Statement on Mandatory Offer by Axel Springer

 

TIDMSTPS 
 
RNS Number : 4059A 
StepStone ASA 
07 October 2009 
 

STATEMENT BY THE BOARD OF DIRECTORS OF STEPSTONE ASA IN CONNECTION WITH THE 
MANDATORY OFFER MADE BY AXEL SPRINGER AG 
INTRODUCTION 
This statement is made by the Board of Directors ("Board") of StepStone ASA 
("StepStone") pursuant to section 6-16 of the Norwegian Securities Trading Act 
of 29 June 2007 (the "Securities Trading Act") in connection with the mandatory 
offer made by Axel Springer AG ("Axel Springer") pursuant to the offer document 
dated 11 September 2009 (the "Offer Document"), and as amended by a press 
release by Axel Springer dated 5 October 2009, to acquire all outstanding shares 
in StepStone as of the date of the Offer Document (the "Revised Offer"). 
According to the Securities Trading Act Section 6-16, the Board of StepStone is 
required to issue a statement in relation to the Offer no later than one week 
prior to the expiry of the offer period. 
Board members Dr. Jens Müffelmann (director), Alexandra Rullen (director), 
Julian Deutz (alternate director) and Donata Hopfen (alternate director) are 
employees of Axel Springer and have not participated in discussions regarding 
the Offer or the issue of this statement. References to the "Board of Directors" 
or the "Board" in this statement shall therefore hereinafter only include a 
quorum consisting of the directors of the board not employed by Axel Springer. 
As previously announced, Morgan Stanley & Co. Limited and ABG Sundal Collier 
Norge ASA have been appointed as financial advisers to StepStone in connection 
with the Revised Offer. Advokatfirmaet Schjødt DA has acted as legal counsel to 
StepStone. 
The Board has issued this statement after having reviewed the Offer Document and 
the financial opinion issued to the Board by Morgan Stanley & Co. Limited and 
considered various alternatives in order to maximise shareholder value. 
Background to the offer 
The following information is presented by the Board of StepStone in the spirit 
of relevant disclosure in order to allow shareholders to better understand the 
Board's position, its efforts to maximise shareholder value and its 
decision-making process in reaching the recommendation presented at the end of 
this document. 
On 2 September 2009, Axel Springer announced that it had secured a majority 
interest in StepStone by acquisition of approx. 19.3 percent of the shares and 
that it held 52.27 percent of StepStone's equity. Furthermore, Axel Springer 
announced its intention to extend a public takeover offer to all shareholders 
for a price of NOK 8.60 per share. 
On 3 September 2009, the Board of StepStone noted that Axel Springer entered 
into agreements on Wednesday, 2 September 2009, to acquire shares in StepStone 
that increased their holding to an interest of about 52%. Furthermore, the Board 
noted that Axel Springer would proceed with a mandatory offer for the remaining 
shares in StepStone. The Board also announced that it would actively consider 
and pursue all available options that could contribute to maximising shareholder 
value and to ensuring equal treatment of shareholders. In addition, the Board 
stated that the value of the individual parts exceeds the value of the Offer and 
that StepStone had received an indication of interest in a part of StepStone's 
business that supported this view. 
On 10 September 2009, the Board of StepStone announced the appointment of Morgan 
Stanley & Co. Limited and ABG Sundal Collier Norge ASA as joint financial 
advisers in connection with the offer by Axel Springer. The purpose of these 
appointments was to provide the Board with the necessary expertise, and 
independent advice on the fair value of the business. In the limited time 
available, also to enable it to fully and properly explore all reasonable 
alternatives that could contribute to maximising value. Of prime importance was 
to ensure equal treatment of shareholders. The Board reiterated that it believed 
that the intended offer, indicated by Axel Springer to be for NOK 8.60 per 
share, did not reflect the full value of the business. 
On 11 September 2009, Axel Springer published the public takeover offer to the 
shareholders of StepStone ASA that was announced on September 2, 2009. The Offer 
comprised all 60,892,610 shares currently issued and outstanding in StepStone 
not owned by Axel Springer. The offer period started on September 14, 2009, and 
is set to close on October 12, 2009 (subject to extension). The offer price was 
NOK 8.60 per share. The Offer excluded any shares authorised and issued after 
the date of the offer, such as any shares issued as a result of exercise of 
9,075,546 vested options held by employees. 
Since the intended Offer was announced, the Board, with the assistance of senior 
management, Morgan Stanley & Co. Limited, ABG Sundal Collier Norge ASA and its 
legal advisers have vigorously been exploring all legally permissible options 
including seeking interest from financial and strategic parties, potential 
capital issuances and legal and technical alternatives. In addition, StepStone 
and its advisers have been in dialogue with current public minority shareholders 
and potential new shareholders. 
As a result of its actions, including preliminary discussions and due diligence, 
StepStone is in receipt of a number of written, non-binding expressions of 
interest supporting the Board's view that the open market value of StepStone's 
Solutions business alone is in excess of EUR100 million. This means that the 
Solutions business open market enterprise value alone represents approximately 
80 percent of StepStone's enterprise valuation on the basis of the Revised Offer 
Price. 
The Chairman and CEO of StepStone also held discussions with senior executives 
of Axel Springer with the objective to agree an improved offer that could be 
recommended by the Board. However, these discussions did not result in a 
recommendable improved offer. 
On 2 October 2009 StepStone issued a notice for an Extraordinary General Meeting 
of shareholders (EGM) to be held on 23 October 2009. This EGM to reconstitute 
the Board had been requested by Axel Springer on 23 September 2009. 
Subsequently on 2 October 2009 StepStone was approached by Axel Springer with a 
revised offer of NOK 9.00, which was conditional on i) receiving a neutral Board 
response statement, ii) stopping of all defence measures and iii) senior 
management confirming its intention to remain in their currently held positions 
with StepStone at least another three years subject to adequate incentivisation. 
On 5 October 2009 a transaction agreement was entered into with Axel Springer 
and announced. 
consequences for StepStone's business 
The Offer Document states that "By making the Offer, Axel Springer pursues its 
goal to confirm its European-level presence in the attractive online job market 
and further implements its strategy of digitization through gaining control over 
one of the leading international providers of human capital management software 
and services." 
The Offer Document contains limited information regarding Axel Springer's 
strategic plans and visions for StepStone's future business following a 
potential acquisition by Axel Springer. The Board has, however, noted the 
statements in the Offer Document that Axel Springer will continue and support 
StepStone's business trajectory in cooperation with management and employees of 
StepStone. 
consequences for AND VIEWS BY the employees 
The employees of StepStone have been informed of the Revised Offer. No statement 
has been provided by or on behalf of the employees as of today's date. 
Management has discussed the Revised Offer with staff and it is clear that the 
employees expect the shareholders, of which Axel Springer will be the largest, 
to be willing and able to continue to invest in both the staff and the business. 
The Board has noted the statement by Axel Springer in the Offer Document that 
completion of the offer will not have any legal, economic or other work-related 
consequences for the employees of StepStone and that Axel Springer does not have 
plans to make changes to StepStone's workforce following completion of the 
Revised Offer. 
The Board notes the statement by Axel Springer in its press release issued 5 
October 2009 regarding the revised offer, that Axel Springer as a shareholder of 
Stepstone Germany since October 2004 and now as majority shareholder of 
StepStone knows the company and its business well and highly values the 
management team and the employees of StepStone as well as the attractive 
prospects for future growth. 
The Revised Offer 
The offer price is NOK 9.00 per share (the "Revised Offer Price"), valuing 
StepStone's issued and outstanding share capital together with the vested 
employee share options at approximately NOK 1.2 billion. 
The Revised Offer Price will be paid in cash according to the terms set out in 
the Offer Document. 
The Revised Offer can be accepted from 5 October 2009 to and including 23 
October 2009 at 17:30 CET (following extension of the original offer period 
ending 12 October 2009) (the "Acceptance Period"). According to the Offer 
Document, Axel Springer may in its sole discretion extend the Acceptance Period 
to and including 26 October 2009. Any extension of the Acceptance Period will be 
announced on or before the last day of the prevailing Acceptance Period. Axel 
Springer will at the end of the Acceptance Period issue a notification informing 
about the level of acceptance in the Revised Offer. 
Axel Springer is not offering to acquire any Depositary Interests, and only the 
underlying Shares to such Depositary Interests are subject to the Revised Offer. 
Holders of Depositary Interests wishing to accept the Revised Offer, should 
accordingly ensure re-registration of their holdings into Shares with the VPS in 
time to accept the Revised Offer within the Acceptance Period or alternatively 
make the necessary arrangements for Capita (as registered holder of the Shares 
in the VPS) to accept the Revised Offer. 
Axel Springer has indicated that for precautionary reasons if, as a result of 
the Revised Offer, it acquires more than 90% of the shares of StepStone, it will 
as a technical possibility evaluate making a compulsory acquisition of the 
remaining shares. Also it has indicated that for precautionary reasons following 
completion of the Revised Offer, dependent upon the number of Shares acquired, 
it reserves its right to propose to the general meeting of StepStone to apply to 
Oslo Børs for the delisting of the Shares in StepStone. Such proposal requires 
the approval of a 2/3 majority to be adopted. Before this background any 
de-listing is to be decided by Oslo Børs in accordance with the Stock Exchange 
rules - Continuing Obligations of stock exchange listed companies. Axel Springer 
has also noted that it may seek to procure that StepStone makes applications to 
the UK Listing Authority for the cancellation of the listing of StepStone Shares 
on the Official List of the London Stock Exchange and to the London Stock 
Exchange for the cancellation of admission to trading in StepStone 
ASSESSMENTS 
The Revised Offer Price of NOK 9.00 per share gives an implied valuation of 
StepStone's total equity of approximately NOK 1.2 billion. 
 
 
The Revised Offer Price represents a premium of 32.4 percent to the closing 
share price of NOK 6.80 on 2 September 2009, the last closing price prior to 
Axel Springer's announcement that it would make the mandatory offer. 
 
 
StepStone shares traded in a band of NOK 6.80 to NOK 7.50 per share in the month 
ending 2 September 2009. 
 
 
The Revised Offer Price represents a premium of: 
  *  26.7 percent to the one month volume weighted average share price ending 2 
  September 2009 and 
  *  27.1 percent to the three month volume weighted average share price ending 2 
  September 2009. 
 
 
 
The Revised Offer Price implies an enterprise value multiple of 1.1 times the 
reported consolidated revenues for the twelve months ended June 30, 2009. 
 
 
The Board is of the view that the value of StepStone exceeds the value of the 
Revised Offer. 
The Board has received a financial opinion dated 6 October 2009 from Morgan 
Stanley & Co. Limited ("Opinion"). Morgan Stanley & Co. Limited's opinion 
provides that, as of the date thereof and based upon and subject to the 
assumptions, considerations, qualifications, factors and limitations set forth 
therein, the Revised Offer Price to be paid to the holders of the shares of 
StepStone (other than Axel Springer) is inadequate, from a financial point of 
view, to such shareholders. 
The financial opinion from Morgan Stanley & Co. Limited has been provided to the 
Board solely for its benefit in connection with, and for the purposes of, its 
consideration of the Revised Offer. The Opinion is not intended to be, and shall 
not constitute, a recommendation to any shareholder of StepStone as to whether 
or not such holder should tender shares in StepStone pursuant to the Revised 
Offer or take any other action in relation to the Revised Offer, is not provided 
on behalf of, nor shall it confer rights or remedies upon, any shareholder in 
StepStone or any other person, other than the Board, and may not be relied upon 
by any person other than the Board or used for any other purpose. 
The Board also received legal advice that it will not be permissible to sell any 
material assets during the offer period without the approval of an EGM, but that 
it might be possible to do so after the expiry of the offer period under certain 
conditions without the approval of an EGM. Given Axel Springer's 53% stake and 
its intention to reconstitute the Board at the EGM on 23 October 2009, the 
chances of legally selling any material assets have become very limited. 
recommendation 
Taking into consideration the current performance and future prospects of 
StepStone as well as other factors that the Board has deemed relevant in 
relation to the Revised Offer, the current stage of the economic cycle, the view 
that StepStone is a late cyclical stock, the pricing of the StepStone shares in 
the market and market conditions in general, the Board believes that the Revised 
Offer is not a full reflection of the long-term potential identified by the 
Board and management. 
The Board finds it relevant to point out that Axel Springer 
- already has a 53% ownership in StepStone and has no obligation to put forward 
further offers once the current offer expires. As a result of this, shareholders 
who do not accept the Revised Offer may become shareholders in a company with 
one majority owner and consequently possibly lower liquidity in StepStone's 
shares. It is therefore uncertain whether shareholders who do not accept the 
Revised Offer, will in the future be able to monetise the long-term value of 
StepStone. 
- has indicated that, for precautionary reasons it reserves its right to propose 
to the general meeting of StepStone to apply to Oslo Børs for the delisting of 
the Shares in StepStone and that it may seek to procure that StepStone makes 
applications to the UK Listing Authority for the cancellation of the listing of 
StepStone Shares. 
- stated on 5 October 2009 that it will be supportive of the StepStone 
management team in the execution of its stated strategy and value enhancing 
options for StepStone, and will be mindful of the protection of minority 
shareholders' rights. 
Finally the Board has also taken into consideration throughout this process the 
needs and requirements of all stakeholders, including shareholders, StepStone's 
employees, customers and business partners. 
For the reasons set out herein the Board has concluded neither to recommend the 
Revised Offer for acceptance, nor to recommend shareholders to reject the 
Revised Offer. The Board refers shareholders to the above mentioned factors 
which, in the view of the Board, may be of relevance when the shareholders 
evaluate the Revised Offer and decide whether to accept it or not. 
Jan Stenberg, Chairman of StepStone owns, directly and indirectly, 3,248 shares 
in StepStone and options exercisable into nil shares. 
Colin Tenwick, Board Member and CEO of StepStone owns, directly and indirectly, 
292,308 shares in StepStone and options exercisable into 3,785,381 shares. 
 
 
Morgan Stanley & Co. Limited is acting as financial adviser to StepStone and no 
one else in connection with the matters described in this announcement. In 
connection with such matters, Morgan Stanley & Co. Limited, its affiliates and 
their directors, officers, employees and agents will not regard any other person 
as their client nor will they be responsible to any other person for providing 
the protections afforded to their clients. 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
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