Zurich Financial Services Group: Unification of the holding structure - Tender offer for Allied Zurich shares and expected closing timetable
At the Extraordinary General Meeting of Allied Zurich p.l.c. (the "Company") held on 20 June 2000, shareholders voted in favour of the recommended proposals to unify the holding structure of the Zurich Financial Services Group. The recommended proposals include authority for the Company to purchase its own ordinary shares ("ordinary shares") (including those represented by American Depositary Shares ("ADSs"). The Company is effecting a share repurchase by launching a tender offer, which will be conducted by UBS Warburg, with a value of up to USD 650 million (the "Tender Offer"). The tender offer document is being posted to Allied Zurich shareholders today.
Shares may be tendered in the range of 700p to 780p per ordinary share. After the close of the Tender Offer on 13 October 2000, the Independent Directors intend to set the strike price (the "Strike Price"). Ordinary shares, including those represented by ADSs ("Shares") which are tendered at or below the Strike Price will be purchased at the Strike Price. If necessary, tenders at the Strike Price will be scaled down pro rata.
Background to the Tender Offer
The unification will result in Shareholders owning shares in a single Swiss holding company, new Zurich Financial Services, which will have a primary listing in Switzerland and a secondary listing in the UK. As new Zurich Financial Services Shares will not be eligible for inclusion in the FTSE UK indices, a number of Shareholders may need (or otherwise choose) to sell their Shares. Whilst UBS Warburg has advised the Zurich Financial Services Group that a majority of this expected selling activity by UK institutions has already occurred, nonetheless increased selling activity may take place until several weeks after the Scheme Effective Date. In recognition of this potential increase in trading activity, the Tender Offer provides an alternative for Shareholders to dispose of their Shares on market.
Further purchases of Shares, shares in Zurich Allied and shares in New Zurich Financial Services ("new Zurich Financial Services")
At the Extraordinary General Meeting of the Company held on 20 June 2000, the Company was authorised to purchase its own Shares to a value of USD 1 billion and, therefore, to the extent that it spends less than that amount under the Tender Offer, it will have a residual power to purchase Shares on the London Stock Exchange. The Company will not make London Stock Exchange purchases during the Tender Offer, nor will it make London Stock Exchange purchases after the Tender Offer is completed if, as expected, the reduction of capital is confirmed and the Scheme is made effective in accordance with the expected timetable. The board of Zurich Allied similarly has power to purchase that company's shares with a value of up to CHF 1 billion in line with restrictions set out by the Swiss Takeover Commission and may make use of that power during the Tender Offer and afterwards. To the extent that the share repurchase powers of the Company or Zurich Allied are unused prior to completion of the unification proposals, the necessary formal steps will be taken in order to enable new Zurich Financial Services, should it deem it appropriate, to purchase its own shares in the remaining amounts.
In the event that such further purchases are made, an announcement will be made.
The Tender Offer
The Tender Offer is only available to ordinary shareholders on the Company's register of members and ADS holders on the transfer books of the US Depository at 6.00 pm (London time) on 20 September 2000 (the "Record Date") and in respect of those Shares held on the Record Date.
Successfully tendered Shares will be cancelled and will not participate in the proposed scheme of arrangement relating to the Company (the "Scheme"). Holders of successfully tendered Shares will be entitled to retain the Special Cash Dividend of 40p per Share.
The principal terms of the Tender Offer are summarised as follows:
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The Company will purchase Shares with an aggregate value of up to USD 650 million
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IShares may be tendered in the price range (the "Price Range") from 700p to 780p in cash per Share
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Shares may only be tendered in Sterling in whole pence per share within the Price Range
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Rather than specifying a price in pence, Shareholders may elect to tender at the Strike Price
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All or part of a registered holding of Shares may be tendered, but only one tender may be made in respect of any single Share. Multiple tenders at different prices may be made in respect of different Shares within a single registered holding All Shares accepted under the Tender Offer, whether tendered at or below the Strike Price, will be acquired at the Strike Price he Strike Price will be the lowest price which, following scaling down but before rounding down, will ensure that the Company pays under the Tender Offer a total consideration equal to USD 650 million (or as near thereto as is practicable but without exceeding the same) or, if Shares with a value (at the Strike Price) of less than USD 650 million are tendered, the highest price within the Price Range at which Shares are tendered
Valid tenders will be accepted in the following order:
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first, all tenders below the Strike Price will be accepted in full
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secondly, tenders up to 500 ordinary shares (inclusive) at the Strike
Price will be accepted in full but only in respect of those ordinary
shareholders with a registered holding of 500 ordinary shares or less
on the Record Date who tender in respect of their entire holding
(but so that this rule may be disapplied in exceptional circumstances)
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third, tenders at the Strike Price will be scaled down pro rata in order
that the Company pays a total consideration of USD 650 million (or as
near thereto as is practicable without exceeding the same) for the
purchased Shares. Any fractions resulting shall be rounded down to
the nearest whole number of ordinary shares.
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Tenders above the Strike Price will be rejected
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Tender forms which have been, or are deemed to be, duly completed and are received by the Receiving Agent will be irrevocable
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The Tender Offer will close at 6.00 pm (UK time) on Friday 13 October 2000 unless it is extended
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There will be no commissions or dealing charges in respect of those Shares accepted under the Tender Offer
The Independent Directors reserve the right, subject to applicable law and regulatory requirements, to amend the terms of the Tender Offer including the Price Range or the aggregate value of Shares to be repurchased under the Tender Offer depending on market conditions and other factors. Any amendment to the Price Range or the aggregate value of Shares to be repurchased under the Tender Offer would include a requirement for the Company to despatch new tender forms and letters of transmittal to ordinary shareholders and ADS holders respectively and may, in certain circumstances, require the Company to extend the Tender Offer. The Independent Directors also reserve the right not to proceed with the Tender Offer at any time prior to 7.00 am (UK time) on 16 October 2000 (or, if the Tender Offer is extended, up to the time and date as announced in accordance with the new timetable) if they conclude that its implementation is no longer in the interests of the Company and/or Shareholders as a whole in the context of the Recommended Proposals.
Full details of the Tender Offer, including the terms and conditions on which it is made, are set out in a circular which is being sent to shareholders today.
Timetable
The expected key dates for the Tender Offer and unification process, in the absence of unforeseen developments, are as follows:
Record Date for Tender Offer:
6.00 pm Wednesday 20 September
Despatch of Tender Forms:
Friday 22 September
Special Cash Dividend Record Time:
6.00 pm Thursday 12 October
Last time and date for receipt of Tender Forms by Receiving Agent:
6.00 pm Friday 13 October
Termination of dealings in and ex-Special Cash Dividend date for Allied Zurich Shares:
close of trading, Monday 16 October
Scheme Record Time, Scheme Effective Date completion of statutory merger:
close of trading, Monday 16 October
Dealings in new Zurich Financial Services commence on SWX Swiss Exchange and London Stock Exchange:
Tuesday 17 October
Recommendation and Directors intentions
The Independent Directors, who have been so advised by Goldman Sachs International and Cazenove & Co., believe the Tender Offer to be in the best interests of the Company and its Shareholders as a whole in the context of the Recommended Proposals. In giving their advice, Goldman Sachs International and Cazenove & Co have taken into account the commercial assessments of the Independent Directors.
Whilst the Independent Directors are satisfied that the Tender Offer is in the best interests of the Company and its Shareholders as a whole each Shareholders' decision to tender shares must be taken with regard to his own personal circumstances. Accordingly, the Independent Directors are making no recommendation as to whether and at what price the Shareholders should tender all or any of their Shares in the Tender Offer. Shareholders are recommended to consult their duly authorised independent advisers and make their own decisions.
The Directors do not intend to tender any of their own shares in the Company.
