Recommended all-share merger
RNS Number : 1637H
Carphone Warehouse Group PLC
15 May 2014
 



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

THE FOLLOWING ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS AND DIXONS SHAREHOLDERS SHOULD NOT MAKE ANY INVESTMENT DECISION IN RELATION TO THE NEW Dixons CARPHONE SHARES EXCEPT ON THE BASIS OF THE INFORMATION IN THE SCHEME DOCUMENT AND THE DIXONS CARPHONE PROSPECTUS WHICH ARE PROPOSED TO BE PUBLISHED IN DUE COURSE

For immediate release

15 May 2014

RECOMMENDED ALL-SHARE MERGER OF CARPHONE WAREHOUSE GROUP PLC

AND DIXONS RETAIL PLC

Summary

·      The Boards of Carphone Warehouse Group plc and Dixons Retail plc are pleased to announce that they have reached agreement on the terms of a recommended all-share merger of Carphone and Dixons, which is to be implemented by way of a scheme of arrangement of Dixons.

 

·      The Merger will result in each of Dixons' and Carphone's Shareholders holding exactly 50 per cent. of Dixons Carphone on a fully diluted basis taking into account existing share options and award schemes for both companies. 1 Under the terms of the Merger, Dixons Shareholders will receive:

 

0.155 of a New Dixons Carphone Share in exchange for each Dixons Share

 

·     The merged entity, to be called "Dixons Carphone plc", will create a leader in European consumer electricals, mobiles, connectivity and related services.

 

·      The Boards of Carphone and Dixons believe that the Merger will deliver significant value to shareholders through a combination of enhanced commercial opportunities and operating synergies.

 

·      The Carphone Directors and Dixons Directors, having reviewed and analysed the potential synergies of the Merger, based on their experience of operating in the consumer electrical and mobile retail sectors, and taking into account the factors they can influence, believe that the Combined Group will be able to achieve integrated mobile retailing and procurement synergies, together with cost savings, of at least £80 million on a recurring basis, which are expected to be delivered in full in the financial year 2017/18. The Boards of Carphone and Dixons expect Dixons Carphone to deliver these synergies progressively, achieving almost half of them in financial year 2015/16.[2]

 

·      The Combined Group will also have the opportunity to achieve significant additional value from growth opportunities arising from the Merger.

 

·      As from Completion, Sir Charles Dunstone, Chairman of Carphone, will become the Chairman of Dixons Carphone. Roger Taylor, Deputy Chairman of Carphone, and John Allan, Chairman of Dixons will become Co-Deputy Chairmen and John Allan will also become Senior Independent Director; Sebastian James, CEO of Dixons, will become CEO; Andrew Harrison, CEO of Carphone, will become Deputy CEO; Humphrey Singer, CFO of Dixons, will become CFO; Katie Bickerstaffe, CEO of UK & Ireland Dixons, and Graham Stapleton, CEO of UK & Ireland Carphone, will join the Dixons Carphone Board as Executive Directors and retain their current responsibilities. In addition, the Dixons Carphone Board will comprise six other Non-Executive Directors. John Gildersleeve, Baroness Morgan of Huyton and Gerry Murphy will be the Non-Executive Directors appointed from Carphone. Tim How, Jock Lennox and Andrea Gisle Joosen will be the Non-Executive Directors appointed from Dixons.

 

·      Each of the Proposed Directors of the Dixons Carphone Board has given a binding undertaking not to dispose of any of his or her beneficial holdings in shares of Dixons Carphone (or any interest therein), which he or she holds on Admission or subsequently acquires during the lock-in period. All of the Proposed Directors have given this undertaking for a period of 24 months following Completion with the exception of Katie Bickerstaffe and Graham Stapleton who have given this undertaking for a period of 12 months, in line with the undertakings expected to be received from other senior executives.

 

·      Carphone and Dixons are both experienced operators with significant knowledge and expertise. The integration of the two businesses will be managed by a dedicated integration team, bringing together the best relevant capabilities of both businesses, with the aim of facilitating a smooth integration.

 

·      Carphone and Dixons have put in place appropriate banking facilities to ensure that Dixons Carphone will have a strong financial profile following Completion, which will enable the Combined Group to retain flexibility whilst reviewing its optimal capital structure going forward.

 

·      Dixons Carphone intends to adopt a dividend policy in line with Carphone's current dividend policy of 3.0x dividend cover based on Headline Earnings. The exchange ratio of the Merger has been determined on the basis that no dividend will be payable by either of Carphone or Dixons prior to Completion, other than an ordinary course Carphone final dividend of 4 pence per Carphone Share in respect of the financial year to 29 March 2014.

 

·      The Merger will be conditional on, amongst other things, the approval of Carphone Shareholders and Dixons Shareholders, the sanction of the Scheme by the Court and relevant anti-trust clearances being received.

 

·      Carphone and Dixons have received irrevocable undertakings to vote in favour of the Merger from those of the Carphone Directors, their families and related trusts, and Dixons Directors, their families and related trusts, who hold or are beneficially entitled to Carphone Shares and/or Dixons Shares, representing in aggregate 26.7 per cent. of Carphone's ordinary share capital and 0.06 per cent. of Dixons' ordinary share capital respectively in issue on 14 May 2014 (being the latest practicable date prior to this Announcement).

 

Sir Charles Dunstone, Chairman of Carphone said:

"We are incredibly excited about the opportunity today's news brings to our organisations, our consumers and our investors. Both Carphone and Dixons have a huge commitment to delivering the consumer the very best service, product and advice around the connected world.  We have a deep respect for each other and we see the merger of these two great companies as an opportunity to bring our skills together for the consumer and create a new retailer for the digital age. We are also creating jobs and we see many opportunities for further growth. This is a new chapter for both businesses and we are energised and proud to be part of what will be another fantastic journey for consumers and shareholders."

John Allan, CBE, Chairman of Dixons said:

"This merger will create a new, world class British retailer for the new digital age, with new opportunities for growth and greater scale and reach. Colleagues of both complementary businesses are experts in their fields, with a shared passion for technology, connectivity and brilliant service. Coming together when both companies are flourishing, we will create a stronger business for our customers, colleagues and shareholders - for now and the future."

The Dixons Directors, who have been so advised by Citigroup Global Markets Limited, consider the terms of the Merger to be fair and reasonable. In providing its advice, Citigroup Global Markets Limited has taken into account the commercial assessments of the Dixons Directors. Accordingly, the Dixons Directors intend unanimously to recommend Dixons Shareholders to vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the Dixons General Meeting, as the Dixons Directors who hold or are beneficially entitled to Dixons Shares have irrevocably undertaken to do in respect of their own beneficial holdings of 2,149,695 Dixons Shares representing, in aggregate, approximately 0.06 per cent. of Dixons' ordinary share capital in issue on 14 May 2014 (being the latest practicable date prior to this Announcement).

The Carphone Directors, who have been so advised by Deutsche Bank, consider the Merger to be in the interests of Carphone Shareholders. In providing its advice, Deutsche Bank has taken into account the commercial assessments of the Carphone Directors. Accordingly, the Carphone Directors intend unanimously to recommend Carphone Shareholders to vote in favour of the resolutions to be proposed at the Carphone General Meeting to approve the Merger and related matters, as the Carphone Directors who hold or are beneficially entitled to Carphone Shares have irrevocably undertaken to do in respect of their own beneficial holdings of 153,680,206 Carphone Shares representing, in aggregate, approximately 26.7 per cent. of Carphone's ordinary share capital in issue on 14 May 2014 (being the latest practicable date prior to this Announcement).

The Merger will be put to Dixons Shareholders at the Court Meeting and at the Dixons General Meeting. In order to become Effective, the Scheme must be approved by a majority in number of the Dixons Shareholders voting at the Court Meeting, either in person or by proxy, representing at least three-quarters in value of the Dixons Shares voted at the Court Meeting. In addition, special resolutions implementing the Scheme and approving the related Capital Reduction must be passed by Dixons Shareholders representing at least three-quarters of votes cast at the Dixons General Meeting.

It is expected that the Scheme Document, containing further information about the Merger and notices of the Court Meeting and the Dixons General Meeting, will be posted to Dixons Shareholders at the end of June 2014. For the purposes of Appendix 7 to the Code and with the agreement of Dixons, the Panel has consented to these arrangements. It is expected that the Scheme will become Effective in the third quarter of 2014, subject to the satisfaction or waiver of the Conditions and certain further terms set out in Appendix I to this Announcement.

It is expected that the Dixons Carphone Prospectus, containing information about the New Dixons Carphone Shares and the Combined Group, will be published at or around the same time as the Scheme Document is posted to Dixons Shareholders.

It is expected that the Carphone Circular, containing details of the Merger and notice of the Carphone General Meeting at which resolutions will be proposed for the approval of the Merger by Carphone Shareholders, will be posted to Carphone Shareholders at the same time as the Scheme Document is posted to Dixons Shareholders.

This summary should be read in conjunction with, and is subject to, the full text of this Announcement (including its appendices).

The Merger will be subject to the Conditions and further terms set out in Appendix I to this Announcement and to the full terms and conditions which will be set out in the Scheme Document. Appendix II contains the bases and sources of certain information used in this summary and this Announcement. Appendix III contains details of the irrevocable undertakings received in relation to the Merger that are referred to in this Announcement. Appendix IV contains details of and bases of calculation of the anticipated quantified financial benefits of the Merger. Appendix V contains definitions of certain terms used in this summary and this Announcement.

There will be an investor and analyst presentation at the Shangri-La Hotel, Shard(35th Floor), 31 St Thomas Street, London Bridge, London, SE1 9RL at 9.00a.m. BST on 15 May 2014. There will be a live webcast of the investor and analyst presentation available on Carphone's website at www.cpwplc.com and on Dixons' website at www.dixonsretail.com.

A copy of this Announcement is and will be available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, for inspection on Carphone's website at www.cpwplc.com and on Dixons' website at www.dixonsretail.com by no later than 12 noon (London time) on the day following this Announcement. For the avoidance of doubt, the contents of those websites are not incorporated and do not form part of this Announcement.



 

 

Enquiries:

 

Carphone Warehouse Group plc

Dixons Retail plc

Kate Ferry                                             +44 77 489 33206

David Lloyd-Seed                                    +44 17 272 05065

Investor Relations Director

IR, PR & Corporate Affairs Director



Deutsche Bank (Lead financial adviser and corporate broker)

Citigroup Global Markets Limited (Lead financial adviser and corporate broker)

Scott Bell                                             +44 20 754 58000

Ben Story                                                   +44 20 798 64000

James Arculus

Jan Skarbek

Matt Hall (Corporate Broking)

Andrew Seaton (Corporate Broking)



UBS (Financial adviser and corporate broker)

Barclays (Financial adviser and corporate broker)

David James                                          +44 20 756 78000

Mark Astaire                                             +44 20 762 32323

Anna Richardson Brown

Jackie Lee      

                                                                                                                                                                                                     

Citigate Dewe Rogerson (PR)

Brunswick (PR)

Anthony Carlisle                                 +44 20 763 89571

Nick Cosgrove                                          +44 20 740 45959

 

Important notices

Deutsche Bank AG is authorised under German Banking Law (competent authority: BaFIN - Federal Financial Supervisory Authority).  Deutsche Bank AG, London Branch is further authorised by the Prudential Regulation Authority and is subject to limited regulation by the Financial Conduct Authority and Prudential Regulation Authority. Deutsche Bank is acting as lead financial adviser and corporate broker to Carphone and no one else in connection with the contents of this Announcement and will not be responsible to anyone other than Carphone for providing the protections afforded to its clients or for providing advice in connection with the contents of this Announcement or any matter referred to herein.

UBS Limited, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting as financial adviser and corporate broker to Carphone and no one else in connection with this Announcement and will not be responsible to anyone other than Carphone for providing the protections afforded to clients of UBS Limited or for giving advice in relation to this Announcement or any other matter referred to herein.

Citigroup Global Markets Limited, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting as lead financial adviser and corporate broker to Dixons and for no-one else in connection with the matters set out in this Announcement and will not be responsible to anyone other than Dixons for providing the protections afforded to its clients or for providing advice in connection with the matters set out in this Announcement or any matter referred to herein.

Barclays Bank PLC, acting through its Investment Bank ("Barclays"), which is authorised by the Prudential Regulation Authority and regulated in the United Kingdom by the Prudential Regulation Authority and the Financial Conduct Authority, is acting as financial adviser and corporate broker to Dixons and no one else in connection with the Merger and the other matters referred to in this Announcement and will not be responsible to anyone other than Dixons for providing the protections afforded to clients of Barclays or for providing advice in connection with the Merger or any matter or arrangement referred to herein.

Forward-looking statements

This Announcement contains statements about Carphone, Dixons and the Combined Group that are or may be forward looking statements. All statements other than statements of historical facts included in this Announcement may be forward looking statements. Without limitation, any statements preceded or followed by or that include the words "targets", "should", "continue", "plans", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "estimates", "projects" or words or terms of similar substance or the negative thereof, are forward looking statements. Forward looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of Carphone's, Dixons' or the Combined Group's operations and potential synergies resulting from the Merger; and (iii) the effects of government regulation on Carphone's, Dixons' or the Combined Group's business.

Such forward looking statements involve risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results to differ materially from those projected or implied in any forward looking statements. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward looking statements, which speak only as of the date hereof. Carphone and Dixons disclaim any obligation to update any forward looking or other statements contained herein, except as required by applicable law or regulation.

If you are in any doubt about the contents of this Announcement or the action you should take, you are recommended to seek your own independent financial advice immediately from your stockbroker, bank manager, solicitor, accountant or independent financial adviser duly authorised under the Financial Services and Market Act 2000 (as amended) if you are resident in the United Kingdom or, if not, from another appropriately authorised independent financial adviser.

 

No profit forecasts or estimates

No statement in this Announcement is intended as a profit forecast or estimate for any period and no statement in this Announcement should be interpreted to mean that earnings or earnings per share for Carphone or Dixons, as appropriate, for the current or future financial years would necessarily match or exceed the historical published earnings or earnings per share for Carphone or Dixons, as appropriate. 

 

Opening Position and Dealing Disclosure Requirements under the Code

Under Rule 8.3(a) of the Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Further information

This Announcement is for information purposes only. It is not intended to and does not constitute, or form part of, any offer, invitation or the solicitation of any offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities, or the solicitation of any vote or approval in any jurisdiction, pursuant to the Merger or otherwise nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. The Merger will be effected solely by means of the Scheme Document which, together with the Forms of Proxy, will contain the full terms and conditions of the Merger including details of how to vote in respect of the Merger.

Dixons will prepare the Scheme Document to be distributed to Dixons Shareholders and Carphone will prepare the Carphone Circular to be distributed to Carphone Shareholders. Carphone will also publish the Dixons Carphone Prospectus containing information about the New Dixons Carphone Shares and the Combined Group. Dixons urges Dixons Shareholders to read the Scheme Document and the Dixons Carphone Prospectus when they become available because they will contain important information in relation to the Merger, the New Dixons Carphone Shares and the Combined Group. Carphone urges Carphone Shareholders to read the Carphone Circular and the Dixons Carphone Prospectus when they become available because they will contain important information in relation to the Merger, the New Dixons Carphone Shares and the Combined Group. Any vote in respect of the Scheme or other response in relation to the Merger should be made only on the basis of the information contained in the Scheme Document and the Dixons Carphone Prospectus, or the Carphone Circular and the Dixons Carphone Prospectus, as appropriate.

This Announcement has been prepared for the purposes of complying with English law, the rules of the London Stock Exchange and the City Code and the information disclosed may not be the same as that which would have been disclosed if this Announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside the United Kingdom.

This Announcement does not constitute a prospectus or prospectus equivalent document.

Please be aware that addresses, electronic addresses and certain other information provided by Dixons Shareholders, persons with information rights and other relevant persons for the receipt of communications from Dixons may be provided to Carphone during the Offer Period as required under Section 4 of Appendix 4 of the Code.

Overseas jurisdictions

The release, publication or distribution of this Announcement in jurisdictions other than in the United Kingdom may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the United Kingdom should inform themselves about, and observe, any applicable requirements. Any failure to comply with applicable requirements may constitute a violation of the laws and/or regulations of any such jurisdiction. To the fullest extent permitted by applicable law, the companies and persons involved in the Merger disclaim any responsibility or liability for the violation of such requirements by any person.

The Merger relates to the acquisition of shares of a UK company and is proposed to be effected by means of a scheme of arrangement under the laws of England and Wales. A transaction effected by means of a scheme of arrangement is not subject to proxy solicitation or tender offer rules under the US Exchange Act. Accordingly, the Scheme is subject to the disclosure requirements, rules and practices applicable in the United Kingdom to schemes of arrangement, which differ from the requirements of US proxy solicitation or tender offer rules. However, if Carphone were to elect to implement the Merger by means of a Merger Offer, such Merger Offer will be made in compliance with all applicable laws and regulations, including Section 14(e) of the US Exchange Act and Regulation 14E thereunder. Such a Merger Offer would be made in the United States by Carphone and no one else. In addition to any such Merger Offer, Carphone, certain affiliated companies and the nominees or brokers (acting as agents) may make certain purchases of, or arrangements to purchase, shares in Dixons outside such Merger Offer during the period in which such Merger Offer would remain open for acceptance. If such purchases or arrangements to purchase were to be made they would be made outside the United States and would comply with applicable law, including the US Exchange Act. Any information about such purchases will be disclosed as required in the UK, will be reported to a Regulatory Information Service and will be available on the London Stock Exchange website: www.londonstockexchange.com.

The financial information included in this Announcement has been prepared in accordance with accounting standards applicable in the UK and thus may not be comparable to financial information of US companies or companies whose financial statements are prepared in accordance with generally accepted accounting principles in the United States.

The New Dixons Carphone Shares have not been and will not be registered under the US Securities Act or under the securities laws of any state or other jurisdiction of the United States. Accordingly, the New Dixons Carphone Shares may not be offered, sold, resold, delivered, distributed or otherwise transferred, directly or indirectly, in or into or from the United States absent registration under the US Securities Act or an exemption therefrom. The New Dixons Carphone Shares are expected to be issued in reliance upon the exemption from the registration requirements of the US Securities Act provided by Section 3(a)(10) thereof. Dixons Shareholders (whether or not US persons) who are or will be affiliates (within the meaning of the US Securities Act) of Carphone or Dixons prior to, or of Carphone after, the Effective Date will be subject to certain US transfer restrictions relating to the New Dixons Carphone Shares received pursuant to the Scheme.  For the purposes of qualifying for the exemption from the registration requirements of the US Securities Act afforded by Section 3(a)(10), Dixons will advise the Court that its sanctioning of the Scheme will be relied upon by Carphone as an approval of the Scheme following a hearing on its fairness to Dixons Shareholders.

The receipt of New Dixons Carphone Shares pursuant to the Merger by a US Dixons Shareholder may be a taxable transaction for US federal income tax purposes and under applicable state and local, as well as foreign and other, tax laws. Each Dixons Shareholder is urged to consult his independent professional adviser immediately regarding the tax consequences of the Merger.

It may be difficult for US Dixons Shareholders to enforce their rights and claims arising out of the US federal securities laws, since Carphone and Dixons are located in countries other than the United States, and some or all of their officers and directors may be residents of countries other than the United States. US Dixons Shareholders may not be able to sue a non-US company or its officers or directors in a non-US court for violations of the US securities laws. Further, it may be difficult to compel a non-US company and its affiliates to subject themselves to a US court's judgment.

None of the securities referred to in this Announcement have been approved or disapproved by the SEC, any state securities commission in the United States or any other US regulatory authority, nor have such authorities passed upon or determined the adequacy or accuracy of the information contained in this Announcement. Any representation to the contrary is a criminal offence in the United States.

Unless otherwise determined by Carphone or required by the Code, and permitted by applicable law and regulation, the Merger will not be made available, directly or indirectly, in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction and no person may vote in favour of the Merger by any such use, means, instrumentality or form within a Restricted Jurisdiction or any other jurisdiction if to do so would constitute a violation of the laws of that jurisdiction. Accordingly, copies of this Announcement and all documents relating to the Merger are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction, and persons receiving this Announcement and all documents relating to the Merger (including custodians, nominees and trustees) must not mail or otherwise distribute or send them in, into or from such jurisdictions where to do so would violate the laws in that jurisdiction.

The availability of New Dixons Carphone Shares under the Merger to Dixons Shareholders who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions in which they are resident. Persons who are not resident in the UK should inform themselves of, and observe, any applicable legal or regulatory requirements.

Copies of this Announcement and formal documentation relating to the Merger will not be and must not be, mailed or otherwise forwarded, distributed or sent in, into or from any jurisdiction where to do so would violate the laws of that jurisdiction.

Publication on websites and availability of hard copies

A copy of this Announcement is and will be available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, for inspection on Carphone's website www.cpwplc.com and on Dixons' website www.dixonsretail.com by no later than 12 noon (London time) on the day following this Announcement. For the avoidance of doubt, the contents of those websites are not incorporated and do not form part of this Announcement.

Carphone Shareholders may request a hard copy of this Announcement by contacting Tim Morris (Carphone Company Secretary and General Counsel) during business hours on +44 20 8617 6002 or by submitting a request in writing to Tim Morris at Carphone's Head Office at 1 Portal Way, London, W3 6RS. Dixons Shareholders may request a hard copy of this Announcement by contacting Capita Asset Services during business hours on 0871 664 0321 or by submitting a request in writing to Capita Asset Services at the Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU.

You may also request that all future documents, announcements and information to be sent to you in relation to the Merger should be in hard copy form.

Rounding

Certain figures included in this Announcement have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.



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

THE FOLLOWING ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS AND DIXONS SHAREHOLDERS SHOULD NOT MAKE ANY INVESTMENT DECISION IN RELATION TO THE NEW DIXONS CARPHONE SHARES EXCEPT ON THE BASIS OF THE INFORMATION IN THE SCHEME DOCUMENT AND THE DIXONS CARPHONE PROSPECTUS WHICH ARE PROPOSED TO BE PUBLISHED IN DUE COURSE

For immediate release

 

15 May 2014

RECOMMENDED ALL-SHARE MERGER OF CARPHONE WAREHOUSE GROUP PLC

AND DIXONS RETAIL PLC

 

1.              Introduction

Further to the announcements made by Dixons Retail plc and Carphone Warehouse Group plc on 24 February 2014 and 24 March 2014, the Boards of Dixons and Carphone are pleased to announce that they have reached agreement on the terms of a recommended all-share merger of Carphone and Dixons. It is proposed that the Merger will be effected by way of a Court-sanctioned scheme of arrangement of Dixons under Part 26 of the Companies Act. It is proposed that the merged entity will be called "Dixons Carphone plc".

 

Dixons Carphone will create a leader in European consumer electricals, mobiles, connectivity and related services.

 

2.              The Merger

Under the terms of the Merger, which will be subject to the Conditions and further terms set out below and in Appendix I to this Announcement and to be set out in the Scheme Document, if the Scheme becomes Effective, Dixons Shareholders will receive:

 

0.155 of a New Dixons Carphone Share in exchange for each Dixons Share

 

The Merger will result in each of Dixons' and Carphone's Shareholders holding exactly 50 per cent. of Dixons Carphone on a fully diluted basis taking into account existing share options and award schemes for both companies. [1]

 

The exchange ratio has been determined on the basis that no dividend will be payable by either of Carphone or Dixons prior to Completion, other than an ordinary course Carphone final dividend of 4 pence per Carphone Share in respect of the financial year to 29 March 2014.

3.              Background to and reasons for the Merger

The consumer electronics and mobile phone retail landscapes have evolved significantly over the last few years. In particular, the growth of smartphones, tablets and speed of internet access both in and out of the home, together with an increasing number of connected devices, are altering the way people live their lives, communicate and use technology. This creates a significant new opportunity for retailers to provide a broader range of products, connectivity, services and solutions to customers.

The Carphone Directors and the Dixons Directors ("we") believe that the winners within this evolving landscape will need to combine:

·      a broad range of products and connectivity solutions;

·      expert product knowledge backed up by independent, trusted advice;

·      a full range of support services;

·      multi-channel capabilities; and

·      a competitive pricing model.

The directors of both Dixons and Carphone believe therefore that combining these two already strong businesses, with industry-leading management teams, will provide the opportunity to create a new retailer for the new digital age. This is underpinned by four principal drivers:

 (i)        The markets in which Carphone and Dixons operate are converging

Technology developments, in particular, hardware innovation, internet connectivity speeds, content evolution and cloud-based storage, have been advancing rapidly. This has been particularly prevalent following the advent of the smartphone and has been supported by increasing consumer adoption rates. This has led to greater convergence of both smart connected devices and the wider markets in which both Dixons and Carphone operate.  These trends are the key building blocks for the so-called 'Internet of Things', extending connectivity of devices, systems and services so that they interact with themselves, with users and with their environment - creating significant new service opportunities as customers seek help and support in the connected world.

In light of the convergence of their respective markets, Carphone and Dixons have become highly complementary businesses. Carphone is one of Europe's largest independent retailers of mobile phones, which are central to how this technology will operate and be controlled, and Dixons is one of Europe's largest retailers of electrical goods with a product range which includes many of the devices that make up the Internet of Things. We believe that the current market propositions, together with a comprehensive service and support infrastructure, create the opportunity both for a compelling end-to-end proposition and for developing a long-term relationship with our customers.

(ii)       The Combined Group will have improved scale and reach

The improved scale and reach in Dixons Carphone's multi-channel offerings are expected to benefit customers, suppliers and network operators alike.

The increased scale from combining Dixons and Carphone will enable the Combined Group to invest more efficiently in systems, employees and training in order to have better conversations with our customers about their needs in a multi-channel world.  These conversations are increasingly viewed as a critical differentiator not only by customers but also by suppliers seeking to communicate their new technologies effectively, and the Merger is expected to enhance further the Combined Group's relevance to its suppliers and network partners.

The complementary store footprint in the UK will also enable the Combined Group to offer customers increased points of presence for services such as Click&Collect or Pay&Collect.

(iii)      Significant synergies arise from the Merger

The Boards of Carphone and Dixons believe that the Merger will deliver significant value to their shareholders through a combination of enhanced commercial opportunities as well as operating efficiencies. We believe that synergies arising from the Merger will be at least £80 million which we expect to be delivered in full in the financial year 2017/18.

In addition to these recurring synergies, further significant additional value from growth opportunities is expected, as outlined under "Synergies and integration" in paragraph 8 below.

(iv)       The Merger will provide a stronger platform to create global opportunities for growth through the provision of services to consumers and businesses

Carphone and Dixons have already taken steps to develop their services platform and believe that the Merger will enhance opportunities to develop this further for consumers and businesses. Carphone has already established contracts with "blue chip" businesses such as Aviva, British Gas and Royal Bank of Scotland to provide services and support, and has opened 31 Samsung stores in seven countries and established a partnership with the Media Saturn Group in the Netherlands. Dixons has started to provide services such as delivering white goods on behalf of suppliers sold by third parties and is exploring the possibilities for utilising its sourcing operations in Hong Kong for the benefit of other electrical retailers internationally.

We believe that the Merger will enable the Combined Group to leverage the strong platforms, capabilities, experiences and skills of both businesses to offer corporate and end-user customers a significantly enhanced and broader range of profitable services.

4.              Recommendations

The Dixons Directors, who have been so advised by Citigroup Global Markets Limited, consider the terms of the Merger to be fair and reasonable. In providing its advice, Citigroup Global Markets Limited has taken into account the commercial assessments of the Dixons Directors. Accordingly, the Dixons Directors intend unanimously to recommend Dixons Shareholders to vote in favour of the Scheme at the Court Meeting and the Special Resolutions to be proposed at the Dixons General Meeting, as the Dixons Directors who hold or are beneficially entitled to Dixons Shares have irrevocably undertaken to do in respect of their own beneficial holdings of 2,149,695 Dixons Shares, representing in aggregate approximately 0.06 per cent. of Dixons' ordinary share capital in issue on 14 May 2014 (being the latest practicable date prior to this Announcement).

The Carphone Directors, who have been so advised by Deutsche Bank, consider the Merger to be in the interests of Carphone Shareholders. In providing its advice, Deutsche Bank has taken into account the commercial assessments of the Carphone Directors. Accordingly, the Carphone Directors intend unanimously to recommend Carphone Shareholders to vote in favour of the resolutions to be proposed at the Carphone General Meeting to approve the Merger and related matters, as the Carphone Directors who hold or are beneficially entitled to Carphone Shares have irrevocably undertaken to do in respect of their own beneficial holdings of 153,680,206 Carphone Shares representing, in aggregate, approximately 26.7 per cent. of Carphone's ordinary share capital in issue on 14 May 2014 (being the latest practicable date prior to this Announcement).

5.              Information relating to Carphone

Over the last 25 years, Carphone's experienced management team has grown the business to become one of the largest independent telecommunications retailers in Europe, operating over 2,000 stores across seven European countries, supported by a well-developed online proposition. Carphone employs highly-trained consultants who provide specialist and independent advice across the products and services that Carphone offers, fostering long-standing relationships with customers beyond the initial sale. Carphone also benefits from strong relationships with the major Western European network operators and suppliers and its management team has a proven track record of establishing and growing successful businesses and driving value in partnerships.

Carphone has recently created its Connected World Services business, which aims to leverage the specialist skills, operating processes and technology of the business to provide services to third parties looking to develop their own connected world solutions. Connected World Services has already established a sizeable customer base and is actively exploring further growth opportunities.

Carphone Shares are traded on the London Stock Exchange and the company is a member of the FTSE 250 index.

6.              Information relating to Dixons

Dixons is one of the leading specialist electrical multi-channel retailing and services companies in Europe. It has expertise in selling electricals and provides a broad range of products to its customers across consumer electricals, computing and domestic appliances, complemented by related services and accessories. Dixons provides this through a multi-channel offering, online and in engaging and exciting store environments, with 943 stores in nine countries. It provides product support services as well as added value services, such as KnowHow, Showhow, fault&fix, flexible delivery options, installation and repair services to its customers. Dixons also undertakes business to business sales and services. Over the last seven years, Dixons has been significantly streamlined to focus on its core markets and has transformed its business by improving store environments, its online offer and product ranges as well as the expertise of its employees.  It has established a strong business model enabling it to offer sustainable competitive pricing in a multi-channel world.  These improvements have been reflected in record levels of customer satisfaction scores being recorded in mystery shops and customer exit surveys.

Dixons Shares are traded on the London Stock Exchange and the company is a member of the FTSE 250 index.

 

7.              Strategy of the Combined Group

The Merger will enable Dixons Carphone to provide customers with an integrated offering across a broad range of technology, connectivity and services beyond the point of sale, enhancing the lifetime value of the Combined Group's customers and improving the offering to existing and new service partners. We believe that this will provide the opportunity to increase the value of the core combined retail operation, the Combined Group's service proposition and its business capability.

The directors of Carphone and Dixons believe that, in addition to the strategy of delivering the synergies identified in paragraph 8, there are three significant additional growth opportunities that have been identified and will be central to the overall strategy of the Combined Group:

(i)         Generating incremental value by providing a seamless multi-channel offering throughout the retail operation, across a comprehensive range of products and connectivity services to benefit customers and our business partners

The directors of Carphone and Dixons believe that we have the opportunity to create enhanced revenue opportunities, in addition to developing an integrated mobile retailing proposition, from an improved customer offering across multiple electrical categories, enabled by a true multi-channel approach, including a wider and more convenient combined footprint for customers. In the UK, Ireland and the Nordics customers will be able to shop in store, online or using a combination of both through Click&Collect or Pay&Collect through our extensive store network.

In store we will cross-fertilise existing technologies and capabilities from Dixons and Carphone to allow simplified and improved customer journeys for multiple connected products, enabling the Combined Group's business partners to see their products and services presented to customers in a compelling manner enhanced by the customer's interaction with Dixons Carphone's highly trained staff.

These incremental capabilities and improved offerings coupled with ever-increasing data speeds and a broadening range of connected electrical devices will, we believe, enhance revenue streams for the Combined Group and its business partners, suppliers and network operators alike.

 (ii)      Driving significant revenue growth through incremental service offerings whilst providing customers with a best in class and comprehensive service proposition both in store and beyond the point of sale

Building on our well-established service offering of KnowHow and Geek Squad we believe that with the Merger the Combined Group will be well placed to extend Dixons Carphone's existing service offering even further across the entire range of connected and electricals products. Through an end-to-end service proposition including product set-up, delivery, ongoing peace of mind product support and insurance, as well as repairs, accessories and recycling, the Combined Group can extend the relationship with customers to provide them with the full service offering they may need anytime, anywhere and drive significant incremental lifetime value opportunities and recurring revenue streams for the Combined Group.

 (iii)     Delivering substantial value enhancement by leveraging existing capabilities and providing Connected World Services to global business partners

The Combined Group will aim to leverage its core systems, services and product expertise for the benefit of both third party customers and suppliers.

Carphone and Dixons have a shared vision for the future opportunity that exists to exploit their respective expertise in building additional services revenue streams. The Combined Group's focus will be on both existing and new markets. Although this business is relatively small, we believe that this can evolve on a global basis, with relatively low capital expenditure, and drive four additional revenue streams over time:

a)         Connected retailing

Dixons Carphone intends to offer a full range of propositions for multi-channel retailing for connected products and services. Opportunities include specific consultancy services such as sales processes, store design and customer fulfilment and loyalty, all the way through to full scale partnerships for retailers, networks and manufacturers.

 

b)         Services and support

We intend to deliver technical support solutions for connected devices using existing logistics infrastructure, insurance expertise (including administration and claims management), repairs, after-sales and technical support capabilities.

c)         Multi-channel platform

The Combined Group intends to provide its technology platforms and managed services to support complex transactions, connections to service providers and customer relationship management.  For example, we intend to be able to offer an end-to-end turn-key software and training solution for partner retailers who wish to navigate the complexities of hardware and networks and deliver a comprehensive mobile and connectivity offer for their customers. 

d)         Global partnerships

Opportunities will include leveraging the Combined Group's scale and commercial relationships, enabling partner retailers not only to source hardware, own brand consumer electrical products and accessories but also to provide network operator services.

We believe that the relationships, resources and combined skills of Dixons Carphone will enable the development of a much stronger business platform than were each company to pursue this strategy individually.

8.              Synergies and integration

The Carphone Directors and Dixons Directors, having reviewed and analysed the potential benefits of the Merger, based on their experience of operating in the consumer electrical and mobile retail sectors, and taking into account the factors they can influence, believe that the Combined Group will be able to achieve integrated mobile retailing and procurement synergies, together with cost savings, of at least £80 million on a recurring basis, which are expected to be delivered in full in the financial year 2017/18. The Boards of Carphone and Dixons expect Dixons Carphone to deliver these synergies progressively, achieving almost half of them in financial year 2015/16.

The principal sources of quantified synergies are as follows:

 

-     approximately half of the identified synergies are expected to come from integrated mobile retailing and procurement synergies. These comprise synergies in the UK, Ireland and the Nordics resulting from creating an integrated mobile offering in Dixons shops, which will promote a seamless customer journey across all technology categories, underpinned by the use of Carphone's expertise in mobile, together with procurement benefits resulting from the Combined Group's scale; and

-     approximately half are expected to come from synergies, including rent and other infrastructure costs, resulting from the rationalisation of certain operational and support functions where there is duplication, both across the UK and in the Nordic regions.

 

In addition to these quantified synergies, the Carphone Directors and the Dixons Directors believe that further value will be created through additional growth opportunities including:

 

-     enhanced revenue opportunities from an improved customer offering across electrical, mobiles and connectivity, enabled by a true multi-channel approach, including a wider and more convenient combined footprint for customers;

-     developing a world class service proposition for customers; and

-     enhancement of the existing Connected World Services opportunities for both existing and new business partners around the globe.

 

It is expected that there will be significant job creation through the rollout of the Dixons Carphone integrated retail offering, resulting in an increase of approximately 4 per cent. of the Combined Group's full-time equivalent employees. This is expected to be substantially complete by the end of 2016. This increase will be partially offset as a result of the rationalisation of certain operational and support functions resulting, in these functions, in a decrease of approximately 2 per cent. of the Combined Group's full-time equivalent employees. Any changes related to the rationalisation are unlikely to take effect prior to 2015 and are anticipated to be implemented gradually over the three years after Completion. Taken together with the job creation opportunities, it is expected there will be a net increase of approximately 2 per cent. of the Combined Group's full-time equivalent employees as a result of the Merger. The integration of the businesses will clearly require some roles to change but, with more new roles being created than those that are lost, it is hoped that there will be opportunities for many of the people involved.  Specific roles have not yet been identified, outcomes will depend on integration planning and will, of course, be subject to consultation with our colleagues.

 

It is expected that the realisation of the identified synergies will result in one-off exceptional costs of approximately £55 - 60 million, largely incurred by the end of financial year 2015/16. It is also expected that incremental capital expenditure of approximately £60 - 70 million will be incurred during the period to the end of financial year 2017/18. Aside from the integration costs and the planned incremental capital expenditure, no material dis-synergies are expected in connection with the Merger.  The identified synergies will accrue as a direct result of the Merger and would not be achieved on a standalone basis.

 

Carphone and Dixons are establishing a full integration team, bringing together the best relevant capabilities of both businesses, to ensure that the synergies of the Merger are maximised. We are confident that the integration of Carphone and Dixons can be achieved without undue disruption to the underlying operations of either business.

 

As at the date of this Announcement, an integration plan is being developed. As soon as practicable following the Effective Date, the Combined Group will aim to have fully validated its initial synergy assumptions, agreed the target operating model of the Combined Group and completed the detailed integration plan across the Combined Group's business. The integration plan, once finalised, will set out the scope of the integration process and quantified objectives, proposed organisation structures and processes to be reviewed and subsequently implemented, together with an overall integration programme and stakeholder communication and consultation timetable. Finalisation of the integration plan will be subject to engagement with appropriate stakeholders, including employee representative bodies.

 

These statements of estimated cost savings and synergies relate to future actions and circumstances which, by their nature, involve risks, uncertainties and contingencies.  As a result, the cost savings and synergies referred to may not be achieved, may be achieved later or sooner than estimated, or those achieved could be materially different from those estimated. For the purposes of Rule 28 of the City Code, these statements of estimated cost savings and synergies are the responsibility of the Directors of Carphone, in its capacity as offeror under the terms of the Merger.  Appendix IV includes reports in connection with the synergy statements from Deloitte LLP and Deutsche Bank, as required pursuant to the City Code. Deloitte LLP and Deutsche Bank have given and not withdrawn their consent to the publication of their reports in the form and context in which they are included.

 

These statements are not intended as a profit forecast and should not be interpreted as such.

 

9.              Management, employees and head office location

The Board of Dixons Carphone will be drawn equally from the Boards of both companies and will comprise 14 Directors, including nine Non-Executive Directors.

As from Completion, Sir Charles Dunstone, Chairman of Carphone, will become the Chairman of Dixons Carphone. Roger Taylor, Deputy Chairman of Carphone, and John Allan, Chairman of Dixons, will become Co-Deputy Chairmen and John Allan will also become Senior Independent Director; Sebastian James, CEO of Dixons, will become CEO; Andrew Harrison, CEO of Carphone, will become Deputy CEO; Humphrey Singer, CFO of Dixons, will become CFO; Katie Bickerstaffe, CEO of UK & Ireland Dixons, and Graham Stapleton, CEO of UK & Ireland Carphone, will join the Dixons Carphone Board as Executive Directors and retain their current responsibilities. In addition, the Dixons Carphone Board will comprise six other Non-Executive Directors. John Gildersleeve, Baroness Morgan of Huyton and Gerry Murphy will be the Non-Executive Directors appointed from Carphone. Tim How, Jock Lennox and Andrea Gisle Joosen will be the Non-Executive Directors appointed from Dixons.

Nigel Langstaff and John Allwood will step down from the Carphone Board upon the Scheme becoming Effective. Each of the Carphone Directors stepping down from the Carphone Board is fully supportive of the rationale for the Merger and of its terms and conditions.

Dharmash Mistry and Prof. Dr. Utho Creusen will step down from the Dixons Board upon the Scheme becoming Effective and will not join the Dixons Carphone Board. Each of the Dixons Directors who will not join the Board of Dixons Carphone is fully supportive of the rationale for the Merger and of its terms and conditions.

The Boards of Carphone and Dixons recognise that in order to achieve the expected benefits of the Merger, operational and administrative restructuring will be required following Completion.

The Combined Group will in due course consolidate its head office functions within one principal location. Dixons and Carphone are currently working on assessing the solution which best suits the future business needs of the Combined Group.

Carphone has given assurances that following Completion the existing employment rights of Dixons' and Carphone's employees will be fully safeguarded.

10.            Irrevocable undertakings

In aggregate, Carphone and Dixons have received irrevocable undertakings from:

-     those of the Dixons Directors and certain members of their families who hold or are beneficially entitled to Dixons Shares to vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the Dixons General Meeting, in respect of an aggregate of 2,149,695 Dixons Shares, representing, in aggregate, approximately 0.06 per cent. of Dixons' ordinary share capital in issue on 14 May 2014 (being the latest practicable date prior to this Announcement); and

 

-     those of the Carphone Directors and certain members of their families who hold or are beneficially entitled to Carphone Shares to vote in favour of the resolutions to be proposed at the Carphone General Meeting to approve the Merger and related matters, in respect of an aggregate of 153,680,206 Carphone Shares, representing, in aggregate, approximately 26.7 per cent. of Carphone's ordinary share capital in issue on 14 May 2014 (being the latest practicable date prior to this Announcement).

 

Further details of the irrevocable undertakings in relation to the Merger are set out in Appendix III to this Announcement.

11.            Lock-in commitments

Each of the Proposed Directors of the Dixons Carphone Board has given a binding undertaking not to dispose of any of his or her beneficial holdings in shares of Dixons Carphone (or any interest therein), which he or she holds on Admission or subsequently acquires during the lock-in period. All of the Proposed Directors have given this undertaking for a period of 24 months following Completion with the exception of Katie Bickerstaffe and Graham Stapleton who have given this undertaking for a period of 12 months, in line with the undertakings expected to be received from other senior executives.

12.            Accounting considerations

The Carphone financial year ends on or around 31 March and the Dixons financial year ends on 30 April. Dixons Carphone will look at the merits of adopting each of these year ends but its current intention is to adopt an end of April year end.

For accounting purposes, it is expected that Dixons will be consolidated into Carphone's balance sheet. A fair value exercise in respect of Dixons' assets and liabilities will be conducted following Completion, resulting in Dixons' assets and liabilities being included at fair value on the Combined Group's balance sheet. Intangible assets arising will include goodwill and brands.

13.            Financing

Unanimous consent has been obtained from Carphone's lending syndicate to amend and retain its existing £400 million RCF and £250 million term loan, both of which mature in April 2017. Additionally, commitments have been obtained for a further RCF of £250 million for the Combined Group, on substantially the same terms as Carphone's existing RCF, and also maturing in April 2017. Subject to approval of the Merger, Dixons' RCF will be cancelled. Dixons has bonds in issue of £101 million which are due in August 2015 and bonds in issue of £150 million which are due in September 2017.  Completion will trigger a 60-day put option, at 101 per cent. of par plus accrued interest, for each bondholder, after which the ability to put any outstanding bonds will end.  Given that the current trading prices of the bonds are significantly above par, the Combined Group does not expect these put options to be exercised, but if this did occur, the additional bank facilities available to the Combined Group provide appropriate headroom.

The Combined Group therefore has appropriate committed banking facilities to ensure that Dixons Carphone will have a strong financial profile following Completion, which will enable the Combined Group to retain flexibility whilst reviewing its optimal capital structure going forward.

14.            Dividends and dividend policy

Dixons Carphone intends to adopt a dividend policy in line with Carphone's current dividend policy of 3.0x dividend cover based on Headline Earnings. The exchange ratio of the Merger has been determined on the basis that no dividend will be payable by either of Carphone or Dixons prior to Completion, other than an ordinary course Carphone final dividend of 4 pence per Carphone Share in respect of the financial year to 29 March 2014.

15.            Structure of the Merger

It is intended that the Merger will be implemented by way of a Court-sanctioned scheme of arrangement between Dixons and the Dixons Shareholders, under Part 26 of the Companies Act, under which Carphone will acquire all of the shares in Dixons.

The purpose of the Scheme is to provide for Carphone to become the holder of the entire issued and to be issued ordinary share capital of Dixons. This is to be achieved by the cancellation of the Dixons Shares held by Dixons Shareholders and the application of the reserve arising from such cancellation in paying up in full such number of new Dixons Shares as is equal to the number of Dixons Shares cancelled, and issuing the same to Carphone in consideration for which Dixons Shareholders will receive consideration on the basis set out in paragraph 2 of this Announcement.

The Merger is subject to the Conditions and certain further terms referred to in Appendix I to this Announcement and to be set out in the Scheme Document, and will only become Effective if, among other things, the following events occur on or before 31 December2014 or such later date as Carphone and Dixons may agree and (if required) the Court and the Panel may allow:

a)   a resolution to approve the Scheme being passed by a majority in number of the Dixons Shareholders who are present and voting at the Court Meeting, either in person or by proxy, representing 75 per cent. or more in value of the Dixons Shares voted by those Dixons Shareholders;

b)   the Special Resolutions necessary to implement the Scheme and to approve the related Capital Reduction being passed by the requisite majority of Dixons Shareholders at the Dixons General Meeting;

c)   the Scheme being sanctioned (with or without modification, on terms agreed by Carphone and Dixons) and the related Capital Reduction being confirmed by the Court;

d)   a copy of each of the Court Orders (together with the Statement of Capital) being delivered to the Registrar of Companies and, if so ordered by the Court, the Court Orders being registered by the Registrar of Companies together with the Statement of Capital;

e)   relevant anti-trust approvals being received on terms satisfactory to Carphone and Dixons (acting reasonably);

f)    the resolutions to be proposed at the Carphone General Meeting to approve, effect and implement the Merger and to grant authority to the Carphone Directors to allot the New Dixons Carphone Shares, being passed by the requisite majority of Carphone Shareholders (but, for the avoidance of doubt, not the other resolutions to be proposed at the Carphone General Meeting which shall not be conditions to the Merger); and

g)   the UK Listing Authority having acknowledged to Carphone or its agent (and such acknowledgement not having been withdrawn) that the application for the admission of the New Dixons Carphone Shares to listing on the premium segment of the Official List has been approved and (subject to satisfaction of any conditions to which such approval is expressed) will become effective as soon as a dealing notice has been issued by the UK Listing Authority and the London Stock Exchange having acknowledged to Carphone or its agent (and such acknowledgement not having been withdrawn) that the New Dixons Carphone Shares will be admitted to trading on the London Stock Exchange's main market for listed securities.

Upon the Scheme becoming Effective, it will be binding on all Dixons Shareholders, irrespective of whether or not they attended or voted at the Court Meeting or the Dixons General Meeting (and if they attended and voted, whether or not they voted in favour), and share certificates in respect of Dixons Shares will cease to be valid and entitlements to Dixons Shares held within the CREST system will be cancelled.

Dixons Shares will be acquired by Carphone pursuant to the Scheme fully paid and free from all liens, charges, equities, encumbrances, rights of pre-emption and any other interests of any nature whatsoever and together with all rights attaching thereto, including voting rights and the rights to receive and retain in full all dividends and other distributions declared, made or paid on or after the Effective Date, save where the record date for such dividend or other distribution falls prior to the Effective Date or otherwise where Carphone and Dixons agree.

The New Dixons Carphone Shares issued to Dixons Shareholders pursuant to the Scheme will be issued credited as fully paid and will rank pari passu in all respects with existing Carphone Shares, including the right to receive dividends and other distributions declared, made or paid on Carphone Shares by reference to a record date falling after the Effective Date.  The New Dixons Carphone Shares will be issued in registered form and will trade under the same ISIN number as the existing Carphone Shares.

Fractions of New Dixons Carphone Shares will not be allotted or issued pursuant to the Merger and fractional entitlements will be rounded down to the nearest whole number of New Dixons Carphone Shares.

If the Scheme does not become Effective on or before 31 December 2014 (or such later date as Carphone and Dixons may agree with the consent of the Panel), it will lapse and the Merger will not proceed.

The Scheme Document will include full details of the Scheme, together with notices of the Court Meeting and the Dixons General Meeting. The Scheme Document will also contain the expected timetable for the Merger, and will specify the necessary actions to be taken by Dixons Shareholders.

The Scheme Document together with the Forms of Proxy will be posted to Dixons Shareholders and, for information only, to persons with information rights and to holders of options and awards granted under the Dixons Share Schemes on or around the end of June 2014. For the purposes of Appendix 7 to the Code and with the agreement of Dixons, the Panel has consented to these arrangements. It is expected that the Court Meeting (subject to the approval of the Court) will be held in July 2014. The Dixons General Meeting is also expected to be held immediately following the conclusion (or adjournment) of the Court Meeting. Subject to the satisfaction or waiver of the Conditions, it is expected that the Scheme will become Effective in the third quarter of 2014.  

16.            Carphone Shareholder approval

In view of the size of the transaction, the Merger will require the approval of Carphone Shareholders. Accordingly, Carphone will be required to seek the approval of Carphone Shareholders for the Merger at the Carphone General Meeting. Carphone is required to prepare and send to Carphone Shareholders a circular summarising the background to and reasons for the Merger and which will include a notice convening the Carphone General Meeting. The Merger is conditional on, amongst other things, the resolutions to approve, effect and implement the Merger, and to grant authority to the Carphone Directors to allot the New Dixons Carphone Shares being passed by the requisite majority of Carphone Shareholders at the Carphone General Meeting (but not, for the avoidance of doubt, the other resolutions to be proposed at the Carphone General Meeting which shall not be conditions to the Merger).

 

The Carphone Circular containing the notice of the Carphone General Meeting will be sent to Carphone Shareholders at the same time as the Scheme Document is posted to Dixons Shareholders, which is expected to be on or around the end of June 2014. It is expected that the Carphone General Meeting will be held in July 2014.

 

Carphone will also be required to make the Dixons Carphone Prospectus available to the public in accordance with the Prospectus Rules. The Dixons Carphone Prospectus will contain information relating to the Combined Group and the New Dixons Carphone Shares. It is expected that the Dixons Carphone Prospectus will be published at or around the same time as the Scheme Document is posted to Dixons Shareholders and Carphone's Circular is posted to Carphone Shareholders.

17.            Dixons Share Schemes and Carphone Share Schemes

Dixons Share Schemes

 

Outstanding executive share options and PSP awards, which are not already exercisable or vested, will vest immediately on the sanction of the Scheme by the Court to the extent that performance conditions are satisfied. PSP awards made in 2013 will be pro-rated by 50 per cent.. Outstanding recruitment and retention awards will also vest on the sanction of the Scheme by the Court. Executive share options which are already vested will participate in the Scheme.

 

Carphone will offer Sharesave participants the opportunity to rollover Sharesave options granted in 2011, 2012 and 2013, enabling them to exercise their options in full over shares in Dixons Carphone at the maturity dates free of income tax, adjusted as appropriate.

 

Carphone Share Schemes

 

Outstanding share option awards under the Carphone Share Schemes, the first of which (apart from the Sharesave plan) are due to vest in 2017 and 2018, will not vest as a result of the Merger and will continue on similar terms. The parties are discussing arrangements for Dixons employees to participate in Dixons Carphone's share schemes.

 

18.            Confidentiality agreement

Carphone and Dixons have entered into a mutual Confidentiality Agreement dated 30 January 2014 pursuant to which each of Carphone and Dixons has undertaken to keep certain information relating to the Merger and  the other party confidential and not to disclose it to third parties (other than to permitted disclosees) unless required by law or regulation. These confidentiality obligations will remain in force until completion of the Merger.

 

19.            Listing, dealings and settlement of the New Dixons Carphone Shares

Applications will be made to the UK Listing Authority for the New Dixons Carphone Shares to be admitted to the premium listing segment of the Official List and to the London Stock Exchange for the New Dixons Carphone Shares to be admitted to trading on the London Stock Exchange's main market for listed securities. It is expected that Admission will become effective and that dealings for normal settlement in the New Dixons Carphone Shares will commence on the London Stock Exchange at 8.00 a.m. on or shortly after the Effective Date.

20.            De-listing of Dixons

Prior to the Scheme becoming Effective, applications will be made to the UK Listing Authority for the cancellation of the listing of the Dixons Shares on the Official List and to the London Stock Exchange for the cancellation of trading of the Dixons Shares on the London Stock Exchange's main market for listed securities, in each case to take effect on or shortly after the Effective Date.

On the Effective Date, Dixons will become a wholly-owned subsidiary of Carphone and share certificates in respect of Dixons Shares will cease to be valid and entitlements to Dixons Shares held within the CREST system will be cancelled.

21.            Disclosure of interest in relevant securities

Carphone confirms that it made an Opening Position Disclosure, setting out the details required to be disclosed by it under Rule 8.1(a) of the Code, on 7 March 2014.

Dixons confirms that it made an Opening Position Disclosure, setting out the details required to be disclosed by it under Rule 8.2(a) of the Code, on 7 March 2014.

22.            Overseas Shareholders

The availability of New Dixons Carphone Shares under the Merger, and the distribution of this Announcement to persons who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdiction in which they are located. Such persons should inform themselves of and observe any applicable legal or regulatory requirements of their jurisdiction. Dixons Shareholders who are in doubt regarding such matters should consult an appropriate independent professional adviser in the relevant jurisdiction without delay.

This Announcement does not constitute an offer for sale of any securities or an offer or an invitation to purchase any securities. Dixons Shareholders are advised to read carefully the Scheme Document, the Dixons Carphone Prospectus and the Forms of Proxy once these have been dispatched. Carphone Shareholders are advised to read carefully the Dixons Carphone Prospectus, the Carphone Circular and the form of proxy accompanying the Carphone Circular once these have been dispatched.

23.            Documents available on website

Copies of the following documents will published by no later than 12 noon (London time) on the day following this Announcement on Carphone's website at www.cpwplc.com and on Dixons' website at www.dixonsretail.com and will be made available until the end of the Offer Period:

·             a copy of this Announcement;

·             the irrevocable undertakings in paragraph 10 and set out in Appendix III to this Announcement;

·             the lock-in commitments referred to in paragraph 11; and

·             the Confidentiality Agreement referred to in paragraph 18.

24.            General

The Merger will be subject to the Conditions and certain further terms set out in Appendix I and to be set out in the Scheme Document when published.

The Scheme will be governed by English law and will be subject to the jurisdiction of the courts of England and Wales. The Scheme will be subject to the applicable requirements of the Code, the Panel, the London Stock Exchange and the FCA.

The bases and sources of certain financial information contained in this Announcement are set out in Appendix II. Certain terms used in this Announcement are defined in Appendix V.

There will be an investor and analyst presentation at the Shangri-La Hotel, Shard(35th Floor), 31 St Thomas Street, London Bridge, London, SE1 9RL at 9.00a.m. BST on 15 May 2014. There will be a live webcast of the investor and analyst presentation available on Carphone's website at www.cpwplc.com and on Dixons' website at www.dixonsretail.com.

A copy of this Announcement is and will be available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, for inspection on Carphone's website at www.cpwplc.com and on Dixons' website at www.dixonsretail.com by no later than 12 noon (London time) on the day following this Announcement. For the avoidance of doubt, the contents of those websites are not incorporated and do not form part of this Announcement.

 

Enquiries:

Carphone Warehouse Group plc

Dixons Retail plc

Kate Ferry                                             +44 77 489 33206

David Lloyd-Seed                               +44 17 272 05065

Investor Relations Director

IR, PR & Corporate Affairs Director



Deutsche Bank (Lead financial adviser and corporate broker)

Citigroup Global Markets Limited (Lead financial adviser and corporate broker)

Scott Bell                                             +44 20 754 58000

Ben Story                                              +44 20 798 64000

James Arculus

Jan Skarbek

Matt Hall (Corporate Broking)

Andrew Seaton (Corporate Broking)



UBS (Financial adviser and corporate broker)

Barclays (Financial adviser and corporate broker)

David James                                         +44 20 756 78000

Mark Astaire                                        +44 20 762 32323

Anna Richardson Brown

Jackie Lee      

                         



Citigate Dewe Rogerson (PR)

Brunswick (PR)

Anthony Carlisle                                 +44 20 763 89571

Nick Cosgrove                                     +44 20 740 45959

 

 

Important notices

Deutsche Bank AG is authorised under German Banking Law (competent authority: BaFIN - Federal Financial Supervisory Authority).  Deutsche Bank AG, London Branch is further authorised by the Prudential Regulation Authority and is subject to limited regulation by the Financial Conduct Authority and Prudential Regulation Authority. Deutsche Bank is acting as lead financial adviser and corporate broker to Carphone and no one else in connection with the contents of this Announcement and will not be responsible to anyone other than Carphone for providing the protections afforded to its clients or for providing advice in connection with the contents of this Announcement or any matter referred to herein.

UBS Limited, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting as financial adviser and corporate broker to Carphone and no one else in connection with this Announcement and will not be responsible to anyone other than Carphone for providing the protections afforded to clients of UBS Limited or for giving advice in relation to this Announcement or any other matter referred to herein.

Citigroup Global Markets Limited, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting as lead financial adviser and corporate broker to Dixons and for no-one else in connection with the matters set out in this Announcement and will not be responsible to anyone other than Dixons for providing the protections afforded to its clients or for providing advice in connection with the matters set out in this Announcement or any matter referred to herein.

Barclays Bank PLC, acting through its Investment Bank ("Barclays"), which is authorised by the Prudential Regulation Authority and regulated in the United Kingdom by the Prudential Regulation Authority and the Financial Conduct Authority, is acting as financial adviser and corporate broker to Dixons and no one else in connection with the Merger and the other matters referred to in this Announcement and will not be responsible to anyone other than Dixons for providing the protections afforded to clients of Barclays or for providing advice in connection with the Merger or any matter or arrangement referred to herein.

Forward-looking statements

This Announcement contains statements about Carphone, Dixons and the Combined Group that are or may be forward looking statements. All statements other than statements of historical facts included in this Announcement may be forward looking statements. Without limitation, any statements preceded or followed by or that include the words "targets", "should", "continue", "plans", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "estimates", "projects" or words or terms of similar substance or the negative thereof, are forward looking statements. Forward looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of Carphone's, Dixons' or the Combined Group's operations and potential synergies resulting from the Merger; and (iii) the effects of government regulation on Carphone's, Dixons' or the Combined Group's business.

Such forward looking statements involve risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results to differ materially from those projected or implied in any forward looking statements. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward looking statements, which speak only as of the date hereof. Carphone and Dixons disclaim any obligation to update any forward looking or other statements contained herein, except as required by applicable law or regulation.

If you are in any doubt about the contents of this Announcement or the action you should take, you are recommended to seek your own independent financial advice immediately from your stockbroker, bank manager, solicitor, accountant or independent financial adviser duly authorised under the Financial Services and Market Act 2000 (as amended) if you are resident in the United Kingdom or, if not, from another appropriately authorised independent financial adviser.

No profit forecasts or estimates

No statement in this Announcement is intended as a profit forecast or estimate for any period and no statement in this Announcement should be interpreted to mean that earnings or earnings per share for Carphone or Dixons, as appropriate, for the current or future financial years would necessarily match or exceed the historical published earnings or earnings per share for Carphone or Dixons, as appropriate.

 

Opening Position and Dealing Disclosure Requirements under the Code

Under Rule 8.3(a) of the Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.takeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure."

Further information

This Announcement is for information purposes only. It is not intended to and does not constitute, or form part of, any offer, invitation or the solicitation of any offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities, or the solicitation of any vote or approval in any jurisdiction, pursuant to the Merger or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. The Merger will be effected solely by means of the Scheme Document which, together with the Forms of Proxy, will contain the full terms and conditions of the Merger including details of how to vote in respect of the Merger.

Dixons will prepare the Scheme Document to be distributed to Dixons Shareholders and Carphone will prepare the Carphone Circular to be distributed to Carphone Shareholders. Carphone will also publish the Dixons Carphone Prospectus containing information about the New Dixons Carphone Shares and the Combined Group. Dixons urges Dixons Shareholders to read the Scheme Document and the Dixons Carphone Prospectus when they become available because they will contain important information in relation to the Merger, the New Dixons Carphone Shares and the Combined Group. Carphone urges Carphone Shareholders to read the Carphone Circular and the Dixons Carphone Prospectus when they become available because they will contain important information in relation to the Merger, the New Dixons Carphone Shares and the Combined Group. Any vote in respect of the Scheme or other response in relation to the Merger should be made only on the basis of the information contained in the Scheme Document and the Dixons Carphone Prospectus, or the Carphone Circular and the Dixons Carphone Prospectus, as appropriate.

This Announcement has been prepared for the purposes of complying with English law, the rules of the London Stock Exchange and the City Code and the information disclosed may not be the same as that which would have been disclosed if this Announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside the United Kingdom.

This Announcement does not constitute a prospectus or prospectus equivalent document.

Please be aware that addresses, electronic addresses and certain other information provided by Dixons Shareholders, persons with information rights and other relevant persons for the receipt of communications from Dixons may be provided to Carphone during the Offer Period as required under Section 4 of Appendix 4 of the Code.

Overseas jurisdictions

The release, publication or distribution of this Announcement in jurisdictions other than in the United Kingdom may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the United Kingdom should inform themselves about, and observe, any applicable requirements. Any failure to comply with applicable requirements may constitute a violation of the laws and/or regulations of any such jurisdiction. To the fullest extent permitted by applicable law, the companies and persons involved in the Merger disclaim any responsibility or liability for the violation of such requirements by any person.

The availability of New Dixons Carphone Shares under the Merger to Dixons Shareholders who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions in which they are resident. Persons who are not resident in the UK should inform themselves of, and observe, any applicable legal or regulatory requirements.

The Merger relates to the acquisition of shares of a UK company and is proposed to be effected by means of a scheme of arrangement under the laws of England and Wales. A transaction effected by means of a scheme of arrangement is not subject to proxy solicitation or tender offer rules under the US Exchange Act. Accordingly, the Scheme is subject to the disclosure requirements, rules and practices applicable in the United Kingdom to schemes of arrangement, which differ from the requirements of US proxy solicitation or tender offer rules. However, if Carphone were to elect to implement the Merger by means of a Merger Offer, such Merger Offer will be made in compliance with all applicable laws and regulations, including Section 14(e) of the US Exchange Act and Regulation 14E thereunder. Such a Merger Offer would be made in the United States by Carphone and no one else. In addition to any such Merger Offer, Carphone, certain affiliated companies and the nominees or brokers (acting as agents) may make certain purchases of, or arrangements to purchase, shares in Dixons outside such Merger Offer during the period in which such Merger Offer would remain open for acceptance. If such purchases or arrangements to purchase were to be made they would be made outside the United States and would comply with applicable law, including the US Exchange Act. Any information about such purchases will be disclosed as required in the UK, will be reported to a Regulatory Information Service and will be available on the London Stock Exchange website: www.londonstockexchange.com.

The financial information included in this Announcement has been prepared in accordance with accounting standards applicable in the UK and thus may not be comparable to financial information of US companies or companies whose financial statements are prepared in accordance with generally accepted accounting principles in the United States.

The New Dixons Carphone Shares have not been and will not be registered under the US Securities Act or under the securities laws of any state or other jurisdiction of the United States. Accordingly, the New Dixons Carphone Shares may not be offered, sold, resold, delivered, distributed or otherwise transferred, directly or indirectly, in or into or from the United States absent registration under the US Securities Act or an exemption therefrom. The New Dixons Carphone Shares are expected to be issued in reliance upon the exemption from the registration requirements of the US Securities Act provided by Section 3(a)(10) thereof. Dixons Shareholders (whether or not US persons) who are or will be affiliates (within the meaning of the US Securities Act) of Dixons or Carphone before, or of Carphone after, the Effective Date will be subject to certain US transfer restrictions relating to the New Dixons Carphone Shares received pursuant to the Scheme.  For the purposes of qualifying for the exemption from the registration requirements of the US Securities Act afforded by Section 3(a)(10), Dixons will advise the Court that its sanctioning of the Scheme will be relied upon by Carphone as an approval of the Scheme following a hearing on its fairness to Dixons Shareholders.

The receipt of New Dixons Carphone Shares pursuant to the Merger by a US Dixons Shareholder may be a taxable transaction for US federal income tax purposes and under applicable state and local, as well as foreign and other, tax laws. Each Dixons Shareholder is urged to consult his independent professional advisor immediately regarding the tax consequences of the Merger.

It may be difficult for US Dixons Shareholders to enforce their rights and claims arising out of the US federal securities laws, since Carphone and Dixons are located in countries other than the United States, and some or all of their officers and directors may be residents of countries other than the United States. US Invensys Shareholders may not be able to sue a non-US company or its officers or directors in a non-US court for violations of the US securities laws. Further, it may be difficult to compel a non-US company and its affiliates to subject themselves to a US court's judgment.

None of the securities referred to in this Announcement have been approved or disapproved by the SEC, any state securities commission in the United States or any other US regulatory authority, nor have such authorities passed upon or determined the adequacy or accuracy of the information contained in this Announcement. Any representation to the contrary is a criminal offence in the United States.

Unless otherwise determined by Carphone or required by the Code, and permitted by applicable law and regulation, the Merger will not be made available, directly or indirectly, in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction and no person may vote in favour of the Merger by any such use, means, instrumentality or form within a Restricted Jurisdiction or any other jurisdiction if to do so would constitute a violation of the laws of that jurisdiction. Accordingly, copies of this Announcement and all documents relating to the Merger are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction, and persons receiving this Announcement and all documents relating to the Merger (including custodians, nominees and trustees) must not mail or otherwise distribute or send them in, into or from such jurisdictions where to do so would violate the laws in that jurisdiction.

The availability of New Dixons Carphone Shares under the Merger to Dixons Shareholders who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions in which they are resident. Persons who are not resident in the UK should inform themselves of, and observe, any applicable legal or regulatory requirements.

Copies of this Announcement and formal documentation relating to the Merger will not be and must not be, mailed or otherwise forwarded, distributed or sent in, into or from any jurisdiction where to do so would violate the laws of that jurisdiction.

Publication on websites and availability of hard copies

A copy of this Announcement will be available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, for inspection on Carphone's website at www.cpwplc.com and on Dixons' website at www.dixonsretail.com by no later than 12 noon (London time) on the day following this Announcement. For the avoidance of doubt, the contents of those websites are not incorporated and do not form part of this Announcement.

Carphone Shareholders may request a hard copy of this Announcement by contacting Tim Morris (Carphone Company Secretary and General Counsel) during business hours on +44 20 8617 6002 or by submitting a request in writing to Tim Morris at Carphone's Head Office at 1 Portal Way, London, W3 6RS . Dixons Shareholders may request a hard copy of this Announcement by contacting Capita Asset Services during business hours on 0871 664 0321 or by submitting a request in writing to Capita Asset Services at the Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU.

Rounding

Certain figures included in this Announcement have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.



Appendix I

Conditions and further terms of the offer

Part a

Conditions To the Merger

1.          The Merger will be conditional upon the Scheme becoming unconditional and Effective, subject to the Code, by not later than 31 December 2014 or such later date (if any) as Carphone and Dixons may agree and (if required) the Court and the Panel may allow.

 

2.          The Scheme will be subject to the following conditions:

 

a)     its approval by a majority in number of the Dixons Shareholders representing not less than 75 per cent. in value of the Dixons Shares voted by those Dixons Shareholders who are present and vote, whether in person or by proxy, at the Court Meeting or at any adjournment of that meeting on or before the 22nd day after the date of the Court Meeting as set out in the Scheme Document (or such later date as Dixons and Carphone may agree and the Court may allow);

 

b)    the resolutions required to approve and implement the Scheme and the Capital Reduction being duly passed by the requisite majorities of Dixons Shareholders at the Dixons General Meeting or at any adjournment of that meeting on or before the 22nd day after the date of the Dixons General Meeting as set out in the Scheme Document (or such later date as Dixons and Carphone may agree and the Court may allow); and

 

c)     the sanction of the Scheme (with or without modification but subject to any modification being on terms acceptable to Carphone and Dixons) and the confirmation of the Capital Reduction by the Court and (a) the delivery of office copies of each of the Court Orders and the Statement of Capital to the Registrar of Companies and (b) if so ordered by the Court, the registration of the Court Orders and the Statement of Capital, and the Court hearing to sanction the Scheme being held on or before the 22nd day after the expected date of the Court sanction hearing as set out in the Scheme Document (or such later date as Dixons and Carphone may agree and the Court may allow).

 

3.       In addition, subject as stated in Part B below and to the requirements of the Panel, the Merger will be conditional upon the following Conditions and, accordingly, the necessary actions to make the Scheme effective will not be taken unless such Conditions (as amended if appropriate) have been satisfied or, where relevant, waived:

 

Approval of Carphone Shareholders

 

a)     the resolutions of Carphone Shareholders required to: (i) approve, effect and implement the Merger, and (ii) confer authorities for the issue and allotment of the New Dixons Carphone Shares to be issued in connection with the Merger (but excluding, for the avoidance of doubt, the other resolutions to be proposed at the Carphone General Meeting which shall not be conditions to the Merger), being duly passed at the Carphone General Meeting (or at any adjournment thereof) in each case by the requisite majority of Carphone Shareholders;

 

Admission of the New Dixons Carphone Shares

 

b)    the UK Listing Authority having acknowledged to Carphone or its agent (and such acknowledgement not having been withdrawn) that the application for the admission of the New Dixons Carphone Shares to the Official List with a premium listing has been approved and (after satisfaction of any conditions to which such approval is expressed to be subject ("listing conditions") will become effective as soon as a dealing notice has been issued by the UK Listing Authority and any listing conditions having been satisfied and (ii) the London Stock Exchange having acknowledged to Carphone or its agent (and such acknowledgement not having been withdrawn) that the New Dixons Carphone Shares will be admitted to trading on the main market of the London Stock Exchange;

 

 

European Commission or National Competition Authority clearance as appropriate

 

c)     insofar as the Merger falls within the scope of Council Regulation (EC) 139/2004 (the "Regulation"):

 

(i)          the European Commission taking a decision, on terms satisfactory to Dixons and Carphone (acting reasonably), that it shall not initiate proceedings under Article 6(1)(c) of the Regulation in relation to the Merger or any matter arising from or relating to the Merger;

 

(ii)                     if the European Commission makes a referral under Article 9(1) of the Regulation to the competent authorities of a National Competition Authority ("NCA") of any Member State other than the UK, that NCA taking a decision on terms satisfactory to Dixons and Carphone (acting reasonably) of equivalent effect to that set out in sub-paragraph (i) above; and

 

(iii)       if the European Commission makes a referral under Article 9(1) of the Regulation to the competent UK authority (being the Competition and Markets Authority, the "CMA"), it being established on terms satisfactory to Dixons and Carphone (acting reasonably) that the CMA has decided not to refer the Merger or any part of it to the CMA's chair for the constitution of a group under Schedule 4 to the Enterprise and Regulatory Reform Act 2013.

 

Notifications, waiting periods and authorisations

 

d)    other than in relation to the matters referred to in Conditions 3(a) to (c), all material notifications, filings or applications which are necessary or reasonably considered appropriate in connection with the Merger having been made and all necessary waiting periods (including any extensions thereof) under any applicable legislation or regulation of any jurisdiction having expired, lapsed or been terminated (as appropriate) and all statutory and regulatory obligations in any jurisdiction having been complied with in each case in respect of the Merger and all Authorisations deemed necessary or reasonably appropriate by Carphone and Dixons in any jurisdiction for or in respect of the Merger and, except pursuant to Chapter 3 of Part 28 of the Companies Act, the acquisition or the proposed acquisition of any shares or other securities in, or control or management of, Dixons, by Carphone having been obtained in terms and in a form reasonably satisfactory to Carphone and Dixons from all appropriate Third Parties or (without prejudice to the generality of the foregoing) from any person or bodies with whom any member of the Wider Dixons Group or the Wider Carphone Group has entered into contractual arrangements and all such Authorisations necessary, appropriate or desirable to carry on the business of any member of the Wider Dixons Group or the Wider Carphone Group in any jurisdiction having been obtained and all such Authorisations remaining in full force and effect at the time at which the Merger becomes otherwise wholly unconditional and there being no notice or intimation of an intention to revoke, suspend, restrict, modify or not to renew such Authorisations;

 

General anti-trust and regulatory

 

e)     other than in relation to the matters referred to in Conditions 3(b) and (c), no anti-trust regulator or Third Party having given notice of a decision to take, institute, implement or threaten any action, proceeding, suit, investigation, inquiry or reference (and in each case, not having withdrawn the same), or having required any action to be taken or otherwise having done anything, or having enacted, made or proposed any statute, regulation, decision, order or change to published practice (and in each case, not having withdrawn the same) and there not continuing to be outstanding any statute, regulation, decision or order which would or might reasonably be expected to (in any case which is material in the context of the Merger):

 

i.  require, prevent or materially delay or affect the divestiture or materially prejudice the terms envisaged for such divestiture by any member of the Wider Carphone Group or by any member of the Wider Dixons Group of all or any material part of their respective businesses, assets, property, shares or other securities in Carphone or Dixons or impose any limitation on the ability of all or any of them to conduct their businesses (or any part thereof) or to own, control or manage any of their assets or properties (or any part thereof) to an extent which is material in the context of the Wider Dixons Group or Wider Carphone Group (as the case may be) taken as a whole;

 

ii. except pursuant to Chapter 3 of Part 28 of the Companies Act, require any member of the Wider Carphone Group or the Wider Dixons Group to acquire or offer to acquire any shares, other securities (or the equivalent) or interest in any member of the Wider Dixons Group or the Wider Carphone Group or any asset owned by any Third Party (other than in the implementation of the Merger);

 

iii.   impose any material limitation on, or result in a material delay in, the ability of any member of the Wider Carphone Group directly or indirectly to acquire, hold or to exercise effectively all or any rights of ownership in respect of shares or other securities in Dixons or on the ability of any member of the Wider Dixons Group or any member of the Wider Carphone Group directly or indirectly to hold or exercise effectively all or any rights of ownership in respect of shares or other securities (or the equivalent) in, or to exercise voting or management control over, any member of the Wider Dixons Group or the Wider Carphone Group to an extent which is material in the context of the Wider Dixons Group or the Wider Carphone Group (as the case may be) taken as a whole;

 

iv.  otherwise adversely affect any or all of the business, assets, financial or trading position, profits or prospects of any member of the Wider Dixons Group or any member of the Wider Carphone Group to an extent which is material in the context of the Wider Dixons Group or Wider Carphone Group (as the case may be) taken as a whole;

 

v. result in any member of the Wider Dixons Group or any member of the Wider Carphone Group ceasing to be able to carry on business under any name under which it presently carries on business;

 

vi.  make the Merger or its implementation, or the acquisition or proposed acquisition of any shares or other securities in, or control or management of, Dixons by any member of the Wider Carphone Group, void, unenforceable and/or illegal under the laws of any relevant jurisdiction, or otherwise, directly or indirectly, materially prevent or prohibit, restrict, restrain, or delay the same or to a material extent or otherwise materially  interfere with the Merger or its implementation, or impose material additional conditions or obligations with respect to, or otherwise materially challenge, impede, interfere or require material amendment of the Merger or the acquisition or proposed acquisition of any shares or other securities in, or control or management of, Dixons by any member of the Wider Carphone Group to an extent which is material in the context of the Merger;

 

vii. require, prevent or materially delay a divestiture by any member of the Wider Carphone Group or the Wider Dixons Group of any shares or other securities (or the equivalent) in any member of the Wider Dixons Group or any member of the Wider Carphone Group to an extent which is material in the context of the Wider Dixons Group or Wider Carphone Group (as the case may be) taken as a whole; or

 

viii.   impose any material limitation on the ability of any member of the Wider Carphone Group or any member of the Wider Dixons Group to conduct, integrate or co-ordinate all or any part of its business with all or any part of the business of any other member of the Wider Carphone Group and/or the Wider Dixons Group to an extent which is material in the context of the Wider Dixons Group or Wider Carphone Group (as the case may be) taken as a whole,

 

and all applicable waiting and other time periods (including any extensions thereof) during which any such anti-trust regulator or Third Party could decide to take, institute, implement or threaten any such action, proceeding, suit, investigation, enquiry or reference or take any other step under the laws of any jurisdiction in respect of the Merger having expired, lapsed or been terminated;

 

Certain matters arising as a result of any arrangement, agreement, etc.

 

f)     except as Disclosed, there being no provision of any arrangement, agreement, lease, licence, franchise, permit or other instrument to which any member of the Wider Dixons Group or the Wider Carphone Group is a party or by or to which any such member or any of its assets is or may be bound, entitled or subject or any event or circumstance which, as a consequence of the Merger or because of a change in the control of Dixons or any other member of the Wider Dixons Group, could or might reasonably be expected to result in (in any case to an extent which is or would be material in the context of the Wider Dixons Group or the Wider Carphone Group taken as a whole):

 

i.  any monies borrowed by, or any other indebtedness, actual or contingent, of, or any grant available to, any member of the Wider Dixons Group or the Wider Carphone Group being or becoming repayable, or capable of being declared repayable, immediately or prior to its or their stated maturity date or repayment date, or the ability of any such member to borrow monies or incur any indebtedness being withdrawn or inhibited or being capable of becoming or being withdrawn or inhibited;

 

ii. the creation or enforcement of any mortgage, charge or other security interest over the whole or any part of the business, property or assets of any member of the Wider Dixons Group or the Wider Carphone Group or any such mortgage, charge or other security interest (whenever created, arising or having arisen) becoming enforceable;

 

iii.   any such arrangement, agreement, lease, licence, franchise, permit or other instrument being terminated or the rights, liabilities, obligations or interests of any member of the Wider Dixons Group or the Wider Carphone Group therein being adversely modified or adversely affected or any obligation or liability arising or any adverse action being taken or arising thereunder;

 

iv.  any liability of any member of the Wider Dixons Group or the Wider Carphone Group to make any severance, termination, bonus or other payment to any of its directors or other officers;

 

v. the rights, liabilities, obligations, interests or business of any member of the Wider Dixons Group or the Wider Carphone Group under any such arrangement, agreement, lease, licence, franchise, permit or other instrument, or the interests or business of any member of the Wider Dixons Group or the Wider Carphone Group in or with any other person, body, firm or company (or any agreement or arrangement relating to any such interests or business) being or becoming capable of being terminated, or adversely modified or affected or any onerous obligation or liability arising or any adverse action being taken thereunder;

 

vi.  any member of the Wider Dixons Group or the Wider Carphone Group ceasing to be able to carry on business under any name under which it presently carries on business;

 

vii. the value of, or the financial or trading position or prospects of, any member of the Wider Dixons Group or the Wider Carphone Group being prejudiced or adversely affected; or

 

viii.   the creation or acceleration of any liability (actual or contingent) by any member of the Wider Dixons Group or the Wider Carphone Group other than trade creditors or other liabilities incurred in the ordinary course of business,

 

and no event having occurred which, under any provision of any arrangement, agreement, lease, licence, franchise, permit or other instrument to which any member of the Wider Dixons Group or the Wider Carphone Group is a party or by or to which any such member or any of its assets are bound, entitled or subject, would be expected to result in any of the events or circumstances as are referred to in Conditions (f)(i) to (viii) (in each case to an extent which is material in the context of the Wider Dixons Group or the Wider Carphone Group taken as a whole);

 

Certain events occurring since publication of half-year results

 

g)    except as Disclosed and except, where relevant, as between Dixons and wholly owned subsidiaries of Dixons, or as between Carphone and wholly owned subsidiaries of Carphone, or between the wholly owned subsidiaries of Dixons, or between the wholly owned subsidiaries of Carphone, no member of the Wider Dixons Group or the Wider Carphone Group having, since in the case of Carphone, 28 September 2013, or, in the case of Dixons, 31 October 2013:

 

i.  issued or agreed to issue or authorised or proposed or announced its intention to authorise or propose the issue, of additional shares of any class, or securities or securities convertible into, or exchangeable for, or rights, warrants or options to subscribe for or acquire, any such shares, securities or convertible securities or transferred or sold or agreed to transfer or sell or authorised or proposed the transfer or sale of Dixons Shares out of treasury or Carphone Shares out of treasury (except for the issue or transfer out of treasury of Dixons Shares on the exercise of employee share options or vesting of employee share awards in the ordinary course under the Dixons Share Schemes, and except for the issue or transfer out of treasury of Carphone Shares on the exercise of employee share options or vesting of employee share awards in the ordinary course under the Carphone Share Schemes);

 

ii. except for an ordinary course final dividend of 4 pence per Carphone Share to be declared to Carphone Shareholders prior to the Effective Date, recommended, declared, paid or made or proposed to recommend, declare, pay or make any bonus, dividend or other distribution (whether payable in cash or otherwise);

 

iii.   other than pursuant to the Merger (and except for transactions in the ordinary course of business) implemented, effected, authorised or proposed or announced its intention to implement, effect, authorise or propose any merger, demerger, reconstruction, amalgamation, scheme, commitment or acquisition or disposal of assets or shares or loan capital (or the equivalent thereof) in any undertaking or undertakings in any such case to an extent which is material in the context of the Wider Dixons Group or the Wider Carphone Group taken as a whole;

 

iv.  except for transactions in the ordinary course of business disposed of, or transferred, mortgaged or created any security interest over any material asset or any right, title or interest in any material asset or authorised, proposed or announced any intention to do so;

 

v. issued, authorised or proposed or announced an intention to authorise or propose, the issue of or made any change in or to the terms of any debentures or become subject to any contingent liability or incurred or increased any indebtedness which is material in the context of the Wider Dixons Group or the Wider Carphone Group as a whole;

 

vi.  entered into or varied or authorised, proposed or announced its intention to enter into or vary any material contract, arrangement, agreement, transaction or commitment (whether in respect of capital expenditure or otherwise) except in the ordinary course of business which is of a long-term, unusual or onerous nature or magnitude or which is or which involves or could involve an obligation of a nature or magnitude which is reasonably likely to be materially restrictive on the business of any member of the Wider Dixons Group or the Wider Carphone Group which, taken together with any other such material transaction, arrangement, agreement, contract or commitment, is material in the context of the Wider Dixons Group or the Wider Carphone Group as a whole;

 

vii. entered into or varied the terms of, or made any offer (which remains open for acceptance) to enter into or vary to a material extent the terms of any contract, service agreement, commitment or arrangement with any director or, except for salary increases, bonuses or variations of terms in the ordinary course, senior executive of any member of the Wider Dixons Group or the Wider Carphone Group;

 

viii.   proposed, agreed to provide or modified the terms of any share option scheme, incentive scheme or other benefit relating to the employment or termination of employment of any employee of the Wider Dixons Group or the Wider Carphone Group which are material in the context of the Wider Dixons Group or the Wider Carphone Group taken as a whole;

 

ix.   purchased, redeemed or repaid or announced any proposal to purchase, redeem or repay any of its own shares or other securities or reduced or, except in respect of the matters mentioned in sub-paragraph (i) above, made any other change to any part of its share capital;

 

x. except in the ordinary course of business, waived, compromised or settled any claim which is material in the context of the Wider Dixons Group or the Wider Carphone Group as a whole;

 

xi.   terminated or varied the terms of any agreement or arrangement between any member of the Wider Dixons Group or the Wider Carphone Group and any other person in a manner which would or might reasonably be expected to have a material adverse effect on the financial position of the Wider Dixons Group or the Wider Carphone Group taken as a whole;

 

xii.  made any material alteration to its memorandum or articles of association or other incorporation documents;

 

xiii. except in relation to changes made or agreed as a result of, or arising from, changes to legislation, made or agreed or consented to any significant change to:

 

a)     the terms of the trust deeds and rules constituting the pension scheme(s) established by any member of the Wider Dixons Group or the Wider Carphone Group for its directors, employees or their dependants;

 

b)      the contributions payable to any such scheme(s) or to the benefits which accrue, or to the pensions which are payable, thereunder;

 

c)      the basis on which qualification for, or accrual or entitlement to, such benefits or pensions are calculated or determined; or

 

d)     the basis upon which the liabilities (including pensions) of such pension schemes are funded, valued, made, agreed or consented to,

 

to an extent which is in any such case material in the context of the Wider Dixons Group or the Wider Carphone Group;

 

xiv. been unable, or admitted in writing that it is unable, to pay its debts or commenced negotiations with one or more of its creditors with a view to rescheduling or restructuring any of its indebtedness, or having stopped or suspended (or threatened to stop or suspend) payment of its debts generally or ceased or threatened to cease carrying on all or a substantial part of its business which is material in the context of the Wider Dixons Group or the Wider Carphone Group taken as a whole;

 

xv.  (other than in respect of a member of the Wider Dixons Group or the Wider Carphone Group which is dormant and was solvent at the relevant time) taken or proposed any steps, corporate action or had any legal proceedings instituted or threatened against it in relation to the suspension of payments, a moratorium of any indebtedness, its winding-up (voluntary or otherwise), dissolution, reorganisation or for the appointment of a receiver, administrator, manager, administrative receiver, trustee or similar officer of all or any material part of its assets or revenues or any analogous or equivalent steps or proceedings in any jurisdiction or appointed any analogous person in any jurisdiction or had any such person appointed;

 

xvi. made, authorised, proposed or announced an intention to propose any change in its loan capital;

 

xvii.  entered into, implemented or authorised the entry into, any joint venture, asset or profit sharing arrangement, partnership or merger of business or corporate entities; or

 

xviii. entered into any agreement, arrangement, commitment or contract or passed any resolution or made any offer (which remains open for acceptance) with respect to or announced an intention to, or to propose to, effect any of the transactions, matters or events referred to in this Condition 3(g);

 

No adverse change, litigation, regulatory enquiry or similar

 

h)    except as Disclosed, since, in the case of Carphone, 28 September 2013, or, in the case of Dixons, 31 October 2013, there having been:

 

i.  no adverse change and no circumstance having arisen which would or might be expected to result in any adverse change in, the business, assets, financial or trading position or profits or prospects or operational performance of any member of the Wider Dixons Group or the Wider Carphone Group which is material in the context of the Wider Dixons Group or the Wider Carphone Group;

 

ii. no litigation, arbitration proceedings, prosecution or other legal proceedings having been threatened, announced or instituted by or against or remaining outstanding against or in respect of, any member of the Wider Dixons Group or the Wider Carphone Group or to which any member of the Wider Dixons Group or the Wider Carphone Group is or may become a party (whether as claimant, defendant or otherwise) having been threatened, announced, instituted or remaining outstanding by, against or in respect of, any member of the Wider Dixons Group or the Wider Carphone Group, in each case which might reasonably be expected to have a material adverse effect on the Wider Dixons Group or the Wider Carphone Group taken as a whole;

 

iii.   no enquiry, review or investigation by, or complaint or reference to, any Third Party against or in respect of any member of the Wider Dixons Group or the Wider Carphone Group having been threatened, announced or instituted or remaining outstanding by, against or in respect of any member of the Wider Dixons Group or the Wider Carphone Group, in each case which might reasonably be expected to have a material adverse effect on the Wider Dixons Group or the Wider Carphone Group taken as a whole;

 

iv.  no contingent or other liability having arisen or become apparent to Carphone or Dixons or increased other than in the ordinary course of business which is reasonably likely to affect adversely the business, assets, financial or trading position or profits or prospects of any member of the Wider Dixons Group or the Wider Carphone Group to an extent which is material in the context of the Wider Dixons Group or the Wider Carphone Group taken as a whole; and

 

v. no steps having been taken and no omissions having been made which are reasonably likely to result in the withdrawal, cancellation, termination or modification of any licence held by any member of the Wider Dixons Group or the Wider Carphone Group which is necessary for the proper carrying on of its business and the withdrawal, cancellation, termination or modification of which might reasonably be expected to have a material adverse effect on the Wider Dixons Group or the Wider Carphone Group taken as a whole;

 

No discovery of certain matters regarding information, liabilities and environmental issues

 

i)      except as Disclosed, Carphone not having discovered in relation to the Wider Dixons Group and Dixons not having discovered in relation to the Wider Carphone Group:

 

i.  that any financial, business or other information concerning the Wider Dixons Group or the Wider Carphone Group publicly announced prior to the date of this Announcement or disclosed at any time to any member of the Wider Carphone Group or to any of their advisers by or on behalf of any member of the Wider Dixons Group, or to any member of the Wider Dixons Group or to any of their advisers by or on behalf of any member of the Wider Carphone Group, prior to the date of this Announcement is misleading, contains a material misrepresentation of any fact, or omits to state a fact necessary to make that information not misleading, to an extent which in any such case is material in the context of the Wider Dixons Group or the Wider Carphone Group taken as a whole;

 

ii. that any member of the Wider Dixons Group or the Wider Carphone Group or any partnership, company or other entity in which any member of the Wider Dixons Group or the Wider Carphone Group has a significant economic interest and which is not a subsidiary undertaking of Dixons or Carphone is, otherwise than in the ordinary course of business, subject to any liability, contingent or otherwise and which is material in the context of the Wider Dixons Group or the Wider Carphone Group taken as a whole or in the context of the Merger;

 

iii.   that any past or present member of the Wider Dixons Group or the Wider Carphone Group has not complied in any material respect with all applicable legislation, regulations or other requirements of any jurisdiction or any Authorisations relating to the use, treatment, storage, carriage, disposal, discharge, spillage, release, leak or emission of any waste or hazardous substance or any substance likely to impair the environment (including any property) or harm human or animal health or otherwise relating to environmental matters or the health and safety of humans, which non-compliance would be likely to give rise to any material liability including any penalty for non-compliance (whether actual or contingent) on the part of any member of the Wider Dixons Group or the Wider Carphone Group which in any case is material in the context of the Wider Dixons Group or the Wider Carphone Group taken as a whole;

 

iv.  that there has been a material disposal, discharge, spillage, accumulation, release, leak, emission or the migration, production, supply, treatment, storage, transport or use of any waste or hazardous substance or any substance likely to impair the environment (including any property) or harm human or animal health which (whether or not giving rise to non-compliance with any law or regulation), would be likely to give rise to any material liability (whether actual or contingent) on the part of any member of the Wider Dixons Group or the Wider Carphone Group which in any case is material in the context of the Wider Dixons Group or the Wider Carphone Group taken as a whole;

 

v. that there is or is reasonably likely to be any material obligation or liability (whether actual or contingent) or requirement to make good, remediate, repair, reinstate or clean up any property, asset or any controlled waters currently or previously owned, occupied, operated or made use of or controlled by any past or present member of the Wider Dixons Group or the Wider Carphone Group (or on its behalf), or in which any such member may have or previously have had or be deemed to have had an interest, under any environmental legislation, common law, regulation, notice, circular, Authorisation or order of any Third Party in any jurisdiction or to contribute to the cost thereof or associated therewith or indemnify any person in relation thereto which in any case is material in the context of the Wider Dixons Group or the Wider Carphone Group taken as a whole;

 

vi.  that circumstances exist (whether as a result of making the Merger or otherwise) which would be reasonably likely to lead to any Third Party instituting (or whereby any member of the Wider Dixons Group or the Wider Carphone Group would be likely to be required to institute) an environmental audit or take any steps which would in any such case be reasonably likely to result in any actual or contingent liability to improve or install new plant or equipment or to make good, repair, reinstate or clean up any property of any description or any asset now or previously owned, occupied or made use of by any past or present member of the Wider Dixons Group or the Wider Carphone Group (or on its behalf) or by any person for which a member of the Wider Dixons Group or the Wider Carphone Group is or has been responsible, or in which any such member may have or previously have had or be deemed to have had an interest, which in any case is material in the context of the Wider Dixons Group or the Wider Carphone Group taken as a whole; or

 

vii. that circumstances exist whereby a person or class of persons have or is reasonably likely to have any legitimate claim or claims in respect of any product or process, or materials used therein, now or previously manufactured, sold, supplied or carried out by any past or present member of the Wider Dixons Group or the Wider Carphone Group which in each case is material in the context of the Wider Dixons Group or the Wider Carphone Group taken as a whole.

 

B. CERTAIN FURTHER TERMS OF THE SCHEME AND THE MERGER

 

1.     Subject to the requirements of the Panel, Carphone reserves the right to waive, in whole or in part, Conditions 3(d) to (i) (inclusive), so far as they relate to Dixons, the Wider Dixons Group or any part thereof.

 

2.     Subject to the requirements of the Panel, Dixons reserves the right to waive, in whole or in part, Conditions 3(d) to (i) (inclusive), so far as they relate to Carphone, the Wider Carphone Group or any part thereof.

 

3.     The Scheme will not become Effective unless the Conditions have been fulfilled or (if capable of waiver) waived or, where appropriate, have been determined by Carphone and Dixons to be or remain satisfied by no later than the date referred to in Condition 1 (or such later date as Carphone and Dixons may agree and (if required) the Panel and the Court may allow).

 

4.     Neither Carphone nor Dixons shall be under any obligation to waive (if capable of waiver), to determine to be or remain satisfied or to treat as fulfilled any of Conditions 3(d) to (i) (inclusive) (insofar as they apply to each of them) by a date earlier than the latest date for the fulfilment of that Condition notwithstanding that the other Conditions of the Merger may at such earlier date have been waived or fulfilled and that there are at such earlier date no circumstances indicating that any of such Conditions may not be capable of fulfilment.

 

5.     Carphone reserves the right to elect, with the consent of the Panel and with Dixons' prior written consent (such consent, for the avoidance of doubt, to also be required in the case of any offer to be made by Carphone in the event Condition 3(d) is not satisfied), to implement the merger by way of a Merger Offer. In such event, the merger will be implemented on substantially the same terms subject to appropriate amendments (including, without limitation, an acceptance condition set at 90 per cent. (or such other percentage being more than 50 per cent. as Carphone and Dixons may agree) of the shares to which the Merger Offer relates and of the voting rights carried by those shares), so far as applicable, as those which would apply to the Scheme.

 

6.     The Merger will lapse if:

 

(a)     in so far as the Merger or any matter arising from the Scheme or Merger constitutes a concentration with a Community dimension within the scope of the Regulation, the European Commission either initiates proceedings under Article 6(1)(c) of the Regulation or makes a referral to a competent authority of the United Kingdom under Article 9(1) of the Regulation and there is then a reference to the Competition and Markets Authority; or

 

(b)    in so far as the Merger or any matter arising from the Scheme or Merger does not constitute a concentration with a Community dimension within the scope of the Regulation, the Scheme or Merger or any part of it becomes subject to a CMA Phase 2 Reference,

 

in each case, before the date of the Court Meeting.

 

7.     The availability of the Merger to persons not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions.  Persons who are not resident in the United Kingdom should inform themselves about and observe any applicable requirements.

 

8.     The Merger is not being made, directly or indirectly, in, into or from, or by use of the mails of, or by any means of instrumentality (including, but not limited to, facsimile, e-mail or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or of any facility of a national, state or other securities exchange of, any jurisdiction where to do so would violate the laws of that jurisdiction.

 

9.     Fractions of New Dixons Carphone Shares will not be allotted or issued to Dixons Shareholders pursuant to the Scheme.  Fractional entitlements to New Dixons Carphone Shares will be rounded down to the nearest whole number of New Dixons Carphone Shares.

 

10.   If the Scheme becomes Effective, the new Dixons shares to be issued pursuant to the Scheme will be acquired by Carphone fully paid and free from all liens, charges, equitable interests, encumbrances, rights of pre-emption and any other rights and interests of any nature whatsoever and together with all rights now and hereafter attaching thereto, including voting rights and, save as referred to below, the right to receive and retain in full all dividends and other distributions (if any) declared, made or paid on or after the Effective Date.

 

11.   The Merger and the Scheme will be governed by the law of England and Wales and will be subject to the jurisdiction of the English courts and to the Conditions and further terms set out in this Appendix 1 and to be set out in the Scheme Document.  The Scheme will be subject to applicable requirements of the Code, the Panel, the London Stock Exchange, the FCA and the UK Listing Authority.

 

12.   Each of the Conditions shall be regarded as a separate Condition and shall not be limited by reference to any other Condition.

 



 

APPENDIX II

BASES AND SOURCES OF INFORMATION

 

1.   As at the close of business on 14 May 2014 (being the latest practicable date prior to this Announcement), there were 3,661,153,393 Dixons Shares in issue.  The International Securities Identification Number for Dixons Shares is GB0000472455.

2.   The maximum number of Dixons Shares that will be exchanged for Dixons Carphone Shares, will be 3,716, 566,252 following settlement of those options and awards over Dixons shares which will vest as a result of the Merger.

3.   As at the close of business on 14 May 2014 (being the latest practicable date prior to this Announcement), there were 576,067,769 Carphone Shares in issue.  The International Securities Identification Number for Carphone Shares is GB00B4Y7R145.



 

APPENDIX III

Details of DIRECTORS' Irrevocable undertakingS

Irrevocable undertakings in respect of Dixons Shares

The following persons have given irrevocable undertakings to vote in favour of the Scheme at the Court Meeting and the related resolutions to be proposed at the Dixons General Meeting in relation to the following Dixons Shares:

Name of shareholder giving irrevocable undertaking

Total number of Dixons Shares in respect of which undertaking given

Percentage of issued ordinary share capital of Dixons

Dixons Directors:



John Allan CBE

1,180,818

0.032%

Sebastian James

109,072

0.003%

Humphrey Singer

92,495

0.003%

Katie Bickerstaffe

208,657

0.006%

Tim How

80,000

0.002%

Jock Lennox

75,000

0.002%

Dharmash Mistry

267,382

0.007%

Prof. Dr. Utho Creusen

97,071

0.003%

Andrea Gisle Joosen

39,200

0.001%

Total

2,149,695

0.059%

 

Irrevocable undertakings in respect of Carphone Shares

The following persons have given irrevocable undertakings to vote in favour of the resolutions to be proposed at the Carphone General Meeting to approve the Merger and related resolutions to be proposed at the Carphone General Meeting in relation to the following Carphone Shares:

Name of shareholder giving irrevocable undertaking

Total number of Carphone Shares in respect of which undertaking given

Percentage of issued ordinary share capital of Carphone

Carphone Directors:



Sir Charles Dunstone

135,083,481

23.45%

Roger Taylor

9,808,554

1.70%

Andrew Harrison

5,000,000

0.87%

Nigel Langstaff

3,654,180

0.63%

John Gildersleeve

123,000

0.02%

John Allwood

10,000

0.00%

Baroness Sally Morgan

991

0.00%

Total

153,680,206

26.68%

 

The irrevocable undertakings from the Carphone Directors and the Dixons Directors shall each lapse if the Scheme Document, Carphone Circular and Dixons Carphone Prospectus are not published by the end of June 2014 (or such later date as Dixons and Carphone may agree), or if the Scheme does not become effective or lapses in accordance with its terms or is withdrawn, or any competing offer for either Dixons or Carphone is made which is declared wholly unconditional or otherwise becomes effective.

 

APPENDIX IV

QUANTIFIED FINANCIAL BENEFITS STATEMENT

Part A

Paragraph 8 of this Announcement (Synergies and integration) includes statements of estimated cost savings and synergies arising from the Merger (together, the "Quantified Financial Benefits Statement").

A copy of the Quantified Financial Benefits Statement is set out below:

"The Carphone Directors and Dixons Directors, having reviewed and analysed the potential benefits of the Merger, based on their experience of operating in the consumer electrical and mobile retail sectors, and taking into account the factors they can influence, believe that the Combined Group will be able to achieve integrated mobile retailing and procurement synergies, together with cost savings, of at least £80 million on a recurring basis, which are expected to be delivered in full in the financial year 2017/18. The Boards of Carphone and Dixons expect Dixons Carphone to deliver these synergies progressively, achieving almost half of them in financial year 2015/16.

The principal sources of quantified synergies are as follows:

-     approximately half of the identified synergies are expected to come from integrated mobile retailing and procurement synergies. These comprise synergies in the UK, Ireland and the Nordics resulting from creating an integrated mobile offering in Dixons shops, which will promote a seamless customer journey across all technology categories, underpinned by the use of Carphone's expertise in mobile, together with procurement benefits resulting from the Combined Group's scale; and

-     approximately half are expected to come from synergies, including rent and other infrastructure costs, resulting from the rationalisation of certain operational and support functions where there is duplication, both across the UK and in the Nordic regions.

In addition to these quantified synergies, the Carphone Directors and the Dixons Directors believe that further value will be created through additional growth opportunities including:

-     enhanced revenue opportunities from an improved customer offering across electrical, mobiles and connectivity, enabled by a true multi-channel approach, including a wider and more convenient combined footprint for customers;

-     developing a world class service proposition for customers; and

-     enhancement of the existing Connected World Services opportunities for both existing and new business partners around the globe.

It is expected that there will be significant job creation through the rollout of the Dixons Carphone integrated retail offering, resulting in an increase of approximately 4 per cent. of the Combined Group's full-time equivalent employees. This is expected to be substantially complete by the end of 2016. This increase will be partially offset as a result of the rationalisation of certain operational and support functions resulting, in these functions, in a decrease of approximately 2 per cent. of the Combined Group's full-time equivalent employees. Any changes related to the rationalisation are unlikely to take effect prior to 2015 and are anticipated to be implemented gradually over the three years after Completion. Taken together with the job creation opportunities, it is expected there will be a net increase of approximately 2 per cent. of the Combined Group's full-time equivalent employees as a result of the Merger. The integration of the businesses will clearly require some roles to change but, with more new roles being created than those that are lost, it is hoped that there will be opportunities for many of the people involved.  Specific roles have not yet been identified, outcomes will depend on integration planning and will, of course, be subject to consultation with our colleagues.

It is expected that the realisation of the identified synergies will result in one-off exceptional costs of approximately £55 - 60 million, largely incurred by the end of financial year 2015/16. It is also expected that incremental capital expenditure of approximately £60 - 70 million will be incurred during the period to the end of financial year 2017/18. Aside from the integration costs and the planned incremental capital expenditure, no material dis-synergies are expected in connection with the Merger.  The identified synergies will accrue as a direct result of the Merger and would not be achieved on a standalone basis."

Further information on the bases of belief supporting the Quantified Financial Benefits Statement, including the principal assumptions and sources of information, is set out below.

Bases of belief

Following initial discussions regarding the Merger in February 2014, Carphone and Dixons established a joint synergy development team to evaluate and assess the potential synergies available for the integration and undertake an initial planning exercise.

The team, which comprised senior strategy and financial personnel from both Carphone and Dixons, has worked collaboratively during the last three months to identify and quantify potential synergies as well as estimate any associated costs.

The team has engaged with the relevant functional heads and other personnel to provide input into the development process and to agree on the nature and quantum of the identified synergy initiatives.

In preparing the Quantified Financial Benefits Statement, both Carphone and Dixons have shared certain operating and financial information to facilitate a detailed analysis in support of evaluating the potential synergies available from the Merger. In circumstances where data has been limited for commercial or other reasons, the team has made estimates and assumptions to aid its development of individual synergy initiatives.

Reports

As required by Rule 28.1(a) of the Code, Deloitte LLP, as reporting accountants to Carphone, have provided a report stating that, in their opinion, the Quantified Financial Benefits Statement has been properly compiled on the basis stated. In addition Deutsche Bank, as financial adviser to Carphone, has provided a report stating that, in its opinion, the Quantified Financial Benefits Statement has been prepared with due care and consideration.

Copies of these reports are included in Parts B and C of this Appendix IV.Deloitte LLP and Deutsche Bank have given and not withdrawn their consent to the publication of their reports in the form and context in which they are included.

Notes

 

1. The statements of estimated cost savings and synergies relate to future actions and circumstances which, by their nature, involve risks, uncertainties and contingencies. As a result, the cost savings and synergies referred to may not be achieved, or may be achieved later or sooner than estimated, or those achieved could be materially different from those estimated. No statement in the Quantified Financial Benefits Statement, or this Announcement generally, should be construed as a profit forecast or interpreted to mean that the Combined Group's earnings in the first full year following the Merger, or in any subsequent period, would necessarily match or be greater than or be less than those of Carphone and/or Dixons for the relevant preceding financial period or any other period.

 

2. Due to the scale of the Combined Group, there may be additional changes to the Combined Group's operations. As a result, and given the fact that the changes relate to the future, the resulting cost savings may be materially greater or less than those estimated.

 

3. In arriving at the estimate of synergies set out in this Announcement, the Carphone Directors and the Dixons Directors have assumed that there will be no significant impact on the underlying operations of either business.

 



 

Part B
Report from Deloitte LLP

 

The Board of Directors
on behalf of Carphone Warehouse Group plc
1 Portal Way
London
W3 6RS

 

Deutsche Bank AG, London Branch
1 Great Winchester Street
London
EC2N 2DB

15 May 2014

 

Dear Sirs,

Recommended all-share merger of Carphone Warehouse Group plc ("Carphone") and Dixons Retail plc ("Dixons")

We report on the statement made by the directors of Carphone (the "Directors") and the directors of Dixons (the "Dixons Directors") of synergy benefits set out in Paragraph 8 of the announcement (the "Announcement") issued jointly by Carphone and Dixons (the "Quantified Financial Benefits Statement" or the "Statement"). 

The Statement has been made in the context of the disclosures within Paragraph 8 and Part A of Appendix IV of the Announcement setting out, inter alia, the basis of the Directors' and the Dixons Directors' belief (identifying the principal assumptions and sources of information) supporting the Statement and their analysis, explanation and quantification of the constituent elements.  This report is required by Rule 28.1(a)(i) of the City Code on Takeovers and Mergers (the "Code") and is given for the purpose of complying with that requirement and for no other purpose.

Responsibilities

It is the responsibility of the Directors to prepare the Statement in accordance with Rule 28 of the Code. 

It is our responsibility to form our opinion, as required by Rule 28.1(a) of the Code, as to whether the Statement has been properly compiled on the basis stated.

Save for any responsibility which we may have to those persons to whom this report is expressly addressed or to the Shareholders of Carphone as a result of the inclusion of this report in the Announcement, to the fullest extent permitted by law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such other person as a result of, arising out of, or in connection with this report, required by and given solely for the purposes of complying with Rule 28.1(a)(i) of the Code, or our statement consenting to its inclusion in the Announcement.

 



 

Basis of opinion

We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom.

Our work included considering whether the Statement has been accurately computed based upon the disclosed bases of belief (including the principal assumptions).  Whilst the bases of belief (and the principal assumptions) upon which the Statement is based are solely the responsibility of the Directors, we considered whether anything came to our attention to indicate that any of the bases of belief (or principal assumptions) adopted by the Directors which, in our opinion, are necessary for a proper understanding of the Statement have not been disclosed or if any bases of belief (or principal assumptions) made by the Directors appears to us to be unrealistic.  Our work did not involve any independent examination of any of the financial or other information underlying the Statement.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with reasonable assurance that the Quantified Financial Benefits Statement has been properly compiled on the basis stated.

Since the Statement (and the principal assumptions on which it is based) relates to the future, the actual synergy benefits achieved are likely to be different from those anticipated in the Statement and the differences may be material.  Accordingly, we can express no opinion as to the achievability of the synergy benefits identified by the Directors in the Statement.

Our work has not been carried out in accordance with auditing or other standards and practices generally accepted in jurisdictions outside the United Kingdom, including the United States of America, and accordingly should not be relied upon as if it had been carried out in accordance with those standards and practices.

Opinion

In our opinion, based on the foregoing, the Quantified Financial Benefits Statement has been properly compiled on the basis stated.

 

Yours faithfully

 

 

Deloitte LLP

Chartered Accountants

 

Deloitte LLP is a limited liability partnership registered in England and Wales with registered number OC303675 and its registered office at 2 New Street Square, London EC4A 3BZ, United Kingdom.  Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited ("DTTL"), a UK private company limited by guarantee, whose member firms are legally separate and independent entities.  Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.

Part C
Report from Deutsche Bank

 

The Directors
Carphone Warehouse Group plc
1 Portal Way
London
W3 6RS

15 May 2014

 

Dear Sirs,

Recommended all-share merger of Carphone Warehouse Group plc ("Carphone") and Dixons Retail plc ("Dixons")

We refer to the Quantified Financial Benefits Statement, the bases of belief thereof and the notes thereto (together, the "Statement") as set out in Part A of Appendix IV of this Announcement, for which the Directors of Carphone are solely responsible under Rule 28 of the Code.

We have discussed the Statement (including the assumptions and sources of information referred to therein), with the Directors of Carphone and those officers and employees of Carphone who developed the underlying plans. The Statement is subject to uncertainty as described in this Announcement and our work did not involve an independent examination of any of the financial or other information underlying the Statement.

We have relied upon the accuracy and completeness of all the financial and other information provided to us by Carphone, or otherwise discussed with us, and we have assumed such accuracy and completeness for the purposes of providing this letter.

We do not express any opinion as to the achievability of the quantified financial benefits identified by the Directors of Carphone.

We have also reviewed the work carried out by Deloitte LLP and have discussed with them the opinion set out in Part B of Appendix IV of this Announcement addressed to yourselves and ourselves on this matter.

This letter is provided to you solely in connection with Rule 28.1(a) (ii) of the City Code on Takeovers and Mergers and for no other purpose.  No person other than the Directors of Carphone can rely on the contents of this letter and to the fullest extent permitted by law, we exclude all liability to any other person, in respect of this letter or the work undertaken in connection with this letter.

On the basis of the foregoing, we consider that the Statement, for which you, as Directors of Carphone are solely responsible, has been compiled with due care and consideration.

Yours faithfully,

 

 

 

Deutsche Bank AG, London Branch

APPENDIX V

DEFINITIONS

The following definitions apply throughout this Announcement unless the context otherwise requires:

£, GBP, Sterling, pence or p

the lawful currency of the UK

Admission

the New Dixons Carphone Shares being admitted to listing on the premium listing segment of the Official List and to trading on the London Stock Exchange's main market for listed securities

Announcement

this announcement made pursuant to Rule 2.7 of the City Code

Authorisations

material authorisations, orders, recognitions, grants, consents, clearances, confirmations, certificates, licences, permissions and approvals

business day

a day, not being a public holiday, Saturday or Sunday, on which banks in the City of London are open for normal business

Capital Reduction

the proposed reduction of Dixons' share capital under Chapter 10 of Part 17 of the Companies Act, pursuant to the Scheme

Carphone

Carphone Warehouse Group plc

Carphone Circular

the circular to be sent to Carphone Shareholders in connection with the Merger

Carphone Directors or Directors of Carphone or Carphone Board or Board of Carphone

the Board of directors of Carphone or the Board of Carphone at the date of this Announcement

Carphone General Meeting

the general meeting of Carphone to be convened in connection with the Merger, notice of which will be set out in the Carphone Circular (including any adjournment thereof)

Carphone Group

Carphone and its subsidiary undertakings and associated undertakings

Carphone Shareholders

holders of Carphone Shares

Carphone Shares

fully paid-up ordinary shares of 0.1 pence each in the capital of Carphone

Carphone Share Schemes

the share option and incentive schemes operated by the Carphone Group, further details of which will be set out in the Dixons Carphone Prospectus

City Code or Code

the City Code on Takeovers and Mergers in the United Kingdom

Closing Price

the closing middle market price of a Dixons Share or a Carphone Share as derived from the Daily Official List

CMA Phase 2 Reference

a reference of the Merger to the chair of the Competition and Markets Authority for the constitution of a group under Schedule 4 to the Enterprise and Regulatory Reform Act 2013

Companies Act

the Companies Act 2006 (as amended)

Combined Group

the combined Carphone Group and Dixons Group following Completion of the Merger

Competition and Markets Authority or CMA

a UK statutory body established under the Enterprise and Regulatory Reform Act 2013

Conditions

the conditions to the implementation of the Merger (including the Scheme) as set out in Appendix I to this Announcement and to be set out in the Scheme Document

Confidentiality
 Agreement

the mutual confidentiality agreement entered into by Dixons and Carphone on 30 January 2014

Court

the High Court of Justice in England and Wales

Court Meeting

the meeting(s) of the Dixons Shareholders to be convened by order of the Court pursuant to section 896 of the Companies Act, notice of which will be set out in Scheme Document, for the purpose of approving the Scheme, including any adjournment thereof

Court Orders

the order of the Court sanctioning the Scheme and the order of the Court confirming the Capital Reduction

CREST

the relevant system (as defined in the Uncertificated Securities Regulations 2001 (SI 2001/3755)) in respect of which Euroclear UK & Ireland Limited is the operator (as defined in such Regulations) in accordance with which securities may be held and transferred in uncertificated form

Daily Official List

the daily official list of the London Stock Exchange

Dealing Disclosure

has the same meaning as in Rule 8 of the City Code

Deutsche Bank

Deutsche Bank AG, London Branch

Disclosed

the information which has been fairly disclosed by Dixons or Carphone (as the case may be): (a) in writing prior to the date of this Announcement by them or on their behalf or by their respective financial, accounting, tax or legal advisers (specifically as advisers in relation to the Merger); (b) in their published annual and/or half year report and accounts for the relevant financial period or periods referred to in the relevant Condition; (c) in a public announcement made in accordance with the Disclosure and Transparency Rules of the FCA prior to the date of this Announcement; or (d) in this Announcement

Dixons

Dixons Retail plc

Dixons Carphone

the parent company of the Combined Group from the Effective Date (being Carphone Group plc, proposed to be renamed "Dixons Carphone plc")

Dixons Carphone Directors or Dixons Carphone Board or Proposed Directors

the proposed Board of directors of Dixons Carphone, further details of which are set out in this Announcement

Dixons Carphone Prospectus

the prospectus to be published by Carphone in connection with the issue of the New Dixons Carphone Shares

Dixons Directors or Directors of Dixons or Dixons Board or Board of Dixons

the Board of directors of Dixons or the Board of Dixons at the date of this Announcement

Dixons General Meeting

the general meeting of Dixons to be convened in connection with the Scheme and the Capital Reduction, notice of which will be set out in the Scheme Document, including any adjournment thereof

Dixons Group

Dixons and its subsidiary undertakings and associated undertakings

Dixons Shareholders

holders of Dixons Shares

Dixons Shares

fully paid-up ordinary shares of 2.5 pence each in the capital of Dixons:

(a)        in issue as at the date of this Announcement;

(b)        (if any) issued after the date of this Announcement and prior to the Scheme Voting Record Time; and

(c)        (if any) issued at or after the Scheme Voting Record Time and on or before the Scheme Record Time on terms that the holder thereof shall be bound by the Scheme or in respect of which the original or any subsequent holders thereof shall have agreed in writing to be bound by the Scheme

Dixons Share Schemes

the share option and incentive schemes operated by the Dixons Group, further details of which will be set out in the Scheme Document

EBIT

Earnings Before Interest and Tax

Effective

the Scheme having become effective pursuant to its terms, or if the Merger is implemented by way of a Merger Offer, the Merger Offer having been declared unconditional in all respects in accordance with the requirements of the City Code

Effective Date or Completion

the date upon which the Merger becomes Effective

FCA

the UK Financial Conduct Authority

Forms of Proxy

the form of proxy in connection with each of the Court Meeting and the Dixons General Meeting, which shall accompany the Scheme Document

FSMA

the Financial Services and Markets Act 2000, as amended

Headline Earnings

headline earnings are stated before the amortisation of acquisition intangibles, exceptional items and the results of discontinued operations and businesses in the process of closure

Listing Rules

the rules and regulations made by the UK Listing Authority under Part VI of the FSMA, and contained in the UK Listing Authority's publication of the same name (as amended from time to time)

London Stock Exchange

the London Stock Exchange plc

Merger

the merger of Dixons and Carphone to be implemented by way of the Scheme or otherwise by way of a Merger Offer

Merger Offer

the implementation of the Merger by means of a takeover offer under section 974 of the Companies Act, rather than by means of the Scheme

New Dixons Carphone Shares

the new ordinary shares of 0.1 pence each in the capital of Dixons Carphone to be issued and credited as fully paid to Dixons Shareholders pursuant to the Merger

Offer Period

as defined in the City Code

Opening Position Disclosure

has the same meaning as in Rule 8 of the City Code

Overseas Shareholders

Dixons Shareholders whose registered addresses are outside of the UK or who are citizens, nationals or residents of countries other than the UK

Panel

the Panel on Takeovers and Mergers

PSP

Performance Share Plans

Prospectus Rules

the prospectus rules made by the FCA under Part VI of the FSMA

Quantified Financial Benefits Statement

as defined in Part A of Appendix IV to this Announcement

RCF

Revolving Credit Facility

Regulatory Authority

any government or governmental, quasi-governmental, supranational, statutory or regulatory body, or any court, institution, investigative body, association, trade agency or professional or environmental body or (without prejudice to the generality of the foregoing) any other person or body in any jurisdiction

Regulatory Information Service

any of the services set out in Appendix III to the Listing Rules

Restricted Jurisdiction

any jurisdiction where local laws or regulations may result in significant risk of civil, regulatory or criminal exposure if information concerning the Merger is sent or made available to Dixons Shareholders in that jurisdiction (in accordance with Rule 30.3 of the City Code)

Scheme

the proposed scheme of arrangement under Part 26 of the Companies Act between Dixons and the Dixons Shareholders in connection with the Merger, with or subject to any modification, addition or condition approved or imposed by the Court and agreed to by Carphone and Dixons

Scheme Document

the document to be sent to Dixons Shareholders containing and setting out, among other things, the full terms and conditions of the Scheme and containing the notices convening the Court Meeting and the Dixons General Meeting

Scheme Record Time

the time and date specified in the Scheme Document, expected to be 6.00 p.m. on the business day immediately prior to the date of the hearing by the Court to sanction the Scheme

Scheme Voting Record Time

the time and date specified in the Scheme Document by reference to which entitlement to vote on the Scheme will be determined

Significant Interest

in relation to an undertaking, a direct or indirect interest of 20 per cent. or more of the total voting rights conferred by the equity share capital (as defined in section 548 of the Companies Act) of such undertaking

Special Resolutions

the special resolutions to be proposed by Dixons at the Dixons General Meeting in connection with, among other things, the approval of the Scheme and confirmation of the Capital Reduction, the alteration of Dixons' articles of association and such other matters as may be necessary to implement the Scheme and the delisting of the Dixons Shares

Statement of Capital

the statement of capital (approved by the Court) showing, with respect to Dixons' share capital as altered by the Court Order, the information required by section 649 of the Companies Act

Third Party

a central bank, government or governmental, quasi-governmental, supranational, statutory, regulatory, environmental or investigative body or authority, court, trade agency, professional association, institution, employee representative body or any other body or person whatsoever in any jurisdiction

UK or United Kingdom

United Kingdom of Great Britain and Northern Ireland

UK Listing Authority

the FCA acting for the purposes of Part VI of the FSMA

US or United States

United States of America, its territories and possessions, any State of the United States of America and the District of Columbia

US person

as defined in Regulation S promulgated under the US Securities Act

US Exchange Act

the US Securities Exchange Act of 1934, as amended

US Securities Act

the US Securities Act of 1933, as amended

Wider Carphone Group

Carphone and associated undertakings and any other body corporate, partnership, joint venture or person in which Carphone and all such undertakings (aggregating their interests) have a Significant Interest

Wider Dixons Group

Dixons and associated undertakings and any other body corporate, partnership, joint venture or person in which Dixons and all such undertakings (aggregating their interests) have a Significant Interest

 

For the purposes of this Announcement, "subsidiary", "subsidiary undertaking", "undertaking" and "associated undertaking" have the respective meanings given by the Companies Act.

References to an enactment include references to that enactment as amended, replaced, consolidated or re-enacted by or under any other enactment before or after the date of this Announcement.  All references to time in this Announcement are to London time unless otherwise stated.

 

 



[1]            Please see Appendix II to this Announcement for further details

[2]            For the purposes of Rule 28 of the City Code, these statements are the responsibility of the Directors of Carphone, in its capacity as offeror under the terms of the Merger. These statements are not intended as a profit forecast and should not be interpreted as such. These statements of estimated cost savings, synergies and expected value enhancement relate to future actions and circumstances which, by their nature, involve risks, uncertainties and contingencies. As a result, the cost savings, synergies and expected value enhancement referred to may not be achieved, or may be achieved later or sooner than estimated, or those achieved could be materially different from those estimated. Neither these statements nor any other statement in this Announcement should be construed as a profit forecast or interpreted to mean that the Combined Group's earnings in the first full year following the Merger, or in any subsequent period, would necessarily match or be greater than or be less than those of Carphone and/or Dixons for the relevant preceding financial period or any other period. For further details of the statements of estimated cost savings and synergies refer to Appendix IV to this Announcement.

            


This information is provided by RNS
The company news service from the London Stock Exchange
 
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