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Document Preview Listing Particulars Relating to the Merger |
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Title: |
Listing Particulars Relating to the Merger |
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Entities: |
Barclays Bank plc; Citibank, NA; Goldman Sachs International; Ogilvy & Mather; Reed Elsevier plc; Smith Barney Inc.; WPP Group plc; Xenova Group plc; Bank of New York; Goldman, Sachs & Co.; Allen & Overy; Fried, Frank, Harris, Shriver & Jacobson; Wachtell, Lipton, Rosen & Katz |
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Date: |
2000 |
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Size: |
Preview shows 16KB of 760KB total |
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Price: |
$99 |
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ID: |
#280780 |
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Start of Preview |
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LISTING PARTICULARS
RELATING TO THE MERGER WITH
YOUNG & RUBICAM INC.
AND
THE ISSUE OF UP TO 433,710,712 ORDINARY SHARES OF 10 PENCE EACH IN WPP GROUP
PLC
SPONSORED BY
GOLDMAN SACHS INTERNATIONAL
AND
MERRILL LYNCH INTERNATIONAL
---------------------------------------------------------
Goldman Sachs International and Merrill Lynch International, each of which is
regulated in the United Kingdom by The Securities and Futures Authority Limited,
are acting exclusively for WPP Group plc and for no-one else in connection with
the Merger and will not be responsible to anyone other than WPP Group plc for
providing the protections afforded to customers of Goldman Sachs International
and Merrill Lynch International respectively or for providing advice in relation
to the Merger.
The distribution of this document in jurisdictions other than the United Kingdom
may be restricted by law and therefore persons into whose possession this
document comes should inform themselves about and observe such restrictions. Any
failure to comply with these restrictions may constitute a violation of the
securities laws of any such jurisdiction.
{PAGE}
CONTENTS
{TABLE}
{CAPTION}
PAGE
--------
{S} {C} {C}
PART I MERGER OF WPP WITH YOUNG & RUBICAM.......................... 3
1. Introduction................................................ 3
2. Summary of the Merger....................................... 3
3. Sale restrictions........................................... 5
4. Y&R's business.............................................. 6
5. Strategic and financial reasons for the Merger.............. 6
6. Enlarged WPP Group board and headquarters................... 9
7. Dividends and dividend policy............................... 9
8. Accounting treatment and reporting.......................... 10
9. Current trading and prospects............................... 10
10. Extraordinary General Meeting............................... 10
11. Listing and dealing......................................... 10
12. Risk factors relating to the Merger......................... 11
13. Forward-looking statements may prove inaccurate............. 12
14. Nature of financial information............................. 13
PART II INFORMATION RELATING TO WPP................................. 14
1. Business description of WPP................................. 14
2. Extraction of financial information......................... 14
3. Financial information on WPP................................ 15
4. Unaudited interim results for the six months ended 30 June
2000........................................................ 52
PART III INFORMATION RELATING TO YOUNG & RUBICAM..................... 71
1. Business description of Y&R................................. 71
2. Extraction of financial information......................... 71
3. Financial information on Y&R................................ 72
4. Unaudited interim results for the six months ended 30 June
2000........................................................ 95
5. Unaudited restatements of Young & Rubicam's financial
information under UK GAAP................................... 101
6. Letter from PricewaterhouseCoopers LLP...................... 111
PART IV PRO FORMA FINANCIAL INFORMATION............................. 113
1. Pro forma financial information on WPP and Y&R.............. 113
2. Letter from Arthur Andersen................................. 121
PART V TERMS OF THE MERGER AND REGULATORY MATTERS.................. 123
Section A: Summary of the terms of the Merger...................... 123
Section B: Summary of the terms of the no-sale agreements.......... 130
Section C: General regulatory matters.............................. 132
PART VI ADDITIONAL INFORMATION...................................... 134
1. Responsibility.............................................. 134
2. Incorporation............................................... 134
3. Share capital............................................... 134
4. Memorandum and Articles of Association of WPP............... 137
5. WPP Share Schemes and details of outstanding options and
awards under the WPP Share Schemes and Y&R stock option
plans....................................................... 142
6. Principal subsidiary undertakings and associated
undertakings................................................ 149
7. Directors, Proposed Directors and Y&R Directors............. 150
8. Interests of the Directors and the Proposed Directors....... 157
9. Material contracts.......................................... 160
10. Litigation.................................................. 162
11. Principal establishments.................................... 163
12. United Kingdom taxation..................................... 163
13. Working capital............................................. 164
14. General..................................................... 164
15. Documents available for inspection.......................... 164
DEFINITIONS........................................................... 166
{/TABLE}
2
{PAGE}
PART I
MERGER OF WPP WITH YOUNG & RUBICAM
1. INTRODUCTION
On 12 May 2000, the boards of WPP and Y&R announced that they had reached
agreement on the terms of a proposed merger of the two companies.
The Merger is subject to a number of conditions, including approval by WPP
Share Owners and Y&R Share Owners at their respective general meetings. In
addition, the Merger is conditional on a number of regulatory and other
consents and confirmations in the European Union and certain other
jurisdictions. The Merger is expected to be completed on 3 October 2000
assuming that the various approvals and regulatory consents are received by
such date.
The Board of Y&R has unanimously approved the Merger Agreement and has
recommended that Y&R Share Owners vote in favour of the Merger. The Board
of WPP has unanimously approved the Merger Agreement and has recommended
that WPP Share Owners vote in favour of the Merger.
2. SUMMARY OF THE MERGER
2.1 STRUCTURE
The Merger is to be effected by a statutory merger under Delaware law
whereby York II Merger Corp (a Delaware corporation and an indirect
wholly-owned subsidiary of WPP), will be merged with and into Y&R and Y&R
will become an indirect wholly-owned subsidiary of WPP in accordance with
the terms of the Merger Agreement.
WPP Ordinary Shares will continue to be traded on the London Stock Exchange
and WPP ADSs will remain listed on the Nasdaq. Following completion of the
Merger, WPP will indirectly own all of the Y&R Common Shares.
2.2 TERMS OF THE MERGER
Under the terms of the Merger, Y&R Share Owners (other than WPP, Y&R or
any of their respective subsidiaries) will be entitled to receive, for
each Y&R Common Share held, 0.835 of a WPP ADS (each ADS representing five
WPP Ordinary Shares). Each Y&R Share Owner may elect to receive five new
WPP Ordinary Shares in lieu of each WPP ADS he would otherwise be entitled
to receive.
Each Y&R Share Owner who would otherwise have been entitled to receive a
fraction of a WPP ADS or a WPP Ordinary Share will receive, in lieu
thereof, cash (without interest) equal to his proportionate interest in the
net proceeds of sale of the WPP Ordinary Shares representing the aggregate
of the fractional entitlements which Y&R Share Owners would be entitled to
receive pursuant to the terms of the Merger.
Upon the Merger becoming effective, each outstanding Y&R Stock Option will
convert into an option to acquire 4.175 new WPP Ordinary Shares, if the
option holder is primarily resident or employed in Europe, or into an
option to acquire 0.835 of a WPP ADS in all other cases. As at 21 August
2000 (the latest practicable date prior to the publication of this
document) there were 23,293,354 Y&R Stock Options outstanding.
In addition, upon the Merger becoming effective, the Y&R Convertible Notes
will become convertible into 0.835 of a WPP ADS for each Y&R Common Share
into which they were convertible prior to the Merger.
Accordingly, it is expected that completion of the Merger will require the
issue of up to approximately 433,710,712 new WPP Ordinary Shares (including
new WPP Ordinary Shares to be issued on the exercise of the Y&R Stock
Options, the conversion of the Y&R Convertible Notes and as deferred
consideration for previous Y&R acquisitions). On the basis of a price of
L8.45 for each WPP Ordinary Share (based on the closing middle market price
on 11 May 2000, the last business day prior to the announcement of the
Merger), the Merger values the entire fully diluted share capital of Y&R at
approximately L3.6 billion.
Immediately following the Merger becoming effective, the interests of WPP's
existing Share Owners are expected to represent approximately two thirds
and those of Y&R Share Owners and option holders one third of the enlarged
fully diluted issued share capital of WPP.
3
{PAGE}
Further details of the Merger, including the principal terms of the Merger
Agreement and the conditions to the implementation of the Merger, are set
out in Section A of Part V of this document.
2.3 SHARE OWNER APPROVALS AND OTHER CONDITIONS
(a) WPP Share Owner approval
The Merger is conditional upon the passing, at the Extraordinary
General Meeting which has been convened for 29 September 2000, of
ordinary resolutions to approve the Merger, to increase the
authorised share capital of WPP, to authorise the Directors to allot
new WPP Ordinary Shares and to approve the appointment of four new
directors who have been designated by Y&R to the Board of WPP. A
special resolution will also be proposed to disapply the statutory
pre-emption rights contained in Section 89(1) of the Companies Act in
respect of the allotment for cash of equity securities of up to an
aggregate nominal amount of L7,662,089 which (after taking account of
certain obligations to be assumed by WPP under the terms of the
Merger Agreement requiring the allotment of WPP Ordinary Shares for
cash) will represent approximately 5% of the expected enlarged issued
share capital of WPP on completion of the Merger. In addition, a
further ordinary resolution will be proposed to increase the limit on
the aggregate annual remuneration which may be paid to non-executive
Directors under WPP's Articles of Association from L250,000 to
L450,000 and a further ordinary resolution will be proposed to enable
the Company to provide any special remuneration to a non-executive
Director, for any special or extra services requested by the Company,
in the form of WPP Ordinary Shares (by means of a right to acquire
those shares in lieu of cash, at a price no less than the nominal
amount of such shares). Approval of the Merger and related matters is
not conditional upon the passing of any of the last three
resolutions.
(b) Y&R Share Owner approval
The Merger is conditional upon approval by the holders of a majority
of the voting rights of the Y&R Common Shares.
A special meeting of Y&R Share Owners has been convened for
28 September 2000, at which Y&R Share Owners will be asked to approve
and adopt the Merger Agreement.
(c) Regulatory consents
The Merger is conditional on certain regulatory consents and
clearances, further details of which are set out in Section C of Part
V of this document.
(d) Other conditions
The Merger is also conditional on the satisfaction or waiver of
certain other conditions including the admission of the Consideration
Shares to the Official List and admission of the Consideration Shares
to trading by the London Stock Exchange. Further details are set out
in Section A of Part V of this document.
2.4 CONSENTS AND TIMING
The Merger is conditional on obtaining certain specified consents, waivers
and clearances. Application has been made to the European Commission and
other relevant national authorities for the necessary consents and
clearances, further details of which are set out in Section C of Part V of
this document. The European Commission issued its clearance decision for
the Merger on 24 August 2000.
Subject to these consents, waivers, clearances and share owner approvals
being obtained, the Merger is expected to be completed on 3 October 2000.
2.5 TERMINATION
The Merger Agreement may be terminated prior to the Effective Date:
(a) by mutual consent of WPP and Y&R;
(b) by either party if:
(i) the Merger has not been completed by 11 February 2001 (the
"Long Stop Date") provided that this right shall not be
exercisable by a party whose failure to comply in
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