The Boards of Directors of Schneider and Spie Batignolles today unanimously approved In principle a merger between the two companies. Before the merger takes place, Schneider will launch a tender offer on Spie Batignolles. The merger following the tender offer will constitute the fast Important step of the reorganization process initiated by Groupe Schneider several years ago. The merger will give Spie Batignolles the level of equity compatible with its operatings activities currently reporting positive results and will also permit Groupe Schneider to continue the concentration process on Its core businesses.
The Board of Directors of Spie Batignolles reviewed the forecasted results for 1994. The company should report a FF 810 million loss. This loss mainly includes reserves and losses on its real-estate activities for FF 440 million, raising to 42% the level of reserves an those assets as well as additionnal reserves on claims yet to be recovered for FF 300 million.
Schneider and Spie Batignolles decided to implement an industrial and financial restructuring to allow:
- The coverage of its risks on real-estate and existing claims which suffered from unfavorable trends during 1994.
Description of the financial restructuring
The restructuring consists of a merger between Schneider and Spie Batignolles preceded by a tender offer on Spie Batignolles by Schneider.
Thus, Schneider will launch, in the course of April 1995, as soon as the books of the two Companies are closed, and after approval from the relevant market authorities, a cash offer at the price of FF 227 per Spie Batignolles share. The price- has been defined - accordingly to the Pads Stock Market regulations - by the computation of ' the average stock price adjusted by the volume of shares traded during the 60 business day period ending March 10, 1995.
Spie Batignolles shareholders will have the following options
- either to tender their shares and obtain FF 227 in cash per share,
The holders of this right will be offered, at a two year maturity date, the payment in cash of the difference between the price of the tender offer capitalized at the rate of 7.5% per annum, that is to say FF 262, and the market price at that time of the entity resulting from the merger, Schneider (ex Spie Batignolles). Therefore, the Spie Batignolles shareholders withholding their shares after the tender offer, will participate in the future development of Groupe Schneider, while benefiting from a guarantee on the value of their shares.
The merger between Schneider and Spie Batignolles will be submitted to the Shareholders' Meetings of the two companies. For legal reasons, linked to the continuation of claims recovery and contractual conditions on current businesses, it has been considered necessary to merge Schneider SA Into Spie Batignolles, the latter being the surviving entity. Subject to the independant auditors', conclusions, terms of the exchange will be 2 Spie Batignolles shares for 1 Schneider share.
After the merger, Spie Batignolles will be renamed Schneider SA.
Preceding the merger, Spie Batignolles will complete the allocation of all its operating activities to subsidiaries. After the merger, a new company, Spie Batignolles SA, a 100% hold by Schneider (ex Spie Batignolles) will receive the shares of those operating subsidiaries.
This operation is for Groupe Schneider, the last important step of a reorganisation process initiated sometime ago, and that Included the mergers of Schneider with Merlin Gerin and SPEP, the constitution of Schneider Electric SA through the merger of Merlin Gerin and Telemecanique, as well as numerous divestitures of non-strategic assets during the recent years.
For 1994, the losses recorded by Spie Batignolles will have a FF 590 million impact on Schneider net result (group share), the most part of which will be neutralized by capital gains recorded In 1994 due to the divestment of non-strategic assets (office building in Neuilly, Electrabel shares, Merlin Gerin Provence) for a net amount of FF 480 million.
This means that Schneider would be able to announce a net result (group share) in the order of FF 700 million, from FF 405 in 1993.
In 1995, the Contracting Segment of Groupe Schneider (i.e. the operating activities of Spie Batignolles) will contribute positively to the results of the Group. The FF 600 million tax saving, that the merger of the two companies will generate in the coming years, will primarily be used to offset the financial and management costs of the reat-estate assets.
The outlook for Groupe Schneider in 1995 is thus favorable. The level of activity during the first months of this year confirms the improvement recorded since the third quarter of 1994 and it is possible to anticipate continuing growth of the net income.