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» 04/06/2010

RECOMMENDED ACQUISITION

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT JURISDICTION.

For immediate release 4 June 2010


RECOMMENDED ACQUISITION

of

Sovereign Reversions plc

by

Grainger plc

to be effected
by means of a Scheme of Arrangement
under Part 26 of the Companies Act 2006

Summary (full press release attached below)

• The boards of Grainger and Sovereign Reversions announce that they have reached agreement on the terms of a recommended acquisition by Grainger (or a subsidiary of Grainger) for all of the issued and to be issued ordinary share capital of Sovereign Reversions. Under the terms of the Transaction, Shareholders will receive 202 pence in cash for every one Share. The offer values the entire issued and to be issued share capital of Sovereign Reversions at approximately £34.6 million.
• The Sovereign Reversions Directors believe the Transaction presents Shareholders with the opportunity to realise their interests in Shares at a significant premium to their market value prior to the commencement of the Offer Period.
• The Grainger Board believes this is an opportune time to invest in quality and complementary UK residential assets in Grainger’s core locations. The Transaction represents an opportunity to acquire a sizeable reversionary portfolio of assets and Home & Capital Advisers, a leading advisory business in the equity release sector.
• The Grainger and Sovereign Reversions Directors believe that the Transaction will result in:
o strengthening of Grainger’s position as a leading equity release provider in the United Kingdom, a sector which the Grainger and Sovereign Reversions Directors strongly believe will become a mass market product as more and more retirees seek to supplement their inadequate pension savings by releasing capital from their principal asset, their homes;
o economies of scale through the rationalisation of management and operating systems being spread across a larger portfolio of assets;
o enhanced ability to access new sources of finance at more attractive rates than currently available to Sovereign Reversions; and
o expediting the growth of the Enlarged Group through the enhancement of Grainger’s distribution and marketing capabilities and raised brand identity.
• It is intended that the Transaction be effected by way of a Court-sanctioned scheme of arrangement under Part 26 of the Act under which Grainger (or a subsidiary of Grainger) will acquire the entire issued and to be issued share capital of Sovereign Reversions. It is expected that the Scheme Document will be posted as soon as practicable, expected to be mid June 2010 and that, subject to the satisfaction, or where relevant waiver, of all relevant conditions and to the sanction of the Court, the Scheme will become Effective and the Transaction completed during August 2010.
• The Sovereign Reversions Directors, who have been so advised by Charles Stanley Securities and Fairfax I.S. PLC, consider the terms of the Transaction to be fair and reasonable. In providing advice to the Sovereign Reversions Directors, Charles Stanley Securities and Fairfax I.S PLC have taken into account the Sovereign Reversions Directors' commercial assessment of the Transaction. The Sovereign Reversions Directors intend to recommend unanimously that Shareholders vote in favour of the resolutions to be proposed at the Court Meeting and the General Meeting, as the Sovereign Reversions Directors have irrevocably undertaken to do in respect of 1,202,677 Shares representing, in aggregate, approximately 7.09 per cent. of the existing issued share capital of Sovereign Reversions. In addition, in the absence of a firm third party offer for Sovereign Reversions, the value of which is 222 pence or more per Share, certain of the Sovereign Reversions Directors have irrevocably undertaken to vote their Shares in favour of the Scheme and other resolutions necessary for its implementation at the Meetings in respect of a further 48,543 Shares representing in aggregate approximately 0.29 per cent. of the existing issued share capital of Sovereign Reversions.
• The Transaction is conditional on, among other things, certain approvals by Shareholders and the sanction of the Scheme by the Court. In order to become Effective, the Scheme must be approved by a majority in number of Shareholders voting at the Court Meeting, representing not less than 75 per cent. in value of the Shares that are voted.
Commenting on the Transaction, Robin Broadhurst, Chairman of Grainger said:
“This transaction will enhance our position as a leading equity release business with a substantial and complementary portfolio of reversionary assets and management expertise. Following the successful conclusion of our rights issue in December 2009, we have been monitoring several acquisition opportunities and I am delighted to see Grainger deploying part of the capital it raised in a manner which will reinforce our presence in this growing and important sector. In addition, acquiring these assets at an attractive price will enhance the Enlarged Group’s ability to improve returns for investors.”
Commenting on the Transaction, Bob Wigley, Chairman of Sovereign Reversions said:
“Grainger initially approached the Board with a view to making an offer for Sovereign Reversions at 175 pence per Share. Since Grainger’s initial approach, the Board of Sovereign Reversions has been exploring all options to maximise value for Sovereign Reversions shareholders by negotiating with Grainger and other potential offerors. The board of Sovereign Reversions now believes its shareholders should be given the opportunity to accept Grainger’s increased offer of 202 pence per Share, which provides a 65 per cent. premium to the market price prior to the announcement of the approach and is a logical combination of our specialist knowledge and Grainger’s access to capital.”

Enquiries

Grainger plc Tel: 020 7795 4700
Andrew Cunningham, Chief Executive
Peter Couch, Chief Operating Officer
Dave Butler, Director, Corporate Affairs

J.P. Morgan Cazenove, Financial Adviser to Grainger Tel: 020 7588 2828
Robert Fowlds
Bronson Albery

Financial Dynamics, Financial PR to Grainger Tel: 020 7831 3113
Stephanie Highett
Dido Laurimore
Rachel Drysdale

Sovereign Reversions plc Tel: 01234 356300
Graeme Marshall, Chief Executive
Rupert Pearce Gould

Charles Stanley Securities, Joint Rule 3 Adviser and broker to Sovereign Reversions Tel: 020 7149 6000
Dugald Carlean
Ben Johnston

Fairfax I.S. PLC, Joint Rule 3 Adviser to Sovereign Reversions Tel: 020 7598 5368
David Floyd
Andrew Cox

Wriglesworth Consultancy, Financial PR to Sovereign Reversions
Mark Baker Tel: 07980 635 243
Tom Urpeth Tel: 020 7427 1400

This summary should be read in conjunction with the full text of this announcement. Appendix I to this announcement contains the Conditions to, and certain further terms of, the Transaction. Appendix II to this announcement contains further details of the sources of information and bases of calculations set out in this announcement. Appendix III includes details on irrevocable undertakings received from Shareholders to vote for the Transaction at the Court Meeting and at the General Meeting in respect of their holdings of Shares and Appendix IV to this announcement contains definitions of certain expressions used in this summary and in this announcement.
In accordance with Rule 19.11 of the City Code, a copy of this announcement will be published on the following websites: www.sovereign-reversions.co.uk and www.graingerplc.co.uk.
J.P. Morgan Cazenove is a marketing name for the UK investment banking business of J.P. Morgan plc and its associated companies. J.P. Morgan Cazenove is acting exclusively for Grainger and no one else in connection with the possible Transaction and will not be responsible to anyone other than Grainger for providing the protections afforded to customers of J.P. Morgan Cazenove or for providing advice in relation to the possible Transaction or any other matter referred to herein.
Brewin Dolphin Investment Banking acts as joint broker to Grainger.
Fairfax I.S. PLC is acting exclusively for Sovereign Reversions and no one else in connection with the possible Transaction and will not be responsible to anyone other than Sovereign Reversions for providing the protections afforded to customers of Fairfax I.S. PLC or for providing advice in relation to the possible Transaction or any other matter referred to herein.
Charles Stanley Securities, a division of Charles Stanley & Co Limited is acting exclusively for Sovereign Reversions and no one else in connection with the possible Transaction and will not be responsible to anyone other than Sovereign Reversions for providing the protections afforded to customers of Charles Stanley Securities or for providing advice in relation to the possible Transaction or any other matter referred to herein.
Forward looking statements
This document may contain “forward-looking statements” concerning Grainger and Sovereign Reversions. Generally, the words “will”, “may”, “should”, “continue”, “believes”, “expects”, “intends”, “anticipates” or similar expressions identify forward-looking statements. The forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Many of these risks and uncertainties relate to factors that are beyond the companies’ abilities to control or estimate precisely, such as future market conditions and the behaviour of other market participants, and therefore undue reliance should not be placed on such statements. Sovereign Reversions and Grainger assume no obligation and do not intend to update these forward-looking statements, except as required pursuant to applicable law.
Dealing disclosure requirements
Under Rule 8.3(a) of the City Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any paper offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any paper offeror is first identified. An Opening Position Disclosure must contain details of the person’s interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (UK time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (UK time) on the 10th business day following the announcement in which any paper offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a paper offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the City Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any paper offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any paper offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person’s interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (UK time) on the business day following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or understanding, whether formal of informal, to acquire or control an interest in relevant securities of an offeree company or a paper offeror, they will be deemed to be a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel’s website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. If you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure, you should contact the Panel’s Market Surveillance Unit on +44 (0)20 7638 0129.
Overseas jurisdictions
The release, publication or distribution of this announcement in jurisdictions other than the United Kingdom may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the United Kingdom should inform themselves about and observe any applicable requirements. This announcement has been prepared for the purpose of complying with English law, the Listing Rules, the AIM Rules and the City Code and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws of jurisdictions outside the United Kingdom.
Any person (including, without limitation, any custodian, nominee and trustee) who would, or otherwise intends to, or who may have a contractual or legal obligation to, forward this announcement and/or any other related document to any jurisdiction outside the UK should inform themselves of, and observe, any applicable legal or regulatory requirements of that jurisdiction.
The Transaction relates to the shares of an English company and is to be made by means of a scheme of arrangement provided for under the laws of England and Wales. The Transaction is subject to the disclosure requirements and practices applicable in the UK to takeover offers implemented by way of scheme of arrangement, which may differ from the disclosure and other requirements of the securities laws of jurisdictions other than the United Kingdom. Financial information included in the relevant documentation will have been prepared in accordance with accounting standards applicable in the UK that may not be comparable to the financial statements of non-UK companies.
Notice to US Shareholders
For US securities law purposes, the Transaction described in this announcement will be made in respect of the securities of a foreign company by means of a scheme of arrangement under Part 26 of the Act. The Transaction is subject to disclosure and procedural requirements of a foreign country that are different from those which would apply in the United States. Financial statements relating to Sovereign Reversions included or incorporated in this announcement have been prepared in accordance with foreign accounting standards that may not be comparable to the financial statements of US companies. It may be difficult for you to enforce your rights and any claim you may have arising under United States federal securities laws, since Sovereign Reversions is located in a foreign country, and some or all of its officers and directors may be residents of a foreign country. You may not be able to sue Sovereign Reversions or its officers or directors in a foreign court for violations of the US securities laws. It may be difficult to compel Sovereign Reversions and its affiliates to subject themselves to a US court’s judgement. This announcement has not been reviewed by any federal or state securities commission or regulatory authority in the United States, nor has any such commission or authority passed upon the accuracy or adequacy of this announcement. Any representation to the contrary is unlawful and may be a criminal offence.

Associated files: Recommended acquisition of Sovereign by Grainger - FINAL APPROVED.pdf (0 KB)

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Grainger Deutschland GmbH, Sitz der Gesellschaft: Frankfurt am Main, HRB 84501, Geschäftsführer: Peter Brock. Ust.-IdNr. DE252464659