Gilde intends to make a public offer of EUR 7.25 per share in cash for Econosto
This is a joint public announcement by Koninklijke Econosto N.V. ("Econosto") and Gilde Buy Out Partners ("Gilde") pursuant to the provisions of Section 5 paragraph 1 of the Dutch Decree on Public Takeover Bids (Besluit openbare biedingen Wft). This is not a public announcement that a public offer is to be made, but that a conditional agreement has been reached on the conditions of a public offer. Not for release, distribution, or publication in whole or in part, in or into the United States of America, Japan or Canada.
- Gilde intends to make a public offer for the entire issued and outstanding share capital of Econosto at an offer price of EUR 7.25 per share in cash (the "Intended Offer");
- the Supervisory Board and Management Board of Econosto unanimously support and recommend the Intended Offer;
- the works council of Econosto has been duly notified and will be asked for advice regarding the Intended Offer;
- Gilde supports Econosto's international growth strategy and the proposed acquisition will contribute to an accelerated realisation of this strategy;
- the Intended Offer of EUR 7.25 represents the highest share price for Econosto in almost seven years and implies a premium of approximately 38.4% over the closing price of Econosto shares on 11 January 2008, the last trading day before this press release;
- a group of large shareholders, collectively holding approximately 51.2% of the share capital, have already irrevocably committed themselves to tender their shares in Econosto under the Intended Offer when it is made;
- all existing rights of Econosto's employees will be respected. There will be no adverse consequences for employment at Econosto as a result of the Intended Offer.
Econosto and Gilde jointly announce that conditional agreement has been reached between Econosto and Gilde with respect to a public offer by Gilde for the entire issued and outstanding share capital of Econosto at an offer price of EUR 7.25 per share in cash. Based on this offer, the total share capital of Econosto is valued at approximately EUR 117 million.
The Intended Offer of EUR 7.25 per share represents the highest share price for Econosto in almost seven years and implies a premium of approximately 38.4% over the closing price of Econosto shares on 11 January 2008, the last trading day before this press release, a premium of approximately 38.0% over the average closing price over the last month, and a premium of approximately 35.5% over the average closing price over the past 12 months before the Intended Offer. The offer is cum dividend: no dividend for 2007 will be distributed by Econosto and no further dividends are expected to be declared prior to the completion of the offer.
After having duly considered the strategic and financial interests as well as the social aspects of the proposed transaction, both the Supervisory Board and Management Board of Econosto unanimously support the Intended Offer and conclude that the Intended Offer is in the best interest of the shareholders and all other stakeholders of Econosto and therefore intend to recommend that Econosto shareholders accept the Intended Offer.
The Intended Offer will have a number of advantages for Econosto, its shareholders, employees, customers and other stakeholders: (i) Gilde supports the overall strategy of the Management Board of Econosto, (ii) Gilde will provide Econosto with financial and management resources to help Econosto accelerate its international growth strategy, which comprises inter alia both organic growth and growth through acquisitions, (iii) Gilde has extensive experience and track-record in the industrial sector and has the means to support the management in growing Econosto, and (iv) the Intended Offer provides current shareholders the opportunity to sell their interest in Econosto at an attractive premium providing the opportunity to immediately realise future value of their shares.
Future of Econosto
Econosto will continue its operations as an independent company under its present name. Gilde supports the current vision and growth strategy as is currently carried out by the Management Board of Econosto. Econosto will get the opportunity to grow further, organically but especially through targeted acquisitions in both the traditional MRO sector and the international project market. The combination of these two activities and corresponding services gives Econosto a unique position in the global market. Through an accelerated expansion of Econosto, the company will be given the opportunity to win prestigious international projects of large multinational clients. Gilde has committed itself to keep the business of Econosto materially intact under one central management.
Upon completion of the Intended Offer Gilde will fund acceptances under the offer through a combination of equity and debt. Gilde has committed itself to maintain a healthy capital and debt structure in order to support Econosto's current business strategy.
Gilde and Econosto expect that the public offer will not have any adverse consequences for employment at Econosto. Gilde will endeavour that Econosto will respect and adhere to the current general employment policy of Econosto, all covenants with the works council, existing social plans and applicable collective labour agreements. In addition, Gilde will respect existing obligations with respect to pension rights of Econosto's employees.
The Management Board of Econosto is invited to participate in the share capital of the entity holding the shares of Econosto after a successful public offer. Gilde also intends to provide certain key personnel of Econosto the opportunity to participate in the share capital of this entity. Gilde will appoint a new Supervisory Board as of completion of the offer, in which board also one current member of the Supervisory Board will be appointed.
As conditions precedent to making and declaring the Intended Offer unconditional, the customary conditions for a transaction of this type will apply. The conditions for declaring the Intended Offer include (i) at least 95% of the issued and outstanding share capital of Econosto has been tendered, (ii) approval by the relevant anti-trust authorities has been obtained, and (iii) no material adverse changes with respect to the business of Econosto have occurred.
Irrevocable undertakings from shareholders
Janivo Beleggingen B.V., Dresdner VPV N.V., Gestion Deelnemingen B.V. and T.W.E. Beheer B.V. and certain other shareholders support the Intended Offer. These major shareholders, who collectively hold approximately 51.2% of the share capital, have committed themselves to tender their shares under the Intended Offer when it is made.
Gilde and Econosto intend to finalise documentation with regard to the Intended Offer over the next weeks. Subsequently, the offer will be made and the offer memorandum will be published. It is currently expected that this will take place mid March.
The Netherlands Authority for the Financial Markets (AFM), Euronext Amsterdam N.V., the Social and Economic Council of the Netherlands (SER) and the relevant anti-trust authorities have been or will be informed of the Intended Offer and, where relevant, requested to provide clearance in respect of the transaction. The works council of Econosto has been duly notified and will be asked for advice.
Once the Intended Offer is declared unconditional, it is intended that Econosto's shares will be delisted. Furthermore, subject to the necessary thresholds being reached, Gilde expects to initiate the statutory procedure as contemplated by the Dutch Civil Code in order to acquire all shares held by minority shareholders or effect a legal merger or to take such other steps to delist Econosto shares and/or acquire shares not otherwise acquired by it.
NIBC Bank is acting as financial adviser and Clifford Chance is acting as legal adviser to Gilde.
Atlas Advisors is acting as financial adviser and Houthoff Buruma is acting as legal adviser of Econosto.
Koninklijke Econosto N.V.
Mr. Frank van Os
Phone: +31 (0) 10 284 12 80
Gilde Buy Out Partners
Mr. Boudewijn Molenaar
Phone: +31 (0) 30 219 25 09
This release does not constitute or form part of an offer to buy or subscribe for any securities by anyone in any jurisdiction. Nowhere outside the Netherlands any action is taken (nor will any action be taken) to make a public offer possible in any jurisdiction where such action would be required.
In certain jurisdictions this release may be restricted by law. Persons into whose possession this release comes are required to inform themselves about and to observe any such restrictions. To the extent possible under applicable law, Gilde and Econosto do not take any responsibility or accept any liability for any violation by anyone of such restrictions. Violation of such restrictions can constitute a violation of applicable securities laws of the relevant jurisdiction. Neither Gilde, nor Econosto, nor their advisers take any responsibility for any violation by anyone of such restrictions. Each shareholder of Econosto which questions its position shall immediately consult an appropriate professional adviser.
This press release is also published in Dutch; the Dutch version will prevail over this English version.
Gilde Buy Out Partners is a leading private equity investor with offices in Utrecht, Paris and Zurich. Gilde has funds under management exceeding EUR 1.3 billion and has invested in more than 200 companies since its inception in 1982. Gilde specialises in mid-market buy out investments in Europe and has particular expertise with investments in industrial companies with a technological character comparable to Econosto.
Gilde has gained extensive experience with the complex delisting process through the public-to-private of Nedschroef, a leading manufacturer of fasteners for the automotive industry, in 2007. Furthermore, Gilde was involved in the public-to-private of Norit, a leading supplier of consumables, components, systems and complete purification solutions in 2000.
Econosto will be added to the Gilde Buy Out Fund III and will be the ninth investment of this fund which has a size of EUR 600 million. Other investments of Gilde Buy Out Fund III include Heiploeg (shrimps), Novasep (synthesis and purification of fine chemicals for the life sciences industry), Nedschroef and Hofmann-Menü (specialist in 'out-of-home' meals).
Koninklijke Econosto N.V., founded in 1892, is an international group of technical wholesale companies with operations in Europe, the Middle East and Far East, and with 650 employees globally. Its core activities include the development, marketing, distribution and service of a full range of high-quality valves, gaskets, industrial hoses and related equipment for the chemical and petrochemical industries, shipbuilding, equipment and machine engineering, heating and general industry. Added value is provided by developing, machining and supplying products specifically geared to projects and customers. In this respect, Econosto specifically benefits from intensive contacts with leading industrial engineering firms. An increasing percentage of sales is generated on the project market, in the form of non-recurring, long-term contracts that guarantee future contributions to cash flow.
Econosto supplies innovative own label products such as Econosto® and Econ®, augmented with A-branded products to customers in both the traditional MRO sector and the international project business. This combination makes Econosto a unique player in the global market. Econosto has been listed on Euronext Amsterdam since 1970.
In the first half of 2007, Econosto's net sales rose by 32% to EUR 120.3 million, an increase of 32% compared to net sales of EUR 91.4 million in the first six months of 2006. The net profit doubled from EUR 1.6 million to EUR 3.2 million. In 2006 realised net sales of EUR 191.4 million and a net profit of EUR 3.9 million. Econosto maintains the net sales expectation as announced in the first half year results press release with regard to the six months ending 30 June 2007, published on 28 August 2007.