BT 2015 Annual Report Download - page 219

217
Overview
The Strategic Report
Purpose and strategy Delivering our strategy Group performance Governance Financial statements Additional information
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Under the Financial Services and Markets Act 2000 and the UK
Disclosure and Transparency Rules there is a statutory obligation on a
person who acuires or ceases to have a notifiable interest in the relevant
share capital of a public company like BT to notify the company of that
fact. The disclosure threshold is 3%. These Rules also deal with the
disclosure by persons of interests in shares or debentures of companies
in which they are directors and certain associated companies. Under
section 9 of the 00 ct referred to in a above  a ascertain
the persons who are or have within the last three years been interested
in its shares and the nature of those interests. The UK City Code on
Takeovers and Mergers also imposes strict disclosure requirements with
reard to dealins in the securities of an oeror or oeree copan on
all parties to a takeover and also on their respective associates during the
course of an oer period.
Material contracts
he contracts suarised below not bein entered into in the ordinar
course of business) have been entered into in the two years preceding
the date of this document by BT or another member of the group and
are, or may be, material to the group or have been entered into by BT
or another member of the group and contain a provision under which a
member of the group has an obligation or entitlement which is, or may
be, material to BT or such other member of the group.
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he definitions fro the shareholder circular appl to the followin
sections: 3URSRVHGDFTXLVLWLRQRI((sVXPPDU\RIWKHSULQFLSDOWHUPV,
3URƬWHVWLPDWHDQGSURƬWIRUHFDVWFRQVLGHUHGLQWKHVKDUHKROGHU
circular and)LQDQFLDOHƪHFWVRIWKHDFTXLVLWLRQFRQVLGHUHGLQWKH
VKDUHKROGHUFLUFXODU. For reference and understanding, we set out
certain of these definitions below.
Acquisition: the proposed acquisition by BT of EE
Acquisition Resolution: the Resolution to approve the Acquisition and to
rant the irectors specific authorit to allot the onsideration hares
Articles: the articles of association of BT in force from time to time
Board: the Directors of the Company from time to time
BT Pension Scheme: s ain defined benefit pension schee
Buy-Back Resolution: the resolution to approve the buy-back of
Ordinary Shares from Deutsche Telekom andor Orange pursuant to the
CP Contracts
CP Contracts: the DT CP Contract and Orange CP Contract
Company: BT Group plc
Completion: completion of the Acquisition pursuant to the terms of the
Share Purchase Agreement
Conditions: the conditions to Completion as set out in the Share
Purchase Agreement
Consideration Shares: the Ordinary Shares to be issued by the Company
to the Sellers pursuant to the Share Purchase Agreement
Directors or Board of Directors: the directors of the Company whose
names appear in the section in the shareholder circular entitled
irectors opan ecretar eistered ce and dvisers
Enlarged Group: the Company and its subsidiaries and subsidiary
undertakings, including EE and its subsidiaries and subsidiary
undertakings, after the Acquisition and from time to time thereafter
Financial Investor: a ualified nstitutional uer as defined in ule
1 under the U ecurities ct 19 or a ualified nvestor as
described in ection 1 of nne  to irective 009 other
than any activist fund, or any company licensed as a telecommunications
operator or its aliates
General Meeting: the general meeting of the Company held at 10.00 am
on 30 April 2015 to approve the Resolutions
Long Stop Date: 5 August 2016
Ordinary Shares: the ordinary shares of nominal value 5 pence each
in the capital of the Company, including, if the context requires, the
Consideration Shares
Regulations: the Uncertificated ecurities eulations 001 of the
United Kingdom
Resolutions: the Resolutions set out in the Notice of General Meeting
Sellers: Deutsche Telekom and Orange
Shareholder: a holder of rdinar hares and hareholders shall be
construed accordingly
Sponsor: JP Morgan Cazenove
Transaction Documents: the Share Purchase Agreement, the
Relationship Agreement, the Standstill and Lock-up Agreement and the
CP Contracts
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Share Purchase Agreement
On 5 February 2015, the Share Purchase Agreement was entered into
between the Company, the Sellers, who hold 100% of the issued share
capital of EE on a combined basis, Deutsche Telekom AG as guarantor
of Deutsche Telekom and Orange SA as guarantor of Orange. Pursuant
to the Share Purchase Agreement, the Sellers have conditionally agreed
to sell, and the Company has conditionally agreed to acquire, the entire
issued share capital of EE.
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1.1 Consideration adjustments
Under the terms of the Share Purchase Agreement, BT will purchase
the entire issued share capital of EE for a purchase price equivalent to
£12.5 billion on a debt and cash free basis. The purchase price to be paid
is subect to custoar post-opletion adustents to reect the debt
cash, working capital and capex position of EE at Completion. Based upon
EE’s net debt as at 31 December 2014, adjusted for estimated other debt-
lie ites the consideration paable b  will be satisfied b
a the issue to eutsche eleo of around 1. billion new rdinar
Shares, equivalent to 12% of BT’s share capital on an enlarged basis
post-Acquisition;
b a residual cash paent to eutsche eleo of around 00
million based upon a reference price of 411.5 pence per Ordinary
hare bein the closin price on  eceber 01 subect to
further variation in accordance with the cap and collar protection
mechanism described below);
c the issue to rane of around 0. billion new rdinar hares
equivalent to 4% of BT’s share capital on an enlarged basis post-
Acquisition; and
d a residual cash paent to rane of around . billion based
upon a reference price of 11. pence per rdinar hare subect
to further variation in accordance with the cap and collar protection
mechanism described below).
The Consideration Shares will be issued at Completion, credited as fully
paid and will rank pari passu in all respects with the existing Ordinary
Shares, including the right to receive all dividends, distributions or any
return of capital declared, made or paid after Completion.
1.2 Cap and collar mechanism
The Share Purchase Agreement contains a cap and collar protection
mechanism which provides for an adjustment to the cash element of
the consideration where there is a movement in the price of an Ordinary
hare easured b reference to the averae rdinar hare price in
the 1 tradin das before the date which is five usiness as before
Completion) from the reference price set out above, subject to:
a a iniu share price per rdinar hare of approiatel
9.0 pence bein % below the reference price). A share price
below this level would not result in further adjustment to the cash
consideration and therefore the value of the Acquisition would fall
below £12.5 billion; and
b a aiu share price per rdinar hare of approiatel
.0 pence bein % above the reference price). A share price
above this level would not result in further adjustment to the cash