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MAKOR VIEW
Today Saxo Bank announced a conditional agreement to acquire BinckBank for €6.35 (cum dividend) per BinckBank share. The transaction has been unanimously supported and recommended by BinckBank’s executive and supervisory board (conditional on works council clearance). The BinckBank Foundation has agreed to tender its shares to the Offer and propose certain resolutions at the EGM.
Saxo Bank will finance the Offer from available cash resources and through equity financing of €100m and has received binding equity commitment letters from Fournais Holding, Geely Financials Denmark and Sampo Plc
MAKOR COMMENTS
The draft memorandum will be submitted to the AFM no later than the end of Q1 2019 with the Offer expected to complete in Q3 2019. The BinckBank EGM will be held at least 6 business days prior to the closing of the Tender Offer period.
Assuming that the draft memorandum is submitted to the AFM by mid-February 2019, the AFM then has 10 business days (subject to extensions if further information is requested) to issue its decision on the Offer Document. The acceptance period under the Dutch Takeover Code typically lasts between 8 and 10 weeks (i.e. the Offer could close between early-mid May) with the EGM taking place the week prior to deal close.
BinckBank and Saxo Bank have also agreed to certain covenants in respect of, corporate governance, financing, organisation, offices & brands, integration, employees, redundancy arrangements, the social plan, retention and training & career opportunities for a 3 year duration after settlement.
If Saxo Bank acquires at least 95% of BinckBank’s shares, Saxo Bank intends to delist BinckBank as soon as possible and commence statutory squeeze-out proceedings. However, if Saxo Bank acquires more than 80% but less than 95% then Saxo Bank will be entitled to pursue a legal triangular merger of BinckBank with two of its subsidiaries. This post-closing merger will be subject to BinckBank’s shareholder approval at an EGM to be held prior to the closing of the tender offer period.
If Saxo Bank pursues the post-closing merger, it will enter into a share purchase agreement with BinckBank Holdco pursuant to which the shares in new BinckBank will be sold and transferred to Saxo Bank as soon as possible after the post-closing merger becomes effective against the payment of a purchase price equal to the Offer Price. Following completion of the share sale, BinckBank Holdco will be dissolved and liquidated. As soon as possible following the effectiveness of the Liquidation, an advance liquidation distribution will be made to the shareholders of BinckBank HoldCo consisting of a payment per share in the capital of BinckBank HoldCo equal to the Offer Price without any interest and subject to withholding taxes and other taxes.
The Offer is pre-conditional on the following:
- No material breach of the Merger Protocol having occurred;
- No revocation or amendment of the recommendation by the BinckBank executive board and the BinckBank supervisory board;
- No MAE having occurred;
- AFM approval of the Offer Memorandum;
- No superior offer having been announced or made;
- No 3rd party having announced or made a mandatory public offer;
- Trading in BinckBank shares not having been suspended or ended as a result of a listing measure by Euronext Amsterdam;
- No notification having been received from AFM stating that one or more investment firms will not be allowed to cooperate with the Offer;
- No order, stay judgement or decree having been issued prohibiting the making of the Offer and/or related transactions;
- Saxo Bank having received executed copies of resignation letter from the resigning members of the BinckBank supervisory board; and,
- The BinckBank foundation irrevocable undertaking being in full force and effect and being complied with.
If Offer Conditions are:
- Minimum acceptance condition of 95% of outstanding shares (reduced to 80% if the post-closing merger resolution is adopted at the EGM and can be waived if the acceptance level is at least 68%);
- Receipt of approval from the European Central Bank (in the form of a declaration of no objection for the (indirect) acquisition of the shares in BinckBank and approval from the Dutch Central Bank on related charges in the co-policymakers of BinckBank;
- Receipt of approval from the Dutch Central bank on the prospective appointment of new members of the BinckBank supervisory board;
- Receipt of approval and/or license from the Dutch Central Bank and/or European Central Bank in respect of the post-closing merger to the extent required;
- No material breach of the merger protocol;
- No revocation or amendment of the recommendation by the BinckBank executive board and the BinckBank supervisory board;
- No MAE;
- No superior offer having been announced or made;
- No 3rd party having announced or made a mandatory public offer;
- Trading in the shares on Euronext Amsterdam not having been suspended or ended as a result of a listing measure by Euronext Amsterdam;
- No notification having been received by the AFM stating that one or more investment firms will not be allowed to cooperate with the Offer;
- The BinckBank Foundation irrevocable undertaking being in full force and effect and being complied with; and,
- No order, stay judgement or decree having been issued prohibiting the making of the Offer and/or related transactions.
The latest date to satisfy the Offer Conditions is 17 December 2019. However, if the regulatory clearances are still outstanding by 1 December 2019, Saxo Bank or BinckBank may notify the other party on or before 10 December 2019 that the Long-Stop Date shall be 1 April 2020.
If a third party offer above €6.858 is received and is committed to be launched or is launched within 10 weeks of announcement (i.e. before 25 February 2019), then Saxo Bank has a matching right. If the Offer is matched by Saxo Bank then BinckBank cannot terminate the merger protocol. Any subsequent offer after this must be c.5% higher (i.e. €6.6675)
There is a reciprocal €4.3m termination fee.
MAKOR CONCLUSION
The expected closing timetable of Q3 2019 is lengthy, although no antitrust approvals are required the receipt of approvals from the Dutch Central Bank and/or the European Central Bank could be prolonged given the nature of the industry.
We note that Saxo Bank is 52% owned by Zhejiang Geeley Holding Group Co. The transaction will allow Saxo Bank to increase its footprint in northern and southern Europe and to enable it to compete more effectively in the online trading and investment sector which is currently facing multiple challenges including challenging competition, increased regulation, low interest rates, considerable technology investment requirements and changing customer behaviour.
It is unclear if BinckBank ran a sales process prior to accepting the Offer from Saxo Bank but Saxo Bank has a matching right if a superior offer (10% higher for the first offer and 5% higher for subsequent offers) and if the superior Offer is matched by Saxo Bank then BinckBank is unable to terminate the merger protocol. However, should BinckBank terminate the merger protocol, there is a €4.3m termination fee payable by BinckBank to Saxo Bank.
The spread is currently €0.21 (3.3%), annualising to 4.5% assuming a mid-September closing date. We would therefore advise investors to build initial positions.