Vodafone K.K. Announces Merger/ Buyout
Vodafone K.K. Announces Merger/ Buyout

Vodafone K.K. Announces Merger/ Buyout

Vodafone K.K. Announces Merger/ Buyout

Ahead of this afternoon’s press release, Vodafone Holdings K.K. and Vodafone K.K. put out a press statement saying they “jointly announce today that their respective boards have agreed to merge the two companies.” According to the statement, Vodafone Holdings K.K. will be the surviving entity and will be renamed Vodafone K.K. after the merger completes [sic]. In a separate announcement, Vodafone Group PLC announced Vodafone International Holdings B.V. (Vodafone International) will launch a 513-billion yen offer for shares in Vodafone Holdings K.K. and Vodafone K.K. Putting good money after bad?

The statement goes on to read:

“The boards of directors of Vodafone Holdings K.K. and Vodafone K.K. believe that the reorganisation of the current structure will enable the merged company to operate with increased efficiency and stronger management focus.

Under the terms of the Merger, the merger ratio will mean that Vodafone K.K. shareholders will receive 7.5898 Vodafone Holdings K.K. shares for every share of Vodafone K.K. held. The merger ratio reflects a liquidity discount for Vodafone K.K. shares compared to Vodafone Holdings K.K. shares.

Following the Merger, the former shareholders of Vodafone Holdings K.K. and Vodafone K.K. will own approximately 58.9% and 41.1% of the merged company, respectively.

The boards of directors of Vodafone Holdings K.K. and Vodafone K.K. have received a fairness opinion from UBS Investment Bank and a legal opinion from Anderson Mori on the terms of the Merger.

The Merger is subject to shareholder and regulatory approvals.

The AGM for Vodafone Holdings K.K. and an EGM for Vodafone K.K., at which resolutions will be proposed to approve the Merger, will be convened for 29 June 2004 and 22 July 2004, respectively.

The Merger is expected to become effective on 1 October 2004. UBS Investment Bank is acting as financial adviser to Vodafone Holdings K.K. and Vodafone K.K.”

The share offers, which Vodafone CEO Arun Sarin is quoted as saying demonstrate “our long-term commitment to the mobile market in Japan,” are being touted as a way of simplifying Vodaphone’s shareholding structure and boosting earnings later.

Here is more from the press release:

The Vodafone Holdings K.K. Offer

The Vodafone Holdings K.K. Offer is to be conducted by way of a Tender Offer Bid (“TOB”), which is expected to be formally launched by Vodafone International on or around 8 June 2004 and will be open for 20 calendar days.

The Vodafone Holdings K.K. Offer price will be 300,000 in cash for each validly tendered Vodafone Holdings K.K. share. Assuming 100% take-up, the total consideration would be approximately 319 billion (£1.6 billion).

The Vodafone Holdings K.K. Offer price represents a 20.0% premium to Vodafone Holdings K.K.’s average closing price (249,933) for the 3 months ended 24 May 2004 and a 24.5% premium to Vodafone Holdings K.K.’s closing price (241,000) on 24 May 2004.

Vodafone Group believes the Vodafone Holdings K.K. Offer is full and fair and has no intention to increase it.

The Vodafone Holdings K.K. Offer is conditional on sufficient valid tenders being received to take Vodafone Group’s ownership of Vodafone Holdings K.K. to 90% or above. Vodafone International reserves the right to waive this condition.

From 26 May 2004 until the TOB launch date, Vodafone International intends to make market purchases in Japan at prices up to the Vodafone Holdings K.K. Offer price of 300,000. Such purchases will cease on the date immediately preceding the TOB launch date.

Following completion of the Vodafone Holdings K.K. Offer, Vodafone Holdings K.K.’s shares are expected to be delisted from the Tokyo Stock Exchange (“TSE”) and the Osaka Securities Exchange in accordance with applicable regulations. Vodafone Group is also investigating the possibility of “squeezing-out” any minority shareholders remaining at that time.

The Vodafone Holdings K.K. board will seek an independent fairness opinion on the Vodafone Holdings K.K. Offer.

The Vodafone K.K. Offer

The Vodafone K.K. Offer price will be 2,371,164 in cash for each validly tendered Vodafone K.K. share. Assuming 100% take-up, the total consideration would be approximately 194 billion (£1.0 billion).

The Vodafone K.K. Offer price is equivalent to the implied value of the Vodafone K.K. shares based upon Vodafone Holdings K.K.’s average closing price for the 3 months ended 24 May 2004.

Details of the Vodafone K.K. Offer, including instructions on how to participate, will be posted to Vodafone K.K. shareholders shortly. The Vodafone K.K. Offer will remain open until 21 July 2004.

The Merger

Vodafone Holdings K.K. intends to issue 7.5898 new shares for every Vodafone K.K. share it does not already own. Following the Merger, the former shareholders of Vodafone Holdings K.K. and Vodafone K.K. will own approximately 58.9% and 41.1% of the merged company, respectively.

Vodafone Holdings K.K. will be the surviving entity and be renamed Vodafone K.K. after the Merger completes.

The AGM for Vodafone Holdings K.K. and an EGM for Vodafone K.K., at which resolutions will be proposed to approve the Merger, have been convened for 29 June 2004 and 22 July 2004, respectively. The Merger is expected to become effective on 1 October 2004.

Delisting Considerations

Under TSE rules, a listed company is automatically delisted after its top 10 shareholders own over 90% of its issued shares. Under TSE rules, a listed company is eventually delisted if its top 10 shareholders own over 80% of its issued shares and if this concentration is not reduced. These rules apply to Vodafone Holdings K.K. both before and after the Merger.

The Offers are neither conditional on each other, nor on the Merger. The Merger is not conditional on either of the Offers. However, Vodafone International reserves the right to withhold its approval of the Merger at the shareholders’ meetings.

UBS Investment Bank is acting as financial adviser to Vodafone and Vodafone International.

-ends-

— WWJ Editors