This is a joint press release by
NN Group N.V. ('NN Group') and Delta Lloyd N.V. ('Delta Lloyd'),
pursuant to the provisions of Section 4 Paragraph 3, Section 5
Paragraph 1 and Section 7 Paragraph 4 of the Decree on Public
Takeover Bids (Besluit Openbare Biedingen Wft) (the 'Decree') in
connection with the intended public offer by NN Group for all the
issued and outstanding ordinary shares in the capital of Delta
Lloyd. This announcement does not constitute an offer, or any
solicitation of any offer, to buy or subscribe for any securities.
Any offer will be made only by means of an offer memorandum. This
announcement is not for release, publication or distribution, in
whole or in part, in or into, directly or indirectly, the United
States, Canada or Japan or in any other jurisdiction in which such
release, publication or distribution would be unlawful.
To form a leading insurance and
asset management company in the Netherlands
-
NN Group and Delta Lloyd
reached a conditional agreement on a recommended all-cash public
offer of EUR 5.40 (cum dividend) per issued and outstanding
ordinary share of Delta Lloyd representing a total consideration of
EUR 2.5 billion
-
Transaction supported and
recommended by Delta Lloyd's Executive Board and Supervisory
Board
-
Offer price represents a
premium of 55% over the 3-months average closing price prior to the
initial announcement on 5 October 2016, delivering immediate and
certain value to Delta Lloyd shareholders
-
Creation of a well-diversified
leader in the Dutch pensions, life and non-life insurance and
banking sectors, with a strong asset management platform,
attractive international presence, ample growth opportunities and
appealing customer propositions
-
NN Group anticipates a return
on investment of around 10% and a double digit accretion in
dividend per share (DPS) for 2018 and onwards
-
Robust combined balance sheet
and solid 3Q16 pro-forma Solvency II ratio of approximately
189%
-
NN Group has committed
financing in place and will fund the transaction via a combination
of existing cash resources and debt
-
Draft offer memorandum will be
submitted to AFM no later than 28 December 2016
NN Group and Delta Lloyd announce today that a conditional
agreement (the 'Merger Protocol') has been reached on a recommended
public offer (the 'Offer') to be made by NN Group for the entire
issued and outstanding ordinary share capital of Delta Lloyd (the
'Shares') for EUR 5.40 in cash per ordinary Delta Lloyd share (cum
dividend) (the 'Offer Price').
This announcement follows constructive interactions between the
boards and management teams of both companies including a period of
targeted due diligence.
Lard Friese, CEO of NN Group:
'Today's announcement is a significant step in our journey to build
a sustainable, profitable business for the future, and to
strengthen our leading position in the Netherlands and Belgium. I
value the entrepreneurial spirit, customer focus, the commercial
agility, and strong distribution capabilities of Delta Lloyd.
Customers of both companies will benefit from an enhanced
proposition by complementing our product offering and distribution.
Consolidation in the insurance sector will bring additional
stability in our markets, and will generate a materially higher
cash return to our shareholders over time, through the benefits of
scale. We strongly believe this transaction to be in the best
interest of both companies' stakeholders, and I am pleased the
transaction has the support and recommendation of the Delta Lloyd
Boards. '
Hans van der Noordaa, CEO of Delta
Lloyd: 'Delta Lloyd is a highly client focused organisation with
excellent market positions. I am proud of how the management and
employees of Delta Lloyd have worked together over the last years
to improve the operations and capital of the Group. We have been
making good progress towards our goals. But our Boards have
recognised the risks to the achievement of those goals which exist
particularly in respect of the ongoing evolution of Solvency II
capital requirements and a competitive market, that is on the verge
of consolidation. After extensive analysis of different
alternatives, we made a clear decision that a combination of NN
Group and Delta Lloyd is in the long term interest of our
stakeholders including our shareholders. The offer provides a
certain cash premium for shareholders and also a secure future for
policyholders.'
Strategic
rationale
NN Group and Delta Lloyd believe that a combination of Delta Lloyd
and the Dutch and Belgian activities of NN Group (the 'Combined
Company') is compelling. The transaction will result in an overall
stronger platform within the Benelux from which to provide enhanced
customer propositions and generate shareholder return:
-
Additional scale and capabilities will result in
an improved customer proposition within the Dutch pension
market;
-
Doubling the size of the non-life insurance
business will drive underwriting results and customer
experience;
-
The integration of two leading asset management
businesses creates additional scale and expertise;
-
Increased size and scale of the banking
business, thereby improving the competitive offering to existing
and new customers;
-
Doubling the presence in Belgium, leading to a
strong life insurance market share with a more diversified offering
through additional channels.
The Combined Company will be better
placed to capture opportunities that technological innovation
brings and will provide increased possibilities for knowledge
sharing, strengthening capabilities and talent development. It will
bring a perspective of growth and lead to opportunities for
employees of both companies and will facilitate continuous
improvement in customer service and experience.
Transaction details
The Offer envisions the acquisition of Shares pursuant to a
recommended public offer by NN Group.
The Offer Price represents:
-
a premium of approximately 31% over the closing
price of EUR 4.12 per Share on 4 October 2016, the last trading day
before NN Group initially announced its intention to make an offer
for Delta Lloyd;
-
a premium of approximately 38% relative to the
average closing price per Share during the last month prior to the
initial announcement; and
-
a premium of approximately 55% relative to the
average closing price per Share of Delta Lloyd during the last
three months prior to the initial announcement.
Financing
The Offer values 100% of the Shares at EUR 2.5 billion. NN Group
will be able to pay the Offer consideration for an amount of EUR
1.4 billion with cash from its own available resources. For the
remainder, NN Group has, subject to customary conditions, committed
debt financing made available to it from reputable global financial
institutions. The financial leverage ratio and fixed cost coverage
ratios of the Combined Company are estimated in a range of 30% and
9x on a pro-forma basis at 30 September 2016.
Synergies and cash
generation
The combination of Delta Lloyd and the Dutch and Belgian activities
of NN Group will facilitate a drive for further efficiency,
supporting the Combined Company's cash generation capacity. NN
Group will provide additional information on potential cost and
capital synergies in due course, but is currently anticipating cost
synergies of approximately EUR 150 million pre-tax by 2020. This is
anticipated to occur in a range of areas including:
-
Integration of operational and supporting
activities in Life and Non-Life, including commercial
migration
-
Full integration of Bank & Asset
Management
-
Removal of overlap in centralised
functions
-
Reduction in project spend
With respect to capital, NN Group estimates the
3Q16 pro-forma Solvency II ratio of the combination to be at 189%,
taking into account the reversal of the EUR 333 million deduction
of the share buy-back and assuming the base case of senior debt
issuance. Based on its due diligence, NN Group believes that there
will be some initial capital synergies from the combination but
also expects meaningful negative impacts from the alignment of
actuarial assumptions under NN Group ownership. The
combination of these is anticipated to result in the 3Q16 pro-forma
Solvency II ratio declining from 189% to approximately 185%.
Over time, NN Group sees potential for further
capital synergies, the transition of Delta Lloyd's legal entities
onto the NN Group Partial Internal Model, but also the removal of
the longevity hedge benefit currently included in Delta Lloyd's
standard formula approach.
NN Group anticipates the transaction to generate a return on
investment of around 10% and a double digit accretion in DPS for
2018 and onwards. The Combined Company will remain focussed on
generating capital within its operating units and remitting this
capital to the holding company where it will be subject to NN
Group's unchanged dividend policy.
Press enquiries NN Group
Media Relations
+31 70 513 1918
mediarelations@nn-group.com |
Investor enquiries NN Group
Investor Relations
+31 88 663 5464
investor.relations@nn-group.com |
Press enquiries Delta Lloyd
Media Relations
+31 20 594 4488
mediarelations@deltalloyd.nl |
Investor enquiries Delta Lloyd
Investor Relations
+31 20 594 9693
ir@deltalloyd.nl |
Wires
call
Lard Friese, Hans van der Noordaa, Delfin Rueda and Clifford
Abrahams will host a wires conference call at 7.30 CET on 23
December 2016. Journalists can join the conference call at +31 20
531 5851 (NL).
Investor call
Lard Friese, Hans van der Noordaa, Delfin Rueda and Clifford
Abrahams will host an analyst and investor conference call at 9.15
CET on 23 December 2016. Members of the investment community can
join the conference call at +31 20 531 5851(NL), +44 20 3365 3210
(UK), +1 866 349 6093 (US) or follow the webcast on
www.nn-group.com.
Press
conference and webcast
Lard Friese and Hans van der Noordaa will host a Press conference
at 11.00 CET on 23 December 2016. Journalists join the conference
at NN Group Headquarters, Prinses Beatrixlaan 35, The Hague or
follow the webcast on www.nn-group.com. Please confirm your
attendance via mediarelations@nn-group.com or +31 70 513 1918.
General
restrictions
This announcement is for information purposes only and does not
constitute an offer or an invitation to acquire or dispose of any
securities or investment advice or an inducement to enter into
investment activity. This announcement does not constitute an offer
to sell or issue or the solicitation of an offer to buy or acquire
the securities of Delta Lloyd or NN Group in any jurisdiction.
The distribution of this press release may, in
some countries, be restricted by law or regulation. Accordingly,
persons who come into possession of this document should inform
themselves of and observe these restrictions. To the fullest extent
permitted by applicable law, NN Group disclaims any responsibility
or liability for the violation of any such restrictions by any
person. Any failure to comply with these restrictions may
constitute a violation of the securities laws of that jurisdiction.
Neither NN Group, nor any of its advisors assumes any
responsibility for any violation by any person of any of these
restrictions. Any shareholder who is in any doubt as to its
position should consult an appropriate professional advisor without
delay. This announcement is not to be published or distributed in
or to the United States, Canada or Japan.
Important legal
information
All figures in this document are unaudited. Small differences are
possible in the tables due to rounding. Certain of the statements
contained herein are not historical facts, including, without
limitation, certain statements made of future expectations and
other forward-looking statements that are based on management's
current views and assumptions and involve known and unknown risks
and uncertainties that could cause actual results, performance or
events to differ materially from those expressed or implied in such
statements. Actual results, performance or events may differ
materially from those in such statements due to, without
limitation: (1) changes in general economic conditions, in
particular economic conditions in NN Group's and Delta Lloyd's core
markets, (2) changes in performance of financial markets, including
developing markets, (3) consequences of a potential (partial)
break-up of the euro, (4) changes in the availability of, and costs
associated with, sources of liquidity as well as conditions in the
credit markets generally, (5) the frequency and severity of insured
loss events, (6) changes affecting mortality and morbidity levels
and trends, (7) changes affecting persistency levels, (8) changes
affecting interest rate levels, (9) changes affecting currency
exchange rates, (10) changes in investor, customer and policyholder
behaviour, (11) changes in general competitive factors, (12)
changes in laws and regulations, (13) changes in the policies of
governments and/or regulatory authorities, (14) conclusions with
regard to accounting assumptions and methodologies, (15) changes in
ownership that could affect the future availability to us of net
operating loss, net capital and built-in loss carry forwards, (16)
changes in credit and financial strength ratings, (17) NN Group's
ability to achieve projected operational synergies and (18) the
other risks and uncertainties detailed in the Risk Factors section
contained in recent public disclosures made by NN Group or Delta
Lloyd.
Any forward-looking statements made by or on
behalf of NN Group or Delta Lloyd speak only as of the date they
are made, and, NN Group or Delta Lloyd assume no obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information or for any other reason.
This document does not constitute an offer to
sell, or a solicitation of an offer to buy, any securities in the
United States or any other jurisdiction.
Read the full press
release
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Delta Lloyd via Globenewswire
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