The board of Bidco and the Independent Committee of the board of KHI announce that they have agreed the terms of a recommended cash offer to be made by Bidco (a wholly-owned subsidiary of KHC) for the entire issued and to be issued share capital of KHI other than the 94,516,240 KHI Shares already owned by the Bidco Group (representing approximately 56.1 per cent. of the issued ordinary share capital of KHI).
The Offer will be US$5.00 in cash for each KHI Share and also values each KHI GDS at US$5.00.
The Offer values KHI's entire existing issued share capital at US$842.9 million.
The Offer represents:
- a premium of 39.7 per cent. to the average closing middle-market price, as derived from NASDAQ Dubai, of US$3.58 per KHI Share for the three months ended 14 March 2010; and
- a premium of 37.2 per cent. to the average closing middle-market price, as derived from the Daily Official List, of US$3.64 per KHI GDS for the three months ended 12 March 2010.
Following the initial approach from representatives of KHC, the board of KHI formed an Independent Committee to evaluate the Offer on behalf of KHI. The formation of the Independent Committee is in accordance with the Takeover Rules and corporate governance best practice.
The Independent Committee of the board of KHI, which has been advised by Perella Weinberg Partners, considers the terms of the Offer to be fair and reasonable and recommends shareholders accept the Offer. In providing its advice, Perella Weinberg Partners has taken into account the commercial assessments of the Independent Committee.
Bidco has received an irrevocable undertaking to accept the Offer from Janus Capital Management LLC, in respect of 22,016,253 KHI GDSs (representing 22,016,253 KHI Shares), representing approximately 13.1 per cent. of KHI's existing issued ordinary share capital.
Bidco has also received irrevocable undertakings to accept the Offer from the directors of KHI who hold KHI Shares (including KHI Shares represented by KHI GDSs) in respect of their own beneficial holdings of 1,080,500 KHI Shares and 299,761 KHI GDSs representing, in aggregate, approximately 0.8 per cent. of KHI's existing issued ordinary share capital, as at the date of this announcement.
The Offer will be conditional upon Bidco obtaining acceptances of the Offer in respect of KHI Shares which, when aggregated with the existing holdings of the Bidco Group, comprise at least 75 per cent. of the voting rights attaching to the share capital of KHI. Should the Offer become unconditional, Bidco intends to procure the delisting and cancellation of trading of the KHI Shares and KHI GDSs.
Commenting on the recommended Offer, His Royal Highness Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud, Chairman of KHC said:
"KHI has a sound business and strong management team. The offer which KHC has today announced represents a significant premium to KHI's historic trading price and is structured to provide minority shareholders with short term liquidity at an exit price for cash on terms we believe are highly attractive. We are delighted to have already secured the support of the Independent Committee of the board of KHI and of KHI's largest minority shareholder for our offer. We look forward to the successful completion of the transaction in due course."
Commenting on the recommended Offer, the Independent Committee said:
"KHI has a proven business model, strong balance sheet and resilient revenue streams from its diverse portfolio of leading hotels. The business is performing well despite challenging market conditions. However, limited liquidity and low trading volumes have affected and are likely to continue to affect the share price. The offer from KHC allows our minority shareholders the opportunity to crystallise cash value at a premium to the level at which KHI's shares have been trading historically."
-Ends-
Enquiries to:
Bidco
Shadi S. Sanbar
Tel: + 966 1 211 1111
Citi (Financial adviser to Bidco)
Julian Mylchreest
Tel: +44 20 7986 7420
Craig Reisser
Tel: +44 20 7986 7508
Deutsche Bank (Financial adviser to Bidco)
Tim Lloyd-Hughes
Tel: +44 20 7545 8000
Apoorva Shah
Tel: +971 4 361 1700
Brunswick Group (PR Adviser to KHI)
Kate Holgate/Laura Cummings
Tel: + 44 20 7404 5959
Rupert Young/Edward Moore
Tel: + 971 4 365 8260
Perella Weinberg Partners (Financial adviser to KHI)
Philip Yates
Tel: +44 20 7268 2800
Graham Davidson
Tel: +44 20 7268 2800
© Press Release 2010
