Stockmann plc ("Stockmann" or the "Company") and AB Lindex (publ)
("Lindex"), a Swedish company listed on OMX Nordic Exchange Stockholm AB
(the "Stockholm Stock Exchange"), have today entered into an agreement
whereby Stockmann or Stockmann's wholly-owned subsidiary will make a
public tender offer, recommended by Lindex' Board of Directors, to acquire
all the outstanding shares in Lindex (the "Offer").
THE OFFER ANNOUNCEMENT UNDER THE SWEDISH TAKEOVER RULES IS ATTACHED AS
APPENDIX 1 HERETO.
The consideration offered by Stockmann to the shareholders of Lindex is
SEK 116 in cash for each share in Lindex. The total value of the Offer
(based on an aggregate of 68,750,000 outstanding shares in Lindex) amounts
to SEK 7,975 million.
The CEO of Stockmann, Mr. Hannu Penttilä, comments: "Stockmann and Lindex
are two strong companies in their domestic markets. The combination of the
companies will create an excellent platform to grow particularly in Russia
and in other East European markets, where Stockmann already has a
considerable presence with over 4,000 employees currently in the area."
Background and reasons for the Offer
Stockmann is a Finnish company listed on OMX Nordic Exchange Helsinki Oy
and engaged in the retail trade. Stockmann operates through three
divisions: Department Store Division, Hobby Hall (specialized in mail
order sales and e-commerce), and Seppälä (chain of fashion stores).
Stockmann operates in Finland, Russia, Estonia, Latvia and Lithuania. The
group gross sales in 2006 were EUR 1,553 million and profit before taxes
EUR 129 million.
Lindex is one of Northern Europe's largest fashion chains with a good
profitability and a strong market position in its chosen core market
areas, especially in Sweden, Norway and Finland. Lindex is in a similar
strategic position as Stockmann, as both companies seek a large share of
their future growth from new market areas.
The combined group will benefit from Stockmann's strong foothold in
Finland, Rus-sia and the Baltic countries and Lindex' strong presence in
Sweden, Norway and Finland. Stockmann will continue to implement its
communicated strategy of rapid expansion in Russia and Eastern Europe,
according to previously presented plans. It is also the intention of
Stockmann to continue the earlier communicated shareholder-friendly
dividend policy. Stockmann estimates that earnings per share for the ac-
counting period ending 31 December 2008 will be positively affected.
Stockmann also estimates that in five years time approximately two thirds
of sales will come from outside of Finland.
One of the main objectives for the combined group will be to use the
trademark Lin-dex to introduce the product assortment and concept of
Lindex in the Russian market. The trademark and concept of Lindex are of
central importance for the expan-sion of the combined group. The
investment in Russia will be enhanced by Stock-mann's existing operations
in the country and provides for the possibility to achieve significant
synergies. Lindex is currently in the process of acquiring title to
intellectual property rights in new markets.
Stockmann's intention, with respect to Lindex is to:
• Further strengthen the market position of Lindex in its existing
market areas and benefit from good profitability and cash flow generation
in these markets.
• Facilitate the expansion of Lindex in Russia and selected other East
European Markets. Based on its long-term experience of operating in the
Russian and Baltic markets Stockmann is ideally positioned to introduce
and grow the Lin-dex concept in Russia and selected other new markets.
Several growth initia-tives in the chosen geographic areas are already
ongoing. Lindex opened its first store in the Czech Republic in the autumn
2007. Stockmann will introduce the Seppälä concept in the Ukraine in 2008
and is currently exploring opportunities to introduce other retail
concepts to the Ukrainian market.
• Achieve cost savings through streamlining of operations and
implementation of best practices within the Stockmann Group. Cost
synergies can be achieved especially in combination with the expansion to
new market areas, related to administration functions and scale benefits
in purchasing and logistics operations.
The new group
The combination of Stockmann and Lindex will create a leading North
European re-tail company with a strong and growing presence in Russia, the
Baltic countries and Eastern Europe.
For the latest reported rolling 12 month period, the new group had pro
forma gross sales of EUR 2,229 million and an operating profit of EUR 153
million. (Please see footnote 1.)
As of 31 August 2007, the new group had, on a pro-forma basis, 583 stores,
whereof 211 in Finland, 193 in Sweden, 87 in Norway, 49 in Russia, 42 in
the Baltic States and one store in the Czech Republic (please see footnote
2).
The new group will employ approximately 14,000 employees.
Description of Lindex
Lindex is one of Northern Europe's largest fashion chains with over 300
stores in Sweden, Norway, Finland, Estonia, Latvia and Lithuania. Lindex'
product areas are women's lingerie, women's wear, children's wear and
cosmetics. The net sales of Lindex during the financial year ended 31
August 2007 were SEK 5,275 million, with an operating profit of SEK 475
million.
Lindex Group key financials (SEK million)
12 months, 1 Sep-31 Aug 2004/05 2005/06 2006/07
Net sales 5,202 5,212 5,275
Operating profit 417 598 475*
Profit after financial items 417 600 461*
31 August 2005 2006 2007
Total Assets 1,918 1,603 1,815
Shareholders' equity 1,032 667 617
Net interest-bearing liabilities -374 43 162
Operating profit margin % 8.0% 11.5% 9.0%
Equity ratio % 53.8% 41.6% 34.0%
Return on capital employed % 42.8% 64.8%
*Including SEK 91m provision for closing costs of Lindex' operations in
Germany
The Offer in brief
Shareholders of Lindex representing approximately 34 percent of the shares
have ex-pressed their support for the Offer. The Board of Directors of
Lindex has on the date hereof decided to recommend that shareholders of
Lindex tender their Lindex shares to Stockmann pursuant to the terms and
conditions of the Offer.
Stockmann has committed funds available to finance the total cash
consideration under the Offer pursuant to a facility agreement with
certain banks. In order to refinance part of the bank financing raised to
finance the Offer, Stockmann's Board of Directors is planning to initiate
measures to increase shareholders' equity with the objective to maintain
the equity ratio at a level of at least 40-50 percent.
The offer period is expected to commence on 29 October 2007 and to end on
30 November 2007. The completion to the Offer is subject to the
fulfillment or waiver of certain customary conditions. The complete terms
and conditions of the Offer and information on how the Offer can be
accepted will be included in the offer document to be published by
Stockmann in connection with the Offer on or about 26 October 2007.
Summa Capital acts as financial advisor and Roschier, Attorneys Ltd. as
legal advisor as to Swedish and Finnish law to Stockmann in connection
with the Offer.
Helsinki, 1 October 2007
Stockmann plc
Hannu Penttilä
CEO
Press conference
A press conference in Finnish in connection to the Offer will be held in
Radisson SAS Royal Hotel, Runeberginkatu 2, Helsinki, on 1 October 2007 at
10:00 am Finnish time (GMT+2) and a press conference and a webcast in
English will be held in Stockholm in Grand Hotel, Södra Blasieholmshamnen
8, Stockholm, at 1:00 pm Swedish time (GMT+1).
For further information, please contact
Hannu Penttilä, CEO, tel. +358 9 121 5801
Heikki Väänänen, Executive VP, Director, Department Store Division,
tel.+358 9 121 5230, or
Pekka Vähähyyppä, CFO, tel. +358 9 121 3351
This stock exchange release is not and must not, directly or indirectly,
be distributed or made public in Australia, Canada, Japan or South Africa.
The Offer is not being made to persons in those jurisdictions or elsewhere
where their participation requires further offer, filings or other
measures in addition to those required by Swedish law.
FOOTNOTES
1. Stockmann's financial figures for the period 1.7.2006-30.6.2007 and
Lindex' financial figures for the period 1.9.2006-31.8.2007. Lindex' gross
sales based on reported revenues added with an estimated VAT. Lindex'
operating profit adjusted with a provision totaling SEK 91 M related to
estimated closure costs for Lindex' German opera-tions. Exchange rate
EUR/SEK = 9.3.
2. Opened on 20 September 2007
APPENDIX 1
This offer announcement is not and must not, directly or indirectly, be
distributed or made public in Australia, Canada, Japan or South Africa.
The Offer is not being made to persons in those jurisdictions or elsewhere
where their participation requires further offer, filings or other
measures in addition to those required by Swedish law.
OFFER ANNOUNCEMENT 1 October 2007 at 8.55
STOCKMANN LAUNCHES A PUBLIC TENDER OFFER FOR Lindex
Summary
Stockmann ("Stockmann" or the "Company") and Lindex ("Lindex"), a Swedish
com-pany listed on OMX Nordic Exchange Stockholm AB (the "Stockholm Stock
Ex-change"), have today entered into an agreement whereby Stockmann or
Stockmann's wholly-owned subsidiary will make a public tender offer,
recommended by Lindex' Board of Directors, to acquire all the outstanding
shares in Lindex (the "Offer").
_ Stockmann offers SEK 116 in cash per each share in Lindex. (Please
see footnote 1.)
_ The Offer reflects a premium of 31 percent compared to the average
closing price of the Lindex share during the three months preceding the
announcement of the presently outstanding offer by KappAhl and of 9
percent compared to the closing price of the Lindex share on 28 September
2007, being the last trading day before the announcement of the Offer.
_ The combination of Stockmann and Lindex will create a leading North
European retail company with a strong and growing presence in Russia, the
Baltic countries and Eastern Europe.
_ For the latest reported rolling 12 month period, the new group had
pro forma gross sales of EUR 2,229 million and an operating profit of EUR
153 million. (Please see footnote 2.)
_ Stockmann will continue to implement its previously communicated
strategy of rapid expansion in Russia and Eastern Europe and Stockmann is
planning to introduce and grow the Lindex concept in Russia and selected
other East European markets.
_ Stockmann estimates that earnings per share for the accounting period
ending 31 December 2008 will be positively affected.
_ A press conference in Finnish in connection to the Offer will be held
in Radisson SAS Royal Hotel, Runeberginkatu 2, Helsinki, on 1 October 2007
at 10:00 am Finnish time (GMT+2) and a press conference and a webcast in
English will be held in Stockholm in Grand Hotel, Södra Blasieholmshamnen
8, Stockholm, at 1:00 pm Swedish time (GMT+1).
The CEO of Stockmann, Mr. Hannu Penttilä, comments: "Stockmann and Lindex
are two strong companies in their domestic markets. The combination of the
companies will create an excellent platform to grow particularly in Russia
and in other East European markets, where Stockmann already has a
considerable presence with over 4,000 employees currently in the area."
Background and reasons for the Offer
Stockmann is a Finnish company listed on OMX Nordic Exchange Helsinki Oy
and engaged in the retail trade. Stockmann operates through three
divisions: Department Store Division, Hobby Hall (specialized in mail
order sales and e-commerce), and Seppälä (chain of fashion stores).
Stockmann operates in Finland, Russia, Estonia, Latvia and Lithuania. The
group gross sales in 2006 were EUR 1,553 million and profit before taxes
EUR 129 million.
Lindex is one of Northern Europe's largest fashion chains with a good
profitability and a strong market position in its chosen core market
areas, especially in Sweden, Norway and Finland. Lindex is in a similar
strategic position as Stockmann, as both companies seek a large share of
their future growth from new market areas.
The combined group will benefit from Stockmann's strong foothold in
Finland, Russia and the Baltic countries and Lindex' strong presence in
Sweden, Norway and Finland. Stockmann will continue to implement its
communicated strategy of rapid ex-pansion in Russia and Eastern Europe,
according to previously presented plans. It is also the intention of
Stockmann to continue the earlier communicated shareholder-friendly
dividend policy. Stockmann estimates that earnings per share for the ac-
counting period ending 31 December 2008 will be positively affected.
Stockmann also estimates that in five years time approximately two thirds
of sales will come from outside of Finland.
One of the main objectives for the combined group will be to use the
trademark Lindex to introduce the product assortment and concept of Lindex
in the Russian market. The trademark and concept of Lindex are of central
importance for the expan-sion of the combined group. The investment in
Russia will be enhanced by Stockmann's existing operations in the country
and provides for the possibility to achieve significant synergies. Lindex
is currently in the process of acquiring title to intellectual property
rights in new markets.
Stockmann's intention, with respect to Lindex is to:
• Further strengthen the market position of Lindex in its existing
market areas and benefit from good profitability and cash flow generation
in these markets.
• Facilitate the expansion of Lindex in Russia and selected other East
European Markets. Based on its long-term experience of operating in the
Russian and Baltic markets Stockmann is ideally positioned to introduce
and grow the Lindex concept in Russia and selected other new markets.
Several growth initiatives in the chosen geographic areas are already
ongoing. Lindex opened its first store in the Czech Republic in the autumn
2007. Stockmann will introduce the Seppälä concept in the Ukraine in 2008
and is currently exploring opportunities to introduce other retail
concepts to the Ukrainian market.
• Achieve cost savings through streamlining of operations and
implementation of best practices within the Stockmann Group. Cost
synergies can be achieved especially in combination with the expansion to
new market areas, related to administration functions and scale benefits
in purchasing and logistics operations.
The combination of Stockmann and Lindex will create a leading North
European retail company with a strong and growing presence in Russia, the
Baltic countries and Eastern Europe.
Description of Lindex
Lindex is one of Northern Europe's largest fashion chains with over 300
stores in Sweden, Norway, Finland, Estonia, Latvia and Lithuania. Lindex'
product areas are women's lingerie, women's wear, children's wear and
cosmetics. The net sales of Lindex during the financial year ended 31
August 2007 were SEK 5,275 million, with an operating profit of SEK 475
million.
The Offer
Stockmann, or its wholly-owned subsidiary, offers SEK 116 in cash for each
share in Lindex (the "Offer Price"). The Offer Price will be adjusted
should Lindex, prior to the settlement of the Offer, distribute a dividend
or in any other way distribute or transfer funds to shareholders.
No commission will be charged in respect of the settlement of the Lindex
shares tendered to Stockmann under the Offer.
The Offer reflects:
_ a premium of 31 percent compared to the average closing price of the
Lindex share of SEK 88.6 during the three months preceding the
announcement of the presently outstanding offer by KappAhl; and
_ a premium of 9 percent compared to the closing price of the Lindex
share of SEK 106.5 on 28 September 2007, being the last trading day before
the announcement of the Offer.
The total value of the Offer (based on an aggregate of 68,750,000
outstanding shares in Lindex) amounts to SEK 7,975 million.
Stockmann does currently not own or control any shares in Lindex.
Stockmann has received confirmation from Lindex' Board of Directors that
no op-tions under the share-based option programme for Lindex' senior
executives have been subscribed for.
Conditions to completion of the Offer
The completion of the Offer is conditional upon:
1. that the Offer is accepted to such extent that Stockmann becomes the
owner of more than 90 percent of the total number of shares in Lindex, on
a fully diluted ba-sis;
2. that no other party publicly announces an offer to acquire shares in
Lindex on terms more favorable for the shareholders in Lindex than the
terms under the Offer;
3. that, with respect to the Offer, the acquisition of Lindex and the
execution thereof, all necessary permits, approvals, decisions and similar
clearances from authorities, including competition authorities, have been
received on terms acceptable to Stockmann;
4. that Stockmann, with the exception of information publicly announced by
Lindex or as otherwise disclosed in writing to Stockmann prior to the date
of the public announcement of the Offer, does not discover that any
information publicly announced by Lindex or otherwise made available to
Stockmann is materially inaccurate or misleading or that any material
information that should have been publicly disclosed by Lindex has not
been so published;
5. that neither the Offer nor the acquisition of Lindex and its execution
is wholly or partly prevented or materially adversely affected by any
legislation or other regulation, court decision, authority decision,
action by third party or similar circumstance, which is actual or could
reasonably be anticipated and is outside the control of Stockmann, and
which Stockmann could not reasonably have foreseen at the time of the
public announcement of the Offer;
6. that Lindex through a final registration with the relevant authority
has acquired title to the trademark "LINDEX" on the Russian market;
7. that no circumstance, which Stockmann did not have knowledge of at the
time of the announcement of the Offer, has occurred or is likely to occur
which has a material negative impact on, or can reasonably be expected to
have a material negative impact on, Lindex' sales, results, liquidity,
equity or assets;
8. that Lindex does not take any measures that are typically intended to
impair the prerequisites for the Offer or the execution thereof; and
9. that disbursement is made in accordance with credit commitments issued
by Stockmann's lenders.
Stockmann reserves the right to withdraw the Offer in the event that it is
clear that any, several or all of the above conditions are not fulfilled
in whole or in part or cannot be fulfilled. As regards conditions 3. to 9.
above, such withdrawal will however only be made if the defective
fulfillment of such condition is of material impor-tance for Stockmann's
acquisition of shares in Lindex.
Stockmann reserves the right to waive, in whole or in part, one or several
of the con-ditions above, including, with respect to condition 1. above,
to complete the Offer at a lower level of acceptance.
Recommendation of Lindex' Board of Directors
The Board of Directors of Lindex unanimously recommends that Lindex'
sharehold-ers accept the Offer. The Board of Directors of Lindex has
received a fairness opin-ion from Handelsbanken Capital Markets,
concluding that, in their opinion and subject to the qualifications and
assumptions set out therein, the Offer Price is fair to Lindex'
shareholders from a financial point of view.
The recommendation and the fairness opinion will be appended to the offer
docu-ment.
Transaction agreement between Stockmann and Lindex
Stockmann and Lindex have entered into a transaction agreement in
connection with the Offer (the "Transaction Agreement"). The Transaction
Agreement includes, inter alia, customary provisions on cooperation with
respect to the offer document to be published by Stockmann in connection
with the Offer and filings with relevant authorities, on Lindex' conduct
of business in the ordinary course of business prior to completion of the
Offer, on the recommendation of the Board of Directors of Lindex with
respect to the Offer, and on so called non-solicitation as well as other
re-lated provisions. Lindex has further undertaken to consult with
Stockmann with regard to the implementation and execution of the Public Re-
cap Transaction published on 3 September 2007 in order not to frustrate
the Offer.
The Transaction Agreement will be appended to the offer document.
Lindex shareholders' support for the Offer
Shareholders of Lindex representing approximately 34 percent of the shares
have ex-pressed their support for the Offer.
Due diligence review
Stockmann has with the consent of Lindex' Board of Directors conducted a
limited due diligence review of certain business, financial and legal
information relating to Lindex.
Financing of the Offer
Stockmann has committed funds available to finance the total cash
consideration under the Offer pursuant to a facility agreement (the
"Credit Agreement") with Han-delsbanken Capital Markets, Svenska
Handelsbanken AB (publ), Nordea Bank Finland Plc, OKO Bank plc and Sampo
Bank plc as mandated lead arrangers, Danske Bank A/S, Helsinki Branch,
Nordea Bank Finland Plc, OKO Bank plc and Svenska Han-delsbanken AB
(publ), Branch Operation in Finland, as original lenders, OKO Bank plc as
agent and Sampo Bank plc as documentation agent. The funds to be provided
under the Credit Agreement will be used to finance the consideration
payable under the Offer, to repay existing indebtedness of Lindex and its
subsidiaries, to cover transaction expenses and for general corporate
purposes.
Drawdown pursuant to the Credit Agreement is subject to the conditions (i)
that shareholders in Lindex have accepted the tender offer in respect of
more than 90 percent of the total number of issued and outstanding shares
in Lindex and (ii) that no change of control in Stockmann has occurred.
Further, drawdown is subject to a limited number of conditions which are
customary for financing of this kind and which are in practice controlled
by Stockmann. Such conditions include delivery by Stockmann of documents
evidencing its authority and capacity to enter into the Credit Agreement.
They also include representations with respect to the corporate status of
Stockmann and its subsidiaries, the legality and effectiveness of the
financing documents and power and authority, compliance with undertakings
relating to the granting of security, disposals and incurring financial
indebtedness, in each case by Stockmann and its subsidiaries without
taking account of Lindex, and the absence of certain events such as
insolvency proceedings relating to Stockmann or its subsidiaries.
After the Offer, Stockmann's net interest bearing debt will amount to
approximately EUR 900 million, corresponding to an equity ratio of
approximately 30 percent. In order to refinance part of the bank financing
raised to finance the Offer, Stockmann's Board of Directors is planning to
initiate measures to increase shareholders' equity with the objective to
maintain the equity ratio at a level of at least 40-50 percent.
Management and employees
It is Stockmann's intention that the management of Lindex will continue in
their current positions with the objective to further improve
profitability and develop opera-tions in existing and new markets, in co-
operation with the Stockmann Group man-agement.
Preliminary timetable
Publication of the offer document: 26 October 2007
Commencement of the offer period: 29 October 2007
Expiry of the offer period: 30 November 2007
Commencement of settlement: 5 December 2007
All dates are preliminary and subject to change. Stockmann reserves the
right to extend the offer period and to postpone the date of the
settlement.
The completion of the Offer is subject, inter alia, to the approvals of
competition authorities. Provided that each respective authority handles
the process as anticipated, such approvals are expected to be granted
during the month of November 2007, at the latest.
Compulsory redemption proceedings and delisting
As soon as possible after Stockmann has acquired shares representing more
than 90 percent of the total number of shares in Lindex, on a fully
diluted basis, Stockmann intends to commence compulsory redemption
proceedings under the Swedish Companies Act to acquire all remaining
shares in Lindex. In connection therewith, Stockmann intends to promote a
delisting of Lindex' shares from the Stockholm Stock Exchange.
Applicable law and disputes
The Offer shall be governed by and construed in accordance with the laws
of Sweden. The rules of the Stockholm Stock Exchange regarding public
takeovers on the stock market (the "Takeover Rules") and the statements of
the Swedish Stock Market Committee (Sw. Aktiemarknadsnämnden) regarding
interpretation and application of the Takeover Rules (including its
statements regarding the rules of the Swedish Industry and Commerce Stock
Exchange Committee (Sw. Näringslivets Börskommitté) on public takeovers)
apply in relation to the Offer. Furthermore, Stockmann has, in ac-cordance
with the Swedish Act on Public Takeovers on the Stock Market, contractu-
ally undertaken to the Stockholm Stock Exchange to comply with said rules
and statements and to submit to any sanctions imposed by the Stockholm
Stock Exchange upon breach of the Takeover Rules. A corresponding
undertaking is made to the shareholders in Lindex. Any dispute regarding
the Offer, or which arises in connection therewith, shall be exclusively
settled by the Swedish courts, and the City Court of Stockholm shall be
the court of first instance.
Advisors
Summa Capital acts as financial advisor and Roschier, Attorneys Ltd. as
legal advisor as to Swedish and Finnish law to Stockmann in connection
with the Offer.
Helsinki, 1 October 2007
Stockmann plc
Hannu Penttilä
CEO
Press conference
A press conference in Finnish in connection to the Offer will be held in
Radisson SAS Royal Hotel, Runeberginkatu 2, Helsinki, on 1 October 2007 at
10:00 am Finnish time (GMT+2) and a press conference and a webcast in
English will be held in Stockholm in Grand Hotel, Södra Blasieholmshamnen
8, Stockholm, at 1:00 pm Swedish time (GMT+1).
For further information, please contact
Hannu Penttilä, CEO, tel. +358 9 121 5801
Heikki Väänänen, Executive VP, Director, Department Store Division, tel.
+358 9 121 5230, or
Pekka Vähähyyppä, CFO, tel. +358 9 121 3351
FOOTNOTES
1. This amount will be adjusted should Lindex, prior to the settlement of
the Offer, distribute a dividend or in any other way distribute or
transfer funds to shareholders.
2. Stockmann's financial figures for the period 1.7.2006-30.6.2007 and
Lindex' financial figures for the period 1.9.2006-31.8.2007. Lindex' gross
sales based on reported revenues added with an estimated VAT. Lindex'
operating profit adjusted with a provision totaling SEK 91 M related to
estimated closure costs for Lindex' German operations. Exchange rate
EUR/SEK = 9.3
APPENDIX 2
Certain financial information on Lindex
The below information has been published in Lindex' financial statement
2006/2007 published on 14 September 2007.
Income statement
SEK M 1 September 2006-31 August 2007
Net sales
Sales, net 5,275
Other operating income 62
Total operating income 5,337
Operating expenses
Goods for resale -2,154
Gross profit 3,183
Other external costs -1,336
Personnel costs -1,204
Depreciation and write-down of tangible -168
and intangible fixed assets
Operating profit 475
Result of financial investments
Financial income 0
Financial expenses -14
Profit after financial items 461
Taxes
Tax on the year's profit -158
Net profit for the year 303
Balance sheet
SEK M 31 August 2007
Intangible fixed assets 344
Tangible fixed assets 335
Financial fixed assets 51
Inventories 739
Trade debtors 14
Other current receivables 122
Liquid funds 210
Total assets 1,815
Equity pertaining to the parent company's 617
shareholders
Long-term liabilities and long-term 64
provisions
Current liabilities and current 1,134
provisions
Total equity, provisions and liabilities 1,815
STOCKMANN plc
Hannu Penttilä
CEO
DISTRIBUTION
OMX Nordic Exchange Helsinki
Principal media