RNS Number:1528O
Citadel Holdings PLC
20 July 2000
Part 1
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR
IN PART IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA OR
JAPAN
CLS Holdings plc ("CLS" or "the Company")
Merger by way of recommended offer for Citadel Holdings
plc ("Citadel")
The CLS Independent Directors, on behalf of CLS, and
the Citadel Independent Directors are pleased to
announce that they have reached agreement on the terms
and conditions of a merger by way of a recommended
offer ("the Merger Offer") to be made by HSBC
Investment Bank plc ("HSBC") on behalf of CLS for the
whole of the issued and to be issued share capital of
Citadel not already owned by CLS.
The Merger Offer will be on the basis of 3 New CLS
Shares for every 5 Citadel Shares.
CLS also announced today its interim results for the
six months ended 30 June 2000 and reported NAV per
share of 284.0 pence (up 16.4 per cent. since 31
December 1999). Profit before taxation was #13.1
million (1999: #9.9 million) and basic earnings per
share were 12.4 pence (1999: 8.3 pence).
The CLS Directors are intending to make a tender offer
buy-back in lieu of dividend for the six months ended
30 June 2000, of a total of approximately #4.35
million following completion of the Merger Offer.
This is equivalent in cash terms to an interim
dividend of 3.92 pence per CLS Share in the Enlarged
Group (1999: 2.85 pence per share), an increase of
37.5 per cent.
Citadel also announced today its interim results for
the six months ended 30 June 2000 and reported NAV per
share of 152.5 pence after notional exercise of share
warrants held by CLS over Citadel Shares (up 10.4 per
cent. since 30 June 1999). Profit before taxation was
#2.2 million (1999: #1.9 million) and basic earnings
per share were 5.8 pence (1999: 5.2 pence).
Due to the Merger Offer, the Citadel Directors have
not declared an interim dividend for the six months
ended 30 June 2000. However, Citadel Shareholders
will be entitled to participate in CLS's intended
tender offer buy-back, on any CLS Shares they receive
under the Merger Offer in lieu of dividend for the six
months ended 30 June 2000.
Based on CLS's Closing Price of 177.5 pence on 19 July
2000 (the last dealing day prior to the date of this
announcement), the Merger Offer:
- values each Citadel Share at approximately 106.5
pence;
- values the whole of Citadel's existing issued
share capital at approximately #35.7 million; and
- represents a discount of approximately 4.5 per
cent. to the Closing Price of 111.5 pence per
Citadel Share on 19 July 2000, the last dealing
day prior to the date of this announcement.
CLS has received irrevocable undertakings from Citadel
Directors in respect of a total of 21.5 per cent. of
Citadel's issued share capital and non-binding letters
of intent, in the absence of a competing offer, to
accept the Merger Offer in respect of a further 25.3
per cent. of Citadel's issued share capital. The
irrevocable undertakings will cease to be binding if
the Merger Offer lapses or is withdrawn.
As at 30 June 2000, the combination of these two
companies would create a real estate investor with a
gross portfolio value in excess of #640 million and
enhanced geographical coverage with strategic holdings
in the three European markets of the United Kingdom,
Sweden and France.
Enquiries:
CLS Holdings plc
Sten Mortstedt Executive Chairman 020 7582 7766
Glyn Hirsch Chief Executive 020 7582 7766
Citadel Holdings plc
Gavin Kelly Chairman of the 020 7578 7070
Citadel Independent
Directors
HSBC Investment Bank plc
Jonathan Gray 020 7336 9983
Teather & Greenwood Limited 020 7426 9534
Russell Cook
This summary should be read in conjunction with and is
subject to the full text of the attached press
announcement.
HSBC Investment Bank plc, which is regulated in the United
Kingdom by The Securities and Futures Authority Limited,
is acting exclusively for CLS Holdings plc and no-one else
in connection with the Merger Offer and will not be
responsible to anyone other than CLS Holdings plc for
providing the protections afforded to customers of HSBC
Investment Bank plc or for providing advice in relation to
the Merger Offer or any other matter referred to herein.
Teather & Greenwood Limited, which is regulated in the
United Kingdom by The Securities and Futures Authority
Limited, is acting exclusively for Citadel Holdings plc,
acting through the Citadel Independent Directors, and for
no-one else in connection with the Merger Offer and will
not be responsible to anyone other than Citadel Holdings
plc, acting through the Citadel Independent Directors, for
providing the protections afforded to customers of Teather
& Greenwood Limited or for providing advice in relation to
the Merger Offer or any other matter referred to herein.
The Merger Offer will not be made, directly or indirectly,
in or into the United States, Australia, Canada or Japan.
Accordingly, copies of this announcement are not being,
and must not be, distributed or sent in, into or from the
United States, Canada, Australia or Japan (whether by
means of the mail or by any means or instrumentality of
interstate or foreign commerce), including, without
limitation, to any Citadel Shareholders or participants in
the Citadel Share Option Scheme with registered addresses
in the United States, Canada, Australia or Japan or to
persons whom CLS knows to be trustees, nominees or
custodians holding Citadel Shares for such persons.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR
IN PART IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA OR
JAPAN
For immediate release on 20 July 2000
CLS Holdings plc ("CLS" or "the Company")
Merger by way of recommended offer for Citadel Holdings
plc ("Citadel")
1. Introduction
The CLS Independent Directors, on behalf of CLS, and the
Citadel Independent Directors are pleased to announce that
they have reached agreement on the terms and conditions of
a merger by way of recommended offer ("the Merger Offer")
to be made by HSBC on behalf of CLS for the issued and to
be issued share capital of Citadel not already owned by
CLS.
CLS already owns 5,827,310 Citadel Shares representing
approximately 17.4 per cent. of Citadel's existing issued
ordinary share capital. CLS also has the ability under
the CLS Warrant to subscribe for a further 8 million
Citadel Shares. However, CLS currently has no intention
of exercising the CLS Warrant. In addition, CLS Directors
and their connected persons own a total of 7,175,861
Citadel Shares and options over 230,000 Citadel Shares.
The Merger Offer values the current issued ordinary share
capital of Citadel at approximately #35.7 million, based
on the Closing Price of a CLS Share of 177.5 pence on 19
July 2000 (the last dealing day prior to the date of this
announcement).
In view of the involvement of Sten Mortstedt, Dan
Baverstam and Glyn Hirsch in the management and equity of
both Citadel and CLS, these directors have been excluded
from participating in decisions taken by the Citadel
Independent Directors relating to the Merger Offer. The
remaining Directors, Richard Lockwood and Gavin Kelly, are
the Citadel Independent Directors, and have taken
responsibility for formulating and discussing the Merger
Offer on behalf of Citadel Shareholders.
In view of the involvement of Sten Mortstedt and Glyn
Hirsch in the management and equity of both Citadel and
CLS, as stated above, these directors have also been
excluded from participating in decisions taken by the CLS
Independent Directors. Thomas Lundqvist has been excluded
due to his involvement in the equity of both CLS and
Citadel. Bengt Mortstedt has also been excluded in view
of his connection with his brother Sten Mortstedt. The
remaining non-executive Directors, Keith Harris, James
Dean and Patrik Gransater are the CLS Independent
Directors, and have taken responsibility for formulating
and discussing the Merger Offer on behalf of CLS.
The Merger Offer is conditional, inter alia, upon the
approval of CLS Shareholders, which will be sought at an
extraordinary general meeting. Further details of the
approvals required are set out in paragraph 10 below.
2. The Merger Offer
On behalf of CLS, HSBC will offer to acquire, on the terms
and subject to the conditions set out or referred to in
this announcement, all the Citadel Shares not already
owned by CLS on the following basis:
for every 5 Citadel Shares 3 New CLS Shares
and so on in proportion for any other number of Citadel
Shares held (any resulting fractional entitlement being
aggregated and sold in the market and the net proceeds of
sale accruing to the benefit of the Enlarged Group.)
On the basis of the Closing Price of a CLS Share of 177.5
pence on 19 July 2000 (the last dealing day prior to the
date of this announcement), the Merger Offer values each
Citadel Share at 106.5 pence and the current issued
ordinary share capital of Citadel, at approximately #35.7
million. This represents a 4.5 per cent. discount over
the Closing Price of a Citadel Share of 111.5 pence on 19
July 2000, the last dealing day prior to the date of this
announcement.
The Merger Offer represents a discount to Citadel's net
asset value of 152.5 pence (after notional exercise of the
CLS Warrant) at 30 June 2000, as stated in its latest
interim statement, of 30.2 per cent. on the basis of the
Closing Price of a CLS Share of 177.5 pence on 19 July
2000, being the last dealing day prior to the date of this
announcement.
Citadel also announced today its interim results for the
six months ended 30 June 2000. Citadel Shareholders are
advised to read the full text of both these results in the
Merger Offer documentation which will be despatched to
them as soon as practicable.
Due to the Merger Offer, the Citadel Directors have not
declared an interim dividend for the six months ended 30
June 2000. However, Citadel Shareholders will be entitled
to participate in CLS's intended tender offer buy-back, in
lieu of dividend for the six months ended 30 June 2000, on
the CLS Shares they receive under the Merger Offer. The
CLS Directors are intending to distribute a total of
approximately #4.35 million following completion of the
Merger Offer by way of tender offer buy-back in November
2000, in lieu of dividend for the six months ended 30 June
2000. This would be on the basis of 235 pence per share
for 1 in 60 of the CLS Shares and the New CLS Shares to be
issued. In view of the timescale, the details of the
tender offer will be circulated later and the CLS
Directors may increase the share price and alter the ratio
if market conditions change. This is equivalent in cash
terms to an interim dividend of 3.92 pence per CLS Share
in the Enlarged Group (1999: 2.85 pence per share), an
increase of 37.5 per cent.
The Merger Offer extends to all Citadel Shares
unconditionally allotted or issued on the date of the
Merger Offer and any further Citadel Shares
unconditionally allotted or issued while the Merger Offer
remains open for acceptance. CLS will make appropriate
proposals to holders of options under the Citadel Share
Option Scheme.
The Citadel Shares are to be acquired by CLS under the
Merger Offer fully paid and free from all liens, charges,
encumbrances and other third party rights of any nature
whatsoever and together with all rights attaching thereto,
including the right to receive and retain any dividends
and other distributions declared, made or paid hereafter.
The Merger Offer will be made subject to the conditions
and further terms set out in Appendix I, and to be set out
in full in the Offer Document and the Form of Acceptance.
3. Recommendation by the Citadel Independent Directors
and change in Nominated AIM Adviser
The Citadel Independent Directors, who have been so
advised by Teather & Greenwood, consider the terms and
conditions of the Merger Offer to be fair and reasonable
so far as Citadel Shareholders are concerned and in the
best interests of Citadel and of Citadel Shareholders as a
whole. In providing advice to the Citadel Independent
Directors, Teather & Greenwood has taken into account the
Citadel Independent Directors' commercial assessments of
the transaction in the circumstances as set out in
Appendix IV.
As HSBC are acting for CLS in the Merger Offer, they have
resigned with immediate effect as Citadel's Nominated AIM
Adviser. Teather & Greenwood, who are Rule 3 advisers to
the Citadel Independent Directors for the purposes of the
Code, have assumed this role with immediate effect.
4. Background to and reasons for recommending the Merger
Offer
Set out in Appendix IV to this announcement is a letter
from the Citadel Independent Directors, setting out the
background to and reasons for recommending the Merger
Offer. This letter will be despatched to Citadel
Shareholders with copies of the Citadel interim results
and this announcement shortly.
5. Irrevocable undertakings and letters of intent
CLS has received irrevocable undertakings from the Citadel
Directors in respect of their entire beneficial holdings
of, in aggregate, 7,201,130 Citadel Shares, representing
approximately 21.5 per cent. of the existing issued share
capital of Citadel. This includes 10,000 Citadel Shares
held by the Citadel Independent Directors, representing
approximately 0.03 per cent of the existing issued share
capital of Citadel.
CLS has also received non-binding letters of intent, in
the absence of a competing offer, to accept the Merger
Offer from other Citadel Shareholders in respect of
8,483,751 Citadel Shares owned or controlled by them,
representing 25.3 per cent. of the existing issued share
capital of Citadel.
These irrevocable undertakings and non-binding letters of
intent to accept are in addition to CLS's existing holding
of 5,827,310 Citadel Shares representing 17.4 per cent.
The irrevocable undertakings detailed in this paragraph,
will all cease to be binding if the Merger Offer lapses or
the Merger Offer is withdrawn.
Save for the Citadel Shares comprised in the undertakings
to accept the Merger Offer and the Citadel Shares and
options over Citadel Shares held by CLS Directors as
disclosed in paragraph 6 below, neither CLS nor any
subsidiary of CLS, nor any CLS Director, nor, so far as
CLS is aware, any person acting in concert with CLS, owns
or controls any Citadel Shares, securities convertible
into Citadel Shares, rights to subscribe for Citadel
Shares, options (including traded options) in respect of
Citadel Shares and derivatives referenced to Citadel
Shares.
6. Interests of CLS Directors in Citadel Shares
The following CLS Directors and their connected persons
hold the following beneficial interests in Citadel Shares
and options over Citadel Shares.
Number of Exercise price
Number of options and period for
Citadel over options over
Shares Citadel Citadel Shares
Shares
Sten Mortstedt 7,149,854 115,000 100p
23/7/2000 -
22/7/2004
Glyn Hirsch 20,920 115,000 100p
23/7/2000 -
22/7/2004
Thomas Lundqvist 5,087 - -
7. New CLS Shares
Full acceptance of the Merger Offer, assuming no exercise
of the CLS Warrant but the exercise in full of options
over Citadel Shares while the Merger Offer remains open
for acceptance, would require the issue of approximately
17.0 million New CLS Shares, representing approximately
17.3 per cent. of the issued share capital of the Enlarged
Group.
The New CLS Shares to be issued will be credited as fully
paid and will rank pari passu in all respects with the
existing CLS Shares, which are listed on the Official
List, including the right to participate in CLS's intended
tender offer buy-back, in lieu of dividend in respect of
the six months ended 30 June 2000 and any other dividends
and other distributions declared, made or paid hereafter.
The New CLS Shares will be issued free from all liens,
charges, encumbrances and other third party rights of any
nature whatsoever. Application will be made to the UK
Listing Authority for the New CLS Shares to be admitted to
the Official List. Application will also be made to the
London Stock Exchange for the New CLS Shares to be
admitted to trading on the London Stock Exchange's main
market for listed securities.
Fractions of New CLS Shares will not be allotted or issued
to Citadel Shareholders. Entitlements to fractions of New
CLS Shares will be aggregated and sold in the market and
the net proceeds of sale will accrue to the benefit of the
Enlarged Group.
8. Background to and reasons for the Merger Offer
CLS's approach has been to seek opportunities to enhance
shareholder value via strategic investment in the
following:
high quality property acquisitions and investments,
including those outside the United Kingdom. As part
of this strategy, the CLS Group increased its
shareholding in Citadel in May 1999 from 12.3 per
cent. to 17.4 per cent.;
refurbishment of existing properties in the United
Kingdom; and
investment in a diversified share investment
portfolio.
In common with many smaller listed property companies, CLS
and Citadel have suffered from a lack of investor
interest. This has been reflected in the closing prices
of their shares as at 19 July 2000, being the last dealing
day prior to the date of this announcement, representing
discounts of 37.5 and 31.7 per cent. respectively to their
net asset values at 30 June 2000.
As at 30 June 2000, the combination of these two companies
would create a real estate investment company with a gross
portfolio value in excess of #640 million and enhanced
geographical coverage with strategic holdings in the three
European markets of the United Kingdom, Sweden and France.
The CLS Independent Directors are of the opinion that the
Enlarged Group may attract increasing investor interest,
with the prospect of decreasing the share price discount
to net asset value for the Enlarged Group. In addition,
the scale of the Enlarged Group may bring benefits
including the efficiency of managing the Enlarged Group
from one corporate entity and increased financial
strength, which will support future investment. The board
of CLS believe that the Enlarged Group has good prospects
for asset growth in the foreseeable future.
9. Financing of the Merger Offer
The consideration under the Merger Offer will be satisfied
entirely by the issue of the New CLS Shares to the Citadel
Shareholders.
10. CLS Shareholder approvals
CLS Shareholder approval is required in view of the size
of the Merger Offer under the rules of the UK Listing
Authority. It is also required to approve the purchase of
Citadel Shares from certain CLS Directors and to create
and authorise the allotment of New CLS Shares. In
addition, in view of the fact that Sten Mortstedt, a
director and a substantial shareholder of CLS, is a
shareholder of Citadel, the Merger Offer is a transaction
with a related party under the Listing Rules. Accordingly
the Merger Offer is conditional upon the approval of CLS
Shareholders, excluding Sten Mortstedt who will abstain
from voting and take all reasonable steps to ensure that
his associates will abstain.
CLS is also seeking CLS Shareholders' approval to grant an
authority for the Company to purchase up to a maximum of
10 per cent. of CLS's issued ordinary share capital
following the issue of New CLS Shares pursuant to the
Merger Offer. The CLS Directors believe that such
purchases could enhance the Company's net assets per
share. This should not be interpreted to mean that net
assets per CLS Share will necessarily be greater than in
any previous year.
Following completion of the Merger Offer, under the rules
of the Code, any increase in the percentage shareholding
in the Enlarged Group by Sten Mortstedt individually or in
the combined interests of Sten Mortstedt and Bengt
Mortstedt or any person connected to them as a result of
any purchases by CLS of its own shares pursuant to the
authority given to CLS at the EGM could oblige Sten
Mortstedt individually or Sten Mortstedt and Bengt
Mortstedt collectively to make a general offer to all CLS
Shareholders pursuant to Rule 9 of the Code. However, the
Panel has agreed, subject to the approval of independent
CLS Shareholders on a poll, to waive this requirement.
The independent CLS Shareholders are the CLS Shareholders
other than Sten Mortstedt and Bengt Mortstedt and their
respective interests.
For the avoidance of doubt, CLS may continue to purchase
its own shares during the Offer Period under its existing
authority granted at the annual general meeting of the
Company held on 3 May 2000 which authorised the Company to
make market purchases of a maximum of 9,616,952 CLS
Shares. CLS has already purchased 2,185,670 CLS Shares
under this existing authority.
11. Information on CLS
CLS is a property company involved in the investment in,
development and management of commercial properties and
the investment in the shares of high technology and
internet companies.
For the year ended 31 December 1999, CLS reported turnover
of #33.7 million (1998: #28.8 million), profit before
taxation of #16.9 million (1998: #11.1 million) and basic
earnings per share of 14.0p (1998: 8.8p). On 31 December
1999, CLS had net assets of #248.7 million (1998: #207.6
million).
CLS also announced today its interim results for the six
months ended 30 June 2000 and reported NAV per share of
284.0 pence (up 16.4 per cent. since 31 December 1999).
Profit before taxation was #13.1 million (1999: #9.9
million) and basic earnings per share were 12.4 pence
(1999: 8.3 pence). Net assets as at 30 June 2000 were
#268.5 million (1999: #226.5 million).
The CLS Directors believe CLS has good prospects for asset
growth in the foreseeable future. Further details of the
CLS Group's recent financial performance and operational
developments are set out in the separate announcement of
the unaudited interim statement for the six months ended
30 June 2000.
12. Information on Citadel
Citadel is a property company involved in the investment
in and management of office properties in Paris and Lyon.
For the year ended 31 December 1999, Citadel reported
turnover of #9.5 million (1998: #5.8 million), profit
before taxation of #3.7 million (1998: #3.1 million) and
basic earnings per share of 11.2p (1998: 7.8p). On 31
December 1999, Citadel had net assets of #50.6 million
(1998: #47.0 million).
Citadel also announced today its interim results for the
six months ended 30 June 2000 and reported NAV per share
of 152.5 pence after notional exercise of the CLS Warrant
(up 10.4 per cent. since 30 June 1999). Profit before
taxation was #2.2 million (1999: #1.9 million) and basic
earnings per share were 5.8 pence (1999: 5.2 pence). Net
assets as at 30 June 2000 were #54.7 million (1999: #48.3
million).
Further details of the Citadel Group's recent financial
performance and operational developments are set out in
the separate announcement of the unaudited interim
statement for the six months ended 30 June 2000.
13. Continuation of the Citadel business
The CLS Directors intend to continue to conduct the
business of Citadel in the same manner as it is currently
conducted and there are no plans to introduce any
substantial change in the business or in employees' terms
of contract.
14. Management and employees
CLS has given assurances to the Citadel Independent
Directors that the existing employment rights of all
management and employees of Citadel will be fully
safeguarded.
15. Citadel Share Option Scheme
Citadel Share Optionholders will be offered the
opportunity to release their options over Citadel Shares
in consideration for the grant of equivalent options over
CLS Shares, using the same valuation as for the Merger
Offer itself. Citadel Share Optionholders who do not
accept this opportunity will be entitled under the terms
of the Citadel Share Option Scheme to exercise their
options when the Merger Offer has become or been declared
unconditional in all respects, and will be able to accept
the Merger Offer while it is open for acceptance. The
Merger Offer will remain open for acceptance for at least
14 days after the date on which it is declared
unconditional in all respects. These proposals will be
circulated to Citadel Share Optionholders in due course.
16. Listing and dealings
Application will be made to the UK Listing Authority for
the New CLS Shares to be admitted to the Official List.
Application will also be made to the London Stock Exchange
for the New CLS Shares to be admitted to trading on the
London Stock Exchange's main market for listed securities.
It is expected that Admission will become effective and
that dealings, for normal settlement, in the New CLS
Shares will commence on the London Stock Exchange on the
first dealing day following the date on which the Merger
Offer becomes or is declared unconditional in all respects
(save for the condition relating to Admission and
admission to trading on the London Stock Exchange's main
market for listed securities).
17. Offer Document and Circular
The Offer Document containing the full terms and
conditions of the Merger Offer, together with a Form of
Acceptance and a copy of the Listing Particulars, will be
despatched to Citadel Shareholders and, for information
only, to participants in the Citadel Share Option Scheme
as soon as practicable.
A Circular (and the Listing Particulars with, for
information only, the Offer Document) will be despatched
to CLS Shareholders describing the Merger Offer and giving
notice to convene an extraordinary general meeting of CLS
Shareholders at which ordinary resolutions will be
proposed to approve the terms of the Merger Offer, to
authorise the CLS Directors to allot the New CLS Shares
pursuant to section 80 of the Act, to waive pre-emption
rights in respect of the New CLS Shares and to approve the
purchase of Citadel Shares from certain CLS Directors. A
special resolution will also be proposed to authorise the
purchase by the Company of its own shares (including,
specifically, the purchase of its own shares from a
Director or person connected with him) and an ordinary
resolution will be proposed to approve the waiver of the
requirements of the Code as a result of the purchase by
the Company of its own shares.
18. Overseas Shareholders
The making of the Merger Offer in, or to persons resident
in or who are citizens, residents or nationals of,
jurisdictions outside the UK may be affected by the laws
of the relevant jurisdiction. Citadel Shareholders who
are not resident in the UK or who are citizens or
nationals of countries outside the UK should inform
themselves about and observe any applicable legal
requirements. It is the responsibility of any such
Citadel Shareholder wishing to accept the Merger Offer to
satisfy himself as to the full observance of the laws of
the relevant jurisdiction in connection therewith,
including the obtaining of any governmental, exchange
control or other consents which may be required, the
compliance with other necessary formalities and the
payment of any issue, transfer or other taxes due in such
jurisdiction.
In particular, the Merger Offer will not be made directly
or indirectly in or into, or by use of the mails of or by
any means or instrumentality of interstate or foreign
commerce of, or of any facilities of a national securities
exchange of, the United States, Australia, Canada or
Japan. This includes, but is not limited to, the post,
facsimile transmission, telex and telephone. Furthermore,
copies of this announcement are not being and must not be
mailed or otherwise distributed or sent in or into or from
the United States, Australia, Canada or Japan including to
Citadel Shareholders or participants in the Citadel Share
Option Scheme with registered addresses in the United
States, Australia, Canada or Japan, or to persons whom CLS
knows to be nominees holding Citadel Shares for such
persons.
The New CLS Shares to be issued pursuant to the Merger
Offer will not be registered under the United States
Securities Act of 1933 (as amended) nor under the
securities laws of any jurisdiction of the United States
nor under any of the relevant securities laws of
Australia, Canada or Japan. No prospectus in relation to
the Merger Offer or the New CLS Shares to be issued
pursuant thereto has been lodged with, or registered by,
the Australian Securities and Investments Commission. The
relevant clearances have not been and will not be obtained
from the Securities Commission of any province or
territory of Canada. Accordingly, unless an exemption
under the relevant securities law of such jurisdictions is
available, the New CLS Shares may not be offered, sold, re-
sold or delivered, directly or indirectly, in or into the
United States, Australia, Canada or Japan. All Citadel
Shareholders (including nominees, trustees or custodians)
who would, or otherwise intend to forward this
announcement, should read the further details in this
regard which will be contained in the Offer Document which
will be issued in due course before taking any action.
19. General
Certain terms used in this announcement are defined in
Appendix III.
This announcement does not constitute an offer or
invitation to purchase any securities.
Further details of the Merger Offer to be made will be
contained in the Offer Document, which will be despatched
to Citadel Shareholders and, for information only, to CLS
Shareholders, together with the Listing Particulars, as
soon as practicable. A circular to CLS Shareholders
containing a notice convening the EGM and providing
information on the Merger Offer, will be despatched to CLS
Shareholders as soon as practicable.
Enquiries:
CLS Holdings plc
Sten Mortstedt Executive Chairman 020 7582 7766
Glyn Hirsch Chief Executive 020 7582 7766
Citadel Holdings plc
Gavin Kelly Chairman of the 020 7578 7070
Citadel Independent
Directors
HSBC Investment Bank plc
Jonathan Gray 020 7336 9983
Teather & Greenwood 020 7426 9534
Russell Cook
HSBC Investment Bank plc, which is regulated in the United
Kingdom by The Securities and Futures Authority Limited,
is acting exclusively for CLS Holdings plc and no-one else
in connection with the Merger Offer and will not be
responsible to anyone other than CLS Holdings plc for
providing the protections afforded to customers of HSBC
Investment Bank plc or for providing advice in relation to
the Merger Offer or any other matter referred to herein.
Teather & Greenwood, which is regulated in the United
Kingdom by The Securities and Futures Authority Limited,
is acting exclusively for Citadel Holdings plc, acting
through the Citadel Independent Directors, and for no-one
else in connection with the Merger Offer and will not be
responsible to anyone other than Citadel Holdings plc,
acting through the Citadel Independent Directors, for
providing the protections afforded to customers of Teather
& Greenwood or for providing advice in relation to the
Merger Offer or any other matter referred to herein.
The CLS Directors accept responsibility for the
information contained in this announcement, except for the
information in this announcement concerning Citadel, its
subsidiaries and their respective businesses, the Citadel
Directors and their connected persons and persons acting
in concert with, and associates of, Citadel. Subject to
this, to the best of the knowledge and belief of the CLS
Directors (who have taken all reasonable care to ensure
that such is the case), the information contained in this
announcement for which they are responsible is in
accordance with the facts and does not omit anything
likely to affect the import of that information.
The Citadel Directors accept responsibility for the
information contained in this announcement, except for the
information in this announcement concerning CLS, its
subsidiaries and their respective businesses, the Citadel
Directors and their connected persons and persons acting
in concert with, and associates of, CLS, with the
exception of expressions of opinion and the recommendation
of the Citadel Independent Directors. Subject to this, to
the best of the knowledge and belief of the Citadel
Directors (who have taken all reasonable care to ensure
that such is the case), the information contained in this
announcement for which they are responsible is in
accordance with the facts and does not omit anything
likely to affect the import of that information.
The Citadel Independent Directors accept responsibility
for expressions of opinion and their recommendation set
out in this announcement. To the best of the knowledge
and belief of the Citadel Independent Directors (who have
taken all reasonable care to ensure that such is the
case), the information contained in this announcement for
which they are responsible is in accordance with the facts
and does not omit anything likely to affect the import of
that information.
Appendix I
Conditions and certain further terms of the Merger Offer
The Merger Offer, which will be made by HSBC Investment
Bank on behalf of CLS, will comply with the applicable
rules and regulations of the UK Listing Authority and the
City Code, will be governed by English law and will be
subject to the jurisdiction of the Courts of England and
to the terms and conditions set out below and to be set
out in the Offer Document and the Form of Acceptance.
Part A: Conditions of the Merger Offer
The Merger Offer is subject to the following conditions:
(a)valid acceptances being received (and not, where
permitted, withdrawn) by 3.00 p.m. on the first
closing date of the Merger Offer (the "First Closing
Date") (or such later time(s) and/or date(s) as CLS
may, subject to the rules of the Code, decide) in
respect of not less than 90 per cent. in nominal value
(or such lower percentage as CLS may decide) of the
Citadel Shares to which the Merger Offer relates,
provided that this condition will not be satisfied
unless CLS shall have acquired or agreed to acquire,
whether pursuant to the Merger Offer or otherwise,
Citadel Shares carrying, in aggregate, more than 50
per cent. of the voting rights then exercisable at a
general meeting of Citadel including for this purpose,
to the extent (if any) required by the Panel, any such
voting rights attaching to any Citadel Shares that may
be unconditionally allotted or issued before the
Merger Offer becomes or is declared unconditional as
to acceptances, whether pursuant to the exercise of
any outstanding conversion or subscription rights or
otherwise and, for this purpose:
(i)the expression "Citadel Shares to which the Merger
Offer relates" shall be construed in accordance
with sections 428 to 430F of the Act; and
(ii) Citadel Shares which have been
unconditionally allotted shall be deemed to carry
the voting rights which they will carry upon
issue;
(b)the UK Listing Authority and the London Stock Exchange
announcing their decision to admit to the Official
List and to trading on the London Stock Exchange's
main market for listed securities (respectively) the
New CLS Shares and such admission becoming effective
in accordance with paragraph 7.1 of the Listing Rules
or the admission standards of the London Stock
Exchange (as appropriate), or (if determined by CLS
and subject to the consent of the Panel) the UK
Listing Authority agreeing to admit to the Official
List and the London Stock Exchange agreeing to admit
to trading on its main market for listed securities
such shares subject only to
(i)the allotment of such shares and/or
(ii) the Merger Offer becoming or being declared
unconditional in all respects;
(c)the passing at the EGM of such resolution or
resolutions as may be necessary or incidental to
approve, implement and effect the terms of the Merger
Offer;
(d)it having been established in terms reasonably
satisfactory to CLS that neither the proposed
acquisition of Citadel by CLS nor any matter arising
from that acquisition will be referred to the
Competition Commission;
(e)no government, government department or governmental,
quasi-governmental, supranational, statutory or
regulatory body, court, trade agency, association,
institution or professional body or any other person
or body whatsoever in any jurisdiction (each a
"Relevant Authority") having, prior to the date when
the Merger Offer would otherwise become unconditional,
instituted, implemented, threatened or communicated to
Citadel its decision to take any action, proceeding,
suit, investigation or enquiry or made, proposed or
enacted any statute, regulation, decision or order or
taken any other steps and there not continuing to be
outstanding any statute, legislation, regulation,
decision or order thereof which would or might:
(i)make the Merger Offer, or the acquisition by CLS
of any shares in, or control of, Citadel, void,
illegal and/or unenforceable or, to a material
extent, restrain, prohibit, restrict, or delay the
Merger Offer or impose additional and material
conditions or obligations or otherwise challenge
or interfere therewith to a material extent;
(ii) result in any material delay or limitation
in the ability of CLS, or render CLS unable, to
acquire some or all of the Citadel Shares;
(iii) require or prevent the divestiture by
Citadel or any of its subsidiaries, or any
company, partnership or joint venture in which any
member of the Citadel Group has a substantial
interest (the "wider Citadel Group") of all or any
material part of their respective businesses,
assets or property or, to an extent which is
material, impose any limitation on the ability of
any member of the wider Citadel Group to conduct
all or any material part of their respective
businesses or own all or any material part of
their respective assets or property;
(iv) require any member of the wider Citadel
Group to offer to acquire any shares in any member
of the wider Citadel Group owned by any third
party; or
(v)otherwise adversely affect the business, profits
or prospects of any member of the wider Citadel
Group to an extent which is material in the
context of the Citadel Group;
and all applicable waiting and other time periods
during which any such Relevant Authority could decide
to take, institute, implement or threaten any such
action, proceeding, suit, investigation or enquiry
having expired, lapsed or been terminated;
(f)all necessary filings having been made and all
appropriate waiting periods under any applicable
legislation or regulations of any jurisdiction having
expired, lapsed or been terminated in each case in
respect of the Merger Offer and the acquisition of
Citadel Shares or of control of Citadel by CLS and all
authorisations, orders, recognitions, grants,
consents, licences, confirmations, clearances,
permissions and approvals ("Authorisations") which in
the opinion of CLS, acting reasonably, are necessary
or appropriate for or in respect of the Merger Offer
or the proposed acquisition of any shares in, or under
the control of, Citadel by CLS having been obtained on
terms and in a form reasonably satisfactory to CLS
from all appropriate Relevant Authorities and all such
Authorisations, together with all Authorisations which
in the opinion of CLS, acting reasonably, are
necessary or appropriate to carry on the business of
any member of the Citadel Group, the absence of which
would be material in the context of the Merger Offer,
remaining in full force and effect and there being no
intimation of an intention to revoke or not to renew
the same and all necessary statutory or regulatory
obligations in any relevant jurisdictions having been
complied with;
(g)save as fairly disclosed in writing to CLS or its
professional advisers prior to the date of this
announcement, there being no provision of any
arrangement, agreement, licence or permit, franchise
or other instrument to which any member of the wider
Citadel Group is a party or by or to which any such
member or any of its assets, which are material to its
business may be bound, entitled or subject and which,
in consequence of the Merger Offer or the proposed
acquisition of any Citadel Shares or control of
Citadel by CLS or otherwise, would or might reasonably
be expected to result (to an extent which is
materially adverse in the context of the Citadel
Group) in:
(i)any such arrangement, agreement, licence or
instrument being terminated or modified or any
action being taken or any obligation arising
thereunder;
(ii) any assets or interests of any such member
being or failing to be disposed of;
(iii) the interest or business of any such member
in or with any firm or body or person being
terminated or materially and adversely modified or
affected;
(iv) any such member ceasing to be able to carry
on business under any name under which it
presently does so;
(v)any monies borrowed by or other indebtedness
(actual or contingent) of any such member being or
becoming capable of being declared repayable
immediately or prior to its stated maturity or the
ability of such member to incur any indebtedness
being withdrawn or inhibited;
(vi) the creation 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 mortgage, charge or other
security becoming enforceable; or
(vii) the financial or trading position or
prospects of any such member being affected;
(h)except as disclosed in the annual report and accounts
of Citadel for the year ended 31 December, 1999, or as
(a) fairly disclosed in writing to CLS or its
professional advisers prior to the date of this
announcement or in the interim financial statements of
Citadel for the six months ended 30 June 2000 or (b)
announced via the London Stock Exchange Companies
Announcements Office prior to the date of this
announcement, no member of the wider Citadel Group
having since 31 December, 1999 (other than by way of
transactions between Citadel and wholly owned
subsidiaries of Citadel or between two or more such
wholly owned subsidiaries):
(i)issued or agreed to issue or authorised or
proposed the issue of additional shares of any
class, or securities convertible into, or rights,
warrants or options to subscribe for or acquire,
any such shares or convertible securities (save
for options granted, and for any Citadel Shares
allotted upon exercise of options granted, prior
to the date when the Merger Offer would otherwise
become unconditional, under the Citadel Share
Option Scheme) or redeemed, purchased, reduced or
made any other change to any part of its share
capital or to vary any rights attached to any
class of its share capital;
(ii) recommended, declared, paid, made or
proposed to recommend, declare, pay or make any
bonus in respect of shares, dividend or other
distribution whether payable in cash or otherwise;
(iii) implemented or authorised or proposed or
announced its intention to effect any
reconstruction, amalgamation, merger or demerger
or acquisition or disposal of assets or any right,
title or interest in any assets or shares or any
change in its share or loan capital (other than
pursuant to the exercise of options granted under
the Citadel Share Option Scheme) in each case
which would be material in the context of the
Citadel Group taken as a whole;
(iv) entered into any transaction, contract or
commitment (whether in respect of capital
expenditure or otherwise) which is of a long-term,
onerous or unusual nature or which involves or
could involve an obligation of a nature or
magnitude which is material in the context of the
Citadel Group taken as a whole;
(v)issued or proposed the issue of any debenture or
incurred any contingent liability or incurred any
indebtedness which is material in the context of
the Citadel Group as a whole;
(vi) disposed of or transferred, mortgaged, or
encumbered any material assets or assets which
together are material in the context of the
Citadel Group taken as a whole or any right, title
or interest in any such asset;
(vii) waived or compromised any claim which is
material in the context of the Citadel Group taken
as a whole;
(viii)entered into or varied the terms of any service
agreement with any Citadel Director;
(ix) taken any action or had any order made for
its winding-up, dissolution or reorganisation, or
for the appointment of a receiver, administrative
receiver, trustee or similar officer of all or any
of its assets which are material to its business
or revenues;
(x)entered into any agreement which restricts to a
material extent the size or nature of the business
of any member of the wider Citadel Group in each
case which will or might be material to the
Citadel Group as a whole;
(xi) terminated or varied the terms of any
agreement between any member of the Citadel Group
and any other person in a manner which would or
might reasonably be expected to have a material
adverse effect on the position or prospects of the
Citadel Group taken as a whole; or
(xii) entered into any agreement or commitment or
passed any resolution with respect to or announced
an intention to effect any of the transactions or
events referred to in this paragraph;
(i)since 31 December 1999 and prior to the date when the
Merger Offer becomes otherwise unconditional, except
as disclosed in the annual report and accounts of
Citadel for the year ended 31 December 1999 or the
interim financial statements of Citadel for the six
months ended 30 June 2000 or, save as (a) fairly
disclosed in writing to CLS or its professional
advisers prior to the date of this announcement or (b)
announced via the London Stock Exchange Companies
Announcements Office prior to the date of this
announcement:
(i)there having been no material adverse change in
the financial or trading position of the Citadel
Group taken as a whole;
(ii) there not having been instituted or
threatened in writing any litigation, arbitration
proceedings, prosecution or other legal
proceedings to which any member of the Citadel
Group or associated person is a party (whether as
plaintiff, defendant or otherwise) which would or
might reasonably be expected to have a material
effect on the Citadel Group taken as a whole and
no such proceedings remaining outstanding;
(iii) no claim or liability (contingent or
otherwise), having arisen in respect of any member
of the wider Citadel Group which would or might
reasonably be expected to have a material and
adverse effect on the Citadel Group taken as a
whole;
(iv) there having been no receiver or
administrative receiver appointed over a material
part of the assets of any member of the wider
Citadel Group or analogous proceedings or steps
having been taken place under the laws of any
relevant jurisdiction and there having been no
petition presented for the administration of any
member of the wider Citadel Group or any
equivalent proceedings or steps taken under the
laws of any relevant jurisdiction;
(j)CLS not having discovered prior to the date when the
Merger Offer becomes otherwise unconditional that:
(i) any past or present member of the wider
Citadel Group has not complied with all applicable
laws of any relevant jurisdiction relating to
environmental matters, or
(ii) that there has been an emission, release,
disposal, discharge, deposit, spillage or leak of
waste or hazardous or harmful substances on or
about or from any land or other asset now or
previously owned, occupied or operating which is
likely to give rise to any liability (whether
actual or contingent) or cost (which would in each
case be material in the context of the Citadel
Group taken as a whole) for any member of the
wider Citadel Group; and
(k)CLS not having discovered prior to the date when the
Merger Offer becomes otherwise unconditional that:
(i)the financial or business information concerning
the wider Citadel Group as contained in the
information publicly disclosed at any time by any
member of the wider Citadel Group contains a
material misrepresentation of fact or omits to
state a fact necessary to make the information
contained therein not materially misleading and
which was not, if material, corrected by a
subsequent public announcement prior to the date
of this announcement which misrepresentation or
omission has or might reasonably be expected to
have a material adverse effect on the wider
Citadel Group; or
(ii) any member of the wider Citadel Group which
is not a subsidiary of Citadel is subject to any
liability (except for any liability arising in the
ordinary course of trading since 31 December
1999), contingent or otherwise which is not
disclosed in the annual report and accounts of
Citadel for the year ended 31 December 1999 or the
interim financial statements of Citadel for the
six months ended 30 June 2000, such liability
being material in the context of the Citadel Group
taken as a whole.
CLS reserves the right to waive, in whole or in part, all
or any of the conditions other than conditions (a), (b)
and (c). Condition (b) and (c) must be fulfilled.
Otherwise CLS shall be under no obligation to waive or
treat as satisfied any of the conditions (a) to (k) by a
date earlier than the latest date specified below for the
satisfaction thereof, notwithstanding that the other
conditions of the Merger Offer may at such earlier date
have been waived or fulfilled and that there are at such
earlier date no circumstances indicating that any such
conditions may not be capable of fulfilment.
If CLS is required by the Panel to make an offer for
Citadel Shares under the provisions of Rule 9 of the Code,
CLS may make such alterations to the above conditions,
including that in condition (a) above, and the other terms
of this Merger Offer as are necessary to comply with the
provisions of that Rule.
The Merger Offer will lapse unless the conditions set out
above (other than condition (a)) are fulfilled (and remain
fulfilled) or if capable of waiver are waived by midnight
on the 21st day after the first closing date of the Merger
Offer and the date on which the Merger Offer becomes or is
declared unconditional as to acceptances, whichever is the
later, or such later date as the Panel may agree.
The Merger Offer will also lapse if the proposed
acquisition of the entire issued share capital of Citadel
is referred to the Competition Commission before the later
of 3.00 p.m. on the first closing date of the Merger Offer
and the date on which the Merger Offer becomes or is
declared unconditional as to acceptances, in which event
not only will the Merger Offer cease to be capable of
further acceptance but also Citadel Shareholders and CLS
will thereafter cease to be bound by prior acceptances.
Part B: Certain further terms of the Merger Offer
Fractions of New CLS Shares will not be allotted or issued
to Citadel Shareholders. Entitlements to fractions of New
CLS Shares will be aggregated and sold in the market and
the net proceeds of sale will accrue to the benefit of the
Enlarged Group.
The making of the Merger Offer in, or to persons resident
in or who are citizens, residents or nationals of,
jurisdictions outside the UK may be affected by the laws
of the relevant jurisdiction. Citadel Shareholders who
are not resident in the UK or who are citizens or
nationals of countries outside the UK should inform
themselves about and observe any applicable legal
requirements. It is the responsibility of any such
Citadel Shareholder wishing to accept the Merger Offer to
satisfy himself as to the full observance of the laws of
the relevant jurisdiction in connection therewith,
including the obtaining of any governmental, exchange
control or other consents which may be required, the
compliance with other necessary formalities and the
payment of any issue, transfer or other taxes due in such
jurisdiction.
MORE TO FOLLOW
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