RNS Number:4335P
Aberdeen Asset Management PLC
05 September 2003
5 September 2003
Embargoed until 7.00 am Friday 5 September 2003
This announcement is not for release, publication or distribution in or into the
United States, Canada, Australia or Japan
RECOMMENDED OFFER
by
ERNST & YOUNG LLP
on behalf of
ABERDEEN ASSET MANAGEMENT PLC
for
EDINBURGH FUND MANAGERS GROUP PLC
Summary
The boards of Aberdeen Asset Management PLC ("Aberdeen") and Edinburgh Fund
Managers Group plc ("Edinburgh") announce the terms of a recommended all share
offer for Edinburgh. The Offer will be made by Ernst & Young on behalf of
Aberdeen.
The Offer, which is being unanimously recommended by the directors of Edinburgh,
comprises 2.05 New Aberdeen Shares for each Edinburgh Share.
Based on the closing middle market price of 61.5p per Aberdeen Share on 4
September 2003, the Offer:
* values an Edinburgh Share at 126p. Edinburgh Shareholders should
however be aware that the New Aberdeen Shares will not qualify for any final
Aberdeen dividend to be paid in respect of the year ending 30 September 2003
* values the entire issued share capital of Edinburgh at approximately
#36 million
* represents a premium of 71.5 per cent. to the closing middle market
price of 73.5p per Edinburgh Share on 1 July 2003, the day before the
announcement that Edinburgh was in discussions which might or might not lead to
an offer being made for the Company
* represents a premium of 51.0 per cent. to yesterday's closing middle
market price of 83.5p per Edinburgh Share
Aberdeen has received irrevocable undertakings to accept the Offer in respect of
a total of 12,715,027 Edinburgh Shares, representing approximately 44.6 per
cent. of the total issued share capital of Edinburgh and a statement of intent
to accept the Offer in respect of a total of 1,437,470 Edinburgh Shares,
representing approximately 5.0 per cent of the total issued share capital of
Edinburgh. Clients managed by the Aberdeen Group currently hold, in aggregate, a
further 788,126 Edinburgh Shares, representing approximately 2.8 per cent. in
aggregate of the total issued share capital of Edinburgh.
The principal commercial rationale for the Offer is the combination of the
institutional funds managed by Aberdeen and Edinburgh. Consequently, Aberdeen
has agreed to procure the sale of the rights to manage the retail funds
currently managed by the Edinburgh Group (comprising unit trusts and open ended
investment companies with approximately #900 million of assets under management)
to New Star for #33 million of which #27 million is to be paid in cash and #6
million in new New Star Shares upon completion of such sale. The Disposal is
consistent with the strategy set out at the time of the previous sale by
Aberdeen to New Star in January 2003 of rights to manage certain retail funds of
Aberdeen.
The Edinburgh Group is an independent investment management group involved in
the management of investment trusts, unit trusts and open-ended investment
companies, pension funds, venture capital funds and other discretionary
portfolios. As at 31 July 2003 funds under management amounted to approximately
#3.3 billion.
The directors of Aberdeen believe that there is an excellent strategic fit
between Aberdeen and Edinburgh and that the Acquisition will:
* create a stronger independent Scottish fund management business
* strengthen the institutional equity and fixed income asset
management business and investment management team of the Aberdeen
Group
* enhance the Aberdeen Group's position as a major manager of UK
closed-end funds
* provide additional resources to the Enlarged Group to enable it to
improve its core disciplines of active management of international
equities and fixed income securities
* provide the Enlarged Group with access to Edinburgh's back office
facility in Dundee
* crystallise the value of the retail funds managed by the Edinburgh
Group through the sale to New Star
* allow Aberdeen to reduce gearing with part of the proceeds of the
sale to New Star, strengthening the balance sheet of the Enlarged
Group and increasing financial flexibility
* provide Aberdeen with a stronger platform for future expansion in a
consolidating market
The directors of Aberdeen believe that the terms of the Offer will increase
shareholder value for Aberdeen Shareholders whilst enabling Edinburgh
Shareholders to retain an interest in the asset management sector and to
participate in any future recovery of that sector and the future value created
by the Enlarged Group.
Aberdeen intends to use the net cash proceeds of the Disposal (after expenses
and any exceptional costs) to reduce debt and to fund additional pension
contributions of #9 million in aggregate into Edinburgh's defined benefit
pension scheme in the period of three years from completion of the Offer. The
Disposal is conditional, inter alia, upon receipt of regulatory consents
(including from the Financial Services Authority), the approval of New Star
Shareholders at an extraordinary general meeting of New Star to the creation and
allotment of new New Star Shares and upon the Offer becoming or being declared
unconditional in all respects.
The Offer is subject, inter alia, to the Sale Agreement becoming unconditional
in all respects save as to the requirement for the Offer to become or be
declared unconditional in all respects. As part of the Disposal, Aberdeen has
undertaken in the Sale Agreement that it will not, without the prior written
agreement of New Star, declare the Offer unconditional unless valid acceptances
have been received from not less than 90 per cent. in nominal value in Edinburgh
shares to which the Offer relates, by the first closing date, being 21 days
after the despatch of the Offer Document.
New Star Shareholders (including certain directors of New Star) holding New Star
Shares representing, in aggregate, approximately 55.1 per cent. of the votes
capable of being cast at an extraordinary general meeting have confirmed that
they will vote in favour of the resolutions to be proposed at the extraordinary
general meeting of New Star to implement the Disposal.
Due to its size, under the Listing Rules, the Offer will be conditional on,
inter alia, the approval of Aberdeen Shareholders at an extraordinary general
meeting. Aberdeen Shareholders representing, in aggregate, 30.0 per cent. of
Aberdeen's issued ordinary shares have confirmed that they will vote in favour
of the resolutions to be proposed at the extraordinary general meeting of
Aberdeen to implement the Offer, as will the directors of Aberdeen in respect of
a further 2.5 per cent. of Aberdeen's issued ordinary shares. The Offer is also
conditional, under Rule 16 of the City Code, upon the approval of Edinburgh
Shareholders (excluding the BT Pension Scheme and other discretionary management
clients of Hermes with a shareholding in Edinburgh) at an extraordinary general
meeting of Edinburgh. Edinburgh Shareholders (including the directors of
Edinburgh) representing, in aggregate, 29.4 per cent. of Edinburgh Shareholders
that are eligible to vote have confirmed that they will vote in favour of the
resolutions to be proposed at the extraordinary general meeting of Edinburgh.
Commenting on the Offer, Martin Gilbert, Chief Executive of Aberdeen, said:
"We believe this is a great deal for Aberdeen and Edinburgh shareholders and
clients alike. It is a transaction that brings three key strategic benefits.
It will consolidate the combined group's position in the fund management
industry; it will reassert the importance of independent third party asset
management; and it demonstrates our collective commitment to our investment
trust clients. The transaction will also broaden the scope of our operations
and strengthen our balance sheet. We very much look forward to working with
Edinburgh."
Sir Charles Nunneley, Chairman of Edinburgh, said:
"The Board is pleased to recommend the Aberdeen offer announced today. It gives
shareholders the opportunity to participate in the development of a larger
independent Scottish fund management company with complementary investment
teams. The Edinburgh brand will remain the focus for our important investment
trust clients. After a period of uncertainty for the group, I believe this
represents a satisfactory outcome not only for our shareholders but also for our
clients, employees and pensioners."
This summary should be read in conjunction with the attached announcement.
Enquiries:
Aberdeen Martin Gilbert Tel: 020 7463 6000
Ernst & Young Howard Myles Tel: 020 7951 2000
John Stephan
Gavin Anderson Neil Bennett Tel: 020 7554 1454
Mark Lunn
Edinburgh Sir Charles Nunneley Tel: 0131 313 1000
Anne Richards
Rod MacRae
Hawkpoint Charles Williams Tel: 020 7665 4500
Myles Pink
Maitland Angus Maitland Tel: 020 7379 5151
Colin Browne
Ernst & Young LLP, which is regulated in the United Kingdom by the Financial
Services Authority, is acting exclusively for Aberdeen and no one else in
connection with the Offer and will not be responsible to anyone other than
Aberdeen for providing the protections afforded to clients of Ernst & Young LLP
nor for providing advice in relation to the Offer.
Hawkpoint Partners Limited, which is authorised and regulated in the United
Kingdom by the Financial Services Authority, is acting exclusively for Edinburgh
and no one else in connection with the Offer and will not be responsible to
anyone other than Edinburgh for providing the protections afforded to customers
of Hawkpoint Partners Limited nor for providing advice in relation to the Offer.
This announcement does not constitute an offer or invitation to purchase any
securities.
The full text of the conditions and certain further terms of the Offer set out
in Appendix I form part of and should be read with this announcement. A summary
of the financial effects of the Offer is set out in Appendix II.
Appendix III contains definitions of the terms used in this announcement.
The Offer will not be made, directly or indirectly, in or into, or by use of the
mails or any other means of instrumentality (including, without limitation,
facsimile transmission, telex or telephone) of interstate or foreign commerce,
or of any facilities of a national securities exchange of the United States,
Canada, Australia or Japan and will not be capable of acceptance by any such
use, means, instrumentality or facilities, or from within the United States,
Canada, Australia or Japan. Accordingly, copies of this announcement are not
being, and must not be, mailed or otherwise distributed or sent in or into or
from the United States, Canada, Australia or Japan and persons receiving this
announcement (including custodians, nominees and trustees) must not distribute
or send it in or into or from the United States, Canada, Australia or Japan or
use such mails or any such means, instrumentality or facility in connection with
the Offer as doing so may invalidate any purported acceptance of the Offer.
5 September 2003
Embargoed until 7.00 am Friday 5 September 2003
This announcement is not for release, publication or distribution in or into the
United States, Canada, Australia or Japan
RECOMMENDED OFFER
by
ERNST & YOUNG LLP
on behalf of
ABERDEEN ASSET MANAGEMENT PLC
for
EDINBURGH FUND MANAGERS GROUP PLC
1. Introduction
The boards of Aberdeen and Edinburgh announce that they have agreed terms for a
recommended all share offer of 2.05 New Aberdeen Shares for each Edinburgh Share
to be made by Ernst & Young, on behalf of Aberdeen, for the whole of the issued
and to be issued share capital of Edinburgh.
The directors of Edinburgh have given irrevocable undertakings to accept the
Offer in respect of their own beneficial shareholdings amounting to 29,519
Edinburgh Shares in aggregate, representing approximately 0.1 per cent. of the
total issued share capital of Edinburgh. Aberdeen has received further
irrevocable undertakings from certain other Edinburgh Shareholders to accept the
Offer in respect of 12,685,508 Edinburgh Shares, representing approximately 44.5
per cent. of the total issued share capital of Edinburgh and a statement of
intent to accept the Offer in respect of a total of 1,437,470 Edinburgh Shares,
representing approximately 5.0 per cent of the total issued share capital of
Edinburgh. Accordingly, Aberdeen holds irrevocable undertakings and a statement
of intent in respect of a total of 14,152,497 Edinburgh Shares, representing
approximately 49.6 per cent of the total issued share capital of Edinburgh.
Clients managed by the Aberdeen Group currently hold, in aggregate, a further
788,126 Edinburgh Shares, representing approximately 2.8 per cent. in aggregate
of Edinburgh's issued share capital.
The principal commercial rationale for the Offer is the combination of the
institutional funds managed by Aberdeen and Edinburgh. Consequently, Aberdeen
has agreed to procure the sale of the rights to manage the retail funds
currently managed by the Edinburgh Group (comprising unit trusts and open ended
investment companies with approximately #900 million of assets under management)
to New Star for #33 million of which #27 million is to be paid in cash and #6
million in new New Star Shares upon completion of such sale. The Disposal is
consistent with the strategy set out at the time of the previous sale by
Aberdeen to New Star in January 2003 of rights to manage certain retail funds of
Aberdeen.
Due to its size, under the Listing Rules, the Offer will be conditional on,
inter alia, the approval of Aberdeen Shareholders at an extraordinary general
meeting. Aberdeen Shareholders representing, in aggregate, 30.0 per cent. of
Aberdeen's issued ordinary shares have confirmed that they will vote in favour
of the resolutions to be proposed at the extraordinary general meeting of
Aberdeen to implement the Offer, as will the directors of Aberdeen in respect of
a further 2.5 per cent. of Aberdeen's issued ordinary shares. A circular will
be dispatched to Aberdeen Shareholders as soon as practicable to convene an
extraordinary general meeting of Aberdeen for the purposes of approving the
Offer and the associated issue of New Aberdeen Shares.
The Offer is also conditional upon all of the conditions set out in the Sale
Agreement (other than the condition that the Offer becomes or is declared
unconditional in all respects) being satisfied or waived and, under Rule 16 of
the City Code, upon the approval of Edinburgh Shareholders (excluding BT Pension
Scheme and other discretionary management clients of Hermes with a shareholding
in Edinburgh) at an extraordinary general meeting of Edinburgh to approve the
arrangements between New Star and the BT Pension Scheme, details of which are
set out in paragraph 3 below. Edinburgh Shareholders (including the directors of
Edinburgh) holding Edinburgh Shares, representing, in aggregate, 29.4 per cent.
of the votes capable of being cast at the extraordinary general meeting have
confirmed that they will vote in favour of the resolutions to be proposed at the
extraordinary general meeting of Edinburgh. A circular will be dispatched to
Edinburgh Shareholders as soon as practicable to convene an extraordinary
general meeting of Edinburgh for the purposes of approving the arrangements
between New Star and the BT Pension Scheme.
The Disposal is conditional, inter alia, upon receipt of regulatory consents
(including from the Financial Services Authority), the approval of New Star
Shareholders at an extraordinary general meeting of New Star to the creation and
allotment of new New Star Shares and upon the Offer becoming or being declared
unconditional in all respects.
As set out in paragraph (f) of Appendix I, the Offer is subject, inter alia, to
the Sale Agreement becoming unconditional in all respects save as to the
requirement for the Offer to become or be declared unconditional in all
respects. As part of the Disposal, Aberdeen has undertaken in the Sale
Agreement that it will not, without the prior written agreement of New Star,
declare the Offer unconditional unless valid acceptances, as set out in
paragraph (a) of Appendix I, have been received from not less than 90 per cent.
in nominal value in Edinburgh shares to which the Offer relates, by the first
closing date, being 21 days after the despatch of the Offer Document.
New Star Shareholders (including certain directors of New Star) holding New Star
Shares representing, in aggregate, approximately 55.1 per cent. of the votes
capable of being cast at an extraordinary general meeting have confirmed that
they will vote in favour of the resolutions to be proposed at the extraordinary
general meeting of New Star to implement the Disposal. A circular will be
dispatched to New Star Shareholders as soon as practicable to convene an
extraordinary general meeting of New Star for the purposes of considering the
resolutions.
2. The Offer
The Offer, which will be subject to the conditions and further terms set out in
Appendix I and in the formal Offer Document and Form of Acceptance to be sent to
Edinburgh Shareholders, will be made on the following basis:
2.05 New Aberdeen Shares
for
each Edinburgh Share
On the bases and assumptions set out in Appendix II (and particularly based on
yesterday's closing middle market price of 61.5p per Aberdeen Share), the Offer,
which is being unanimously recommended by the directors of Edinburgh:
* values an Edinburgh Share at 126p. Edinburgh Shareholders should,
however, be aware that the New Aberdeen Shares will not qualify for any final
Aberdeen dividend to be paid in respect of the year ending 30 September 2003
* values the entire issued share capital of Edinburgh at approximately
#36 million
* represents a premium of 71.5 per cent. to the closing middle market
price of 73.5p per Edinburgh Share on 1 July 2003, the day before the
announcement that Edinburgh was in discussions which might or might not lead to
an offer being made for the Company
* represents a premium of 51.0 per cent. to yesterday's closing middle
market price of 83.5p per Edinburgh Share
Fractions of New Aberdeen Shares will not be allotted to Edinburgh Shareholders
and their entitlement will be rounded down to the nearest whole number of New
Aberdeen Shares.
The Edinburgh Shares which are the subject of the Offer will be acquired fully
paid, free from all liens, equities, charges, encumbrances, rights of
pre-emption and other third party interests and together with all rights now or
hereafter attaching thereto, including the right to receive and retain all
dividends and other distributions (if any) declared, made or paid on or after
the date of this announcement.
The New Aberdeen Shares to be allotted and issued in connection with the Offer
will be allotted and issued credited as fully paid and will rank pari passu in
all respects with the existing issued Aberdeen Shares, together with the right
to retain and receive in full all dividends and other distributions declared,
made or paid after the date of this announcement save for any final dividend to
be declared in respect of the year ending 30 September 2003.
If the Offer becomes or is declared unconditional in all respects, full
acceptance of the Offer would result in the issue of up to 58,879,491 New
Aberdeen Shares, representing approximately 25.0 per cent. of the issued share
capital of Aberdeen as enlarged by the Acquisition. For these purposes it has
been assumed that the only options outstanding under the Edinburgh Share Option
Schemes which will be exercised are those for which the exercise price is lower
than the value of an Edinburgh Share under the Offer as at 4 September 2003
(being the last business day prior to this announcement).
Application will be made to the UK Listing Authority for the New Aberdeen Shares
to be admitted to listing on the Official List and to the London Stock Exchange
for the New Aberdeen Shares to be admitted to trading on the London Stock
Exchange's market for listed securities. It is expected that listing will
become effective and that dealings will commence in the New Aberdeen Shares on
the first dealing day following the day on which the Offer becomes or is
declared unconditional in all respects (save only for the admission to trading
of such New Aberdeen Shares becoming effective).
Subject to the Offer becoming or being declared unconditional in all respects,
except in the case of certain Overseas Shareholders, settlement of the
consideration to which any Edinburgh Shareholder is entitled under the Offer,
will be effected (i) in the case of acceptances of the Offer received, complete
in all respects, by the date on which the Offer becomes or is declared
unconditional in all respects, within 14 days of such date, or (ii) in the case
of acceptances of the Offer received, complete in all respects, after the date
on which the Offer becomes or is declared unconditional in all respects but
while the Offer remains open for acceptance, within 14 days of such receipt, in
the following manner.
Where an acceptance relates to Edinburgh Shares held in CREST (that is in
uncertificated form) the New Aberdeen Shares to which the accepting Edinburgh
Shareholder is entitled will be issued to such person in uncertificated form
within the CREST system. Where an acceptance relates to Edinburgh Shares in
certificated form, the New Aberdeen Shares to which the accepting Edinburgh
Shareholder is entitled will be issued in certificated form. Definitive
certificates for the New Aberdeen Shares will be dispatched by post (or by such
other method as may be approved by the Panel). In relation to New Aberdeen
Shares issued in certificated form, temporary documents of title will not be
issued. Pending the dispatch by post of definitive certificates for such New
Aberdeen Shares in accordance with the terms of the Offer, transfers will be
certified against the register.
The formal documentation relating to the Offer and the issue of New Aberdeen
Shares will be dispatched to Edinburgh Shareholders and Aberdeen Shareholders
(other than certain Overseas Shareholders) as soon as practicable and, in any
event, save with the consent of the Panel, within 28 days of the date of this
announcement.
3. Disposal and use of proceeds
The sale to New Star of the rights to manage the Retail Funds is consistent with
the strategy set out at the time of the previous sale by Aberdeen to New Star in
January 2003 of rights to manage certain retail funds of Aberdeen. The
directors of Aberdeen believe that the UK retail marketplace continues to be
extremely competitive with some 130 managers selling over 1,900 fund products
into the unit trust and open ended investment companies sector alone.
The Disposal will be structured as a sale of rights to manage the Retail Funds
with no transfer to New Star of assets or liabilities save for those relating to
the rights themselves. During a six month transitional period, Aberdeen will
procure the provision of certain services to New Star to facilitate the orderly
movement of the Retail Funds to New Star's operating platform. These services
will be provided by Aberdeen on a cost only basis. New Star intends to re-brand
the relevant funds under the New Star brand following completion of the
Disposal. Aberdeen, Edinburgh and New Star will cooperate to communicate the
benefits of the transaction to unitholders and distributors to ensure an orderly
transition of the Retail Funds to the New Star brand and platform.
The Sale Agreement provides for limited warranties and indemnities to be given
at completion of the Disposal to New Star by Aberdeen, Edinburgh and certain of
Edinburgh's subsidiaries. New Star will have the opportunity to engage certain
of the staff associated with the management of the Retail Funds. Aberdeen will
guarantee the obligations of Edinburgh and its subsidiaries in respect of the
Disposal and will provide covenants not to compete with New Star in respect of
the Retail Funds. Further details of the Sale Agreement will be included in the
Listing Particulars to Aberdeen Shareholders.
New Star is financing the cash element of the acquisition of the management
rights through a combination of existing cash, bank facilities and new equity.
This financing is already committed and is conditional only on the Sale
Agreement becoming unconditional. As part of the equity financing, the BT
Pension Scheme has agreed to subscribe for #10 million of new New Star Shares.
Other investors have committed to underwrite the placing of additional new New
Star Shares at the same price and on the same terms as the BT Pension Scheme.
The BT Pension Scheme, which currently owns 23.4 per cent. of Edinburgh's share
capital has given an irrevocable undertaking to Aberdeen to accept the Offer.
Under Rule 16 of the City Code, which relates to arrangements between an offeror
or parties in concert with it and shareholders in an offeree company where such
arrangements are not extended to all shareholders, the arrangements between New
Star and the BT Pension Scheme is subject to the approval of Edinburgh
Shareholders at the extraordinary general meeting of Edinburgh. The BT Pension
Scheme will be excluded from this vote. A significant proportion of the BT
Pension Scheme's assets are managed by Hermes, which is wholly-owned by the BT
Pension Scheme. Other discretionary investment management clients of Hermes,
which together hold a further 5.8 per cent of Edinburgh's share capital, will
also be excluded from voting on the arrangements between New Star and the BT
Pension Scheme at the extraordinary general meeting of Edinburgh.
Aberdeen intends to use the net cash proceeds of the Disposal (after expenses
and any exceptional costs) to reduce debt and to fund additional pension
contributions of #9 million in aggregate into Edinburgh's defined benefit
pension scheme, comprising a #4 million up-front payment and a total of #5
million of additional contributions in the period of three years following the
month after the Offer becomes or is declared unconditional in all respects. The
#5 million additional contributions will be guaranteed by Bank of Scotland or
otherwise secured. In the event of a revaluation the #5 million of additional
contributions may be adjusted accordingly.
4. Recommendation
The directors of Edinburgh, who have been so advised by Hawkpoint, consider the
terms of the Offer to be fair and reasonable. In providing advice to the
directors of Edinburgh, Hawkpoint has taken into account the Edinburgh
directors' commercial assessments. Accordingly, the directors of Edinburgh
intend unanimously to recommend Edinburgh Shareholders to accept the Offer, as
certain of them have irrevocably undertaken to do in respect of their entire
holdings which in aggregate amount to 29,519 Edinburgh Shares, representing
approximately 0.1 per cent of the entire issued share capital of Edinburgh.
The directors of Edinburgh, who have been so advised by Hawkpoint, consider the
terms of the arrangements between New Star and the BT Pension Scheme to be fair
and reasonable as far as other Edinburgh Shareholders are concerned. The
Directors of Edinburgh have confirmed that they will vote in favour of the
resolution to be proposed at the extraordinary general meeting to approve these
arrangements between New Star and the BT Pension Scheme in respect of their
entire holdings which in aggregate amount to 159,882 Edinburgh Shares,
representing approximately 0.6 per cent of the entire issued share capital of
Edinburgh.
5. Information on the Aberdeen Group
The Aberdeen Group is an independent asset management group managing a diverse
range of investment vehicles catering to some 400,000 investors worldwide,
including: 21 open-ended (unit trust or open-ended investment companies) funds
marketed in the UK, 29 closed-end funds listed in the UK (of which 17 are
conventional investment trusts), a range of funds listed in Luxembourg, Dublin
and Singapore, life and institutional funds, a private client business, a
substantial private equity business and an institutional property asset
management business. As at 31 July 2003, total assets under management amounted
to approximately #20.5 billion.
For the year ended 30 September 2002, Aberdeen had turnover of #192.1 million
(2001: #182.1 million), profit before taxation of #18.3 million (2001: #24.6
million) and basic earnings per share of 3.29p (2001: 8.51p). As at 30
September 2002, Aberdeen had net assets of #207.2 million (2001: #219.8
million).
The unaudited interim results for the six months ended 31 March 2003 reported
turnover of #74.9 million (2002: #94.3 million), profit before tax of #41.9
million (2002: #10.8 million) and basic earnings per share of 17.29p (2002:
2.71p). As at 31 March 2003, Aberdeen had net assets of #228.7 million (#209.6
million).
6. Information on the Edinburgh Group
The Edinburgh Group is an independent investment management group involved in
the management of investment trusts, unit trusts and open-ended investment
companies, pension funds, venture capital funds and other discretionary
portfolios. As at 31 July 2003, funds under management amounted to
approximately #3.3 billion.
For the year ended 31 January 2003, Edinburgh had turnover of #30.7 million
(2002: #34.9 million), loss before tax of #2.0 million (2002: profit #2.8
million) and loss per share of 6.1p (2002: profit 5.7p). As at 31 January 2003,
Edinburgh had net assets of #11.1 million (2002: #13.5 million).
Edinburgh has today separately announced its unaudited interim results for the
six months ended 31 July 2003 which record turnover of #12.4 million (2002:
#17.2 million), profit before tax of #3.3 million (2002: #1.7 million) and basic
earnings per share of 11.4p (2002: 4.0p). As at 31 July 2003, Edinburgh had net
assets of #15.1 million (2002: #14.2 million). The directors of Edinburgh have
not proposed an interim dividend for the six months ended 31 July 2003.
7. Background to and reasons for the Offer
The directors of Aberdeen believe that there is an excellent strategic fit
between Aberdeen and Edinburgh and that the Acquisition will:
* create a stronger independent Scottish fund management business
* strengthen the institutional equity and fixed income asset
management business and investment management team of the Aberdeen
Group
* enhance the Aberdeen Group's position as a major manager of UK
closed-end funds
* provide additional resources to the Enlarged Group to enable it to
improve its core disciplines of active management of international
equities and fixed income securities
* provide the Enlarged Group with access to Edinburgh's back office
facility in Dundee
* crystallise the value of the retail funds managed by the Edinburgh
Group through the sale to New Star
* allow Aberdeen to reduce gearing with part of the proceeds of the
sale to New Star, strengthening the balance sheet of the Enlarged
Group and increasing financial flexibility
* provide Aberdeen with a stronger platform for future expansion in a
consolidating market
The directors of Aberdeen believe that the terms of the Offer will increase
shareholder value for Aberdeen Shareholders whilst enabling Edinburgh
Shareholders to retain an interest in the asset management sector and to
participate in any future recovery of that sector and the future value created
by the Enlarged Group.
The market capitalisation of the Enlarged Group would be approximately #145.0
million (based on the terms of the Offer and the closing middle-market price for
Aberdeen Shares as at 4 September 2003, the last dealing day prior to this
announcement). For these purposes it has been assumed that the only options
outstanding under the Edinburgh Share Option Schemes which will be exercised are
those for which the exercise price is lower than the value of a Edinburgh Share
under the Offer as at 4 September 2003 (being the last business day prior to
this announcement).
8. Aberdeen's current trading and prospects
Although equity markets have shown tentative signs of improvement in the first
half of 2003, overall conditions remain very depressed after the longest
downturn in equity markets since the 1930s. The Aberdeen Group, in common with
others in the asset management sector, has had to adjust to this environment.
The first half of the new financial year was challenging and this has continued
with little evidence of material improvement in retail confidence. The directors
of Aberdeen envisage that market conditions will remain difficult for some time
to come. Against this background, the board of Aberdeen has focused and
continues to focus on three key initiatives:
* refinement of core products: an initiative to strengthen the Group's
investment process has been accelerated and now encompasses all
equity and fixed interest desks
* market re-positioning: the Group has changed the shape of its
open-ended funds business dramatically in the last 12 months from
high volume retail investors to high value professional and
institutional investors
* cost control: the cost reduction programme initiated during 2002
remains on track
Although it is early days, the board of Aberdeen believes results are
encouraging: the strengthening of investment process is yielding improvements in
investment performance in a number of areas and the distinctive characteristics
of Aberdeen's investment process are attracting attention from a wide variety of
professional advisers and institutional investors. Net sales of open-ended funds
moved back into positive territory in March 2003 and (excluding anticipated and
planned withdrawals) have continued to increase ever since.
The sale of retail fund management rights to New Star in January 2003 has
facilitated Aberdeen's re-positioning as a provider of clearly differentiated
product offerings in established asset classes and an extensive range of
products in more specialist areas. The range of closed-end funds managed by the
Group continues to perform steadily, particularly those traded on North American
exchanges.
The Group's ongoing cost reduction programme encompasses a reduction in the
number of open-ended funds from 68 to 47 (eliminating those funds that lack
critical mass and/or that are no longer consistent with the strengthened
investment approach). The cost reduction programme is on track to deliver the
savings previously predicted but the opportunity for further cost reductions
will continue to be monitored.
For the nine months ended 30 June 2003, the unaudited consolidated turnover for
the Aberdeen Group had fallen by 31.4 per cent. when compared with the nine
months ended 30 June 2002 due, principally, to the sale of the retail fund
management rights referred to above and a reduction in management fee income as
assets under management had fallen between these two dates.
9. Management and employees
It is intended that Anne Richards and Rod MacRae, the executive directors of
Edinburgh, will be offered senior management roles in the Enlarged Group. The
non-executive directors of Edinburgh have indicated their intention to resign
upon the Offer becoming or being declared unconditional in all respects.
Aberdeen has given assurances to the directors of Edinburgh that, on the Offer
becoming or being declared unconditional in all respects, the existing
employment rights, including pension rights, of all the management and employees
of the Edinburgh Group will be fully safeguarded.
10. Edinburgh Share Option Schemes
The Offer will extend to any Edinburgh Shares issued or unconditionally allotted
prior to the date on which the Offer closes (or such earlier date not being
earlier than the date on which the Offer becomes or is declared unconditional as
to acceptances or, if later, the First Closing Date, as Aberdeen may, subject to
the City Code, determine) as a result of the exercise of options granted under
the Edinburgh Share Option Schemes.
To the extent that such options have value but are not exercised or do not vest
in full, it is intended that appropriate proposals will be made to option
holders in the Edinburgh Share Option Schemes if the Offer becomes or is
declared unconditional in all respects.
11. De-listing and compulsory acquisition
In the event of the Offer becoming or being declared unconditional in all
respects and sufficient Edinburgh Shares being controlled by the Aberdeen Group,
Aberdeen intends, as soon as it is appropriate thereafter to do so, to procure
that Edinburgh will apply for cancellation of the listing of the Edinburgh
Shares on the Official List of the UKLA and that Edinburgh will propose a
resolution to re-register as a private limited company under and subject to the
relevant provisions of the Act.
The Offer will extend to any Edinburgh Shares, which are unconditionally
allotted or issued and fully paid (or credited as fully paid) whilst the Offer
remains open for acceptance (or by such earlier date, not being earlier than the
date on which the Offer becomes unconditional as to acceptances or, if later,
the First Closing Date as Aberdeen may, subject to the Code, determine). In the
event of sufficient acceptances being obtained under the Offer, Aberdeen intends
to exercise its rights under the provisions of section 428 to 430F of the Act to
acquire compulsorily any remaining Edinburgh Shares to which the Offer relates.
Under those provisions, Aberdeen will, upon having acquired or contracted to
acquire by virtue of acceptance of the Offer, 90 per cent or more in value of
the Edinburgh Shares to which the Offer relates, notify holders of any
outstanding Edinburgh Shares that it wishes to acquire such shares. Upon such
notices being issued, the procedure stipulated in the above mentioned provisions
of the Act would apply and, barring any intervention by a competent court,
Aberdeen will be entitled to acquire compulsorily all outstanding Edinburgh
Shares.
12. General
The Offer will be made on the terms and subject to the conditions which are set
out in Appendix I and those terms to be set out in the formal Offer Document and
Form of Acceptance to be sent to Edinburgh Shareholders and such further terms
as may be required to comply with the provisions of the City Code. The
availability of the Offer to persons not resident in the United Kingdom may be
affected by the laws of the relevant jurisdictions. Persons who are not
resident in the United Kingdom should inform themselves about and observe any
applicable requirements.
The directors of Aberdeen accept responsibility for the information contained in
this announcement other than relating to the Edinburgh Group, the directors of
Edinburgh and their immediate families. To the best of the knowledge and belief
of the directors of Aberdeen (who have taken all reasonable care to ensure that
such is the case), the information contained herein for which they accept
responsibility is in accordance with the facts and does not omit anything likely
to affect the import of such information.
The directors of Edinburgh accept responsibility for the information contained
in this announcement relating to the Edinburgh Group, themselves and their
immediate families. To the best of the knowledge and belief of the directors of
Edinburgh (who have taken all reasonable care to ensure that such is the case),
the information contained herein for which they accept responsibility is in
accordance with the facts and does not omit anything likely to affect the import
of such information.
Neither Aberdeen, the directors of Aberdeen nor, so far as Aberdeen is aware,
any person acting in concert with Aberdeen, owns or controls any Edinburgh
Shares (save for the shares that are subject to the irrevocable undertakings
received by Aberdeen and the Edinburgh Shares owned by clients managed by
Aberdeen referred to above) or holds any options to purchase Edinburgh Shares.
Appendix III contains definitions of the terms used in this announcement.
The Offer will not be made, directly or indirectly, in or into, or by use of the
mails or any other means of instrumentality (including, without limitation,
facsimile transmission, telex or telephone) of interstate or foreign commerce,
or of any facilities of a national securities exchange of the United States,
Canada, Australia or Japan and will not be capable of acceptance by any such
use, means, instrumentality or facilities, or from within the United States,
Canada, Australia or Japan. Accordingly, copies of this announcement are not
being, and must not be, mailed or otherwise distributed or sent in or into or
from the United States, Canada, Australia or Japan and persons receiving this
announcement (including custodians, nominees and trustees) must not distribute
or send it in or into or from the United States, Canada, Australia or Japan or
use such mails or any such means, instrumentality or facility in connection with
the Offer as doing so may invalidate any purported acceptance of the Offer.
This announcement does not constitute an offer or an invitation to purchase any
securities.
Enquiries:
Aberdeen Martin Gilbert Tel: 020 7463 6000
Ernst & Young Howard Myles Tel: 020 7951 2000
John Stephan
Gavin Anderson Neil Bennett Tel: 020 7554 1454
Mark Lunn
Edinburgh Sir Charles Nunneley Tel: 0131 313 1000
Anne Richards
Rod MacRae
Hawkpoint Charles Williams Tel: 020 7665 4500
Myles Pink
Maitland Angus Maitland Tel: 020 7379 5151
Colin Browne
Ernst & Young LLP, which is regulated in the United Kingdom by the Financial
Services Authority, is acting exclusively for Aberdeen and no one else in
connection with the Offer and will not be responsible to anyone other than
Aberdeen for providing the protections afforded to clients of Ernst & Young LLP
nor for providing advice in relation to the Offer.
Hawkpoint Partners Limited, which is authorised and regulated in the United
Kingdom by the Financial Services Authority, is acting exclusively for Edinburgh
and no one else in connection with the Offer and will not be responsible to
anyone other than Edinburgh for providing the protections afforded to customers
of Hawkpoint Partners Limited nor for providing advice in relation to the Offer.
APPENDIX I
The Offer will be subject to the following conditions:
(a) valid acceptances being received (and not, where permitted,
withdrawn) by not later than 3.00 p.m. (London time) on the First Closing Date
(or such later time(s) and/or date(s) as Aberdeen may, subject to the City Code,
decide) in respect of not less than 90 per cent. in nominal value (or such
lesser percentage as Aberdeen may decide) of the Edinburgh Shares to which the
Offer relates provided that this condition will not be satisfied unless Aberdeen
and its wholly-owned subsidiaries shall have acquired, or agreed to acquire,
whether pursuant to the Offer or otherwise, Edinburgh Shares carrying, in
aggregate, more than 50 per cent. of the voting rights then normally exercisable
at a general meeting of Edinburgh, including for this purpose (except to the
extent otherwise required by the Panel) any such voting rights attaching to any
Edinburgh Shares that are unconditionally allotted or issued before the Offer
becomes or is declared unconditional as to acceptances pursuant to the exercise
of any outstanding subscription or conversion rights or otherwise and for the
purposes of this condition: (i) Edinburgh Shares which have been unconditionally
allotted but not issued shall be deemed to carry the voting rights which they
will carry on issue; and (ii) the expression "Edinburgh Shares to which the
Offer relates" shall be construed in accordance with sections 428 to 430F
(inclusive) of the Act;
(b) the passing at an extraordinary general meeting of Aberdeen (or at
any adjournment thereof) of all resolutions necessary to implement the Offer,
the acquisition of any Edinburgh Shares by Aberdeen and the issue of New
Aberdeen Shares pursuant to the Offer;
(c) the passing at an extraordinary general meeting of Edinburgh (or at
any adjournment thereof) of all resolutions necessary to approve the
subscription by the BT Pension Scheme for new New Star Shares;
(d) it being established, in terms reasonably satisfactory to Aberdeen,
that the proposed acquisition of Edinburgh by Aberdeen or any matter arising
from that acquisition will not be referred to the Competition Commission;
(e) the UK Listing Authority agreeing to admit to the Official List the
New Aberdeen Shares and such admission becoming effective in accordance with
paragraph 7.1 of the Listing Rules or (if determined by Aberdeen and subject to
the consent of the Panel) agreeing to admit such shares to the Official List
subject only to the allotment of such shares and/or the Offer becoming or being
declared unconditional in all respects and the London Stock Exchange agreeing to
admit the New Aberdeen Shares to trading;
(f) the Sale Agreement becoming unconditional in all respects (save as to
the requirement for the Offer to become or be declared unconditional in all
respects) including in particular receipt of all necessary regulatory consents
and approval of the creation and allotment of new New Star shares by the
shareholders of New Star;
(g) no government or governmental, quasi-governmental, supranational,
statutory, regulatory, environmental or investigative body or association,
institution or agency (including any trade agency) or any court or other body
(including any professional body) or person in any relevant jurisdiction (a
"Relevant Authority") having initiated or decided to take, instituted or
threatened any action, proceeding, suit, investigation or enquiry or enacted,
made or proposed the enactment or making of any statute, regulation, order or
decision that would or might be reasonably expected to:
(i) make the Offer or its implementation or the acquisition or the
proposed acquisition of any shares in or other securities in, or control of,
Edinburgh by any member of the Aberdeen Group void, unenforceable or illegal
under the laws of any relevant jurisdiction or otherwise directly or indirectly
restrain, restrict, prohibit or otherwise delay or interfere with the
implementation of, or impose additional conditions or obligations with respect
to, or otherwise challenge, hinder or interfere with, in each case in a manner
which is material in the context of the Offer, the acquisition of any shares in,
or control of, Edinburgh or any member of the Edinburgh Group by any member of
the Aberdeen Group;
(ii) require, prevent or delay the divestiture by any member of the
Aberdeen Group or any member of the Edinburgh Group of all or any material part
of their respective businesses, assets or property or impose any limitation on
their ability to conduct all or any part of their respective businesses or to
own any of their respective assets or properties or any material part thereof to
an extent which is material in the context of the Aberdeen Group taken as a
whole or, as the case may be, the Edinburgh Group taken as a whole;
(iii) require, prevent or materially delay any divestiture by any member
of the Aberdeen Group of any shares or other securities in Edinburgh;
(iv) impose any material limitation on or result in a material delay in,
the ability of any member of the Aberdeen Group to acquire or hold or to
exercise effectively, directly or indirectly, all or any rights of ownership in
respect of shares or other securities convertible into shares or other
securities (or the equivalent) in, or to exercise management control over,
Edinburgh or any member of the Edinburgh Group or any of Edinburgh's assets to
an extent which is material in the context of the Aberdeen Group taken as a
whole or, as the case may be, the Edinburgh Group taken as a whole;
(v) otherwise adversely affect the business, assets, financial or trading
position or profits or prospects of any member of the Edinburgh Group or any
member of the Aberdeen Group in a manner which is material in the context of the
Edinburgh Group taken as a whole or, as the case may be, the Aberdeen Group
taken as a whole;
(vi) except pursuant to Part XIIIA of the Companies Act, require any
member of the Aberdeen Group or any member of the Edinburgh Group to offer to
acquire any shares or other securities or interest in any member of the
Edinburgh Group or any member of the Aberdeen Group owned by any third party to
an extent which is material in the context of the Aberdeen Group or the
Edinburgh Group, as the case may be, taken as a whole;
(vii) impose any material limitation on the ability of any member of the
Edinburgh Group or any member of the Aberdeen Group to integrate or co-ordinate
its business, or any part of it, with all or any part of the business of any
other member to an extent which is material in the context of the Aberdeen Group
or the Edinburgh Group, as the case may be, taken as a whole; or
(viii) result in any member of the Edinburgh Group or any member of the
Aberdeen Group ceasing to be able to carry on business under the name under
which it presently does so (the consequences of which would be material in the
context of the Offer);
and all applicable waiting and other time periods during which any such Relevant
Authority could institute or threaten any such action, proceeding, suit,
investigation or enquiry or reference or any other step under the laws or
regulations of any relevant jurisdiction in respect of and to an extent material
in the context of the Offer having expired, lapsed or been terminated;
(h) all necessary filings having been made in respect of the Offer and
all necessary statutory or regulatory obligations in any relevant jurisdiction
having been complied with and all appropriate waiting periods under any
applicable legislation or regulation of any relevant jurisdiction having
expired, lapsed or been terminated, in each case in respect of and to an extent
material in the context of the Offer and the acquisition (except pursuant to
Part XIIIA of the Companies Act) of any shares in, or control of, Edinburgh by
any member of the Aberdeen Group and to the extent material in the context of
the Offer all authorisations, orders, recognitions, grants, consents, licences,
confirmations, clearances, permissions and approvals ("Authorisations")
reasonably considered necessary or appropriate by Aberdeen in any relevant
jurisdiction for or in respect of and to an extent material in the context of
the Offer and the proposed acquisition (except pursuant to Part XIIIA of the
Companies Act) of any shares in, or control of, Edinburgh by any member of the
Aberdeen Group being obtained in terms and in a form satisfactory to Aberdeen
from all appropriate Relevant Authorities or from any persons or bodies with
whom any member of the Edinburgh Group has entered into contractual arrangements
(where the absence of such Authorisations would have a material adverse effect
on the Aberdeen Group taken as a whole or the Edinburgh Group taken as a whole)
and such Authorisations together with all Authorisations necessary or
appropriate for the Edinburgh Group to carry on its business remaining in full
force and effect and no notice or intimation of any intention to revoke,
suspend, restrict or modify or not to renew any of the same having been made;
(i) except as disclosed by Edinburgh to Aberdeen prior to 9.00 a.m. on
the date of this announcement, there being no provision of any arrangement,
agreement, franchise, lease, licence, permit or other instrument to which
Edinburgh or any member of the Edinburgh Group is a party or by or to which
Edinburgh or any member of the Edinburgh Group or any of its assets may be
bound, entitled or be subject which, as a result of the making or implementing
the Offer or the acquisition or proposed acquisition by Aberdeen of any shares
in or other securities in Edinburgh, or because of a change in the control of
Edinburgh or any member of the Edinburgh Group or otherwise, would or might
reasonably be expected to result in, to an extent which would be material in the
context of the Edinburgh Group taken as a whole:-
(i) any monies borrowed by, or any other indebtedness (actual or
contingent) of, or any grant available to, any member of the Edinburgh Group
being or becoming repayable or capable of being declared repayable immediately
or earlier than the stated maturity or repayment date or the ability of any such
member to borrow monies or incur any indebtedness being withdrawn or inhibited
or being capable of becoming or being withdrawn or inhibited;
(ii) any such arrangement, agreement, franchise, lease, licence or other
instrument being terminated or adversely modified or any onerous obligation
arising or any adverse action being taken or arising thereunder;
(iii) the creation or enforcement of any mortgage, charge or other
security interest over the whole or any part of the business, property or assets
of Edinburgh or of any member of the Edinburgh Group or any such mortgage,
charge or other security interest (whenever arising or having arisen) becoming
enforceable in each case in a manner which is material in the context of the
Edinburgh Group taken as a whole;
(iv) any assets or interests of Edinburgh or any member of the Edinburgh
Group being or falling to be disposed of or charged or any right arising under
which any such asset or interest could be required to be disposed of or charged
otherwise than in the ordinary course of business;
(v) the value of Edinburgh or any member of the Edinburgh Group, or the
financial or trading position of any member of the Edinburgh Group or their
prospects being prejudiced or adversely affected;
(vi) any member of the Edinburgh Group ceasing to be able to carry on
business under any name under which it presently does so; or
(vii) the creation of any liability, actual or contingent, by any member of
the Edinburgh Group;
and no event having occurred (other than in the ordinary course of business)
which, under any provision of any arrangement, agreement, franchise, lease,
licence, permit or other instrument to which any member of the Edinburgh Group
is a party or by or to which any such member or any of its assets may be bound,
entitled or be subject, could result in any events or circumstances as are
referred to in sub-paragraphs (i) to (vii) of this paragraph (i) in any context
which would be material in the context of the Edinburgh Group as a whole;
(j) except as disclosed by Edinburgh to Aberdeen or as otherwise
publicly announced to a Regulatory Information Service by or on behalf of
Edinburgh prior to 9.00 a.m. on the date of this announcement or as disclosed in
Edinburgh's annual report and accounts for the year ended 31 January 2003, no
member of the Edinburgh Group having since 4 September 2003:
(i) issued or agreed to issue or authorised the issue of additional
shares of any class, or securities convertible into, or rights, warrants or
options to subscribe for or acquire, any such shares or convertible securities
other than as between Edinburgh and wholly-owned subsidiaries of Edinburgh and
other than any options granted as disclosed to Aberdeen prior to 9.00 a.m. on
the date of this announcement and any shares issued upon the exercise of any
options granted under any of the Edinburgh Share Option Schemes;
(ii) recommended, declared, paid or made or proposed to recommend,
declare, pay or make any bonus, dividend or other distribution, whether payable
in cash or otherwise which is material (except as referred to in this document);
(iii) made, authorised or proposed any merger, demerger, acquisition or
disposal or authorised or proposed the issue of or transfer of assets or any
right, title or interest in any assets or shares which is material in the
context of the Edinburgh Group taken as a whole;
(iv) made, authorised or proposed or announced its intention to propose
any change in its loan capital;
(v) disposed of or transferred, mortgaged or charged, or created any
other security interest over, any asset or any right, title or interest in any
asset, or entered into, implemented, authorised, proposed or announced, any
contract, transaction, reconstruction, amalgamation, scheme, commitment or
arrangement which is material in the context of the Edinburgh Group taken as a
whole and which is otherwise than in the ordinary course of business;
(vi) issued, authorised or proposed or announced the issue of any
debentures or (save in the ordinary course of business) incurred or increased
any indebtedness or contingent liability;
(vii) entered into, or varied the terms of any, management, secretarial/
administrative or advisory contract or varied or terminated, or authorised,
proposed or announced its intention to enter into, vary or terminate any
contract, transaction, commitment or arrangement (whether in respect of capital
expenditure or otherwise) which is outside the ordinary course of business and
which is of a long-term, onerous or unusual nature or magnitude or which
involves or could involve an obligation of a nature or magnitude which is
material in the context of the Edinburgh Group as a whole;
(viii) entered into any contract, commitment or arrangement or passed any
resolution that will result in a restriction on the scope of the business of
Edinburgh or any member of the Edinburgh Group;
(ix) been unable, or admitted in writing that it is unable, to pay its
debts or having stopped or suspended (or threatened to stop or suspend) payment
of its debts generally or ceased or threatened to cease carrying on all or a
substantial part of its business;
(x) taken or proposed any corporate action or had any legal proceedings
started or threatened against it for its winding-up (voluntary or otherwise),
dissolution or reorganisation or for the appointment of a receiver,
administrator, administrative receiver, trustee or similar officer of all or any
material part of its assets and revenues or had any analogous proceedings in any
jurisdiction started or threatened or had any such person appointed;
(xi) waived or compromised any claim which is material in the context of
the Edinburgh Group taken as a whole;
(xii) entered into or varied or made any offer (which remains open for
acceptance) to enter into or vary the terms of any contract (including service
agreements) with any director or senior executive of Edinburgh or any member of
the Edinburgh Group;
(xiii) entered into any contract, commitment or arrangement or passed any
resolution in general meeting with respect to or proposed or announced any
intention to effect or propose any of the transactions, matters or events
referred to in this paragraph (j);
(xiv) passed any resolution to alter its memorandum or articles of
association;
(xv) purchased, redeemed or repaid or announced any proposal to
purchase, redeem or repay any of its own shares or other securities or reduced
or made any other change to any part of its share capital; or
(xvi) otherwise acted or omitted to act in a manner which materially
breaches the undertaking granted by Edinburgh in favour of Aberdeen dated 4
September 2003
(k) since 4 September 2003 and except as disclosed in Edinburgh's annual
report and accounts for the year ended 31 January 2003 and except as disclosed
by Edinburgh to Aberdeen or as otherwise publicly announced by or on behalf of
Edinburgh prior to 9.00 a.m. on the date of this announcement:
(i) no material adverse change or deterioration having occurred in the
business, assets, financial or trading position or profits or prospects of the
Edinburgh Group taken as a whole;
(ii) no litigation, arbitration proceedings, prosecution or other legal
proceedings to which any member of the Edinburgh Group is or may become a party
(whether as plaintiff, defendant or otherwise) having been threatened,
announced, instituted or remaining outstanding by, against or in respect of any
member of the Edinburgh Group which in any such case might adversely affect the
Edinburgh Group to a material extent taken as a whole and (other than as a
result of the Offer) no investigation by any Relevant Authority or other
investigative body against or in respect of Edinburgh or any member of the
Edinburgh Group having been threatened, announced, instituted or remaining
outstanding by, against or in respect of Edinburgh or any member of the
Edinburgh Group which would or might be likely to adversely affect the Edinburgh
Group to a material extent taken as a whole; and
(iii) no contingent or other liability having arisen or become apparent to
Aberdeen which would or might be reasonably be likely to materially adversely
affect the business, assets, financial or trading position or profits of the
Edinburgh Group taken as a whole; and
(l) Aberdeen not having discovered after the time of this announcement:
(i) that any financial, business or other information concerning the
Edinburgh Group publicly disclosed at any time by or on behalf of Edinburgh or
any member of the Edinburgh Group is misleading in any material respect,
contains a material misrepresentation of fact or omits to state a fact necessary
to make any information contained therein not misleading in any material respect
in any case which has not subsequently been corrected before the date of this
announcement by disclosure; or
(ii) that any member of the Edinburgh Group is subject to any liability
(contingent or otherwise) which is material, which is not, but which should have
been, disclosed in Edinburgh's annual report and accounts for the financial year
ended 31 January 2003;
(iii) that any past or present member of the Edinburgh Group has failed to
comply with any applicable legislation or regulation of any jurisdiction with
regard to the storage, disposal, spillage, release, discharge, leak or emission
of any waste or hazardous or harmful substance or any substance likely to impair
the environment or harm human health to an extent which is material in the
context of the Edinburgh Group taken as a whole or that there has otherwise been
any such storage, disposal, spillage, release, discharge, leak or emission of
any waste or hazardous or harmful substance (whether or not the same constituted
a non-compliance by any person with any such legislation or regulations, and
wherever the same may have taken place) which has given rise to or would be
reasonably likely to give rise to any liability (actual or contingent) on the
part of any member of the Edinburgh Group to an extent which is material in the
context of the Edinburgh Group taken as a whole;
(iv) that there is, or is reasonably likely to be, for that or any other
reason whatsoever, any liability (actual or contingent) of any member of the
Edinburgh Group to make good, repair, reinstate or clean up any property or any
controlled waters now or previously owned, occupied, operated or made use of or
controlled by any member of the Edinburgh Group, under any environmental
legislation, regulation, notice, circular or order of any government,
governmental body, agency, court, association or any other person or body in any
jurisdiction to an extent which is material in the context of the Edinburgh
Group taken as a whole; or
(v) that circumstances exist whereby a person or class of persons would
be likely to have any claim or claims in respect of any product or process of
manufacture or materials used therein now or previously manufactured, sold or
carried out by any member of the Edinburgh Group which claim or claims would be
likely to affect adversely any member of the Edinburgh Group to an extent which
is material in the context of the Edinburgh Group taken as a whole.
Subject to the requirements of the Panel, Aberdeen reserves the right to waive
all or any of the above conditions (other than (a), (c) and (f) provided that
condition (f) may be waived with the prior written approval of Edinburgh), in
whole or in part. The Offer will lapse unless all the above conditions are
fulfilled or (if capable of waiver) waived or, where appropriate, determined by
Aberdeen to have been or remain satisfied by midnight on the day which is 21
days after the later of the First Closing Date and the date on which the Offer
becomes or is declared unconditional as to acceptances (or such later date as
Aberdeen may, with the consent of the Panel, decide). Aberdeen shall be under no
obligation to waive or treat as fulfilled any condition (other than (a)) by a
date earlier than the latest date specified above for the fulfillment thereof
notwithstanding that the other conditions of the Offer may at such earlier date
have been waived or fulfilled and that there are at such earlier date no
circumstances indicating that any of such conditions may not be capable of
fulfillment.
The Offer will lapse (unless otherwise agreed by the Panel) if, before 3.00 p.m.
on the First Closing Date or the date when the Offer becomes or is declared
unconditional as to acceptances (whichever is the later) the acquisition of
Edinburgh by Aberdeen is referred to the Competition Commission. If the Offer
lapses, it will cease to be capable of further acceptances and persons accepting
the Offer and Aberdeen shall thereupon cease to be bound by acceptances
delivered on or before the date on which the Offer lapses.
If the Panel requires Aberdeen to make an offer for Edinburgh Shares under the
provisions of Rule 9 of the City Code, Aberdeen may make such alterations to the
conditions of the Offer, including to condition (a), as are necessary to comply
with the provisions of that Rule.
APPENDIX II
Financial Effects of Acceptance of the Offer
The following paragraphs set out for illustrative purposes only, and on the
bases and assumptions set out in the notes below, the financial effects of
acceptance of the Offer on capital value and gross income for an accepting
holder of 100 Edinburgh Shares if the Offer becomes or is declared wholly
unconditional.
A. Increase in Capital Value under the terms of the Offer
Notes Share Consideration
Value of 205 New Aberdeen Shares (i) #126.07
Value of 100 Edinburgh Shares (ii) #73.50
Increase in capital value #52.57
This represents an effective increase of 71.5%
B. Increase in Gross Income under the terms of the Offer
No dividend was declared on the Edinburgh Shares for the year ended 31 January
2003 and the directors of Edinburgh are not proposing an interim dividend for
the six months ended 31 July 2003.
In the interim results for the six months ended 31 March 2003, Aberdeen declared
an interim dividend of 2p per Aberdeen Share in respect of the financial year
ending 30 September 2003.
Accepting Edinburgh Shareholders will be entitled to participate in dividends
declared on the New Aberdeen Shares made or paid after the date of this
announcement save for any final dividend to be paid in respect of the year
ending 30 September 2003.
Notes:
(i) The value of 205 Aberdeen Shares is based on the closing middle
market price for an Aberdeen Share on 4 September 2003 (the last business day
prior to the date of this announcement), as derived from the Daily Official
List. Edinburgh Shareholders should be aware however the New Aberdeen Shares
will not qualify for any final dividend to be paid in respect of the year ending
30 September 2003.
(ii) The value of 100 Edinburgh Shares is based on the closing middle
market price for an Edinburgh Share on 1 July 2003 (the day before the
announcement that Edinburgh was in discussions which might or might not lead to
an offer being made for the Company), as derived from the Daily Official List.
(iii) No account has been taken of any potential liability to taxation.
APPENDIX III
Definitions
The following definitions apply throughout this announcement, unless the context
otherwise requires:
"Aberdeen" Aberdeen Asset Management PLC
"Aberdeen Group" or "Group" Aberdeen, its subsidiaries and its
subsidiary undertakings
"Aberdeen Shares" ordinary shares of 10p each
in the share capital of Aberdeen
"Aberdeen Shareholders" holders of Aberdeen Shares
"Acquisition" the proposed acquisition of
Edinburgh pursuant to the Offer
"Act" or "Companies Act" the Companies Act 1985 (as
amended)
"Australia" the Commonwealth of Australia, its
territories and possessions
"BT Pension Scheme" an occupational pension scheme
established for the benefit of UK
employees of British
Telecommunications plc
"Canada" Canada, its provinces and
territories and all areas subject
to its jurisdiction and any
political subdivision thereof
"certificated" or "certificated form" not in uncertificated form, that
is a share not held in CREST
"City Code" or "Code" The City Code on Takeovers and
Mergers
"CREST" the electronic share settlement
system operated by CRESTCo
"CRESTCo" CRESTCo Limited
"Daily Official List" the Daily Official List of the
London Stock Exchange
"Disposal" the proposed disposal by the
Edinburgh Group of the rights to
manage the Retail Funds pursuant
to the Sale Agreement
"Edinburgh" or "the Company" Edinburgh Fund Managers Group plc
"Edinburgh Group" Edinburgh, its subsidiaries and
its subsidiary undertakings
"Edinburgh Share Option Schemes" The EFM Group Executive Share
Option Scheme, The Edinburgh Fund
Managers Group 1998 Unapproved
Executive Share Option Scheme, The
Edinburgh Group 1995 Executive
Share Option Scheme and The
Edinburgh Group 1995 Savings
Related Share Option Scheme
"Edinburgh Shareholders" holders of Edinburgh Shares
"Edinburgh Shares" the existing unconditionally
allotted or issued and fully paid
ordinary shares of 5p each in
Edinburgh and any further such
shares which are issued or
unconditionally allotted and fully
paid (or credited as fully paid)
prior to the date on which the
Offer closes, (or such earlier
date, not being earlier than the
date on which the Offer becomes
unconditional as to acceptances
of, if later, the First Closing
Date, as Aberdeen may, subject to
the City Code, decide) including
those which are allotted or issued
upon the exercise of any options
granted under the Edinburgh Share
Option Schemes
"Enlarged Group" the Group as enlarged by
the Edinburgh Group excluding the
Retail Funds
"Ernst & Young" Ernst & Young LLP
"First Closing Date" the day which is 21 days
following the posting of the Offer
Document
"Form of Acceptance" the form of acceptance relating to
the Offer to be sent to Edinburgh
Shareholders with the Offer
Document
"Hawkpoint" Hawkpoint Partners Limited
"Hermes" Hermes Investment Management
Limited
"Japan" Japan, its cities, prefectures,
territories and possessions
"Listing Particulars" the listing particulars to be sent
to Aberdeen Shareholders and
Edinburgh Shareholders in
connection with the Offer
"Listing Rules" the listing rules and regulations
made by the UKLA under the
Financial Services and Markets Act
2000
"London Stock Exchange" London Stock Exchange plc
"New Aberdeen Shares" the new Aberdeen Shares to be
allotted and issued to Edinburgh
Shareholders (other than certain
Overseas Shareholders) credited as
fully paid pursuant to the Offer
"New Star" New Star Asset Management Group
Limited
"New Star Shareholders" holders of voting shares in the
share capital of New Star
"New Star Shares" A ordinary shares of #5 each
in the capital of New Star
"Offer Document" the offer document to be
addressed to Edinburgh
Shareholders in connection with
the Offer
"Offer" the recommended all share offer to
be made by Ernst & Young on behalf
of Aberdeen for the Edinburgh
Shares subject to the terms and
conditions to be set out in the
Offer Document and the Form of
Acceptance and, where the context
so requires, any subsequent
revision, variation, extension or
renewal of such offer
"Official List" the Official List of the UKLA
"Overseas Shareholders" Edinburgh Shareholders whose
registered address is outside the
UK or who are citizens or
residents of countries other than
the UK
"Panel" The Panel on Takeovers and Mergers
"Retail Funds" certain unit trusts and open-ended
investment companies the assets of
which are currently managed by
members of the Edinburgh Group or
their agents, further details of
which are contained in the Sale
Agreement
"Regulations" the Uncertificated Securities
Regulations 2001 (SI2001/3755)
"Sale Agreement" the conditional agreement dated 4
September 2003 between Aberdeen
(1) and New Star (2) relating to
the Disposal (and incorporating
asset sale agreements in agreed
form), the principal terms of
which will be summarised in the
Listing Particulars
"UK" or "United Kingdom" the United Kingdom of Great
Britain and Northern Ireland
"UKLA" or "UK Listing Authority" the Financial Services Authority
in its capacity as competent
authority under the Financial
Services and Markets Act 2000
"uncertificated" or "uncertificated form" means held in CREST
"United States" the United States of America, its
possessions or territories, any
state of the United States of
America and the District of
Columbia or any area subject to
its jurisdictions or any political
subdivision thereof
In addition, "subsidiary", "subsidiary undertaking", "associated undertaking"
and "undertaking" have the meanings respectively ascribed to them by the
Companies Act, disregarding for this purpose paragraph 20(1)(b) of Schedule 4A
to the Companies Act and "significant interest" means a direct or indirect
interest in twenty per cent or more of the equity share capital (as defined in
the Companies Act) of a company.
This information is provided by RNS
The company news service from the London Stock Exchange
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OFFEADNSESKDEEE