The Grafton group has issued its formal offer document for Heitons which values the DIY and builders merchant group at €336 million, writes Siobhan Creaton, Finance Correspondent.
The offer is based on the Heiton's closing price on August 11th of €6.65 and values each Heiton ordinary share at approximately €6.54. This represents a premium of 39 per cent over the Heiton's closing price of €4.70 in May just before Grafton began to build a stake in the company. Under the terms of the offer Heiton shareholders will receive €2.64 in cash per Heiton ordinary share or approximately 40 per cent of the purchase price. The remaining 60 per cent will comprise Grafton shares.
The directors had previously recommended the deal to shareholders based on the slightly higher price of €6.76, its closing price on August 5th. The price agreed reflects the fluctuations in the share price since that date. The exact price will be confirmed when the deal goes unconditional.
To proceed, the offer must be accepted by 80 per cent of Heiton shareholders and must be approved by the Competition Authority.
Heiton chief executive, Mr Leo Martin, is the only executive who will join Grafton's board which comprises executive chairman, Mr Michael Chadwick and Mr Colm Ó Nuallain. Mr Martin refused to elaborate on the nature of his position within the enlarged group last night.
A spokesman for Grafton said it was premature to discuss the executive make-up of the group. It is understood that none of Heiton's other directors will join the Grafton board.
Following the acquisition, the document says the enlarged group will continue to pursue a strategy of participating in the ongoing consolidation of the UK merchanting sector, whilst also further strengthening the position of its Irish businesses through small, bolt-on acquisitions and greenfield developments.
The document details an agreement struck between Grafton and Heiton under which Heiton had undertaken to reimburse its acquirer for any specific and quantifiable costs incurred as a result of the share offer up to a maximum of approximately €3.36 million.
This arises if a third party offer for the company was to be entertained. If the directors withdraw their recommendation in circumstances other than those associated with another bid then no financial penalty arises.
The share offer is exclusive of the proposed final dividend for the year ended April 30th, 2004 of €0.107 per issued ordinary Heiton share. This payment is subject to approval at the next annual general meeting of the Heiton Group, is proposed to be paid on August 20th, 2004.
