PREMIER FARNELL PLC
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN, INTO OR
FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE
RELEVANT LAWS OF SUCH JURISDICTION
FOR IMMEDIATE RELEASE
5 February 2016
Premier Farnell plc
Proposed disposal of Akron Brass for US$224.2 million to create a more focused
business
Premier Farnell plc ("Premier Farnell") today announces that, together with its
wholly owned subsidiaries, Celdis Limited and Premier Farnell Corp., it has
entered into a conditional agreement with respect to the sale of Akron Brass
Holding Corp. ("Akron Brass") to IDEX Corporation for cash consideration of
US$224.2 million (the "Disposal").
Highlights
* Total consideration of US$224.2 million (£153.8 million), payable in cash
on completion, subject to customary adjustments.
* Represents an attractive enterprise valuation of approximately 8.8x Akron
Brass FY15 EBITDA.
* The Disposal will enable further focus on executing the initiatives
identified as part of its operational review to restore growth in
profitability in FY17 and provide increased financial flexibility to pursue
growth opportunities within the core electronics distribution business.
* Net cash proceeds arising from the Disposal will be used to reduce Premier
Farnell's existing indebtedness and to redeem its preference shares.
* As announced on 17 September 2015, the Board's dividend policy is to target
a dividend cover in the range of 1.5x to 2.0x; the Board intends to
maintain this policy following the Disposal.
* Completion is expected by the end of March 2016.
The Disposal is a Class 1 transaction for Premier Farnell under the Listing
Rules and is therefore conditional, amongst other things, upon the approval of
shareholders. A circular containing further details of the Disposal and the
notice convening a general meeting will be sent to Premier Farnell shareholders
in due course.
Mark Whiteling, Premier Farnell Interim Chief Executive, said:
"Following the completion of the operational review and the conclusions
announced in December 2015, the sale of Akron Brass marks the next important
milestone in the strategic refocusing of Premier Farnell. The review confirmed
that there are significant opportunities to improve the operational and
financial performance of Premier Farnell. The sale of Akron Brass will enable
us to focus on executing the initiatives identified as part of our review in
order to restore growth in profitability in FY17."
Following the year end on 31 January, the FY16 profit outcome is expected to be
broadly in line with recent guidance.
Lazard & Co., Limited ("Lazard") is acting as lead financial adviser in
relation to the Disposal. Barclays Bank PLC, acting through its Investment Bank
("Barclays") is acting as sponsor and financial adviser to Premier Farnell in
relation to the Disposal.
This summary should be read in conjunction with the full text of this
announcement.
Premier Farnell expects to announce its preliminary results for the year ended
31 January 2016 on 17 March 2016.
For further information, please contact:
Premier Farnell plc
+44 (0) 20 7851
4107
Mark Whiteling, Interim Chief Executive Officer
Helen Willis, Interim Chief Financial Officer
FTI
Consulting
+44 (0) 20 3727 1374
Richard
Mountain
Lazard & Co.,
Limited
+44 (0)20 7187 2000
Nicholas Shott
Cyrus Kapadia
Vasco Litchfield
Barclays Bank PLC
Mark
Astaire
+44 (0)20 3134 5180
Alex de
Souza
+44 (0)20 3134 1063
Nicola
Tennent
+44 (0)20 3134 9801
Premier Farnell's announcements (including this announcement and the circular,
when published) and presentations are available at www.premierfarnell.com
together with business information and links to all other group web sites.
Proposed disposal of Akron Brass for US$224.2 million to create a more focused
business
1. Introduction
Premier Farnell plc ("Premier Farnell" or the "Company") today announces that,
together with its wholly owned subsidiaries, Celdis Limited and Premier Farnell
Corp. (the "Sellers"), it has entered into a conditional agreement with IDEX
Corporation (the "Purchaser") with respect to the sale of Akron Brass Holding
Corp. ("Akron Brass") for a consideration of US$224.2 million (£153.8 million)
payable in cash on completion, subject to customary adjustments (the
"Disposal").
The Disposal is a Class 1 transaction for the Company (together with its
subsidiaries, the "Premier Farnell Group") under the Listing Rules and is
therefore conditional, amongst other things, upon the approval of shareholders.
A circular containing further details of the Disposal, and the notice convening
a general meeting, at which the resolutions to give the necessary shareholder
approval will be proposed, will be sent to shareholders of Premier Farnell in
due course.
2. Background to and reasons for the Disposal
In July 2015, Premier Farnell reported that Premier Farnell Group sales per day
momentum had slowed significantly, particularly in the North American and UK
markets, affected by a more difficult trading environment. The Company had
implemented a number of initiatives to drive sales and margin performance and
deliver cost savings. Weakness in certain core markets and prevailing exchange
rates resulted in adjusted operating profit declining 9.9% in the first half of
the financial year ending 31 January 2016.
The Board therefore announced that it had initiated a review of the Premier
Farnell Group's global electronics distribution business. The purpose of that
review was to address some of the challenges facing that business, as well as
positioning it to exploit opportunities. The scope of the review covered all
aspects of this business including:
* Trading - a focus on customer proposition and experience and the costs of
servicing those customers by business channel;
* Operations - product acquisition cost, product range and network design;
* Support - the cost of support functions and overheads; and
* Working capital - targeted improvements.
In September 2015, the Board announced that, to enable focus and allow
investment in the core electronics distribution business, it had decided that
the Premier Farnell Group would seek to sell Akron Brass, which is considered
not to fit strategically within the Premier Farnell Group.
The sale process leading to the proposed Disposal attracted a significant
number of interested parties. The Board believes that this competitive process
has ensured that the cash consideration of US$224.2 million recognises the
market position and future prospects of Akron Brass and provides an attractive
valuation.
3. Information on Akron Brass
Akron Brass is a leader in engineered life safety products and solutions for
fire fighting and emergency response applications. Since 1918, Akron Brass has
been providing engineered life-safety products to the municipal fire fighting
equipment, industrial fire and vapour mitigation, commercial vehicle, and
emergency medical rescue and transport markets. Its products are designed to
improve the safety and efficiency of personnel and equipment engaged in the
suppression of fire. Its headquarters is in Wooster, Ohio (with manufacturing
facilities in Columbus, Ohio and Washington, Illinois) and it sells through its
own field sales force and through distributors to customers all over the world.
It has a significant share of the North American market for the products it
sells and seeks to grow by broadening its product range and reaching new
geographic and industrial markets, assisted by appropriate acquisitions.
Akron Brass's safety and emergency response solutions were expanded through the
acquisitions of GFE Manufacturing (2004), Weldon Technologies (2005) and Reach
Engineering (2013), which broadened the portfolio of products and which support
a technology platform that underpins the company's growth strategy of providing
integrated equipment and electronic control technology to the first-responder
market.
Details of key individuals important to Akron Brass Group
Name of key individual Position
Sean President
Tillinghast..........................................................
Brian Vice President of Finance
Hungerman.......................................................
Richard Senior Vice President of Operations
Wuescher......................................................
Fabio Senior Vice President of
Ferrari.............................................................. International Sales
David Vice President of Marketing
Durstine...........................................................
4. Information on the Purchaser
IDEX Corporation is a publicly traded global applied solutions provider
specialising in fluid and metering technologies, health and science
technologies, and fire, safety and other diversified products in high-growth
markets. IDEX Corporation was incorporated in Delaware on 24 September 1987 and
trades under the symbol "IEX" on the New York Stock Exchange and Chicago Stock
Exchange. Headquartered in Lake Forest, Illinois, the company has operating
facilities across five continents with more than 6,700 employees worldwide.
5. Use of proceeds and financial effects of the Disposal
The net cash proceeds arising from the Disposal are expected to be
approximately £124.8 million.
It is Premier Farnell's intention to use the net cash proceeds from the
Disposal to reduce the debt of the Premier Farnell Group and to redeem its
cumulative convertible redeemable preference shares in April 2016. The Company
intends to apply the net cash proceeds as follows: first, to redeem its
cumulative convertible redeemable preference shares in full on the redemption
date in April 2016 (the redemption amount currently stands at approximately £
53.6 million); second, to repay an aggregate amount of US$50.0 million to
lenders under its US private placement notes at par on a pro rata basis across
all notes; and third, to use the remaining net cash proceeds to reduce drawings
under its revolving credit facility.
In the financial year ended 1 February 2015, the Akron Brass Group (as defined
below) contributed operating profit of £14.7 million to Premier Farnell. As at
1 February 2015, the Akron Brass Group had gross assets of £86.2 million.
6. Dividend Policy
The Board is confident that Premier Farnell Group's strategy will deliver value
to shareholders over the medium term. As announced on 17 September 2015, the
Board's dividend policy is to target a dividend cover in the range of 1.5x to
2.0x. The Board intends to maintain this policy following the Disposal.
7. Terms of the Disposal
Under the terms of a share sale agreement which was signed today, the Sellers
have conditionally agreed to sell their stock in Akron Brass Holding Corp.,
which comprises all the stock in Akron Brass Holding Corp., the holding company
of Akron Brass Company (together the "Akron Brass Group"), to the Purchaser.
The consideration of US$224.2 million for the Disposal is payable in cash on
completion of the Disposal, subject to customary adjustments. The consideration
is based on an enterprise valuation of Akron Brass of US$225 million.
Completion is conditional upon, among other things, applicable waiting periods
under US anti-trust regulation having expired or been terminated and the
approval of shareholders at a general meeting of Premier Farnell.
In the event that (a) the Premier Farnell directors accept a competing bid to
acquire Akron Brass in accordance with the terms of the share sale agreement
and enter into a definitive contract with the relevant third party, (b) the
Premier Farnell directors either do not give or they withdraw their
recommendation that shareholders vote in favour of the Disposal or (c) the
Company's shareholders do not approve the transaction at the general meeting, a
break fee will become payable to the Purchaser of US$2,242,000.
8. Expected timetable to completion
A circular containing further details of the Disposal and the notice convening
a general meeting will be sent to Premier Farnell shareholders in due course.
Completion of the Disposal is expected to occur by the end of March 2016.
9. Advisers
Lazard is acting as lead financial adviser in relation to the Disposal.
Barclays is acting as sponsor and financial adviser to Premier Farnell in
relation to the Disposal.
PREMIER FARNELL : Disposal
February 05, 2016 at 02:01 am EST
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