RNS No 596h
CASSELL PLC
30th October 1998
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO
THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
THE ORION PUBLISHING GROUP LIMITED
Recommended Unconditional Cash Offer for Cassell plc
* The boards of Orion and Cassell announce that they
have agreed the terms of a recommended cash offer to be
made by Close Brothers on behalf of Orion for the whole
of the issued and to be issued share capital of Cassell
which Orion has not already agreed to acquire
* The Recommended Offer of 125p for each Cassell Share
represents a premium of 177.8 per cent. to the Closing
Price of a Cassell Share on 9 October 1998, the last
dealing date prior to the announcement of Macmillan's
unsolicited offer, and a premium of 25 per cent. to
Macmillan's unsolicited offer
* Orion has agreed to acquire, conditional only on
this announcement, 3,670,549 Cassell Shares, representing
approximately 50.01 per cent. of the issued share capital
of Cassell from certain Cassell Shareholders, including
the directors of Cassell and the relevant family trusts
* As a result, Orion will be making a mandatory cash
offer for the issued share capital of Cassell that it has
not already agreed to acquire, pursuant to Rule 9 of the
Code. Since Orion has agreed to acquire more than 50 per
cent. of the issued share capital of Cassell, the
Recommended Offer will be wholly unconditional
* Full implementation of the Recommended Offer is
expected to significantly increase the Orion Group's
turnover and enhance its market position in the United
Kingdom. The acquisition of Cassell is part of Orion's
parent company Hachette's strategy to develop its
publishing interests in the English speaking world
Commenting on the Recommended Offer, Anthony Cheetham,
Chief Executive Officer of Orion, said:
'I welcome this opportunity to create a new force in
British publishing with a momentum and a market share
which will make us truly competitive with the larger
groupings in the publishing industry'
Commenting on the Recommended Offer, Philip Sturrock,
Chairman of Cassell, said:
'Orion's offer more accurately reflects the value of
Cassell's underlying assets than Macmillan's unsolicited
bid. Furthermore, I believe that Cassell will benefit
from being part of this new vibrant group. The Board
unanimously recommends that shareholders accept the
Recommended Offer'
This summary should be read in conjunction with the
attached announcement. The terms defined in Appendix I of
the attached announcement have the same meaning in this
announcement unless the context requires otherwise.
Enquiries
Peter Roche Tel: 0171 240 3444
The Orion Publishing Group Limited
Richard Wickerson Tel: 0171 426 4000
Close Brothers Corporate Finance
Limited
Sue Whillans Tel: 0171 588 4000
Credit Lyonnais Securities
Phillip Sturrock Tel: 0171 420 5555
Cassell plc
Peter May Tel: 0171 248 4000
Charterhouse Tilney Securities
Limited
Close Brothers Corporate Finance Limited, which is
regulated by The Securities and Futures Authority
Limited, is acting for Orion and no one else in
connection with the Recommended Offer and will not be
responsible to anyone other than Orion for providing the
protections afforded to customers of Close Brothers
Corporate Finance Limited, or for providing advice in
relation to the Recommended Offer.
Charterhouse Tilney Securities Limited, which is
regulated by The Securities and Futures Authority
Limited, is acting for Cassell and no one else in
connection with the Recommended Offer and will not be
responsible to anyone other than Cassell for providing
the protections afforded to customers of Charterhouse
Tilney Securities Limited, or for providing advice in
relation to the Recommended Offer.
The availability of the Recommended Offer to certain
persons who are citizens, residents or nationals of,
jurisdictions outside the UK may be affected by the laws
of the relevant jurisdiction. Persons in that position
should inform themselves about and observe any applicable
legal requirements.
The Recommended Offer will not be made, directly or
indirectly, in or into or by the use of the mails, or any
means or instrumentality (including without limitation,
post, facsimile transmission, telex, or telephone) of
interstate or foreign commerce of, or any facilities of a
national securities exchange of, the United States, nor
is it being made in Canada, Australia or Japan and the
Recommended Offer should not be accepted by any such use,
means, instrumentality or facilities or from within the
United States, Canada, Australia or Japan. Doing so may
render invalid any purported acceptance. Accordingly,
copies of this announcement are not being, and must not
be, mailed or otherwise distributed or sent in or into
the United States, Canada, Australia or Japan.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO
THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
PART I
THE ORION PUBLISHING GROUP LIMITED
Recommended Unconditional Cash Offer for Cassell plc
1. Introduction
The boards of Orion and Cassell announce that they have
reached agreement on the terms of a recommended cash
offer to be made by Close Brothers on behalf of Orion to
acquire the whole of the issued and to be issued share
capital of Cassell which Orion has not already agreed to
acquire.
Certain Cassell Shareholders, including the directors of
Cassell and the relevant family trusts, have agreed,
conditional only upon this announcement, to sell to Orion
3,670,549 Cassell Shares in aggregate, representing
approximately 50.01 per cent. of the issued share capital
of Cassell.
As a result, Orion will be making a mandatory cash offer
for the whole of the issued share capital of Cassell that
it has not already agreed to acquire, pursuant to Rule 9
of the Code. Since Orion has agreed to acquire more than
50 per cent. of the issued share capital of Cassell, the
Recommended Offer will be wholly unconditional.
2. The Recommended Offer
The Recommended Offer will be made on the following
basis:
For each Cassell Share 125p in cash
The Recommended Offer represents a premium of 177.8 per
cent. to the Closing Price of a Cassell Share on 9
October 1998, the last dealing day prior to the
announcement of Macmillan's unsolicited offer, and a
premium of 25 per cent. to the unsolicited offer by
Macmillan of 100p and values the issued share capital of
Cassell at approximately #9.2 million.
The Recommended Offer is to be funded by new debt
facilities within Orion. The payment obligations of
Orion under the terms of the new debt facility have been
guaranteed by Hachette.
The Recommended Offer will be subject to the terms set
out in the formal offer document to be posted to Cassell
Shareholders and, for information only, to holders of
Cassell Share Options as soon as is practicable.
3. Recommendation
The board of Cassell, which has been so advised by
Charterhouse Tilney, considers the terms of the
Recommended Offer to be fair and reasonable. In providing
advice to the board of Cassell, Charterhouse Tilney has
taken into account the board of Cassell's commercial
assessments.
The directors of Cassell and the relevant family trusts
have agreed, conditional only on this announcement, to
sell to Orion the directors' entire beneficial and non
beneficial holdings, representing 255,883 Cassell Shares
or approximately 3.5 per cent. of the issued share
capital of Cassell and will unanimously recommend that
Cassell Shareholders accept the Recommended Offer.
4. Financial effects of acceptance
The following tables show, for illustrative purposes only
and on the bases and assumptions set out in the notes
below, the financial effects on capital value and gross
income for an accepting Cassell Shareholder.
Notes
(a) Increase in capital value
Cash receivable for one Cassell Share 125p
Market value of one Cassell Share (1) 45p
Increase in capital value 80p
Representing an increase of approximately 178%
(b) Increase in gross income
Gross income from re-investment of cash (2) 6.5p
consideration
Dividend income on one Cassell Share (3) 3.0p
Increase in gross income 3.5p
Representing an increase of approximately 115%
Notes:
(1) The market value of a Cassell Share is based on the
Closing Price of a Cassell Share of 45p on 9 October 1998
(the last dealing day prior to the announcement of
Macmillan's unsolicited offer)
(2) The cash consideration is assumed to be reinvested
so as to yield 5.17 per cent. gross per annum, being the
cash yield on the FT Actuaries Medium Coupon for
securities of up to five years maturity on 28 October
1998
(3) The dividend income on a Cassell Share is based on
the aggregate of (i)the interim dividend payment of 1.5p
(net) in respect of the six months ended 30 June 1997 and
(ii) the final dividend of 1.5p (net) declared in respect
of the year ended 31 December 1997
(4) As a result of provisions contained in the Finance
(No. 2) Act 1997, pension funds cannot claim repayment of
tax credits on dividends paid on or after 2 July 1997.
The same will be true of most other shareholders in
respect of dividends paid on or after 6 April 1999
5. Information on Orion
Orion is a private company engaged in the publication and
distribution of books. Orion covers a range of fiction
and non-fiction titles. It operates through four
divisions: Weidenfeld & Nicholson, Orion Books,
Paperbacks and Littlehampton Book Services. Its imprints
include Orion, Phoenix and Weidenfeld & Nicholson. Its
authors include Penny Vincenzi, Ian Rankin, Maeve Binchy,
Jostein Gaarder, Stephen King, Vikram Seth, Alan Clark,
Antonia Fraser and Edna O'Brien.
In the year ended 31 December 1997 Orion generated
operating profits of #2.5 million from sales of #37.2
million. At the same date Orion had shareholders' funds
of #12.2 million.
Orion is a 71.5 per cent. owned (on a fully diluted
basis) subsidiary of Hachette, the French book publisher.
Hachette is wholly owned by Lagardere SCA, a French
holding company whose shares are quoted on the Paris
Bourse and which is capitalised at approximately FFr 24.8
billion. Hachette is involved in publishing and book
distribution. In the year ended 31 December 1997,
Hachette generated turnover of FFr 4.5 billion and
profits before interest and tax of FFr 266 million,
accounting for 7.0 per cent. of the Lagardere group's
turnover and 6.7 per cent. of its profits before interest
and tax.
6. Information on Cassell
Cassell, founded in 1848, has just celebrated 150 years
of publishing history. The Cassell Group owns a
portfolio of prestigious imprints, each serving its own
distinct market.
The Cassell Group has interests in both academic and
general publishing with over 6,000 titles currently in
print, many of which are household names. Well known
titles with a long pedigree include: Brewer's Dictionary
of Phrase and Fable; The Cassell Concise Dictionary; and
Mrs Beeton's Book of Cookery and Household Management.
There are also newer titles by high profile contemporary
authors such as Nick Hornby and Tim Smit. Other high
profile publishing assets include Poems on the
Underground and the Terry Pratchett backlist.
Cassell had a total turnover of #23.2 million for the
year ended 31 December 1997 and profit before interest
and taxation of #0.8 million. At 31 December 1997 Cassell
had consolidated shareholders' funds of #9.9 million.
7. Cassell's current trading
On 15 September 1998, Cassell announced its interim
results for the six months ended 30 June 1998, which
showed a seasonal group operating loss of #216,000 (1997:
loss of #489,000).
In view of the importance to a publisher of sales in
September, October, November and December, the directors
of Cassell have stated that they do not believe that it
would be appropriate to make a profit forecast for the
year ending 31 December 1998 but that early indications
of sales for September and October were below
expectations. The directors of Cassell can now report
that, as indicated, the outcome for September was
materially worse than expected and sales to date in
October continue to be disappointing.
8. Reasons for the Recommended Offer
Full implementation of the Recommended Offer is expected
to significantly increase Orion Group's turnover and
significantly enhance its market position in the United
Kingdom. The acquisition of Cassell is part of Hachette's
strategy of developing its publishing interests in the
English speaking world. The combined group will have a
wide range of imprints covering popular fiction and non-
fiction, literary fiction and non-fiction, reference and
information, religious and academic literature and
paperbacks. The Recommended Offer will create a
combined group with sufficient critical mass to generate
economies of scale. In addition, it is the intention of
the board of Orion to utilise the combined group's strong
position within the United Kingdom to develop all the
combined group's existing brand lines, including the
group's academic and religious publishing brands, fully
utilise a strong backlist and expand the combined group's
mass market paperback presence.
9. Management and employees
Orion has given assurances to the board of Cassell that
the existing employment rights, including pension rights,
of the employees of Orion will be fully safeguarded.
Philip Sturrock, Chairman of Cassell, will be appointed
to the board of Orion as a director and a Vice Chairman
of the enlarged group and will continue to be Managing
Director of the Cassell division comprising Cassell
Illustrated/Reference and Cassell Academic and Religious.
The Victor Gollancz division will join the Orion Books
division of Orion. Frank Roney will continue in his
existing role. The remaining directors of Cassell will
resign from the board of Orion in due course.
10. Cassell Share Option Schemes
The Recommended Offer will extend to any fully paid
Cassell Shares which are unconditionally allotted or
issued while the Recommended Offer remains open for
acceptance (or such shorter period as Orion may, subject
to the Code, decide), including Cassell Shares
unconditionally allotted or issued pursuant to the
exercise of options granted under the Cassell Share
Option Schemes or otherwise. Appropriate proposals will
be made in due course to holders of Cassell Share
Options.
11. Overseas Shareholders
The availability of the Recommended Offer to certain
persons who are citizens, residents or nationals of,
jurisdictions outside the UK may be affected by the laws
of the relevant jurisdiction. Persons in that position
should inform themselves about and observe any applicable
legal requirements.
The Recommended Offer will not be made, directly or
indirectly, in or into or by the use of the mails, or any
means or instrumentality (including without limitation,
post, facsimile transmission, telex or telephone) of
interstate or foreign commerce of, or any facilities of a
national securities exchange of, the United States, nor
is it being made in Canada, Australia or Japan and the
Recommended Offer should not be accepted by any such use,
means, instrumentality or facilities or from within the
United States, Canada, Australia or Japan. Doing so may
render invalid any purported acceptance. Accordingly,
copies of this announcement are not being, and must not
be, mailed or otherwise distributed or sent in or into
the United States, Canada, Australia or Japan.
12. Interests in Cassell Shares
No director of Orion nor, so far as Orion is aware, any
party acting in concert with Orion, owns or controls any
Cassell Shares (save for those shares referred to above
that Orion has agreed to acquire from the directors of
Cassell and certain other Cassell Shareholders) or holds
any options to purchase Cassell Shares or has entered
into any derivative contract referenced to Cassell Shares
which remains outstanding.
13. General
The document containing the formal Recommended Offer and
the form of acceptance relating to the Recommended Offer
setting out full details of the Recommended Offer will be
posted to Cassell Shareholders and, for information only,
to holders of Cassell Share Options as soon as
practicable. This announcement does not constitute an
offer or an invitation to purchase any securities.
The Cassell Shares will be acquired fully paid and free
from all liens charges and encumbrances together with all
rights now or hereafter attaching to them, including the
right to receive and retain all dividends and other
distributions (if any) declared, made or paid on or after
30 October 1998.
Close Brothers is satisfied that Orion has the necessary
financial resources available to it to satisfy full
acceptance of the Recommended Offer.
Close Brothers Corporate Finance Limited, which is
regulated by The Securities and Futures Authority
Limited, is acting for Orion and no one else in
connection with the Recommended Offer and will not be
responsible to anyone other than Orion for providing the
protections afforded to customers of Close Brothers
Corporate Finance Limited, or for providing advice in
relation to the Recommended Offer.
Charterhouse Tilney Securities Limited, which is
regulated by The Securities and Futures Authority
Limited, is acting for Cassell and no one else in
connection with the Recommended Offer and will not be
responsible to anyone other than Cassell for providing
the protections afforded to customers of Charterhouse
Tilney Securities Limited, or for providing advice in
relation to the Recommended Offer.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO
THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
THE ORION PUBLISHING GROUP LIMITED
Recommended Unconditional Cash Offer for Cassell plc
APPENDIX I
DEFINITIONS
The following definitions apply throughout this
announcement, unless the context otherwise requires:
"Cassell" Cassell plc
"Cassell Group" Cassell and its subsidiaries
"Cassell Shares" issued ordinary shares of 20p each
in the capital of Cassell
"Cassell Share Options" options over Cassell Shares under
the Cassell Share Option Schemes
"Cassell Share Option the Non-Approved Share Option
Schemes" Scheme 1994 and the Cassell
Executive Share Option Scheme
"Cassell Shareholders" holders of Cassell Shares
"Charterhouse Tilney" Charterhouse Tilney Securities
Limited
"City Code" or "Code" the City Code on Takeovers and
Mergers
"Close Brothers" Close Brothers Corporate Finance
Limited
"Closing Price" the middle price of a Cassell
Share, as derived from the Daily
Official List of the London Stock
Exchange
"Hachette" Hachette Livre SA
"London Stock Exchange" London Stock Exchange Limited
"Macmillan" Macmillan Publishers Limited
"Orion" The Orion Publishing Group Limited
"Orion Group" Orion and its subsidiaries
"Recommended Offer" the recommended offer to be made
by Close Brothers on behalf of
Orion and to be contained in an
offer document and an
advertisement to acquire the
Cassell Shares on the terms set
out or referred to therein and the
form of acceptance, and where the
context admits, any subsequent
revision, variation, extension or
renewal thereof
"United Kingdom" or "UK" The United Kingdom of Great
Britain and Northern Ireland
END
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