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Share Name | Share Symbol | Market | Type |
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Orange. | TG:FTE | Tradegate | Ordinary Share |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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-0.028 | -0.28% | 9.968 | 9.948 | 9.988 | 10.01 | 9.912 | 9.998 | 16,527 | 22:50:06 |
RNS Number:2626P Orange S.A. 01 September 2003 SIMPLIFIED PUBLIC EXCHANGE OFFER RELATING TO SHARES OF ORANGE BY FRANCE TELECOM PRESENTED BY GOLDMAN SACHS INTERNATIONAL SG CORPORATE AND INVESTMENT BANKING Terms of the Offer filed with the Conseil des Marches Financiers: 11 existing or to be issued France Telecom shares for 25 Orange shares This press release relating to the public offer referred to herein, with respect to which a proposal was filed on 1 September 2003 with the Conseil des marches financiers has been drafted and distributed in conformity with the provisions of Regulation ndegrees2002-04 of the Commission des operations de bourse ("COB") and the Instruction issued in respect of such regulation. The offer and the distribution to the public of the information memorandum (note d'information) remain subject to the approval of the market authorities. This press release may not be published, distributed or diffused in the United States of America, Canada or Japan. This press release is not an extension into the United States of America, Canada or Japan of the exchange offer mentioned herein and is not an offer to sell securities or the solicitation of an offer to buy securities in the United States of America. Other restrictions are applicable. Please see the important notice at the end of this press release. I- Presentation of the Public Exchange Offer The Boards of Directors of France Telecom and Orange met on 31 August 2003 and the France Telecom Board approved and the Orange Board recommended a proposal for the acquisition of the Orange shares not already held by France Telecom by way of a simplified public exchange offer (the "Offer"). This Offer was filed on 1 September 2003 with the French market authorities. II- Opinions of the Board of Directors of France Telecom and Orange Opinion of the Board of Directors of France Telecom The Board of Directors of France Telecom met on 31 August 2003, with Thierry Breton chairing the meeting and was informed of the proposed Offer and the related draft joint information memorandum. All members were either present or represented. The Board approved the proposed transaction, with five directors abstaining. Mr. Samuel-Lajeunesse announced to the Board that "the French State supports this proposal and that, in consequence, the State, which holds directly and indirectly 58.7% of the capital of France Telecom, will vote in the General Shareholders Meeting on 6 October 2003 in favor of the resolutions approved at the board meeting." Opinion of the Board of Directors of Orange The Board of Directors of Orange held a meeting on August 31, 2003, chaired by Mr. Thierry Breton, to consider the Offer. The Chairman of the Board reviewed the principal events that had led to this meeting: * On August 19, 2003, the Chairman of the Board of Directors, to whom France Telecom had delivered its proposed Offer, requested Messrs. Cardoso, Henkel, and Hobley (the "Independent Directors"), to undertake preparations for the Board of Directors so as to enable it to take a position on the proposed transaction. For this purpose, the Independent Directors immediately (i) pre-selected independent legal and financial advisors to assist the Board of Directors in connection with the proposed transaction and (ii) through such advisors, began preliminary work to evaluate such transaction. * Between 19 and 22 August, all of Orange's Directors were informed by the Chairman of France Telecom's intentions, which provided them with complete information on the Offer and the France Telecom group (the "Group"). * The evaluation of the proposal by the Independent Directors and their pre-selected financial advisors continued, and, between that time and August 28, 2003, France Telecom finalised the exchange ratio for the proposed Offer. * During its meeting held on 29 August, 2003, a draft information memorandum having been transmitted by the Chairman, the Board of Directors approved (i) the preliminary preparations of the Independent Directors on the proposed public exchange offer and (ii) the appointment of the investment banks, Deutsche Bank AG, London Office, and Merrill Lynch Capital Markets (FRANCE) SAS, and the law firms Bredin Prat and Slaughter and May, which had been selected by the Independent Directors, as advisors to Orange and its Board of Directors in connection with the proposed transaction. The Board of Directors, after reviewing the information memorandum jointly prepared with France Telecom, emphasized that the proposed transaction would make it possible to pursue Orange's development as part of the Group. The Board of Directors reviewed the fairness opinions, dated the date hereof, delivered by Deutsche Bank AG, London Office, and Merrill Lynch Capital Markets (France) SAS, which opined on the fairness of the exchange ratio offered to Orange shareholders (except for France Telecom and its subsidiaries) in connection with the proposed Offer. The Board of Directors commented that such exchange ratio included a premium for Orange shareholders of: * 22.9% on the basis of the average trading price over the ten trading days preceding the date of this announcement; * 23.1% on the basis of the average trading price over the month preceding the date of this announcement; * 21.3% on the basis of the average trading price over the three months preceding the date of this announcement. On the basis of the foregoing considerations, the Board of Directors, after deliberation, unanimously resolved that the proposed simplified public exchange offer was in the interests of Orange, its shareholders, and its employees, and recommended to Orange's shareholders that they tender their shares in the Offer. Finally, the Board of Directors resolved to authorize and direct the company's Chief Executive Officer, with the right to grant sub-delegations of authority, to sign the information memorandum jointly prepared with France Telecom, which will be submitted to the Commission des Operations de Bourse for its approval. The members of the Board of Directors indicated that they intended to tender their Orange shares in the Offer. III - Reasons for the Offer The Offer is consistent with the strategic vision of France Telecom and is based among other things on: * The growing needs of the Group's customers for integrated services on fixed and mobile platforms; * A growth strategy based on the development of new innovative services; * A model of strong coordination between the different activities of the Group in key areas such as strategy, the development of new services, client development and centralization of purchasing. Orange is a key asset of the France Telecom group, both strategically and financially, and is a significant contributor to growth and the generation of cash flow. The Offer today is a natural step for the Group in line with the "Ambition FT 2005" plan. On a financial level, the transaction will ensure improved flexibility for France Telecom, including: * The purchase of Orange minority interests will ensure an optimal financial equilibrium in the future between the Group's sources of cash flow generation and the Group's interest expense. * The credit profile of the Group will benefit from the strengthening of shareholders' equity and an optimization of intra-group cash flow; this should enable France Telecom to obtain improved financing terms in the credit markets. * In the event France Telecom holds more than 95% of the capital and voting rights of Orange, France Telecom will be able to consolidate the results of Orange for tax purposes. This would permit an acceleration of the timetable regarding the use of deferred tax assets of France Telecom. France Telecom shareholders and Orange shareholders who choose to tender their shares in the Offer should benefit from the improved market profile of the Group. France Telecom's shares will benefit from an enlarged float and increased visibility and the transaction will reinforce France Telecom's status as the leading telecommunications share on the Bourse de Paris. This transaction will increase the weighting of France Telecom in the CAC 40 index and Eurostoxx 50 index and which should of itself generate additional demand for France Telecom shares from the index funds. The transaction will also enable Orange shareholders tendering their shares in the Offer to maintain an interest in the economic and financial performance of Orange, since the growth, commercial success and profitability of Orange and France Telecom are closely linked. By becoming shareholders of France Telecom, the Orange shareholders who tender their shares in the Offer will participate in the new dynamism of the Group, thus gaining access, in particular, to all of the effects of the TOP Program and the benefits of improved integration of the Group's activities. Orange shareholders participating in the Offer will benefit, in addition to the premium offered (see in particular below, VII "Key information for an evaluation of the exchange ratio"), from the anticipated considerably enhanced liquidity of France Telecom shares with average daily trading volumes of 149 million euros for France Telecom shares against 37 million euros for Orange shares. These figures cover the period from 15 April to 29 August 2003 (source: Datastream). IV- Organization of France Telecom Group after the Offer Orange will remain a separate company with its own Board of Directors and will conserve among other things its management independence, its operational resources, its enterprise culture and its own trademark. The transaction will entail no modification of the legal structures and management bodies of Orange. The Offer will have no impact on the employees of Orange and France Telecom. No change is planned in the composition of the corporate bodies of Orange as a result of the Offer. France Telecom has indicated that it does not envisage any merger of France Telecom and Orange after the Offer. France Telecom intends to return to a policy of making distributions to shareholders from 2004. In the event that France Telecom holds, alone or in concert, at least 95% of the Orange voting rights following the Offer, France Telecom reserves the right to subsequently file a public buy-out offer (offre publique de retrait) followed by a compulsory buy-out (retrait obligatoire) with respect to any Orange shares that it does not already hold. France Telecom draws the attention of investors to the fact that the liquidity of Orange shares could be significantly reduced after the Offer. It is expressly noted, furthermore, that after the closing of the Offer France Telecom does not intend to maintain such liquidity. V - Summary of the Principal Terms of the Offer France Telecom irrevocably offers to exchange Orange ordinary shares, with a nominal value of 1 euro each, held by Orange shareholders for existing or to be issued France Telecom ordinary shares, with a nominal value of 4 euros, at an exchange rate of 11 France Telecom shares for 25 Orange shares. The new France Telecom shares will rank pari passu in all respects with the existing France Telecom shares. Summary of the Principal Conditions for Tendering in the Offer Each tender must cover a round lot of 25 Orange shares or a multiple thereof. Holders of Orange shares shall be responsible for dealing with any balances. The Offer covers all existing Orange shares not already held by France Telecom, as well as any Orange shares that may be issued prior to the closing of the Offer pursuant to the exercise of stock options, namely an aggregate of: * 660,765,197 issued Orange shares, representing 13.72% of the capital and voting rights of Orange at the date of this information memorandum; * 51,676,178 shares subject to issuance prior to the closing of the Offer upon exercise of 51,676,178 stock options, representing 1.07% of the capital and voting rights of Orange at the date of this information memorandum. On this basis the aggregate number of Orange shares capable of being tendered in the Offer is 712,441,375 shares. France Telecom holds, directly or indirectly, at the date hereof 4,154,521,243 shares of Orange representing 86.28% of the capital and voting rights of Orange. France Telecom has not acquired, directly or indirectly, any Orange shares during the preceding twelve months. Shares tendered in the Offer will be accepted regardless of the number of Orange shares tendered. Origin of the France Telecom Shares Remitted in Exchange The France Telecom shares available for exchange for Orange shares in the Offer comprise of: * new shares to be issued further to a decision of the Chairman and Chief Executive Officer of France Telecom in application of the powers granted him by the Board of Directors in its meeting of 31 August 2003 pursuant to the authorization given to it by the general meeting of the shareholders of 25 February 2003. * 95,363,219 existing shares held by France Telecom. The combined general meeting of France Telecom shareholders of 27 May 2003 authorized, by its second resolution, for a period of eighteen months, the Board of Directors of France Telecom to repurchase France Telecom S.A. shares representing up to 10% of France Telecom's share capital. According to the terms of the authorization given by the combined general meeting of the shareholders of the company in its sixth resolution, the selling price shall not be less than 25 euros per security, subject to adjustments related to the capital of the company. In order to enable France Telecom to remit the treasury shares it holds to shareholders of Orange who tender their shares in the Offer, the France Telecom shareholders will be asked at the ordinary general meeting to be held on 6 October 2003, to reduce the minimum selling price of the shares of the company to 14.50 euros. (See also above "Opinion of the Board of Directors of France Telecom"). The maximum number of France Telecom shares that may be remitted in exchange under the Offer is as follows: Number of treasury shares 95,363,219 Maximum number of new France Telecom shares that may be issued under the Offer 218,110,986 Maximum total number of shares that may be remitted under the Offer 313,474,205 Orange shares tendered will be exchanged first for existing France Telecom shares. The new France Telecom shares will rank pari passu in all respects with the existing France Telecom shares and will be fully fungible with them. Hedging Transactions In the context of the implementation of the Liquidity Agreement, France Telecom may have to remit France Telecom shares to the Orange option holders (see VIII below). Taking into account France Telecom's use of its treasury shares for the purposes of the Offer, France Telecom plans to implement a strategy in order to manage the Group's financial risk resulting from these options. In addition, France Telecom issued on 29 November 2001, 3,492,000 notes exchangeable for existing France Telecom shares maturing on 29 November 2005, each note, with a nominal amount of 1000 euros, being exchangeable, as of the date hereof, into 17.0800 France Telecom shares. (These exchange rights are currently "out of the money".) As a consequence of using its treasury shares for the purposes of the Offer, France Telecom may implement a strategy to obtain existing shares in order to be able to cover possible exchanges of the exchangeable notes through their maturity. As part of these strategies, France Telecom may implement, during the period starting with the announcement of the Offer, hedging arrangements for all or part of the shares underlying the Liquidity Agreement and the exchangeable notes, involving derivative transactions (particularly future purchases of, or purchases of call options on, France Telecom shares from financial institutions, which may be the sponsoring institutions for the Offer; which institutions in turn may trade in the market during the Offer period to hedge their positions) or the purchase of France Telecom shares. As of the date hereof, the flow of purchases of France Telecom shares likely to result, on a net basis, from these hedging transactions, should be in the order of 10 million shares. Any such intervention will be implemented within the scope of the France Telecom corporate repurchase program and would be made in conformity with the exemptions provided for by Articles 5-2-14 and 5-3-7 of the General Regulations of the CMF, and comply with the conditions of Regulation 90-04 of the COB. VI - Agreements that may have a significant effect on the Offer To the knowledge of France Telecom and Orange, there are no agreements that are likely to impact the evaluation of the Offer or the result of the Offer. VII - Key information for an evaluation of the exchange ratio The premia/(discounts) calculated below highlight the difference between the proposed exchange ratio of 11 France Telecom shares for 25 Orange shares (either 0.44 France Telecom shares for 1 Orange share, or 2,27 Orange shares for 1 France Telecom share) and the implied exchange ratio on the basis of the criteria analysed. 1 Share prices The closing share prices as of 29 August 2003 of France Telecom and Orange, were respectively Euro22.60 and Euro8.45 per share and are the latest quoted share prices before the announcement of the Offer. Consequently, the market data as presented to assess the proposed exchange ratio is prior to the announcement of the Offer on 1 September 2003. Moreover, given the 14.85 billion euro net capital increase, which closed on 15 April 2003, France Telecom share prices prior to this date cannot be used to assess the exchange ratio. As a result, historical exchange ratios calculated based on periods before 15 April have not been included. Period (*) France Ratio France Ratio Orange Telecom Orange Telecom / / France Premium Offered (Euro / share) (Euro / share) Orange (x) Telecom(x) (%) 22.60Euro 8.45Euro 2.67x 0.37x 17.7% Close of day 29 August 2003 Average 1 week 22.80Euro 8.31Euro 2.74x 0.36x 20.7% Average 10 days 23.23Euro 8.31Euro 2.79x 0.36x 22.9% Average 1 month 23.10Euro 8.26Euro 2.80x 0.36x 23.1% Average 3 months 21.39Euro 7.76Euro 2.76x 0.36x 21.3% Average from 15 April 21.11Euro 7.66Euro 2.75x 0.36x 21.2% 2003 to 29 August 2003 Highest ratio from 15 2.92x 0.38x 14.8% April 2003 to 29 August 2003 Lowest ratio from 15 2.61x 0.34x 28.5% April 2003 to 29 August 2003 (*) Source: Datastream, volume weighted average share prices This analysis indicates a premium of between 14.8% and 28.5%. 2 Analysis of premia offered in similar public exchange offers Analysis of premia offered in simplified public exchange offers in France since 1999 has been completed for transactions above 200 million euros. Five simplified public exchange offers have been taken into account1. Premium to Share Price (%) Last Share Avg. 1 Avg. 3 Avg. 6 Price month month month 25.9% 27.6% 25.5% 23.7% Average of the Sample Used 20.3% 20.5% 20.3% 17.0% Median of the Sample Used 17.7% 23.1% 21.3% NA. Premium Offered by France Telecom The premium offered is consistent with premia observed for similar public offers. In particular, the median of premia offered, calculated based on the average 1 month, equals 20.5%, to be compared with a 23.1% premium offered on the 1-month average, as indicated in the previous table. 3 Analysis of economic contribution This methodology assesses the relative contribution of Orange and France Telecom based on multiples widely employed by the financial community with respect to the telecom industry: * EBITDA multiples * Free cash flow yields * Cash earnings multiples The table beneath presents the exchange ratios implied by this methodology: EBITDA Free Cash Flow Cash Earnings 2002 1/07/2002 - 2002 1/07/2002 2002 1/07/2002 - 30/06/2003 - 30/06/ 30/06/2003 2003 2.7x 2.5x 7.7x 3.2x 4.5x 4.1x France Telecom / Orange exchange ratio (x) 0.37x 0.39x 0.13x 0.31x 0.22x 0.25x Orange / France Telecom exchange ratio (x) 20.4% 12.0% 237.0% 40.4% 97.1% 78.5% Premium offered (%) The magnitude of premia calculated for the year 2002 using free cash flow yield and cash earnings multiple is due to the disparity in maturity between the two companies as of that time. Exchange ratios derived from these metrics have been excluded. Based on the other remaining metrics, the median exchange ratio for the economic contribution methodology is 0.34 France Telecom share for 1 Orange share. The premium implied by the 0.44 France Telecom share for 1 Orange share exchange ratio over the 0.34 exchange ratio derived from the above analysis of economic contribution methodology is 29.6%. 4 Summary table of all exchange ratio assessment methodologies Exchange Ratio Exchange Ratio Premium Offered France Telecom / Orange / France Orange Telecom (%) Share Price 2.67x 0.37x 17.7% Spot 2.74x 0.36x 20.7% Average 1 week 2.79x 0.36x 22.9% Average 10 day 2.80x 0.36x 23.1% Average 1 Month 2.76x 0.36x 21.3% Average 3 Month 2.75x 0.36x 21.2% Average 15 April 2003 - 29 Aug 2003 2.94x 0.34x 29.6% Contribution Analysis 2.27x 0.44x - Exchange Offer Moreover, the premium offered over the Orange share price is in line with premia paid in comparable transactions in France since 1999, i.e. 20.3% premium over spot price, 20.5% over the 1-month average and 20.3% over the 3-month average VIII. Other Items Liquidity Contract Upon completion of the Offer, and as a complement thereto, France Telecom intends to offer a liquidity agreement (the "Liquidity Agreement") to the holders of Orange stock options and to holders of Orange shares obtained upon exercise of Orange stock options or acquired in the context of a share purchase plan that are non-transferable for tax or social security reasons under the relevant option plan, such agreement to be entered into no later than three (3) months following the date of publication of the notice of result of the Offer. The Orange shares covered by the Liquidity Agreement will be automatically transferred to France Telecom either upon exercise by the holder of the relevant options, or upon termination of the non-transferability period for the shares already existing at the date of the Offer. The signatories will have to undertake not to exercise their options prior to the end of any tax and social security non-transferability period which may be applicable and more generally not to transfer or convert into bearer shares the Orange shares obtained upon exercise of their options under conditions liable to require the payment of social security or tax contributions by Orange or one of its subsidiaries. The shares will be exchanged at the exchange rate used in the Offer, adjusted, where applicable, to take into account any changes in the capital or shareholders' equity of Orange and/or France Telecom. Contacts: France Telecom: Nilou du Castel 01 44 44 93 93 Orange: Tarek Robbiati 44 (207) 984 1691 This press release may not be published, distributed, diffused or otherwise sent into the United States of America (including its territories and possessions, every State in the United States and the District of Columbia), Canada or Japan. This press release does not constitute an extension into the United States, Canada or Japan of the offer mentioned in this press release, nor does this press release constitute nor form part of an offer to sell securities or the solicitation of an offer to buy securities in the United States, Canada or Japan. The securities mentioned in this press release have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States absent registration or exemption from registration under the Securities Act. There will not be any public offering in the United States, Canada or Japan. This press release does not constitute an offer of shares of France Telecom, nor a public offer for the shares of Orange, in Germany. No action has been, or will be taken, in Germany that would permit a public offer for the shares of Orange. The shares of France Telecom may only be offered and sold in Germany in accordance with the restrictions set forth in the German Securities Selling Prospectus Act (Verkaufsprospektgesetz). This press release has not been prepared in the context of a public tender offer in Italy within the meaning of Article 1, paragraph 1, letter (v) of Legislative Decree No. 58 of February 24 1998 ("Decree 58/98"), and Article 33 paragraph 1 of Regulation No. 11971 of May 14, 1999, as amended, of the Commissione Nazionale per le Societa e la Borsa ("CONSOB") and has therefore not been submitted to CONSOB pursuant to Art. 102 of Decree 58/98. There will not be any public tender offer in Italy. The release, publication or distribution of this press release in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this press release is released, published or distributed must inform themselves about and observe such restrictions. Receipt of this press release will not constitute an offer in those jurisdictions in which it would be illegal to make the offer or to offer securities and in such circumstances it will be deemed to have been sent for information purposes only. This press release has been approved in the UK, solely for the purposes of Section 21 of the Financial Services and Markets Act 2000, by Goldman Sachs International and SG Corporate and Investment Banking (a division of Societe Generale). Goldman Sachs International and SG Corporate and Investment Banking are acting exclusively for France Telecom in connection with the Offer and will not be responsible to anyone other than France Telecom for providing the protections afforded to clients of Goldman Sachs International or SG Corporate and Investment Banking or for providing advice in relation to the Offer. This press release does not constitute or form part of the Offer by France Telecom for the shares of Orange, or an invitation to purchase securities. The Offer will be made only when approved by the relevant authorities. The terms and conditions of the Offer (including details of how the Offer may be accepted) will be set out in the note d'information (the "Offer Document"). Holders of Orange shares who accept the offer may only rely on the Offer Document for all the terms and conditions of the Offer. In deciding whether or not to accept the Offer in relation to their Orange shares, shareholders should rely only on the information contained, and the procedures described, in the Offer Document. The Offer may affect the particular financial and tax circumstances of private customers. Such customers are therefore strongly advised to consult their financial and tax advisors before accepting the Offer. This information is provided by RNS The company news service from the London Stock Exchange END OFBEAXNFESKDEFE
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