RNS No 4118m
FILOFAX GROUP PLC
24th September 1998
PART 1
Not for release, publication or distribution in or
into Canada, Australia or Japan
Day Runner UK plc
(a wholly owned subsidiary of Day Runner, Inc.)
Cash offer
for
Filofax Group plc
Summary
The Board of Day Runner announces a cash offer to
acquire the entire issued and to be issued ordinary
share capital of Filofax. The Offer is being made by
Wasserstein Perella on behalf of Day Runner UK, a
wholly owned subsidiary of Day Runner. Cazenove is
broker to the Offer.
The Offer:
* is 200 pence in cash for each Filofax Share
* values the entire issued ordinary share
capital of Filofax at approximately #47.9 million
* represents a premium of approximately 42.9 per
cent. over yesterday's closing middle market price
of 140 pence per Filofax Share
* is higher than any daily closing price
since Filofax's profit warning in July 1996
* represents a multiple of 13.3x Filofax's 1998
earnings per share, before the loss attributable to
Henry Ling Day Runner markets personal organising
products to broad-based consumer audiences through
retail distribution channels. It is the leading
producer of paper-based personal organisers for the
US retail market and also supplies a number of
related organising products. Through a careful
strategy of building its brand, Day Runner has seen
sales increase at a compound annual growth rate of
over 18 per cent. over the last five years to
US$167.8 million for the year ended 30 June 1998. In
the same period Day Runner's net income increased at
a compound annual growth rate of over 27 per cent.
This performance is attributable almost entirely to
organic growth.
Day Runner has closely followed Filofax and observed
how in recent years Filofax has struggled to find a
way forward, failed to develop the Filofax brand and
failed to deliver value:
* it has been ex-growth since 1996
* its share price has underperformed the FTSE All-
Share Index by over 59 per cent. since 1
January 1996
* its diversification strategy has failed
* it has had reorganisations and reviews but has
not delivered results
* its talks with third parties earlier this
year did not deliver value
* it has itself recently pointed towards
reduced growth expectations
Commenting on the Offer, Mark Vidovich, Chairman of
Day Runner, said today:
"We are offering a serious price for an
underperforming company that lacks direction.
Filofax needs Day Runner's skills to develop the
brand further and take the business forward."
Press Enquiries:
Day Runner Mark Vidovich Tel: 0171 404 5959
Judy Tucker Tel: 0171 404 5959
Wasserstein Perella Howard Covington Tel: 0171 446 8000
Karen Dodd Tel: 0171 446 8000
Cazenove Julian Cazalet Tel: 0171 825 9350
Ed Byers Tel: 0171 825 9113
Brunswick James Bradley Tel: 0171 404 5959
Lucas van Praag Tel: 0171 404 5959
The Offer is not being made, directly or indirectly,
in or into, or by use of the mails of, or by any
means or instrumentality (including, without
limitation, telephonically or electronically) of
interstate or foreign commerce of, or any
facilities of a national securities exchange of,
Canada, Australia or Japan and the Offer will not
be capable of acceptance by any such use, means,
instrumentality or facilities or from within
Canada, Australia or Japan, except pursuant to any
applicable exemption. The Loan Notes which may be
issued pursuant to the Offer have not been, and
will not be, registered under the Securities Act or
under any of the relevant securities laws of any
State of the United States, Canada, Australia or
Japan. Accordingly, unless an exemption under the
Securities Act or such relevant securities laws is
applicable, the Loan Notes may not be offered,
sold, resold, delivered or distributed, directly or
indirectly, in or into the United States, Canada,
Australia or Japan and will not be available to US
Persons.
Wasserstein Perella, which is regulated in the
UK by The Securities and Futures Authority
Limited, is acting for Day Runner and Day Runner
UK and no one else in connection with the Offer and
will not be responsible to anyone other than Day
Runner and Day Runner UK for providing the
protections afforded to customers of Wasserstein
Perella nor for giving advice in relation to the
Offer.
This summary should be read in conjunction with the
attached announcement.
Not for release, publication or distribution in or
into Canada, Australia or Japan
Day Runner UK plc
(a wholly owned
subsidiary of Day
Runner, Inc.)
Cash offer
for
Filofax Group plc
Introduction
The Board of Day Runner announces the terms of a
cash offer for Filofax. The Offer is being made
by Wasserstein Perella on behalf of Day Runner UK,
a wholly owned subsidiary of Day Runner, for the
entire issued and to be issued ordinary share capital
of Filofax. Cazenove is broker to the Offer.
The Offer
The Offer is being made on the following basis:
For each Filofax Share 200 pence in cash
The Offer values Filofax's issued share capital at
approximately #47.9 million.
The Offer represents a premium of approximately 42.9
per cent. to yesterday's closing middle market price
of 140 pence per Filofax Share and a multiple of
13.3x Filofax's 1998 earnings per share,
before the loss attributable to Henry Ling. It is
also a higher price than any daily closing price
since Filofax's profit warning in July 1996
The Offer will be subject to the conditions and on
the terms set out in Appendix I and on the further
terms to be set out in the Offer Document.
Filofax Shares will be acquired pursuant to the Offer
fully paid and free from all liens, equities,
charges, encumbrances and other interests and
together with all rights now or hereafter attaching
thereto, including, without limitation, the right
to receive and retain all dividends and other
distributions announced, declared, made or paid after
31 March 1998, save for the final ordinary
dividend of 2.42 pence per Filofax Share payable
on 30 October 1998.
The Offer will extend to all existing issued Filofax
Shares and any Filofax Shares which are
unconditionally allotted or issued prior to the date
on which the Offer closes (or such earlier date not
(without the consent of the Panel) being earlier
than the date on which the Offer becomes or is
declared unconditional as to acceptances or, if
later, the first closing date of the Offer, as Day
Runner UK may decide) as a result of the exercise
of options under the Filofax Share Schemes or
otherwise.
Background to and reasons for the Offer
Day Runner has closely followed Filofax and
observed how in recent years Filofax has struggled
to find a way forward, failed to develop the Filofax
brand and failed to deliver value:
* it has been ex-growth since 1996
* its share price has underperformed the FTSE All-
Share Index by over 59 per cent. since 1 January
1996
* its diversification strategy has failed
* it has had reorganisations and reviews but has
not delivered results
* its talks with third parties
earlier this year did not deliver value
* it has itself recently pointed towards reduced growth
expectations
Day Runner has believed for some time that a
combination of Day Runner and Filofax would
create a much stronger platform to develop the
Filofax brand and so create value for both sets of
shareholders. In many ways Day Runner is
the logical international partner for Filofax. Day
Runner and Filofax are complementary both in
geographical coverage and in distribution channels.
In November 1997, Filofax announced that it had
initiated a review of the strategic opportunities
open to it. This led to talks with a number of
parties regarding strategic alliances, joint
ventures and the sale of the group. Day Runner
was astounded that despite this apparently far
reaching review, Filofax made no attempt during
this period to develop a dialogue with Day Runner.
Filofax's talks came to nothing and failed to
deliver value for Filofax's Shareholders.
Against this background, Day Runner believes it
is in the interests of the business and its
shareholders for Day Runner to make a public case
for a combination. Day Runner is prepared to offer
a full cash price for Filofax despite the
current uncertainties in financial markets and the
world economy and is confident in its ability to
develop the Filofax brand in a way that current
management has been unable to do.
Information on Day Runner UK
Day Runner UK is an indirect wholly owned
subsidiary of Day Runner, and has been established
in order to implement the Offer. To date, Day
Runner UK has engaged in no activities other than
those incidental to its incorporation and the
making of the Offer.
Information on Day Runner
Day Runner markets personal organising products to
broad-based consumer audiences through retail
distribution channels. It is the leading producer
of paper-based personal organisers for the US retail
market and also supplies a number of related
organising products. Day Runner is headquartered in
Irvine, California. Its shares are quoted on The
Nasdaq Stock Market in the US (ticker symbol "DAYR"), and it
has a market capitalisation of
approximately US$ 229 million (#136 million).
Through a careful strategy of building its brand, Day
Runner has seen sales increase at a compound annual
growth rate of over 18 per cent. over the last
five years. In the same period Day Runner's net
income increased at a compound annual growth rate of
over 27 per cent. This performance is
attributable almost entirely to organic growth.
In the year ended 30 June 1998, Day Runner
reported audited consolidated operating profit of
US$25.6 million (# 15.2 million) on sales of
US$167.8 million (# 99.9 million). This represented
sales growth of 31.8 per cent. over the prior year.
At 30 June 1998, Day Runner had shareholders'
funds of US$74.5 million (# 44.4 million).
Day Runner has established a strong retail
distribution network in the US, where its
products are carried by more than 20,000 retail
stores. During its fiscal year ended 30 June 1998,
Day Runner sold more than 6 million organisers and
approximately 20 million refills, which include
calendars, other pages and accessories.
A key element of Day Runner's strategy has been to
identify and cultivate new sources of demand for
organisers by creating organisers and planners
designed to appeal to distinct consumer segments,
from business and professional people to students
and housewives. All of these products have
been internally developed. Suggested retail prices
for Day Runner's organisers range from US$4 to
$150 (approximately # 2.38 to #89.29).
Organiser lines include:
Day Runner System, the original Day Runner
time management system
PRO Business System, designed for business and
professional people
FactCentreT, aimed at budget-conscious consumers
4-1-1T Student Planners
PerennialsT, designed to appeal to young women
Licensed products featuring DILBERTT, The
Mickey Unlimited Brand of the Walt Disney Co., THE
FAR SIDE and Warner Bros. Looney TunesT classic
cartoon characters
To leverage its brand name and strong retail
distribution, Day Runner also develops,
manufactures and markets a number of related
organising products. Sales of related organising
products grew by 221 per cent. in the year ended 30
June 1998 and represented 19.6 per cent. of Day
Runner's total turnover. Internally developed
related organising products, virtually all of which
have been introduced since March 1995, include
telephone/address books, appointment books, business
accessories, pocket calendars, desk calendars and
several lines of organising wallboards, among others.
Day Runner's student planners have established Day
Runner as a supplier of back-to-school products.
Day Runner's success at building its back-to-
school business since 1994 has been the primary
factor in reducing the seasonality of Day Runner's
sales by lessening its dependence on calendar year-
end purchasing and establishing a second strong
selling season. Day Runner's sales in the quarter
ended 30 June, the primary quarter for back-toschool
shipments, have grown from US$14.0 million in 1993,
the year before Day Runner introduced 4-1-1
Student Planners, to US$50.9 million in 1998.
Information on Filofax
Filofax is a manufacturer and supplier of
stationery products. Filofax's core business is the
supply of ring binder organisers under the
Filofax, Microfile and Lefax brands. Other products
include time management systems, business forms
and telephone message pads and up-market writing
instruments.
In the year ended 31 March 1998, Filofax's
consolidated turnover was #42.2 million (#37.7
million for continuing operations) and operating
profit was #4.3 million (#6.1 million for
continuing operations). Net assets at 31 March 1998
were #10.5 million.
The Loan Note Alternative
Instead of some or all of the cash consideration
which would otherwise be receivable by them
under the Offer, Filofax Shareholders (other than
persons who are citizens or residents of the United
States and certain other overseas persons) accepting
the Offer will be entitled to elect to receive Loan
Notes on the following basis:
for each #1 of cash consideration under the Offer
#1 nominal of Loan Notes
The Loan Notes will be unsecured obligations of Day
Runner UK and will be issued, credited as fully
paid, in amounts and integral multiples of #1
nominal value; all fractional entitlements will be
disregarded and not paid. The Loan Notes will bear
interest (from the date of issue to the relevant
holder of Loan Notes) at a rate of 1.0 per
cent. per annum below LIBOR. Interest on the
Loan Notes will be payable annually in arrears on
30 September (or, if not a business day in any year,
on the first business day thereafter), commencing 30
September 1999. The Loan Notes will be redeemable
at the option of the holders on each interest
payment date from and including 30 September 1999
(or, if not a business day, on the first business
day thereafter ). Unless previously redeemed or
purchased, the Loan Notes will be redeemed on 30
September 2003 or, if not a business day, on the
first business day thereafter. The Loan Notes will,
subject to certain conditions, be transferable but
no application is intended to be made for the Loan
Notes to be listed, or dealt in, on any stock
exchange. Payment of principal of and interest on
the Loan Notes will be guaranteed by Day Runner.
The Loan Notes have not been, and will not be,
registered under the Securities Act or under any
other securities laws and should not be offered,
sold, resold, delivered or distributed, directly or
indirectly, in or into the United States, Canada,
Australia or Japan and will not be available to
US Persons (except in transactions exempt from or
not subject to the registration requirements of the
Securities Act or the relevant securities laws of
any State of the United States, Canada, Japan or
Australia).
The Loan Note Alternative will be conditional on
the Offer becoming or being declared unconditional
in all respects and will remain open for so long as
the Offer remains open for acceptance. No Loan
Notes will be issued unless, by the time the
Offer becomes or is declared wholly unconditional,
valid elections from accepting Filofax Shareholders
have been received for at least #5 million nominal
value of Loan Notes (or such lesser value as Day
Runner UK may decide). If insufficient elections
are received, Filofax Shareholders who validly
elect for the Loan Note Alternative will
instead receive cash in accordance with the terms
of the Offer. Details of the principal terms of the
Loan Notes will be contained in the Offer Document.
Financing for the Offer Day Runner will finance the Offer out of medium
term credit facilities which it has put in place
both for this purpose and to provide working capital
for the Day Runner Group in future.
Employees
The Board of Day Runner has confirmed that
the existing employment rights, including pension
rights, of the employees of Filofax will be fully
safeguarded.
Filofax Share Schemes
The Offer extends to any Filofax Shares
unconditionally allotted or issued prior to the date
on which the Offer closes (or such earlier date as
Day Runner UK may determine) as a result of the
exercise of options granted under the Filofax Share
Schemes. To
the extent that such options are not or cannot be
exercised in full, it is intended that appropriate
proposals will be made to option holders under the
Filofax Shares Schemes in due course, once the
Offer has become unconditional in all respects.
General
Neither Day Runner nor Day Runner UK, nor any of
their respective directors nor, so far as Day
Runner UK is aware, any person acting in concert
with Day Runner or Day Runner UK, owns or controls
any Filofax Shares or has any option to acquire
any Filofax Shares, or has entered into any
derivative referenced to securities of Filofax which
remains outstanding.
The Offer Document, setting out details of the
Offer (including the Loan Note Alternative) and the
Form of Acceptance will be posted to Filofax
Shareholders as soon as practicable. The Offer
will be open for at least twenty business days from
the date of the Offer Document.
The availability of the Offer and any election
thereunder to persons outside the UK may be
affected by the laws of the relevant
jurisdiction. Such persons should inform
themselves about and observe any applicable
requirements.
This announcement does not constitute an offer or an
invitation to purchase any securities.
Certain terms used in this announcement are defined
in Appendix II.
Day Runner and PRO Business System are registered
trademarks, and FactCentre, 4-1-1 and Perennials are
trademarks of Day Runner, Inc. Disney. DILBERT
is a trademark of United Feature
Syndicate, Inc. THE FAR SIDE is a registered
trademark of FarWorks, Inc. LOONEY TUNES,
characters, names and all related indicia are
trademarks of Warner Bros. All other trademarks
remain the property of their respective companies.
Press Enquiries:
Day Runner Mark Vidovich Tel: 0171 404 5959
Judy Tucker Tel: 0171 404 5959
Wasserstein Perella Howard Covington Tel: 0171 446 8000
Karen Dodd Tel: 0171 446 8000
Cazenove Julian Cazalet Tel: 0171 825 9350
Ed Byers Tel: 0171 825 9113
Brunswick James Bradley Tel: 0171 404 5959
Lucas van Praag Tel: 0171 404 5959
Wasserstein Perella, which is regulated in the
UK by The Securities and Futures Authority
Limited, is acting for Day Runner and Day Runner
UK and no one else in connection with the Offer and
will not be responsible to anyone other than Day
Runner and Day Runner UK for providing the
protections afforded to customers of Wasserstein
Perella nor for giving advice in relation to the
Offer.
The Offer is not being made, directly or indirectly,
in or into, or by use of the mails of, or by any
means or instrumentality (including, without
limitation, telephonically or electronically) of
interstate or foreign commerce of, or any
facilities of a national securities exchange of,
Canada, Australia or Japan and the Offer will not
be capable of acceptance by any such use, means,
instrumentality or facilities or from within
Canada, Australia or Japan except pursuant to any
applicable exemption. The Loan Notes which may be
issued pursuant to the Offer have not been, and
will not be, registered under the Securities Act or
under any of the relevant securities laws of any
State of the United States, Canada, Australia or
Japan. Accordingly, unless an exemption under the
Securities Act or such relevant securities laws is
applicable, the Loan Notes may not be offered,
sold, resold, delivered or distributed, directly or
indirectly, in or into the United States, Canada,
Australia or Japan and will not be available to US
Persons.
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