, London WC2 Freehold Investment
23/25 Garrick Street, London, WC2 Freehold Investment
39 King Street, London, WC2 Freehold Investment
11 Long Acre, London, WC2 Freehold Investment
4 New Row, London WC2 Freehold Investment
7-8 New Row, London WC2 Freehold Investment
12 New Row, London WC2 Freehold Investment
13 New Row, London WC2 Freehold Investment
19 New Row, London WC2 Freehold Investment
21-22 New Row, London W1 Freehold Investment
23-27 New Row, London WC2 Leasehold Investment
36/36a St Martins Lane, London WC2 Freehold Investment
37/39 St Martins Lane, London WC2 Freehold Investment
55/58 St Martins Lane, London WC2 Freehold Investment
APPENDIX B: SOURCES OF INFORMATION
In addition to information established by us, we have relied on the information as listed below:
Information
Floor areas
Leasing information
Floor areas
Details of planning uses and relevant planning consents
Service charge information
Details of irrecoverable outgoings
Details of current negotiations in hand, including rent reviews, dilapidation claims, details of any CPOs,
highway schemes, outstanding requirements under legislation or similar
Details of recent, current or proposed marketing of the Property and offers received
Costs, timetables and specification details relating to properties in the course of refurbishment / development
or to be refurbished / developed in the future
Potential EPC capital expenditure
Valuation
Longmartin Properties Limited
Shaftesbury PLC
Valuation date: 31 March 2022
Shaftesbury PLC
The Directors
Shaftesbury PLC ("Shaftesbury")
22 Ganton Street
Carnaby
London W1F 7FD
For the attention of Shaftesbury PLC
The Directors and Proposed Directors
Capital & Counties Properties PLC ("Capco")
Regal House
14 James Street
London WC2E 8BU
And
Evercore Partners International LLP ("Evercore")
15 Stanhope Gate
London W1K 1LN
N.M. Rothschild & Sons Limited ("Rothschild & Co.")
New Court
St Swithin's Lane
London EC4N 8AL Date of issue 16 June 2022
Our Ref: I:1093115
Valuation Report - Longmartin Properties Limited
Further to your instructions, we are pleased to provide our Valuation Report in respect of the above properties.
If you have any queries regarding this report, please let us know as soon as possible.
Signed for and on behalf of Knight Frank LLP
Signature.
Rosella van der Weyden MRICS Simon Gillespie MRICS
RICS Registered Valuer RICS Registered Valuer
Associate, Valuation & Advisory Partner, Valuation & Advisory
Rosella.vanderweyden@knightfrank.com simon.gillespie@knightfrank.com
T +44 20 3640 7021 T +44 20 7861 1292
M +44 7815 654 629 M +44 7771 976 748
This report has been reviewed, but not undertaken, by:
Signature.
Andrew Low MRICS
RICS Registered Valuer
Partner, Valuation & Advisory
Executive summary
Properties to be valued in London WC2 (the "Properties"):
- 1124/138 Long Acre
- 1/5 (odd) Mercer Street
- 10/12 Upper St. Martin's Lane
- Slingsby Place
- 13/14 Upper St. Martin's Lane
- 15-17 Mercer Street & Wellington House
- 6/9 Upper St. Martin's Lane
- Wellington Court
- 2/8 (even) Shelton Street and 7/13 (odd) Mercer Street
- 16/19 Upper St. Martin's Lane
- 139/142 Long Acre, Sussex House and the Sussex Public House, 143 Long Acre
- 20 Upper St. Martin's Lane
1. Terms of engagement
Engagement of Knight Frank LLP
1.1 This valuation report (the "Valuation Report") has been prepared in accordance with our
Terms of Engagement letter dated 23 May 2022 and our General Terms of Business for
Valuation Services (together the "Agreement").
1.2 We now report to you formally our valuation of properties held in the Longmartin Properties
Limited joint venture between Shaftesbury PLC and the Mercers' Company ("The Parties")
(the "Valuation"). The Properties have been valued free and clear of the joint venture
agreement and the figure reported represents 100% of the Market Value of the Properties.
Client
1.3 Our client for this instruction is Shaftesbury PLC (the "Client", "you", "your"). We agree that
our Valuation Report will be addressed to you, Shaftesbury directors, the directors and
proposed directors of Capco, Evercore and Rothschild & Co (together the "Addressees").
1.4 The Addressees shall be entitled to rely on and enforce the terms of the Engagement as
set out in the Engagement Letter and on the Valuation Report subject in each case to the
terms of the Engagement.
Valuation standards
1.5 This valuation has been undertaken in accordance with the current editions of RICS
Valuation - Global Standards, which incorporate the International Valuation Standards, and
the RICS UK National Supplement. References to the "Red Book" refer to either or both of
these documents, as applicable. As required by the Red Book, some key matters relating
to this instruction are set out below. In this context "current edition" means the version in
force at the Valuation Date.
1.6 The valuation and the Valuation Report will comply with Rule 29 of the City Code on
Takeovers and Mergers (the "Code") as issued by The Takeover Panel (the "Panel").
Independence and expertise
Regulated Purpose Valuations (RPVs)
1.7 This valuation is a Regulated Purpose Valuation within the meaning of the Red Book, which
requires us to make the following disclosures:
- It is our policy to rotate persons responsible for valuations and the signatory to
valuations on a seven yearly basis, unless specifically agreed otherwise. In relation to
our preceding financial year, the total fees payable by you as a percentage of our total
fee income was less than 5%.
- We have acted for the Client for eighteen years. Please note that this relates to any
service, not necessarily to valuation services.
- We have been undertaking this valuation role for eighteen years.
- The Lead Valuer (as defined below) has been the signatory to this report for three
years. Simon Gillespie has been responsible for this instruction since 2019 and
Anthony Dunnett since 2009.
Disclosure of any conflicts of interest.
We confirm that we do have a material connection or involvement giving rise to a potential
conflict of interest, as set out below:
- We have valued the Properties for the Client within the last 2 years for accounts
purposes and for the inclusion in the prospectus for the offering of the Company's
securities, known as Project Cooper
1.8 This has been disclosed to you and you have given your consent to us proceeding with this
instruction. We confirm that we are not aware of any undisclosed matter giving rise to a
potential conflict of interest and that we are providing an objective and unbiased valuation.
1.9 Accordingly, we confirm that: (i) we are not aware of any reason why we would not satisfy
the requirements of Rule 29.3(a)(i) of the Code; and (ii) during the term of the Engagement,
we shall not do anything that could reasonably be expected to cause us not to satisfy the
requirements of Rule 29.3(a)(i) of the Code.
Valuer and expertise
1.10 The valuers, on behalf of Knight Frank LLP, with the responsibility for this report are Simon
Gillespie MRICS and Anthony Dunnett MRICS, RICS Registered Valuers. We confirm that
the valuer and additional valuers meet the requirements of the Red Book, having sufficient
current knowledge of the particular market and the skills and understanding to undertake
the valuation competently.
1.11 For the purposes of the Red Book, we are acting as External Valuers, as defined therein
and by regulations made by the Financial Conduct Authority.
1.12 We are appointed as your valuation advisors; our role is limited to providing property
valuation services in accordance with the Red Book and the terms of this Agreement.
1.13 For the avoidance of doubt, we are not acting as an "External Valuer" for the purposes of
Directive 2011/61/EU and/or any implementing legislation, laws or regulations thereof
(including, but not limited to, the Alternative Investment Fund Manager's Regulations 2013)
("AIFMD"). We shall not perform the valuation function referred to in Article 19 of AIFMD
for the Fund, and, we are not responsible for making the final determination of the value of
the Properties nor for the calculation of the Net Asset Value of the Fund.
1.14 By entering into this Agreement and instructing us you represent that no notice purporting
to appoint or to have appointed us, or any member, employee, partner or consultant of
Knight Frank LLP, as your 'external valuer' under AIFMD (or in any respect to have any
meaning other than that defined by the Red Book) has been or will be sent to any regulatory
body, nor will any announcement or communication of any nature to similar effect be made
or sent to your investors. If we are determined to be or reasonably consider that we are at
risk of being determined to be an 'external valuer' within the meaning of AIFMD then we
reserve the right to terminate this Agreement immediately.
1.15 This report has been vetted as part of Knight Frank LLP's quality assurance procedures.
Use of this Valuation
Purpose of valuation
1.16 The Valuation is provided solely for the purpose (the "Purpose") of inclusion in the
announcement of the all-share merger of Capco and Shaftesbury (the "Proposed
Transaction") made by Capco pursuant to Rule 2.7 of the Code (the "Announcement").
The Valuation may not be used for any other purpose (other than the Purpose set out in
this letter), without our express written consent.
For the purposes of this Agreement, the Announcement shall be referred to as the
"Transaction Documentation" and "Transaction Document" shall mean such
document.
Third party reliance and liability
1.17 Save for: (a) the Addressees; and (b) the shareholders of the Company in respect of any
Code Transaction Documentation; as and to the extent there provided, in accordance with
Clauses 3 & 4 of the General Terms and to the fullest extent permitted by law we do not
assume any responsibility and will not accept any liability to any other person for any loss
suffered by any such other person as a result of, arising out of, or in accordance with the
Valuation Report or our statement, required by and given solely for the purposes of
complying with Rule 29 of the Code.
1.18 We acknowledge that shareholders or prospective shareholders of Shaftesbury and/or
Capco may rely on the Valuation Report in the form it is included in any Transaction
Document.
1.19 The Client agrees and acknowledges that we shall have no liability for any error, omission
or inaccuracy in the Valuation Report to the extent resulting from our reliance on information
provided by or on behalf of the Client unless such use was negligent, reckless or in bad
faith or unless otherwise stated.
Disclosure
1.20 Clauses 4.3 to 4.6 of the General Terms limit disclosure and generally prohibits publication
of the Valuation and the Valuation Report. As stated therein, the Valuation is confidential
to you and the Addressees and neither the whole, nor any part, of the Valuation nor any
reference thereto may be included in any published document, circular or statement, nor
published in any way, without our prior written consent and written approval of the form or
context in which it may appear.
1.21 Notwithstanding this, the Valuation Report may be disclosed in accordance with the terms
of the Agreement, for the Purpose and as set out below.
1.22 Our final Valuation Report will be included in the Announcement. We will review the
sections of the Announcement relating to the Properties and you agree to not publish the
Announcement, containing the Valuation Report until you have received a Consent Letter
from us. We also acknowledge that the Valuation Report will be published on a website in
accordance with Rule 26 of the Code. We consent to the publication and reproduction of
this Valuation Report as required by Rule 26 and 29 of the Code as issued by The Panel.
1.23 For the purposes of Rule 29.5 of the Code, we confirm that, in our opinion, the current
valuation on the Property as at the date of this Valuation Report would not be materially
different from the valuation of the property as at the Valuation Date.
Limitations on liability
1.24 Knight Frank LLP's total liability for any direct loss or damage (whether caused by
negligence or breach of contract or otherwise) arising out of or in connection with this
Valuation is limited in accordance with the terms of the Agreement. Knight Frank LLP
accepts no liability for any indirect or consequential loss or for loss of profits.
1.25 We confirm that we hold adequate and appropriate PII cover for this instruction.
1.26 No claim arising out of or in connection with this Valuation may be brought against any
member, employee, partner or consultant of Knight Frank LLP. Those individuals will not
have a personal duty of care to any party and any claim for losses must be brought against
Knight Frank LLP.
1.27 Nothing in this Agreement excludes or limits our liability to the extent that such liability may
not be excluded or limited as a matter of applicable law or the requirements of the Financial
Conduct Authority or the London Stock Exchange.
Scope of work
Information provided to us which we have relied upon
1.28 In this report we have been provided with the following information by you, your advisors
or other third parties and we have relied upon this information as being materially correct
in all aspects.
1.29 In particular, we detail the following:
- Tenancy Schedules provided by Shaftesbury PLC & CBRE
- Reports on title produced by Herbert Smith LLP on behalf of the Mercers' Company
and by Lovells on behalf of Shaftesbury PLC
- Headleases and occupational leases produced by Shaftesbury PLC
1.30 In the absence of any documents or information provided, we have had to rely solely upon
our own enquiries as outlined in this report. Any assumptions resulting from the lack of
information are also set out in the relevant section of this report.
Investigations carried out by us
1.31 We have not made planning enquiries of the Local Authority, but have relied upon
information provided Shaftesbury PLC.
Responsibility
1.32 For the purposes of the Code, we are responsible for this Valuation Report and accept
responsibility for the information contained in this Valuation Report and confirm that to the
best of our knowledge (having taken all reasonable care to ensure that such is the case),
the information contained in this Valuation Report is in accordance with the facts and
contains no omissions likely to affect its import.
1.33 The valuation and Valuation Report comply with Rule 29.4 of the Code.
Consent to publication
Knight Frank has given and has not withdrawn its consent to the inclusion of this Valuation
Report in the Announcement published by Capco dated 16 June 2022 in the form and
context in which it is included.
2. The Properties
Interests held in the Joint Venture
2.1 The head-leasehold interest held by Longmartin Properties Limited in 124/138 Long Acre,
1/5 (odd) Mercer street, 10/12 Upper St. Martin's Lane and Slingsby Place, London WC2,
dated 1 February 2005, subject to the existing occupational leases.
2.2 The head-leasehold interest held by Longmartin Properties Limited in 13/14 Upper St.
Martin's Lane, 17 Mercer Street and Wellington House, 6/9 Upper St. Martin's Lane,
Wellington Court, 2/8 (even) Shelton Street and 7/13 (odd) Mercer Street, and 15 Mercer
Street (basement), London WC2, dated 15 March 2005, subject to the existing occupational
leases.
2.3 The head-leasehold interest held by Longmartin Properties Limited in 16/19 Upper St.
Martin's Lane and 139/142 Long Acre, London WC2 dated 24 May 2005, subject to the
existing occupational lease.
2.4 The head-leasehold interest held by Longmartin Properties Limited in Sussex House and
the Sussex Public House at 143 Long Acre and 20 Upper St. Martin's Lane, London WC2
dated 8 November 2005, subject to the existing occupational leases.
2.5 Summary of property information:
Property Description, Age & Tenure Terms of Existing Tenancies
124-143 Long Acre, 6-19 A mixed-use scheme, The property is multi-let on
Upper St Martin's Lane, 2-8 completed is 2010, approximately 94
Shelton Street and 1-11 & comprises retail, commercial and residential
15/17 Mercer Street, restaurants, offices and lease. The commercial
London WC2 residential uses. The total leases are mostly on
area is c.266,000 sq ft. effectively full repairing and
insuring terms, including
Tenure: rent review. The residential
units are predominantly let
Held leasehold under 4 on Assured Shorthold
head-leases with lease terms with the landlord
expiries between March responsible for the
2125 and March 2180. 3 of maintenance and
the leases are subject to insurance. There are 10
paying 7.50% of the net vacant commercial units
rents, with the 4th lease and 20 residential units
subject to a peppercorn representing c. 13% of the
rent. total estimated rental value
of the property. The WAULT
to break/expiry is c 4.3 years,
4.9 years excluding the residential
element.
Scope of inspection
2.6 We were instructed to inspect the Properties externally and we will internally inspect
selected parts as part of our ongoing bi-annual inspections of the Estate.
2.7 In accordance with instructions from the Parties, we have relied on full measurements
provided to us by both parties.
2.8 We have not undertaken either structure or condition surveys on the Properties and are,
therefore, unable to report that The Properties are free of any structural fault, rot, infestation
or defects of any other nature, including inherent weaknesses due to the use in construction
of deleterious materials. No tests were carried out on the technical services and we have
not investigated ground conditions. In the course of our inspections, due regard has been
paid to the apparent state of repair and condition of the Properties. We have had regard
to these factors in arriving at our valuation.
Environmental considerations
Contamination
2.9 Investigations into environmental matters would usually be commissioned from suitably
qualified environmental specialists. Knight Frank LLP is not qualified to undertake scientific
investigations of sites or buildings to establish the existence or otherwise of any
environmental contamination, nor do we undertake searches of public archives to seek
evidence of past activities which might identify potential for contamination.
2.10 Subject to the above, while carrying out our valuation inspection, we have not been made
aware of any uses conducted at the subject property that would give cause for concern as
to possible environmental contamination. Our valuation is provided on the assumption that
the property is unaffected.
Legal title
2.11 We have assumed there to be a good and marketable title to the Properties. We have
taken account of comments, as far as we are aware, of unusual outgoings, planning
proposals, onerous restrictions or local authority intentions which affect the Properties. We
confirm that we have taken account of the limited guarantee with which the Mercers Lease
is transferred by Mercers Reconstructions.
2.12 We have previously been provided with Reports on Title prepared by Herbert Smith LLP
on behalf of The Mercers' Company and Hogan Lovells International LLP on behalf of
Shaftesbury PLC and confirm that we have had regard to their contents in carrying out our
valuations.
2.13 We recommend that our understanding of all legal title issues is referred to your legal
advisers. It is also particularly important that your legal advisers should be asked to check
whether there have been any transactions relating to the property which reveal price paid
information which we should be made aware of.
2.14 If any matters come to light as a result of your legal adviser's review of these issues, we
request that these matters are referred back to us as this information may have an
important bearing upon the values reported.
Statutory licences & certificates
2.15 We have assumed that the premises comply with all necessary statutory requirements
including fire and building regulations.
Fire safety
2.16 It is a requirement for a fire safety risk assessment to be carried out and for a fire
management plan to be maintained. These requirements, which were introduced in 2006
replace the previous requirement for a Fire Certificate. We have not viewed any such
documents relating to the property and have assumed for the purposes of our valuation
that the relevant requirements have been fully complied with.
Taxation and costs
2.17 We have made no allowances in our valuations for expenses of realisation or for taxation
which may arise in the event of development or disposals and our valuations are expressed
exclusive of any Value Added Tax that may become chargeable.
2.18 We have made deductions in our valuations to reflect purchaser's acquisition costs.
3. Valuation
Methodology
3.1 Our valuation has been undertaken using appropriate valuation methodology and our
professional judgement.
Investment method
3.2 Our valuation has been carried out using the comparative and investment methods. In
undertaking our valuation of the property, we have made our assessment on the basis of a
collation and analysis of appropriate comparable investment and rental transactions,
together with evidence of demand within the vicinity of the subject property. With the
benefit of such transactions we have then applied these to the property, taking into account
size, location, terms, covenant and other material factors.
Valuation bases
Market Rent
3.3 The basis of valuation for our opinion of rental value is Market Rent. This is defined in
RICS Valuation - Global Standards as:
"The estimated amount for which an interest in real property should be leased on the valuation date
between a willing lessor and a willing lessee on appropriate lease terms in an arm's length
transaction, after proper marketing and where the parties had each acted knowledgeably, prudently
and without compulsion".
Market Value
3.4 The Properties have been valued on the basis of Market Value which is defined within RICS
Valuation - Global Standards as:
"The estimated amount for which an asset or liability should exchange on the valuation date between
a willing buyer and a willing seller in an arm's length transaction after proper marketing and where
the parties had each acted knowledgeably, prudently and without compulsion."
Valuation date
Valuation date
3.5 The valuation date is 31 March 2022.
Market Value
Market Value
3.6 We are of the opinion that the Market Value of the long leasehold interest in the property,
at the valuation date is:
GBP345,500,000 Three Hundred and Forty Five Million Five Hundred Thousand Pounds).
3.7 The Market Value of the Client's apportioned share of the Client's interest in the long
leasehold interest in The Properties, at the valuation date is:
GBP172,750,000 (One Hundred and Seventy Two Million Seven Hundred and Fifty Thousand Pounds)
APPENDIX 6
DEFINITIONS
The following definitions apply throughout this Announcement unless the context requires otherwise:
"Admission" admission of the New Capco Shares (i) to the Official
List with a premium listing and to trading on the Main
Market of the London Stock Exchange and (ii) to
trading on the Main Board of the JSE
"Announcement" this announcement made pursuant to Rule 2.7 of the Code
"Annualised Current Income" Total annualised actual and 'estimated income'
reserved by leases at a valuation date. No rent is
attributed to leases which were subject to rent-free
periods at that date. It does not reflect any ground
rents, head rents nor rent charges and estimated
irrecoverable outgoings at the valuation date.
'Estimated income' refers to gross ERVs in respect of
rent reviews outstanding at the valuation date and,
where appropriate, ERV in respect of lease renewals
outstanding at the valuation date where the fair value
reflects terms for a renewed lease
"Annualised Gross Income" Annualised Current Income plus sundry non-leased income
"Australia" the Commonwealth of Australia, its states, territories
and possessions
"Authorisations" authorisations, orders, recognitions, grants, consents,
licences, confirmations, clearances, permissions and approvals
"Barclays" Barclays Bank PLC
"Blackdown" Blackdown Partners Limited
"Board of the Combined Group" the board of directors of the Combined Group following
Completion comprising the individuals whose names
are listed in paragraph 10 of this Announcement
"Business Day" a day (other than a Saturday or Sunday) on which
banks are open for general business in London
"Capco" Capital & Counties Properties PLC, incorporated in
England with registered number 07145051
"Capco Directors" or "Capco Board" the board of directors of Capco and "Capco Director"
means any of them
"Capco Equalisation Dividend" if any Excess Shaftesbury Dividend is paid, a dividend
per Capco Share equal to (i) the amount of the relevant
Excess Shaftesbury Dividend (expressed on a pence
per Shaftesbury Share basis) divided by (ii) the
Exchange Ratio, to be paid by Capco to the Capco
Shareholders on the register of members as at close of
business on the Business Day prior to the Effective Date
"Capco's Exchangeable Bonds" the GBP275,000,000 2.00% Secured Exchangeable
Bonds due 2026 issued by Capco on 30 November
2020, as constituted by the Exchangeable Bonds Trust Deed
"Capco First Interim Dividend" a dividend of up to 0.8 pence per Capco Share to be
paid by Capco to the Capco Shareholders on the
register of members as at close of business on the
normal record date for Capco's interim dividend,
expected to be in August 2022, in respect of the six
months ended 30 June 2022
"Capco FY21 Final Dividend" the final dividend of 1.0 pence per Capco Share to be
paid by Capco to the Capco Shareholders on the
register of members as at close of business on 10 June
2022 in respect of the year ending 31 December 2021
"Capco General Meeting" the general meeting of Capco Shareholders to be
convened in connection with the Merger, notice of
which will be set out in the Circular, to consider, and if
thought fit, approve various matters in connection with
the Merger, including any adjournment thereof
"Capco Group" Capco and its subsidiary undertakings
"Capco Pro Rata Second Interim a dividend of up to 1.0 pence per Capco Share to be
Dividend" paid by Capco to the Capco Shareholders on the
register of members as at close of business on the
Business Day prior to the Effective Date in respect of
the period from 1 July 2022 to 30 September 2022
"Capco Resolutions" the shareholder resolutions of Capco which will be set
out in the Circular and which are necessary to
implement the Merger, including without limitation to
approve the Merger as a Class 1 Transaction under the
Listing Rules, to grant authority to the Capco Directors
to allot the New Capco Shares, and to approve the
Related Party Transaction (and any amendment(s) thereof)
"Capco Share Plan" the Capco Performance Share Plan 2017, which
provides for the grant of:
(a) nil-cost options and conditional awards over
Capco Shares subject to performance conditions;
(b) nil-cost options and conditional awards over
Capco Shares not subject to performance
conditions representing the deferral of a
proportion of bonuses earned under
Capco's annual bonus arrangements; and
(c) market-value options over Capco Shares
under a schedule to the PSP which operates
as an HM Revenue and Customs tax-
advantaged Company Share Option Plan
"Capco Shareholders" holders of Capco Shares
"Capco Shares" the ordinary shares of 25 pence each in Capco
"Canada" Canada, its provinces and territories and all areas subject
to its jurisdiction and any political sub-division thereof
"CBRE" CBRE Limited
"Circular" the document to be sent to Capco Shareholders
containing information in relation to the Merger and,
amongst other things, convening the Capco General
Meeting to approve the Capco Resolutions
"Class 1 Transaction" the Class 1 Transaction as defined in the Listing Rules
for Capco in respect of the Merger
"CMA" the Competition and Markets Authority of the UK
"Code" the City Code on Takeovers and Mergers
"Combined Group" the combined group following the Merger comprising
the Capco Group and the Shaftesbury Group
"Companies Act" the Companies Act 2006
"Completion" the date of the last Admission
"Conditions" the conditions to the implementation of the Merger
(including the Scheme) which are set out in Appendix 1
to this Announcement and to be set out in the Scheme Document
"Confidentiality Agreement" the confidentiality agreement between Capco and
Shaftesbury dated 7 December 2021
"Co-operation Agreement" the co-operation agreement dated 16 June 2022
between Capco and Shaftesbury and relating, among
other things, to the implementation of the Merger
"Court" Her Majesty's High Court of Justice in England and Wales
"Court Meeting" the meeting of Scheme Shareholders (or any further
class or classes thereof) to be convened by an order of
the Court under the Companies Act, notice of which will
be set out in the Scheme Document, to consider, and
if thought fit, approve the Scheme (with or without
amendment) including any adjournment thereof, notice
of which is to be contained in the Scheme Document
"Court Order" the order of the Court sanctioning the Scheme under
Part 26 of the Companies Act
"CREST" the relevant system (as defined in the Uncertificated
Securities Regulations 2001 (SI 2001/3755)) in respect
of which Euroclear UK & Ireland Ltd is the operator
"Cushman & Wakefield" Cushman & Wakefield Debenham Tie Leung Limited
"Dealing Disclosure" an announcement pursuant to Rule 8 of the Code
containing details of dealings in interests in relevant
securities of a party to an offer
"Disclosed" the information fairly disclosed:
(i) by Shaftesbury in its published annual report and
accounts for the period ended 31 September 2021 and
the half year results for the six months ended 31 March 2022;
(ii) in any other public announcement made by
Shaftesbury in accordance with the Market Abuse
Regulation, Listing Rules, Disclosure Rules or
Transparency Rules of the FCA or otherwise after the
date of this Announcement;
(iii) by or on behalf of Shaftesbury to Capco (or its
respective officers, employees, agents or advisers in
their capacity as such) prior to the date of this
Announcement; or
(iv) in this Announcement
"EA2002" the Enterprise Act 2002
"Effective" in the context of the Merger:
(i) if the Merger is implemented by way of a Scheme,
means the Scheme having become effective pursuant
to its terms; or
(ii) if the Merger is implemented by way of a Takeover
Offer, such offer having become or been declared
unconditional in all respects in accordance with its terms
"Effective Date" the date on which (i) the Scheme becomes effective
pursuant to its terms; or (ii) if Capco elects to implement
the Merger by way of a Takeover Offer, the Takeover
Offer becomes or is declared unconditional in all respects
"EPRA" European Public Real Estate Association
"EPRA NTA" EPRA Net Tangible Assets
"ERV" estimated rental value
"Evercore" Evercore Partners International LLP
"Excess Capco Dividend" any Return of Value which is announced, declared,
made, payable or paid in respect of the Capco Shares
on or after the date of this Announcement and on or
prior to the Effective Date and which has a record date
on or prior to the Effective Date, other than, or in excess
of, the Permitted Capco Dividends
"Excess Shaftesbury Dividend" any Return of Value which is announced, declared,
made, payable or paid in respect of the Shaftesbury
Shares on or after the date of this Announcement and
on or prior to the Effective Date and which has a record
date on or prior to the Effective Date, other than, or in
excess of, the Permitted Shaftesbury Dividends
"Exchange Property" has the meaning given to it in the Exchangeable Bond
Conditions
"Exchange Ratio" the exchange ratio of 3.356 New Capco Shares in
exchange for each Shaftesbury Share
"Exchangeable Bond Conditions" the terms and conditions of Capco's Exchangeable
Bonds set out in the Exchangeable Bonds Trust Deed
"Exchangeable Bond Secured Parties" Exchangeable Bonds Trustee for the benefit of itself
and the other secured parties under Capco's
Exchangeable Bonds (including the holders of Capco's
Exchangeable Bonds)
"Exchangeable Bonds Trust Deed" the trust deed entered into between Capco and the
Exchangeable Bonds Trustee on 30 November 2020
constituting Capco's Exchangeable Bonds and which
sets out the Exchangeable Bond Conditions
"Exchangeable Bonds Trustee" BNY Mellon Corporate Trustee Services Limited
"Existing Capco Shareholding" the 96,971,003 Shaftesbury Shares held, as at close of
business on the Last Practicable Date, by the Capco
Group
"FCA" the Financial Conduct Authority acting in its capacity as
the competent authority for the purposes of Part VI of
FSMA
"FSMA" the Financial Services and Markets Act 2000 (as
amended)
"HSBC" HSBC Bank plc
"IFRS" International Financial Reporting Standards
"J.P. Morgan Cazenove" J.P. Morgan Securities PLC
"Jefferies" Jefferies International Limited
"JLL" Jones Lang LaSalle Limited
"JSE" (i) JSE Limited, a public company incorporated in
accordance with the laws of South Africa and licensed
as an exchange under the South African Financial
Markets Act, 19 of 2012 or
(ii) the securities exchange operated by JSE Limited,
as the context indicates
"Knight Frank" Knight Frank LLP
"KPMG" KPMG LLP
"Last Practicable Date" the last Business Day prior to the date of this
Announcement
"Liberum" Liberum Capital Limited
"Lillie Square Joint Venture" the Lillie Square joint venture, a residential
development located in West London, in which Capco
has a 50% interest
"Listing Rules" the listing rules issued by the FCA pursuant to Part 6
of FSMA
"Loan Facility Agreement" a GBP576,000,000 unsecured term loan facility entered
into between Capco and Barclays, BNP Paribas and
HSBC as the original lenders on 16 June 2022
"London Stock Exchange" London Stock Exchange PLC
"Long Stop Date" 30 April 2023 or such later date as may be agreed in
writing by Capco and Shaftesbury (with the Panel's
consent and as the Court may approve (if such
approval(s) are required))
"Longmartin Joint Venture" the Longmartin joint venture, which owns a long
leasehold interest in a 1.9-acre site comprising mixed-
use buildings centred on St Martin's Courtyard in
Covent Garden, in which Shaftesbury has a 50%
interest
"LTV" loan-to-value
"Madison International Realty" Madison International Realty LLC
"Main Market" the Main Market of the London Stock Exchange for
listed securities
"Market Abuse Regulation" Regulation (EU) No. 596/2014 of the European
Parliament and the Council of 16 April 2014 on market
abuse as retained as part of English Law by virtue of
the European Union (Withdrawal) Act 2018, as
amended from time to time
"Merger" the proposed acquisition by Capco of the entire issued
and to be issued share capital of Shaftesbury
(excluding the Unsecured Existing Capco
Shareholding) to be implemented by the Scheme or,
should Capco so elect with the consent of the Panel
and subject to the terms of the Co-operation
Agreement, by means of a Takeover Offer
"Merger Control Clearance" the CMA clearance necessary for the implementation
of the Merger
"New Capco Shares" the new Capco Shares, to be allotted pursuant to the Merger
"Norges Bank" Norges Bank (the Central Bank of Norway)
"Official List" the Official List maintained by the FCA pursuant to Part 6 of FSMA
"Opening Position Disclosure" an announcement pursuant to Rule 8 of the Code
containing details of interests or short positions in, or
rights to subscribe for, any relevant securities of a party
to an offer
"Overseas Shareholders" Scheme Shareholders who are resident in, ordinarily
resident in, or citizens of, jurisdictions outside the
United Kingdom
"Panel" or "Takeover Panel" the Panel on Takeovers and Mergers
"Peel Hunt" Peel Hunt LLP
"Permitted Capco Dividends" the Capco FY21 Final Dividend, the Capco First Interim
Dividend, the Capco Pro Rata Second Interim Dividend
and a Capco Equalisation Dividend, as applicable
"Permitted Shaftesbury Dividends" the Shaftesbury Interim Dividend, the Shaftesbury Full
Year Dividend and a Shaftesbury Equalisation
Dividend, as applicable
"Phase 2 CMA Reference" a reference pursuant to Section 22 or 33 of the EA2002
of the Merger to the chair of the CMA for the
constitution of a group under Schedule 4 to the
Enterprise and Regulatory Reform Act 2013
"PID" property income distribution
"PRA" the Prudential Regulation Authority
"Proposed Directors" the existing directors of Shaftesbury, who will join the
Combined Group Board following Completion, being
Jonathan Nicholls, Chris Ward, Richard Akers,
Jennelle Tilling, Ruth Anderson CVO and Helena Coles
"Prospectus" the prospectus to be published by Capco under the
Prospectus Regulation in respect of the New Capco
Shares to be issued to Scheme Shareholders in
connection with the Merger and for the purpose of Admission
"Prospectus Regulation" the Prospectus Regulation (EU) 2017/1129 as retained
as part of English Law by virtue of the European Union
(Withdrawal) Act 2018, as amended from time to time
"Quantified Financial Benefits as defined in Appendix 4 to this Announcement
Statement"
"Registrar of Companies" the Registrar of Companies in England and Wales
"Regulatory Information Service" a primary information provider which has been
approved by the FCA to disseminate regulated
information
"REIT" real estate investment trust
"Related Party Transaction" means the Related Party Transaction as defined in the
Listing Rules in respect of the issue of the New Capco
Shares to Norges Bank pursuant to the Merger
"Restricted Jurisdiction" any jurisdiction where local laws or regulations may
result in a significant risk of civil, regulatory or criminal
exposure if information concerning the Merger is sent
or made available to Shaftesbury Shareholders in that
jurisdiction
"Return of Value" any dividend and/or other distribution and/or other
return of capital or value
"Rothschild & Co" N.M. Rothschild & Sons Limited
"Scheme" or "Scheme of Arrangement the scheme of arrangement proposed to be made
under Part 26 of the Companies Act between
Shaftesbury and the holders of the Scheme Shares to
be set out in the Scheme Document, with or subject to
any modification, addition or condition approved or
imposed by the Court and agreed by Shaftesbury and Capco
"Scheme Court Hearing" the hearing of the Court to sanction the Scheme under
Part 26 of the Companies Act, including any
adjournment thereof
"Scheme Document" the document to be sent to Shaftesbury Shareholders
setting out, amongst other things, the Scheme and
notices convening the Court Meeting and the
Shaftesbury General Meeting
"Scheme Record Time" the time and date specified as such in the Scheme
Document, expected to be 6.00 p.m. on the Business
Day immediately preceding the Effective Date or such
other time as Capco and Shaftesbury may agree
"Scheme Shareholders" holders of Scheme Shares and a "Scheme Shareholder"
shall mean any one of those Scheme Shareholders
"Scheme Shares" the Shaftesbury Shares:
(i) in issue at the date of the Scheme Document and
which remain in issue at the Scheme Record Time;
(ii) (if any) issued after the date of the Scheme
Document but before the Voting Record Time and
which remain in issue at the Scheme Record Time; and
(iii) (if any) issued at or after the Voting Record Time
but at or before the Scheme Record Time on terms that
the holder thereof shall be bound by the Scheme or in
respect of which the original or any subsequent holders
thereof are, or have agreed in writing to be, bound by
the Scheme and, in each case, which remain in issue
at the Scheme Record Time, excluding, in any case, any
Shaftesbury Shares held in treasury at the Scheme Record
Time and excluding the Unsecured Existing Capco Shareholding
"Secured Existing Capco Shareholding" the Shaftesbury Shares comprising part of the Existing
Capco Shareholding held, at the date of this
Announcement, by certain subsidiaries of Capco which
are subject to security in accordance with the
Exchangeable Bond Conditions in favour of the
Exchangeable Bond Secured Parties, being
38,008,138 Shaftesbury Shares as at close of business
on the Last Practicable Date
"Secured New Capco Shares" the New Capco Shares which will form the Exchange Property
"Shaftesbury" Shaftesbury PLC, incorporated in England with
registered number 01999238
"Shaftesbury 2016 Deferred Share the Shaftesbury 2016 Deferred Share Bonus Plan
Bonus Plan" adopted by the board of directors of Shaftesbury on
18 November 2015, as amended from time to time
(including without limitation prior to the date of this Announcement)
"Shaftesbury Capital" Shaftesbury Capital PLC, the proposed name for the Combined Group
"Shaftesbury Directors" or "Shaftesbury the board of directors of Shaftesbury and "Shaftesbury
Board" Director" means any of them
"Shaftesbury Equalisation Dividend" if any Excess Capco Dividend is paid, a dividend per
Shaftesbury Share equal to (i) the amount of the
relevant Excess Capco Dividend (expressed on a
pence per Capco Share basis) multiplied by (ii) the
Exchange Ratio, to be paid by Shaftesbury to the
Shaftesbury Shareholders on the register of members
as at close of business on the Business Day prior to the
Effective Date
"Shaftesbury Full Year Dividend" a dividend of up to 5.4 pence per Shaftesbury Share to
be paid by Shaftesbury to the Shaftesbury
Shareholders on the register of members as at close of
business on the earlier of (i) the normal record date for
Shaftesbury's full year-end dividend, expected to be in
January 2023; and (ii) the Business Day prior to the
Effective Date in respect of the year ending
30 September 2022
"Shaftesbury Interim Dividend" the interim dividend of 4.8 pence per Shaftesbury
Share to be paid by Shaftesbury to the Shaftesbury
Shareholders on the register of members as at close of
business on 10 June 2022 in respect of the six months
ended 31 March 2022
"Shaftesbury General Meeting" the general meeting of Shaftesbury Shareholders to be
convened in connection with the Merger, including the
proposed amendments to the articles of association in
connection with implementation of the Scheme, notice
of which will be set out in the Scheme Document, to
consider, and if thought fit, approve various matters in
connection with the Merger, including any adjournment
thereof
"Shaftesbury Group" Shaftesbury and its subsidiary undertakings
"Shaftesbury Long-Term Incentive Plan" the Shaftesbury 2016 Long-Term Incentive Plan,
adopted by the board of directors of Shaftesbury on 18
November 2015 and approved by the shareholders of
Shaftesbury on 5 February 2016, as amended from
time to time (including without limitation prior to the
date of this Announcement)
"Shaftesbury's Mortgage Bonds" (i) the GBP290,000,000 2.348% guaranteed first mortgage
bonds due 2027 issued by Shaftesbury Chinatown plc
and guaranteed by Shaftesbury, as constituted by the
Trust Deed dated 7 September 2017 and (ii) the
GBP285,000,000 2.487% guaranteed first mortgage
bonds due 2031 issued by Shaftesbury Carnaby plc
and guaranteed by Shaftesbury, as constituted by the
Trust Deed dated 7 October 2016
"Shaftesbury Resolutions" all resolutions required to approve and implement the
Scheme to be proposed at the Shaftesbury General
Meeting, including the proposed special resolution to
amend the articles of association of Shaftesbury in
connection with implementation of the Scheme
"Shaftesbury Share Plans" each of the:
(d) Shaftesbury 2016 Long-Term Incentive Plan;
(e) Shaftesbury 2016 Deferred Share Bonus Plan; and
(f) Shaftesbury Sharesave Scheme.
"Shaftesbury Shareholders" holders of Shaftesbury Shares
"Shaftesbury Shares" ordinary shares of 25 pence each in the capital of Shaftesbury
"Shaftesbury Sharesave Scheme" The Shaftesbury Sharesave Scheme approved by the
shareholders of Shaftesbury on 8 February 2011, as
amended from time to time (including without limitation
prior to the date of this Announcement)
"Significant Interest" in relation to an undertaking, a direct or indirect interest
of 20% or more of (i) the total voting rights conferred by
the equity share capital (as defined in section 548 of
the Companies Act) of such undertaking or (ii) the
relevant partnership interest
"South Africa" the Republic of South Africa
"Strate" Strate Proprietary Limited, a private company
incorporated in accordance with the laws of South
Africa, with registration number 1998/022242/07 and
licensed as a central securities depository under the
South African Financial Markets Act, 19 of 2012
"subsidiary" and have the meanings given to them in the Companies Act
"subsidiary undertaking"
"Takeover Offer" should the Merger be implemented by way of a
Takeover Offer as defined in section 974 of the
Companies Act, the offer to be made by or on behalf of
Capco to acquire the entire issued and to be issued
share capital of Shaftesbury (excluding the Unsecured
Existing Capco Shareholding) and, where the context
permits, any subsequent revision, variation, extension
or renewal of such Takeover Offer
"Third Party" any government or governmental, quasi-governmental,
supra-national, statutory, administrative or regulatory
body, authority, court, trade agency, association,
institution, environmental body or any other person or
body in any jurisdiction
"Treasury Shares" shares held as treasury shares as defined in section 724(5)
of the Companies Act
"UBS" or "UBS Investment Bank" UBS AG London Branch
"UK" or "United Kingdom" 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 of America,
the District of Columbia, and all other areas subject to
its jurisdiction
"Unsecured Existing Capco the Shaftesbury Shares comprising part of the Existing
Shareholding" Capco Shareholding held, as at close of business on
the Last Practicable Date, by certain subsidiaries of
Capco which are not subject to security in accordance
with the Exchangeable Bond Conditions, being
58,962,865 Shaftesbury Shares as at close of business
on the Last Practicable Date
"Voting Record Time" the time and date specified in the Scheme Document
by reference to which entitlement to vote at the Court
Meeting will be determined, expected to be 6.30 p.m.
on the day which is two days before the date of the
Court Meeting or if the Court Meeting is adjourned,
6.30 p.m. on the day which is two days before such
adjourned meeting
"Wider Capco Group" Capco and its subsidiaries, subsidiary undertakings,
associated undertakings and any other body corporate,
partnership, joint venture or person in which Capco and
all such undertakings (aggregating their interests) have
a Significant Interest
"Wider Shaftesbury Group" Shaftesbury and its subsidiaries, subsidiary
undertakings, associated undertakings and any other
body corporate, partnership, joint venture or person in
which Shaftesbury and all such undertakings
(aggregating their interests) have a Significant Interest
"GBP" or "Sterling" pounds sterling, the lawful currency for the time being of the UK
and references to "pence" and "p" shall be construed accordingly
All times referred to are London time unless otherwise stated.
All references to statutory provision or law or to any order or regulation shall be construed as a
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Java Capital
Date: 17-06-2022 07:05:00
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