| To: Business Editor | For immediate release |
DAIRY FARM TO ACCEPT MERGER OFFER BY SOMERFIELD
FOR KWIK SAVE
19th February 1998 -- Dairy Farm International Holdings Limited ("Dairy Farm") said today that the Board of its 29.2%-owned associated company, Kwik Save Group PLC ("Kwik Save"), has recommended the acceptance of an all share merger offer to be made by Somerfield PLC ("Somerfield") for the whole of the issued ordinary share capital of Kwik Save. Dairy Farm has given an irrevocable undertaking to accept the offer in respect of its shareholding in Kwik Save, subject to there being no higher competing offer made.
Kwik Save is one of the United Kingdom's leading low-cost grocers with sales of over £3 billion a year, serving more than 8 million customer transactions a week, in over 850 stores nationwide. Somerfield is a leading neighbourhood and high street grocery retailer in the UK with sales of £3.2 billion trading out of over 560 stores. The proposed merger between the two supermarket chains would create the UK's leading high street and neighbourhood grocery retailer, able to compete with the major out-of-town retailers.
The merger is proposed to be effected by a share for share exchange with Kwik Save shareholders receiving 7 Somerfield shares for every 6 Kwik Save shares held, reflecting the recent share prices of both companies. Dairy Farm's current holding of 45,455,783 Kwik Save shares would be exchanged for 53,031,746 Somerfield shares, representing some 11.0% of the enlarged share capital. Based on the valuation of 304.5 pence per Kwik Save share and the closing price of Somerfield shares on 18th February of 261 pence, Dairy Farm's shareholding would be worth £138 million (US$227 million). This compares with a carrying value in Dairy Farm's consolidated balance sheet at 31st December 1996 of US$209 million.
The merger is not expected to have a material financial effect on the Dairy Farm's Group balance sheet and cash flow, but will have a dilutive effect on earnings per share due to the necessary change in accounting treatment.
In addition, shareholders of Kwik Save, including Dairy Farm, will receive a special interim dividend of 6 pence per share in respect of the period ending 14th March 1998. Dairy Farm will receive approximately £2.7 million (US$4.5 million).
In the year ended 31st December 1997, Kwik Save contributed US$33 million to Dairy Farm's profit before tax.
Commenting on the proposal, Ronald J Floto, Group Chief Executive of Dairy Farm, said, "This is a sensible combination which offers significant commercial benefits; we can see the clear financial advantages which we expect to benefit all shareholders involved."
Note: £/US$ exchange rate on 18th February 1998 of £1/$1.64.
For further information please contact:
| Dairy Farm Management Services Limited Edouard Ettedgui or Simon Neville |
(852) 2837-6481 (office) |
| Ludgate Asia Limited Trish Harwood or Eric Wong |
(852) 2543-5413 (office) |
This announcement can be accessed through the Internet at
"http://www.irasia.com/listco/sg/dairyfarm" and also through "First Call".
Dairy Farm is an international retailing and wholesaling group which focuses primarily on the Asia-Pacific Region, with additional interests in the United Kingdom. The Group operates some 1,350* outlets, principally supermarkets, convenience stores and drugstores, and its associates operate a further 1,300. The Group employs some 44,000* people and its associates a further 41,900. In 1996, Dairy Farm reported sales of US$7,000 million which, with its associates, totalled some US$12,800 million.
Since the middle of 1997, the Group has significantly strengthened its operating management and has taken steps to focus on its core retail activities in the Asia Pacific Region. Recent disposals have included its joint venture food manufacturing interests and its Spanish supermarket chain. Decisions have also been taken to close its loss-making drugstore chain in Taiwan and pilot supermarket operation in Japan.
In February 1998, Dairy Farm purchased an interest in Hero group in Indonesia, with a total of 71 supermarkets.
The primary share listing of the parent company, Dairy Farm International Holdings Limited, is in London and the bulk of its shares are traded in Singapore. The Company is incorporated in Bermuda, and its businesses are managed from Hong Kong by Dairy Farm Management Services Limited through regional offices in Asia, Australasia and Europe.
* These figures do not include Simago, Mannings Taiwan and Wellsave Japan.
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