PRESS RELEASE RELATING TO THE FILING OF THE DRAFT NOTE PREPARED BY
TARKETT IN RESPONSE TO THE SIMPLIFIED PUBLIC TENDER OFFER INITIATED
BY TARKETT PARTICIPATION
This document is an
English-language translation for convenience only of the press
release relating to the filing of the draft response document
(“projet de note en réponse”) which was filed with the French
Autorité des marchés financiers on May 21, 2021, and which remains
subject to its review.
PRESS RELEASE DATED MAY 21, 2021 RELATING
TO THE FILING OF THE DRAFT NOTE PREPARED BY
IN RESPONSE
TO THE SIMPLIFIED PUBLIC TENDER OFFER FOR
THE SHARES OF TARKETT INITIATED BY THE COMPANY
TARKETT PARTICIPATION
Acting in concert with Société
Investissement Deconinck (and the members of the Deconinck family
acting in concert with the latter) and Trief Corporation
SA
This press release was prepared and made
available to the public on May 21, 2021 in accordance with the
provisions of article 231-26, II of the AMF’s general
regulation.
The draft offer and the draft response document
remain subject to review by the Autorité des marchés
financiers.
The draft response document filed with the AMF on
May 21, 2021 (the “Draft Response Document”) is
available on the websites of Tarkett (www.tarkett.com) and of the
AMF (www.amf-france.org) and is provided to the public free of
charge at the registered office of Tarkett, Tour Initiale - 1,
Terrasse Bellini, 92919 Paris La Défense Cedex.
In accordance with article 231-28 of the AMF’s
general regulation, the information relating to the legal,
financial and accounting relating to Tarkett will be filed with the
AMF and will be provided to the public, under the same conditions,
no later than the day before the offer opens.
A press release will be published, no later than
the day before the offer opens, to inform the public about how this
document may be obtained.
1.
PRESENTATION OF THE OFFER
In accordance with Title III of Book II and more
specifically Articles 233-1 et seq. of the AMF’s general
regulation, Tarkett Participation, a simplified joint-stock company
whose registered office is located at Tour Initiale - 1 Terrasse
Bellini, 92919 Paris La Défense Cedex, registered with the Nanterre
trade and companies register under number 898 347 877
(the “Offeror”), acting in concert within the
meaning of Article L. 233-10 of the French Commercial Code
with Société Investissement Deconinck1 (“SID” or
the “Historic Shareholder”) and Trief Corporation
SA2 (“the “Investor”) (hereinafter referred to,
together with the Offeror, as the “Concert”), are
making an irrevocable offer to all shareholders of Tarkett, a
public limited company governed by a supervisory board and a
management board, whose registered office is located at Tour
Initiale - 1 Terrasse Bellini, 92919 Paris La Défense Cedex,
registered with the Nanterre trade and companies register under
number 352 849 327 (“Tarkett” or the
“Company”, and together with its direct and
indirect subsidiaries the “Group”), to acquire all
shares in the Company (the “Shares”) that the
members of the Concert do not hold directly or indirectly as of the
date of the draft offer document prepared by the Offeror and filed
with the AMF (the “Draft Offer Document”) at a
price of 20 euros per Share (the “Offer Price”)
through a simplified public tender offer, the terms of which are
more fully described in the Draft Offer Document (the
“Offer”).
The Shares are admitted for trading on
compartment B of the Euronext Paris regulated market
(“Euronext Paris”) under ISIN FR0004188670
(ticker: TKTT).
As of the date of the Draft Response Document,
the Offeror and the members of the Concert, as well as the members
of the Deconinck family acting in concert with the Offeror,
together hold 36,319,459 Shares in the Company, representing 55.41%
of the share capital and 54.74% of the theoretical voting rights of
the Company on the basis of a total number of 65,550,281 shares and
66,358,345 theoretical voting rights of the Company3, in accordance
with Article 223-11 of the AMF’s general regulation.
The Offer is for:
- all Shares not held directly or indirectly by the Offeror,
alone or in concert, that are already issued, except for Shares
held in treasury by the Company4, it being specified that this
represents, as of the date of the Draft Response Document, a
maximum number of 29,230,822 Shares;
- all Shares that may be transferred before the Offer closes as a
result of the vesting of free Shares awarded by the Company under
the 2018-2021 LTIP, i.e., as of the date of the Draft Response
Document, a maximum of 249,377 Shares5;
making a total maximum of 29,480,199 Shares.
The Shares held directly by the Deconinck family
are included in the Offer and will be contributed to the Offer.
As of the date of the Draft Response Document,
there are no equity securities or other financial instruments or
rights that may give access, either immediately or in the future,
to the Company’s share capital or voting rights other than the free
Shares awarded by the Company to certain managers and employees
described in section 1.2.5 of the Draft Response Document.
The Offer will take place according to the
simplified procedure in accordance with Articles 233-1 et seq. of
the AMF’s general regulation. The Offer will be open for a period
of twenty-one (21) trading days.
It should also be noted that the Offeror is
required to file the Offer pursuant to Article L. 433-3 I of the
French Monetary and Financial Code and Article 234-2 of the AMF’s
general regulation, following the SID Contribution (as described in
Section 5.1 of the Draft Response Document) and the fact that SID
and the Investor are acting in concert.
The Offeror intends to implement the squeeze-out
procedure for the shares of the Company not tendered to the Offer,
at the end of the Offer, pursuant to the provisions of Article L.
433-4 II of the French Monetary and Financial Code and Articles
237-1 et seq. of the AMF’s general regulation.
In accordance with Article 231-13 of the AMF’s
general regulation, Rothschild Martin Maurel, BNP Paribas, Crédit
Agricole Corporate and Investment Bank (“CA-CIB”)
and Société Générale filed the draft Offer and the Draft Offer
Document with the AMF on 26 April 2021.
Only BNP Paribas, CA-CIB and Société Générale
guarantee, in accordance with Article 231-13 of the AMF’s general
regulation, the content and irrevocable nature of the undertakings
made by the Offeror in connection with the Offer.
2.
REASONED OPINION OF THE COMPANY’S SUPERVISORY BOARD
The supervisory board of Tarkett is currently
composed of:
- Mr. Eric La Bonnardière (chairman of the supervisory
board);
- Mr. Didier Deconinck (vice-chairman of the supervisory
board);
- Mr. Julien Deconinck;
- Mr. Nicolas Deconinck;
- Mrs. Françoise Leroy*;
- Mr. Didier Michaud-Daniel*;
- Mrs. Sabine Roux de Bézieux*;
- Mrs. Agnès Touraine; et
- Mrs. Véronique Laury.
*Independent members according to the
independence criteria of the Afep-Medef Code.
Mr. Bernard-André Deconinck is an observer
(censeur) on the Company’s supervisory board.
In accordance with the provisions of Article
261-1, III of the AMF’s general regulation, the supervisory board,
at its meeting of March 31, 2021, upon recommendation of the
nomination, compensation and governance committee, decided to set
up an ad hoc committee composed of:
- Mrs. Françoise Leroy (chairwoman of the ad hoc committee);
- Mr. Didier Michaud-Daniel;
- Mrs. Sabine Roux de Bézieux.
At the same meeting of March 31, 2021, upon
recommendation of the ad hoc committee, the supervisory board
appointed, in accordance with article 261-1, I, 1°, 2° and 4° and
II of the AMF’s general regulation, Finexsi, represented by Mr.
Olivier Péronnet and Mr. Olivier Courau, as independent expert in
charge of issuing a report on the financial terms of the Offer.
At its meeting of April 23, 2021, the members of
the supervisory board:
- noted the main characteristics of the draft Offer;
- noted that (i) Mr. Didier Michaud-Daniel intended, as a
precaution, to abstain from participating in the work and
deliberations of the ad hoc committee going forward due to the
selection by the Deconinck family of Wendel as a minority financial
partner, Wendel being a significant shareholder of Bureau Veritas,
of which he is the chief executive officer (a situation likely, in
his view, to give rise to an appearance of conflict of interest
even if his independent judgment is not affected) and,
consequently, (ii) the ad hoc committee will continue its mission
without the participation of Mr. Michaud-Daniel who is abstaining,
while remaining composed of its three original members; and
- upon recommendation of the ad hoc committee, positively
welcomed, in principle, the draft Offer, and approved the draft
press release that could be published upon announcement of the
draft Offer, as of April 23, 2021, after the close of trading.
In accordance with the provisions of article
231-19 of the AMF’s general regulation, the members of the
Company's supervisory board met on May 20, 2021, under the
chairmanship of Mr. Eric La Bonnardière, chairman of the
supervisory board, in order to review the draft Offer and to issue
a reasoned opinion on the interest and consequences of the draft
Offer for the Company, its shareholders and its employees. All the
members of the supervisory board were present in person or by
videoconference.
Prior to the meeting, the members of the
supervisory board were provided with:
- the Draft Offer Document filed by the Offeror with the AMF on
April 26, 2021, including the context and the reasons for the
Offer, the intentions of the Offeror, the characteristics of the
Offer and the elements for assessing the Offer Price;
- the draft reasoned opinion prepared by the ad hoc committee in
accordance with article 261-1, III of the AMF’s general
regulation;
- the report of Finexsi, the independent expert; and
- the Draft Response Document of the Company prepared in
accordance with article 231-19 of the AMF’s general
regulation.
The supervisory board of the Company, at the
said meeting of May 20, 2021, has therefore issued the following
reasoned opinion by the unanimity of its members, including the
independent members who participate in the work of the ad hoc
committee, the other members of the Supervisory Board agreeing with
the opinion of the ad hoc committee:
“[…] Work of the independent
expert
At its meeting of March 31, 2021, upon
recommendation of the ad hoc committee, the Company’s Supervisory
Board appointed Finexsi, represented by Messrs. Olivier Péronnet
and Olivier Courau, as independent expert in accordance with the
provisions of Article 261-1, I, 1°, 2° and 4° and II of the AMF’s
general regulation, in charge of issuing a report on the financial
terms of the Offer. The process and the basis for the appointment
of the independent expert will be explained by the ad hoc committee
during the presentation of its work.
The Chairman indicates that the ad hoc committee
has had several exchanges with the independent expert and followed
up his work.
Finexsi, represented by Messrs. Olivier Péronnet
and Olivier Courau, summarizes the conclusions of its work to the
Supervisory Board:
“We consider the DCF approach as the most
appropriate to estimate the intrinsic value of Tarkett shares.
Based on management's business plan and our sensitivity analyses,
this criterion results in a range of values per share between €14.4
and €17.2, with a central value of €16.2. The Offer price of €20
per Tarkett share represents a premium of +23.3% compared to this
central value. On this basis, the Offer price provides “full value”
without having to bear the risk of executing this ambitious
business plan in terms of profitability in an uncertain and
volatile market context.
In addition, the liquidity and the free float’s
turnover of Tarkett shares are at sufficient levels to retain the
share price as a principal reference. The Offer price represents a
premium of +25.8% compared to the Spot price before the
announcement of the Offer, and of +44% on the basis of the 60-day
VWAP.
Moreover, the DCF valuation range is
corroborated by the result of the trading comparables’ method
implemented as a secondary criterion and by the analysts' price
targets, also presented as a secondary criterion, the upper bound
corresponds to the HSBC price target, which nonetheless stopped
covering Tarkett shares since March 2021.
As for the comparable transactions method, which
is presented for indicative purposes only, the range that results
from its application, is considered to be a "low value" insofar as
the average multiple used over the last five years applies to the
non-normative profitability levels observed in 2019 and 2020. In
this respect, it should be emphasized that this method does not
take into account the Company's development prospects and in
particular the improvement in profitability expected in the
business plan.
The examination of the related agreements that
could have a significant influence on the assessment of the Offer,
as presented in the draft Information Memorandum, namely (i) the
Investment Agreement and its annexes, including the terms and
conditions for the financing of the Offer and the refinancing of
the existing debt, (ii) the Shareholders' Agreement, (iii) the
compensation mechanism for certain managers and (iv) the liquidity
mechanism, did not reveal any provision that could, in our opinion,
call into question the fairness of the Offer from a financial point
of view.
Accordingly, we believe that the Offer price of
€20 per Tarkett share is fair from a financial point of view for
Tarkett shareholders.
This conclusion also applies to the indemnity
provided for the mandatory squeeze-out, which is equal to the Offer
price, i.e. €20 per share.”
Work and recommendation of the ad hoc
committee
Ms. Françoise Leroy, in her capacity as chair of
the ad hoc committee, then reports on its mission and briefly
summarizes the work accomplished in this context:
Process for appointing the independent
expert
Two firms were identified as being able to meet
the criteria of competence required by the applicable
regulations.
On March 1, 2021, the prospective members of the
ad hoc committee met with representatives of the two firms
approached, including Finexsi. The ad hoc committee carried out an
in-depth review of the profile and experience of these firms, as
well as the transactions they may have conducted with the Company
that could affect their independence.
Following this review, during the first formal
meeting of the ad hoc committee on March 31, 2021, which followed
its appointment by the Supervisory Board, Finexsi was selected by
the committee because of its recent experience in comparable and
complex transactions, its reputation and the absence of any
conflict of interest.
Finexsi has confirmed not to be in a conflict of
interest situation and that it has sufficient material resources
and the necessary availability to carry out its mission in the
contemplated timetable. In view of the above, the ad hoc committee
decided to recommend the appointment of Finexsi to the Supervisory
Board, which ratified this proposal on March 31, 2021.
Work of the ad hoc committee and interactions with the
independent expert
- As from the establishment of the ad hoc committee, the members
of the ad hoc committee met 14 times between March 31, 2021 and May
20, 2021 for the purpose of their mission, including 13 times in
the presence of the independent expert, as detailed below. Given
the health constraints related to the Covid-19 pandemic, almost all
the meetings of the ad hoc committee and the exchanges of its
members with the various people involved took place by telephone or
videoconference,
- Weekly follow-up meetings were set up, at the occasion of which
the legal and financial advisers of the Offeror, of the Company and
of the ad hoc committee kept the members of the ad hoc committee
informed, in the presence of the independent expert, of the
progress of the draft Offer, and more particularly of the
evolutions of the contemplated timetable, of the discussions
relating to the draft agreements between the various parties
(including the project of refinancing of the Group) and the
evolution of the stock market activity. On each occasion, the ad
hoc committee ensured that the independent expert was provided with
all the information needed to date to carry out its mission and
that it was able to carry out its work under satisfactory
conditions,
- On April 2, 2021, the Company’s business plan was presented to
the independent expert, in the presence of the members of the ad
hoc committee, who were also able to discuss for the first time
valuation issues with the independent expert;
- On April 16, 2021, the members of the ad hoc committee attended
a meeting during which (i) their legal advisor presented and
explained certain legal aspects of the proposed Offer and (ii) the
independent expert updated the members of the ad hoc committee on
his valuation work. On this occasion, the ad hoc committee and the
independent expert exchanged in particular on the preliminary
analyses relating to the valuation methods used by the financial
advisors of the Offeror for the valuation of the Company;
- On April 20, 2021, the members of the ad hoc committee, with
the participation of the independent expert and their legal
advisor, attended a meeting to present the envisaged terms and
conditions of the financing of the proposed Offer and the
refinancing of the Group by the management of the Company and the
financial and legal advisors of the Offeror, during which the
members of the ad hoc committee had the opportunity to ask
questions on the reasons, the terms, the consequences and the
possible alternatives of the envisaged refinancing of the Group and
to request precise information with respect to the allocation of
the resulting financing and refinancing costs between the Company
and the Offeror;
- On April 21, 2021, the members of the ad hoc committee, with
the participation of their legal advisor, attended a meeting to
present the elements of assessment of the valuation of the Company
by the financial advisors of the Offeror, during which they had in
particular the opportunity to ask questions and to discuss the
methods and assumptions of valuation retained. On this occasion,
the ad hoc committee noted that in the current state of its work,
the independent expert had not identified any elements calling into
question the valuation presented by the Offeror’s financial
advisers;
- On April 22, 2021, the members of the ad hoc committee were
individually informed of the investment offer made by Wendel and of
the price envisaged for the draft Offer and received, in response
to their questions, additional information regarding the allocation
of financing and refinancing costs between the Offeror and the
Company;
- On that date of April 22, the members of the ad hoc committee
had received and reviewed various documents relating to the
proposed Offer, including a draft offer document from the Offeror
as well as presentations prepared by the Offeror’s financial
advisors on the terms and costs of the Group’s refinancing, a
comparative presentation of the financial terms of recent Term Loan
B issues on the market and elements of the Company’s valuation.
Finally, they had been able to consult an opinion issued by the
bank Rothschild & Co for the use of the members of the ad hoc
committee on the favourable nature of the financial conditions
obtained in the context of the envisaged refinancing of the Group
in with respect to the market;
- On April 23, 2021, the members of the ad hoc committee met with
their legal advisor and the independent expert in order to (i)
review in detail the financial terms and conditions of the draft
Offer and discuss its potential consequences for the Group and (ii)
decide on the recommendation to be made to the Supervisory Board
regarding the welcome of the draft Offer, the recommendation
regarding the authorization of related-party agreements in
connection with the draft Offer pursuant to Article L. 225-86 of
the French Commercial Code and the review of a draft press release.
The members of the ad hoc committee unanimously decided to propose
to the Supervisory Board to positively welcome the draft Offer
proposed by the Offeror. As a reminder, the draft Offer was
announced on April 23, 2021, after closing of the stock
exchange;
- On April 30, 2021, the members of the ad hoc committee met with
the independent expert to be updated in detail on the expert’s
valuation work;
- On May 4, 2021, the members of the ad hoc committee, with the
participation of their legal advisor and the independent expert,
attended a meeting with representatives of the Offeror and Wendel,
during which they were able to discuss Wendel’s motivations and
intentions as a minority financial partner of the Deconinck family,
as well as their vision of the future of the Group. In particular,
they noted that Wendel supported the continuation of the current
management team of Tarkett and the pursuit of the company’s
strategic orientations;
- On May 6, 2021, the members of the ad hoc committee, with the
participation of their legal advisor and the independent expert,
attended a meeting with the respective legal advisors of the
management team and of the Offeror, during which they received a
detailed presentation of the plan of investment and profit-sharing
of the main executives of the Group in the capital of the Offeror
(in the form of the subscription of ordinary shares known as "pari
passu" and preference shares known as "ratchet", and free
allotments of ordinary and preference shares known as "ratchet"),
during which the members of the ad hoc committee received, among
other things, confirmation that these investments were made at a
market price consistent with the price of the Offer. During this
same meeting, liquidity agreements proposed by the Offeror in the
context of the draft Offer to the beneficiaries of free allocations
of shares of the Company, as long as these shares will not have
been delivered at the end of the Offer or will be subject to
retention obligations until a date subsequent to the end of the
Offer were presented to the members of the ad hoc committee;
- On May 6, 2021, a letter was sent by the management company
Tweedy, Browne Company LLC, a significant minority shareholder of
the Company, to the independent members of the Supervisory Board
(corresponding in fact to the members of the ad hoc committee).
This letter, of which the Chair of the ad hoc committee
acknowledged receipt on May 8, 2021, contained observations
claiming an insufficient Offer price and the lack of relevance of
the stock market price as a reference for the value of the Company
in view of, in particular, according to them (i) a lack of
liquidity of the Tarkett share on the stock market, (ii) certain
analysts’ notes concerning the Offer price and (iii) Tarkett’s
potential to generate EBIT on the basis of a "normative" EBIT
calculated by the minority shareholder;
- On May 9, 2021, the ad hoc committee met in the presence of its
legal advisor and the independent expert to review the arguments
raised in the letter received from the minority shareholder
mentioned above;
- On May 17, 2021, the ad hoc committee met in the presence of
its legal advisor and the independent expert. The independent
expert presented to the ad hoc committee the preliminary
conclusions of its report and exchanged with the members of the ad
hoc committee on its work as well as the answers given to the
observations of the minority shareholder mentioned above. The
independent expert specified, in particular, that, subject to the
finalization of its work, its preliminary report concluded to the
fairness of the Offer. The ad hoc committee then prepared on this
basis its recommendations to the Supervisory Board with respect to
its reasoned opinion on the Offer;
- On May 20, 2021, the ad hoc committee held a meeting prior to
the Supervisory Board meeting in charge of issuing its reasoned
opinion on the Offer with the participation of the independent
expert. During this meeting, the ad hoc committee (i) reviewed the
final report of the independent expert, (ii) finalized its
recommendations to the Supervisory Board with respect to its
opinion on the Offer (iii) reviewed the latest version of the draft
note in response of the Company as well as a draft press release to
be published by the Company at the time of the filing of the said
note in response and (iv) ensured once again that the independent
expert was provided with all the information needed to carry out
its mission and that it was able to carry out its work under
satisfactory conditions;
- The ad hoc committee also ensured that the business plan of the
Company presented to the independent expert (i) was the latest
business plan prepared by the Management Board and communicated to
the Supervisory Board and that it therefore reflected, at the time
of the Offer, the best possible estimate of the Company’s forecasts
and (ii) that there were no other relevant forward-looking data.
Finally, the ad hoc committee ensured that the Company’s financial
communication (in particular, the 2021 outlook and medium-term
objectives confirmed to the market on April 23, 2021 at the time of
the publication of the 2021 Q1 turnover) was consistent with the
outlook set out in the business plan;
- The ad hoc committee has noted that, except for the
above-mentioned letter, no question or reflexion from shareholders
has been addressed to the ad hoc committee or to the independent
expert, including via the AMF;
Conclusions and recommendations of the ad hoc committee
- The ad hoc committee has noted the elements resulting from the
intentions and objectives declared by the Offeror in its draft
offer document;
- It reviewed the interests of the Offer for the Company, for the
shareholders and for the employees and considered that the Offer
was in line with the interests of the Company, its employees and
its shareholders. Consequently, following its meeting of May 20,
2021, it recommends to the Supervisory Board to resolve
accordingly, it being recalled that Mr. Didier Michaud-Daniel has
abstained from participating in the debates and deliberations of
the ad hoc committee since April 23, 2021 (including this
recommendation);
- It is specified that due to the holding shares obligations of
the members of the Supervisory Board provided in the articles of
association, the members of the ad hoc committee intend not to
tender their Tarkett shares to the Offer.
Reasoned opinion of the Supervisory Board
- The Supervisory Board notes the work of the ad hoc committee
and its recommendations on the Offer as well as the conclusions of
the independent expert.
- With regard to the interest of the Offer for the Company, the
Supervisory Board notes that:
- the Deconinck family has been a shareholder of the Company
since its origins, when Sommer Allibert SA and Tarkett AG merged in
1997. Since then, it has accompanied the company through all the
stages of its development, including its latest IPO in 2013. The
members of the Deconinck family, acting in concert with the Offeror
through SID and with the Investor, currently hold, directly and
indirectly, a total of 55.41% of the capital and 54.74% of the
voting rights;
- the Offeror is controlled by SID and co-owned with the Investor
(a wholly-owned subsidiary of Wendel SE) as a long-term minority
financial partner, which has notably undertaken, under the terms of
a shareholders’ agreement with the SID, to hold its shares in the
capital of the Offeror for a period of five years;
- the Deconinck family wishes to "strengthen its control" over
the Company through the Offeror, which intends "with the financial
support provided by the Investor and with the help of the Company’s
current management team, intends to pursue the main strategies
being implemented by the Company and SID and to support the
Company’s development”,
- the Offeror also intends, in the context of the proposed
transaction, to set up in favour of certain directors and managers
of the Company an investment and incentive plan providing in
particular for (i) an investment in ordinary shares and so-called
"ratchet" performance shares at the level of the Offeror
"conferring on their holders a portion of the capital gain
realized" in the event of a subsequent IPO or transfer of control,
and (ii) the free allocation of such ordinary and performance
shares;
- the refinancing of most of the Group’s indebtedness in the
context of the draft Offer presents financial advantages for the
Group and an equitable allocation of the related costs between the
Offeror and the Company (taking into account, in particular, the
commitment of the Offeror to the Company to bear a share of the
costs to which the Group would be exposed as a result of the
refinancing, up to an amount of 5.95 million euros depending on the
final amount of such costs), which enabled the Supervisory Board,
at its meeting of April 23, 2021, to consider that the refinancing
agreements concerned were in the interest of the Company and to
authorize their conclusion, and
- the Offeror does not intend to merge the Offeror with the
Company.
- With regard to the interest of the Offer for the shareholders,
in financial terms, the Supervisory Board notes that:
- the offered price of 20 euros per share represents a premium of
+25.8% compared to the last closing price before the announcement
of the Offer and of +44% based on the average closing price
weighted by the daily volumes of the last 60 trading days preceding
the announcement of the Offer;
- the discounted cash flow (DCF) valuation approach, considered
to be the most appropriate by the independent expert to estimate
the intrinsic value of the Tarkett share, leads, on the basis of
the Company’s business plan and the expert’s sensitivity analyses,
to a central value per share of €16.2, i.e. a premium of +23.3%
compared to this value, the contribution to the Offer thus allowing
to capture the full value of the Company without having to bear the
risk of executing a business plan considered ambitious in terms of
profitability in an uncertain and volatile market context;
- the independent expert noted that the offered price of 20 euros
showed a premium in relation to all the valuation criteria that it
retained as main criteria and that this price was fair, from a
financial point of view, for the shareholders of the Company who
would decide to tender their shares to the Offer. The ad hoc
committee agrees with the conclusions of the independent expert
that the financial terms offered in the Offer are fair;
- the main observations made by Tweedy, Browne Company LLC on May
6, 2021 as to the Offer price have been the subject of detailed
responses in section 9 of the independent expert's report, which
indicates in particular that (i) the liquidity and turnover of the
free float are at sufficient levels to retain the stock market
price as a relevant valuation reference (with, for example, a
turnover of the free float of 69.2% over the 12 months preceding
the announcement of the Offer) (ii) the pre-announcement price
targets of two analysts who had made mixed judgments on the Offer
price were respectively €17.1 and €18 per Tarkett share (the Offer
price showing respectively premiums of +17.0% and +11.0% on these
price targets) and (iii) the application of the "normative" EBIT
multiple valuation method proposed by Tweedy, Browne Company LLC
should in fact result in a value per Tarkett share of €16.94,
significantly lower than the Offer price;
- the Offer allows each shareholder of the Company to transfer
immediately, if they so wish, their shareholding whatever the
number of shares they holds and thus to benefit from a greater
liquidity than that offered by the market prior to the announcement
of the Offer, the ad hoc committee drawing the shareholders’
attention to the lesser liquidity which could exist on the market
after the Offer in the absence of a squeeze-out;
- with regard to dividends, the Offeror, which is already the
Company’s majority shareholder, has indicated that "[i]n the next
twelve months, the Offeror intends to maintain a dividend policy in
line with that adopted in 2020 and 2021, i.e., not to make any
dividend payments”.
- With regard to the interest of the Offer for the employees, the
Supervisory Board notes that:
- the Offeror indicates that the contemplated transaction " forms
part of a plan in which the Company’s business activities and
development are to continue" and that the Offer “should not in
itself result in any particular impact on the Company’s workforce,
wage policy or human resource management policy” it being noted,
however, that (i) certain functions "specifically related to the
listing" could be affected in the event of a squeeze-out and (ii)
the Offeror has indicated that in the event of a squeeze-out the
Company would be transformed into a simplified joint stock company
managed by a president, which would result in the disappearance of
the Supervisory Board on which the employees currently have the
right to appoint a representative;
- the Offeror will propose to the beneficiaries of free Tarkett
shares during the vesting period and to the holders of Tarkett
shares during the holding period to enter into liquidity agreements
with the Offeror allowing them to transfer their shares at a price
determined according to a formula consistent with the price of the
Offer (in the form of call and put options exercisable in case of
lack of liquidity of the market of the share or of delisting), it
being specified that in the event of implementation of the
squeeze-out, the shares subject to this liquidity mechanism will be
assimilated to the shares held by the Offeror in accordance with
article L. 233-9 I, 4° of the French Commercial Code and will
therefore not be covered by the said squeeze-out, and
- the “FCPE” (company investment funds) set up in favour of the
Group’s employees will have the possibility, upon decision of its
supervisory board, to contribute the Tarkett shares it holds to the
Offer.
- The Supervisory Board notes that the Offeror intends to
implement a squeeze-out of the Tarkett shares at the end of the
Offer if the shares of the Company not tendered to the Offer do not
represent more than 10% of the capital and voting rights of the
Company.
In view of the elements submitted and in particular (i) the
objectives and intentions expressed by the Offeror, (ii) the
valuation elements prepared by the presenting institutions
Rothschild Martin Maurel, BNP Paribas and Crédit Agricole Corporate
and Investment Bank, (iii) the conclusions of the report of the
independent expert on the financial conditions of the Offer,
including its answers to the written observations received from a
minority shareholder concerning the Offer price, (iv) the
conclusions of the review work of the ad hoc committee, (vi) the
draft press release submitted to the Supervisory Board and (vi) the
elements set out above, the Supervisory Board, after deliberation,
unanimously by its members present or represented (including the
independent members who participate in the work of the ad hoc
committee, the other members of the Supervisory Board agreeing with
the opinion of the ad hoc committee) considers that the Offer is in
line with the interests of the Company, its shareholders and its
employees and decides:
- to issue, in the light of the work, conclusions and
recommendations of the ad hoc committee, a favorable opinion on the
proposed Offer, which may be followed by a squeeze-out of the
Company’s shares if the conditions for such squeeze-out are met, as
presented to it,
- accordingly, to recommend to the Company’s shareholders to
tender their shares to the Offer,
- to acknowledge, as necessary, the fact that, since the treasury
shares held by the Company are not covered by the Offer, the
Company will not tender them to the Offer, […]”
3.
REPORT OF THE INDEPENDENT EXPERT PURSUANT TO ARTICLE 261-1 OF THE
AMF’S GENERAL REGULATION
In accordance with Article 261-1, I, 1°, 2° and
4° and II of the AMF’s general regulation, Finexsi, represented by
Messrs. Olivier Péronnet and Olivier Courau, has been appointed as
independent expert by the Company’s supervisory board on March 31,
2021 in order to issue a report on the financial terms of the Offer
and the possible squeeze-out.
The conclusion of this report, dated May 20,
2021, is reproduced below:
“We consider the DCF approach as the most
appropriate to estimate the intrinsic value of Tarkett shares.
Based on management's business plan and our sensitivity analyses,
this criterion results in a range of values per share between €14.4
and €17.2, with a central value of €16.2. The Offer price of €20
per Tarkett share represents a premium of +23.3% compared to this
central value. On this basis, the Offer price provides “full value”
without having to bear the risk of executing this ambitious
business plan in terms of profitability in an uncertain and
volatile market context.
In addition, the liquidity and the free float’s
turnover of Tarkett shares are at sufficient levels to retain the
share price as a principal reference. The Offer price represents a
premium of +25.8% compared to the Spot price before the
announcement of the Offer, and of +44% on the basis of the 60-day
VWAP.
Moreover, the DCF valuation range is
corroborated by the result of the trading comparables’ method
implemented as a secondary criterion and by the analysts' price
targets, also presented as a secondary criterion, the upper bound
corresponds to the HSBC price target, which nonetheless stopped
covering Tarkett shares since March 2021.
As for the comparable transactions method, which
is presented for indicative purposes only, the range that results
from its application, is considered to be a "low value" insofar as
the average multiple used over the last five years applies to the
non-normative profitability levels observed in 2019 and 2020. In
this respect, it should be emphasized that this method does not
take into account the Company's development prospects and in
particular the improvement in profitability expected in the
business plan.
The examination of the related agreements that
could have a significant influence on the assessment of the Offer,
as presented in the draft Information Memorandum, namely (i) the
Investment Agreement and its annexes, including the terms and
conditions for the financing of the Offer and the refinancing of
the existing debt, (ii) the Shareholders' Agreement, (iii) the
compensation mechanism for certain managers and (iv) the liquidity
mechanism, did not reveal any provision that could, in our opinion,
call into question the fairness of the Offer from a financial point
of view.
Accordingly, we believe that the Offer price of
€20 per Tarkett share is fair from a financial point of view for
Tarkett shareholders.
This conclusion also applies to the indemnity provided for the
mandatory squeeze-out, which is equal to the Offer price, i.e. €20
per share.”
This report is reproduced in its entirety in
Section 7 of the Draft Response Document and forms an integral part
of it.
4.
PROVISION OF COMPANY’S OTHER INFORMATION
Other information relating to the Company, in
particular its legal, financial and accounting characteristics will
be filed with the AMF no later than the day before the opening of
the Offer. Pursuant to Article 231-28 of the AMF’s general
regulation, these information will be made available on Tarkett’s
website (www.tarkett.com) and on the AMF’s website
(www.amf-france.org) the day before the opening of the Offer and
may be obtained free of charge at Tarkett’s registered office, Tour
Initiale - 1, Terrasse Bellini, 92919 Paris La Défense Cedex.
Information for U.S.
holders
The Offer described in this press release is
made for the securities of Tarkett and is subject to the laws of
France. It is important that U.S. holders understand that the Offer
and this press release are subject to disclosure and takeover laws
and regulations in France that may be different from those in the
United States. To the extent applicable, Tarkett Participations
will comply with Regulation 14E under the U.S. Securities Exchange
Act of 1934, as amended (the “Exchange Act”).
Tarkett Participations intends to treat the
Offer as one to which the “Tier II” exemption mentioned in Rule
14d-1(d) under the Exchange Act applies. Pursuant to an exemption
from Rule 14e-5 under the Exchange Act, Tarkett Participations may,
from time to time, purchase or make arrangements to purchase shares
outside the Offer from the time the Offer was announced until the
expiration of the acceptance period of the Offer, to the extent
permitted under the applicable French laws and regulations and
provided certain other conditions are met.
Neither the U.S. Securities and Exchange
Commission nor any securities commission of any state of the United
States has (a) approved or disapproved the Offer; (b) passed upon
the merits of fairness of the Offer; or (c) passed upon the
adequacy or accuracy of the disclosure in this press release. Any
representation to the contrary is a criminal offense in the United
States.
1 A simplified joint-stock corporation whose
registered office is located at Tour Initiale - 1 Terrasse Bellini,
92919 Paris La Défense Cedex and which is registered with the
Nanterre trade and companies register under number
421 199 274, controlled by the Deconinck family.
2 A public limited company incorporated under
Luxembourg law whose registered office is located at 5 rue Pierre
d'Aspelt, L-1142 Luxembourg and which is registered with the
Luxembourg trade and companies register under number B50162, a
wholly owned subsidiary of Wendel SE, 89 rue Taitbout, 75009
Paris.
3 Based on information as of 30 April 2021 published by the
Company on its website in accordance with Article 223-16 of the
AMF's general regulation.
4 It being specified that as of the date of this document, the
Company holds 392,427 shares in treasury (of which 125.647 are
allocated to awards of performance shares free of charge under the
2018-2021 LTIP).
5 As indicated in section 1.2.5 of the Draft
Response Document, after application of the performance conditions,
125, 647 Shares will definitively vest on July 1, 2021 under the
2018-2021 LTIP.
- 2021-05-21-Press Release related to the filing of the note in
response of Tarkett to the simplified tender offer-ENG
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