Coronavirus Update

Daejan Holdings Plc - Recommended Final Cash Offer for Daejan Holdings Plc

This content has been sourced from: https://www.investegate.co.uk/centremanor-limited/...

RECOMMENDED FINAL CASH OFFER FOR DAEJAN HOLDINGS PLC

BY

DOCK NEWCO LIMITED

a newly incorporated company within the Freshwater Group intended to be effected by means of a scheme of arrangement under Part 26 of the Companies Act

Summary

The board of directors of Dock Newco Limited ("BidCo") and the independent non-executive director (the "Daejan Independent Director") of Daejan Holdings plc ("Daejan") are pleased to announce that they have reached agreement on the terms of a recommended final cash offer (the "Offer") for the entire issued and to be issued share capital of Daejan not already owned directly or indirectly by the Freshwater Concert Party.

BidCo is a newly incorporated company formed at the direction of, and is a wholly-owned subsidiary of, Centremanor and is part of the Freshwater Group. As at the date of this Announcement, the Freshwater Concert Party holds a legal and/or beneficial interest in 12,948,093 Daejan Shares, representing approximately 79.5 per cent. of the entire issued share capital of Daejan.

Under the terms of the Offer, Relevant Daejan Shareholders will be entitled to receive:

for each Daejan Share:  £80.50 cash (the "Offer Price")

  • The Offer Price values the entire issued share capital of Daejan at approximately £1,311.8 million and the approximately 20.5 per cent. of free float shares at approximately £269.5 million.

The Offer Price represents:

  • a premium of approximately 56 per cent. to the closing price of £51.70 per Daejan Share on 20 February 2020, being the last Business Day immediately prior to the date of this Announcement; and
  • a premium of approximately 58 per cent. to the volume weighted average price of £50.84 per Daejan Share for the six month period ending on 20 February 2020, being the last Business Day immediately prior to the date of this Announcement.
  • The financial terms of the Offer are final and will not be increased.
  • It is intended that the Offer will be implemented by means of a scheme of arrangement under Part 26 of the Companies Act.

Recommendation

  • The Daejan Independent Director understands the rationale, set out in paragraph 4 below, for the Freshwater Group's belief that Daejan no longer requires a minority public listing to support its strategic direction. The Daejan Independent Director believes that it is in the interests of Relevant Daejan Shareholders that any proposed cancellation of the listing is only achieved as a result of a successful takeover of Daejan by the Freshwater Concert Party at a meaningful premium to the prevailing share price and, for that reason, that Relevant Daejan Shareholders be given the opportunity to realise their full investment in Daejan through the Offer.
  • Against this background, although the Daejan Independent Director, who has been so advised by Lazard as to the financial terms of the Offer, believes that the terms of the Offer undervalue Daejan's assets by reference to the Reported NAV per Daejan Share, in light of the factors set out in paragraph 5 below, including the very substantial premium to the prevailing Daejan Share price which the Offer represents, and having taken advice from Lazard, the Daejan Independent Director intends to recommend that Relevant Daejan Shareholders vote in favour of the resolutions to be proposed at the Court Meeting and the General Meeting. In providing its advice to the Daejan Independent Director, Lazard has taken into account the commercial assessments of the Daejan Independent Director. Lazard is providing financial advice to the Daejan Independent Director for the purposes of Rule 3 of the Code.

Information on BidCo

  • BidCo is a wholly-owned subsidiary of Centremanor, a property investment and development company in the commercial, industrial and residential sectors. BidCo and Centremanor are part of the Freshwater Group.

Information on Daejan

  • Daejan is a real estate company and a member of the FTSE 250 Index. Daejan's property portfolio comprises residential, industrial and commercial property in the UK and on the eastern seaboard of the United States.

Timetable and Conditions

  • The Offer is conditional on, among other things, certain approvals by the Relevant Daejan Shareholders and the sanction of the Scheme by the Court. In order to become effective, the Scheme must be approved by a majority in number representing not less than 75 per cent. in value of the Relevant Daejan Shareholders present and voting in person or by proxy at the Court Meeting.
  • The Offer will be on the terms and subject to the Conditions set out in Appendix I to this Announcement. Full details of the Offer will be set out in the Scheme Document which will include, in accordance with Rule 29 of the Code, either updated valuations or confirmations that the valuations referred to in this Announcement continue to apply. It is expected that the Scheme Document will be published in March 2020 and that, subject to the satisfaction, or where relevant waiver, of all relevant Conditions, the Scheme will become Effective in the second quarter of 2020.

Comments

Commenting on the Offer, Mr Solly Benaim, the Daejan Independent Director said:

"The Offer represents an opportunity for shareholders to realise in cash their investment in Daejan at a premium of approximately 56 per cent. to the prevailing share price and I intend to recommend shareholders to vote in favour of the Offer."

Commenting on the Offer, Mr Benzion Freshwater, Director of Centremanor and Chairman of Daejan said:

"On behalf of the Freshwater Group, of which Centremanor is a member, I am pleased to present an offer which provides shareholders of Daejan with a meaningful premium in cash for their investment at a level which is significantly above the all-time high share price.

Daejan has not issued any further shares since floatation in 1959 and, in view of the Freshwater Group's commitment to long-term ownership of Daejan, the Freshwater Group does not believe that it will offer any of its shares for sale in the future meaning there is no possibility of a successful third party offer for Daejan emerging. Accordingly, it seems to me that it is in the best interests of external shareholders to have the opportunity of realising their investment at this time.

I would like to take this opportunity of thanking shareholders for their loyal support over many years and to say that I hope they will feel that their confidence has been rewarded."