| Fri 10 Dec 2004, 9:55 | | Proposed Merger Of Rensburg With Carr |
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Investec plc / Investec Limited - Proposed Merger Of Rensburg With Carr
Sheppards Crosthwaite To Form Group With GBP9.6 Billion Funds Under Management
Investec plc
Reg. no: 3633621
ISIN: GB0031773103
Share code: INP
Investec Limited
Incorporated in the Republic of South Africa
Reg. No. 1925/002833/06
Share code: INL ISIN: ZAE000040531
10th December 2004
INVESTEC PLC/ RENSBURG PLC
PROPOSED MERGER OF RENSBURG WITH CARR SHEPPARDS CROSTHWAITE TO FORM GROUP WITH
GBP9.6 BILLION FUNDS UNDER MANAGEMENT
Introduction
The Boards of Investec plc (`Investec`) and Rensburg plc (`Rensburg`) announce
that agreement has been reached in principle for Rensburg to merge with Carr
Sheppards Crosthwaite Limited (`Carr Sheppards Crosthwaite`), a wholly owned
subsidiary of Investec, to create a major listed wealth management business in
the United Kingdom (`UK`) with pro-forma funds under management of GBP9.6
billion.
The proposed merger is driven by a compelling strategic fit, common vision and
complementary geographic and service strengths. The merger is expected to
generate significant cost savings and the enlarged group will be well positioned
to take advantage of revenue growth opportunities.
The merger is to be effected by Rensburg acquiring Carr Sheppards Crosthwaite,
through the issue to Investec of 38.6 million Rensburg new ordinary shares
representing 63.6 per cent of the issued share capital of the enlarged group.
The new Rensburg ordinary shares will not qualify for the final dividend in
respect of the year ended 30th November 2004 or an interim dividend in respect
of the pre-merger period. As part of the transaction, Rensburg intends to
return GBP10 million to its current shareholders from its existing cash
resources. It is currently envisaged that this distribution will be effected
through a payment of 45 pence for each current Rensburg ordinary share following
completion of the transaction.
Trading Suspension and Approvals
The proposed transaction will be classified as a reverse takeover under the UK
Listing Rules and accordingly trading in Rensburg ordinary shares has been
suspended temporarily. This suspension is expected to be lifted on publication
of the Listing Particulars and Shareholder Circular, anticipated to occur in
February 2005. The proposed merger is a Class 2 transaction for Investec.
The transaction will be subject, inter alia, to approval by Rensburg
shareholders and to regulatory approvals.
Strategic Rationale for Rensburg
Rensburg is an established provider of investment management services to private
investors, trustees, charities and pension funds in the UK. The proposed merger
meets Rensburg`s strategic ambition to develop its business both organically and
through acquisition and to expand its office network in the South of England, a
traditional market for Carr Sheppards Crosthwaite. The combination will grow
funds under management, while providing continuity for its clients and staff.
The proposed merger creates a scale fund manager with a robust, profitable and
balanced UK business.
Strategic Rationale for Carr Sheppards Crosthwaite
The proposed merger will capitalise on Carr Sheppards Crosthwaite`s core
strengths as a leading private client wealth management business, based in the
South of England. As part of a major listed UK-wide wealth management group,
Carr Sheppards Crosthwaite`s profile in its core markets will be substantially
expanded.
Strategic Rationale for Investec
Investec`s core business strategy is to build a distinctive market leading
financial services business in each geography in which it operates. The merger
of the Carr Sheppards Crosthwaite business with Rensburg enables Investec to
participate in the consolidating UK private client wealth management sector by
creating an industry leader with geographical spread and depth. Investec
expects this transaction to create shareholder value as a result of the
potential synergies. As part of the transaction, Investec has agreed to
maintain its shareholding for a minimum period of eighteen months.
Benefits for Rensburg`s Shareholders
The benefits for Rensburg`s shareholders are expected to be:
Participation in a market-leading wealth management operation with improved
critical mass, complemented by Investec`s long term support;
Value creation through improving operational gearing by the merging and
streamlining of the back office functions;
The distribution to Rensburg`s current shareholders is anticipated to be 45
pence per Rensburg ordinary share; and
The Board of Rensburg expects the merger will be accretive to earnings per
share.
Board of the Enlarged Group
The Board of the enlarged group will comprise:
Non-Executive Chairman
Christopher Clarke Currently Non-Executive Chairman of Rensburg plc
Executive Directors
Mike Burns Chief Executive, currently Chief Executive of Rensburg plc
Steve Elliott Managing Director, currently Chief Executive of Carr
Sheppards Crosthwaite Limited
Jonathan Wragg Finance Director, currently Finance Director of
Rensburg plc
Nick Lane Fox Executive Director, currently Executive Director of Rensburg
plc
Ian Maxwell Scott Executive Director, currently Executive Director of
Carr Sheppards Crosthwaite Limited
Nick Bagshawe Executive Director, currently Executive Director of Carr
Sheppards Crosthwaite Limited
Non-Executive Directors
Andrew Tyrie Senior Independent Non-Executive Director, currently Senior
Independent Non-Executive Director of Rensburg plc
Three Non-Executive Directors to be appointed by Investec.
Branding
Carr Sheppards Crosthwaite and Rensburg are well established brands in the
wealth management industry and will continue to operate separately during a
transitional period. The proposed management team for the enlarged group is
already working together to agree a branding strategy for the enlarged group
prior to the publication of the Listing Particulars and Shareholder Circular.
Remuneration Structure
It is expected that following completion, but no later than 30th November 2005,
the proposed Board of the enlarged group in conjunction with the Remuneration
Committee will implement revised long term incentive plans for senior management
and employees across the enlarged group. These arrangements will strive to
adhere to best practice for listed companies.
Investec will undertake to distribute a portion of its Rensburg consideration
shares to senior Carr Sheppards Crosthwaite employees, which will take the form
of restricted stock.
Overview of Rensburg
Rensburg is an investment management business with funds under management of
GBP3.9 billion as at 31st May 2004 of which GBP1.9 billion related to fee paying
clients, GBP1.6 billion to managed clients and GBP0.4 billion to Rensburg Fund
Management Limited.
Rensburg has offices in London, Liverpool, Leeds, Sheffield, Manchester, Glasgow
and Belfast. From these offices, Rensburg offers a full range of financial
services to private and corporate clients, including investment management and
financial planning.
For the year ended 30th November 2003, Rensburg had profit before tax from
continuing operations (before exceptional items, amortisation and interest on
capital) of GBP5.5 million and net assets as at 30th November 2003 of GBP41.9
million. For the six months ended 31st May 2004, Rensburg had profit before tax
(before exceptional items, amortisation and interest on capital) of GBP3.5
million and net assets as at 31st May 2004 of GBP43.0 million.
Overview of Carr Sheppards Crosthwaite
Carr Sheppards Crosthwaite is one of the larger private client stockbrokers and
investment managers in the UK with offices in London, Farnham, Reigate,
Cheltenham and Worcester. At 30th September 2004, Carr Sheppards Crosthwaite
managed some GBP5.7 billion of assets on behalf of private clients, corporates,
trusts and charities with 63% of these funds being managed on a discretionary
basis.
For the year ended 31st March 2004, Carr Sheppards Crosthwaite had pro forma
profit before tax (before exceptional items, amortisation and interest on
capital) of GBP10.9 million and net assets as at 31st March 2004 of GBP15.7
million. For the six months ended 30th September 2004, Carr Sheppards
Crosthwaite had pro forma profit before tax (before exceptional items,
amortisation and interest on capital) of GBP5.7 million and net assets as at
30th September 2004 of GBP18.7 million. Derivation of the pro forma information
is set out in the notes to the editors.
Conditions
The proposed transaction is subject, inter alia, to the following conditions:
- Signing of a binding sale and purchase contract and associated transaction
agreements between Rensburg, Carr Sheppards Crosthwaite and Investec for the
acquisition of Carr Sheppards Crosthwaite;
- Signing of a binding agreement between the enlarged group and Investec
regulating their ongoing relationship following completion;
- Approval from the Financial Services Authority, South African Reserve Bank
and other regulatory authorities;
- The agreement of The Panel on Takeovers and Mergers to a waiver under Rule
9 of the City Code (under the `whitewash` procedure);
Completion of satisfactory due diligence on Carr Sheppards Crosthwaite and due
diligence on Rensburg;
- Rensburg shareholders passing the necessary resolutions for the approval
and implementation of the proposed merger at an Extraordinary General Meeting to
be convened in due course; and
- Admission to trading on the Official List on the London Stock Exchange of
the issued share capital of the enlarged Rensburg group.
Commenting on the proposed merger Mike Burns, Chief Executive of Rensburg, said
today:
`This is a unique opportunity to create one of the leading private client wealth
management groups, extending our franchise throughout the UK. The clear
financial and commercial benefits for all our stakeholders are supported by a
strong strategic fit, common vision and shared culture. I am confident that the
enlarged group will be well positioned to enhance the interests of our
shareholders, clients and staff.`
Stephen Koseff, Chief Executive of Investec, commented:
`The merger of Rensburg and Carr Sheppards Crosthwaite represents a significant
step in the development of the Investec group in the UK. It transforms our
private client business and creates a strong listed platform for future growth.
Investec is fully committed to the continued growth of the group going forward.`
Bernard Kantor, Managing Director of Investec, commented:
`We recognise the quality of Rensburg`s business and its people. This
transaction makes us one of the most significant listed businesses in the
sector. In doing so it provides assurance to our clients of the maintenance of
the highest service standards in the sector.`
Rensburg is being advised by Fenchurch Advisory Partners. Investec is being
advised by Goldman Sachs and Putnam Lovell NBF. Numis is sponsor and corporate
broker to Rensburg.
Enquiries:
Rensburg plc +44 151 227 Investec plc
2030 Bernard Kantor +44 20 7597 4000
Michael Burns Ursula Munitich +27 11 286 7070
Carr Sheppards
Crosthwaite Limited
+44 20 7597 1234
Steve Elliott
Fenchurch Advisory Goldman Sachs
+44 20 7961 0740 +44 20 7774 1000
Partners Luigi Rizzo
Malik Karim Jonathan Sorrell
Graham Marchant
Numis Putnam Lovell NBF
+44 20 7776 1500 +44 20 7478 1600
Christopher Wilkinson Kevin Pakenham
Simon Law Nirav Hathi
GCG Hudson Sandler Citigate Dewe
+44 20 7796 4133 +44 20 7638 9571
Nick Lyon Rogerson
Simon Rigby
Fenchurch Advisory Partners Limited (`Fenchurch Advisory Partners`), which is
authorised and regulated by the Financial Services Authority in the UK, is
acting for Rensburg and no one else in connection with the transaction and will
not be responsible to any person other than Rensburg for providing the
protections afforded to the clients of Fenchurch Advisory Partners nor for
providing advice in relation to the transaction.
Goldman Sachs International (`Goldman Sachs`), which is authorised and regulated
by the Financial Services Authority in the UK, is acting for Investec and no one
else in connection with the transaction and will not be responsible to any
person other than Investec for providing the protections afforded to the clients
of Goldman Sachs nor for providing advice in relation to the transaction.
Putnam Lovell NBF Securities Inc (`Putnam Lovell NBF`), which is authorised and
regulated by the Financial Services Authority in the UK, is acting for Investec
and no one else in connection with the transaction and will not be responsible
to any person other than Investec for providing the protections afforded to the
clients of Putnam Lovell NBF nor for providing advice in relation to the
transaction.
Numis Securities Limited (`Numis`), which is authorised and regulated by the
Financial Services Authority in the UK, is acting for Rensburg and no one else
in connection with the transaction and will not be responsible to any person
other than Rensburg for providing the protections afforded to the clients of
Numis nor for providing advice in relation to the transaction.
Notes to editors
Information on Rensburg
Overview of Rensburg
Rensburg is an investment management business with funds under management of
GBP3.9 billion as at 31st May 2004 of which GBP1.9 billion related to fee paying
clients, GBP1.6 billion to managed clients and GBP0.4 billion to Rensburg Fund
Management Limited.
Rensburg has offices in London, Liverpool, Leeds, Sheffield, Manchester, Glasgow
and Belfast. From these offices, Rensburg offers a full range of financial
services to private and corporate clients, including investment management and
financial planning.
For the year ended 30th November 2003, Rensburg had profit before tax from
continuing operations (before exceptional items, amortisation and interest on
capital) of GBP5.5 million and net assets as at 30th November 2003 of GBP41.9
million. For the six months ended 31st May 2004, Rensburg had profit before tax
(before exceptional items, amortisation and interest on capital) of GBP3.5
million and net assets as at 31st May 2004 of GBP43.0 million.
Overview of Carr Sheppards Crosthwaite
Carr Sheppards Crosthwaite is the result of the successful mergers of WI Carr
(Investments) Limited and Sheppards Limited in 1993 and the subsequent merger of
Carr Sheppards Limited and Henderson Crosthwaite Limited in 1999. The latter
followed the acquisition of Henderson Crosthwaite Limited`s immediate parent -
Guinness Mahon - by Carr Sheppards Crosthwaite`s parent - Investec Group Limited
- in 1998.
Carr Sheppards Crosthwaite is one of the larger private client stockbrokers and
investment managers in the UK with offices in London, Farnham, Reigate,
Cheltenham and Worcester. At 30th September 2004, Carr Sheppards Crosthwaite
managed some GBP5.7 billion of assets on behalf of private clients, corporates,
trusts and charities with 63% of these funds being managed on a discretionary
basis.
For the year ended 31st March 2004, Carr Sheppards Crosthwaite had pro forma
profit before tax (before exceptional items, amortisation and interest on
capital) of GBP10.9 million and net assets as at 31st March 2004 of GBP15.7
million. For the six months ended 30th September 2004, Carr Sheppards
Crosthwaite had pro forma profit before tax (before exceptional items,
amortisation and interest on capital) of GBP5.7 million and net assets as at
30th September 2004 of GBP18.7 million.
The financial information in respect of Carr Sheppards Crosthwaite set out above
has been extracted from the consolidation schedules used to prepare the audited
consolidated accounts of Investec for the year ended 31st March 2004 and the
unaudited consolidated interim financial statements of Investec for the six
months ended 30th September 2004 adjusted for the following:
- Exclusion of costs of GBP1.5 million (year ended 31st March 2004: GBP3.5m)
relating to current remuneration and incentive practices which will be
discontinued;
- Exclusion of costs of GBP0.5m (year ended 31st March 2004: GBP1.1m) charged
to Carr Sheppards Crosthwaite through being part of the Investec group which
will no longer be incurred by Carr Sheppards Crosthwaite;
- Exclusion of income and expenditure related to businesses being disposed of
(revenue of GBP1.0m (year ended 31st March 2004: GBP2.2m) and loss before
interest and tax of GBP0.1m (year ended 31st March 2004: profit of GBP0.1m); and
- A calculation of interest earned on the firm`s capital of GBP0.3m (year
ended 31st March 2004: GBP0.6m) has been excluded from both revenue and profit
before exceptional items, amortisation of goodwill, interest on capital and
taxation.
Information on Investec
Investec is an international specialist banking group that provides a diverse
range of financial products and services to a niche client base in three
principal geographies namely, UK, Australia and South Africa. Its operations
focus on four key areas: Private Client Activities, Treasury and Specialised
Finance, Investment Banking and Asset Management.
In July 2002 Investec implemented a dual listed companies structure with primary
listings on the London and Johannesburg Stock Exchanges. Investec`s current
market capitalisation is approximately GBP1.8 billion.
Investec`s UK operations mirror those of its other international businesses and
include:
Investec Private Bank
Investec Treasury and Specialised Finance
Investec Investment Banking and Securities
Investec Asset Management
Carr Sheppards Crosthwaite (Private Client Stockbroking and Portfolio
Management)
For the year ended 31st March 2004, Investec had total profit before tax (before
goodwill amortisation and exceptional items) of GBP132.3 million, assets of
GBP15.3 billion and total capital resources of GBP1.3 billion. For the six
months ended 30th September 2004, Investec had total profit before tax (before
goodwill amortisation and exceptional items) of GBP88.7 million, assets of
GBP16.5 billion and total capital resources of GBP1.3 billion.
