CVC and Akzo Nobel are of the opinion that it is in the interests of all concerned to expedite the negotiation process and complete the transaction as soon as possible. This view is fully supported by the Acordis management. Employee representative bodies and unions have been informed and consultation procedures will commence shortly, where applicable. The required regulatory approvals will be sought as and when appropriate.
Folkert Blaisse, Chief Executive Officer of Acordis said: "We back CVC’s offer a hundred percent. We trust that the transaction will be completed fast, effectively and efficiently. For our employees it will put an end to a period of uncertainty, and we are all looking forward to building Acordis into the world leader in fibers".
“CVC’s proposal fits our stated strategy of establishing Acordis as an independent company with a solid foundation,” said Cees van Lede, Chairman of Akzo Nobel’s Board of Management.
Following finalization of the integration of the former Courtaulds and Akzo Nobel fibers businesses and completion of the restructuring measures announced earlier, CVC backs the management’s strategy of growing Acordis organically and through add-on acquisitions in the core markets it serves. CVC was advised by Chase Manhattan Bank.
CVC Capital partners is a leading independent equity provider in Europe with total funds under management in excess of USD 4 billion (EUR 4 billion). CVC has offices in 10 European countries and has made investments in more than 200 companies across Europe. These include Kappa Packaging, Wavin, Bols, William Hill and Danone’s/Gerresheimer glass packaging businesses.
Akzo Nobel, based in the Netherlands, serves customers throughout the world with healthcare products, coatings, chemicals and fibers. Akzo Nobel currently employs approximately 85,000 people in some 70 countries. Consolidated sales for 1998 totaled EUR 12.5 billion (USD 13.8 billion). Financial results for the third quarter of 1999 will be announced on October 27.
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QUESTIONS & ANSWERS
1. What does the CVC proposal mean for the future of Acordis? We launched Acordis on January 1, 1999 as a “quasi-independent” company. With this offer on the table there is a very real possibility that it will now become a truly independent company. The proposed transaction would end a period of uncertainty for the Acordis employees. Acordis has developed:
* a sound strategy aimed at building a focused portfolio with technological coherence; and
* a good mixture of growth, cash generating and business under restructuring.
* Acordis would have a sound financial basis following the proposed transfer of ownership; and
* following completion of the restructuring measures previously announced in April, Acordis would be more resilient to the cyclicality of the fibers market.
Furthermore, we should stress that:
* CVC has an excellent worldwide track record with a lot of experience in Europe; and
* CVC has expressed that it is prepared to fund additional acquisitions.
2. What will be the legal structure of the stand-alone Acordis business? Will it be listed? It is the intention that the holding company will be registered in the Netherlands as a BV (limited liability company). A listing could be a possibility after around four years.
3. What would be the board structure following the proposed transaction? It is too early to comment in detail on this subject, however, it is the intention to have a two-tier structure with a Supervisory Board and the existing Board of Management with Folkert Blaisse as the CEO.
4. What is the intended time schedule? Parties will strive for an expeditious negotiation process and completion of the contemplated transaction as soon as possible.
5. What is the impact of the intended transaction on Acordis employees?
* Details of the transaction still have to be worked out and both works councils and trade unions when and where appropriate will have ample opportunities to give their opinions during the consultation procedures, which will commence shortly.
* The restructuring measures announced in April will, naturally, continue.
6. Do you expect any difficulties from the European authorities? Of course we have to notify the European authorities, but given the background of CVC-there is no overlap in businesses-we do not envisage difficulties.
7. Can you elaborate on the funding of Acordis? Though the funding of the proposed transaction is secured, the financial structure of Acordis still has to be worked out in detail. It is of course the intention that Acordis will have a sound financial basis.
8. What will be the intended shareholding structure of Acordis? CVC and the Acordis management would own some 80%, assuming that Akzo Nobel would make use of its right to acquire some 20% of the newly established company.
9. Why would Akzo Nobel participate in the new company? With this participation Akzo Nobel would also be involved in a later IPO with the possibility to realize an upward potential. The participation would be limited and would not involve Akzo Nobel management.
10. Can you elaborate on the offered consideration? The offered consideration of EUR 825 million would be paid in cash with the exception of some EUR 150 million in the form of an interest-bearing loan from Akzo Nobel to Acordis. The offer reflects the net asset value of Acordis; in addition, Acordis will also take along existing provisions of approximately EUR 225 million.
11. What about the restructuring charges for Acordis you announced earlier this year? In the context of the restructurings announced in April we gave an indication of charges being in the area of a couple of hundred million euros. We currently estimate these charges to have an after-tax effect of approximately EUR 200 million. These restructurings are independent of the intended transaction. The charges will be recognized in the Akzo Nobel financial statements later this year.
12. Will there be an additional impact from the proposed transaction on the balance sheet of Akzo Nobel? The net book value of Acordis (including provisions of EUR 225 million) is approximately EUR 1.4 billion. Taking into account the proceeds from the transaction and the expected tax benefits, the intended transaction will have a net negative impact of approximately EUR 300 million.
The proceeds of the intended transaction would be used by Akzo Nobel to reduce its debt. Gearing would improve slightly from the current level of 1.5, with interest coverage approaching 6.
13. Is this a fair value offer? The consideration of EUR 825 million for the Acordis business, taking along provisions of some EUR 225 million, reflects a fair value of the activities. The parties’ respective external advisors also endorse this view. The advising bank to CVC is the Chase Manhattan Bank. The key advisor to Akzo Nobel was ABN-AMRO.
Considering all the aspects of this intended transaction for Akzo Nobel and our stakeholders and for Acordis, we strongly believe that this is the preferred route to the launch of Acordis as a sound independent company.
14. When may we expect further information? The detailed negotiation process and consultation procedures will commence shortly. Further information will be made available at the appropriate time.