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2014-02-13 09:05:00 CET 2014-02-13 09:05:45 CET REGULATED INFORMATION Pohjola Pankki Oyj - Tender offerSTATEMENT OF THE BOARD OF DIRECTORS OF POHJOLA BANK PLC REGARDING THE VOLUNTARY PUBLIC BID BY OP-POHJOLA GROUP CENTRAL COOPERATIVEPohjola Bank plc STOCK EXCHANGE RELEASE 13 February 2014 at 10:05 am NOT TO BE RELEASED OR DISTRIBUTED, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, JAPAN, AUSTRALIA, SOUTH AFRICA, HONG KONG OR IN ANY OTHER STATE IN WHICH THE TENDER OFFER WOULD BE PROHIBITED BY APPLICABLE LAW. STATEMENT OF THE BOARD OF DIRECTORS OF POHJOLA BANK PLC REGARDING THE VOLUNTARY PUBLIC BID BY OP-POHJOLA GROUP CENTRAL COOPERATIVE Reference is made to the stock exchange release by OP-Pohjola Group Central Cooperative (hereinafter the "Offeror") on 6 February 2014 (the "Launch Release") concerning the launch of a voluntary public tender offer (the "Bid") by the Offeror for the outstanding Series A and K shares (hereinafter the"Shares") in Pohjola Bank plc (hereinafter "Pohjola") that are not already held by the Offeror. The Board of Directors of Pohjola (the "Pohjola Board") hereby issues the following statement pursuant to Chapter 11, Section 13 of the Finnish Securities Market Act (746/2012, as amended) regarding the Bid. The Bid in Brief The following summary of the terms and conditions of the Bid is based on information contained in the Launch Release. The cash consideration in the Bid (the "Offer Price") is EUR 16.80 for each Series A and Series K share. The amount of distributed dividends or other assets payable for each tendered share will be deducted from the Offer Price in the event that Pohjola decides on the distribution of dividends or other assets before the tendered Shares have been transferred to the Offeror. The Offeror estimates that the offer period for the Bid begins on 24 February 2014, and the Bid is expected to remain in force until 1 April 2014. The Offeror reserves the right to extend the offer period from time to time in accordance with the terms and conditions of the Bid. The completion of the Bid is conditional on certain preconditions being met or the waiver thereof by the Offeror. Such conditions include, among other, that the Bid is validly approved for Shares that, together with the other Shares owned by the Offeror or those acquired by the Offeror during or before the offer period, represent more than ninety (90) percent of the Shares and votes issued by Pohjola, and that the Pohjola Board has recommended that the shareholders accept the Bid (and said recommendation remains in force without amendment). The detailed terms and conditions of the Bid as well as instructions on how to approve the Bid will be included in the offer document (the "Tender Offer Document"), which the Offeror expects to publish by 21 February 2014. For the purposes of issuing this statement the Offeror has provided the Pohjola Board with a Finnish language draft of the Tender Offer Document. Assessment of the Bid from the Perspective of Pohjola and its Shareholders The Pohjola Board recognizes the industrial logic underlying the Bid, as it is described in the Launch Release. The Pohjola Board also recognizes that compared to the volume-weighted average trading price of the Series A shares on NASDAQ OMX Helsinki Ltd the Offer Price includes a premium of approximately 30.5 percent during the 12-month period preceding the date of the announcement of the Bid, a premium of approximately 23.3 percent during the 6-month period preceding the announcement of the Bid, and a premium of approximately 18.1 percent compared to the closing price of the Series A share of EUR 14.23 on 5 February 2014 (the last trading day before the announcement of the Bid). The Pohjola Board has considered that the approach by the Offeror has been serious as provided in the Helsinki Takeover Code (Ostotarjouskoodi) referred to in Chapter 11, Section 28 of the Finnish Securities Markets Act. The Pohjola Board has resolved that entering into negotiations with the Offeror, including the possibility for the Offeror to conduct due diligence regarding Pohjola, has been in the interests of all Pohjola's shareholders. The Pohjola Board has assessed the Bid and its terms and conditions. The Pohjola Board concludes that the Bid provides a reasonable alternative for shareholders in prevailing circumstances where: a. the Offeror held on the date of the announcement of the Bid approximately 37.2 percent of the Shares and approximately 61.3 percent of the votes in Pohjola and is the central institution of OP-Pohjola Group; b. Pohjola's regulatory environment is changing due to increasing capital requirements, among other things; c. OP-Pohjola Group will increase its capitalisation targets as announced by the Offeror concurrently with the Bid, which may have an impact on Pohjola's capitalisation targets as well; and d. the liquidity of the Shares may decrease as a result of the Bid. Based on the above the Pohjola Board recommends that the shareholders of Pohjola accept the Bid. The Pohjola Board draws the attention of Pohjola's shareholders to the fact that the Offeror held on the date of the announcement of the Bid approximately 37.2 percent of the Shares and approximately 61.3 percent of the vote in Pohjola and is consequently in a position at Pohjola's General Meeting of Shareholders to nominate the Board of Directors of Pohjola and to resolve within the limits of applicable law on the distributable amount of dividend, among other things. Furthermore, by virtue of law and Pohjola's Articles of Association, the Chairman and the Vice Chairman of the Pohjola Board are appointed by the Offeror instead of Pohjola's General Meeting of Shareholders. Based on the above and the position of Pohjola as the central financial institution of OP-Pohjola Group, it is unlikely that a successful competing tender offer by a third party would be made concerning the Shares. The attention of the shareholders is also drawn to the fact that the Offeror does not currently have an obligation to make a mandatory tender offer regarding the Shares. The transferring to the Offeror of Shares validly tendered pursuant to the Bid may for its part result in a decrease in the number of Pohjola's shareholders, which may in turn decrease the liquidity of Pohjola's Series A shares. Pursuant to the Finnish Companies Act, a shareholder with more than nine tenths of the shares in the company and voting rights carried by the shares has the right to redeem the shares of the other shareholders at a fair price in statutory redemption proceedings. A value for the Shares at the level of the Bid or higher may not necessarily be realised in the future. Shareholders who do not accept the Bid should therefore take notice of the facts described above. Strategic Plans of the Offeror and Their Likely Effects on Operations and Employment The Offeror has in the Launch Release outlined its strategic plans following the completion of the Bid, which include, among other things, the streamlining of the corporate structure and decision-making within OP-Pohjola Group. The streamlining is planned to include transferring Pohjola Insurance Ltd and Pohjola Asset Management Ltd to the Offeror as fully owned direct subsidiaries, as well as the merger of Pohjola and Helsinki OP Bank Plc. The Offeror has estimated that the planned arrangements are expected to generate approximately EUR 50 million per annum in synergy benefits for the OP-Pohjola Group, of which approximately EUR 20 million is estimated to come from cost synergies and EUR 30 million from revenue synergies. The Offeror estimates that these synergies will be fully implemented over approximately five years. Based on the information provided by the Offeror, the Pohjola Board estimates that the strategic plans of the Offeror pursuant to the Bid would not appear generally to have a significant effect on the business operations, assets or employment of Pohjola. The Pohjola Board notes, however, that the Offeror has stated in the Launch Release that the possible impact of the planned arrangements on the status of the management and employees of Pohjola and OP- Pohjola Group Central Cooperative Consolidated will be specified at a later date in connection with the re-organisation and integration planning that will take place after the completion of the Bid. Financing of the Bid According to information published by the Offeror, the Offeror intends to finance the purchase of the Shares pursuant to the Bid through cooperative capital, supplementary cooperative capital, debt financing and internal liquid assets. Pohjola has in relation to the Bid agreed to provide to the Offeror a credit limit on arm's length terms on the basis of Pohjola's task to fulfil the funding needs of OP-Pohjola Group as OP-Pohjola Group's central financial institution. The credit limit concerns the acquisition of Pohjola's Series A shares, and its granting is based on Section 35 of the Act on Credit Institutions (121/2007, as amended), among other things. Preparation of the Statement The Pohjola Board has set up a committee consisting of Pohjola Board members with no ties to the Offeror or the Bid to prepare the assessment by Pohjola of the Bid. The committee members are Tom von Weymarn (Chairman), Jukka Hienonen and Mirja-Leena (Mirkku) Kullberg. To meet quorum requirements, Board members Jukka Hulkkonen and Marjo Partio have participated in Pohjola Board meetings regarding the Bid to the extent that decisions have been required to be taken. Hulkkonen and Partio do not have a conflict of interest in the matter, but have certain ties to the Bid as defined in the Helsinki Takeover Code. Hulkkonen and Partio have not taken part in preparing the decisions relating to the Bid. Reijo Karhinen (Chairman of the Board of Directors), Tony Vepsäläinen (Vice Chairman of the Board of Directors) and Harri Sailas (Board member) have not taken part in either any preparatory measures or any decision-making by Pohjola regarding the Bid. Other Matters As part of its evaluation of the Bid, the Pohjola Board has requested from Deutsche Bank AG, London Branch, to deliver a fairness opinion (the "Fairness Opinion") concerning the fairness, from a financial point of view, of the Offer Price to Pohjola's shareholders not affiliated with the Offeror or its affiliated parties. The Fairness Opinion is attached in full as Appendix to this statement. In matters related to the Bid, Pohjola has committed itself to complying with the Helsinki Takeover Code (Ostotarjouskoodi) referred to in Chapter 11, Section 28 of the Finnish Securities Markets Act. This statement of the Pohjola Board does not constitute investment or tax advice, and the Pohjola Board does not specifically evaluate herein the general price development or the risks relating to the Shares in general. Shareholders must independently decide whether to accept the Bid, and they should take into account all relevant information available to them, including information presented in the Tender Offer Document and this statement. Deutsche Bank AG (London Branch) has acted as the financial adviser and Hannes Snellman Attorneys Ltd as the legal counsel to Pohjola with respect to the Bid. Helsinki, 13 February 2014 POHJOLA BANK PLC Board of Directors Carina Geber-Teir Chief Communications Officer For more information, please contact: Tom von Weymarn, Chairman of the independent committee Please contact OP-Pohjola Pressroom for an interview +358 505239904 DISTRIBUTION NASDAQ OMX Helsinki LSE London Stock Exchange SIX Swiss Exchange Major media pohjola.com, op.fi Pohjola is a Finnish financial services group which provides its customers with banking, non-life insurance and asset management services. Our mission is to promote the sustainable prosperity, security and well-being of our customers. Profitable growth and an increase in company value form our key objectives. Pohjola Group serves corporate customers in Finland and abroad by providing an extensive range of financial, investment, cash- management and non-life insurance services. We offer non-life insurance and private banking services to private customers. Pohjola Series A shares have been listed on the Large Cap List of the NASDAQ OMX Helsinki since 1989. The number of shareholders totals around 32,000. Pohjola's consolidated earnings before tax came to 473 million euros in 2013 and the balance sheet total amounted to 44 billion euros on 31 December 2013. Pohjola is part of OP-Pohjola Group, the leading financial services group in Finland with 4.3 million customers. www.pohjola.com Deutsche Bank AG is authorised under German Banking Law (competent authority: BaFin - Federal Financial Supervisory Authority) and authorised and subject to limited regulation by the Financial Conduct Authority. Details about the extent of Deutsche Bank AG's authorisation and regulation by the Financial Conduct Authority are available on request. Deutsche Bank AG, London Branch is acting as financial adviser to Pohjola Bank plc and no one else in connection with the contents of this announcement and will not be responsible to anyone other than Pohjola Bank plc for providing the protections afforded to clients of Deutsche Bank AG, London Branch, nor for providing advice in relation to any matters referred to herein. THIS RELEASE IS NOT A TENDER OFFER DOCUMENT AND DOES NOT CONSTITUTE AN OFFER OR AN INVITATION TO MAKE A SALES OFFER. NO TENDER OFFER WILL BE MADE DIRECTLY OR INDIRECTLY IN ANY JURISDICTION WHERE OFFERING OR OFFER PARTICIPATION WOULD BE PROHIBITED BY APPLICABLE LAW, OR WHERE ANY TENDER OFFER DOCUMENT OR REGISTRATION OR ANY OTHER REQUIREMENT WOULD APPLY IN ADDITION TO THOSE UNDERTAKEN IN FINLAND. IN PARTICULAR, NO TENDER OFFER WILL BE MADE DIRECTLY OR INDIRECTLY IN OR INTO, OR BY USE OF THE POSTAL SERVICE OR ANY OTHER MEANS (INCLUDING, WITHOUT LIMITATION, FACSIMILE, TELEX, TELEPHONE OR THE INTERNET) OR ANY FACILITIES OF A SECURITIES EXCHANGE OF, THE UNITED STATES, CANADA, JAPAN, AUSTRALIA, SOUTH AFRICA OR HONG KONG. APPENDIX: Fairness Opinion by Deutsche Bank AG (London Branch) dated 12 February 2014 12 February 2014 The Board of Directors Pohjola Pankki Oyj Teollisuuskatu 1B FI-00510, Helsinki Finland Dear Sirs Deutsche Bank AG, acting through its London Branch ("Deutsche Bank") is acting as financial adviser to Pohjola Pankki Oyj ("Pohjola") in connection with the proposed offer (the "Offer") made by OP-Pohjola Group Central Cooperative (the"Offeror") for the entire issued and outstanding ordinary share capital of Pohjola not already held by the Offeror. The consideration proposed to be paid by the Offeror pursuant to the Offer is €16.80 per each ordinary "A" share and ordinary "K" share of Pohjola (each an "Ordinary Share" and, together, the"Ordinary Shares") to be paid in cash (the "Consideration") pursuant to the terms and conditions as described in the Offeror's announcement of the Offer dated 6 February 2014 (the "Terms and Conditions"). As at the date hereof, the Offeror and its affiliated parties (such affiliated parties together, the "Offeror Affiliates") together in aggregate hold approximately 55.4 percent of the outstanding share capital and approximately 75.8 percent of the voting power of Pohjola. The Offeror holds approximately 37.2 percent of the outstanding share capital and approximately 61.3 percent of the voting power of Pohjola. Accordingly, we understand the Offeror is a related party of Pohjola pursuant to Chapter 8, Section 6 of the Finnish Companies Act and Section 140 of the Finnish Credit Institutions Act from 2007 (the "Finnish Credit Institutions Act"), and the Offer thus a related party transaction. In accordance with Finnish corporate governance best practices and management duties based on Chapter 1, Section 8 of the Finnish Companies Act and as noted in the Helsinki Takeover Code, Recommendation 5, Pohjola has requested Deutsche Bank to provide an opinion addressed to the board of directors of Pohjola (the"Board of Directors") as to whether the Consideration is fair from a financial point of view to the Ordinary Shareholders (as defined below). For the purposes of this letter, "Ordinary Shareholders" shall mean holders of the Ordinary Shares excluding the Offeror, the Offeror Affiliates and their respective affiliates. We understand that the Board of Directors has established a special committee consisting of three board members independent of the Offeror to assess the Offer. This letter has been provided at the request of such committee. To meet quorum requirements two additional board members who are not independent of the Offeror have, as required, also participated in board meetings regarding the Offer. We understand that the three remaining board members who are also not independent of the Offeror have not taken part in any board meetings, preparatory measures or any decision-making processes by the Board of Directors regarding the Offer. In connection with Deutsche Bank's role as financial adviser to Pohjola, and in arriving at the opinion contained in this letter, Deutsche Bank has reviewed certain publicly available financial and other information concerning Pohjola, certain internal analyses, financial forecasts and other information furnished to it by Pohjola. Deutsche Bank has also held discussions with members of the senior management of Pohjola regarding the businesses and prospects of Pohjola. In addition, Deutsche Bank has: (i) reviewed the reported prices and trading activity for the Ordinary Shares; (ii) compared certain financial and stock market information for Pohjola with similar information for certain selected companies which Deutsche Bank has considered comparable to Pohjola and whose securities are publicly traded; (iii) reviewed the financial aspects of certain selected merger and acquisition transactions which Deutsche Bank has considered comparable to the Offer; (iv) reviewed the financial terms of the Offer; (v) reviewed the Terms and Conditions and certain related documents; and (vi) performed such other studies and analyses and considered such other factors as it deemed appropriate. In conducting its analyses and arriving at the opinion contained in this letter, Deutsche Bank has utilised a variety of generally accepted valuation methods commonly used for these types of analyses. The analyses prepared by Deutsche Bank were prepared solely for the purpose of enabling Deutsche Bank to provide the opinion contained in this letter to the Board of Directors as to the fairness, from a financial point of view, of the Consideration to the Ordinary Shareholders, and do not purport to be appraisals or necessarily reflect the prices at which businesses or securities may actually be sold, which are inherently subject to uncertainty. Deutsche Bank has not assumed responsibility for, and has not independently verified, any information, whether publicly available or furnished to it, concerning Pohjola or the Offeror, including, without limitation, any financial information, forecasts or projections considered in connection with the rendering of the opinion contained in this letter. Accordingly, for the purposes of the opinion contained in this letter, Deutsche Bank has, with Pohjola's permission, assumed and relied upon the accuracy and completeness of all such information. Deutsche Bank has not conducted a physical inspection of any of the properties or assets, and has not prepared or obtained any independent valuation or appraisal of any of the assets or liabilities (including any contingent, derivative, or off-balance sheet assets and liabilities), of Pohjola or the Offeror or any of their respective affiliates, nor has Deutsche Bank evaluated the solvency or fair value of Pohjola or the Offeror under any applicable law relating to bankruptcy, insolvency or similar matters. With respect to the financial forecasts and projections, including the forecasts of certain financial synergies expected by the Offeror to be achieved as a result of the Offer contained in the Terms and Conditions (collectively the "Synergies"), made available to Deutsche Bank and used in its analyses, Deutsche Bank has assumed with Pohjola's permission that they have been reasonably prepared on bases reflecting the best currently available estimates and judgements of the management of Pohjola or the Offeror as to the matters covered thereby. In rendering the opinion contained in this letter, Deutsche Bank expresses no view as to the reasonableness of such financial information, forecasts and projections, including the Synergies, or the assumptions on which they are based. In arriving at its opinion Deutsche Bank has noted that Pohjola is controlled by the Offeror and forms part of the Offeror's group. Deutsche Bank understands that pursuant to the Finnish Act on Cooperative Banks and Other Cooperative Credit Institutions from 2013, Section 51, the Offeror is required to maintain a majority interest by votes in Pohjola (such requirement, the "Ownership Requirement"). Accordingly, Deutsche Bank was not requested to, and did not, solicit or consider third party indications of interest in the possible acquisition of all or part of Pohjola, nor was Deutsche Bank requested to consider, and the opinion contained in this letter does not address, the relative merits of the Offer as compared to any alternative offers or business strategies. In addition to the Ownership Requirement noted above, the Offeror, Pohjola and the Offeror Affiliates (together the "Group"), form a financial and insurance conglomerate pursuant to the Act on the Supervision of Financial and Insurance Conglomerates, the effect of which is that the Group is considered to be a single entity for certain regulatory purposes, including capital adequacy requirements. Pohjola also has extensive commercial and financial arrangements with the rest of the Group, the terms of which are subject to periodic amendment and renegotiation. In addition, the banking operations of the Group are subject to joint liability in accordance with the Finnish Act on the Amalgamation of Deposit Banks. Accordingly, the financial results of Pohjola, its prospects and the valuation of the Ordinary Shares are all highly dependent upon the relationships that exist between Pohjola and the rest of the Group. For the purposes of rendering its opinion, Deutsche Bank has assumed, with Pohjola's permission, that the existing arrangements between Pohjola and the rest of the Group will not change materially for the foreseeable future. Deutsche Bank understands that financing in the form of a credit facility is to be provided to the Offeror by Pohjola in connection with the Offer. Deutsche Bank has not obtained independent legal advice as to whether this financing qualifies for an exemption to the financial assistance rules set forth in Section 35.2 of the Finnish Credit Institutions Act and, for the purposes of rendering the opinion contained in this letter, Deutsche Bank has assumed, with Pohjola's permission, that such financing provided by Pohjola to the Offeror has been provided on market terms and would not be deemed to be a form of financial assistance pursuant to the Act. For the purposes of rendering its opinion, Deutsche Bank has assumed with Pohjola's permission that, in all respects material to its analysis, the Offer will be consummated in accordance with the Terms and Conditions, without any material waiver, modification or amendment of any term, condition or agreement. Deutsche Bank has also assumed that all material governmental, regulatory or other approvals and consents required in connection with the consummation of the Offer will be obtained and that in connection with obtaining any necessary governmental, regulatory or other approvals and consents, no material restrictions will be imposed. Deutsche Bank is not a legal, regulatory, tax or accounting expert and has relied on the assessments made by Pohjola and its advisors with respect to such issues. This letter has been approved and authorised for issuance by a fairness opinion review panel, is addressed to, and for the use and benefit of, the Board of Directors and is not a recommendation to the shareholders of Pohjola to accept or reject the Offer. The opinion contained in this letter is limited to the fairness, from a financial point of view, of the Consideration to the Ordinary Shareholders, and is subject to the assumptions, limitations, qualifications and other conditions contained herein and is necessarily based on financial, economic, market and other conditions, and the information made available to Deutsche Bank, as of the date hereof. Pohjola has not asked Deutsche Bank to, and the opinion contained in this letter does not, address the fairness of the Offer, or any consideration received in connection therewith, to the holders of any other class of securities, creditors or other constituencies of Pohjola, nor does it address the fairness of the contemplated benefits of the Offer. Deutsche Bank expressly disclaims any undertaking or obligation to advise any person of any change in any fact or other matter affecting the opinion contained in this letter of which it becomes aware after the date hereof. Deutsche Bank expresses no opinion as to the merits of the underlying decision by Pohjola to engage in the Offer. In addition, Deutsche Bank does not express any view or opinion as to the fairness, financial or otherwise, of the amount or nature of any compensation payable to or to be received as a result of the Offer by any of Pohjola's officers, directors, or employees, or any class of such persons. Deutsche Bank will be paid a fee for its services as financial adviser to Pohjola in connection with the Offer, a portion of which is contingent upon delivery of this letter and the remainder of which is contingent upon completion of the Offer. Pohjola has also agreed to indemnify Deutsche Bank against certain liabilities in connection with its engagement. In this letter, Deutsche Bank AG and its subsidiary undertakings from time to time are referred to as the "DB Group". One or more members of the DB Group has, from time to time, provided investment banking, commercial banking (including extension of credit) and other financial services to Pohjola, the Offeror or its affiliates for which it has received compensation. In the ordinary course of their business, members of the DB Group may actively trade in the securities and other instruments and obligations of Pohjola for their own accounts and for the accounts of their customers. Accordingly, the members of the DB Group may at any time hold a long or short position in such securities, instruments and obligations. For the purpose of arriving at the opinion contained in this letter, Deutsche Bank has not considered any information that may have been provided to it in those capacities or in any other capacity than fairness opinion provider. Based upon and subject to the foregoing, it is Deutsche Bank's opinion as investment bankers, as of the date hereof, that the Consideration is fair, from a financial point of view, to the Ordinary Shareholders. This letter may not be reproduced, summarised or referred to in any public document or given to any person without the prior written consent of Deutsche Bank. Notwithstanding the foregoing, this letter may be included in the statement of the Board of Directors with respect to the Offer, required to be made public pursuant to Chapter 11, Section 13 of the Finnish Securities Markets Act, provided that it is reproduced in full, and that any description of or reference to Deutsche Bank in such disclosure document is in a form reasonably acceptable to Deutsche Bank and its legal advisers. Yours faithfully, DEUTSCHE BANK AG, LONDON BRANCH [HUG#1761656] |
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