12 October, 2009
Manager, Company Announcements, ASX Limited, Level 4, 20 Bridge Street, Sydney NSW 2000
Dear Sir,
Takeover bid by GUD Holdings Limited for Breville Group Limited Bidder’s statement
We attach, by way of service pursuant to item 5 of subsection 633(1) of the Corporations Act 2001 (Cth), a copy of GUD Holdings Limited (GUD) bidder’s statement and offer document in relation to GUD’s off-market takeover bid for all the ordinary shares in Breville Group Limited.
Yours faithfully,
Malcolm G Tyler Company Secretary
Att. G.U.D. Holdings Limited ABN 99 004 400 891 BIDDER’S STATEMENT ACCEPT GUD’s Offer to purchase all of your ordinary shares in Breville Group Limited
For every four of your Breville Shares, you will receive one GUD Share.
This is an important document and requires your immediate attention. If you are in any doubt about how to deal with this document, you should contact your broker, financial adviser or legal adviser immediately.
To accept the Offer, you should follow the instructions on the enclosed Acceptance Form.
Financial Adviser Legal Adviser
IMPORTANT NOTICES
NATURE OF THIS DOCUMENT results expressed or implied in any advice on and observe any such forward looking statement, except restrictions. Any failure to comply This Bidder’s Statement is issued to the extent required by law. You with such restrictions may constitute by G.U.D. Holdings Limited are cautioned not to place undue a violation of applicable securities ABN 99 004 400 891 (GUD) reliance on any forward looking laws. This Bidder’s Statement under Part 6.5 of the Corporations statement. The forward looking does not constitute an offer in Act 2001 (Cth). statements in this Bidder’s Statement any jurisdiction in which, or to any A copy of this Bidder’s Statement reflect views held only as at the date person to whom, it would not be was lodged with ASIC on 12 October of this Bidder’s Statement. lawful to make such an offer. No 2009. Neither ASIC nor its officers action has been taken to register or DISCLAIMER AS TO BREVILLE takes any responsibility for the qualify GUD or to otherwise permit AND MERGED GROUP content of this Bidder’s Statement. a public offering of GUD Shares INFORMATION outside Australia. GUD Shares have INVESTMENT ADVICE The information on Breville, not been, and will not be, registered In preparing this Bidder’s Statement, Breville’s securities and Breville under the United States Securities GUD has not taken into account Group contained in this Bidder’s Act of 1933 (Securities Act) and may the individual objectives, financial Statement has been prepared not be offered or sold in the United situation or needs of individual by GUD using publicly available States or to, or for the account or Breville shareholders. Accordingly, information. benefit of, a U.S. person (as defined before making a decision whether in Regulation S under the Securities The information in this Bidder’s or not to accept the Offer, you may Act), except in a transaction exempt Statement concerning Breville and wish to consult with your financial or from the registration requirements the assets and liabilities, financial other professional adviser. of the Securities Act and applicable position and performance, profits United States state securities laws. DISCLAIMER AS TO FORWARD and losses and prospects of the LOOKING STATEMENTS Breville Group, has not been PRIVACY independently verified by GUD. Some of the statements appearing GUD has collected your information Accordingly GUD does not, subject in this Bidder’s Statement may be from the Breville register of to the Corporations Act, make any in the nature of forward looking shareholders for the purpose of representation or warranty, express statements. You should be aware making this Offer and, if accepted, or implied, as to the accuracy or that such statements are only administering your holding of completeness of such information. predictions and are subject to Breville Shares. The Corporations inherent risks and uncertainties. The information on the Merged Act requires the name and address Those risks and uncertainties Group contained in this Bidder’s of shareholders to be held in a include factors and risks specific to Statement, to the extent that it public register. Your information may the industry in which Breville and incorporates or reflects information be disclosed on a confidential basis GUD and the members of the GUD on Breville and Breville Group, has to GUD’s related bodies corporate Group operate as well as general also been prepared using publicly and external service providers, and economic conditions, prevailing available information. Accordingly, may be required to be disclosed exchange rates and interest rates information in relation to the Merged to regulators such as ASIC. The and conditions in the financial Group is subject to the foregoing registered address of GUD is 245 markets. Actual events or results disclaimer to that extent. Sunshine Road, Sunshine, VIC, may differ materially from the events Australia, 3020. Further information relating to or results expressed or implied in Breville’s business may be included DEFINED TERMS any forward looking statement. in Breville’s target’s statement None of GUD, the officers or A number of defined terms are which Breville must provide to its employees of GUD, any persons used in this Bidder’s Statement. shareholders in response to this named in this Bidder’s Statement Unless the contrary intention Bidder’s Statement. with their consent or any person appears, the context requires involved in the preparation of this FOREIGN JURISDICTIONS otherwise or words are defined Bidder’s Statement, makes any in Section 12 of this Bidder’s The distribution of this Bidder’s representation or warranty (express Statement, words and phrases in Statement in jurisdictions outside or implied) as to the accuracy or this Bidder’s Statement have the Australia may be restricted by likelihood of fulfilment of any forward same meaning and interpretation law, and persons who come into looking statement, or any events or as in the Corporations Act. possession of it should seek
KEY DATES
Date of this Bidder’s Statement 12 October 2009
Date of Offer [insert date]
Offer closes (unless extended or withdrawn) 7 pm (Melbourne time) on [insert date].
KEY CONTACTS
Share registrar for the Offer GUD Offer Information Line* Computershare Investor Services Pty 1300 822 876 (local call charges apply) from Limited within Australia; or GPO Box 52 + 61 3 9415 4686 (normal charges apply) from outside Australia. Melbourne VIC 3001 * Calls to these numbers may be recorded.
CONTENTS
CHAIRMAN'S LETTER
WHY YOU SHOULD ACCEPT THE OFFER
1 SUMMARY OF THE OFFER 1
2 INFORMATION ON GUD 3
3 INFORMATION ON GUD SECURITIES 13
4 INFORMATION ON BREVILLE 17
5 INFORMATION ON BREVILLE SECURITIES 23
6 BIDDER’S INTENTIONS IN RELATION TO BREVILLE 27
7 EFFECT OF THE OFFER ON GUD AND PROFILE OF THE MERGED GROUP 31
8 RISK FACTORS 35
9 TAX CONSIDERATIONS 39
10 ADDITIONAL INFORMATION 43
11 THE TERMS AND CONDITIONS OF THE OFFER 47
12 DEFINITIONS AND INTERPRETATION 63
13 APPROVAL OF BIDDER’S STATEMENT 67
CORPORATE DIRECTORY
12 October 2009
Dear Breville shareholders
Offer for your Breville Shares On behalf of the Board of GUD Holdings Limited (GUD), I am pleased to present to you this attractive Offer to acquire all of Your Shares in Breville Group Limited (Breville), and the exciting opportunity to participate in a leading consumer products business in Australia and New Zealand. Under GUD’s Offer, accepting Breville shareholders will receive one GUD Share for every 4 Breville Shares held (Offer). At the date of the announcement of the Offer, the Offer price represented a value of $2.20 for each of your Breville Shares1, which represents an attractive premium for Your Shares, reflecting the quality of the Breville business and the potential benefits of combining Breville with GUD’s Sunbeam business. The Offer price represents a: 2 47% premium to Breville’s closing share price on 8 October 2009 (the day prior to announcement of the Offer) of $1.50; 2 51% premium to the one month VWAP of Breville Shares up to and including 8 October 2009; 2 value higher than Breville had traded at any time during the 12 months prior to announcement of the Offer; 2 206% premium to the price GUD paid for its 19.4% interest in Breville on 29 May 2009 of 72 cents per share; and 2 62% premium to the average broker 12 month price target for Breville2. Breville shareholders collectively will have the opportunity to own up to 30%3 of the Merged Group, and will therefore have the opportunity to participate in the potential financial and operational benefits of a combination of our two complementary businesses4. GUD is a leading Australian small industrials company with a proud track record of long-term earnings growth and shareholder value creation. The combination of our business with the businesses of Breville is consistent with the GUD Group’s strategy to expand the company’s product range and geographic scope of operations, invest in new products and technologies, improve product sourcing terms, and maximise the value of our brand portfolio for the benefit of shareholders.
1 Based on the 1 month volume weighted average price of ‘on market’ trades on ASX (i.e. normal trades, crossed trades, stabilisation trades and short sell trades) (VWAP) for GUD Shares up to and including 8 October 2009 of $8.80. The value of the Offer at a particular time will depend on the value of GUD Shares at the time. In this document, we have used the 1 month VWAP before the date the Offer was announced to illustrate that value as, for that period, GUD’s share price was unaffected by the Offer and the Announcement Date coincides with the date this document is being prepared. However, GUD’s share price will fluctuate. The value for each Breville Share implied by the Offer from time to time will approximate the market price of GUD Shares divided by four. 2 The average broker 12 month price target is based on the latest publicly available estimates (calculated as the mean) known to GUD from the period from 24 August 2009 (the date Breville announced its result for the 2009 financial year) to the announcement of the Offer. The estimates were issued by four brokers and ranged from $1.25 to $1.42. 3 Based on GUD ordinary shares on issue as at 8 October 2009 of 60,606,420, and fully diluted Breville Shares on issue (including 620,000 Options and 1,282,000 Performance Rights) of 131,417,322. The calculation has been adjusted to exclude the Breville Shares already owned by GUD. 4 The extent to which the businesses may be combined will depend on the level of acceptances under the Offer.
- 2 -
The Board of GUD believes the combination of GUD and Breville will be beneficial for all Breville shareholders, and will build on the existing product research, development and innovation, sourcing and marketing expertise of the two complementary businesses. The merger of GUD and Breville will create a leading small domestic appliance business in Australia and New Zealand, with enhanced international growth opportunities. GUD intends to establish an Institutional Acceptance Facility with respect to the Offer. A number of Breville’s larger institutional shareholders (including Perpetual Investment Management Limited, Paradice Investment Management Pty Ltd, BT Investment Management (RE) Limited, Souls Funds Management and Kosmos Asset Management) holding at least 28.0%5 in aggregate of the Breville Shares, have advised GUD that, provided there is no superior offer made, they intend to accept GUD’s Offer for all of their Breville Shares through the Institutional Acceptance Facility. GUD’s current 19.4% Relevant Interest in Breville, when combined with the approximately 28.0% held by the institutional shareholders referred to above, represents approximately 47.4% of the Breville Shares on issue5. The Offer is subject to several conditions, including GUD obtaining a Relevant Interest in 50.1% of the Breville Shares (on a fully diluted basis), and the receipt of ACCC clearance. You should read Section 11.8 of this Bidder’s Statement which sets out the full terms of all the conditions of the Offer. I strongly encourage Breville shareholders to read all of this Bidder’s Statement carefully, and then to accept the Offer as soon as possible. To accept the Offer, you should follow the instructions on the enclosed Acceptance Form. If you require any assistance, please contact the GUD Offer Information Line on 1300 822 876 (local call charges apply) from within Australia or + 613 9415 4686 (normal charges apply) from outside Australia. As Chairman of the GUD Board, I am excited by the future opportunities for the combined GUD and Breville businesses, and look forward to welcoming you as a new GUD shareholder.
Yours sincerely
Clive K. Hall Chairman
5 Based on 129,515,322 Breville Shares on issue as at 8 October 2009
WHY YOU SHOULD ACCEPT THE OFFER
The Offer represents attractive value for your Breville Shares
Figure 1.1: Implied Offer Value
$2.40 Implied Offer value ($2.20)
$2.00 206% 206% 85% 62% 51% 47%
$1.60
$1.20
$0.80
$0.40
$0.00 Breville Share price Price paid for Breville 3 month Average broker 12 Breville 1 month Breville Share price at close of trade on 19.4% stake in VWAP ($1.19) month price target VWAP ($1.46) at close of trade on 28 May ($0.72) Breville ($0.72) ($1.36) 8 October ($1.50)
GUD’s Offer of one GUD Share for every 4 Breville Shares implies a value of $2.20 per security6. This represents a:
2 47% premium to the Breville closing price on 8 October 2009, the date prior to announcement of the Offer;
2 51% premium to the 1 month VWAP of Breville Shares up to and including 8 October 2009; 7 2 206% premium to the price per share paid by GUD for its 19.4% shareholding in Breville, announced on 29 May 2009;
2 206% premium to the Breville closing price on 28 May 2009, being the day prior to announcement of GUD’s investment in Breville; and 8 2 62% premium to the average broker 12 month price target for Breville .
6 Based on the 1 month VWAP of GUD Shares up to and including 8 October 2009 of $8.80. The value of the Offer at a particular time will depend on the value of GUD Shares at the time. In this document, we have used the 1 month VWAP before the date the Offer was announced to illustrate that value as, for that period, GUD’s share price was unaffected by the Offer and the Announcement Date coincides with the date this document is being prepared. However, GUD’s share price will fluctuate. The value for each Breville Share implied by the Offer from time to time will approximate the market price of GUD Shares divided by four. 7 GUD paid $0.72 per Breville Share for 25,073,712 shares on 29 May 2009. 8 The average broker 12 month price target is based on the latest publicly available estimates (calculated as the mean) known to GUD from the period from 24 August 2009 (the date Breville announced its result for the 2009 financial year) to the announcement of the Offer. The estimates were issued by four brokers and ranged from $1.25 to $1.42.
The average implied Offer premium9 over the period from 1 July 2009 of 82% is reflective of the full and fair price offered for Your Shares.
Figure 1.2: Average Daily Offer Premium
$2.50
$2.00 Average Premium of 82% $1.50
$1.00
$0.50
$0.00 1-Jul-09 1-Aug-09 1-Sep-09 1-Oct-09
Breville Share price Implied Offer value
The Offer has the support of key shareholders representing 47.4% of Breville A number of Breville’s larger institutional shareholders (including Perpetual Investment Management Limited, Paradice Investment Management Pty Ltd, BT Investment Management (RE) Limited, Souls Funds Management and Kosmos Asset Management) holding in aggregate at least 28.0%10 of the shares on issue in Breville, have advised GUD that, provided there is no superior offer made, they intend to accept GUD’s Offer for all of their current Breville Shares through the Institutional Acceptance Facility. GUD’s current Relevant Interest in Breville of 19.4%, when combined with the approximately 28.0% held by the institutional shareholders referred to above, represents approximately 47.4% of the shares on issue in Breville10. With the support of these institutional shareholders, GUD believes that there is a high probability that the Offer conditions will be satisfied, providing Breville shareholders with a near-term opportunity to receive a premium value for their Breville Shares.
You will become a shareholder in a leading Australasian branded product distribution company, with enhanced international growth opportunities The combination of GUD and Breville will, depending on the extent to which GUD obtains control over Breville:
2 possess an attractive product portfolio of highly regarded small appliance brands in Australia and New Zealand, designed to satisfy customers at a variety of price points;
2 be well positioned to benefit from the combined product development, sourcing, marketing and distribution expertise of both companies providing opportunities for significant rationalisation activities and cost savings;
9 Average daily premium of the implied Offer value over the Breville Share price calculated on the basis of the Offer of 1 GUD share for each 4 Breville Shares, and the respective GUD and Breville Share prices at close of trade on each trading day from 1 July 2009 up to 8 October 2009. 10 Based on 129,515,322 Breville Shares on issue as at 8 October 2009
2 be better positioned to capitalise on international expansion opportunities by leveraging the Merged Group’s increased scale, product and market expertise, and enhanced access to growth capital though an increased equity market presence; and 11 2 provide Breville shareholders collectively with the opportunity to own up to 30 % of the Merged Group to participate in the potential benefits and future upside of the Merged Group. Additionally, GUD’s other portfolio businesses are generally market leaders in their respective markets, and will provide Breville shareholders with greater diversification from the more cyclical consumer appliance businesses of Sunbeam and Breville.
You will benefit from GUD’s proven management expertise, which has delivered significantly superior performance to that of Breville GUD’s experienced management team has a proven track record of creating shareholder value, both through the prudent management and restructuring of GUD’s portfolio businesses, and the integration of value-added acquisitions (e.g. Oates).
Superior Total Shareholder Returns (TSR) GUD’s strong TSR performance is within the 77th percentile for the 3 years to 30 June 2009, independently measured against a comparator group comprising companies in the Small Ordinaries index12. GUD Shares have provided total shareholder returns of 611%, assuming reinvestment of dividends, for the period since Breville listed on ASX13 until 8 October 2009. This compares to total shareholder returns (assuming reinvestment of dividends) of 141% for Breville over the same time period14.
Figure 1.3: Total Shareholder Returns Since Breville Listed on ASX
800%
700% 611% 600%
500%
400%
300% Total shareholder return 200% 141%
100%
-% May-99 May-01 May-03 May-05 May-07 May-09 (100%) GUD Breville
11 Based on 129,515,322 Breville Shares on issue plus 620,000 Options and 1,282,000 Performance Rights as at 8 October 2009. The calculation has been adjusted to exclude the Breville Shares already owned by GUD. 12 Independently measured against the companies comprising the Small Ordinaries index after removing resource and mining companies. 13 Breville listed on ASX on 25 May 1999. 14 Based on the capital gain on GUD Shares and Breville Shares, assuming reinvestment of dividends at the prevailing market prices at the close of trade on the relevant dividend payment date, or the dividend reinvestment plan price (if relevant) from 24 May 1999 up to and including 8 October 2009. Assumes Breville Shares acquired in the Breville initial public offering at the issue price of $1.00. The Breville 1.5 cent per share final dividend with respect to the 2009 financial year has been included in the calculation of the Breville total shareholder return for comparability with GUD.
Superior Earnings per Share Growth GUD has achieved significantly higher growth in basic earnings per share, with a 15.5% CAGR15 compared to Breville’s CAGR of negative 3.4% since FY200016.
Figure 1.4: Basic Earnings per Share
90
70
50
30
10 Basic earnings per share (cents) share per earnings Basic
FY2000 FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 (10)
Breville GUD (30)
Superior Dividend per Share Growth GUD has also achieved significantly higher growth in dividends per share, with a 16.7% CAGR compared to Breville’s CAGR of negative 4.1% since FY2000.
Figure 1.5: Dividends per Share
80
70
60
50
40
30
20 Dividend declared per share (cents) share per declared Dividend 10
- FY2000 FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009
Breville GUD
15 Compound annual growth rate. 16 FY2000 being the first full fiscal year that Breville was listed on ASX.
You may receive a significant dividend uplift and increased franking Breville has historically paid a significantly lower dividend per share than GUD. For the financial year ended 30 June 2009, GUD declared a fully franked 60.0 cents per share dividend. Applying the ratio under the Offer of 1 GUD Share for every 4 Breville Shares, this equates to 15 cents per Breville Share. This is approximately 173% above the unfranked 5.5 cent per share dividend declared by Breville in respect of the financial year ended 30 June 2009. Breville’s last three dividends have not been franked17, and Breville has announced that it does not expect to resume paying franked dividends in the short to medium term18. GUD has paid fully franked dividends since September 2002. Accepting Breville shareholders may therefore receive significantly greater dividends and increased franking on an equivalent basis.
Figure 1.6: Potential Dividend Uplift
16 15.0
14 173% uplift 12
10
8 5.5 6
4 Cents Share per Breville
2
0 Breville dividend per share declared in respect of Implied GUD dividend per Breville Share under the the 2009 financial year Offer ratio
The Merged Group will have significantly greater trading liquidity than Breville Breville Shares have historically had a low level of trading liquidity on ASX in dollar terms and this can limit the ability of security holders to trade their stake. Over the 12 months to 30 September 2009, the average monthly value of GUD Shares traded on ASX was more than 13 times greater than that of Breville (adjusted to exclude the 19.4% stake in Breville acquired by GUD on 29 May 2009)19.
17 No Breville dividend has been franked since the interim dividend paid by Breville with respect to the 2008 financial year in April 2008. 18 Breville results announcement, 24 August 2009. 19 Based on the value of GUD and Breville Shares traded on ASX from 1 October 2008 to 30 September 2009, adjusted to exclude the $18,089,343 of Breville Shares traded pursuant to GUD’s acquisition of 25,073,712 shares on 28 May 2009.
Figure 1.7: Trading Liquidity
30 27.2
25 More than 13x average monthly trading value over the 12 months to 30 20 September 2009
15
10
5 1.9 Average monthly trading value ($m) value trading monthly Average - Breville GUD This additional trading liquidity is expected to provide benefits for accepting Breville shareholders, including:
2 greater trading flexibility; and 2 increased interest from international investors as GUD is included in the S&P ASX 200 index, and Breville is not.
You will not incur any brokerage costs If you accept the Offer, you will not incur any brokerage costs in relation to the sale of those shares (unless you are a Foreign Shareholder – see Sections 10.4 and 11.7 for further information).
In the absence of GUD’s Offer, the Breville Share price is likely to fall Following the acquisition by GUD of its 19.4% stake in Breville on 29 May, Breville’s share price rose significantly above the level at which it was trading immediately prior to the announcement. On the day GUD announced this Offer, Breville’s share price increased by 33.3% by the close of trade. Should GUD’s Offer for Breville or a competing offer or proposal not proceed, it is likely that the Breville Share price will fall.
Figure 1.8: Breville Share Price Performance and Offer Value $2.50
$2.00
GUD acquired 19.4% stake in $1.50 Breville
$1.00
$0.50
$0.00 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Breville Share price Implied Offer value (based on the GUD 1 month VWAP up to and including 8 October 2009) Breville Share price at close on 28 May 2009 All Ordinaries Index (rebased)
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SUMMARY OF THE OFFER 1
1 SUMMARY OF THE OFFER
1 SUMMARY OF THE OFFER
What GUD is offering to GUD is offering to buy all Breville Shares it does not currently own, buy including Breville Shares that are issued during the Offer Period whether due to the conversion of Breville Options or Performance Rights on the terms set out in this Bidder’s Statement.
You may only accept this Offer in respect of all the Breville Shares held by you.
What you will receive if If you accept the Offer, subject to the satisfaction of the conditions to the you accept the Offer Offer, you will receive one GUD Share for every 4 of your Breville Shares.
When you will be paid Generally, GUD will issue the GUD Shares to you under the Offer on or before the earlier of:
2 one month after this Offer is accepted or one month after all of the conditions have been freed or fulfilled (whichever is the later); and
2 21 days after the end of the Offer Period.
Full details of when consideration will be provided are set out in Section 11.6 of this Bidder’s Statement.
No brokerage on You will not pay brokerage if you accept the Offer unless you are a Foreign acceptances Shareholder. Any such costs will be borne by GUD.
Close of the Offer The Offer closes at 7pm (Melbourne time) on [insert date], unless it is extended under the Corporations Act.
There are some The Offer is subject to a number of conditions, including: conditions to the Offer 2 GUD obtaining a Relevant Interest in at least 50.1% of Breville Shares (on a fully diluted basis);
2 GUD receiving formal advice from the Australian Competition and Consumer Commission (ACCC) that the ACCC will not seek to prevent the acquisition of Breville Shares by GUD, or seek to impose conditions or require undertakings in relation to the acquisition20;
2 no change of control clauses are triggered by the Offer; and
2 certain other conditions set out in Section 11.8 of this Bidder’s Statement.
Full terms of all of the conditions are set out in Section 11.8 of this Bidder’s Statement.
Offer in respect of GUD is not making a separate offer to holders of Breville Options or Breville Options and Performance Rights. Performance Rights The holders of Breville Options or Performance Rights whose Options or Performance Rights are converted into Breville Shares during the Offer Period will be able to accept the Offer in respect of the Breville Shares which they are issued during the Offer Period, provided their acceptance is also received inside the Offer Period.
20 GUD has made submissions to the ACCC and anticipate that the ACCC will commence public market inquiries shortly.
PAGE 1 1 SUMMARY OF THE OFFER
How you accept the You may only accept the Offer for all Your Shares. Offer Issuer sponsored shareholders If Your Shares are held on Breville’s issuer sponsored subregister (such holdings will be evidenced by an ‘I’ appearing next to your securityholder reference number on the attached Acceptance Form), to accept this Offer, you must complete and sign the Acceptance Form enclosed with this Bidder’s Statement and return it to the address indicated on the form so that it is received before the Offer closes. CHESS shareholders If Your Shares are in a CHESS Holding (such holdings will be evidenced by an ‘X’ appearing next to your holder identification number on the attached Acceptance Form), you may accept the Offer by either: 2 completing and signing the Acceptance Form enclosed with this booklet and returning it to the address indicated on the form; or 2 instructing your Controlling Participant (normally your broker) and instructing your broker to accept the Offer on your behalf,
so that your acceptance is received before the Offer closes. Participants If you are a Participant, acceptance of this Offer must be initiated in accordance with Rule 14.14 of the ASTC Settlement Rules before the Offer closes. Full details on how to accept the Offer are set out in Section 11.3 of this Bidder’s Statement.
Institutional Acceptance GUD intends to establish an Institutional Acceptance Facility in relation to Facility the Offer. The Institutional Acceptance Facility will be open by invitation to certain wholesale clients (as defined in Section 761G of the Corporations Act) who hold at least $500,000 worth of Breville Shares (Eligible Institutional Shareholders). GUD will arrange for a facility agent to act as acceptance collection agent (Facility Agent) for the Eligible Institutional Shareholders. GUD will issue a supplementary Bidder’s Statement containing details of the Institutional Acceptance Facility once the terms have been finalised and the facility is established.
Where to go for further For queries in relation to your Breville shareholding, call Link Market information Services on + 612 8280 7111. For all queries in relation to the Offer, please contact the GUD Offer Information Line on 1300 822 876 (local call cost) from within Australia, or + 613 9415 4686 (normal charges apply) from outside Australia. Please note that any calls to the above numbers may be recorded. Inquiries in relation to the Offer will not be received on any other telephone numbers of GUD or its advisers.
Important notice The information in this Section 1 is a summary only of GUD’s Offer and is qualified by the detailed information set out elsewhere in this Bidder’s Statement.
PAGE 2 INFORMATION ON GUD 2
2 INFORMATION ON GUD
2 INFORMATION ON GUD
2.1 Overview of GUD
The bidder under the Offer is GUD Holdings Limited. GUD is an active manager of a number of leading consumer and industrial product businesses in Australia and New Zealand. GUD operates through four discrete business divisions:
Table 2.1: GUD Key Operating Divisions FY2009 FY2009 Revenue EBIT FY2009 EBIT Key Operating Divisions ($m) ($m) Contribution21
Leading marketer of small electrical Consumer 46% appliances and cleaning products under the 254.9 29.9 Products Sunbeam and Oates brands
Manufactures, sources and distributes a 23% Water broad range of products for use in the 123.6 15.0 Products transfer, conservation, and treatment of water in a range of end-markets
An importer and marketer of automotive Automotive filtration and niche branded fuel pump 29% 78.4 19.3 Products products, predominantly for aftermarket distribution channels
2% Manufactures, sources and distributes a Security range of locking solutions, predominantly for 11.5 1.3 Products original equipment manufacturers
Through these businesses, GUD is also the owner and manager of one of the Asia- Pacific region's premier brand portfolios. Most of these brands are market leaders in their product categories. GUD’s principal skills are in brand management, product design and development, product sourcing and supply chain optimisation. Following significant business restructuring in recent years, GUD’s business profile has changed considerably. From being heavily involved in manufacturing activities at the start of the 21st century, GUD’s operations are now more weighted to designing and sourcing finished product. Only the Water Products and Security Products businesses maintain local manufacturing capability and this is complemented with sourced product, where appropriate. GUD’s primary strength is its portfolio of highly regarded, market leading brands. GUD greatly values new product development and innovation, and pursues growth through a blend of new products, new lines of business and complementary acquisitions.
21 Percentage EBIT contribution is calculated with reference to segment EBIT which excludes $4.7 million corporate and/or unallocated expenses.
PAGE 3 2 INFORMATION ON GUD
In addition to brand management, GUD's principal skills are in product design and development, offshore sourcing and supply chain management. GUD strongly believes in new product development and innovation, believing that these are fundamental to generating marketing-leading brands which provide long-term, above average returns. GUD's primary objectives are to produce long-term shareholder returns above the cost of capital and to maximise the value of its brand portfolio for the benefit of shareholders.
2.2 Directors
Brief profiles of the directors of GUD as at the date of this Bidder’s Statement are as follows: Clive K Hall* B Sc. (Metallurgy), B Com, MBA, FCPA, FAICD (Age 67) Non-Executive Director since 13 September 1999. Appointed Chairman on 27 April 2004. Chairman of Nominations Committee and Remuneration Committee. Mr Hall is a Director and Immediate Past President of the Royal Automobile Club of Victoria (RACV) Ltd, a Director of Club Assist Corporation Pty Ltd and retired as Chairman of Victorian Energy Networks Corporation (VENCorp) on 30 June 2009. Mr Hall has held senior executive positions in investment and merchant banking, including Managing Director of National Australia Ltd. between 1985 and 1993, and was Chairman of the International Banks and Securities Association between 1990 and 1992. G (Doug) W Curlewis* BA MBA FAICD (Age 68) Appointed Non-Executive Director on 1 March 2003. Mr Curlewis is Deputy Chairman of Nufarm Limited (a director since January 2000). He is also a director of Sigma Pharmaceuticals Limited (since June 2007) and is a Member of Indec Consulting Advisory Board. Former Chairman of Remunerator Australia Pty Limited (retired August 2006). Former Managing Director of National Consolidated Limited, and a former director of GrainCorp Limited (retired October 2008), Pacifica Group Limited (retired March 2007) and National Foods Limited (retired June 2005). Peter A F Hay* LLB MAICD (Age 59) Appointed Non-Executive Director on 26 May 2009. Mr Hay is currently Chairman of the Advisory Board at Lazard in Australia. He is also a Director of Australia and New Zealand Banking Group Limited (since October 2008), Alumina Limited (since December 2002), NBN Co. Ltd (since August 2009), Landcare Australia Limited and the Epworth Foundation. Former director of Pacifica Group Limited (retired May 2008). Appointed Member – Australian Government Takeovers Panel in May 2009. Ross M Herron* FCA FAICD (Age 59) Appointed Non-Executive Director on 17 June 2004. Appointed Chairman of Audit & Compliance Committee on 17 June 2004. Mr Herron has been a Chartered Accountant since 1973. Former Deputy Chairman of Coopers & Lybrand (now PricewaterhouseCoopers). Mr Herron retired as a partner of PricewaterhouseCoopers in December 2002. Mr Herron is also a Non-Executive Director of The Royal Automobile Club of Victoria (RACV) Ltd (since July 2007), Select Harvests Limited (since January 2005), Heemskirk Consolidated Limited (since June 2004) and a major industry superannuation fund.
PAGE 4 2 INFORMATION ON GUD
Mark G Smith* FAMI CPM FAIM MAICD (Age 54) Appointed Non-Executive Director on 26 May 2009. Mr Smith is a Non-Executive Director of Toll Holdings Limited (since July 2007). Former Managing Director of Cadbury Schweppes Australia and New Zealand (2003 to 2007) and has extensive experience in senior roles including marketing in Unilever and Uncle Toby’s. Ian A Campbell FAICD (Age 59) Appointed Managing Director on 5 October 1998. Mr Campbell was appointed a Non-Executive Director of Mirrabooka Investments Limited on 15 November 2007. Vice-President of Australian Industry Group (Vic.). Former Managing Director of Pacific Dunlop Cables Group. Roger J Wodson FCPA FAICD (Age 64) Appointed Finance Director on 25 June 2001. Mr Wodson was appointed Chief Financial Officer of GUD on 1 February 2000. Former Chief Financial Officer of Bunge Defiance Group. * All Non-Executive Directors are independent.
2.3 History, Structure and Ownership of GUD
(a) History and operations GUD was formed to acquire the G.U.D. Manufacturing Company Pty Ltd. The G.U.D. Manufacturing Company Pty Ltd originally commenced business in December 1940 as a manufacturer of chemical products and during the war, began manufacturing oil filters. By 1958, oil filters constituted the major part of the company's business. GUD was incorporated in Victoria in 1958 as G.U.D. Holdings Limited. GUD is now an Australasian product marketing company operating in a number of dynamic consumer and industrial markets. GUD has a proud history of owning, managing and developing many market leading and highly respected brands. These brands include:
2 Sunbeam small appliances;
2 Oates cleaning products;
2 Ryco, Wesfil and Goss automotive parts;
2 Davey water products; and
2 Lock Focus, Locktech and Kiroo security products. GUD has been listed on the Melbourne Stock Exchange and ASX since 1962 and is included in the S&P ASX 200 index.
(b) Business Divisions GUD operates through four separate business divisions: Consumer Products, Water Products, Automotive Products and Security Products.
PAGE 5 2 INFORMATION ON GUD
Consumer Products The Consumer Products division is comprised of the Sunbeam and Oates businesses. Sunbeam Sunbeam is a leading wholesaler and marketer of small appliances across Australia and New Zealand. Sunbeam’s Australian operations include product design and innovation, with finished goods sourced from international manufacturers (predominantly located in China). Sunbeam’s product range includes:
2 products for the kitchen, including kettles, frypans, juicers, coffee machines, water filters and chillers and other cooking and food preparation and preservation systems;
2 products for the household, including irons and ironing boards, electric blankets and electric heating and cooling appliances;
2 products for personal use, including hairdryers, hair stylers, epilators, body massagers and foot spas; and
2 products for outdoor entertaining, including barbeques and beverage chillers. The key channels to market for Sunbeam products are via department stores, mass merchants, and specialist electrical retailers. Future Direction and Strategy:
2 develop and enter new categories, where appropriate;
2 invest heavily in development of new products and technologies to support revenue and margin growth;
2 continue progressive upgrades of the existing product range; and
2 actively seek product cost reduction opportunities without sacrificing brand or product quality.
Oates Oates is one of Australasia’s leading distributors of cleaning products and accessories for both domestic and professional use. Oates products are designed in Australia, with finished products predominantly sourced from foreign manufacturers. Oates provides a broad range of cleaning products, including brushware, mops, buckets, sponges, wipes and scourers, as well as cleaning trolleys and associated accessories designed for professional use. Oates products are distributed through Australian grocery and hardware retailers, mass merchants, and specialist distributors of commercial and industrial cleaning products. Future Direction and Strategy:
2 refocus business on innovative product design and development activities following successful relaunch of brand; and
2 seek value adding acquisitions of complementary branded product.
Water Products The Water Products division has been created over time through the incremental acquisition and integration of several small businesses to support the original Davey pumps business. The Water Products business complements its manufactured range of products with products sourced internationally, offering a broad range of products for a variety of markets, including:
2 water supply: pumping, water conservation and water treatment for use in urban, rural, irrigation and commercial applications; and
PAGE 6 2 INFORMATION ON GUD
2 pool and spa: domestic and commercial swimming pool and spa products, including chlorinators, pumps, filters, heaters, controllers and accessories. GUD’s Water Products are distributed through a range of channels, including plumbing retailers, specialist pool and spa retailers, trade distributors, and specialist water pump and irrigation distributors. Future Direction and Strategy:
2 continue to implement a range of new product launches across most market segments to facilitate sales and margin growth;
2 seek further product opportunities in growing water conservation and treatment markets; and
2 continue to assess acquisition opportunities to add to our branded product portfolio.
Automotive Products The Ryco business comprised the original business of GUD. Today, the Automotive Products division comprises the Ryco, Wesfil and Goss businesses. Ryco and Wesfil are Australian and New Zealand manufacturers, importers and marketers of automotive filtration products, predominantly for aftermarket distribution channels. Products include Ryco, Wesfil and Cooper branded oil, air and fuel filters, Wix branded heavy duty filters and Goss niche branded fuel pumps, hose and carburettor repair kits. GUD’s automotive product range is distributed via automotive aftermarket wholesalers and resellers. Future Direction and Strategy:
2 facilitate further growth of the Ryco brand via product line extensions and a re- focussed brand marketing programme;
2 continue to focus on supplier/cost management initiatives to maintain competitive position;
2 assess and pursue alternative routes to market to support continued sales and earnings growth; and
2 seek value-added acquisitions of complementary branded product.
Security Products The Security Products division, operated through Lock Focus, is a significant participant in the Australian security products industry. Lock Focus manufactures a range of locking solutions for equipment manufacturers operating in a number of market segments. The division complements its manufactured range with imported products for specific applications. Its principal markets include metal and wooden furniture, garage and security doors, commercial and domestic windows, caravans and electrical cabinets. GUD’s security products are predominantly distributed through locksmiths and third-party equipment manufacturers. Future Direction and Strategy:
2 continued investment in factory automation to reduce costs and improve product quality;
2 investment in product development activities to support revenue growth; and
2 continue to assess opportunities to acquire complementary branded businesses.
PAGE 7 2 INFORMATION ON GUD
2.4 Financial Information on the GUD Group
(a) Basis of presentation of historical financial information The historical financial information below relates to GUD on a stand-alone basis and accordingly does not reflect any impact of the Offer. It is a summary only and the full financial accounts for GUD for the financial period described below, which includes the notes to the accounts, can be found in GUD’s annual report for that period.
(b) Historical financial information of the GUD Group
(1) Balance Sheet The summarised historical balance sheet of the GUD Group as at 30 June 2009 set out in Table 2.2 has been extracted from the audited consolidated balance sheet of the GUD Group as at 30 June 2009, being the last balance date prior to the date of this Bidder’s Statement.
PAGE 8 2 INFORMATION ON GUD
Table 2.2: GUD Balance Sheet
Balance Sheet Consolidated 2009 $’000
Current assets Cash and cash equivalents 16,206 Trade and other receivables 62,327 Other assets 6,559 Inventories 82,671 Total current assets 167,763 Non-current assets Other financial assets 24,013 Property, plant and equipment 19,609 Deferred tax assets 456 Goodwill 42,063 Other intangible assets 49,509 Total non-current assets 135,650 Total assets 303,413 Current liabilities Trade and other payables 44,266 Borrowings and loans 454 Current tax payables 4,820 Provisions 13,602 Total current liabilities 63,142 Non-current liabilities Borrowings and loans 106,360 Deferred tax liabilities 1,415 Provisions 1,380 Total non-current liabilities 109,155 Total liabilities 172,297 Net assets 131,116 Equity Share Capital 94,505 Reserves (873) Retained earnings 37,484 Total equity 131,116
PAGE 9 2 INFORMATION ON GUD
(2) Income Statement The summarised historical income statement of the GUD Group for the period ended 30 June 2009 set out in Table 2.3 has been extracted from the audited consolidated income statement for the year ended 30 June 2009.
Table 2.3: GUD Income Statement Income Statement Consolidated 2009 $’000
Continuing Operations: Revenue 468,334 Cost of goods sold (279,735) Gross Profit 188,599 Other income 432 Marketing and selling (55,567) Product development and sourcing (5,619) Logistics expenses and outward freight (37,623) Administration (28,138) Reorganisation of subsidiaries -- Restructure of Oates business -- Other (1,295) Results from operating activities 60,789 Net finance expense before interest rate hedging restructure (7,716) Interest rate hedging restructure – revaluation and settlement (3,732) costs Net finance expense including interest rate hedging (11,448) restructure Profit before income tax 49,341 Income tax expense (14,543) Profit from continuing operations 34,798 Discontinued Operations: Operating profit from discontinued operations (net of income tax) -- Gain on sale (net of income tax) -- Profit from discontinued operations (net of income tax) -- Profit for the period 34,798
Earnings per share: Basic earnings per share (cents per share) 60.0 Diluted earnings per share (cents per share) 60.0 Continuing operations Basic earnings per share (cents per share) 60.0 Diluted earnings per share (cents per share) 60.0 Pro forma earnings per share*: Basic earnings per share (cents per share) 64.5 Diluted earnings per share (cents per share) 64.5
* Pro forma earnings per share has been calculated by adding back to earnings the effect of the interest rate hedging restructure (net of tax)
PAGE 10 2 INFORMATION ON GUD
(c) Management commentary on historical results On a continuing operations basis, GUD’s performance can be summarised as follows: 1. Steady sales at $468.3 million. This result was achieved despite a sizeable reduction in demand for pool and spa products impacting on the Water Products division, and a slowing of economic activity resulting in customers of the Security Products division de-stocking (and hence ordering less). These declines were offset by growth in Consumer Products, especially in the Oates cleaning products business, and in Ryco and Wesfil in the Automotive Products division. 2. Underlying net profit after tax (excluding restructuring costs) declined 1% to $37.4 million22. This was a solid performance in light of the swings in consumer sentiment experienced during the year, the extreme fluctuations in the value of the Australian dollar, and the weakening economies of Australia and New Zealand. 3. Reported net profit after tax declined 7% on the prior year to $34.8 million. The 2007/08 year included an operating profit contribution from Victa and a small profit on sale of the business. 4. A cost of $2.6 million after tax was incurred in the first half relating to a restructure of GUD’s interest rate hedging activities. This was done to take advantage of rapidly declining interest rates and its impact is evident in the reduction in net finance expenses from $9.3 million in FY2008 to $7.7 million in FY2009. 5. A continuing strong balance sheet position, underpinned by strong operating cash flow at $57.9 million. Interest cover remains solid at 7.9 times – up from 6.7 times previously, with net debt up slightly to $90.6 million. A share purchase plan (which closed on 19 May 2009) was implemented during the second half of the year which netted $14.1 million in proceeds. The 2009 financial year was exceptional in terms of the operational and financial obstacles that confronted the businesses of GUD and its peers. The speed and degree of change driven by the global financial crisis created significant management challenges. The effects of the financial crisis impacted GUD’s businesses in a number of ways, in particular through declining consumer confidence and a depreciating Australian dollar. The depreciating Australian dollar required unique management reaction as the currency, after appreciating to near parity with the US dollar, rapidly declined to near US60 cents. In Australian dollar terms the cost of purchasing one US dollar rose from A$1.06 in July 2008 to A$1.55 in February 2009 – an increase of 46% over an eight month period. As GUD’s businesses import the majority of the final products sold, this cost impost was significant and required swift action to ensure profitability was protected. Across GUD, the reaction embodied three elements – price increases across all brands, product cost reductions on the basis of declining commodity prices, and overhead cost reduction. On the whole these actions have protected profitability, while the Australian dollar has returned to more favourable levels (from an importer’s perspective). GUD’s revenue was essentially static over these 12 months of extreme and unprecedented turmoil, and this reflected the role of strong, market leading businesses – Sunbeam, Oates, Ryco, Wesfil, Davey and Lock Focus - in providing revenue stability in times of market disarray. The 2009 financial year was also one in which no business restructuring activity occurred. It was a year of consolidation, and one in which the benefits of the prior year’s Oates business reorganisation became evident in that operation’s financial performance.
22 After removing the $2.6 million post-tax impact of the restructure of GUD’s interest rate hedging activities.
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(d) Forecast information GUD’s future financial performance is dependent on a range of factors, many of which are beyond GUD’s control. Accordingly, GUD directors have concluded that forecast financial information would be misleading to provide, as a reasonable basis does not exist for providing forecasts that would be sufficiently meaningful and reliable as required by applicable Australian law, policy and market practice.
2.5 Publicly Available Information about GUD
GUD is a listed disclosing entity for the purposes of the Corporations Act 2001 (Cth) and as such is subject to regular reporting and disclosure obligations. GUD is subject to the Listing Rules of ASX which require continuous disclosure of any information GUD has concerning itself that a reasonable person would expect to have a material effect on the price or value of its securities. ASX maintains files containing publicly disclosed information about all listed companies. GUD’s file is available for inspection at ASX during normal business hours. GUD is also required to lodge various documents with ASIC. Copies of documents lodged with ASIC by GUD may be obtained from, or inspected at, an ASIC office. On request to GUD and free of charge, Breville shareholders may obtain a copy of:
2 the annual financial report of GUD for the year ended 30 June 2009 (being the annual financial report most recently lodged with ASIC before lodgement of this Bidder’s Statement with ASIC);
2 any half-year financial report lodged with ASIC by GUD after the lodgement of the annual financial report referred to above and before lodgement of this Bidder’s Statement with ASIC; and
2 any continuous disclosure notice given to ASX by GUD since the lodgement with ASIC of the 2009 annual report for GUD referred to above and before lodgement of this Bidder’s Statement with ASIC. A substantial amount of information about GUD is available in electronic form from www.gud.com.au.
PAGE 12 INFORMATION ON GUD SECURITIES 3
3 INFORMATION ON GUD SECURITIES
3 INFORMATION ON GUD SECURITIES
3.1 GUD Issued Securities As at the date of this Bidder’s Statement, GUD’s issued securities consisted of 60,606,420 fully paid ordinary shares.
3.2 Recent Trading of GUD Shares
In presenting the value of the Offer, GUD Shares are valued at the 1 month VWAP, up to and including 8 October 2009 of $8.80. The following chart shows the last sale price of GUD Shares on ASX in the 12 months prior to the Announcement Date.
Figure 3.1: GUD Share Price Performance $10.00 $9.00 $8.00 $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $- Oct-08 Dec-08 Feb-09 Apr-09 Jun-09 Aug-09 Oct-09
GUD Share price All Ordinaries Index (rebased)
3.3 Dividend History
Set out below is a chart showing the dividends declared and paid by GUD since March 2004, all of which have been fully franked23.
Figure 3.2: GUD Dividend History
80
70
60
50 38.0 33.0 34.0 33.0 40 27.0 30 23.0 20 30.0 23.0 27.0 27.0 27.0 10 17 . 0 0 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 Interim Dividend (cents per share) Final Dividend (cents per share)
23 The chart above shows the dividend that was declared in respect to the relevant financial year. For example, the final dividend with respect to the 2009 financial year of 33.0 cents per share is included in the FY2009 total dividend as it relates to the earnings derived in the 2009 financial year, despite the payment of the dividend occurring in FY2010.
PAGE 13 3 INFORMATION ON GUD SECURITIES
On 28 July 2009, the GUD Board resolved to reintroduce a Dividend Reinvestment Plan (DRP) to allow shareholders to apply some or all of future dividends due on their shares in purchasing or subscribing for new shares in GUD. The price at which shares are purchased or subscribed under the DRP is at a discount (to be determined by the Board) to the volume weighted average price during a pricing period of five trading days commencing on the day after the Record Date for the relevant dividend. The offer of the DRP in relation to a particular dividend, and any discount applying to shares purchased or subscribed under the DRP, will remain at the discretion of the GUD Board to be announced at the time of the announcement of each relevant dividend. In relation to the final dividend of 33 cents per share declared on 28 July 2009 in respect of the financial year ended 30 June 2009, the GUD Board determined that a discount of 2.5% to the volume weighted average price would apply in the pricing of the shares purchased or subscribed under the DRP. On 30 September 2009, GUD allotted 482,159 shares at an issue price of $8.686 per share pursuant to the DRP.
3.4 Rights Attaching to GUD Shares
(a) Introduction The rights and liabilities attaching to the GUD Shares which will be issued as the consideration under the Offer are set out in GUD’s constitution and in the Corporations Act. The rights and liabilities attaching to the GUD Shares are summarised below.
(b) Meetings of shareholders and voting rights Each GUD shareholder is entitled to receive notice of, attend and vote at general meetings of GUD and to receive all notices, accounts and other documents required to be sent to shareholders under the constitution of GUD or the Corporations Act. At a general meeting, every person present who is a GUD shareholder or a proxy, attorney or representative of a GUD shareholder and is entitled to vote on the resolution has one vote on a show of hands, provided that:
2 where a shareholder has appointed more than one person as representative, proxy, or attorney, none such person is entitled to vote; and
2 where a person attending the meeting is representing more than one member, that person is only entitled to one vote, despite representing more than one member, and one vote on a poll for each fully paid GUD Share held (with adjusted voting rights for partly paid shares). Where the directors determine a GUD shareholder (entitled to attend and vote on a resolution) may vote by electronic or other means, then the directors may, in their absolute discretion, determine the means by which such vote may be cast and specify such means in the notice of meeting. Voting at any general meeting of GUD shareholders is by a show of hands unless a poll is demanded by at least five GUD shareholders entitled to vote on the resolution, by GUD shareholders holding not less than 5% of the total voting rights of all GUD shareholders having the right to vote on the resolution, or by the chairman. No poll may be demanded on the election of the chairman of a meeting unless the chairman determines otherwise.
(c) Dividends The directors of GUD may pay any interim and final dividends that, in their judgement, the financial position of GUD justifies. The directors may rescind a decision to pay a dividend if they decide, before the payment date, that GUD’s financial position no longer justifies the payment. Payment of a dividend does not require confirmation by a general meeting of GUD shareholders.
PAGE 14 3 INFORMATION ON GUD SECURITIES
Each GUD Share has the same dividend rights, subject to any special rights or restrictions attached to the shares (with adjusted dividend rights for partly paid shares).
(d) Winding up If GUD is wound up and the property of GUD available for distribution among the GUD shareholders is more than sufficient to pay all of the debts and liabilities of GUD and the costs, charges and expenses of the winding up, the excess must be divided among the GUD shareholders in proportion to the GUD Shares held by them, irrespective of the amounts paid or credited as paid on the GUD Shares If GUD is wound up, the liquidator may, with the sanction of a special resolution, divide among the GUD shareholders the whole or any part of GUD’s property and decide how the division is to be carried out as between the GUD shareholders.
(e) Transfer of shares GUD shareholders may transfer their GUD Shares in any manner permitted by the Corporations Act. The directors may refuse to register a transfer of GUD Shares unless prohibited by the Corporations Act or ASX Listing Rules and must give notice of such refusal.
(f) Alteration of capital Subject to the requirements set out in Chapter 2J of the Corporations Act, the directors may do anything required to give effect to any resolution altering GUD’s share capital.
(g) Alteration of rights attaching to a class Unless otherwise provided in the terms of issue of a class of securities, all or any of the rights or privileges attached to the class may be varied, whether or not GUD is being wound up, only with the consent in writing of the holders of three-quarters of the issued GUD Shares in that class, or with the sanction of a special resolution passed at a separate meeting of the holders of the issued GUD Shares in that class. The rights conferred upon the holders of the GUD Shares in a class are to be taken as not having been varied by the creation or issue of further GUD Shares ranking equally with them.
(h) Non-marketable parcels The directors may cause GUD to sell GUD Shares held by a GUD shareholder which constitute less than a marketable parcel, provided they follow the procedure set out in rule 23 of the constitution.
(i) Alternation of GUD’s constitution In accordance with the Corporations Act, GUD’s constitution can only be amended by special resolution passed by at least 75% of votes cast by GUD shareholders entitled to vote on the resolution.
3.5 No Share and Option Plans
Other than the DRP described in Section 3.3, GUD does not have any share or option
plans in place and no options are on issue.
PAGE 15 3 INFORMATION ON GUD SECURITIES
3.6 Substantial Holders in GUD Shares
As at the date of this Bidder’s Statement, so far as known to GUD there are no substantial holders of GUD Shares except as set out below:
Table 3.1: GUD Substantial Shareholders Date of Last Number of GUD Substantial Shareholder Voting Power Notice Shares Held
Barclays Group 21 May 2009 3,932,3321 6.49%2
Notes: 1. Based on the number of GUD Shares held as stated in the relevant notices lodged with ASX. 2. Calculated using the number of GUD Shares on issue as at the date of this Bidder’s Statement.
PAGE 16 INFORMATION ON BREVILLE 4
4 INFORMATION ON BREVILLE
4 INFORMATION ON BREVILLE
4.1 Overview of Breville
Breville Group Limited (Breville) is the holding company of the Breville Group. The Breville Group is a leading provider of small consumer electrical products. Breville is an Australian public company listed on ASX, generating the bulk of its revenue from the design, manufacture and distribution of small consumer electrical products. Breville employs approximately 560 people and has operations in Australia, the United States of America, Canada, New Zealand and Hong Kong. Breville is headquartered in Botany, New South Wales.
4.2 Directors
As at the date of this Bidder’s Statement, the directors of Breville are:
2 John Schmoll, Non-executive Chairman;
2 Steven Fisher, Non-executive Director;
2 Dean Howell, Non-executive Director;
2 Steven Klein, Non-executive Director; and
2 Samuel Weiss, Non-executive Director.
4.3 History, Operations and Ownership of Breville Group
(a) History and operations Breville (formerly Housewares International Limited) began as an Australian-based importer in 1957. The company acquired the US based Metro Marketing in 1997, before being listed on ASX in 1999. In 2001 the then Housewares International Limited acquired the Breville companies in Australia, New Zealand and Hong Kong, as well as a 50% interest in Anglo-Canadian Housewares (a distributor of homewares in Canada). Since this time, the focus of the Breville Group has fundamentally shifted towards the small consumer electrical products market. During January 2007, Breville acquired the remaining 50% interest in Anglo-Canadian Housewares from its joint venture partner. With the continued focus on the small consumer electrical products market globally, the Breville Group disposed of its Australian homewares and cleaning products businesses during June 2007. The refocused Breville Group is a global small consumer electrical products business, centred around the Breville brand. Breville imports and distributes small consumer electrical products to a number of markets including Australia, USA, Canada, South Africa, New Zealand and Hong Kong. The Hong Kong and Shanghai offices are responsible for sourcing and trading. Breville owns the Breville, Kambrook, Ronson, Goldair and Blinq brands. It has exclusive distribution rights to Philips small domestic appliances in Australia and New Zealand, is the exclusive distributor for the Scanpan range of cookware in the USA and Canada, and has the licensing rights in North America to manufacture and distribute homewares products under the Laura Ashley brand name. Products are distributed through all major Australian retailers. Breville also distributes the Metro brand in the USA, Canada and Latin America and the Mayfair & Jackson brand in North America.
PAGE 17 4 INFORMATION ON BREVILLE
In addition to Australia, Breville is exposed to markets in New Zealand, USA, Canada, Europe, Hong Kong, South Africa, Mexico and Israel. The Hong Kong office is responsible for the sourcing, quality control, shipping and administration for the electrical division. The office also manages Breville's international sales. Breville has been transforming its business focus towards product development, rather than direct sourcing, to support its market positions in Australia and New Zealand and to take advantage of business opportunities in North America and internationally.
(b) Ownership Breville currently has 129,515,322 ordinary shares on issue. As at the date of this Bidder’s Statement, based on shareholdings disclosed in the Breville 2009 Annual Report lodged with ASX on 9 October 2009, there are no substantial holders of Breville Shares except as set out below:
Table 4.1: Breville Substantial Shareholders
Substantial Shareholder Number of Breville Shares Held Voting Power1
Premier Investments Limited 39,318,823 30.36% and Associated Entities
GUD Holdings Limited 25,073,712 19.36%
Perpetual Limited and 19,016,554 14.68% subsidiaries Paradice Investment 8,970,800 6.93% Management Pty Ltd
Note: 1. Calculated using the number of Breville Shares on issue as at the date of this Bidder’s Statement, being 129,515,322. This figure is consistent with the number of ordinary shares at 30 June 2009 as disclosed by Breville on page 62 of its revised 2009 Annual Report lodged with ASX on 9 October 2009.
A list of the top 20 shareholders of Breville as at 3 September 2009, is set out in its 2009 Annual Report, which is available at www.brevillegroup.com.au.
4.4 Financial Information on Breville
(a) Basis of presentation of historical financial information The historical financial information below relates to the Breville Group on a stand-alone basis and accordingly does not reflect any impact of the Offer. It is a summary only and the full financial accounts for Breville for the financial period described below, which includes the notes to the accounts, can be found in Breville’s annual report for that period.
PAGE 18 4 INFORMATION ON BREVILLE
(b) Historical financial information on the Breville Group
(1) Balance Sheet The summarised historical balance sheet of the Breville Group as at 30 June 2009 set out in Table 4.2 has been extracted from the consolidated balance sheet of Breville as at 30 June 2009, being the last balance date prior to the date of this Bidder’s Statement.
Table 4.2: Breville Balance Sheet Balance Sheet Consolidated 2009 $’000 Current assets Cash and cash equivalents 6,290 Trade and other receivables 68,608 Inventories 68,243 Other financial assets 77 Current tax assets 303 Other assets 1,488 Total current assets 145,009 Non-current assets Investments in jointly controlled entities -- Investment in controlled entities -- Plant and equipment 8,222 Deferred tax assets 15,837 Intangible assets – other 43,152 Intangible assets – goodwill 24,558 Total non-current assets 91,769 Total assets 236,778 Current liabilities Trade and other payables 42,247 Borrowings 9,944 Current tax liabilities 2,944 Provisions 6,316 Other financial liabilities 6,736 Total current liabilities 68,187 Non-current liabilities Borrowings 29,354 Deferred tax liabilities 5,027 Provisions 2,897 Total non-current liabilities 37,278 Total liabilities 105,465 Net assets 131,313 Equity Equity attributable to equity holders of the parent Issued capital 137,581 Reserves (13,274) Retained earnings/(accumulated losses) 7,006 Total equity 131,313
PAGE 19 4 INFORMATION ON BREVILLE
(2) Income Statement The summarised historical income statement of Breville for the period ended 30 June 2009 set out in Table 4.3 has been extracted from the audited consolidated income statement for the year ended 30 June 2009.
Table 4.3: Breville Income Statement Income Statement Consolidated 2009 $’000 Revenue 431,941 Cost of sales (308,909) Gross profit 123,032 Other income 845 Employee benefits (expenses)/benefit excluding redundancy costs (49,796) Premises, lease & utilities expenses (14,492) Advertising expenses (15,248) Other expenses (10,736) Underlying earnings before interest, tax, depreciation & amortisation (EBITDA) 33,605 Non-trading net foreign exchange (losses)/gains (2,041) Redundancy costs (1,593) Earnings before interest, tax, depreciation & amortisation 29,971 (EBITDA) Depreciation & amortisation expense (6,544) Earnings before interest and tax 23,427 Finance costs, net (5,607) Interest rate swap (loss)/gain (2,188) Profit before income tax 15,632 Income tax expense (3,877) Net profit for the year attributable to members of Breville Group Limited 11,755
Redundancy costs and non-trading, non cash, unrealised mark-to-market losses/(gains) included within net profit attributable to members of Breville Group Limited: - Redundancy costs 1,038 - Non-trading net foreign exchange losses/(gains) 1,525 - Interest rate swap loss/(gain) 1,532 Underlying net profit after income tax 15,850
Earnings per share for profit attributable to the ordinary Cents equity holders of the parent entity: - basic earnings per share 9.08 - diluted earnings per share 8.97 Earnings per share for underlying profit attributable to the
ordinary equity holders of the parent entity: - basic earnings per share 12.24 - diluted earnings per share 12.09
PAGE 20 4 INFORMATION ON BREVILLE
4.5 Disclaimer
The information on Breville has been prepared by GUD using publicly available information. The information has not been independently verified and GUD does not make any representation or warranty, express or implied, as to the accuracy or completeness of that information. The information on Breville in this Bidder’s Statement should not be considered comprehensive. Further information relating to Breville’s business may be included in Breville’s Target Statement which Breville must provide to Breville shareholders in response to this Bidder’s Statement.
4.6 Publicly Available Information about the Breville Group
Breville is a listed disclosing entity for the purposes of the Corporations Act and, as such, is subject to regular reporting and disclosure obligations. Breville is subject to the Listing Rules of ASX which require continuous disclosure of any information Breville has concerning itself that a reasonable person would expect to have a material effect on the price or value of its securities. ASX maintains files containing publicly disclosed information about all listed companies. Breville’s file is available for inspection at ASX during normal business hours. In addition, Breville is required to lodge various documents with ASIC. Copies of documents lodged with ASIC may be obtained from, or inspected at, an ASIC office. A substantial amount of information about Breville is available in electronic form from www.brevillegroup.com.au
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PAGE 22 INFORMATION ON BREVILLE SECURITIES 5
5 INFORMATION ON BREVILLE SECURITIES
5 INFORMATION ON BREVILLE SECURITIES
5.1 Breville’s Issued Securities
According to documents provided by Breville to ASX, as at the date of this Bidder’s Statement, Breville’s issued securities consisted of:
2 129,515,322 Breville Shares;
2 620,000 Options; and
2 1,282,000 Performance Rights.
5.2 Options
According to documents provided by Breville to ASX, Options over unissued shares have been issued by Breville to senior executives under the second senior executive option plan at the recommendation of the chief executive officer and as approved by the remuneration committee. The performance hurdle to be achieved is based on Breville’s underlying EPS achieving growth over a three year term, of at least 10% per annum, compounded annually. Options will vest only if this performance hurdle is met. If the underlying EPS growth condition is not achieved in any year, the underlying EPS growth for that year will be carried forward and recalculated at the end of the following year until the end of the term of the Options. As a result, Options may still vest and become exercisable where the vesting conditions are met in a subsequent year. In assessing whether the performance hurdles have been met each year, Breville receives independent data which provides the underlying EPS growth achieved for the year. If the performance hurdle has been met, the executive will generally be able to exercise Options as follows:
2 of the Options issued, any time during the one year period commencing one year after the issue date;
2 of the Options issued, any time during the one year period commencing two years after the issue date; and
2 of the Options issued, any time during the one year period commencing three years after the issue date. The exercise price of the Options is generally based on the volume weighted average price of all Breville Shares traded on ASX on the five trading days up to and including the issue date plus a premium of 11%. The Options are not quoted on ASX. So far as is known to GUD, the exercise prices and expiry dates for the Options on issue as at the date of this Bidder’s Statement are as follows:
PAGE 23 5 INFORMATION ON BREVILLE SECURITIES
Table 5.1: Breville Issued Options
Exercise Price Expiry Date Number Issued
$1.12 1 July 2012 300,000
$1.82 27 March 2012 120,000
$2.36 2 November 2011 200,000
The Options cannot be transferred and are not quoted on ASX. Any Options not vested at the date of termination of the relevant executive will be forfeited unless otherwise determined by the Breville Board.
5.3 Performance Rights
According to documents provided by Breville to ASX, 1,282,000, Performance Rights were issued to Breville senior executives under the Performance Rights Plan on 20 April 2009. The performance hurdle to be achieved is based on Breville’s underlying EPS achieving growth over a three year term of at least 8% per annum, compounded annually. If the performance hurdle has been met, the Performance Right may be exercised. On exercise of a Performance Right, one fully paid ordinary share will be either issued or transferred to the relevant executive for nil consideration. There are no cash alternatives, the rights cannot be transferred and the rights are not quoted on ASX. Any Performance Rights not vested at the date of termination of the relevant executive will be forfeited unless otherwise determined by the Breville Board. So far as is known to GUD, the Performance Rights issued on 20 April 2009 are exercisable from 1 September 2011 to 3 October 2011.
5.4 Interests in Breville Shares
As at the date of this Bidder’s Statement and as at the date of the Offer:
2 GUD’s voting power in Breville was 19.36%; and
2 GUD had a Relevant Interest in 25,073,712 Breville Shares.
5.5 Dealings in Breville Shares
Neither GUD nor any associate of GUD has provided, or agreed to provide, consideration for Breville Shares under any purchase or agreement during the 4 months before the date
of this Bidder’s Statement.
PAGE 24 5 INFORMATION ON BREVILLE SECURITIES
5.6 Effect of the Offer on Options and Performance Rights
The Offer extends to Breville Shares that are issued on the exercise of Breville Options or Performance Rights during the period from the Register Date to the end of the Offer Period. If GUD and its associates have Relevant Interests in at least 90% of the Breville Shares during, or at the end of the Offer Period, GUD will (if it and its associates have a Relevant Interest in more than 90% of Breville Shares at the time) give a notice of compulsory acquisition to all outstanding Breville shareholders, even if the Breville Shares to which those notices relate are issued:
2 after the Offer closes but before the notices are given (pursuant to Section 661A(4)(b) of the Corporations Act); or
2 on exercise of Breville Options or Performance Rights, up to 6 weeks after the notices are given (pursuant to Section 661A(4)(c) of the Corporations Act).
5.7 No Pre-Offer Benefits
During the period of 4 months before the date of this Bidder’s Statement, neither GUD nor any associate of GUD gave, or offered to give, or agreed to give a benefit to another person which was likely to induce the other person, or an associate of the other person, to:
2 accept the Offer; or
2 dispose of Breville Shares, and which is not offered to all holders of Breville Shares under the Offer.
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PAGE 26 BIDDER’S INTENTIONS IN RELATION TO BREVILLE 6
6 BIDDER’S INTENTIONS IN RELATION TO BREVILLE
6 BIDDER’S INTENTIONS IN RELATION TO BREVILLE
6.1 Introduction
This Section 6 sets out GUD’s intentions in relation to the following:
2 the continuation of the business of Breville;
2 any major changes to the business of Breville and any redeployment of the fixed assets of Breville;
2 the compulsory acquisition of Breville Shares and the delisting of Breville; and
2 the future employment of the present employees of Breville. GUD’s intentions have been formed on the basis of facts and public information concerning Breville, and the general business environment, which are known at the time of preparing this Bidder’s Statement. Final decisions regarding these matters will only be reached by GUD in light of material information and circumstances at the relevant time. Accordingly, the statements set out in this Section 6 are statements of current intention only and may vary as new information becomes available or circumstances change. The articulation and formulation of GUD’s intentions are necessarily limited by virtue of the fact that it has only had access to publicly available information about Breville and its affairs.
6.2 Overview and Rationale for the Offer
On 29 May 2009, GUD acquired a 19.4% stake in Breville. At the time of this purchase, GUD stated that the acquisition was an attractive investment opportunity, satisfying its strategic and financial objectives. Following the release of Breville’s 2009 full year results, GUD believes that an Offer for the Breville Shares it does not already own is in the best interests of both companies’ shareholders. GUD believes that the combination of the businesses’ product development and innovation capabilities may lead to an improvement of the Merged Group’s overall product range offering to customers, and the increased scale of the combined businesses (depending on the extent to which Breville is controlled by GUD) may provide cost reduction opportunities. The combination of Breville and GUD may also provide further avenues for growth in international markets, including North America, where Breville has an established distribution capability.
6.3 Intentions for Breville as a Wholly Owned Controlled Entity
This Section 6.3 describes GUD’s intentions if GUD and its associates acquire a Relevant Interest in 90% or more of Breville Shares, and so becomes entitled to proceed to compulsory acquisition of outstanding Breville Shares in accordance with Part 6A.1 of the Corporations Act.
PAGE 27 6 BIDDER’S INTENTIONS IN RELATION TO BREVILLE
In that circumstance, GUD’s current intentions are as follows:
(a) Corporate matters GUD intends to:
2 proceed with compulsory acquisition of the outstanding Breville Shares in accordance with the provisions of Part 6A.1 of the Corporations Act, including any Breville Shares which are issued after the close of the Offer as a result of the exercise of Options and Performance Rights (see Section 5 of this Bidder’s Statement);
2 arrange for Breville to be removed from the official list of ASX; and
2 replace the members of the Breville Board with the nominees of GUD. Replacement board members have not yet been identified by GUD and their identity will depend on the circumstances at the relevant time. However, it is expected that the majority of the replacement board members will be members of the GUD management team.
(b) General operational review Post-acquisition, GUD intends to conduct a strategic and financial review of Breville and to further develop a detailed post-merger integration plan. Further details in relation to the strategic and financial review and integration plan are set out below. GUD intends to establish a dedicated integration team. This team will be headed by the Managing Director of GUD and managed by a steering committee. It will be responsible for planning, co-ordinating, and implementing the integration of GUD’s Sunbeam business and Breville. The integration team will:
2 evaluate Breville’s performance, profitability and prospects; and
2 develop an operating business plan for the Merged Group’s small appliance business. In the course of this review, GUD intends to focus on a number of key specific areas including (but not limited to):
2 opportunities to accelerate growth in international markets, particularly in North America utilising Sunbeam’s product platforms and the Breville brands;
2 optimisation of product sourcing and other operational initiatives, which GUD expects to be available through merged economies of scale;
2 opportunities to co-ordinate product development and enhance the product range of the Merged Group;
2 branding strategies; and
2 back office and support function integration. The focus of the operational review will include:
2 development of plans to ensure the relative strengths of the Breville and Sunbeam brands are maximised; and
2 rationalisation of activities in common functions across the Merged Group’s small appliance business to maximise cost reductions.
(c) Specific intentions GUD intends that the marketing and sales organisation of Breville (with its Breville and Kambrook brands) will continue to be run under a separate management team and will continue to directly compete with GUD’s Sunbeam marketing and sales organisation.
PAGE 28 6 BIDDER’S INTENTIONS IN RELATION TO BREVILLE
(d) Impact on Employees As a result of the implementation of these intentions, it is possible that certain operational functions will become redundant. Some job losses may occur as a result, however, the incidence, extent and timing of such job losses cannot be predicted in advance. Where possible, GUD will seek to minimise job losses through consideration of current Breville employees for appropriate roles within the Merged Group’s small appliance business. If redundancies do occur, the relevant employees will receive benefits in accordance with their contractual and other legal entitlements.
6.4 Intentions for Breville as a Part Owned Controlled Entity
This Section 6.4 describes GUD’s intentions if Breville becomes a controlled entity of GUD, but GUD is not entitled to proceed to compulsory acquisition in accordance with Part 6A.1 of the Corporations Act. In that circumstance, GUD’s current intentions are as follows:
(a) Corporate matters After the end of the Offer Period, GUD intends:
2 subject to the Corporations Act and the constitution of Breville, to seek to replace some or all of the members of the Breville Board. The majority would be replaced with nominees of GUD. Existing directors who are not independent would be replaced. Replacement board members have not yet been decided by GUD and their identity will depend on the circumstances at the relevant time. However, it is expected that the replacement board members will comprise:
2 an independent non-executive chairman;
2 independent non-executive directors; and
2 members of the GUD and Breville management teams. GUD will seek, to the extent possible, through its nominees on the Breville Board, to implement the intentions detailed in Section 6.3 where they are consistent with Breville being a controlled entity of (but not wholly owned by) GUD and are considered to be in the best interests of Breville shareholders as a whole, including the rights of minority shareholders. Additionally, GUD intends:
2 to retain most Breville management who will be expected to participate in the strategic and financial review as outlined in Section 6.4(b); and
2 to maintain Breville’s listing on ASX, while it continues to meet ASX listing requirements. Breville shareholders should be aware that in this circumstance the liquidity of Breville Shares may be materially decreased. It is possible that, even if GUD is not entitled to proceed to compulsory acquisition of minority holdings after the end of the Offer Period under Part 6A.1 of the Corporations Act, it may subsequently become entitled to exercise rights of general compulsory acquisition under Part 6D.2 of the Corporations Act; for example, as a result of acquisitions of Breville Shares in reliance on the ‘3% creep’ exception in item 9 of Section 611 of the Corporations Act. If so, it intends to exercise those rights.
(b) General operational review and strategic alliance After the end of the Offer Period, GUD, through its nominees on the Breville Board, intends to propose that an immediate, broad-based review of Breville’s operations be conducted on both a strategic and financial level, along similar lines to that described in Section 6.3(b). GUD intends, subject to the approval of the Breville Board, to participate in this review.
PAGE 29 6 BIDDER’S INTENTIONS IN RELATION TO BREVILLE
As part of this review, GUD intends to propose that GUD and Breville explore potential partnership opportunities which may provide mutual operational and financial benefits for both GUD and Breville. This may include consideration of the formation of a strategic alliance between GUD and Breville in relation to international product sales, product sourcing, and supply chain functions.
(c) Dividends and funding The payment of dividends by Breville will be at the discretion of the Breville Board, the majority of which would comprise GUD nominees. GUD has not formed any intention about retaining or varying the current dividend policy of Breville (through its nominees to the Breville Board), and will not do so until the review referred to in Section 6.4(b) is completed. Breville shareholders should be aware that Breville may not declare a dividend in the future. GUD’s current intention is for Breville to frank any future Breville dividends to the maximum extent possible. In the event that the existing debt facilities of Breville are terminated as a result of a change of control, GUD intends (through its nominees to the Breville Board) to recommend the replacement of the Breville debt with existing GUD financing facilities.
(d) Limitations in giving effect to intentions The ability of GUD to implement the intentions set out in this Section 6.4 will be subject to the legal obligations of Breville directors to have regard to the interests of Breville and all Breville shareholders, including the rights of all minority shareholders, and the requirements of the Corporations Act and ASX Listing Rules relating to transactions between related parties. GUD will only make a decision on the above mentioned courses of action following legal and financial advice in relation to those requirements.
6.5 Other Intentions
Subject to the matters described above in this Section 6 and elsewhere in this Bidder’s Statement, it is the intention of GUD, on the basis of the facts and information concerning Breville that are known to it and the existing circumstances affecting the assets and operations of Breville at the date of this Bidder’s Statement, that all governance matters related to Breville will continue to be overseen by the current Breville Board, including:
2 the business of Breville will be conducted in substantially the same manner as at the date of this Bidder’s Statement;
2 no other major changes will be made to the business of Breville;
2 there will be no redeployment of the fixed assets of Breville; and
2 the present employees of Breville will continue to be employed by Breville.
PAGE 30 EFFECT OF THE OFFER ON GUD AND PROFILE OF THE MERGED GROUP 7
7 EFFECT OF THE OFFER ON GUD AND PROFILE OF THE MERGED GROUP
7 EFFECT OF THE OFFER ON GUD AND PROFILE OF THE MERGED GROUP
7.1 Strategy and Rationale
The combination of GUD and Breville will create a leading consumer products company in Australia and New Zealand, with a portfolio of highly regarded brands which service a range of price points in a variety of end-markets. As outlined in Section 6.2 of this Bidder’s Statement, depending on the extent to which GUD controls Breville, GUD expects that the Merged Group will benefit from the combined product development, sourcing, marketing and distribution expertise, which is expected to provide opportunities for significant rationalisation activities and cost reductions. GUD believes that the combination of the GUD and Breville businesses (where Breville is wholly owned by GUD) will create enhanced international expansion opportunities, leveraging the Merged Group’s increased scale, product and market knowledge, and the Merged Group’s enhanced access to capital to fund growth. GUD intends that the Merged Group will continue to develop its portfolio of market- leading brands, potentially through organic growth, or by appropriate acquisitions to generate long-term value for its shareholders.
7.2 Pro Forma Consolidated Financial Statements for the Merged Group
(a) Basis of presentation of pro forma financial information The pro forma financial information should be read together with the assumptions underlying their preparation as set out in this Section 7.2, the risk factors contained in Section 8 and other information contained in this document. The pro forma financial information has been prepared in accordance with recognition and measurement requirements of Australian Accounting Standards with the exception of some recognition requirements of AASB 3 Business Combinations. More information is contained below. The pro forma historical financial information has been prepared as if the pro forma transactions set out in this Section 7.2 had occurred on the applicable dates.
(b) Pro forma consolidated balance sheet of the Merged Group The pro forma balance sheet for the Merged Group for the year ended 30 June 2009 (reflecting both a 50.1% and 100% ownership position) is set out in Table 7.1 for illustrative purposes as a guide to assist Breville shareholders in considering the effect of completion of the Offer on GUD. By its nature, pro forma financial information is only illustrative of the types of impacts which a particular set of assumed transactions can have on underlying financial information.
PAGE 31 7 EFFECT OF THE OFFER ON GUD AND PROFILE OF THE MERGED GROUP
Table 7.1: Pro Forma Balance Sheet Pro Forma Balance Sheet as at 30 June 2009
Pro forma Pro forma Pro forma GUD Breville adjustments Merged Merged $ 000 (1) (2) Group Group (50.1%) (100%)(3) Current assets Cash and cash equivalents 16,206 6,290 - - 22,496 22,496 Trade and other receivables 62,327 68,608 - - 130,935 130,935 Inventories 82,671 68,243 - - 150,914 150,914 Other assets 6,559 1,868 - - 8,427 8,427 Total current assets 167,763 145,009 - - 312,772 312,772 Non-current assets Other financial assets 24,013 - 87,590 (105,643) 5,960 5,960 Property, plant, and 19,609 8,222 - - 27,831 27,831 equipment Deferred tax assets 456 15,837 - - 16,293 16,293 Goodwill 42,063 24,558 - 39,855 106,476 183,133 Other intangible assets 49,509 43,152 - - 92,661 92,661 Total non-current assets 135,650 91,769 87,590 (65,788) 249,221 325,878 Total assets 303,413 236,778 87,590 (65,788) 561,993 638,650 Current liabilities Trade and other payables 44,266 42,247 - - 86,513 86,513 Borrowings and loans 454 9,944 - - 10,398 10,398 Current tax payables 4,820 2,944 - - 7,764 7,764 Provisions 13,602 6,736 - - 19,918 19,918 Other liabilities - 6,316 - - 6,736 6,736 Total current liabilities 63,142 68,187 - - 131,329 131,329 Non-current liabilities Borrowings and loans 106,360 29,354 - - 135,714 135,714 Deferred tax liabilities 1,415 5,027 - - 6,442 6,442 Provisions 1,380 2,897 - - 4,277 4,277 Total non-current 109,155 37,278 - - 146,433 146,433 liabilities Total liabilities 172,297 105,465 - - 277,762 277,762 Net assets 131,116 131,313 87,590 (65,788) 284,231 360,888 Equity Share capital 94,505 137,581 87,590 (137,581) 182,095 324,277 Reserves (873) (13,274) - 13,274 (873) (873) Retained earnings 37,484 7,006 - (7,006) 37,484 37,484 Total equity attributable to 131,116 131,313 87,590 (131,313) 218,706 360,888 equity holders Minority Interest - - - 65,525 65,525 - Total Equity 131,116 131,313 87,590 65,788 284,231 360,888
PAGE 32 7 EFFECT OF THE OFFER ON GUD AND PROFILE OF THE MERGED GROUP
(c) Pro forma adjustments (1) This reflects the acquisition of an additional 30.7% of the ordinary issued share capital of Breville (total of 50.1% including GUD’s 19.4% holding acquired in May 2009). The pro forma adjustment assumes that 1 GUD Share is issued in exchange for every 4 Breville Shares. The adjustment assumes a value of $8.80 per GUD Share, which represents the one month VWAP up to and including 8 October 2009). Attributable transaction costs that will be included in the income statement are not reflected as a pro forma adjustment. (2) This reflects the pro forma consolidation entries relating to GUD’s investment in Breville and the recognition of goodwill and minority interest on acquisition. Note that upon completion of the final purchase price allocation:
2 the fair value of the identifiable assets, liabilities and contingent liabilities are subject to change following a detailed assessment of the fair values at the time of acquisition, which will be undertaken subsequent to the actual acquisition date. For the purposes of the pro forma balance sheet, it has been assumed that the fair values of the assets and liabilities equates to their carrying value at 30 June 2009; and
2 additional intangible assets may be required to be recognised and amortised over their useful lives (3) The pro forma balance sheet reflects the potential acquisition of 50.1% of the total ordinary issued share capital of Breville. Should GUD be successful in acquiring 100% of Breville’s total ordinary issued share capital, an additional $142.2 million worth of shares will be issued by GUD, which will increase goodwill and share capital on consolidation and no minority interest will be recognised. The pro forma balance sheet assumes that no additional Breville Shares will be issued by Breville as a result of the exercise of the Options or Performance Rights. As far as is known to GUD the Options and Performance Rights cannot be exercised prior to the conclusion of the Offer.
(d) Pro forma consolidated income statement of the Merged Group The pro forma income statement for the Merged Group for the year ended 30 June 2009 (reflecting both a 50.1% and 100% ownership position) is presented below for illustrative purposes as a guide to assist Breville shareholders in considering the effect of completion of the Offer on GUD. By its nature, pro forma financial information is only illustrative of the types of impacts which a particular set of assumed transactions can have on underlying financial information. It should be noted that the pro forma income statement of the Merged Group presented below represents the pro forma historical results of GUD and Breville and as such does not reflect the benefit of operational initiatives that GUD may achieve if between 50.1% and 100% of Breville is acquired.
PAGE 33 7 EFFECT OF THE OFFER ON GUD AND PROFILE OF THE MERGED GROUP
Table 7.2: Pro Forma Income Statement
Pro Forma Income Statement for the 12 months to 30 June 2009
Pro forma adjustments Pro forma $ 000 GUD Breville (1) (2) Merged Group
Revenue 468,334 431,941 - - 900,275 Cost of goods sold (279,735) (308,909) - - (588,644) Gross profit 188,599 123,032 - - 311,611 Other income 432 845 - - 1,277 Operating expenses (117,691) (93,906) - - (211,597) EBITDA 71,340 29,971 - - 101,311 Depreciation and amortisation (10,551) (6,544) - - (17,095) EBIT 60,789 23,427 - - 84,216 Finance costs (11,448) (7,795) 3,732 2,188 (13,323) Net profit before tax 49,341 15,632 3,732 2,188 70,893 Income tax expense (14,543) (3,877) (1,120) (656) (20,196) Net profit after tax (3) 34,798 11,755 2,612 1,532 50,697 Net profit attributable to minority - (5,866) - (764) (6,630) interest Net profit attributable to equity 34,798 5,889 2,612 768 44,067 holders of GUD
1. Finance costs have been adjusted to exclude non-recurring losses relating to interest rate swap contracts which were closed out by GUD during the financial year ended 30 June 2009 given the significant volatility in interest rates during the period. 2. Although Breville did not close out interest rate swap contracts during the year, the non-recurring portion of the interest rate swap contracts, as disclosed by Breville has been adjusted in the pro forma income statement for consistency with GUD. 3. If GUD is successful in acquiring 100% of the Breville Shares, net profit after tax would be entirely attributable to equity holders of GUD.
Pro forma earnings per share for net profit attributable to Cents the ordinary equity holders of GUD (if 50.1% acquired): - basic earnings per share 64.8 - diluted earnings per share 64.8
Pro forma earnings per share for net profit attributable to Cents the ordinary equity holders of GUD (if 100% acquired): - basic earnings per share 60.2 - diluted earnings per share 60.2
Weighted average number of shares used in pro forma Thousands earnings per share calculations: - if 50.1% of Breville ordinary shares acquired 67,994 - if 100% of Breville ordinary shares acquired 84,151
PAGE 34 RISK FACTORS 8
8 RISK FACTORS
8 RISK FACTORS
8.1 Introduction
If the Offer becomes unconditional, Breville shareholders who accept the Offer will become GUD shareholders, and GUD will acquire an interest in Breville. In that event, Breville shareholders will continue to be indirectly exposed to the risks associated with having an interest in Breville’s assets and general economic, share market and industry risks. There are also additional risks relating to the Offer and the Merged Group, to which Breville shareholders will be exposed through their holding of GUD Shares.
8.2 General Risks
(a) Economic factors Changes in the economic climate in which the Merged Group will operate may adversely impact its financial performance. The majority of the Merged Group’s operations are located in, or service, the Australian, North American and New Zealand markets. Changes in economic factors in these regions, such as economic growth, employment levels, interest and inflation rates, foreign exchange rates, consumer sentiment and spending, market volatility, global commodity prices, labour costs, transportation costs, commodity costs and the availability and cost of credit could adversely impact the financial and/or operational performance of the Merged Group or the value of GUD Shares. The key economic risks affecting the Merged Group are set out below: 1. Movements in the Australian Dollar / US Dollar (A$/US$) exchange rate Both GUD and Breville purchase a significant proportion of product from international suppliers. These purchases, as well as associated freight charges, are typically denominated in US Dollars. Movements in the A$/US$ exchange rate may impact the cost of product sourcing for the Merged Group, potentially impacting sales volumes and margins. While GUD engages in hedging activities to mitigate some of this exposure from time to time, and a significant proportion of Breville’s sales are also denominated in US Dollars, providing a partial natural hedge, movements in exchange rates may still impact Merged Group financial performance. 2. Reduction in consumer spending General levels of consumer sentiment and consumer spending in the Merged Group’s regions of operation may impact operational and financial performance. Consumer spending and sentiment can, in turn, be influenced by several factors, including the level of general economic growth, employment, population and income growth, interest and inflation rates. A significant or sustained decline in consumer spending may materially impact the performance of the Merged Group. 3. Movements in economic factors which affect product costs The profitability of the Merged Group may be adversely impacted by movements in economic factors which increase product costs, including increases in commodity, labour, and transportation costs.
PAGE 35 8 RISK FACTORS
(b) Share market factors There are general risks associated with an investment in the share market which may affect the value of GUD Shares, and therefore the value of the consideration received by Breville shareholders. Share market factors affecting the value of GUD Shares are unpredictable and may be unrelated or disproportionate to the financial or operating performance of the Merged Group. Factors which may impact the value of GUD Shares include domestic and international economic factors (refer to Section 8.2(a) above), investor sentiment, changes in the market value of other distribution or retail-linked companies, broker and analyst recommendations, and actual or anticipated variations in the operating results of the Merged Group.
(c) General operational risks Like many companies, the Merged Group may be exposed to commercial risks, such as brand/reputation damage, competition, the risk of the loss of major customers, contractors or suppliers, litigation and industrial disputes, operational risks, such as supply chain disruption, inventory shrinkage, information technology system failures and environmental issues and liabilities. As a distributor of products, the Merged Group will be particularly dependent on the continuing operation of its supply chain, and is dependent on suppliers and freight providers to ensure the delivery of products to its customers in full and on time. Supply chain disruption resulting in the delayed or non-delivery of products may have a significant impact on the performance of the Merged Group. Further, the Merged Group may face risks associated with faulty or defective products. Breaches of its obligations may have a significant impact on the Merged Group’s financial performance. As a distributor of products, the Merged Group may also be exposed to the risk of its customers sourcing product directly from manufacturers, particularly in relation to product ranges where there is a low degree of product differentiation (e.g. automotive filters, toasters, brushware, etc.). This may lead to decline in the sales volume of the Merged Group and may represent a threat to the Merged Group’s operational and financial performance.
(d) Changes to government, monetary or fiscal policy or regulatory regimes Changes to key government policies or regulatory regimes affecting the businesses of the Merged Group, including those in the areas of industrial relations and tax, may affect the operational and financial performance of the Merged Group.
(e) Small electrical appliance industry conditions The Merged Group will be exposed to the general risks of operating in the small electrical appliance distribution industry in Australia, New Zealand and North America, including: 1. Consumer sentiment and level of discretionary spending Adverse changes in the levels of consumer spending, particularly in relation to discretionary items, may impact the demand for small appliances in the markets in which the Merged Group operates. Consumer sentiment and spending levels are likely to be driven by a combination of the general economic factors described in Section 8.2(a). A significant and sustained decline in discretionary spending may have a substantial impact on the financial performance of the Merged Group;
PAGE 36 8 RISK FACTORS
2. Competition from other distributors of small appliances The global small appliance distribution industry is highly competitive, and the Merged Group is likely to face intense competition from a number of small appliance distributors, which may represent a threat to the Merged Group’s operating and financial performance; and 3. Retailer substitution of Merged Group products for ‘own-branded’ products Retailers may elect to bypass distributors and source ‘own-branded’ or ‘manufacturer branded’ small electrical appliances directly from manufacturers, which may adversely impact the performance of the Merged Group; 4. Reduced access to retail shelf space Product sales of the Merged Group may be adversely impacted if the retail shelf space available to display its products in customers’ stores is reduced by its retail customers.
(f) Specific risks relating to the existing business of GUD GUD has a diverse mix of operating businesses which expose the company to a broad range of industry sectors. The operating businesses may be influenced by general economic and share market conditions as described above. Additionally, the demand for GUD’s heating and cooling appliances, water pumps, water conservation products and pool and spa products is subject to variation due to climatic conditions in Australasia (its key geographic market).
8.3 Risks Relating to the Offer and the Merged Group
(a) Issue of GUD Shares as consideration Breville shareholders are being offered consideration under the Offer that consists of a specified number of GUD Shares, rather than a number of GUD Shares with a specified market value. As a result, the value of the consideration will fluctuate depending upon the market price of the GUD Shares. Furthermore, under the Offer, GUD will issue a significant number of GUD Shares. Some Breville shareholders may not intend to continue to hold their GUD Shares and may wish to sell them on ASX. There is a risk that if a significant number of Breville shareholders seek to sell their GUD Shares, this may adversely impact the price of GUD Shares for a period of time.
(b) Acquisition of less than 100% of Breville Shares It is possible that GUD will acquire less than 100% of Breville Shares under the Offer. The impact on the Merged Group of GUD acquiring less than 100% of Breville Shares will depend on the ultimate level of ownership acquired but, in any event, the existence of a minority interest in Breville may have an impact on the Merged Group’s capacity to realise operational benefits from the acquisition of Breville. If, after the Offer, GUD does not hold 80% or more of the Breville Shares, Breville shareholders who sold their shares into the Offer will be unable to elect scrip for scrip rollover. This means that for those Australian resident shareholders for income tax purposes who hold their Breville Shares on capital account and who would make a gain on disposal of their Breville Shares will be unable to disregard the gain and a capital gain would crystallise at the time of sale of their Breville Shares, even if Offer proceeds were received entirely in GUD Shares. A general summary of the tax consequences to Australian resident holders of Breville Shares as a result of accepting the Offer is set out in Section 9.
PAGE 37 8 RISK FACTORS
(c) Integration risks There are risks that any integration between the businesses of GUD and Breville may take longer than expected and that potential efficiencies and benefits of that integration may not be achieved. These risks include possible differences in the management culture of the two groups, inability to achieve operational benefits and cost savings, and the potential loss of key personnel.
(d) Change of control risk As the Offer may result in a change in control of Breville, there could be adverse consequences for the Merged Group. For example, contracts to which Breville is a party may be subject to review or termination in the event of a change of control of Breville.
(e) Limited due diligence In preparing the information in this Bidder’s Statement on Breville, including the pro forma financial information, GUD has relied on publicly available information. As only public information due diligence was able to be carried out on Breville, risks may exist of which GUD is unaware. If any material risks are known to the directors of Breville, they will need to be disclosed in the Target’s Statement to be issued by Breville.
PAGE 38 TAX CONSIDERATIONS 9
9 TAX CONSIDERATIONS
9 TAX CONSIDERATIONS
9.1 Introduction
The following is a general description of the Australian income tax (including capital gains tax (CGT)) consequences to Breville shareholders of accepting the Offer. The comments set out below are relevant only to those Breville shareholders who hold their Breville Shares as capital assets. Breville shareholders who hold their shares as trading stock or otherwise on revenue account should seek their own advice. The comments below are also not relevant to Breville shareholders that acquire their Breville Shares as a result of exercising Options or Performance Rights and the date of disposal of the shares is within 30 days of the ‘cessation time’ for those Options or Performance Rights. Breville shareholders who are not resident in Australia for tax purposes or are temporary residents of Australia should take into account the tax consequences under the laws of their country of residence, as well as under Australian law, of accepting the Offer. The following description is based upon the Australian law and administrative practice in effect at the date of this Bidder’s Statement, but it is general in nature and is not intended to be an authoritative or complete statement of the laws applicable to the particular circumstances of every Breville shareholder. Breville shareholders should seek independent professional advice in relation to their own particular circumstances.
9.2 Australian Resident Shareholders (excluding temporary residents)
(a) CGT on disposal of Breville Shares Acceptance of the Offer will involve the disposal by Breville shareholders of their Breville Shares by way of transfer to GUD. This change in the ownership of the Breville Shares will constitute a CGT event for Australian income tax purposes. If a shareholder ‘acquired’ (for CGT purposes) the Breville Shares before 20 September 1985 then no CGT consequences will arise on a disposal of those Breville Shares.
1. General position A capital gain will arise to the Breville shareholder if the market value of the GUD Shares received, calculated at the time the Breville Shares are disposed of, exceeds the cost base of the Breville Shares. For CGT purposes, the cost base of the Breville Shares would generally include the amount paid to acquire those shares plus any incidental costs of acquisition (for example, brokerage fees and stamp duty). For CGT purposes, the date of disposal depends on whether the Breville Shares are sold as a result of accepting the Offer or under compulsory acquisition. If a Breville shareholder accepts the Offer then the date of disposal will be the date of acceptance. If GUD acquires at least 90% of the Breville Shares and compulsorily acquires the remaining Breville Shares, the date of disposal for those Breville shareholders will be the date the shares are acquired by GUD. If an individual, trust or complying superannuation fund has held the Breville Shares for at least 12 months, they should be eligible to treat the gain as a discount capital gain:
2 for an individual or trust – to include in assessable income, only one-half of the realised gain without indexation; and
2 for a complying superannuation fund – to include in assessable income, two-thirds of the realised gain, without indexation. A Breville shareholder that is a company will not be eligible to treat the gain as a discount capital gain.
PAGE 39 9 TAX CONSIDERATIONS
Under the discount capital gain rules, any available capital losses of the shareholder (e.g. from the disposal of other assets) must be applied to reduce the gain on the Breville Shares before applying the CGT discount. A Breville shareholder who acquired Breville Shares prior to 11.45am on 21 September 1999 may choose to index the cost base of the Breville Shares for inflation up to 30 September 1999. If the shareholder elects to use indexation to calculate the gain, it may not be treated as a discount capital gain. Any capital losses that are available to the shareholder are applied after calculating the capital gain on the Breville Shares using the indexed cost base. A capital loss will result if the capital proceeds received are less than the reduced cost base of the Breville Shares (the reduced cost base will normally be the same as the cost base). A capital loss may be used to offset capital gains derived in the same or, subject to satisfying certain tests, subsequent years of income. A capital loss cannot be offset against income other than capital gains.
2. Scrip for scrip rollover relief Scrip for scrip rollover relief should be available if GUD holds at least 80% of Breville Shares after the Offer. Only Breville shareholders that would otherwise realise a capital gain on disposal of their Breville Shares will be able to claim rollover relief. Scrip for scrip rollover will not be available for Breville shareholders that acquired their Breville Shares before 20 September 1985. The effect of a shareholder choosing to claim rollover relief will be that any capital gain realised by the shareholder from the disposal of their Breville Shares will be disregarded to the extent that the consideration received is represented by shares in GUD. The other consequences of electing rollover relief are explained in more detail below in Section 9.2(c).
(b) Implications of holding GUD Shares As a consequence of accepting the Offer, a shareholder will cease to be a shareholder of Breville and will become a shareholder of GUD. Dividends received by an Australian resident shareholder of GUD would generally be required to be included in the assessable income of such a shareholder. If the dividends are franked and the shareholder is a ‘qualified person’ in respect of the dividend, then the attached franking credit will also need to be included in the assessable income of the shareholder. In that event the shareholder will be entitled to a tax offset equal to the amount of the franking credit.
(c) Subsequent disposal of GUD Shares For a shareholder that holds GUD Shares as capital assets, a subsequent disposal of GUD Shares will generally result in Australian CGT implications similar to those described in Section 9.2(a) above. However, the amount of any capital gain or capital loss will differ depending upon whether or not scrip for scrip rollover relief was claimed (if available) in relation to the disposal of Breville Shares pursuant to the Offer.
1. Where scrip for scrip rollover relief is not claimed or is not available in relation to the disposal of Breville Shares. Where scrip for scrip rollover relief was not claimed or was not available in relation to the disposal of the Breville Shares, the cost base of the GUD Shares would include the market value of the Breville Shares disposed of under the Offer, calculated at the time of disposal (the time of disposal for CGT purposes is explained in Section 9.2(a) above). That should be equal to the market value of the GUD Shares received in return at the same time. Indexation will not be available in relation to the cost base of the GUD Shares.
PAGE 40 9 TAX CONSIDERATIONS
Where a shareholder is an individual, trust or complying superannuation fund that has held GUD Shares for twelve months or longer at the time of the subsequent disposal, the capital gain derived will be a discount capital gain so that only half of the realised nominal gain (or two-thirds of the gain for complying superannuation funds) will be included in the shareholder’s assessable income (after allowance for any available capital losses as described in Section 9.2(a)(1) above). Where the GUD Shares have been held for less than twelve months or are owned by a company, the gain will not be a discount capital gain and the full amount of any realised gain will be included in the shareholder’s assessable income.
2. Where scrip for scrip rollover relief is claimed in relation to the disposal of Breville Shares Where scrip for scrip rollover relief is claimed in relation to the disposal of Breville Shares, the cost base of the GUD Shares is adopted from the original cost base (including indexation where applicable) of the Breville Shares disposed of under the Offer. A shareholder will be taken to have acquired the GUD Shares at the time the Breville Shares were acquired for CGT purposes. Consequently, the shareholder will be entitled to add together the ownership periods for both the Breville and GUD Shares to determine whether the 12 month ownership requirement is satisfied for the discount capital gain rules.
9.3 Non-resident Shareholders
Breville shareholders who are not resident in Australia or who are temporary residents of Australia for income tax purposes should not be subject to Australian tax on the disposal of Breville Shares if they and their associates have not held 10% or more of the issued Breville Shares at any time in the two years preceding the disposal of their Breville Shares. Any Breville shareholders who are non-residents or temporary residents that have held, together with associates, 10% or more of the issued Breville Shares during that time should seek independent advice. In broad terms, they will only be subject to tax if more than half of Breville’s value is attributable to Australian real property.
9.4 Goods and Services Tax
Holders of Breville Shares, Options or Performance Rights should not be liable to GST in respect of a disposal of those Shares or exercise of the Options or Performance Rights.
PAGE 41 9 TAX CONSIDERATIONS
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PAGE 42 ADDITIONAL INFORMATION10
10 ADDITIONAL INFORMATION
10 ADDITIONAL INFORMATION
10.1 Australian Competition and Consumer Commission Approval
Section 50 of the Trade Practices Act 1974 (Cth) prohibits any merger which has, or is likely to have, the effect of substantially lessening competition in a substantial market in Australia. The Australian Competition and Consumer Commission (ACCC), which is responsible for administering the Trade Practices Act, is undertaking a review of GUD’s proposed acquisition of all the Breville Shares in the context of that prohibition. GUD is not required to lodge any formal notification with the ACCC in relation to the Offer. However, GUD has made submissions to the ACCC as to the likely effect of the proposed merger, and has sought confirmation from the ACCC that it will not seek to intervene in respect of the proposed merger. Accordingly, the Offer and any contract formed on acceptance of the Offer is conditional on the ACCC not seeking to prevent the acquisition of Breville Shares by GUD or seeking to impose conditions or require undertakings in relation to the acquisition.
10.2 Date for Determining Holders of Breville Shares
For the purposes of Section 633 of the Corporations Act, the date for determining the people to whom information is to be sent under items 6 and 12 of Section 633(1) is the Register Date.
10.3 Consents
This Bidder’s Statement includes statements which are made in, or based on statements made in, documents lodged with ASIC or given to ASX. Under the terms of ASIC Class Order 01/1543, the parties making those statements are not required to consent to, and have not consented to, inclusion of those statements in this Bidder’s Statement. If you would like to receive a copy of any of those documents, or the relevant parts of the documents containing the statements, (free of charge), during the bid period, please contact the GUD Offer Information Line on 1300 822 876 (local call cost) from within Australia, or +613 9415 4686 (normal charges apply) from outside Australia. Calls to this number may be recorded. As permitted by ASIC Class Order 03/635, this Bidder’s Statement may include or be accompanied by certain statements:
2 fairly representing a statement by an official person; or
2 from a public official document or a published book, journal or comparable publication. Macquarie Capital Advisers Limited, Freehills and Deloitte have consented to being named in this Bidder’s Statement, but should not be regarded as authorising the issue of this Bidder’s Statement or any statements in it. Each of Perpetual Investment Management Limited, Paradice Investment Management Pty Ltd, BT Investment Management (RE) Limited, Souls Funds Management and Kosmos Asset Management have consented to being named in this Bidder’s Statement in the form and context in which they are named.
10.4 Foreign Shareholders
Breville shareholders who are Foreign Shareholders will not be entitled to receive GUD Shares as consideration for their Breville Shares pursuant to the Offer, unless GUD otherwise determines.
PAGE 43 10 ADDITIONAL INFORMATION
A Breville shareholder is a Foreign Shareholder for the purposes of the Offer if their address as shown in the register of members of Breville is in a jurisdiction other than Australia or its external territories or New Zealand. However, such a person will not be a Foreign Shareholder if GUD is satisfied that it is not legally or practically constrained from making the Offer to a Breville shareholder in the relevant jurisdiction and to issue GUD Shares to such a shareholder on acceptance of the Offer, and that it is lawful for the shareholder to accept the Offer in such circumstances in the relevant jurisdiction. Notwithstanding anything else in this Bidder’s Statement, GUD is not under any obligation to spend any money, or undertake any action, in order to satisfy itself concerning any of these matters. The GUD Shares which would otherwise have been issued to Foreign Shareholders will instead be issued to a nominee approved by ASIC, who will sell these shares. The net proceeds of the sale of such shares will then be remitted to the relevant Foreign Shareholders. See Section 11.7 for further details.
10.5 Social Security and Superannuation Implications of the Offer
Acceptance of the Offer may have implications under your superannuation arrangements or on your social security entitlements. If in any doubt, you should seek specialist advice.
10.6 Disclosure of Interests of Certain Persons
Other than as set out below or elsewhere in this Bidder’s Statement no:
2 director or proposed director of GUD;
2 person named in this Bidder’s Statement as performing a function in a professional, advisory or other capacity in connection with the preparation or distribution of this Bidder’s Statement;
2 promoter of GUD; or
2 underwriter to the issue of GUD Shares or financial services licensee named in this Bidder’s Statement as being involved in the issue of GUD Shares, (together, the Interested Persons) holds at the date of this Bidder’s Statement or held at any time during the last two years, any interest in:
2 the formation or promotion of GUD;
2 property acquired or proposed to be acquired by GUD in connection with its formation or promotion, or the offer of GUD Shares under the Offer; or
2 the offer of GUD Shares under the Offer.
10.7 Disclosure of Fees and Benefits Received by Certain Persons
Other than as set out below or elsewhere in this Bidder’s Statement, no amounts have been paid or agreed to be paid and no benefits have been given or agreed to be given:
2 to a director or proposed director of GUD to induce them to become, or to qualify as, a director of GUD; or
2 for services provided by an Interested Person in connection with the formation or promotion of GUD or the offer of GUD Shares under the Offer. Macquarie Capital Advisers Limited has acted as corporate advisers to GUD in relation to the Offer. As at the date of this Bidder’s Statement GUD has paid or agreed to pay Macquarie Capital Advisers Limited, a success fee equal to approximately 1.6% of the Breville enterprise value implied by the Offer value as at 8 October 2009, being the last Business Day prior to the Announcement Date. As at the date of this Bidder’s Statement, GUD has paid or agreed to pay Freehills approximately $165,000 for their services and will pay further amounts in accordance with standard agreements. PAGE 44 10 ADDITIONAL INFORMATION
Deloitte has acted as accounting due diligence adviser to GUD in relation to the Offer. GUD estimates it will pay Deloitte approximately $80,000 for those services. Deloitte has also received other fees for advising GUD on other matters.
10.8 Disclosure of Interests of Directors
(a) Interests in GUD Shares As at the date of this Bidder’s Statement, the directors of GUD had the following Relevant Interests in GUD Shares:
Table 10.1: GUD Directors’ Interests in GUD
Director Shares Held Beneficially Total
Own Private
Name Company/Trust C K Hall – 72,442 72,442 G D W Curlewis – 12,442 12,442 R M Herron 10,000 12,442 22,442 P A F Hay 1,882 1,882 M G Smith - I A Campbell 137,473 127,093 264,566 R J Wodson 1,037 41,442 42,479
(b) Interests in Breville Shares No director of GUD has a Relevant Interest in Breville Shares as at the date of this Bidder’s Statement.
(c) Indemnity and insurance The constitution of GUD permits the grant of an indemnity (to the maximum extent permitted by law) in favour of each director, the company secretary, past directors and secretaries and all past and present executive officers of GUD. GUD has entered into deeds of indemnity and access with all of the current directors. This indemnity is against liability to third parties by such officers unless the liability arises out of conduct involving a lack of good faith. The indemnity also covers costs or expenses incurred by an officer in unsuccessfully defending proceedings relating to that person’s position. GUD maintains an insurance policy in respect of certain present and future officers against certain liability incurred in that capacity. Disclosure of the total amount of any premium paid and the nature of the liabilities in respect of such insurance is prohibited by the contract of insurance.
PAGE 45 10 ADDITIONAL INFORMATION
10.9 Expiry Date
No securities will be issued on the basis of this Bidder’s Statement after the date which is 13 months after the date of this Bidder’s Statement.
10.10 Other Material Information
Except as disclosed elsewhere in this Bidder’s Statement, there is no other information that is:
(a) material to the making of a decision by a Breville shareholder whether or not to accept the Offer; and
(b) known to GUD, which has not previously been disclosed to Breville shareholders.
PAGE 46 THE TERMS AND CONDITIONS OF THE OFFER 11
11 THE TERMS AND CONDITIONS OF THE OFFER
11 THE TERMS AND CONDITIONS OF THE OFFER
11.1 Offer
(a) GUD offers to acquire all of Your Shares on and subject to the terms and conditions set out in this Section 11 of this Bidder’s Statement.
(b) The consideration under the Offer is one GUD Share for every 4 of Your Shares. If, after aggregating all holdings of Your Shares, you become entitled to a fraction of a GUD Share that fraction will be rounded to the nearest whole GUD Share.
(c) If, at the time this Offer is made to you, you are a Foreign Shareholder, you will not receive GUD Shares. Instead, you are offered and will receive a cash amount determined in accordance with Section 11.7 of this Bidder’s Statement.
(d) The GUD Shares to be issued are ordinary shares in GUD and will be credited as fully paid and upon issue have the rights summarised in Section 3.4.
(e) By accepting this Offer, you undertake to transfer to GUD not only the Breville Shares to which the Offer relates, but also all Rights attached to those Breville Shares (see Section 11.5(c)(6) and Section 11.6(c)).
(f) This Offer is being made to each person registered as the holder of Breville Shares in the register of Breville shareholders at open of business (Melbourne time) on the Register Date. It also extends to:
(1) holders of securities or Rights (including the holders of any Options or Performance Rights) that convert to Breville Shares during the period from the Register Date to the end of the Offer Period due to the conversion of, or exercise of Rights conferred by, such securities and which are on issue as at the Register Date; and
(2) any person who becomes registered, or entitled to be registered, as the holder of Your Shares during the Offer Period.
(g) If, at the time the Offer is made to you, or at any time during the Offer Period, another person is registered as the holder of some or all of Your Shares, then:
(1) a corresponding offer on the same terms and conditions as this Offer will be deemed to have been made to that other person in respect of those Breville Shares; and
(2) a corresponding offer on the same terms and conditions as this Offer will be deemed to have been made to you in respect of any other Breville Shares you hold to which the Offer relates; and
(3) this Offer will be deemed to have been withdrawn immediately at that time.
PAGE 47 11 THE TERMS AND CONDITIONS OF THE OFFER
(h) If at any time during the Offer Period you are registered or entitled to be registered as the holder of one or more parcels of Breville Shares as trustee or nominee for, or otherwise on account of, another person, you may accept as if a separate and distinct offer on the same terms and conditions as this Offer had been made in relation to each of those parcels and any parcel you hold in your own right. To validly accept the Offer for each distinct parcel, you must comply with the procedure in Section 653B(3) of the Corporations Act. If, for the purposes of complying with that procedure, you require additional copies of this Bidder’s Statement and/or the Acceptance Form, please call the GUD Offer Information Line on 1300 822 876 (local call cost) from within Australia, or +613 9415 4686 (normal charges apply) from outside Australia to request those additional copies. Calls to this number may be recorded.
(i) If Your Shares are registered in the name of a broker, investment dealer, bank, trust company or other nominee you should contact that nominee for assistance in accepting the Offer.
(j) The Offer is dated [leave blank in lodged version].
11.2 Offer Period
(a) Unless withdrawn, the Offer will remain open for acceptance during the period commencing on the date of this Offer and ending at 7pm (Melbourne time) on the later of:
(1) [leave blank in lodged version]; or
(2) any date to which the Offer Period is extended.
(b) GUD reserves the right, exercisable in its sole discretion, to extend the Offer Period in accordance with the Corporations Act.
(c) If, within the last 7 days of the Offer Period, either of the following events occurs:
(1) the Offer is varied to improve the consideration offered; or
(2) GUD’s voting power in Breville increases to more than 50%, then the Offer Period will be automatically extended so that it ends 14 days after the relevant event in accordance with Section 624(2) of the Corporations Act.
11.3 How to Accept this Offer
(a) General
(1) Subject to Section 11.1(g) and Section 11.1(h), you may accept this Offer only for all of Your Shares.
(2) You may accept this Offer at any time during the Offer Period.
PAGE 48 11 THE TERMS AND CONDITIONS OF THE OFFER
(b) Breville Shares held in your name on Breville’s issuer sponsored subregister To accept this Offer for Breville Shares held in your name on Breville’s issuer sponsored sub-register (in which case your Securityholder Reference Number will commence with ‘I’), you must:
(1) complete and sign the Acceptance Form in accordance with the terms of this Offer and the instructions on the Acceptance Form; and
(2) ensure that the Acceptance Form (including any documents required by the terms of this Offer and the instructions on the Acceptance Form) is received before the end of the Offer Period, at the address shown on the Acceptance Form.
(c) Breville Shares held in your name in a CHESS Holding
(1) If Your Shares are held in your name in a CHESS Holding (in which case your Holder Identification Number will commence with ‘X’) and you are not a Participant, you should instruct your Controlling Participant (this is normally the stockbroker either through whom you bought Your Shares or through whom you ordinarily acquire shares on the ASX) to initiate acceptance of this Offer on your behalf in accordance with Rule 14.14 of the ASTC Settlement Rules before the end of the Offer Period.
(2) If Your Shares are held in your name in a CHESS Holding (in which case your Holder Identification Number will commence with ‘X’) and you are a Participant, you should initiate acceptance of this Offer in accordance with Rule 14.14 of the ASTC Settlement Rules before the end of the Offer Period.
(3) Alternatively, to accept this Offer for Breville Shares held in your name in a CHESS Holding (in which case your Holder Identification Number will commence with ‘X’), you may sign and complete the Acceptance Form in accordance with the terms of this Offer and the instructions on the Acceptance Form and ensure that it (including any documents required by the terms of this Offer and the instructions on the Acceptance Form) is received before the end of the Offer Period, at the address shown on the Acceptance Form.
(4) If Your Shares are held in your name in a CHESS Holding (in which case your Holder Identification Number will commence with ‘X’), you must comply with any other applicable ASTC Settlement Rules.
(d) Acceptance Form and other documents
(1) The Acceptance Form forms part of the Offer.
(2) If your Acceptance Form (including any documents required by the terms of this Offer and the instructions on the Acceptance Form) is returned by post, for your acceptance to be valid you must ensure that they are posted or delivered in sufficient time for them to be received by GUD at one of the addresses shown on the Acceptance Form before the end of the Offer Period. You may only return your Acceptance Form by facsimile with the prior approval of GUD.
(3) When using the Acceptance For to accept this Offer in respect of Breville Shares in a CHESS Holding, you must ensure that the Acceptance Form (and any documents required by the terms of this Offer and the instruction on the Acceptance Form) are received by GUD in sufficient time for GUD to instruct your Controlling Participant to initiate acceptance of this Offer on your behalf in accordance with Rule 14.14 of the ASTC Settlement Rules before the end of the Offer Period. You may only return your Acceptance Form by facsimile with prior approval of GUD.
PAGE 49 11 THE TERMS AND CONDITIONS OF THE OFFER
(4) When using the Acceptance Form to accept this Offer in respect of Breville Shares in a CHESS Holding, you must ensure that the Acceptance Form (and any documents required by the terms of this Offer and the instruction on the Acceptance Form) are received by GUD in time for GUD to instruct your Controlling Participant to initiate acceptance of this Offer on your behalf in accordance with Rule 14.14 of the ASTC Settlement Rules before the end of the Offer Period.
(5) The postage and transmission of the Acceptance Form and other documents is at your own risk.
11.4 Validity of Acceptances
(a) Subject to this Section 11.4, your acceptance of the Offer will not be valid unless it is made in accordance with the procedures set out in Section 11.3.
(b) GUD will determine, in its sole discretion, all questions as to the form of documents, eligibility to accept the Offer and time of receipt of an acceptance of the Offer. GUD is not required to communicate with you prior to or after making this determination. The determination of GUD will be final and binding on all parties.
(c) Notwithstanding Sections 11.3(b), 11.3(c)and 11.3(d), GUD may, in its sole discretion, at any time and without further communication to you, deem any Acceptance Form it receives to be a valid acceptance in respect of Your Shares, even if a requirement for acceptance has not been complied with but the payment of the consideration in accordance with the Offer may be delayed until any irregularity has been resolved or waived and any other documents required to procure registration have been received by GUD.
(d) Where you have satisfied the requirements for acceptance in respect of only some of Your Shares, GUD may, in its sole discretion, regard the Offer to be accepted in respect of those of Your Shares but not the remainder.
(e) GUD will provide the consideration to you in accordance with Section 11.6, in respect of any part of an acceptance determined by GUD to be valid.
11.5 The Effect of Acceptance
(a) Once you have accepted the Offer, you will be able to revoke your acceptance at any time while the condition in Section 11.8 remains unfulfilled. When the condition in Section 11.8 has been fulfilled, you will be unable to revoke your acceptance, the contract resulting from your acceptance will be binding on you and you will be unable to withdraw Your Shares from the Offer or otherwise dispose of Your Shares, except as follows:
(1) if, by the relevant times specified in Section 11.5(b), the conditions in Section 11.8 have not all been fulfilled or freed, this Offer will automatically terminate and Your Shares will be returned to you; or
(2) if the Offer Period is extended for more than one month and, at the time, this Offer is subject to one or more of the conditions in Section 11.8, you may be able to withdraw your acceptance and Your Shares in accordance with Section 650E of the Corporations Act. A notice will be sent to you at the time explaining your rights in this regard.
PAGE 50 11 THE TERMS AND CONDITIONS OF THE OFFER
(b) The relevant times for the purposes of Section 11.5(a)(1) are:
(1) in relation to the condition in Section 11.8(l), the end of the third business day after the end of the Offer Period; and
(2) in relation to all other conditions in Section 11.8, the end of the Offer Period.
(c) By signing and returning the Acceptance Form, or otherwise accepting this Offer pursuant to Section 11.3, you will be deemed to have:
(1) accepted this Offer (and any variation of it) in respect of, and, subject to all of the conditions to this Offer in Section 11.8 being fulfilled or freed, agreed to transfer to GUD, all Your Shares (even if the number of Breville Shares specified on the Acceptance Form differs from the number of Your Shares), subject to Section 11.1(g) and Section 11.1(h);
(2) represented and warranted to GUD, as a fundamental condition going to the root of the contract resulting from your acceptance, that at the time of acceptance, and the time the transfer of Your Shares (including any Rights) to GUD is registered, that all Your Shares are and will be free from all mortgages, charges, liens, encumbrances and adverse interests of any nature (whether legal or otherwise) and free from restrictions on transfer of any nature (whether legal or otherwise), that you have full power and capacity to accept this Offer and to sell and transfer the legal and beneficial ownership in Your Shares (including any Rights) to GUD, and that you have paid to Breville all amounts which at the time of acceptance have fallen due for payment to Breville in respect of Your Shares;
(3) irrevocably authorised GUD (and any director, secretary, nominee or agent of GUD) to alter the Acceptance Form on your behalf by inserting correct details relating to Your Shares, filling in any blanks remaining on the form and rectifying any errors or omissions as may be considered necessary by GUD to make it an effective acceptance of this Offer or to enable registration of Your Shares in the name of GUD;
(4) if you signed the Acceptance Form in respect of Breville Shares which are held in a CHESS Holding, irrevocably authorised GUD (or any director, secretary, nominee or agent of GUD) to instruct your Controlling Participant to initiate acceptance of this Offer in respect of Your Shares in accordance with Rule 14.14 of the ASTC Settlement Rules;
(5) if you signed the Acceptance Form in respect of Breville Shares which are held in a CHESS Holding, irrevocably authorised GUD (or any director, secretary, nominee or agent of GUD) to give any other instructions in relation to Your Shares to your Controlling Participant, as determined by GUD acting in its own interests as a beneficial owner and intended registered holder of those Breville Shares;
(6) irrevocably authorised and directed Breville to pay to GUD, or to account to GUD for, all Rights in respect of Your Shares, subject, if this Offer is withdrawn, to GUD accounting to you for any such Rights received by GUD;
(7) irrevocably authorised GUD to notify Breville on your behalf that your place of address for the purpose of serving notices upon you in respect of Your Shares is the address specified by GUD in the notification;
PAGE 51 11 THE TERMS AND CONDITIONS OF THE OFFER
(8) with effect from the time and date on which all the conditions to this Offer in Section 11.8 have been fulfilled or freed, to have irrevocably appointed GUD (and any director, secretary or nominee of GUD) severally from time to time as your true and lawful attorney to exercise all your powers and rights in relation to Your Shares, including (without limitation) powers and rights to requisition, convene, attend and vote in person, by proxy or by body corporate representative, at all general meetings and all court-convened meetings of Breville and to request Breville to register, in the name of GUD or its nominee, Your Shares, as appropriate, with full power of substitution (such power of attorney, being coupled with an interest, being irrevocable);
(9) with effect from the date on which all the conditions to this Offer in Section 11.8 have been fulfilled or freed, to have agreed not to attend or vote in person, by proxy or by body corporate representative at any general meeting or any court- convened meeting of Breville or to exercise or purport to exercise any of the powers and rights conferred on GUD (and its directors, secretaries and nominees) in Section 11.5(c)(8);
(10) agreed that in exercising the powers and rights conferred by the powers of attorney granted under Section 11.5(c)(8), the attorney will be entitled to act in the interests of GUD as the beneficial owner and intended registered holder of Your Shares;
(11) agreed to do all such acts, matters and things that GUD may require to give effect to the matters the subject of this Section 11.5(c) (including the execution of a written form of proxy to the same effect as this Section 11.5(c) which complies in all respects with the requirements of the constitution of Breville) if requested by GUD;
(12) agreed to indemnify GUD in respect of any claim or action against it or any loss, damage or liability whatsoever incurred by it as a result of you not producing your Holder Identification Number or Securityholder Reference Number or in consequence of the transfer of Your Shares to GUD being registered by Breville without production of your Holder Identification Number or your Securityholder Reference Number for Your Shares;
(13) represented and warranted to GUD that, unless you have notified it in accordance with Section 11.1(h), Your Shares do not consist of separate parcels of Shares;
(14) irrevocably authorised GUD (and any nominee) to transmit a message in accordance with Rule 14.17 of the ASTC Settlement Rules to transfer Your Shares to GUD’s Takeover Transferee Holding, regardless of whether it has paid the consideration due to you under this Offer;
(15) agreed, subject to the conditions of this Offer in Section 11.8 being fulfilled or freed, to execute all such documents, transfers and assurances, and do all such acts, matters and things that GUD may consider necessary or desirable to convey Your Shares registered in your name and Rights to GUD; and
(16) agreed to accept the GUD Shares to which you have become entitled by acceptance of this Offer subject to the constitution of GUD and have authorised GUD to place your name on its register of shareholders in respect of those GUD Shares.
(d) The undertakings and authorities referred to in Section 11.5(c) will remain in force after you receive the consideration for Your Shares and after GUD becomes registered as the holder of Your Shares.
PAGE 52 11 THE TERMS AND CONDITIONS OF THE OFFER
11.6 Payment of Consideration
(a) Subject to Sections 11.4(b), 11.6 and 11.7 and the Corporations Act, GUD will provide the consideration due to you for Your Shares on or before the earlier of:
(1) one month after the date of your acceptance or, if this Offer is subject to a defeating condition when you accept this Offer, within one month after this Offer becomes unconditional; and
(2) 21 days after the end of the Offer Period.
(b) Where the Acceptance Form requires an additional document to be delivered with your Acceptance Form (such as a power of attorney):
(1) if that document is given with your Acceptance Form, GUD will provide the consideration in accordance with Section 11.6(a);
(2) if that document is given after your Acceptance Form and before the end of the Offer Period while this Offer is subject to a defeating condition, GUD will provide the consideration due to you on or before the earlier of one month after this Offer becomes unconditional and 21 days after the end of the Offer Period;
(3) if that document is given after your Acceptance Form and before the end of the Offer Period while this Offer is not subject to a defeating condition, GUD will provide the consideration due to you on or before the earlier of one month after that document is given and 21 days after the end of the Offer Period;
(4) if that document is given after the end of the Offer Period, and the Offer is not subject to a defeating condition, GUD will provide the consideration within 21 days after that document is given. However, if at the time the document is given, the Offer is still subject to a defeating condition that relates only to the happening of an event or circumstance referred to in Section 652C(1) or (2) of the Corporations Act, GUD will provide the consideration due to you within 21 days after the Offer becomes unconditional.
(c) If you accept this Offer, GUD is entitled to all Rights in respect of Your Shares. GUD may require you to provide all documents necessary to vest title to those Rights in GUD, or otherwise to give it the benefit or value of those Rights. If you do not give those documents to GUD, or if you have received the benefit of those Rights, GUD will deduct from the consideration otherwise due to you the amount (or value, as reasonably assessed by GUD) of those Rights, together with the value (as reasonably assessed by GUD) of the franking credits, if any, attached to the Rights. Any such deduction will be made from the cash component of the Offer.
(d) If you have accepted the Offer and you are a Foreign Shareholder, you will be paid your share of the proceeds from the sale of the GUD Shares in accordance with Section 11.7.
(e) Payment of any cash amount to which you are entitled under the Offer will be made by cheque in Australian currency. Cheques will be posted to you at your risk by ordinary mail (or in the case of overseas shareholders, by airmail) to the address that GUD has been informed by Breville from time to time is shown on its register of members.
PAGE 53 11 THE TERMS AND CONDITIONS OF THE OFFER
(f) The obligation of GUD to issue and allot any GUD Shares to which you are entitled will be satisfied by GUD:
(1) entering your name on the register of members of GUD; and
(2) dispatching or procuring the dispatch to you by pre-paid post to your address recorded in Breville’s register of members at 8:00am (Melbourne time) on the Register Date, an uncertificated holding statement in your name. If Your Shares are held in a joint name, an uncertificated holding statement will be issued in the name of, and forwarded to, the holder whose name appears first in Breville’s register of members at 8:00am (Melbourne time) on the Register Date.
(g) If at the time you accept the Offer any of the following:
(1) Banking (Foreign) Exchange Regulations 1959 (Cth);
(2) Charter of the United Nations (Dealing with Assets) Regulations 2008 (Cth);
(3) Charter of the United Nations (Sanctions – Afghanistan) Regulations 2008 (Cth);
(4) Charter of the United Nations (Sanctions – Iraq) Regulations 2008 (Cth); or
(5) any other law of Australia, require that an authority, clearance or approval of the Reserve Bank of Australia, the Australian Taxation Office or any other government authority be obtained before you receive any consideration for Your Shares, or would make it unlawful for GUD to provide any consideration to you for Your Shares, you will not be entitled to receive any consideration for Your Shares until all requisite authorities, clearances or approvals have been received by GUD. As far as GUD is aware, as at the date of this Bidder’s Statement, the persons to whom this Section 11.6(g) will apply are: prescribed supporters of the former government of Yugoslavia; ministers and senior officials of the Government of Zimbabwe; persons associated with the former government of Iraq (including senior officials, immediate family members of senior officials, or an entity controlled by any of those persons); the Taliban; members of the Al-Qaida organisation; and a person named in the list maintained pursuant to paragraph 2 of Resolution 1390 of the Security Council of the United Nations.
PAGE 54 11 THE TERMS AND CONDITIONS OF THE OFFER
11.7 Foreign Shareholders
(a) If you are a Foreign Shareholder, you will not be entitled to receive GUD Shares as the consideration for Your Shares as a result of accepting this Offer, and GUD will:
(1) arrange for the issue to a nominee approved by ASIC (the Nominee) of the number of GUD Shares to which you and all other Foreign Shareholders would have been entitled but for Section 11.1(c) and the equivalent provision in each other offer under the Offer;
(2) cause the GUD Shares so issued to be offered for sale by the Nominee on ASX as soon as practicable and otherwise in the manner, at the price and on such other terms and conditions as are determined by the Nominee; and
(3) cause the Nominee to pay to you the amount ascertained in accordance with the formula: N× YS
TS where: ‘N’ is the amount which is received by the Nominee upon the sale of all GUD Shares under this Section 11.7 less brokerage and sale expenses; ‘YS’ is the number of GUD Shares which would, but for Section 11.1(c), otherwise have been allotted to you; and ‘TS’ is the total number of GUD Shares allotted to the Nominee under this Section 11.7.
(b) You will receive your share of the proceeds of the sale of GUD Shares by the Nominee in Australian currency.
(c) Payment will be made by cheque posted to you at your risk by ordinary mail (or in the case of overseas shareholders, by airmail) at the address provided on your Acceptance Form within the period required by the Corporations Act.
(d) Under no circumstances will interest be paid on your share of the proceeds of the sale of GUD Shares by the Nominee, regardless of any delay in remitting these proceeds to you.
11.8 Conditions of this Offer
Subject to Section 11.9, the completion of this Offer and any contract that results from an acceptance of this Offer, are subject to the fulfilment of the conditions set out below:
(a) ACCC approval Either between the Announcement Date and the end of the Offer Period (each inclusive) the ACCC has not commenced or threatened to commence legal proceedings seeking orders to restrain the acquisition of Breville Shares by GUD, or, before the end of the Offer Period, GUD has received notice in writing from the ACCC stating, or stating to the effect, that:
(1) the ACCC does not propose to intervene or seek to prevent the acquisition of Breville Shares by GUD; or
(2) the ACCC does not seek to impose conditions on the acquisition of Breville Shares by GUD or require undertakings from GUD or any member of the GUD Group in relation to the acquisition of Breville Shares,
PAGE 55 11 THE TERMS AND CONDITIONS OF THE OFFER
and that notice has not been withdrawn, revoked or amended.
(b) Other regulatory approvals Before the end of the Offer Period, all approvals or consents that are required by law, or by any Public Authority, as are necessary to permit:
(1) the Offer to be lawfully made to and accepted by Breville shareholders; and
(2) the transactions contemplated by this Bidder’s Statement to be completed (including, without limitation, full, lawful and effectual implementation of the intentions set out in Section 6 of this Bidder’s Statement), are granted, given, made or obtained on an unconditional basis, remain in full force and effect in all respects, and do not become subject to any notice, intimation or indication of intention to revoke, suspend, restrict, modify or not renew the same.
(c) No regulatory action Between the Announcement Date and the end of the Offer Period (each inclusive):
(1) there is not in effect any preliminary or final decision, order or decree issued by any Public Authority;
(2) no action or investigation is announced, commenced or threatened by any Public Authority; and
(3) no application is made to any Public Authority (other than by GUD or any associate of GUD), in consequence of or in connection with the Offer (other than an application to, or a decision or order of, ASIC or the Takeovers Panel in exercise of the powers and discretions conferred by the Corporations Act) which restrains, prohibits or impedes, or threatens to restrain, prohibit or impede, or materially impact upon, the making of the Offers and the completion of any transaction contemplated by this Bidder’s Statement (including, without limitation, full, lawful, timely and effectual implementation of the intentions set out in Section 6 of this Bidder’s Statement) or which requires the divestiture by GUD of any Breville Shares or any material assets of Breville or any subsidiary of Breville.
(d) Minimum acceptance At the end of the Offer Period, GUD has a Relevant Interest in at least 50.1% of the Breville Shares (on a fully diluted basis).
(e) Options Either all Options granted by Breville have been exercised or cancelled, or during or at the end of the Offer Period, GUD is entitled to compulsorily acquire all outstanding Options.
(f) Performance Rights Either all Performance Rights granted by Breville have been exercised or cancelled, or during or at the end of the Offer Period, GUD is entitled to compulsorily acquire them or substitute all outstanding Performance Rights for equivalent rights in GUD Shares and/or GUD Shares.
PAGE 56 11 THE TERMS AND CONDITIONS OF THE OFFER
(g) No persons entitled to exercise or exercising rights under certain agreements or instruments Breville states in its Target’s Statement in response to the Offer or in an announcement to ASX before the date of its Target’s Statement, expressed to be made with the approval of the directors of Breville, that, after due enquiry, none of Breville or any of its subsidiaries is party to, bound by or subject to a contract under which any other party to such contract could: (1) terminate;
(2) vary, amend or modify; or
(3) exercise any right, as a result of: (4) GUD making the Offer;
(5) GUD acquiring Breville Shares under the Offer;
(6) GUD obtaining a Relevant Interest in 50% or more of Breville Shares then on issue; or
(7) GUD implementing any of its intentions for Breville as described in this Bidder’s Statement, and the statement is not materially varied, revoked or qualified before the end of the Offer Period. If there is any such contract, details of it must be specified in the Target’s Statement. (h) Acquisitions, disposals and joint ventures Between the Announcement Date and the end of the Offer Period (each inclusive), neither Breville nor any of its subsidiaries, acquires or disposes of, or enters into or announces any agreement for the acquisition or disposal of, any asset or business, or enters into any corporate transaction (including establishment of a partnership or joint venture), which would or would be likely to involve a material change in:
(1) the manner in which Breville conducts its business;
(2) the nature (including balance sheet classification), extent or value of the assets of Breville; or
(3) the nature (including balance sheet classification), extent or value of the liabilities of Breville,
(4) including, without limitation, any transaction which would or (subject to one or more conditions) may involve Breville or any subsidiary of Breville disposing, or agreeing to dispose of, one or more companies, businesses or assets (or any interest therein) for an amount in aggregate greater than $5,000,000.
(i) No litigation on foot or pending Between the Announcement Date and the end of the Offer Period (each inclusive), no litigation against Breville which may reasonably result in either a judgement of $2,000,000 or more or material damage to the market reputation of Breville is commenced, is threatened to be commenced, is announced, or is made known to GUD (whether or not becoming public) or Breville, other than that which is in the public domain as at the Announcement Date.
PAGE 57 11 THE TERMS AND CONDITIONS OF THE OFFER
(j) Index out Between the Announcement Date and the end of the Offer Period (each inclusive), the S&P ASX 200 Index does not close below 4,292 (representing 10% below the index level at close of trade on 8 October 2009, being the last trading day prior to the Announcement Date) for 3 or more consecutive trading days.
(k) Equal access Between the Announcement Date and the end of the Offer Period, Breville promptly, and in any event within 2 Business Days, provides to GUD a copy of all information that is not generally available (within the meaning of the Corporations Act) relating to Breville or any of its subsidiaries, or their respective assets, liabilities or operations, that has been provided by Breville or any of its directors, officers, agents or representatives to any person other than GUD, other than in the ordinary course of ordinary business, including (without limitation) for the purposes of soliciting, encouraging or facilitating any proposal with respect to:
(1) a takeover bid for, or scheme of arrangement proposed by, Breville, under the Corporations Act;
(2) the acquisition by that person or an associate of substantially all the assets and operations of Breville; or
(3) any transaction having a similar economic effect.
(l) No prescribed occurrences Between the Announcement Date and the date 3 business days after the end of the Offer Period (each inclusive), none of the following prescribed occurrences happen:
(1) Breville converting all or any of the Shares into a larger or smaller number of shares under Section 254H of the Corporations Act;
(2) Breville or a subsidiary of Breville resolving to reduce its share capital in any way;
(3) Breville or a subsidiary of Breville entering into a buyback agreement or resolving to approve the terms of a buyback agreement under Section 257C(1) or 257D(1) of the Corporations Act;
(4) Breville or a subsidiary of Breville making an issue of Breville Shares (other than Shares issued as a result of the exercise of Options or Performance Rights into Breville Shares) or granting an option over the Breville Shares or agreeing to make such an issue or grant such an option;
(5) Breville or a subsidiary of Breville issuing, or agreeing to issue, convertible notes;
(6) Breville or a subsidiary of Breville disposing or agreeing to dispose, of the whole, or a substantial part, of its business or property;
(7) Breville or a subsidiary of Breville charging, or agreeing to charge, the whole, or a substantial part, of its business or property;
(8) Breville or a subsidiary of Breville resolving that it be wound up;
(9) the appointment of a liquidator or provisional liquidator of Breville or of a subsidiary of Breville;
(10) the making of an order by a court for the winding up of Breville or of a subsidiary of Breville;
PAGE 58 11 THE TERMS AND CONDITIONS OF THE OFFER
(11) an administrator of Breville or of a subsidiary of Breville being appointed under Section 436A, 436B or 436C of the Corporations Act;
(12) Breville or a subsidiary of Breville executing a deed of company arrangement; or
(13) the appointment of a receiver, receiver and manager, other controller (as defined in the Corporations Act) or similar official in relation to the whole, or a substantial part, of the property of Breville or of a subsidiary of Breville.
(m) No distributions Between the Announcement Date and the end of the Offer Period (each inclusive), Breville does not announce, make, declare or pay any distribution (whether by way of dividend, capital reduction or otherwise and whether in cash or in specie), other than the final dividend payable on 13 October 2009 in respect of the financial year ended 30 June 2009 of 1.5 cents per share.
(n) No break fees Between the Announcement Date and the end of the Offer Period, Breville does not agree (whether conditionally or unconditionally) to make any payment by way of break fee, inducement fee, cost reimbursement or otherwise, to any person other than GUD or an associate, or forgo any amount to which it would otherwise be entitled, in connection with that a proposal by that person for:
(1) a takeover bid for, or scheme of arrangement proposed by, Breville, under the Corporations Act;
(2) the acquisition by that person or an associate of substantially all the assets and operations of Breville; or
(3) any transaction having a similar economic effect. This Section does not apply to a payment by way of remuneration for professional services or to directors of Breville for the discharge of their duties in connection with the Offer.
11.9 Nature and Benefit of Conditions
(a) The conditions in Section 11.8(a) and 11.8(b) are conditions precedent to the acquisition by GUD of any interest in Shares of a kind which would cause a breach of the provisions of laws referred to therein. Notwithstanding your acceptance of the Offer, unless and until the conditions in those Sections are fulfilled:
(1) no contract for the sale of Your Shares will come into force or be binding on you or on GUD;
(2) GUD will have no rights (conditional or otherwise) in relation to Your Shares;
(3) if any of Your Shares are held in a CHESS Holding, you will be entitled to withdraw your acceptance in respect of those Shares by having your Controlling Participant transmit a valid originating message to ASX Settlement and Transfer Corporation Pty Limited specifying the Shares to be released from the sub-position, in accordance with Rule 14.16 of the ASTC Settlement Rules, at any time prior to the fulfilment of those conditions; and
PAGE 59 11 THE TERMS AND CONDITIONS OF THE OFFER
(4) if any of Your Shares are not held in a CHESS Holding, you will be entitled to withdraw your acceptance in respect of those Shares by sending a notice to that effect signed by you (or on your behalf, in which case documentation proving that the person or persons signing the notice are authorised to do so must accompany the notice) to any of the addresses specified on the Acceptance Form, so that it is received at the relevant address at any time prior to the fulfilment or freedom of those conditions.
(b) The other conditions in Section 11.8 are conditions subsequent. The non-fulfilment of any condition subsequent does not, until the end of the Offer Period (or in the case of the conditions in Section 11.8(l), until the end of the third business day after the end of the Offer Period), prevent a contract to sell Your Shares from arising, but entitles GUD by written notice to you, to rescind the contract resulting from your acceptance of this Offer.
(c) Subject to the Corporations Act and Section 11.9(a), GUD alone is entitled to the benefit of the conditions in Section 11.8, or to rely on any non-fulfilment of any of them.
(d) Each condition in Section 11.8 is a separate, several and distinct condition. No condition will be taken to limit the meaning or effect of any other condition.
11.10 Freeing the Offer of Conditions
GUD may free this Offer, and any contract resulting from its acceptance, from all or any of the conditions subsequent in Section 11.8, either generally or by reference to a particular fact, matter, event, occurrence or circumstance (or class thereof), by giving a notice to Breville and to ASX declaring this Offer to be free from the relevant condition or conditions specified, in accordance with Section 650F of the Corporations Act. This notice may be given:
(a) in the case of the condition in Section 11.8(l), not later than 3 business days after the end of the Offer Period; and
(b) in the case of all the other conditions in Section 11.8, not less than 7 days before the end of the Offer Period. If, at the end of the Offer Period (or in the case of the conditions in Section 11.8(l), at the end of the third business day after the end of the Offer Period), the conditions in Section 11.8 have not been fulfilled and GUD has not declared the Offer (or it has not become) free from those conditions, all contracts resulting from the acceptance of the Offer will be automatically void.
11.11 Official Quotation of GUD Shares
(a) GUD has been admitted to the official list of ASX. Shares of the same class as those to be issued as consideration have been granted official quotation by ASX.
(b) An application will be made within 7 days after the start of the bid period to ASX for the granting of official quotation of the GUD Shares to be issued in accordance with the Offer. However, official quotation is not granted automatically on application.
(c) Pursuant to the Corporations Act, this Offer and any contract that results from your acceptance of it are subject to a condition that permission for admission to official quotation by ASX of the GUD Shares to be issued pursuant to the Offer being granted no later than 7 days after the end of the bid period. If this condition is not fulfilled, all contracts resulting from the acceptance of the Offers will be automatically void.
PAGE 60 11 THE TERMS AND CONDITIONS OF THE OFFER
11.12 Notice on Status of Conditions
The date for giving the notice on the status of the conditions required by Section 630(1) of the Corporations Act is [Leave blank in lodged version] (subject to extension in accordance with Section 630(2) if the Offer Period is extended).
11.13 Withdrawal of this Offer
This Offer may be withdrawn with the consent in writing of ASIC, which consent may be subject to conditions. If ASIC gives such consent, GUD will give notice of the withdrawal to ASX and to Breville and will comply with any other conditions imposed by ASIC.
11.14 Variation of this Offer
GUD may vary this Offer in accordance with the Corporations Act.
11.15 No Stamp Duty or Brokerage
(a) GUD will pay any stamp duty on the transfer of Your Shares to it.
(b) As long as Your Shares are registered in your name and you deliver them directly to GUD, you will not incur any brokerage in connection with your acceptance of this Offer.
11.16 Governing Laws
This Offer and any contract that results from your acceptance of it are to be governed by the laws in force in Victoria, Australia.
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PAGE 62 DEFINITIONS AND INTERPRETATION 12
12 DEFINITIONS AND INTERPRETATION
12 DEFINITIONS AND INTERPRETATION
12.1 Definitions
In this Bidder’s Statement and in the Acceptance Form unless the context otherwise appears, the following terms have the meanings shown below:
Term Meaning
$ or A$ Australian dollars, the lawful currency of the Commonwealth of Australia.
ACCC Australian Competition and Consumer Commission.
Acceptance Form the acceptance form enclosed with this Bidder’s Statement.
Announcement Date the date of the announcement of the Offer by GUD, being 9 October 2009.
ASIC the Australian Securities and Investments Commission.
ASTC ASX Settlement and Transfer Corporation Pty Ltd ABN 49 008 504 532.
ASTC Settlement Rules the operating rules of the ASTC which govern the administration of the Clearing House Electronic Sub-register System.
ASX ASX Limited ABN 98 008 624 691.
Bidder’s Statement this document, being the statement of GUD under Part 6.5 Division 2 of the Corporations Act relating to the Offer.
Breville Breville Group Limited ABN 90 086 933 431
Breville Board the board and directors of Breville.
Breville Shares fully paid ordinary shares in the capital of Breville.
Business Day means a day on which banks are open for business in Melbourne, excluding a Saturday, Sunday or public holiday.
CGT capital gains tax.
CHESS Holding a number of Shares which are registered on Breville’s share register being a register administered by the ASTC and which records uncertificated holdings of shares.
Controlling Participant in relation to Your Shares, has the same meaning as in the ASTC Settlement Rules.
Corporations Act the Corporations Act 2001 (Cth).
DRP the dividend reinvestment plan as described in Section 3.3.
EPS earnings per share.
Eligible Institutional Shareholders that meet the eligibility requirements to participate in the Shareholders Institutional Acceptance Facility, as described in Section 1 of this Bidder’s Statement.
PAGE 63 12 DEFINITIONS AND INTERPRETATION
Term Meaning
Foreign Shareholder a Breville shareholder whose address as shown in the register of members of Breville is in a jurisdiction other than Australia or its external territories or New Zealand, unless GUD otherwise determines (in its absolute discretion) after being satisfied that it is not unlawful, not unduly onerous and not unduly impracticable to make the Offer to a Breville shareholder in the relevant jurisdiction and to issue GUD Shares to such a Breville shareholder on acceptance of the Offer, and that it is not unlawful for such a Breville shareholder to accept the Offer in such circumstances in the relevant jurisdiction.
FY the financial year ended or ending on 30 June of the relevant year.
GUD G.U.D. Holdings Limited ABN 99 004 400 891.
GUD Board the board of directors of GUD.
GUD Shares fully paid ordinary shares in the capital of GUD.
Holder Identification has the same meaning as in the ASTC Settlement Rules. Number
Institutional The Institutional Acceptance Facility described in Section 1 of this Bidder’s Acceptance Facility Statement that GUD intends to establish.
Interested Person has the meaning in Section 10.6 of this Bidder’s Statement.
Issuer Sponsored a holding of Shares on Breville issuer sponsored subregister. Holdings
Listing Rules the Official Listing Rules of ASX, as amended and waived by ASX from time to time.
Merged Group means GUD following the acquisition by GUD of all or a majority of Breville Shares.
Nominee has the meaning as defined in Section 11.7 of this Bidder’s Statement.
Offer the offer for Shares under the terms and conditions contained in Section 11 of this Bidder’s Statement.
Offer Period the period during which the Offer will remain open for acceptance in accordance with Section 11.2 of this Bidder’s Statement.
Options options to subscribe for Breville Shares as described in Section 5.2 of this Bidder’s Statement.
Participant an entity admitted to participate in the Clearing House Electronic Sub-register system under Rule 4.3.1 and 4.4.1 of the ASTC Settlement Rules.
Performance Rights the performance rights in relation to Breville Shares including those described in Section 5.3 of this Bidder’s Statement.
Public Authority any government or any governmental, semi-governmental, statutory or judicial entity, agency or authority, whether in Australia or elsewhere, including (without limitation) any self-regulatory organisation established under statute or otherwise discharging substantially public or regulatory functions, and ASX or any other stock exchange.
Register Date the date set by GUD under Section 633(2) of the Corporations Act, being 7:00pm (Melbourne time) on Tuesday 13 October 2009.
Relevant Interest as set out in Sections 608 and 609 of the Corporations Act.
Rights all accreditations, rights or benefits of whatever kind attaching or arising from Shares directly or indirectly at or after the Announcement Date (including, but not limited to, all dividends or other Distributions and all rights to receive them or rights to receive or subscribe for shares, notes, bonds, options or other securities declared, paid or issued by Breville or any of its subsidiaries).
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Term Meaning
Securityholder has the same meaning as in the ASTC Settlement Rules. Reference Number
Takeover Bid the off-market takeover bid constituted by the dispatch of the Offers in accordance with the Corporations Act.
Takeover Transferee has the same meaning as in the ASTC Settlement Rules. Holding
VWAP volume weighted average price of ‘on market’ trades on ASX (i.e. normal trades, crossed trades, stabilisation trades and short sell trades).
Your Shares subject to Section 11.1(g) and Section 11.1(h), the Breville Shares (a) in respect of which you are registered, or entitled to be registered, as holder in the register of shareholders of Breville at the open of business Melbourne time) on the Register Date, or (b) to which you are able to give good title at the time you accept this Offer during the Offer Period.
12.2 Interpretation
In this Bidder’s Statement and in the Acceptance Form, unless the context otherwise requires:
(a) words and phrases have the same meaning (if any) given to them in the Corporations Act;
(b) words importing a gender include any gender;
(c) words importing the singular include the plural and vice versa;
(d) an expression importing a natural person includes any company, partnership, joint venture, association, corporation or other body corporate and vice versa;
(e) a reference to a clause, Section, attachment and schedule is a reference to a clause of and a Section of and an attachment and schedule to this Bidder’s Statement as relevant;
(f) a reference to any statute, regulation, proclamation, ordinance or by-law includes all statutes, regulations, proclamations, ordinances, or by-laws amending, varying, consolidating or replacing it and a reference to a statute includes all regulations, proclamations, ordinances and by-laws issued under that statute;
(g) headings and bold type are for convenience only and do not affect the interpretation of this Bidder’s Statement;
(h) a reference to time is a reference to time in Melbourne, Australia;
(i) a reference to writing includes facsimile transmissions; and
(j) a reference to dollars, $, A$, cents, ¢ and currency is a reference to the lawful currency of the Commonwealth of Australia.
PAGE 65 12 DEFINITIONS AND INTERPRETATION
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PAGE 66 13 APPROVAL OF BIDDER’S STATEMENT
13 APPROVAL OF BIDDER’S STATEMENT
This Bidder’s Statement has been approved by a unanimous resolution passed by the directors of GUD. 12 October 2009
Signed for and on behalf of GUD by
sign here Director print name Ian Campbell
PAGE 67
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I.2742006.2 Printed 12/10/09 (15:03)
CORPORATE DIRECTORY
GUD Holdings Limited 245 Sunshine Rd Tottenham VIC 3012 Australia
Accounting and Tax Advisers Deloitte Touche Tohmatsu 550 Bourke Street GPO Box 78 Melbourne VIC 3000 Australia
Financial Adviser Macquarie Capital Advisers Limited Level 23, 101 Collins Street Melbourne VIC 3000 Australia
GUD Share Registry Computershare Investor Services Pty Limited Yarra Falls 452 Johnston Street Abbotsford VIC 3067 Australia
Legal Adviser Freehills Level 42, 101 Collins Street Melbourne VIC 3000 Australia
GUD Offer Information Line 1300 822 876 (local call charges apply) from within Australia; or + 61 3 9415 4686 (normal charges apply) from outside Australia
This Document is printed on Greenhouse FriendlyTM ENVI Laser Carbon Neutral Paper *M000001456Q02* Acceptance Form-IssuerSponsoredHolding defined intheBidder’sStatementbutnotthisformhavesamemeaningasunlesscontextre ABN 90086933431pursuanttoaBidder’sStatementdated12October2009andanyreplacementorsupplements(the“Bidder’sSta This formrelatestotheOffer(“Offer”)byGUDHoldingsLimited(“GUD”)acquireallofYourSharesinBrevilleGroupLimite attention. Ifyouareindoubtabouthowtodealwithit,pleaseconsultasuitablyqualifiedadviser. This isapersonalisedformforthesoleuseofholderandshareholdingrecordedhere.Itanimportantdocumentreq inside thegreyareas. Print inCAPITALletters Use ablackpen. D C B A E GUD reservestherighttomakeamendments tothisformassetoutintheOfferTerms.Pleasereferlodgementinstruction Sole DirectorandCompany Secretary Individual orSecurityholder1 applicable toGUD. (including theinstructionsastoacceptanceonbackofthisform) I/We acceptGUD’sOfferinrespectofalltheBrevillesharesI/wehold andI/weagreetobeboundbythetermsconditio Sign here-thissectionmustbesignedbeforewe canprocessthisform. Contact details You willbedeemedtohaveacceptedGUD’sOfferinrespectofallYourSharesBrevilleifyousignandreturnthisform. To becompletedbySecurityholder * If youareaForeignShareholder,yourGUDShareswillbeallocatedto Statement*. The considerationapplicableisthatsetoutinSection11oftheBidder’s Consideration Please providethecontactdetailsofpersonyouauthoriseustoincaseweneedspeakaboutthisform. Name ofcontactperson GUD Statement. a nomineeandsoldonyourbehalf.SeeSection10.4oftheBidder’s ABN 99004400891 GUD HoldingsLimited SAMPLEVILLE VIC3030 SAMPLE ESTATE THE SAMPLEHILL 123 SAMPLESTREET FLAT 123 MR JOHNSMITH1 SAM 000 000001
A 1301011221012102012221332120133322113 B C 1 2 1TIO Director Individual orSecurityholder2 3 andtransferallofmy/ourBrevillesharestoGUDfortheconsideration Securityholder details Your holdinginBeville Subregister Contact person’sdaytimetelephonenumber ( Computershare InvestorServicesPtyLimited
103194_00W8NA Acceptance ofGUDOffer How tocompletethisform Please notethisformmaynotbeusedtochangeyouraddress. callers outsideAustralia). If youhaveanyenquiriesconcerningGUD’sOfferpleasecontacttheGUD OfferInformationLineon1300822876(forcallerswit e-mail [email protected] general corporatecommunications.Youmayelectnottoreceivemarketingmaterial bycontactingCIS.YoucancontactCISusing incorrect oroutofdate,pleasecontactCIS.InaccordancewiththeCorporationsAct,youmaybesentmaterial(includingmark providers, orasotherwiserequiredpermittedbylaw.IfyouwouldlikedetailsofyourpersonalinformationheldCIS, corporate actionsandcommunications.Yourpersonalinformationmaybedisclosedtoourrelatedbodiescorporate,externals Personal informationiscollectedonthisformbyCIS,asregistrarforGUDthepurposeofmaintainingregisterssecurit Privacy Statement Neither CISnorGUDacceptsanyresponsibilityifyoulodgetheAcceptanceFormatotheraddressorbymeans. MELBOURNE VIC3001 GPO Box52 Computershare InvestorServicesPtyLimited By Mail: This AcceptanceFormmustbereceivedbyCISnolaterthantheendofOfferPeriod.Youshouldallowsufficienttimefo Lodgement ofAcceptanceForm A C B envelope provided ortothe address opposite: Please returnthecompleted forminthe will beresponsibleforanydelaysincurredbythisprocess. Neither GUDorComputershareInvestorServicesPtyLimited(‘CIS’) restrictions ontransferofanykindandfreefromthirdpartyrights mortgages, charges,liens,encumbrances(whetherlegalorequitable), Acceptance FormrelatesandthatGUDwillacquirethemfreefromall and beneficialownershipoftheYourSharesinBrevilletowhichthis (and authoriseGUDtowarrantonyourbehalf)thatyouhavefulllegal If yousignandreturnthisAcceptanceForm,warranttoGUD no laterthantheendofOfferPeriod. complete andreturnthisformtotheaddressbelowsothatitisreceivedby As YourSharesinBrevilleareheldanIssuerSponsoredHolding, How toacceptGUD’sOffer of GUD’sBidder’sStatement. The considerationpayableisthatsetoutintheOfferSection11 Consideration need nottakeanyfurtheraction. If youhavealreadysoldallYourSharesinBrevilleshownoverleaf, on GUD’scopyoftheBrevilleregister. this form.Yourconsiderationwillbeissuedinthename(s)whichappear(s) Your SharesinBrevillearecurrentlyregisteredthename(s)printedon Registration Details D E opne: where thecompany hasaSoleDirectorwhoisalso Companies: all executorsmustsignand,acertifiedcopyof Deceased Estate: to signunderPowerofAttorney,youmustattacha Power ofAttorney: where theholdingisinmorethanonenameallof Joint holding: You mustsigntheformasfollowsinspaceprovided: Signature(s) used intheeventthatregistryhasaqueryregardingthisform. in caseweneedtospeakyouaboutthisform.Thesedetailswillonlybe Please providethecontactdetailsofpersonyouauthoriseusto Contact details Australia Melbourne Victoria 3001 GPO Box52 Computershare InvestorServices PtyLimited place toindicatetheofficeheld. Company Secretary.Pleasesignintheappropriate by aDirectorjointlywitheitheranotheror also signalone.Otherwisethisformmustbesigned not haveaCompanySecretary,SoleDirectorcan section 204AoftheCorporationsAct2001)does signed bythatperson.Ifthecompany(pursuantto the SoleCompanySecretary,thisformmustbe this form. Probate orLettersofAdministrationmustaccompany when youreturnit. certified copyofthePowerAttorneytothisform securityholders mustsign. youwouldliketocorrectinformationthatisinaccurate, yholders, facilitatingdistributionpaymentsandother eting material)approvedbyGUDinadditionto r thistooccur.ReturnAcceptanceFormto: ervice companiessuchasprintormailservice the detailsprovidedonfrontofthisformor hin Australia)or+61394154686(for
GUD 1TIO 103194_00W8NA This Document is printed on Greenhouse FriendlyTM ENVI Laser Carbon Neutral Paper *M000001456Q02* Acceptance Form-CHESSHolding Statement butnotinthisformhavethesamemeaningasBidder’sunlesscontextrequiresotherwise. 431 pursuanttoaBidder’sStatementdated12October2009andanyreplacementsorsupplements(the“Bidder’sStatement”).Term This formrelatestotheOffer(“Offer”)byGUDHoldingsLimited(“GUD”)acquireallofYourSharesinBrevilleGroupLimite If youareindoubtabouthowtodealwithit,pleaseconsultasuitablyqualifiedadviser. This isapersonalisedformforthesoleuseofholderandshareholdingrecordedhere.Itanimportantdocumentre Use thisformtoacceptGUD’sOfferforYourSharesinBreville inside thegreyareas. Print inCAPITALletters Use ablackpen. D C B A E GUD reservestherighttomakeamendments tothisformassetoutintheOfferterms.Pleasereferlodgementinstruction to GUD. the instructionsastoacceptanceofGUD’sOfferonbackthisform) Sole DirectorandCompanySecretary Individual orSecurityholder1 I/We acceptGUD’sOfferinrespectofallYourSharesBrevilleI/wehold andI/weagreetobeboundbythetermscond Sign here-thissectionmustbesignedbeforewecan processthisform. ● ● You willbedeemedtohaveacceptedGUD’sOfferinrespectofallYourSharesBrevilleifyousignandreturnthisform. You willbedeemedtohaveacceptedGUD’sOfferinrespectofallYourSharesBrevilleifyousignandreturnthisform. To becompletedbySecurityholder * If youareaForeignShareholder,yourGUDShareswillbeallocatedto Statement*. The considerationapplicableisthatsetoutinSection11oftheBidder’s Consideration Please provideyourcontactdetailsincaseweneedtospeakyouaboutthis form. Contact details Name ofcontactperson GUD AuthoriseGUDtocontactyourControllingParticipantonbehalf, whichyoucandobysigningandreturningthisform.By InstructyourControllingParticipantdirectly-normallystockbroker Statement. a nomineeandsoldonyourbehalf.SeeSection10.4oftheBidder’s or you willbedeemedtohaveauthorisedGUDcontactyourControllingParticipantdirectly. ABN 99004400891 GUD HoldingsLimited SAMPLEVILLE VIC3030 SAMPLE ESTATE THE SAMPLEHILL 123 SAMPLESTREET FLAT 123 MR JOHNSMITH1 SAM 000 000001
A 1301011221012102012221332120133322113 B C 1 2 1TCO Director Individual orSecurityholder2 3 and transfer all of Your Shares in Breville to GUD for the consideration applicable andtransferallofYourSharesinBrevilletoGUDfortheconsiderationapplicable Securityholder details Your holdinginBreville Subregister Contact person’sdaytimetelephonenumber ( Computershare InvestorServicesPtyLimited Enquiries (withinAustralia)1300 822876 X *I1234567890* Holder IdentificationNumber(HIN) Please returncompletedformto: For your keep security your SRN/HINconfi dential.
103194_00W8OA Acceptance ofGUD’sOffer How tocompletethisform Please notethisformmaynotbeusedtochangeyouraddress. outside Australia). If youhaveanyenquiriesconcerningGUDpleasecontacttheOfferInformation Lineon1300822876(forcallerswithinAust e-mail [email protected] general corporatecommunications.Youmayelectnottoreceivemarketingmaterial bycontactingCIS.YoucancontactCISusing incorrect oroutofdate,pleasecontactCIS.InaccordancewiththeCorporations Act,youmaybesentmaterial(includingmark providers, orasotherwiserequiredpermittedbylaw.Ifyouwouldlikedetails of yourpersonalinformationheldbyCIS,or corporate actionsandcommunications.Yourpersonalinformationmaybedisclosed toourrelatedbodiescorporate,externals Personal informationiscollectedonthisformbyCIS,asregistrarforGUD,the purposeofmaintainingregisterssecuri Privacy Statement Neither CISnorGUDacceptsanyresponsibilityifyoulodgetheAcceptanceFormatotheraddressorbymeans. MELBOURNE VIC3001 GPO Box52 Computershare InvestorServicesPtyLimited By Mail: Return thisAcceptanceFormto: This AcceptanceFormmustbereceivedbyCISinsufficienttimetoallowyourinstructionactedupontheendofOf Lodgement ofAcceptanceForm A C B envelope provided ortothe address opposite: Please returnthecompleted forminthe initiate theacceptanceofGUD’sOfferonyourbehalf. should allowsufficienttimeforyourControllingParticipantorGUDto will beresponsibleforanydelaysincurredbythisprocess.You Neither GUDnorComputershareInvestorServicesPtyLimited(‘CIS’) any kindandfreefromthirdpartyrights. liens, encumbrances(whetherlegalorequitable),restrictionsontransferof relates andthatGUDwillacquirethemfreefromallmortgages,charges, beneficial ownershipofBrevillesharestowhichthisAcceptanceForm authorise GUDtowarrantonyourbehalf)thatyouhavefulllegaland If yousignandreturnthisAcceptanceForm,warranttoGUD(and of GUD’sOfferonyourbehalf. authorise GUDtoinstructyourControllingParticipantinitiateacceptance your instructiontobeacteduponbytheendofOfferPeriod.Thiswill form totheaddressbelowsothatitisreceivedinsufficienttimeallow contact yourControllingParticipantonbehalf,signandreturnthis this AcceptanceFormtoyourControllingParticipant.IfyouwantGUD to acceptGUD’sOffer.Ifyoudothis,willneedsignandreturn Controlling Participantdirectly(normallyyourstockbroker)withinstructions As YourSharesinBrevilleareaCHESSholding,youmaycontactyour How toacceptGUD’sOffer Statement. The considerationpayableisthatsetoutinSection11oftheBidder’s Consideration need nottakeanyfurtheraction. If youhavealreadysoldallYourSharesinBrevilleshownoverleaf, on GUD’scopyoftheBrevilleregister. this form.Yourconsiderationwillbeissuedinthename(s)whichappear(s) Your SharesinBrevillearecurrentlyregisteredthename(s)printedon Registration Details D E opne: where thecompanyhasaSoleDirectorwhoisalso Companies: all executorsmustsignand,acertifiedcopyof Deceased Estate: to signunderPowerofAttorney,youmustattacha Power ofAttorney: where theholdingisinmorethanonenameallof Joint holding: You mustsigntheformasfollowsinspaceprovided: Signature(s) used intheeventthatregistryhasaqueryregardingthisform. in caseweneedtospeakyouaboutthisform.Thesedetailswillonlybe Please providethecontactdetailsofpersonyouauthoriseusto Contact details Australia Melbourne Victoria 3001 GPO Box52 Computershare InvestorServices PtyLimited place toindicatetheofficeheld. Company Secretary.Pleasesignintheappropriate by aDirectorjointlywitheitheranotheror also signalone.Otherwisethisformmustbesigned not haveaCompanySecretary,SoleDirectorcan section 204AoftheCorporationsAct2001)does signed bythatperson.Ifthecompany(pursuantto the SoleCompanySecretary,thisformmustbe this form. Probate orLettersofAdministrationmustaccompany when youreturnit. certified copyofthePowerAttorneytothisform securityholders mustsign. fer Period. You should allow sufficient time for this to occur. fer Period.Youshouldallowsufficienttimeforthistooccur. youwouldliketocorrectinformationthatisinaccurate, tyholders, facilitatingdistributionpaymentsandother eting material)approvedbyGUDinadditionto ervice companiessuchasprintormailservice the detailsprovidedonfrontofthisformor ralia) or+61394154686(forcallers
GUD 1TCO 103194_00W8OA