Not for release, publication or distribution in or into the United States, Canada, Australia or Japan
Lafarge announces an Increased Offer for Blue Circle of 450p per share in cash, subject as set out below.
Bertrand Collomb, Chairman and Chief Executive Officer of Lafarge, commented:
"In its increasingly desperate efforts to preserve its independence, Blue Circle has resorted over the last few weeks to hyperbole regarding its future prospects.
The reality is rather more prosaic. Blue Circle has forfeited its position as a world leader in cement. Following its proposed return of capital to shareholders, it would be doomed to remain a second division player with neither the scale nor the resources to compete with the leaders in this global market.
Blue Circle would not be able to deliver on its promises, and would disappoint its shareholders in the future as it has in the past.
By contrast, Lafarge is offering shareholders the certainty of a full cash offer today."
1 - Terms of the Increased Offer
The Blue Circle Shares which are the subject of the Increased Offer will be acquired fully paid and free from all liens, charges, equitable interests, encumbrances and third party rights and together with all rights now or hereafter attaching thereto, including the right to all dividends and other distributions declared, made or paid on or after 1 February 2000 (the date on which the Original Offer was announced).
Accordingly, in the light of Blue Circle's decision to declare a special interim dividend of 10.95p per share following the announcement of Lafarge's Original Offer and with the consent of the Panel, if the Increased Offer becomes unconditional in all respects, the Blue Circle shares will be acquired on the following basis:
(a) Blue Circle shareholders who accept the Increased Offer before the close of business on 5 June 2000 and, in relation to the shares in respect of which the Increased Offer is accepted, were on the register as at the close of business on 17 March 2000 will (assuming that the special interim dividend has not already been paid) receive a cash consideration of 450p per share in respect of such shares. Under the terms of the Increased Offer, such Blue Circle shareholders will agree to waive their entitlement to the special interim dividend;
(b) Blue Circle shareholders who have not accepted the Increased Offer by the close of business on 5 June 2000, but who are entitled to receive the special interim dividend in respect of some or all of their Blue Circle Shares, will be paid the special interim dividend in respect of the relevant shares on 6 June 2000. If such shareholders subsequently accept the Increased Offer, they will receive a cash consideration of 439.05p per share in respect of those shares;
(c) except as provided in (d) below, Blue Circle shareholders who accept the Increased Offer and, in relation to the shares in respect of which the Increased Offer is accepted, were not on the register as at the close of business on 17 March 2000 will receive a cash consideration of 439.05p per share; and
(d) Blue Circle shareholders who accept the Increased Offer in respect of Blue Circle Shares which were issued after 17 March 2000 will receive a cash consideration of 450p per share in respect of such shares.
Blue Circle shareholders who were on the register as at the close of business on 17 March 2000 and who have subsequently sold or otherwise transferred their Blue Circle Shares will be paid the special interim dividend on 6 June 2000 in respect of their shareholdings as recorded on the register as at the close of business on 17 March 2000.
The conditions of the Increased Offer and the Increased Convertible Bond Offer are set out in the Appendix to this announcement.
2 - Blue Circle Share Option Schemes
The Increased Offer will extend to Blue Circle Shares currently in issue, or allotted or issued prior to the date on which the Increased Offer closes (or such earlier date as Lafarge may, subject to the Code, decide) as a result of the exercise of options granted under the Blue Circle Share Option Schemes. Appropriate proposals will be made to optionholders under the Blue Circle Share Option Schemes following the Increased Offer becoming or being declared unconditional in all respects.
3 - Increased Offer for Blue Circle Convertible Bonds
An Increased Offer will also be made for the Blue Circle Convertible Bonds, conditional on the Increased Offer becoming or being declared unconditional in all respects.
4 - 450p per share is a full price
450p per share represents:
|Ø a multiple of Blue Circle's 1999
basic earnings per share of
|Ø a multiple of Blue Circle's 1999 earnings per share before exceptional items of||18.1 times|
|Ø a premium to the share price (pre speculation) on 27 January 2000 of||43.2 per cent.|
|Ø a premium to the share price on 28 January 2000, the day prior to the commencement of the Offer period, of||31.0 per cent.|
5 - Lafarge believes that Blue Circle will be unable to deliver on its promises
- Has forfeited its position as a global cement group. It operates in only a small number of markets, is thinly spread across the world and has modest regional market shares.
- Is heavily dependent on a small number of economies which have historically been volatile.
- Has been a disappointing investment. It achieved almost no growth in operating profits between 1995 and 1999 and no share price growth over the same period.
- Has attempted to defend itself against Lafarge's offer with unrealistic claims about the future whilst ignoring its current problems.
- Wishes its shareholders to believe that its world of promises will deliver certainty of improved performance. The real world is one of uncertainty, complexity, risk and delay.
- Does not have the scale or resources to enable it to compete successfully with the major global cement players.
In its defence, Blue Circle has claimed that:
- Its recently announced operational improvements will lead to a step change in profitability.
The reality is that the cost savings claimed are unrealistically high and past cost-saving initiatives have not delivered shareholder value.
- Profits in Malaysia are set to recover rapidly and on a sustainable basis.
The reality is that supply will continue substantially to exceed demand. Lafarge believes that Blue Circle's approach to Malaysia is flawed and its profit forecasts unrealistic.
- The value of its property assets was not recognised.
The reality is that, on 23 March 2000, it published an open market valuation of its properties which was below most market estimates.
- Its proposed return of capital can be achieved without damaging the prospects for the business.
The reality is that it would condemn Blue Circle to remaining in the second division of world cement producers. Lafarge believes that Blue Circle has abandoned its growth strategy.
6 - Lafarge is offering certain value now
Lafarge's Increased Offer delivers certain value in cash now. Blue Circle shareholders are urged to accept the Increased Offer without delay and, in any event, by not later than 1.00 p.m. on Wednesday, 3 May 2000.
7 - General
By 3.00 p.m. on 13 April 2000, valid acceptances of the Original Offer had been received in respect of a total of 20,967,124 Blue Circle Shares, representing approximately 2.59 per cent. of the issued ordinary share capital of Blue Circle. Valid acceptances of the Convertible Bond Offer had been received in respect of a total of £7,000 nominal value of Blue Circle Convertible Bonds, representing approximately 5.6 per cent. of the issued Blue Circle Convertible Bonds.
As at 28 January 2000, Michael Blakenham, a director of Lafarge, was interested in 148 Blue Circle Shares and Henderson Investors, a person deemed to be acting in concert with Lafarge, held 139,000 Blue Circle Shares, representing approximately 0.02 per cent. of the issued ordinary share capital of Blue Circle.
Save as disclosed above, or save as previously disclosed by BNP Arbitrage S.A., neither Lafarge nor any persons deemed to be acting in concert with Lafarge held any Blue Circle Shares or Blue Circle Convertible Bonds (or rights over such Shares or such bonds) immediately prior to the commencement of the Offer period. Save as previously disclosed by BNP Arbitrage S.A., neither Lafarge nor any persons deemed to be acting in concert with Lafarge have acquired or agreed to acquire any Blue Circle Shares or Blue Circle Convertible Bonds (or rights over such shares or such bonds) since the commencement of the Offer period and no acceptances have been received from any persons acting in concert with Lafarge.
The Increased Offer will be posted to Blue Circle Shareholders today.
8 - Analysts' meeting and press conference
A briefing for analysts will take place at the Financial Dynamics Presentation Centre, Holborn Gate, 26 Southampton Buildings, London WC2 at 09.30 a.m. today.
A briefing for the press will take place at the Financial Dynamics Presentation Centre, Holborn Gate, 26 Southampton Buildings, London WC2 at 11.30 a.m. today.
Audio link-up for analysts (listen only). Ask for Lafarge conference call +44 (0)20 8240 8242
Instant replay (from approximately 11.30 a.m.)(access code 636582) +44 (0)20 8288 4459
Denis Berthu +33 1 44 34 11 71
Denis Boulet +33 6 70 80 45 23
Dresdner Kleinwort Benson + 44 207 623 8000
BNP Paribas +33 1 42 98 12 34
Financial Dynamics +44 207 831 3113
Web site address www.lafarge-update.com
Dresdner Kleinwort Benson, which is regulated in the United Kingdom by The Securities and Futures Authority Limited, is acting for Lafarge and Lafarge Minerals and no one else in connection with the Increased Offer and will not be responsible to anyone other than Lafarge and Lafarge Minerals for providing the protections afforded to customers of Dresdner Kleinwort Benson or for giving advice in relation to the Increased Offer.
BNP UK Corporate Finance, a division of BNP London Branch which is a branch of Banque Nationale de Paris S.A., and Paribas, the London branch of Paribas S.A., (together "BNP Paribas") which are regulated in the United Kingdom by The Securities and Futures Authority Limited, are acting for Lafarge and Lafarge Minerals and no one else in connection with the Increased Offer and will not be responsible to anyone other than Lafarge and Lafarge Minerals for providing the protections afforded to customers of BNP Paribas or for giving advice in relation to the Increased Offer.
Dresdner Kleinwort Benson and BNP Paribas have approved this announcement solely for the purposes of Section 57 of the Financial Services Act 1986.