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
- A premium of approximately 30 percent to the closing price of 126.8 pence
per Pilkington share on October 28, 2005, the last business day before Pilkingtons
announcement that it had received a preliminary approach regarding a possible
- A premium of approximately 39 percent to the average closing price for the
12-month period ending October 28, 2005; approximately 118.5 pence per Pilkington
- A multiple of approximately 18.1 times Pilkingtons reported diluted
earnings per share for the 12 month period to March 31, 2005 (as restated under
IFRS) of 9.1 pence.
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."