Mexichem intends to make a recommended all cash public offer of € 10.50 per ordinary Wavin share
Mexichem intends to make a cash offer of € 10.50 per Wavin ordinary share representing a premium of 177% over the closing price of 18 November 2011, for 100% of the outstanding shares of Wavin
- The Management and Supervisory Boards of Wavin support and recommend the intended Offer
Compelling Strategic Rationale
- The combination of Wavin and Mexichem creates the global market leader in plastic pipe systems with total annual sales of around € 4.0 billion (1)
- The combined group will be better equipped for future growth from consolidation and expansion into new markets
- Mexichem and Wavin are highly complementary with very limited geographic overlap
- The combined group will have stronger design, engineering and R&D capabilities whilst leveraging Mexichem’s low cost manufacturing platform
- The combined group will have a more diversified end-market profile across the residential, non-residential and infrastructure segments exposing it to different economic and construction cycles
Identity of Wavin Maintained Within the Combination
- Wavin will retain a separate operating and legal structure with headquarters in Zwolle, the Netherlands
- Wavin’s brand will be retained and R&D innovation centre will be kept in the Netherlands
- Existing rights of the employees, including pension rights, will be respected and the current Wavin employee consultation structure will be left unchanged. There will be no reduction of the number of employees as a consequence of the Transaction
- The combination represents an opportunity for Wavin and Mexichem employees and management to become part of a diversified group with a strong capital structure
Mexico-City/Zwolle, February 8, 2012 – Mexichem S.A.B. de C.V. (“Mexichem”) and Wavin N.V. (“Wavin”) jointly announce they have reached a conditional agreement in connection with a public cash offer by Mexichem for all issued and outstanding ordinary shares of Wavin at an offer price of € 10.50 for each Wavin ordinary share (the “Offer”). The offer price represents a 177% premium to Wavin’s closing share price as at 18 November 2011, and a 97% premium to Wavin’s average closing price for the three months up to and including 18 November 2011, respectively. The Offer values 100% of the issued and outstanding shares of Wavin at approximately € 531 million.
The combination of Mexichem and Wavin will create the global leader (€ 4.0 billion annual sales) in plastic pipe systems and solutions, building on a combined history of innovation and a commitment to client servicing. The companies will capitalise on a strong complementary fit in geography, product portfolio, R&D and business lines and together will be better equipped for future growth from consolidation and expansion into new markets.
Ricardo Gutiérez Muñoz, President of Executive Committee, Mexichem
“A combination between Mexichem and Wavin represents an important step for both of our companies in creating the leading global operator in the plastic pipe systems industry. The geographic footprint and product portfolio of Wavin and Mexichem are highly complementary and together we will be exceptionally positioned to capitalise on growth opportunities. We welcome Wavin to the Mexichem group and are excited about the opportunity of working with the Wavin management team.”
Henk ten Hove, Wavin CEO
“We believe Mexichem’s offer provides an opportunity for Wavin to join forces with a leading plastic pipe systems company whilst preserving our history, culture and assets such as our brand, our broad portfolio and our innovative power. We will be able to accelerate the Wavin 2015 strategy, to participate in the industry consolidation and to benefit from cross selling, sourcing power and best practice sharing. We look forward to a sustainable future together.”
Support from the Management Board and Supervisory Board of Wavin
The Board of Management and the Supervisory Board of Wavin support and recommend the Offer to its shareholders, with the exception of Mr Kottman, chairman of the Supervisory Board of Wavin, who has not participated in the deliberations and decision-making of the Supervisory Board of Wavin in connection with the intended Offer given his relationship with one of the large Wavin shareholders. After careful consideration of all of Wavin’s strategic alternatives, the Board of Management and the Supervisory Board of Wavin believe this transaction provides a fair price and is in the best interests of the company and its stakeholders. ING Bank N.V. has issued a fairness opinion to the Supervisory Board of Wavin and has opined that the intended Offer is fair to the shareholders of Wavin from a financial point of view.
Unanimous Support from Mexichem
The Board of Directors of Mexichem unanimously support the Offer. A Mexichem EGM, resolving on the approval of the Offer, is expected to be convened by March 2012. The Board of Directors of Mexichem shall propose and recommend such resolution to its shareholders.
Corporate Governance and Integration
The Wavin employees will become part of a global leader in the plastic pipe systems and solutions industry which will capitalise on the strong brands of both companies. The Wavin employee consultation structure, the existing rights and benefits of Wavin employees and existing pension rights will remain unchanged. There will be no reduction of the number of employees as a consequence of the Transaction. Mexichem is focused on ensuring that Wavin’s key management is retained and is committed to providing them with career opportunities within the combination.
Mexichem believes that the integration can be successfully executed with minimal disruptions, taking into account both companies’ strengths and cultures.
Wavin will retain a separate operating and legal structure with headquarters in Zwolle, the Netherlands. Wavin’s brand will be retained and Wavin’s R&D innovation centre will be kept in Dedemsvaart, the Netherlands. The business of the Wavin Group will be kept intact and the corporate identity, culture and commitment to sustainable development will be maintained. Mexichem will support Wavin with the realisation of the Wavin 2015 Strategy Plan.
Wavin Nederland Beheer B.V. will maintain the mitigated structure regime.
After successful completion of the Offer, the current members of Wavin’s Board of Management will continue to serve on Wavin’s Board of Management. In addition, Mexichem will nominate a new member of the Management Board. The Supervisory Board will consist of six members, two of which will be independent from Mexichem and its related parties and who will have special rights to safeguard the non-financial commitments agreed upon with Mexichem.
Customers and Business Partners
The customers of both Mexichem and Wavin will benefit from an enlarged range of high quality products and services through an extended global sales and service network and through improved product innovation.
Financing of the Offer
The Offer values 100% of the issued and outstanding Wavin shares at approximately € 531 million. Approximately two per cent of the issued and outstanding Wavin shares are held by Mexichem. Mexichem will finance the Offer for the other approximately 98% of the issued and outstanding Wavin shares (approximately € 520 million) with cash on its balance sheet and existing committed credit facilities.
Pre-Offer and Offer conditions
The commencement of the Offer is subject to the satisfaction or waiver of certain pre-offer conditions customary for a transaction of this kind, such as (i) completion of the notification procedures pursuant to the Dutch Merger Code (SER-besluit Fusiegedragsregels 2000), (ii) completion of all actions necessary to consult Wavin’s central works council and the European works council, (iii) no revocation of the recommendation by Wavin’s Board of Management or Supervisory Board, (iv) Mexichem and Wavin having reached agreement on the contents of the offer memorandum and which is subsequently approved by the AFM, (v) no competing offer having been made, (vi) no order, stay judgment or decree restraining, prohibiting or delaying the transaction, (vii) no preference shares having been issued by Wavin, (viii) no material breach of the merger protocol and (ix) no material adverse effect having occurred. The material adverse effect clause may also be invoked in the event of a breach of the warranties given by Wavin if such breach results in a payment obligation in excess of € 25 million.
When made, the consummation of the Offer will be subject to the satisfaction or waiver of certain offer conditions customary for transactions of this kind, such as (i) relevant antitrust clearance for the Offer, (ii) a minimum acceptance of 80% of the Wavin shares on a fully diluted basis, (iii) no revocation of the recommendation by Wavin’s Board of Management and Supervisory Board, (iv) no competing offer having been made, (v) no preference shares having been issued by Wavin (vi) no order, stay judgment or decree restraining, prohibiting or delaying the transaction, (vii) no material breach of the merger protocol, (viii) approval of Transaction at a Mexichem EGM and (ix) no material adverse effect having occurred.
Wavin and Mexichem may terminate the conditional agreement in the event that a bona fide third-party offeror makes an offer which is, a more beneficial offer than the Offer, which is binding upon such party and (i) exceeds the Offer Price by 10% and (ii) includes non-financial commitments which are similar to those agreed upon in the merger protocol (a “Competing Offer”). In the event of a Competing Offer, Mexichem will be given the opportunity to revise its Offer. If this revised Offer by Mexichem is at least equally beneficial to the Competing Offer, Wavin may not terminate the conditional agreement with Mexichem. The same is true for any subsequent Competing Offer. If Wavin terminates the agreement in the event a third party offer has been declared unconditional with at least 50% of the Shares plus one Share having been tendered and provided that such third party has offered an offer price per Share that exceeds the Offer Price by at least 3%, Mexichem is entitled to a break fee amounting to € 8 million. The same break fee applies if the Management and Supervisory Boards revoke their recommendation. The Company is entitled to a break fee of € 8 million if the Merger Protocol is terminated due to Mexichem’s EGM not approving the Transaction.
Mexichem and Wavin will seek to obtain all the necessary approvals and competition clearances as soon as practicable and will complete the required recommendation and consultation procedures with Wavin’s central works council, European works council and unions before launch of the Offer. The offer memorandum is expected to be published and the Offer is expected to commence during Q1 2012 in accordance with the applicable timetable. In March 2012, Mexichem will hold an EGM in order to obtain shareholder approval for the Offer. Wavin will hold an informative EGM before closing of the offer period.
Barclays Capital is acting as lead financial advisor and Citigroup Global Markets as joint financial advisor to Mexichem; Bank of America Merrill Lynch is acting as financial advisor to Wavin.
Allen & Overy is acting as legal counsel to Mexichem; Stibbe is acting as legal counsel to Wavin.
Hill+Knowlton Strategies is acting as communications advisor to Mexichem.
Today at 9.15 a.m. CET a joint media call of Mexichem and Wavin will take place. The call can be joined by dialling +31 (0) 20 717 68 68.
A replay of the conference call will be available after the call on the companies’ websites.
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