Eaga is a shortlisted provider on the DWP Employment Related Support Services Framework and has recently tendered for the Work Programme contracts in Yorkshire and London
* Recommended cash Acquisition that, together with the declared Eaga interim dividend, has a value of 120 pence per Eaga Share.
* The value for each Eaga Share comprises consideration of 118.79 pence in cash and payment of the Interim Dividend of 1.21 pence.
* A share alternative, worth a maximum of 40 per cent. of the total value of the cash consideration, is being made available to Eaga shareholders, with the New Carillion Shares valued at 385.2 pence per share (being the Closing Price on 10 February 2011, the last Business Day before this announcement).
* The Acquisition, together with the Interim Dividend, values Eaga’s issued and to be issued share capital at approximately £306.5 million.
* Carillion believes that there is a compelling strategic rationale for the combination, which brings together two complementary companies and further enhances Carillion’s leading position in the UK support services market, creating a business with a combined support services revenue of approximately £3 billion on an historical proforma basis:
- Creates a scalable platform to build the UK’s largest independent Energy Services provider.
- Increases Carillion’s capabilities to provide integrated support services solutions for its customers.
- Establishes a number of attractive cross-selling opportunities between Carillion and Eaga’s existing customers.
Carillion believes it can achieve synergies in the Enlarged Group of £9 million by the end of 2013 (see Note 1), with one-off costs of delivering those savings in the region of £15 million.
* The Acquisition is expected to be immediately earnings enhancing even before synergies.
* The Acquisition value, together with the Interim Dividend, represents a premium of approximately 50.0 per cent. to the Closing Price of 80 pence for each Eaga Share on 2 February 2011, the last Business Day prior to the issue of an announcement that Eaga was in talks that might lead to an offer, and a premium of approximately 30.4 per cent. to the Closing Price of 92 pence for each Eaga Share on 10 February 2011, the last Business Day prior to the issue of this announcement.
* It is currently intended that the Acquisition will be effected by way of a scheme of arrangement of Eaga (see Note 2).
* Irrevocable undertakings have been received from the Eaga Directors, and from Eaga Partnership Trustee Limited and Eaga Partnership Trustee Two Limited (together, the ''ePTs'') to vote in favour of the resolutions to effect the Scheme in respect of 102,520,847 Eaga Shares (representing, in aggregate, approximately 40.8 per cent. of the existing issued share capital of Eaga).
- The ePTs have irrevocably undertaken to elect for the Share Alternative in respect of all the cash to which they would be entitled under the Acquisition, underpinning their long-term commitment to continue as important stakeholders in the Enlarged Group.
* The Acquisition is subject to approval by shareholders of Eaga, change of control approval from the FSA and confirmation by the Court, and it is expected to become effective in April 2011.
Commenting on the Acquisition, Philip Rogerson, Chairman of Carillion, said:
“The acquisition brings together two complementary companies, enhancing Carillion’s position as one of the UK’s leading support services companies. The acquisition is expected to be immediately earnings enhancing and builds on Carillion’s previously announced objectives for growth.
Carillion has identified the low carbon market as a strategic area of growth and the acquisition of Eaga will create a scalable platform to build the UK’s largest independent energy services provider. This will also extend Carillion’s capability to provide integrated support services solutions for its existing customers, for whom energy services are an increasingly important requirement.
The Carillion Board is therefore confident that this transaction will deliver significant value for shareholders of the Enlarged Group.”
Commenting on the Acquisition, Charles Berry, Chairman of Eaga, said:
“The offer received from Carillion has come at an interesting time in Eaga''''s development, as our markets are changing rapidly. While there are exciting future prospects, we believe these are potentially better accessed as part of a larger group. Carillion offers our unique business the opportunity to grow in a strong home, it offers our Partners the prospect of delivering that growth potential, while our shareholders receive a significant cash premium and a partial share alternative which allows them to participate in the Enlarged Group''''s future potential.”