Further information concerning the takeover of Edah by Sligro Food Group and Sperwer Holding
Introduction
On 29 May 2006, Sligro Food Group N.V. and Sperwer Holding B.V. announced that agreement had been reached with Laurus N.V. on the takeover of 223 company-owned and operated Edah and Edah Lekker & Laag stores and the temporary rental of the distribution centre in Someren through the vehicle of a specially formed consortium. This press release contains further information relating to the transaction, which will be put before an extraordinary general meeting of shareholders of Sligro Food Group for approval on 28 June 2006.
The consortium has set up a company, S&S Winkels B.V., which will act as the contracting party vis-à-vis Laurus for the takeover of the Edah activities. The two partners each hold 50% of the shares of S&S Winkels B.V.
Activities to be acquired by S&S Winkels:
- The 223 company-owned and operated stores
The stores have a combined sales area of 234,000 m2 and generated consumer sales of approximately €880 million in 2005. The acquisition involves the takeover of the leases on 215 stores and the transfer of ownership of eight stores. Inventories, equipment, fixtures and fittings together with the stores’ liquid assets are included in the takeover.
- The distribution centre in Someren
Under this part of the deal, the distribution centre will be sublet to the new owners for the period up to the end of 2007 on market terms and conditions. Again, inventories, equipment, fixtures and fittings are included in the takeover.
All permanent staff in the stores (approximately 2,800 FTEs), the distribution centre (approximately 200 FTEs) and that part of the head office concerned with Edah activities (74 FTEs) will have their contracts of employment transferred to S&S Winkels. The distribution centre also employs temporary staff numbering approximately 200 FTEs.
Purchase price
The indicative purchase price for the assets is €221 million. The finalised purchase price will be determined on the basis of the value of specific assets as at transaction date, i.e. final settlement will depend on the actual value of the existing inventories and cash on that date and any movements in the carrying amounts of equipment, fixtures and fittings. The purchase price relates solely to the assets and not to the liabilities connected with operations, such as suppliers’ credit, amounts owed to staff and taxes payable. Such liabilities will arise in S&S Winkels after the transaction date, and it is expected that the net purchase price to be financed will work out at approximately €175 million. Overall, the assets (gross) are made up of approximately 1/3 inventories, 1/3 property, plant and equipment and other assets and 1/3 intangible assets which are tax-deductible.
Plans for after the takeover
The transaction is expected to be concluded in the third quarter. Before that can happen, the usual procedures will have to be gone through, including clearance by the Netherlands Competition Authority.
Sligro Food Group and Sperwer have given undertakings to S&S Winkels and to each other that they will each take on 60 stores, details of which have since been mutually agreed, at an agreed identical rate as part of an initial phase in the transition process to be concluded by the end of 2007 at the latest. The stores concerned together achieved approximately 65% of the total consumer sales in 2005 and account for approximately 60% of the sales area. A further 30 or so of the remaining stores are expected to be sold off when the transaction has been concluded because the sites concerned do not lend themselves to the service formats of the two partners. With regard to the residual stores, a decision will be taken as part of a second phase early in 2007. This will depend to some extent on progress with Phase I. S&S Winkels. will continue to operate the Edah and Edah Lekker & Laag formats up to the end of 2007. The aim is to have completed the entire transition process by the end of 2007.
In Phase I, Sligro Food Group will be converting approximately two-thirds of the stores to its EM-TÉ format. This mainly concerns stores in the south of the Netherlands. The remaining stores will be converted to stores for affiliated independent retailers under the Golff banner. Sperwer Holding will be converting all its stores in Phase 1 to franchise outlets under either the Plus or Spar banners. Both Sligro Food Group and Sperwer Holding expect to be able to integrate the Phase I conversions into their existing logistics infrastructures without any major capital expenditure.
Financing
Sligro Food Group and Sperwer will each be making funds of €80 million available to S&S Winkels. For the remaining finance, S&S Winkels has received commitments from financial institutions. The ultimate amount of the net investment on the part of Sligro Food Group will depend on the final purchase price and the proceeds from the transfer of a number of stores to independent retailers and the sale of stores to third parties as part of Phase I and decisions concerning the future of the second group of stores in Phase II. Sligro Food Group has accordingly not made any decision on the method of financing its share of the acquisition. For its contribution to S&S Winkels, Sligro Food Group has received commitments from financial institutions. Sligro Food Group expects the acquisition to contribute to profits and to earnings per share from 2008 onwards, when the transition has been completed.
Further announcements
Sligro Food Group will be reporting on the progress of the transaction when the company publishes its third-quarter trading update on 19 October. As mentioned above, the transaction will be explained in a presentation to the Extraordinary General Meeting of Shareholders to be convened on 28 June 2006, at which shareholders will be invited to approve the deal. The venue for the meeting, which is due to start at 11:00 a.m., will be the Sligro Food Group Headquarters, Corridor 11, Veghel. Non-shareholders will also be able to attend.
Veghel, 20 June 2006
On behalf of the Executive Board of Sligro Food Group N.V.
A.J.L. Slippens
H.L. van Rozendaal
Tel. +31 413 34 35 00
www.sligrofoodgroup.com
