Heard about this in the financial press at the weekend and now it is announced - takeover of Countryside Properties.
https://www.investegate.co.uk/vistry-gr ... 00071932Y/RECOMMENDED CASH AND SHARE COMBINATION
of
Vistry Group PLC ("Vistry")
and
Countryside Partnerships PLC ("Countryside")
to be effected by means of a scheme of arrangement
under Part 26 of the Companies Act 2006
Summary
· The board of directors of each of Vistry and Countryside are pleased to announce that they have reached agreement on the terms of a recommended cash and share combination pursuant to which Vistry will acquire the entire issued and to be issued ordinary share capital of Countryside (the "Combination"). The Combination is to be effected by means of a scheme of arrangement under Part 26 of the Companies Act.
· Under the terms of the Combination, Countryside Shareholders shall be entitled to receive:
for each Countryside Share
0.255 of a New Vistry Share
and
60 pence in cash
· Based upon Vistry's closing share price of 741 pence as of 2 September 2022 (being the last practicable date prior to this announcement), the Combination represents a total implied value of 249 pence per Countryside Share, valuing the entire issued and to be issued ordinary share capital of Countryside at approximately £1,254 million.
· The terms of the Combination represent a premium of approximately 9.1 per cent. to the Closing Price per Countryside Share of 228 pence on 2 September 2022 (being the latest practicable date prior to the date of this announcement).
· A Mix and Match Facility will also be made available to Countryside Shareholders (other than certain persons in the United States and other Restricted Jurisdictions) in order to enable them to elect, subject to off-setting elections, to vary the proportions in which they receive cash and New Vistry Shares in respect of their holdings in Countryside Shares. However, the total number of New Vistry Shares to be issued and the maximum aggregate amount of cash to be paid under the terms of the Combination will not be varied as a result of elections under the Mix and Match Facility.
· Under the terms of the Combination, Countryside Shareholders will, in aggregate, receive approximately 128,398,747 New Vistry Shares. Immediately following Completion of the Combination, Countryside Shareholders will own approximately 37 per cent. of the ordinary share capital of the Combined Group (based on the existing issued ordinary share capital of Vistry and the fully diluted ordinary share capital of Countryside) as at 2 September 2022 (being the latest practicable date prior to the date of this announcement).
· The Combination would create one of the country's leading homebuilders, comprising a top tier housebuilder and a leading partnerships business, with capability across all housing tenures, and delivering much needed affordable housing. The Combination has a strong strategic rationale and the potential for material value creation for shareholders in the Combined Group. In particular, the Combination would have, among other things, the following key advantages:
· strengthens the Vistry Group's position across both housebuilding and partnerships to deliver sector-leading returns;
· a capital-light, high ROCE partnerships business, targeting a 40 per cent. ROCE in the short term and expected to increase to over £3 billion revenue per annum in the medium term, representing a larger part of the Vistry Group. In addition, if the market does not recognise the full value of the Combined Group by 2025, it is expected that each of its two divisions would be large enough to succeed as independent businesses, giving the option to separate them at the time if the board of directors of the Combined Group considered this to be in the best interests of its shareholders;
· increased partnerships exposure, which offers greater resilience to the cyclicality of the housing market, with increased earnings visibility and a consistently strong forward order book underpinned by a high and sustained level of demand for affordable housing;
· significant benefits and value creation from the increased scale of the combined business and synergies of at least £50 million and potentially from the Countryside Group's timber frame capability, with operational benefits including procurement processes, an improved implementation of the Future Homes Standard and the reduction of people risk within the current tight labour market;
· combined brand strength of Bovis Homes, Linden Homes and the highly regarded Countryside's partnerships business allows for a multiple branded, mixed-tenure strategy that enhances market presence while driving higher absorption rates; and
· extensive management capability with a strong and proven track record, led by the Vistry Group's Chief Executive Officer Greg Fitzgerald, who is highly qualified to integrate the two businesses and lead the Combined Group through a new phase of growth, together with the Vistry Group's existing leadership team and senior executive support from Countryside.
· Following Completion of the Combination, both Countryside Shareholders and Vistry Shareholders will share in the benefits accruing to the Combined Group via the expected realisation of meaningful cost synergies. The Vistry Directors believe that the Combined Group can deliver at least £50 million of pre-tax recurring cost synergies on an annual run-rate basis by the end of the second year following Completion.
· The board of directors of each of Vistry and Countryside also note that, in total, five Countryside Shareholders, being Browning West, Inclusive Capital Partners, David Capital Partners, Anson Advisors and Abrams Capital Management, representing approximately 39.1 per cent. of Countryside's issued ordinary share capital as at 2 September 2022 (being the latest practicable date prior to the date of this announcement), are supportive of the Combination and have each entered into irrevocable undertakings to vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the Countryside General Meeting.
· The Countryside Board also notes that Inclusive Capital Partners, representing 9.2 per cent. of Countryside's issued ordinary share capital as at 2 September 2022 (being the latest practicable date prior to the date of this announcement), who previously announced a possible offer to acquire Countryside under Rule 2.4 of the Code and had indicated that it would be willing to participate in the Formal Sales Process, has provided an irrevocable undertaking to Vistry in connection with the Combination.
· Vistry intends the Combined Group to maintain a strong and robust balance sheet, with target Gearing of less than 10 per cent.
· Vistry is funding the cash consideration payable pursuant to the Combination through new debt financing arranged by HSBC. Consistent with the Vistry Group's prudent approach to debt financing, it is intended that this new debt financing for funding will be repaid within two years.
and later
Dividends
· Vistry Shareholders will be entitled to receive and retain:
· any interim dividend that is announced, declared, paid or made or becomes payable by Vistry in respect of the six-month period ended 30 June 2022; and
· any Vistry dividend that is announced, declared, paid or made or becomes payable by Vistry in respect of the six-month period ending 31 December 2022 (the "December Vistry Dividend").
· If Completion of the Combination occurs before the record date for any December Vistry Dividend, Countryside Shareholders will be entitled to receive and retain any December Vistry Dividend as shareholders in the Combined Group. If Completion of the Combination occurs after the record date for any December Vistry Dividend that is, on or prior to Completion, announced, declared made, paid or becomes payable by Vistry, Countryside and Vistry have agreed that Countryside has the right to declare and pay an equalisation dividend to Countryside Shareholders in an amount up to (but not exceeding) the amount of the December Vistry Dividend (calculated in accordance with the Equalisation Formula described below), without any reduction being made to the Combination Consideration (a "Countryside Equalisation Dividend"). Any such Countryside Equalisation Dividend will be calculated per Countryside Share as the amount of the December Vistry Dividend per Vistry Share multiplied by the Exchange Ratio (the "Equalisation Formula").
· Vistry's existing dividend policy is to pay out to a two times ordinary dividend cover in respect of a full financial year. The typical timing for the record date for a dividend in respect of the six-month period ending 31 December, where declared, is during April each year.
· In respect of Countryside Shares, if, on or after the date of this announcement and on or prior to the Effective Date, any dividend, distribution, or other return of value is announced, declared, made, paid or becomes payable by Countryside, other than with respect to a Countryside Equalisation Dividend that is calculated in accordance with the Equalisation Formula, Vistry reserves the right (without prejudice to any right Vistry may have, with the consent of the Panel, to invoke Condition 3(g)(ii) in Part A of Appendix I to this announcement) to (at Vistry's sole discretion): (i) reduce the Combination Consideration by an amount equivalent to all or any part of such dividend, distribution, or other return of value, in which case any reference in this announcement to the Combination Consideration will be deemed to be a reference to the Combination Consideration as so reduced; or alternatively (ii) declare and pay an equalisation dividend to Vistry Shareholders so as to reflect the value attributable to the dividend, distribution, or other return of value as is announced, declared, made, paid or becomes payable by Countryside.
· Under the terms of the Co-operation Agreement, Vistry has undertaken not to declare, make or pay any dividend, distribution, or other return of value other than as contemplated in respect of Vistry as above. Nothing in this announcement or the Co-operation Agreement shall require Vistry to announce, declare, make or pay any dividend.
Termination of Formal Sales Process, Countryside Chief Executive Officer search and Countryside Share Buyback Programme
· As a result of the Combination, the Countryside Directors have taken the decision to terminate the Formal Sales Process with immediate effect and Countryside has ceased all preparations in connection therewith.
· The Countryside Directors have also decided to discontinue the search for a permanent Chief Executive Officer and to terminate the share buy-back programme previously announced (which was discontinued for so long as the Formal Sales Process was ongoing).
Vistry Shareholder approval of the Combination
· The Combination constitutes a Class 1 transaction for Vistry for the purposes of the Listing Rules. Accordingly, the Combination will be conditional on, amongst other things, the approval of Vistry Shareholders at the Vistry General Meeting.
Countryside Recommendation
· The Countryside Directors, who have been so advised by Rothschild & Co as to the financial terms of the Combination, consider the terms of the Combination to be fair and reasonable. In providing its advice to Countryside Directors, Rothschild & Co has taken into account the commercial assessments of the Countryside Directors. In addition, the Countryside Directors consider the terms of the Combination to be in the best interests of Countryside Shareholders as a whole.
· Accordingly, the Countryside Directors intend to recommend unanimously that Countryside Shareholders vote in favour of the Scheme at the Court Meeting and the resolution to be proposed at the Countryside General Meeting as those Countryside Directors who hold Countryside Shares have irrevocably undertaken to do in respect of their own beneficial holdings of 411,209 Countryside Shares representing, in aggregate, approximately 0.08 per cent. of the ordinary share capital of Countryside in issue on 2 September 2022 (being the latest practicable date prior to this announcement).
Vistry Recommendation
· The Vistry Directors consider the Combination to be in the best interests of Vistry and the Vistry Shareholders as a whole and intend to recommend unanimously that Vistry Shareholders vote in favour of the Vistry Resolutions at the Vistry General Meeting, as those Vistry Directors who hold Vistry Shares have irrevocably undertaken to do in respect of their entire beneficial holdings of, in aggregate, 524,654 Vistry Shares, representing approximately 0.24 per cent. of Vistry's issued ordinary share capital on 2 September 2022 (being the latest practicable date prior to this announcement).
· The Vistry Directors have received financial advice from HSBC and Lazard in relation to the Combination. In providing their advice to the Vistry Directors, HSBC and Lazard have relied upon the Vistry Directors' commercial assessments of the Combination.