NSG and Pilkington Boards Reach Acquisition Agreement
The boards of Japans Nippon Sheet Glass (NSG) and Pilkington have announced they have reached an agreement on the terms of a cash acquisition by NSG of Pilkington. The acquisition is effective by way of a scheme of arrangement as part of section 425 of the Companies Act.
Under the terms of the acquisition, Pilkington shareholders will be entitled to receive 165 pence ($2.80 USD) in cash for each Pilkington share held. Acquisition terms value the entire existing issued and to-be-issued share capital of Pilkington at approximately £2.2 billion ($3.5 billion USD)(net of options proceeds), and the cash consideration payable for the entire issued and to be issued share capital of Pilkington not already owned by the NSG Group at approximately £1.8 billion (approximately $3.1 billion).
The consideration of 165 pence in cash for each Pilkington share represents the following:
A Loan Note Alternative will also be made available to Pilkington shareholders (other than to certain overseas shareholders).
According to the announcement from Pilkington, upon completion of the acquisition, NSG intends to nominate Stuart Chambers, Pilkingtons current group chief executive, to the board of NSG. NSG expects that the executive directors of Pilkington (Stuart Chambers, Iain Lough, finance director and Pat Zito, head of automotive), along with the rest of Pilkingtons senior management team, will remain with the combined group and that Stuart Chambers will lead the integration process for the combined glass activities.
At the time of the announcement, NSG owns 260,176,633 Pilkington shares, approximately 19.7 percent of Pilkingtons issued share capital.
According to the announcement, the directors of Pilkington consider the terms of the acquisition to be fair and reasonable; the directors of Pilkington intend unanimously to recommend to Pilkington shareholders to vote in favor of the resolutions to be proposed at the Court Meeting and the Extraordinary General Meeting, as they have undertaken to do in respect of their own beneficial holdings of 6,366,884 Pilkington shares (representing, in aggregate, approximately 0.5 per cent of shares currently in issue).
The Scheme will be presented to shareholders at the Court Meeting and at the Extraordinary General Meeting, which will be convened in due course. It is expected that the Scheme Document will be posted to shareholders by the end of March 2006 and that, subject to the satisfaction of the conditions, the acquisition will become effective by the end of June 2006.
"We are delighted that we have reached an agreement that the Pilkington board unanimously intends to recommend to its shareholders," said Yozo Izuhara, chairperson and chief executive officer of NSG. "This is a transformational deal for the glass industry and one that creates real value and prudently manages risk for our shareholders." Izuhara continued, "The combination of NSG and Pilkington will create a single global player with market leading positions across both developed and emerging markets. Our historical relationship and cultural fit will allow us to work closely with the management and employees of Pilkington to realize the considerable potential that exists to grow our combined business and to serve our global customers even better."
Sir Nigel Rudd, chairperson of Pilkington, added "I am proud to have been chairman of Pilkington for more than ten years, during which we significantly improved profitability and cash flow whilst repositioning it in growth markets. I am pleased to say that NSGs offer of 165 pence per share is an excellent offer, which enables our shareholders to realize the value of their investment in Pilkington. I am also convinced that the combination with NSG will ensure that Pilkington will continue to be a leading international force at the forefront of the glass industry."
"Over the past nine years Pilkington has significantly improved its cost structure to become leaner and more profitable," said Stuart Chambers, group chief executive of Pilkington. "Recently Pilkington has moved to the third stage of its strategy, focusing on investments in the growing emerging markets of Russia, China, India and the Middle East. The combination with NSG will expand our geographic reach and enhance Pilkingtons position as a global World Class glass manufacturer."
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