L'Oreal S.A
17 March 2006
FOR IMMEDIATE RELEASE
17 March 2006
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN, INTO OR
FROM THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN OR ANY OTHER JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH
JURISDICTION
Recommended cash offer
by JPMorgan Cazenove
on behalf of L'Oreal S.A.
for
The Body Shop International PLC
Summary
The boards of L'Oreal and The Body Shop are pleased to announce that they have
reached agreement on the terms of a recommended cash offer to be made by
JPMorgan Cazenove, on behalf of L'Oreal, to acquire the entire issued and to be
issued share capital of The Body Shop. The Offer will be at 300 pence in cash
for each The Body Shop Share, which values The Body Shop's existing issued share
capital at approximately £652.3 million.
Highlights
• The terms of the Offer represent a premium of approximately:
- 34.2% to The Body Shop's closing mid market price of 223.5 pence on 21
February 2006 (being the last day prior to press speculation of a possible bid
for The Body Shop);
- 21.5% to The Body Shop's closing mid market price of 247.0 pence on 22
February 2006 (being the last business day prior to the date of L'Oreal's
announcement of a possible offer for The Body Shop); and
- 31.5% to The Body Shop's average closing mid market price of 228.2
pence for the 6 months up to and including 21 February 2006.
• The Body Shop Shareholders on the register at 16 March 2006 will be
entitled to receive a second interim dividend, of 4.4 pence per The Body Shop
Share, payable after the Offer becomes or is declared wholly unconditional, in
lieu of a final The Body Shop dividend for the 52 weeks to 25 February 2006.
• The acquisition of The Body Shop would enhance L'Oreal's existing,
strong and diversified brand portfolio. L'Oreal believes that the acquisition
of The Body Shop would:
- provide L'Oreal with a sizeable and complementary brand with revenue of £419
million in the 52 weeks to 26 February 2005 and a presence in 54 countries;
- give L'Oreal access to a successful, naturally-orientated, cosmetics brand
with a clear and unique position in the 'Masstige' sector; and
- provide L'Oreal with access to a dedicated, global, multi-channel,
distribution network through retail outlets, The Body Shop At Home and
e-commerce.
• The Body Shop would retain its existing identity and values and would
continue to be based in the United Kingdom. The Body Shop would operate
independently within the L'Oreal Group and would be led by The Body Shop's
current management team reporting directly to the CEO-Designate of L'Oreal,
Jean-Paul Agon.
• L'Oreal expects that the acquisition of The Body Shop would be EPS
neutral in the financial year to 31 December 2006, and EPS accretive thereafter
*.
• A Loan Note Alternative will also be made available to all The Body
Shop Shareholders (other than any The Body Shop Shareholders in any Restricted
Jurisdiction).
• The directors of The Body Shop, who have been so advised by Merrill
Lynch, consider the terms of the Offer to be fair and reasonable. In providing
its advice, Merrill Lynch has taken into account the commercial assessments of
the directors of The Body Shop. Accordingly, the directors of The Body Shop
intend unanimously to recommend that The Body Shop Shareholders accept the
Offer, as the directors of The Body Shop have irrevocably undertaken to do in
respect of their own beneficial shareholdings.
• The Offer is conditional, amongst other things, upon receiving the
required regulatory clearances. Further information on the terms and conditions
to which the Offer will be subject are set out in Appendix 1 and will be set out
in the Offer Document, which L'Oreal expects to despatch to The Body Shop
Shareholders as soon as practicable.
Irrevocable undertakings and call option
L'Oreal has received irrevocable undertakings to accept the Offer from Dame
Anita Roddick and Mr Gordon Roddick, in respect of 39,171,672 The Body Shop
Shares in aggregate, representing approximately 18.0 per cent. of The Body
Shop's existing issued share capital. All of the other directors of The Body
Shop have given irrevocable undertakings to accept the Offer in respect of
7,806,046 The Body Shop Shares in aggregate representing approximately 3.6 per
cent. of The Body Shop's existing issued share capital. All of these
undertakings will remain binding in the event of a higher competing offer.
In addition to the irrevocable undertakings described above, Beaverbridge
Holdings Limited has granted L'Oreal a call option which gives L'Oreal the
ability to require Beaverbridge Holdings Limited to tender 45,666,768 The Body
Shop Shares, in aggregate, representing approximately 21.0 per cent. of The Body
Shop's existing issued share capital (being The Body Shop Shares in which Mr Ian
McGlinn is interested) to the Offer. The call option will remain binding in the
event of a higher competing offer.
In aggregate, the irrevocable undertakings and the call option described above
account for approximately 42.6 per cent. of The Body Shop's total existing
issued share capital.
Further details of these irrevocable undertakings and the call option are set
out in Appendix 3 to this announcement.
The Chairman and CEO of L'Oreal, Sir Lindsay Owen-Jones, said:
'We have always had great respect for The Body Shop's success and for its strong
identity and values created by its outstanding founder, Dame Anita Roddick. A
partnership between our companies makes perfect sense. Combining L'Oreal's
expertise and knowledge of international markets with The Body Shop's distinct
culture and values will benefit both companies. We are delighted that The Body
Shop's board has agreed to unanimously recommend our offer to the Company's
shareholders. We look forward to working together with The Body Shop's
management, employees and franchisees to fulfil The Body Shop's independent
potential as part of the L'Oreal family.'
Commenting on the Offer, Mr Adrian Bellamy, Chairman of The Body Shop, said:
'For the shareholders, L'Oreal's offer is a significant premium to the share
price and I believe provides an opportunity for them to now realise fully the
prospects for the group on a stand alone basis.
For the other stakeholders this combination of our two great organisations - The
Body Shop and L'Oreal - will provide significant strategic impetus to The Body
Shop's growth plans for its three retail channels of stores, direct selling and
e-commerce around the world. In just 30 years The Body Shop has grown into a
substantial global branded retailer operating in 54 countries with great
opportunities ahead. Furthermore, L'Oreal's significant strengths in the
management and development of global brands, combined with our skills as a
global retailer with strong values and commitments, will be a powerful
combination in the cosmetics and personal care market place with corresponding
opportunities for our employees, franchisees and The Body Shop consultants.'
Commenting on the Offer, Dame Anita Roddick, founder and non-executive director
of The Body Shop, said:
'For both Gordon and I, this is without doubt the best 30th anniversary gift The
Body Shop could have received.
L'Oreal has displayed visionary leadership in wanting to be an authentic
advocate and supporter of our values. They understand what a maverick The Body
Shop was in the business world and how we helped change the language of
business, incorporating the action of social change, especially in human rights,
animal welfare, the environment and community trade. I am so proud of these
achievements. I want to thank all those employees, consultants, franchisees,
suppliers and NGO friends who helped shape our identity. I am confident that
they will see being part of the L'Oreal family as a great opportunity for The
Body Shop.'
JPMorgan Cazenove is acting as financial adviser to L'Oreal. Merrill Lynch is
acting as financial adviser and corporate broker to The Body Shop.
This summary should be read in conjunction with, and is subject to, the full
text of the following announcement. Appendix 2 of this announcement contains the
sources and bases of certain information used in this summary and in the
following announcement. Appendix 4 of this announcement contains definitions of
certain terms used in this summary and the following announcement.
There will be a financial information meeting for analysts and media at
L'Oreal's headquarters, 41 Rue Martre, Clichy at 4:30 p.m. Paris time today (17
March 2006).
Enquiries:
L'Oreal
General +33 1 47 56 70 00
Analysts and institutional investors of L'Oreal
Mrs Caroline Millot +33 1 47 56 86 82
Individual Shareholders of L'Oreal and market authorities
Mr. Jean-Regis Carof +33 1 47 56 83 02
Journalists
Mr. Mike Rumsby +33 1 47 56 76 71
JPMorgan Cazenove +44 207 588 2828
Mark Breuer
Barry Weir
The Body Shop
For all investor relations and media queries contact:
Brunswick +44 207 404 5959
Louise Charlton
William Cullum
Deborah Spencer
Dominic McMullan
Merrill Lynch +44 207 628 1000
Kevin Smith
Jamie Heath
Mark Astaire (Corporate Broking)
Peter Tracey (Corporate Broking)
This announcement does not constitute an offer to sell or an invitation to
purchase any securities or the solicitation of an offer to buy any securities,
pursuant to the Offer or otherwise. The Body Shop Shareholders are advised to
read carefully the formal documentation in relation to the Offer once it has
been despatched. This will contain the full terms and conditions of the Offer,
including details of how the Offer may be accepted.
JPMorgan Cazenove, which is authorised by the Financial Services Authority, is
acting exclusively for L'Oreal and no one else in connection with the Offer and
will not be responsible to anyone other than L'Oreal for providing the
protections afforded to clients of JPMorgan Cazenove or for providing advice in
relation to the Offer or any other matters referred to in this announcement.
Merrill Lynch is acting exclusively for The Body Shop in connection with the
Offer and no one else and will not be responsible to anyone other than The Body
Shop for providing the protections afforded to clients of Merrill Lynch or for
providing advice in relation to the Offer or any other matters referred to in
this announcement.
The availability of the Offer to The Body Shop Shareholders who are not resident
in and citizens of the United Kingdom may be affected by the laws of the
relevant jurisdictions in which they are located or of which they are citizens.
Such persons should inform themselves of, and observe, any applicable legal or
regulatory requirements of their jurisdictions. Further details in relation to
overseas shareholders will be contained in the Offer Document.
Unless otherwise determined by L'Oreal, and permitted by applicable law and
regulation, the Offer, including the Loan Note Alternative, will not be made,
directly or indirectly, in, into or from, and will not be capable of acceptance
in or from the United States, Canada, Australia or Japan or any jurisdiction
where to do so would constitute a breach of securities laws in that
jurisdiction. Accordingly, copies of this announcement are not being, and must
not be, mailed or otherwise forwarded, distributed or sent in, into or from the
United States, Canada, Australia or Japan or any jurisdiction where to do so
would constitute a breach of securities laws in that jurisdiction. Persons
receiving this announcement (including custodians, nominees and trustees) should
observe these restrictions and should not send or distribute this announcement
in, into or from any such jurisdictions.
The Loan Notes to be issued in connection with the Offer have not been, nor will
they be, registered under the US Securities Act or under the securities laws of
any state or other jurisdiction of the United States (or under the securities
laws of any other jurisdiction, the residents of which L'Oreal is advised to
treat as Restricted Overseas Persons); the relevant clearances have not been,
and will not be, obtained from the securities commission of any province,
territory or jurisdiction of Canada; and no prospectus has been lodged with, or
registered by, the Australian Securities and Investments Commission or the
Japanese Ministry of Finance. Accordingly, unless an exemption under such act or
securities laws is available or unless otherwise determined by L'Oreal, and
permitted by applicable law and regulation, the Loan Notes may not be offered,
sold, resold, delivered or transferred, directly or indirectly, in or into the
United States, Canada, Australia or Japan or any other jurisdiction if to do so
would constitute a violation of the relevant laws of, or require registration
thereof in, such jurisdiction or to, or for the account or benefit of, a person
located in the United States, Canada, Australia or Japan.
Forward Looking Statements
This announcement includes certain 'forward-looking statements'. These
statements are based on the current expectations of the management of The Body
Shop and L'Oreal and are naturally subject to uncertainty and changes in
circumstances. The forward-looking statements contained herein include
statements about the expected effects on L'Oreal of the Offer, the expected
timing and scope of the Offer, anticipated earnings enhancements, estimated cost
savings and other synergies, costs to be incurred in achieving synergies, other
strategic options and all other statements in this announcement other than
historical facts. Forward-looking statements include, without limitation,
statements typically containing words such as 'intends', 'expects',
'anticipates', 'targets', 'estimates' and words of similar import. By their
nature, forward-looking statements involve risk and uncertainty because they
relate to events and depend on circumstances that will occur in the future.
There are a number of factors that could cause actual results and developments
to differ materially from those expressed or implied by such forward-looking
statements. These factors include, but are not limited to, the satisfaction of
the conditions to the Offer, and L'Oreal's ability to successfully integrate the
operations and employees of The Body Shop, as well as additional factors, such
as changes in economic conditions, changes in the level of capital investment,
success of business and operating initiatives and restructuring objectives,
customers' strategies and stability, changes in the regulatory environment,
fluctuations in interest and exchange rates, the outcome of litigation,
government actions and natural phenomena such as floods, earthquakes and
hurricanes. Other unknown or unpredictable factors could cause actual results to
differ materially from those in the forward-looking statements. Neither The Body
Shop nor L'Oreal undertake any obligation to update publicly or revise
forward-looking statements, whether as a result of new information, future
events or otherwise, except to the extent legally required.
Dealing Disclosure Requirements
Under the provisions of Rule 8.3 of the City Code, if any person is, or becomes,
'interested' (directly or indirectly) in 1 per cent. or more of any class of '
relevant securities' of The Body Shop, all 'dealings' in any 'relevant
securities' of The Body Shop (including by means of an option in respect of, or
a derivative referenced to, any such 'relevant securities') must be publicly
disclosed by no later than 3.30 p.m. (London time) on the London business day
following the date of the relevant transaction. This requirement will continue
until the date on which the Offer becomes, or is declared, unconditional as to
acceptances, lapses or is otherwise withdrawn or on which the 'offer period'
otherwise ends. If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire an 'interest' in 'relevant
securities' of The Body Shop, they will be deemed to be a single person for the
purpose of Rule 8.3.
Under the provisions of Rule 8.1 of the City Code, all 'dealings' in 'relevant
securities' of The Body Shop by L'Oreal or The Body Shop, or by any of their
respective 'associates', must be disclosed by no later than 12.00 noon (London
time) on the London business day following the date of the relevant transaction.
A disclosure table, giving details of the companies in whose 'relevant
securities' 'dealings' should be disclosed, and the number of such securities in
issue, can be found on the Panel's website at www.thetakeoverpanel.org.uk.
'Interests in securities' arise, in summary, when a person has long economic
exposure, whether conditional or absolute, to changes in the price of
securities. In particular, a person will be treated as having an 'interest' by
virtue of the ownership or control of securities, or by virtue of any option in
respect of, or derivative referenced to, securities.
Terms in quotation marks are defined in the City Code, which can also be found
on the Panel's website. If you are in any doubt as to the application of Rule 8
to you, please contact an independent financial adviser authorised under the
Financial Services and Markets Act 2000, consult the Panel's website at
www.thetakeoverpanel.org.uk or contact the Panel on telephone number +44 (0) 20
7382 9026; fax +44 (0) 20 7638 1554.
Not for release, publication or distribution, in whole or in part, in, into or
from the United States, Canada, Australia or Japan.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN, INTO OR
FROM THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN OR ANY OTHER JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH
JURISDICTION
17 March 2006
Recommended cash offer
by JPMorgan Cazenove
on behalf of L'Oreal S.A.
for
The Body Shop International PLC
1. Introduction
The boards of L'Oreal and The Body Shop are pleased to announce that they have
reached agreement on the terms of a recommended cash offer to be made by
JPMorgan Cazenove, on behalf of L'Oreal, to acquire the entire issued and to be
issued share capital of The Body Shop. The terms of the Offer value the existing
issued share capital of The Body Shop at approximately £652.3 million.
JPMorgan Cazenove is acting as financial adviser to L'Oreal. Merrill Lynch is
acting as financial adviser and corporate broker to The Body Shop.
2. Summary of the Offer
Under the Offer, which will be subject to the conditions and further terms set
out below and in Appendix 1 and the full terms and conditions which will be set
out in the Offer Document, The Body Shop Shareholders will be entitled to
receive:
for each The Body Shop Share,
300 pence in cash
The terms of the Offer value the entire existing issued share capital of The
Body Shop at approximately £652.3 million.
The terms of the Offer represent a premium of approximately:
- 34.2% to The Body Shop's closing mid market price of 223.5 pence on 21
February 2006 (being the last day prior to press speculation of a possible bid
for The Body Shop);
- 21.5% to The Body Shop's closing mid market price of 247.0 pence on 22
February 2006 (being the last business day prior to the date of L'Oreal's
announcement of a possible offer for The Body Shop); and
- 31.5% to The Body Shop's average closing mid market price of 228.2
pence for the 6 months up to and including 21 February 2006.
The Body Shop Shares that are subject to the Offer will be acquired fully paid
with full title guarantee and free from all liens, charges, equitable interests,
encumbrances, rights of pre-emption and any other third party rights and
interests of any nature whatsoever and together with all rights now and
hereafter attaching thereto, including, without limitation, voting rights and
the right to receive and retain in full all dividends (other than the second
interim dividend in lieu of a final The Body Shop dividend for the 52 weeks to
25 February 2006) and other distributions (if any) declared, made or paid on or
after the date of this announcement.
A Loan Note Alternative will be made available to all The Body Shop Shareholders
(other than any The Body Shop Shareholders in any Restricted Jurisdiction),
further details of which are set out in paragraph 5 below.
The Body Shop Shareholders on the register at 16 March 2006 will be entitled to
receive a second interim dividend, of 4.4 pence per The Body Shop Share, payable
after the Offer becomes or is declared wholly unconditional, in lieu of a final
The Body Shop dividend for the 52 weeks to 25 February 2006.
3. Recommendation
The directors of The Body Shop, who have been so advised by Merrill Lynch,
consider the terms of the Offer to be fair and reasonable. In providing its
advice, Merrill Lynch has taken into account the commercial assessments of the
directors of The Body Shop. Accordingly, the directors of The Body Shop intend
unanimously to recommend that The Body Shop Shareholders accept the Offer, as
the directors of The Body Shop have irrevocably undertaken to do in respect of
their own beneficial shareholdings.
4. Irrevocable undertakings and call option
L'Oreal has received irrevocable undertakings to accept the Offer from Dame
Anita Roddick and Mr Gordon Roddick, in respect of 39,171,672 The Body Shop
Shares, in aggregate, representing approximately 18.0 per cent. of The Body
Shop's existing issued share capital. All of the other directors of The Body
Shop have given irrevocable undertakings to accept the Offer in respect of
7,806,046 The Body Shop Shares in aggregate, representing approximately 3.6 per
cent. of The Body Shop's existing issued share capital. All of these
undertakings will remain binding in the event of a higher competing offer.
In addition to the irrevocable undertakings described above, Beaverbridge
Holdings Limited has granted L'Oreal a call option which gives L'Oreal the
ability to require Beaverbridge Holdings Limited to tender 45,666,768 The Body
Shop Shares, in aggregate, representing approximately 21.0 per cent. of The Body
Shop's existing issued share capital (being The Body Shop Shares in which Mr Ian
McGlinn is interested) to the Offer. The call option will remain binding in the
event of a higher competing offer.
In aggregate, the irrevocable undertakings and the call option described above
account for approximately 42.6 per cent. of The Body Shop's total existing
issued share capital.
Further details of these irrevocable undertakings and the call option are set
out in Appendix 3 to this announcement.
5. The Loan Note Alternative
As an alternative to all or some of the cash consideration of 300 pence per The
Body Shop Share, The Body Shop Shareholders (other than any The Body Shop
Shareholders in any Restricted Jurisdiction) who validly accept the Offer will
be able to elect to receive Loan Notes issued by L'Oreal on the following basis:
For each £1 of cash consideration
£1 nominal value of Loan Notes
The Loan Note Alternative will be conditional upon the Offer becoming or being
declared unconditional in all respects. The Loan Note Alternative will remain
open for acceptance until the Offer closes.
The Loan Notes will be issued by L'Oreal, credited as fully paid, in amounts and
integral multiples of £1 and the balance of any entitlement that is not a whole
multiple of £1 will be disregarded and not issued. The Loan Notes will bear
interest at 0.50 per cent. below six-month sterling LIBOR to be determined on
the first business day of each interest period. Interest will be payable by
half-yearly instalments in arrears (less any tax) on 30 June and 31 December in
each year. The first payment of interest will be made on the first 30 June or
31 December date which falls more than six months after the date of issue of the
Loan Notes (the 'First Payment Date').
On the First Payment Date, interest will be paid in respect of the period from
(and including) the date of issue of the relevant Loan Notes to (but excluding)
the First Payment Date. The Loan Notes will be redeemable in whole or in part
for cash at par at the option of noteholders on the first 30 June or 31 December
date which falls more than six months after the date of issue of the Loan Notes
and subsequently on each interest payment date.
Unless L'Oreal decides otherwise, no Loan Notes will be issued by L'Oreal
unless, on or before the date on which the Offer becomes or is declared
unconditional in all respects, the aggregate nominal value of all Loan Notes to
be issued as a result of valid elections for the Loan Note Alternative exceeds
£1 million. If such aggregate is less than £1 million, any such election shall,
unless L'Oreal decides otherwise, be void and, provided the acceptance of the
Offer is otherwise valid, the relevant The Body Shop Shareholders will be deemed
to have accepted the Offer for cash. L'Oreal will have the right to redeem all
of the Loan Notes if the aggregate nominal value of outstanding Loan Notes falls
below £1 million at any time during their term. If not previously redeemed, the
final redemption date will be 30 June 2013. Any Loan Notes outstanding on the
final redemption date will be redeemed at par (together with any accrued
interest) on that date. The Loan Notes will not be transferable, and no
application will be made for them to be listed on, or dealt on, any stock
exchange or other trading facility.
The Loan Notes and the Loan Note Instrument will be governed by and construed in
accordance with English law and will be unsecured obligations of L'Oreal.
Further details of the Loan Notes and the Loan Note Alternative will be
contained in the formal Offer Document.
6. Information relating to L'Oreal
L'Oreal is one of the world's leading manufacturers of cosmetics, on which it
has been focused since it was founded nearly a century ago. L'Oreal's strategic
vision is grounded in its respect for the different sensitivities and cultural
preferences of its consumers over the world. For this reason, L'Oreal does not
seek to export nor impose one single vision of beauty throughout the world.
L'Oreal has 4 divisions with a unique and diverse portfolio of 18 distinct and
complementary global brands of diverse cultural origins with strong
personalities, developed for each distribution channel and which enjoy worldwide
recognition:
- The Professional Products Division is dedicated to the hairdressing
community. Its products aim to meet the requirements of salon professionals in
hair colourants, texture and haircare, and are used and sold in salons
worldwide.
- The Consumer Products Division markets a portfolio of complementary brands
through mass-market retail channels. Its products combine high technology and
strong added-value with affordable pricing.
- The Luxury Products Division has a portfolio of prestigious brands whose
products are sold in selective retail outlets such as department stores,
perfumeries, travel retail outlets and the group's own boutiques. The
Division's brands provide exclusive products featuring innovations developed by
L'Oreal research.
- The Active Cosmetics Division markets dermo-cosmetic skincare products sold
in pharmacies and specialist sections of drugstores.
L'Oreal's products are distributed through a range of channels including
mass-market channels, perfumeries, department stores and duty-free shops, hair
salons, pharmacies and specialty health and beauty outlets. L'Oreal also
distributes mail-order cosmetics through The Club des Createurs de Beaute, a
jointly held subsidiary of L'Oreal. The L'Oreal Group is now present in over
130 countries and has approximately 52,000 employees, whose diversity of
nationalities' beliefs and preferences is considered an asset of L'Oreal.
In the year ended 31 December 2005, the L'Oreal Group generated net sales (on an
IFRS basis) of approximately €14.5 billion. The L'Oreal Group currently has a
market capitalisation of approximately €49.1 billion (based on a closing share
price of €74.6 for each L'Oreal share on 16 March 2006, being the last business
day prior to the date of this announcement).
7. Information relating to The Body Shop
The Body Shop markets a wide range of The Body Shop-branded cosmetics, including
bath and body products, skin-care products, make-up, fragrances, hair-care and
men's grooming products. The Body Shop was founded by Dame Anita Roddick and Mr
Gordon Roddick in Brighton, United Kingdom in 1976. The company is
headquartered in Littlehampton, United Kingdom and as at 26 February 2005 had
approximately 7,000 company employees within a total of approximately 30,000
people including The Body Shop consultants and franchisee employees who relied
on The Body Shop for employment.
The Body Shop operates a multi-channel distribution network distributing its own
The Body Shop-branded products through company owned retail stores, franchised
stores and through its direct selling division 'The Body Shop at Home' and
e-commerce. The manufacture of The Body Shop's products is mainly outsourced,
with 28 suppliers in 22 countries as at 26 February 2005.
The Body Shop is present in 54 countries worldwide, with particular strength in
the UK and Americas, and robust growth prospects in Asia-Pacific and Continental
Europe, the Middle East, and Africa. As of 27 August 2005, The Body Shop had
304 stores in the UK and Ireland, of which 235 were owned and 69 franchised, 433
stores in the Americas of which 360 were owned and 73 franchised, 583 in Asia
Pacific of which 66 were owned and 517 franchised, and 765 stores in Continental
Europe, the Middle East, and Africa of which 117 were owned and 648 franchised.
In the 52 weeks to 26 February 2005, (on a restated IFRS basis) The Body Shop
generated earnings before interest and tax of £39.2 million with revenue of
£419.0 million.
8. Background to and reasons for the Offer
L'Oreal believes that the Offer would create significant value for its
shareholders and is consistent with L'Oreal's strategy of acquiring market
leading brands with global reach, with further potential to grow.
Brand
The Body Shop is a successful, global, naturally-oriented, cosmetics brand with
a clear and differentiated identity. The brand is underpinned by strong and
well defined values with a distinct heritage. The Body Shop's brand positioning
would be highly complementary to L'Oreal's portfolio and would provide L'Oreal
with a sizeable brand in the cosmetics sector which generated more than £700
million in retail sales (approximately £419 million in revenue) in the 52 weeks
to 26 February 2005 (on a restated IFRS basis). The Body Shop would constitute
L'Oreal's only owned brand of British origin occupying the leading position in
the high-growth environmentally conscious consumer segment. The Body Shop brand
would represent an appealing addition to L'Oreal's existing range of brands.
The Body Shop would operate independently within the L'Oreal Group and would be
led by The Body Shop's current management team reporting directly to the
CEO-Designate of L'Oreal, Jean-Paul Agon. The Body Shop would continue to be
based in the United Kingdom.
Expertise in distribution
The Body Shop markets its products through an extensive company-owned and
franchised store network (which comprised 2,085 stores worldwide as at 27 August
2005) with an e-commerce channel and a direct selling operation, thereby
exercising total control over the distribution of its products. L'Oreal would
intend to develop The Body Shop brand and its retail network as a separate
entity, exclusively selling The Body Shop branded products, while L'Oreal's
existing products would continue to be marketed through its traditional
distribution channels.
L'Oreal believes that its contribution to The Body Shop would consist primarily
of the provision of access to L'Oreal's research and development capabilities
and allowing The Body Shop to leverage L'Oreal's extensive marketing expertise
in the cosmetics sector to further develop The Body Shop brand identity.
L'Oreal would also continue to roll-out the new The Body Shop store format and
accelerate store openings in existing and new markets as part of The Body Shop's
existing £100 million growth programme.
L'Oreal expects that the acquisition of The Body Shop would be EPS neutral in
the financial year to 31 December 2006, and EPS accretive thereafter*.
9. Background to and reasons for recommending the Offer
Since its founding in 1976, The Body Shop has become a leading global cosmetics
brand by pioneering the development of the market for naturally inspired
personal care products. By espousing its founders' values of respect for the
environment, animals and humanity, The Body Shop has developed a loyal customer
base, which has continued to grow as the need for ethical products has increased
amongst consumers.
Following The Body Shop's rapid international expansion and success in the 1980s
and 1990s, The Body Shop experienced disappointing profitability as The Body
Shop Group struggled to cope with its growth. As a result of the substantial
reorganisation that has taken place over the last four years under the current
executive management team, operating profit and earnings per share have improved
substantially, resulting in a strong share price performance. In 2004, a £100
million investment plan was put in place to grow The Body Shop brand in existing
and new markets and improve systems. This strategy was underpinned by a vision
of creating an integrated multi-channel retailer offering customers a choice of
channels to access The Body Shop products including retail, The Body Shop At
Home and e-commerce.
Over the last two years, this strategy has delivered positive sales growth with
a particularly strong performance in The Body Shop At Home. In the most recent
trading update in January 2006, sales performance in Asia and Europe, Middle
East and Africa was good, but the Americas and the United Kingdom & Republic of
Ireland underperformed group expectations. At the time, the board of The Body
Shop made clear that it was confident in the strategy and the medium term growth
prospects for The Body Shop.
Against this background, the board of The Body Shop believe that the offer by
L'Oreal not only fully reflects the prospects for The Body Shop Group on a stand
alone basis but also provides an opportunity for the furtherance of The Body
Shop Group's employees and its social values within a world-class cosmetics
company.
10. Management and employees of The Body Shop
L'Oreal recognises the strong contribution made by The Body Shop's management
and employees to the development of The Body Shop and views them as being
critical to the future success of The Body Shop, within the L'Oreal Group. The
Body Shop will add an important additional brand to the L'Oreal portfolio and
L'Oreal expects that The Body Shop's managers and employees will play an
important role in the L'Oreal Group as well as benefiting from greater
opportunities within it. Accordingly, L'Oreal has given the board of The Body
Shop assurances that, following the closing of the Offer, the existing
employment rights, including pension rights, of all management and employees of
The Body Shop will be fully safeguarded.
L'Oreal expects that the executive directors of The Body Shop (Adrian Bellamy
and Peter Saunders), along with the rest of The Body Shop's senior management
team, will remain with The Body Shop. Dame Anita Roddick has also agreed to
enter into a consultancy agreement with L'Oreal pursuant to which she will
provide consultancy services to the L'Oreal Group in addition to her current
role as consultant to The Body Shop.
11. The Body Shop Share Schemes
The Offer will extend to any The Body Shop Shares unconditionally allotted or
issued pursuant to the exercise of options under The Body Shop Share Options
Schemes while the Offer remains open for acceptance (or such earlier date as
L'Oreal may, subject to the rules of the Code, decide). Appropriate proposals
will be made to participants in The Body Shop Share Options Schemes in due
course.
12. Financing
In addition to L'Oreal's existing financial resources, L'Oreal has obtained
committed financing, arranged by J.P.Morgan Chase Bank N.A. Paris Branch,
sufficient to enable L'Oreal to satisfy in full the cash consideration payable
to The Body Shop Shareholders and otherwise to fulfil its commitments under the
terms of the Offer.
13. Disclosure of interests in The Body Shop Shares
Save as set out in this announcement, as at 16 March 2006, the last practicable
date prior to this announcement, neither L'Oreal nor, so far as L'Oreal is
aware, any person acting in concert with L'Oreal had an interest in or right to
subscribe for relevant securities of The Body Shop or had any short position in
relation to the relevant securities of The Body Shop (whether conditional or
absolute and whether in the money or otherwise), including any short position
under a derivative, any agreement to sell or any delivery obligation or right to
require another person to purchase or take delivery of any relevant securities
of The Body Shop.
14. Dealing disclosure requirements
Under the provisions of Rule 8.3 of the City Code, if any person is, or becomes,
'interested' (directly or indirectly) in 1 per cent. or more of any class of
'relevant securities' of The Body Shop, all 'dealings' in any 'relevant
securities' of The Body Shop (including by means of an option in respect of, or
a derivative referenced to, any such 'relevant securities') must be publicly
disclosed by no later than 3.30 p.m. (London time) on the London business day
following the date of the relevant transaction. This requirement will continue
until the date on which the Offer becomes, or is declared, unconditional as to
acceptances, lapses or is otherwise withdrawn or on which the 'offer period'
otherwise ends. If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire an 'interest' in 'relevant
securities' of The Body Shop, they will be deemed to be a single person for the
purpose of Rule 8.3.
Under the provisions of Rule 8.1 of the City Code, all 'dealings' in 'relevant
securities' of The Body Shop by L'Oreal or The Body Shop, or by any of their
respective 'associates', must be disclosed by no later than 12.00 noon (London
time) on the London business day following the date of the relevant transaction.
A disclosure table, giving details of the companies in whose 'relevant
securities' 'dealings' should be disclosed, and the number of such securities in
issue, can be found on the Panel's website at www.thetakeoverpanel.org.uk.
'Interests in securities' arise, in summary, when a person has long economic
exposure, whether conditional or absolute, to changes in the price of
securities. In particular, a person will be treated as having an 'interest' by
virtue of the ownership or control of securities, or by virtue of any option in
respect of, or derivative referenced to, securities.
Terms in quotation marks are defined in the City Code, which can also be found
on the Panel's website. If you are in any doubt as to the application of Rule 8
to you, please contact an independent financial adviser authorised under the
Financial Services and Markets Act 2000, consult the Panel's website at
www.thetakeoverpanel.org.uk or contact the Panel on telephone number +44 (0) 20
7382 9026; fax +44 (0) 20 7638 1554.
15. Delisting, compulsory acquisition and re-registration
If the Offer becomes or is declared unconditional in all respects, and
sufficient acceptances under the Offer are received, L'Oreal intends to procure
that The Body Shop make applications to cancel the listing of The Body Shop
Shares from the UKLA's Official List and to cancel admission to trading in The
Body Shop Shares on the London Stock Exchange's market for listed securities.
If L'Oreal receives acceptances under the Offer in respect of, or otherwise
acquires, 90 per cent. or more of The Body Shop Shares to which the Offer
relates, L'Oreal intends to exercise its rights pursuant to the provisions of
sections 428 to 430F (inclusive) of the Act to acquire compulsorily the
remaining The Body Shop Shares in respect of which the Offer has not been
accepted on the same terms as the Offer.
It is anticipated that cancellation of listing on the Official List and
admission to trading on the London Stock Exchange will take effect no earlier
than 20 business days either (i) after L'Oreal has by virtue of its
shareholdings and acceptances of the Offer, acquired or agreed to acquire issued
share capital carrying 75 per cent. of the voting rights of The Body Shop or
(ii) on the first date of issue of compulsory acquisition notices under section
429 of the Act. L'Oreal will notify The Body Shop Shareholders when the
required 75 per cent. has been attained and confirm that the notice period has
commenced and the anticipated date of cancellation. De-listing would
significantly reduce the liquidity and marketability of any The Body Shop Shares
not assented to the Offer at that time.
It is also intended that, following the Offer becoming or being declared
unconditional, The Body Shop will be re-registered as a private company under
the relevant provisions of the Companies Act.
16. General
The Offer Document and Form of Acceptance, which will include a letter of
recommendation from the Chairman of The Body Shop, will be despatched to The
Body Shop Shareholders by L'Oreal as soon as practicable.
The Offer will be on the terms and subject to the conditions set out herein and
in Appendix 1 and to be set out in the Offer Document.
This announcement does not constitute an offer to sell or an invitation to
purchase any securities or the solicitation of an offer to buy any securities,
pursuant to the Offer or otherwise. The Body Shop Shareholders are advised to
read carefully the formal documentation in relation to the Offer once it has
been despatched. This will contain the full terms and conditions of the Offer,
including details of how the Offer may be accepted.
The bases and sources of certain financial information contained in this
announcement are set out in Appendix 2 to this announcement. Certain terms used
in this announcement are defined in Appendix 4 to this announcement.
Enquiries:
L'Oreal
General +33 1 47 56 70 00
Analysts and institutional investors of L'Oreal
Mrs Caroline Millot +33 1 47 56 86 82
Individual Shareholders of L'Oreal and market authorities
Mr. Jean-Regis Carof +33 1 47 56 83 02
Journalists
Mr. Mike Rumsby +33 1 47 56 76 71
JPMorgan Cazenove +44 207 588 2828
Mark Breuer
Barry Weir
The Body Shop
For all investor relations and media queries contact:
Brunswick +44 207 404 5959
Louise Charlton
William Cullum
Deborah Spencer
Dominic McMullan
Merrill Lynch +44 207 628 1000
Kevin Smith
Jamie Heath
Mark Astaire (Corporate Broking)
Peter Tracey (Corporate Broking)
JPMorgan Cazenove, which is authorised by the Financial Services Authority, is
acting exclusively for L'Oreal and no one else in connection with the Offer and
will not be responsible to anyone other than L'Oreal for providing the
protections offered to clients of JPMorgan Cazenove or for providing advice in
relation to the Offer or any other matters referred to in this announcement.
Merrill Lynch is acting exclusively for The Body Shop and no one else in
connection with the Offer and will not be responsible to anyone other than The
Body Shop for providing the protections afforded to clients of Merrill Lynch or
for providing advice in relation to the Offer or any other matters referred to
in this announcement.
The availability of the Offer to The Body Shop Shareholders who are not resident
in and citizens of the United Kingdom may be affected by the laws of the
relevant jurisdictions in which they are located or of which they are citizens.
Such persons should inform themselves of, and observe, any applicable legal or
regulatory requirements of their jurisdictions. Further details in relation to
overseas shareholders will be contained in the Offer Document.
Unless otherwise determined by L'Oreal, and permitted by applicable law and
regulation, the Offer, including the Loan Note Alternative, will not be made,
directly or indirectly, in, into or from, and will not be capable of acceptance
in or from the United States, Canada, Australia or Japan or any jurisdiction
where to do so would constitute a breach of securities laws in that
jurisdiction. Accordingly, copies of this announcement are not being, and must
not be, mailed or otherwise forwarded, distributed or sent in, into or from the
United States, Canada, Australia or Japan or any jurisdiction where to do so
would constitute a breach of securities laws in that jurisdiction. Persons
receiving this announcement (including custodians, nominees and trustees) should
observe these restrictions and should not send or distribute this announcement
in, into or from any such jurisdictions.
The Loan Notes to be issued in connection with the Offer have not been, nor will
they be, registered under the US Securities Act or under the securities laws of
any state or other jurisdiction of the United States (or under the securities
laws of any other jurisdiction, the residents of which L'Oreal is advised to
treat as Restricted Overseas Persons); the relevant clearances have not been,
and will not be, obtained from the securities commission of any province,
territory or jurisdiction of Canada; and no prospectus has been lodged with, or
registered by, the Australian Securities and Investments Commission or the
Japanese Ministry of Finance. Accordingly, unless an exemption under such act or
securities laws or unless otherwise determined by L'Oreal, and permitted by
applicable law and regulation, the Loan Notes may not be offered, sold, resold,
delivered or transferred, directly or indirectly, in or into the United States,
Canada, Australia or Japan or any other jurisdiction if to do so would
constitute a violation of the relevant laws of, or require registration thereof
in, such jurisdiction or to, or for the account or benefit of, a person located
in the United States, Canada, Australia or Japan.
Forward Looking Statements
This announcement includes certain 'forward-looking statements'. These
statements are based on the current expectations of the management of The Body
Shop and L'Oreal and are naturally subject to uncertainty and changes in
circumstances. The forward-looking statements contained herein include
statements about the expected effects on L'Oreal of the Offer, the expected
timing and scope of the Offer, anticipated earnings enhancements, estimated cost
savings and other synergies, costs to be incurred in achieving synergies, other
strategic options and all other statements in this announcement other than
historical facts. Forward-looking statements include, without limitation,
statements typically containing words such as 'intends', 'expects',
'anticipates', 'targets', 'estimates' and words of similar import. By their
nature, forward-looking statements involve risk and uncertainty because they
relate to events and depend on circumstances that will occur in the future.
There are a number of factors that could cause actual results and developments
to differ materially from those expressed or implied by such forward-looking
statements. These factors include, but are not limited to, the satisfaction of
the conditions to the Offer, and L'Oreal's ability to successfully integrate the
operations and employees of The Body Shop, as well as additional factors, such
as changes in economic conditions, changes in the level of capital investment,
success of business and operating initiatives and restructuring objectives,
customers' strategies and stability, changes in the regulatory environment,
fluctuations in interest and exchange rates, the outcome of litigation,
government actions and natural phenomena such as floods, earthquakes and
hurricanes. Other unknown or unpredictable factors could cause actual results to
differ materially from those in the forward-looking statements. Neither The Body
Shop nor L'Oreal undertake any obligation to update publicly or revise
forward-looking statements, whether as a result of new information, future
events or otherwise, except to the extent legally required.
APPENDIX 1
CONDITIONS AND FURTHER TERMS OF THE OFFER
The Offer, which will be made by JPMorgan Cazenove on behalf of L'Oreal, will
comply with the City Code and will be governed by English law and subject to the
jurisdiction of the English courts. In addition, the Offer will be subject to
the terms and conditions to be set out in the Offer Document. The Offer will be
subject to the following conditions:
1 valid acceptances of the Offer being received (and not,
where permitted, withdrawn) by no later than 3:00 p.m. on the first closing
date of the Offer (or such later time(s) and/or date(s) as L'Oreal may, subject
to the rules of the Code, decide) in respect of not less than 90 per cent. (or
such lesser percentage as L'Oreal may decide) of The Body Shop Shares to which
the Offer relates, provided that this condition will not be satisfied unless
L'Oreal and/or any member of the L'Oreal Group shall have acquired or agreed to
acquire (whether pursuant to the Offer or otherwise) The Body Shop Shares
carrying in aggregate more than 50 per cent. of the voting rights normally
exercisable at a general meeting of The Body Shop. For the purposes of this
condition:
1.1 The Body Shop Shares which have been unconditionally allotted
shall be deemed to carry the voting rights which they will carry upon issue;
1.2 the expression 'The Body Shop Shares to which the Offer
relates' shall be construed in accordance with Sections 428 to 430F of the
Companies Act 1985; and
1.3 valid acceptances shall be deemed to have been received in
respect of The Body Shop Shares which are treated for the purposes of section
429(8) of the Companies Act 1985 as having been acquired or contracted to be
acquired by L'Oreal by virtue of acceptances of the Offer;
2 if the Offer constitutes a concentration with a Community
dimension within the scope of Council Regulation (EC) 139/2004 (the 'Regulation
'):
2.1 the European Commission having confirmed, in terms satisfactory
to L'Oreal, that it does not intend to initiate proceedings under Article 6(1)
(c) of the Regulation in respect of the Offer or any aspect of the Offer; and
2.2 if a request under Article 9(2) of the Regulation has been made
by a European Union or EFTA state, either:
2.2.1 the European Commission having confirmed, in terms satisfactory
to L'Oreal, that it does not intend to refer the Offer or any aspect of the
Offer to the competent authorities of such a European Union or EFTA state in
accordance with Article 9(3) of the Regulation; or
2.2.2 if the European Commission, in accordance with Article 9(3) of
the Regulation, refers the Offer or any aspect of the Offer to the competent
authorities of such a European Union or EFTA state, that competent authority
indicating, in terms satisfactory to L'Oreal, that it does not intend to
initiate second phase proceedings (as provided for under the national laws of
the relevant European Union or EFTA state) in respect of L'Oreal or any aspect
of the Offer;
3 to the extent that the Offer constitutes a concentration or
is otherwise subject to merger control filing, notification or approval in any
of Canada, Turkey, South Korea or Taiwan or the approval of the competent agency
in one of those jurisdictions is required before L'Oreal can acquire shares
pursuant to the Offer, the receipt of evidence, in a form and substance
satisfactory to L'Oreal, that in relation to the Offer and the acquisition of
any shares in, or control of, The Body Shop by L'Oreal or any member of the
L'Oreal Group, all applicable filings and notifications have been made, all
applicable waiting and/or other relevant time periods have expired, lapsed or
been terminated and any required approvals have been obtained, unconditionally
or, if subject to conditions, on terms satisfactory to L'Oreal;
4 all required filings having been made under the United
States Hart-Scott-Rodino Antitrust Improvements Act of 1976 (as amended) and the
rules and regulations thereunder and the applicable waiting period having
expired or been terminated as appropriate in connection with the Offer;
5 no central bank, government or governmental, quasi-
governmental, supranational, statutory, regulatory or investigative body, trade
agency, court, professional association, or any other such body or person in any
jurisdiction (each a 'Third Party') having given notice of a decision to take,
institute or threaten any action, proceeding, suit, investigation, enquiry or
reference, or having required any action to be taken, or otherwise having done
anything, or having enacted, made or proposed any statute, regulation, decision
or order which would:
5.1 make the Offer, its implementation or the acquisition or
proposed acquisition of any The Body Shop Shares by L'Oreal void, unenforceable
or illegal, or restrict, prohibit or delay to a material extent or otherwise
materially interfere with the implementation of, or impose material additional
conditions or obligations with respect to, or otherwise materially challenge or
require material amendment of, the Offer or the acquisition of any The Body Shop
Shares by L'Oreal;
5.2 result in a material delay in the ability of L'Oreal, or render
it unable, to acquire some or all of The Body Shop Shares or require a
divestiture by L'Oreal or any member of the L'Oreal Group of any shares in The
Body Shop;
5.3 require, prevent or delay the divestiture, or alter the terms
envisaged for any proposed divestiture, by L'Oreal or any member of the L'Oreal
Group or by any member of The Body Shop Group of all or any part of their
respective businesses, assets or properties, or impose any limitation on their
ability to conduct their respective businesses (or any of them) or to own their
respective assets or properties or any part of them, to an extent in any such
case which is material in the context of the Offer;
5.4 impose any material limitation on, or result in a material
delay in, the ability of L'Oreal or any member of the L'Oreal Group to acquire
or to hold or to exercise effectively, directly or indirectly, all rights of
ownership of shares, loans or other securities (or the equivalent) in The Body
Shop or the ability of any member of The Body Shop Group or L'Oreal to hold or
exercise effectively any rights of ownership of shares, loans or other
securities in or in any respect which is material in the context of The Body
Shop Group taken as a whole to exercise management control over any member of
The Body Shop Group;
5.5 except pursuant to Part XIIIA of the Companies Act 1985,
require any member of the L'Oreal Group or of The Body Shop Group to acquire or
offer to acquire any shares or other securities (or the equivalent) in, or any
asset owned by, any member of The Body Shop Group owned by any third party;
5.6 result in any member of The Body Shop Group ceasing to be able
to carry on business under any name which it presently does so, the consequences
of which would be material in the context of The Body Shop Group taken as a
whole;
5.7 impose any limitation (other than relating to merger control)
that is material in the context of the business of The Body Shop Group taken as
a whole on the ability of any member of the L'Oreal Group or The Body Shop Group
to integrate or co-ordinate (to the extent that it is consistent with this
announcement) the business of any member of The Body Shop Group, or any part of
it, with that of any member(s) of the L'Oreal Group and/or any other member of
The Body Shop Group;
5.8 otherwise adversely affect the business, assets, liabilities,
or profits or prospects of any member of the L'Oreal Group or of The Body Shop
Group, to an extent in any such case which is material in the context of The
Body Shop Group taken as a whole,
and all applicable waiting and other time periods during which any
such Third Party could take, institute or threaten any such action, proceeding,
suit, investigation, enquiry or reference or otherwise so intervene having
expired, lapsed or been terminated;
6 all necessary material notifications and filings, except any
notifications and filings relating to merger control, having been made in
connection with the Offer and all material statutory and regulatory obligations
in connection with the Offer in any jurisdiction having been complied with and
all material authorisations, orders, recognitions, grants, consents, clearances,
confirmations, certificates, licences, permissions and approvals
('Authorisations') reasonably necessary in any jurisdiction for, or in respect
of, the Offer and the acquisition or the proposed acquisition of The Body Shop
Shares by L'Oreal or any member of the L'Oreal Group, except any Authorisation
relating to merger control, having been obtained in terms reasonably
satisfactory to L'Oreal from all appropriate Third Parties, all or any
applicable waiting and other time periods have expired, lapsed or been
terminated (as appropriate) and all such Authorisations (together with all
material Authorisations reasonably necessary to carry on the business of any
member of The Body Shop Group) remaining in full force and effect at the time at
which the Offer becomes otherwise unconditional and there being no notice of any
intention to revoke, suspend, restrict, amend or not to renew any such
Authorisations;
7 save as disclosed to any member of the L'Oreal Group or its
advisers by or on behalf of The Body Shop prior to the date of this announcement
or save as publicly announced by The Body Shop prior to the date of this
announcement, there being no provision of any material arrangement, agreement,
lease, licence, permit or other instrument to which any member of The Body Shop
Group is a party or by or to which any such member or any of its assets is or
may be bound or be subject, which as a consequence of the Offer or the
acquisition or the proposed acquisition by L'Oreal or any member of the L'Oreal
Group of any shares or other securities (or the equivalent) in The Body Shop or
because of a change in the control or management of any member of The Body Shop
Group or otherwise, would result in, in any case to an extent which is material
in the context of The Body Shop Group taken as a whole:
7.1 any monies borrowed by, or any other indebtedness, actual or
contingent, of, any member of The Body Shop Group which is not already repayable
on demand being or becoming repayable, or being capable of being declared
repayable immediately or prior to their or its stated maturity, or the ability
of any such member to borrow monies or incur any indebtedness being withdrawn or
inhibited;
7.2 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 Body Shop Group or any such mortgage, charge or
other security interest (whenever arising or having arisen) becoming
enforceable;
7.3 any such arrangement, agreement, lease, licence, permit or
other instrument being terminated or adversely modified or affected or any
onerous obligation or liability arising or any adverse action being taken
thereunder;
7.4 (other than in the ordinary course of business) any assets or
interests of any member of The Body Shop Group being or falling to be disposed
of or charged or any right arising under which any such asset or interest could
be required to be disposed of or charged;
7.5 any such member of The Body Shop Group ceasing to be able to
carry on business under any name under which it presently does so;
7.6 the value or financial or trading position, profits or
prospects of The Body Shop or any member of The Body Shop Group being prejudiced
or adversely affected; or
7.7 the creation of any liability (actual or contingent) by any
member of The Body Shop Group, in each case, to an extent which is material in
the context of The Body Shop Group taken as a whole;
8 save as disclosed in the Annual Report, publicly announced
through a Regulatory Information Service prior to the date of this announcement
or disclosed to any member of the L'Oreal Group or its advisers by or on behalf
of The Body Shop prior to the date of this announcement, no member of The Body
Shop Group having since 26 February 2005:
8.1 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 convertible into, or exchangeable for, or rights,
warrants or options to subscribe for or acquire, any such shares or convertible
securities (save as between The Body Shop and wholly-owned subsidiaries of The
Body Shop and save for the issue of The Body Shop Shares to employees on the
exercise of options granted under, or the grant of options under, The Body Shop
Share Option Schemes);
8.2 (other than the second interim dividend in lieu of a final The
Body Shop dividend for the 52 weeks to 25 February 2006 of 4.4 pence per The
Body Shop Share) recommended, declared, paid or made or proposed to recommend,
declare, pay or make any bonus issue, dividend or other distribution whether
payable in cash or otherwise other than dividends (or other distributions
whether payable in cash or otherwise) lawfully paid or made to another member of
The Body Shop Group;
8.3 (save for intra-The Body Shop Group transactions and other than
in the ordinary course of business) implemented, effected, authorised, 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 the equivalent thereof) in any
undertaking or undertakings, in any such case that is material in the context of
The Body Shop Group taken as a whole or any change in its share or loan capital;
8.4 (save for intra-The Body Shop Group transactions and other than
in the ordinary course of business) disposed of, or transferred, mortgaged or
created any security interest over any asset or any right, title or interest in
any asset, in any such case that is material in the context of The Body Shop
Group taken as a whole or authorised, proposed or announced any intention to do
so;
8.5 (save for intra-The Body Shop Group transactions) issued,
authorised or proposed or announced an intention to authorise or propose, the
issue of any debentures or (save for intra-The Body Shop Group transactions or
transactions under existing credit arrangements) incurred any indebtedness or
contingent liability which is material in the context of The Body Shop Group
taken as a whole;
8.6 entered into or varied or authorised, proposed or announced its
intention to enter into or vary any contract, arrangement, agreement,
transaction or commitment (whether in respect of capital expenditure or
otherwise) which is of a long term, unusual or onerous nature or magnitude or
which involves or is reasonably likely to involve an obligation of such a nature
or magnitude which is, in any such case, or which is or is likely to be
restrictive on the business of any member of The Body Shop Group, which is, in
any such case, material in the context of The Body Shop Group taken as a whole;
8.7 entered into or varied to a material extent or authorised,
proposed or announced its intention to enter into or vary to a material extent
the terms of, or make any offer (which remains open for acceptance) to enter
into or vary to a material extent the terms of, any service agreement with any
director or, save for salary increases, bonuses or variations of terms in the
ordinary course, senior executive of The Body Shop;
8.8 purchased, redeemed or repaid or announced a proposal to
purchase, redeem or repay any of its own shares or other securities (or the
equivalent) or reduced or made any other change to or proposed the reduction or
other change to any part of its share capital to an extent that is material in
the context of The Body Shop Group taken as a whole, save for any shares
allotted upon the exercise of options granted under The Body Shop Share Option
Schemes or as between The Body Shop and wholly-owned subsidiaries of The Body
Shop;
8.9 waived, compromised or settled any claim which is material in
the context of The Body Shop Group taken as a whole otherwise than in the
ordinary course of business;
8.10 terminated or varied the terms of any agreement or arrangement
between any member of The Body Shop 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 or prospects of The Body Shop Group taken as a whole;
8.11 (save as disclosed on publicly available registers) made any
alteration to its memorandum or articles of association;
8.12 made or agreed or consented to any significant change to the terms
of the trust deeds constituting the pension schemes established for its
directors and/or employees and/or their dependants or to the benefits which
accrue, or to the pensions which are payable, thereunder, or to the basis on
which qualification for or accrual or entitlement to such benefits or pensions
are calculated or determined or to the basis upon which the liabilities
(including pensions) of such pension schemes are funded or made, or agreed or
consented to any change to the trustees involving the appointment of a trust
corporation;
8.13 been unable, or admitted in writing that it is unable, to pay its
debts or having stopped or suspended (or threatened to stop or suspend) payment
of its debts generally or ceased or threatened in writing to cease carrying on
all or a substantial part of any business which is material in the context of
The Body Shop Group taken as a whole;
8.14 (other than in respect of a member which is dormant and was
solvent at the relevant time) taken or proposed any corporate action or had any
action or proceedings or other steps instituted against it for its winding-up
(voluntary or otherwise), dissolution or reorganisation or for the appointment
of a receiver, administrator, administrative receiver, trustee or similar
officer of all or any material part of its assets or revenues or any analogous
proceedings in any jurisdiction or appointed any analogous person in any
jurisdiction; or
8.15 entered into any agreement, arrangement or commitment or passed
any resolution or made any proposal or announcement with respect to, or to
effect, any of the transactions, matters or events referred to in this condition
8;
9 since 26 February 2005, save as disclosed in the Annual
Report, or save as disclosed to any member of the L'Oreal Group or its advisers
by or on behalf of The Body Shop or except as publicly announced by The Body
Shop (by the delivery of an announcement to a Regulatory Information Service),
in each case prior to the date of this announcement, there having been:
9.1 no adverse change in the business, assets, financial or trading
position or profits or prospects of any member of The Body Shop Group which is
material in the context of The Body Shop Group taken as a whole;
9.2 no litigation, arbitration proceedings, prosecution or other
legal proceedings having been announced or instituted by or against or remaining
outstanding against or in respect of any member of The Body Shop Group and no
investigation by or written complaint or reference to any Third Party (other
than relating to merger control) against or in respect of any member of The Body
Shop Group having been threatened in writing, announced or instituted or
remaining outstanding, against or in respect of any member of The Body Shop
Group and which in any such case is material in the context of The Body Shop
Group taken as a whole; or
9.3 no contingent or other liability having arisen or become
apparent which might reasonably be expected to adversely affect any member of
The Body Shop Group and which, in any case, is material in the context of The
Body Shop Group taken as a whole;
10 save as publicly announced by the delivery of an announcement
to a Regulatory Information Service prior to the date of this announcement or as
otherwise disclosed in the Annual Report or to any member of the L'Oreal Group
or its advisers by or on behalf of The Body Shop prior to the date of this
announcement, L'Oreal not having discovered that the financial, business or
other information concerning The Body Shop Group publicly announced or disclosed
at any time by or on behalf of any member of The Body Shop Group is misleading,
contains a misrepresentation of fact or omits to state a fact necessary to make
the information contained therein not misleading and which is, in any case,
material in the context of The Body Shop Group taken as a whole;
11 save as disclosed to any member of the L'Oreal Group or its
advisers by or on behalf of The Body Shop prior to the date of this
announcement, in relation to any release, emission, discharge, disposal or other
fact or circumstance which causes or might reasonably be expected to cause
pollution of the environment or harm to human health, no past or present member
of The Body Shop Group having, in any manner or to an extent which is material
in the context of The Body Shop Group taken as a whole: (i) committed any
violation of any laws, statutes, ordinances or regulations of any Third Party;
and/or (ii) incurred any liability (whether actual or contingent) with respect
thereto.
For the purposes of the conditions set out in this Appendix 1:
(i) 'parent undertaking', 'subsidiary undertaking', 'associated
undertaking' and 'undertaking' have the meanings given by the Companies Act
1985, but for this purpose ignoring paragraph 20(1)(b) of Schedule 4A of the
Companies Act 1985; and
(ii) 'substantial interest' means a direct or indirect interest
in 20 per cent. or more of the voting equity capital of an undertaking.
L'Oreal reserves the right to waive, in whole or in part, all or any of the
above conditions 2 to 11 (inclusive).
If L'Oreal is required by the Panel to make an offer for The Body Shop Shares
under the provisions of Rule 9 of the Code, L'Oreal may make such alterations to
any of the above conditions, including condition 1 above, and terms of the Offer
as are necessary to comply with the provisions of that Rule.
The Offer will lapse unless conditions 2 to 11 (inclusive) set out above have
been fulfilled or, where permitted, waived or, where appropriate, have been
determined by L'Oreal to be or remain satisfied, by midnight on the 21st day
after the later of the first closing date of the Offer and the date on which
condition 1 is fulfilled (or in each case such later date as L'Oreal may, with
the consent of the Panel, decide). L'Oreal shall be under no obligation to waive
(if capable of waiver), to determine to be or remain satisfied or to treat as
fulfilled any of conditions 2 to 11 (inclusive) by a date earlier than the
latest date specified above for the fulfilment of that condition.
The Offer will lapse (unless otherwise agreed with the Panel) if, before the
later of the first closing date of the Offer and the date when the Offer becomes
or is declared unconditional as to acceptances:
(i) the European Commission initiates proceedings under Article
6(1)(c) of the Regulation; or
(ii) following a referral by the European Commission under
Article 9.1 of the Regulation to a competent authority in the United Kingdom,
there is a subsequent reference to the Competition Commission.
If the Offer lapses, the Offer will cease to be capable of further acceptance
and accepting The Body Shop Shareholders and L'Oreal shall cease to be bound by
Forms of Acceptance submitted at or before the time when the Offer so lapses.
APPENDIX 2
SOURCES OF INFORMATION AND BASES OF CALCULATION
(i) The value placed by the Offer on the existing issued share capital
of The Body Shop is based on 217,434,814 The Body Shop Shares in issue on 16
March 2006, being the last dealing day prior to the date of this announcement.
(ii) The closing mid-market share prices on 21 February 2006, 22 February
2006 and 16 March 2006 are taken from the Official List.
(iii) Unless otherwise stated, the financial information relating to The
Body Shop is extracted from the audited consolidated financial statements of The
Body Shop for the financial year to 26 February 2005 and has been restated in
accordance with IFRS.
(iv) The financial information relating to L'Oreal is extracted from the
audited consolidated financial statements of L'Oreal for the year ended 31
December 2005 and has been prepared in accordance with IFRS.
APPENDIX 3
DETAILS OF IRREVOCABLE UNDERTAKINGS AND CALL OPTION
The following holders of The Body Shop Shares have given irrevocable
undertakings to accept the Offer:
Name Number of The Body Shop Shares % of
issued share capital
Dame Anita Roddick 20,210,836 9.3%
Mr Gordon Roddick 18,960,836 8.7%
Mr Adrian Bellamy 7,425,000 3.4%
Mr Peter Saunders 111,046 0.1%
Mrs Irene Miller 200,000 0.1%
Mr Jack Keenan 70,000 0.0%
Total 46,977,718 21.6%
In addition to the irrevocable undertakings described above, L'Oreal has been
granted a call option which gives L'Oreal the ability to require that the
following The Body Shop Shares are tendered to the Offer:
Name Number of The Body Shop Shares % of
issued share capital
Beaverbridge Holdings Limited 45,666,768 21.0%
Total 45,666,768 21.0%
APPENDIX 4
DEFINITIONS
The following definitions apply throughout this announcement unless the context
requires otherwise.
'Act' the Companies Act 1985, as amended
'Annual Report' the annual report and accounts of The Body Shop for
the year ended 26 February 2005
'Australia' the commonwealth of Australia, its territories and
possessions and all areas subject to its jurisdiction
and all political sub-divisions thereof
'Authorisations' has the meaning given to it in paragraph 6 of
Appendix 1 of this announcement
'Canada' Canada, its provinces and territories and all areas
subject to its jurisdiction and all political
sub-divisions thereof
'City Code' or 'Code' the City Code on Takeovers and Mergers
'EFTA States' Iceland, Liechtenstein and Norway
'EPS' earnings per share
'Form of Acceptance' the form of acceptance and authority to be issued in
connection with the Offer and which will accompany
the Offer Document
'FSA' the Financial Services Authority
'IFRS' International Financial Reporting Standards
'Japan' Japan, its cities and prefectures, territories and
possessions
'JPMorgan Cazenove' JPMorgan Cazenove Limited, 20 Moorgate, London EC2R
6DA
'L'Oreal' L'Oreal S.A.
'L'Oreal Group' L'Oreal, its subsidiaries, subsidiary undertakings
and associated undertakings and any other body
corporate, partnership, joint venture or person in
which L'Oreal and such undertakings (aggregating
their interests) have a direct or indirect interest
of 20 per cent. or more of the voting or equity
capital or equivalent
'LIBOR' The London Inter-Bank Offered Rate expressed as a
rate per annum for six month sterling deposits of £1
million commencing on the first business day of the
relevant interest period which appears on the
Telerate Page 3750 or Telerate Page 3740 (as
appropriate) at or about 11:00a.m. on such date
'Listing Rules' the rules and regulations made by the Financial
Services Authority in its capacity as the UK Listing
Authority under the Financial Services and Markets
Act 2000, and contained in the UK Listing Authority's
publication of the same name
'Loan Note Alternative' the alternative by which The Body Shop Shareholders
(other than The Body Shop Shareholders in any
Restricted Jurisdiction) who validly accept the Offer
may elect to receive Loan Notes instead of all or
part of the cash consideration to which they would
otherwise have been entitled under the Offer
'Loan Note Instrument' the instrument constituting the Loan Note
'Loan Notes' the floating rate unsecured Loan Notes due 30 June
2013 of L'Oreal to be issued pursuant to the Loan
Note Alternative
'London Stock Exchange' London Stock Exchange plc
'Merrill Lynch' Merrill Lynch International, 2 King Edward Street,
London, EC1A 1HQ
'Offer' the recommended cash offer being made by JPMorgan
Cazenove on behalf of L'Oreal to acquire all of The
Body Shop Shares on the terms and subject to the
conditions to be set out in the Offer Document and
the Form of Acceptance, including, where the context
requires, any subsequent revision, variation,
extension or renewal of such offer and includes any
election available thereunder
'Offer Document' the document to be despatched on behalf of L'Oreal
containing the terms and conditions of the Offer and,
where appropriate, any other document(s) containing
terms and conditions of the Offer constituting the
full terms and conditions of the Offer
'Official List' The Daily Official List of the UK Listing Authority
'Panel' The Panel on Takeovers and Mergers
'Regulation' has the meaning given to it in paragraph 2 of
Appendix 1 of this announcement
'Regulatory Information Service' any of the services set out in Appendix 3 to the
Listing Rules of the UKLA
'Restricted Jurisdiction' any of the United States, Australia, Canada or Japan
or any jurisdiction where extension or acceptance of
the Offer would violate the law of that jurisdiction
'Restricted Overseas Persons' a person (including an individual, partnership,
unincorporated syndicate, limited liability company,
unincorporated organisation, trust, trustee,
executor, administrator or other legal
representative) in, or resident in, or any person
whom L'Oreal reasonably believes to be in, or
resident in, the United States, Canada, Australia
or Japan and persons in any other jurisdiction (other
than persons in the UK) whom L'Oreal is advised to
treat as restricted overseas persons in order to
observe the laws of such jurisdiction or to avoid the
requirement to comply with any governmental or other
consent or any registration, filing or other
formality which L'Oreal regards as unduly onerous
'The Body Shop' or the 'Company' The Body Shop International plc
'The Body Shop Group' The Body Shop, its subsidiaries, subsidiary
undertakings and associated undertakings and any
other body corporate, partnership, joint venture or
person in which The Body Shop and such undertakings
(aggregating their interests) have a direct or
indirect interest of 20 per cent. or more of the
voting or equity capital or the equivalent
'The Body Shop Shareholders' or 'Shareholders' the holders of The Body Shop Shares
'The Body Shop Share Option Schemes' The Body Shop 1991 Share Option Scheme, The Body Shop
Sharesave Option Scheme, The Body Shop 1995 Employee
Share Option Scheme, The Body Shop 2001 Savings
Related Share Option Scheme, The Body Shop 2002
Employee Share Option Scheme (Inland Revenue
Approved), The Body Shop 2002 Employee Share Option
Scheme (Unapproved) and The Body Shop 2005
Performance Share Plan
'The Body Shop Shares' the existing unconditionally allotted or issued and
fully paid ordinary shares of 5 pence each in the
capital of The Body Shop and any further such
ordinary shares which are unconditionally allotted or
issued while the Offer remains open for acceptance or
before such earlier date as L'Oreal (subject to the
City Code) may determine, not, unless the Panel so
permits, being earlier than the date on which the
Offer is declared unconditional as to acceptances or,
if later, the first closing date of the Offer
'Third Party' has the meaning given to it in paragraph 5 of
Appendix 1 of this announcement
'UKLA' the UK Listing Authority, being the Financial
Services Authority Limited acting in its capacity as
the competent authority for the purposes of Part IV
of the Financial Services and Markets Act 2000
'United Kingdom' or 'UK' the United Kingdom of Great Britain and Northern
Ireland
'United States' or 'US' the United States of America, its territories and
possessions, any State of the United States of
America and the District of Columbia
'US Securities Act' The United States Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder
For the purposes of this announcement, 'subsidiary', 'subsidiary undertaking',
'undertaking' and 'associated undertaking' have the respective meanings given
thereto by the Act.
All the times referred to in this announcement are London times.
References to the singular include the plural and vice versa.
€ means Euros, the lawful currency of the European Union.
£ and pence means Pounds and Pence Sterling, the lawful currency of the United
Kingdom.
--------------------------
* This statement should not be interpreted to mean that the EPS for the current
or future financial years will necessarily match or exceed the historical
published EPS.
* This statement should not be interpreted to mean that the EPS for the current
or future financial years will necessarily match or exceed the historical
published EPS.
This information is provided by RNS
The company news service from the London Stock Exchange