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