takeover Brantano

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takeover Brantano

  1. 1. PRESS RELEASE PUBLISHED IN ACCORDANCE WITH ARTICLE 8 OF THE BELGIAN ROYAL DECREE OF APRIL 27, 2007 ON TAKE OVER BIDS MACINTOSH RETAIL GROUP PLANS TO MAKE VOLUNTARY PUBLIC OFFER FOR SHOE RETAILER BRANTANO • Acquisition of Brantano is perfectly in line with Macintosh Retail Group’s growth strategy. • Macintosh Retail Group will strengthen its position as international shoe retailer. • Brantano leads the Belgian shoe market with 125 stores, and is the largest out-of- town shoe retail chain in the UK with 146 outlets. • Total turnover Brantano approx. € 300 million; long-term profitable company. • Offer price per share: € 55.00 (almost 30% premium); total offer price: € 158.2 million. • Finance of the acquisition entirely with loan capital. • Brantano’s major shareholders (jointly owning over 56%) support the offer and are prepared to tender their shares. Macintosh Retail Group NV today announces that it wishes to acquire shoe retailer Brantano NV (“Brantano”), a company listed on the Euronext Brussels stock exchange. To this end, Macintosh Retail Group plans to make a voluntary and provisional public offer in cash for Brantano’s entire share capital. The offer price per share is € 55.00, representing a 29.4% premium over the closing price of Friday, October 26, 2007 (€ 42.50). Macintosh Retail Group has reached an agreement with Brantano’s major shareholders (Mitiska NV and Sobradis NV), which jointly represent over 56% of the shares, under which these shareholders have irrevocably and unconditionally undertaken to tender their shares against the offer price of € 55.00. Macintosh Retail Group will submit a formal notification of its offer, together with a draft prospectus, as soon as possible to the Banking, Finance and Insurance Commission (CBFA), the Belgian financial supervisory authority. Brantano’s Board of Directors considers the offer to be friendly and will formulate its position in respect of the public offer in detail in the reply it is obliged to issue by virtue of Section 22 -1-
  2. 2. of the Belgian Takeover Bids Act of April 1, 2007. Brantano’s major shareholders will recommend this offer within Brantano’s Board of Directors. Profile of shoe retailer Brantano Brantano currently operates 125 shoe stores in Belgium, 4 in Luxembourg, 146 in the United Kingdom and 11 franchising stores in the Middle East. In Belgium, Brantano leads the shoe market, with turnover of approx. € 140 million and a market share of some 12% in volume terms and some 11% in value terms. In the United Kingdom, it is the largest out-of-town shoe specialty store format, with turnover of approx. € 160 million and a market share of 1,8%. Brantano’s stores have average net floor spaces of 800 m2 and are generally situated at attractive locations on the outskirts of medium-sized and large cities. The stores operate according to the self-service concept. Their product range covers a mix of own and international brands. 75% of the assortment are shoes, 15% are sports articles and 10% are apparel and accessories. Brantano is a structurally profitable company with solid balance sheet ratios and good opportunities for growth. Brantano key figures: (€ millions) H1 2007 H1 2006 FY 2006 2 Turnover 152.2 140.3 295.2 1 Recurring EBITDA 6.5 6.9 19.6 (REBITDA) 1 Recurring operating result 1.8 2.2 9.7 (REBIT) Balance sheet total 152.6 160.1 146.0 Solvency 52.4% 33.1% 56.9% 1. Adjusted to exclude non-recurring items, which include proceeds from the sale of properties 2. Representing an 8.5% increase (Belgium/ Luxembourg: +3.9% and UK: +10.9%) The lower REBIT in the first half of 2007, compared with the first half of 2006, was caused by increased marketing efforts to support the repositioning in the United Kingdom and additional rental costs incurred in Belgium following the sale of company-owned properties in late 2006. For the whole of 2007, Brantano’s Board of Directors expects to realise turnover of between € 300 and € 310 million (+ 5%) and REBIT that will be at the top end of the € 5 to € 7 million range. For further information about Brantano, please refer to the company’s website at www.brantano.be or www.brantano.co.uk. -2-
  3. 3. Key elements of the offer Macintosh Retail Group offers € 55.00 per share, representing a 29.8% premium over Brantano’s average closing price in the past three months and 29.4% over the closing price of October 26, 2007 (€ 42.50). Furthermore, it offers € 17.30 for each of the 33,000 share options outstanding under the 2004 share option plan (exercise price: € 42.45) and € 15.70 for each of the 12,500 share options under the 2005 plan (exercise price: € 46.99). In aggregate, the acquisition price for the outstanding shares and options totals € 158,169,450. In compliance with Belgian takeover legislation, Macintosh Retail Group will submit its file to the CBFA for its approval as soon as possible. Subject to acceptance, from this date onwards, CBFA and Brantano may submit comments to the notification and the draft prospectus. Subsequently, the final prospectus will be made available to the public. The voluntary public offer will be declared unconditional if the following cumulative conditions have been met: 1. The offer must have been approved by simple majority of votes at a General Meeting of Shareholders of Macintosh Retail Group NV. To this end, a meeting will be convened as soon as possible in the usual manner. Macintosh Retail Group had preliminary talks with some of its major shareholders (under condition of confidentiality an stand still), resulting in the commitment of some 45% of the outstanding share capital supporting the public offer; and 2. At least 85% of Brantano’s outstanding share capital must have been tendered in response to the offer; and 3. The Belgian competition authorities must have given their approval. Macintosh Retail Group expressly reserves the right to declare its offer unconditional and accept the tendered shares if the second condition referred to above has not been met. If applicable conditions are met, Macintosh Retail Group intends to launch a public squeeze-out bid to acquire the remaining outstanding shares. Key acquisition rationale The acquisition of Brantano is perfectly in line with Macintosh Retail Group’s strategy, which focuses on growth of its existing retail chains and acquisition of substantial and long-term profitable companies, preferably in the shoe and home furnishing sectors. Macintosh Retail Group’s operations in the shoe sector and those of Brantano complement and reinforce each other. -3-
  4. 4. With its shoe retail chains Scapino, Dolcis, Manfield, Invito and PRO sport, Macintosh Retail Group is the largest shoe retailer in the Netherlands, operating more than 420 outlets and holding a market share of some 13% in value terms and some 17% in volume terms. In Belgium, Macintosh Retail Group has been engaged in shoe retailing with Scapino, which now operates 31 stores. Together, market leader Brantano and Scapino have a market share of some 12% in value terms and some 14% in volume terms. In the United Kingdom, Brantano is the largest out-of-town shoe retailer, with a market share of 1.8%. Following the acquisition, Macintosh Retail Group’s net turnover in the shoe sector will total approximately € 635 million, making it one of the leading European players in the shoe market. After the acquisition Macintosh Retail Group will have operations in the Netherlands, Belgium/Luxembourg, the United Kingdom, France and Germany, with some 70% of the group’s total turnover being realised in the Netherlands (currently some 90%). Macintosh Retail Group expects Brantano to be able to boost its strategy in the near future aimed at growth in well profitable operations. In Belgium, Brantano is the unchallenged number one shoe store, with an aided brand awareness of 96%. In Belgium, its track record is excellent in terms of cash flow and profitability. Macintosh Retail Group sees opportunities for further improvements in profitability and turnover in this country. Recently, the new store concept was introduced in the majority of the Belgian Brantano’s stores, and all outlets will be refurbished by the spring of 2008. In Belgium, Brantano sees room for opening some ten stores. In the United Kingdom, Brantano is the largest out-of-town shoe retailer, with outlets at attractive locations in retail parks. Following a period of healthy profits, Brantano recently went through a slowdown in the United Kingdom. A programme has been launched since, aimed at improving turnover and profitability. Accordingly, during the past year, Brantano UK repositioned itself as a mid-market player, focusing on fashion. To this end, it converted and standardised all of its stores and modified its product range. This required substantial marketing efforts and resulted in a 10.5% increase in turnover in the first half of 2007. If the programme started results in further improvements, Brantano will have good prospects for expansion in the United Kingdom. Macintosh Retail Group expects to realise benefits from the collaboration between Brantano and the existing Scapino and Hoogenbosch shoe formats once the integration period is over. The acquisition of Brantano will significantly strengthen Macintosh Retail Group’s position as an international shoe retailer, which, in the medium term, will result in purchasing benefits -4-
  5. 5. and competitive advantages, also by using the Group’s direct purchasing facilities in the Far East. Together with the measures Brantano has already advocated, such as a reduction in the number of suppliers, Macintosh Retail Group expects this to have a positive effect on its gross margin. Furthermore, cost savings would appear to be feasible, among other things by having the Brantano shares de-listed. Impact on Macintosh Retail Group Based on 2006 figures Based on the published income statements of Macintosh Retail Group and Brantano for 2006 (adjusted for the furniture activities Macintosh Retail Group has sold and the properties Brantano has sold) the combined pro forma income statement would be as follows: 2006 (€ millions) Macintosh Brantano Combination Turnover 914.5 295.2 1,209.7 Recurring EBITDA 85.2 19.6 104.8 Recurring operating result 64.7 9.7 74.4 (REBIT) REBIT as a % of turnover 7.1% 3.3% 6.2% Based on the published balance sheets of Macintosh Retail Group and Brantano as at year-end 2006 (adjusted for the furniture activities Macintosh Retail Group has sold) and taking the financing of the acquisition into consideration, the combined pro forma balance sheet would be as follows: 2006 (€ millions) Macintosh Brantano Combination1 Balance sheet total 394.4 146.0 605.6 Shareholders’ equity 169.2 83.1 169.2 Net debt 89.4 (1.2) 246.4 1: Including the effects of financing the acquisition (estimated financing of acquisition and goodwill). As from 2008 It is expected that, in the years ahead, Brantano will make a structural and substantial contribution to Macintosh Retail Group’s net profit. The year 2008 will, first and foremost, be used to integrate Brantano into Macintosh Retail Group and to make arrangements for the de-listing of its shares. For this reason, and because of financing costs and (already planned earlier) expenses associated with Brantano’s repositioning in the United Kingdom, Macintosh Retail Group expects the acquisition to have -5-
  6. 6. a neutral impact on its net profit for 2008 . The measures to be taken are expected to result in a limited contribution to earnings per share in 2009 and a substantial contribution in 2010. Macintosh Retail Group considers that for Brantano an EBIT margin (operating result as a percentage of turnover) in the order of 6% is realistic (2006: 3.3%), also given the Group’s experience with existing shoe formats, whose EBIT margins were more than 10% in 2006. Following the acquisition, Macintosh Retail Group will continue to display solid balance sheet and other ratios. On the basis of pro-forma calculations, its solvency after the acquisition would be more than 30% and its net debt/EBITDA ratio and interest coverage ratio would be slightly more than 2 and more than 6 respectively, thereby satisfying banks’ requirements. The future of Brantano as part of Macintosh Retail Group Following the acquisition, Brantano will operate as an autonomous subsidiary of Macintosh Retail Group, with its present operational management team being directly accountable and reporting to the Managing Board. Brantano’s head office will continue to be in Erembodegem (Belgium). Macintosh Retail Group’s Managing Board is convinced that the acquisition will create a healthy basis for Brantano’s further growth. Acquisition price and financing The total acquisition price is € 158.2 million. In exchange, Macintosh Retail Group will acquire a company whose balance sheet total is € 146.0 million (as at year-end 2006), that has virtually no interest-bearing debt and whose equity totals € 83.1 million (as at year-end 2006). It will finance the acquisition entirely with loan capital, thus preventing any dilution in earnings per share. Rabobank will provide security for the financing and will act as the coordinator in financing the acquisition. Miscellaneous The law firm of Cleary Gottlieb Steen & Hamilton LLP, Ernst & Young Transaction Advisory Services BV and Tax Advisers, Allen & Overy LLP (Netherlands) and Claeys & Van Robaeys Lawyers act as the most important advisers to Macintosh Retail Group. Bank Degroof acts as paying agent and will organise the cancelling of the shares and cash settlement. -6-
  7. 7. This press release is neither an offer to purchase or sell, nor a request by any party whatsoever in any jurisdiction. Nowhere outside Belgium have steps been taken (nor shall steps be taken) to enable a public offer in any jurisdiction in which action would be required. During a joint press conference to be held at the head quarters of Brantano in Erembodegem (Belgium, Kwadelapstraat 2) later today at 15.00 hours, Macintosh Retail Group and Brantano will comment on this press release. This press release is also published in Dutch. In the event of any conflict of interpretation, the Dutch version prevails. Brantano will issue a press release with similar content simultaneously. The Managing Board of Macintosh Retail Group NV Maastricht, October 29, 2007 Further information: Macintosh Retail Group: P.T.A. Hünen, tel.: + 31 (0)43-3280728. Brantano: C. Vermeersch, tel.: + 32 (0)53-850000 This press release can also be found on the Macintosh Retail Group Internet site: www.macintosh.nl. Retail is our business. Macintosh Retail Group is a large-scale non-food retailer that specialises in the distribution of consumer products in the Living, Fashion and Automotive & Telecom sectors. Macintosh Retail Group operates almost 1,000 stores in the Netherlands, Belgium, France and Germany, with a total retail floor space of some 530,000 m². The Living sector consists of 146 home furnishing stores in the Netherlands, Belgium and France under the names Kwantum and GP Décors. The Fashion sector comprises 455 shoe stores of Scapino, Dolcis, Manfield Invito and PRO sport in the Netherlands, Belgium and Germany. Nea International, producer of Push-braces, is also part of the Fashion sector. In the Automotive & Telecom sector BelCompany is with 165 stores the largest provider of mobile telecom products and services in the Netherlands and with 62 shops one of the largest telecom retailers in Belgium. Halfords is the specialist in bicycles and car and bicycle accessories, with 158 stores in the Netherlands and Belgium. Should different interpretations arise between the Dutch and the English version of this press release, the Dutch language version prevails. -7-

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