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[August 2006]
Wienerberger Announces Recommended Cash Acquisition of Baggeridge Brick
Wienerberger AG (Vienna, Austria) has announced a proposed recommended cash acquisition of 100% of the issued share capital of Baggeridge Brick PLC. The proposed cash acquisition is pre-conditional on UK anti-trust approval.Wienerberger will offer Baggeridge’s shareholders 216 pence per share equal to £89.2 million for the entire issued share capital. Baggeridge’s Board of Directors has recommended that Baggeridge shareholders accept the cash acquisition. All members of the Board of Directors, the trustees of the P. A. Ward family trusts and P. A. Ward, who together control 26.5% of the shares in Baggeridge, have committed to vote in favour of the transaction; in addition, a shareholder currently holding 7.1% has provided a letter of intent to vote in favour of the transaction if the anti-trust pre-condition is satisfied. The transaction will be effected by means of a scheme of arrangement under the English Companies Act 1985. It will therefore require approval by a majority in number of the Baggeridge shareholders representing at least 75% in value of the share capital voted at the meeting of Baggeridge shareholders to be called to agree on the acquisition.
Baggeridge, with headquarters in Sedgley near the city of Birmingham, operates a total of four production plants in the Midlands and one in the South of England, manufacturing facing bricks, pavers and products for the façade. In addition, Baggeridge has significant excess raw material reserves and one undeveloped site near Birmingham with planning permission for production. These assets are of strategic value to Wienerberger for future growth projects in the UK and have been reflected in the valuation of the company. In the preceding financial year, ending 30 September 2005, Baggeridge generated revenues of £50.7 million, and an EBITDA of £9.2 million, employing a workforce of 575 people. The company had a net cash position of £0.8 million as of 30 September 2005.
The UK is the largest European market for facing bricks. Although it has slowed in 2005 and 2006, Wienerberger regards it as highly attractive and is confident of the long-term outlook in view of its population trends, the significant pent-up demand for family housing stock and the growth rate of the UK economy being above the European Union average.
This transaction provides advantages to both Wienerberger and Baggeridge, said the company. For Baggeridge, Wienerberger represents a strategic partner whose declared aim is to quickly integrate and further develop the company’s existing business operations. For Wienerberger, the optimal enhancement of its production facilities, the expansion of its product portfolio as well as the capability to significantly increase its presence in the Irish market, open up attractive opportunities to improve earnings in the United Kingdom and ensure ongoing profitable growth.
"We are delighted about the recommendation submitted by Baggeridge’s Board of Directors to its shareholders to vote in favour of our proposed acquisition," said Wolfgang Reithofer, CEO of Wienerberger AG, in commenting on the proposed acquisition. "We will combine the best competencies of both organisations in a single integrated operation. Through the merger of our activities as well as the structure of our product portfolio, we expect to achieve significant medium-term synergies of approximately £5 million per annum. As a result, we will not only be in a position to considerably strengthen our number three position in the largest European market for facing bricks, but also to significantly enlarge our product portfolio throughout the United Kingdom.
"We intend to expand the current facing brick operations over the coming years, in particular by adding clay roof tiles to our present product range. All in all, the integration of the two companies will enable us to deal more effectively with current market challenges, such as high energy costs, as well as offer our customers, investors and employees a sustained enhancement in value."
Alan Baxter, CEO of Baggeridge Brick PLC, commented on the transaction: "The proposed acquisition represents a unique opportunity for Baggeridge to build upon its operational expertise and enter into the next stage of its development. The significant premium of 32.5% over the average closing price of Baggeridge for the last twelve months prior to the announcement of the proposed acquisition represents an attractive opportunity for investors to realise today the potential benefits of the recommended combination. As such the directors of Baggeridge believe that the proposed acquisition provides certainty and value to the Baggeridge shareholders at the present time".
The proposed acquisition will be completely financed from Wienerberger’s debt capacity. UBS is acting as Wienerberger’s financial advisor on this transaction.
"For us, the positive conclusion of this transaction would represent a milestone in the long-term success story of our company. In the last 10 years alone, we have acquired more than 100 companies and successfully integrated them into our existing business operations", Wolfgang Reithofer concluded. "In the name of the entire Managing Board of Wienerberger AG, I would like to thank the directors of Baggeridge for their constructive cooperation in advance of the takeover proposal."
www.wienerberger.com
ENDS