The board of directors of Amer Sports Corp issued a statement providing detailed reasons behind its support of a sale of the company to a consortium led by China’s Anta Sports. The statement points to the major premium Amer’s shareholders will earn at the offering price and the benefits from partnering with Anta, including a “significant opportunity to accelerate the expansion of its businesses in the Chinese market.” Heikki Takala, president and CEO of Amer Sports, and his key executives are expected to continue leading the Amer Sports’ businesses.
On December 7, the consortium, under the Mascot Bidco Oy name, made an offer to acquire Finland’s Amer Sports in a deal that values the company at €4.6 billion (US$5.23 billion) and Amer’s board recommended shareholders approve the offer. The consortium plans to operate Amer Sports independently from Anta, with a separate board of directors.
The full statement from Amer’s board follows:
Statement of the Board of Directors of Amer Sports Corporation regarding the voluntary public cash tender offer by Mascot Bidco Oy
On December 7, 2018, Mascot Bidco Oy (the “Offeror“) announced that it will make a voluntary public cash tender offer to acquire all of the issued and outstanding shares in Amer Sports Corporation (“Amer Sports” or the “Company“) that are not held by Amer Sports or any of its subsidiaries (the “Shares“) (the “Tender Offer“).
The Board of Directors of the Company (the “Amer Sports Board“) has decided to issue the statement below regarding the Tender Offer as required by the Finnish Securities Markets Act.
Tender Offer in Brief
The Offeror is a Finnish private limited company incorporated under the laws of Finland. Currently, the Offeror is indirectly wholly-owned by Mascot JVCo (Cayman) Limited (“JVCo“). JVCo was incorporated to be the holding company in the acquisition structure and is currently wholly-owned by ANLLIAN Sports Products Limited (“ANTA SPV“), a special purpose vehicle directly wholly-owned by ANTA Sports. The Offeror will eventually be an indirect wholly-owned subsidiary of ANTA Sports Products Limited (“ANTA Sports“), FV Mascot JV, L.P. (an investment vehicle managed by FountainVest Partners (“FountainVest“)) (“FV Fund“) and Anamered Investments Incorporation (“Anamered Investments“). ANTA Sports, FV Fund, Anamered Investments and Tencent Holdings Limited (“Tencent“) (which will invest through Mount Jiuhua Investment Limited (“Tencent SPV“) as a limited partner in FV Fund) together form an investor consortium (the “Investor Consortium“) for the purposes of the Tender Offer. The Investor Consortium has agreed that, before completion of the Tender Offer, ANTA Sports will indirectly through ANTA SPV own 57.95 percent, FV Fund will own 21.40 percent (and Baseball Investment Limited (which is currently owned/controlled by funds advised/managed by FountainVest) will indirectly, and Tencent will indirectly through Tencent SPV, in each case as a limited partner in FV Fund, respectively own 15.77 percent and 5.63 percent), and Anamered Investments will own 20.65 percent of the shares in the Offeror.
The Offeror, ANTA Sports, FV Fund, Anamered Investments, JVCo and Amer Sports have on December 7, 2018 entered into a combination agreement (the “Combination Agreement“) setting out, among other things, the main terms and conditions pursuant to which the Tender Offer will be made by the Offeror.
The Tender Offer will be made in accordance with the terms and conditions of the tender offer document expected to be published by the Offeror on or about December 20, 2018 (the “Tender Offer Document“).
The offer price is EUR 40.00 in cash for each share in Amer Sports validly tendered into the Tender Offer (the “Offer Price“). The Offer Price represents a premium of:
- approximately 39 percent compared to the closing price of the shares in Amer Sports on Nasdaq Helsinki Ltd (“Nasdaq Helsinki“) on September 10, 2018 (the “Original Disclosure Date“), the last trading day prior to Amer Sports confirming the receipt of a non-binding preliminary indication of interest from ANTA Sports and FountainVest;
- approximately 43 percent compared to the volume-weighted average trading price of the shares in Amer Sports on Nasdaq Helsinki during the three-month trading period prior to and up to the Original Disclosure Date;
- approximately 63 percent compared to the volume-weighted average trading price of the shares in Amer Sports on Nasdaq Helsinki during the 12-month trading period prior to and up to the Original Disclosure Date;
- approximately 14 percent compared to the closing price of the shares in Amer Sports on Nasdaq Helsinki on December 5, 2018, the last trading day before the stock exchange release announcing the Tender Offer dated December 7, 2018; and
- approximately 44 percent compared to the volume-weighted average trading price of the shares in Amer Sports on Nasdaq Helsinki during the 12-month period preceding the date of the stock exchange release announcing the Tender Offer dated December 7, 2018.
The following major shareholders of Amer Sports have, subject to certain customary conditions, irrevocably undertaken to accept the Tender Offer: Kaleva Mutual Insurance Company, Ilmarinen Mutual Pension Insurance Company, Mandatum Life Insurance Company Limited and Varma Mutual Pension Insurance Company, representing in aggregate approximately 7.91 percent of the issued shares and votes in Amer Sports. In addition, Maa- ja vesitekniikan tuki r.y., who hold approximately 4.29 percent of the issued shares and votes in Amer Sports, have expressed that they view the Tender Offer positively.
The completion of the Tender Offer is subject to the satisfaction or waiver by the Offeror of certain conditions on or prior to the Offeror`s announcement of the final results of the Tender Offer including, among others, that approvals by the relevant regulatory authorities (including competition authorities) have been received and the Offeror having gained control of more than 90 percent of the issued and outstanding shares and voting rights in Amer Sports.
The Offeror has, and will have on the twelfth (12th) business day following the announcement of the final result of the Tender Offer (the “Closing Date“), access to debt and equity financing in sufficient amounts, as evidenced in equity commitment letters executed by Investor Consortium members and/or their affiliates, to finance the payment of the aggregate Offer Price for all of the Shares in connection with the Tender Offer (including any mandatory redemption proceedings in accordance with the Finnish Companies Act). The Offeror`s obligation to complete the Tender Offer is not conditional upon availability of financing (assuming that all the offer conditions are otherwise satisfied or waived by the Offeror).
The offer period under the Tender Offer is expected to commence on or about December 20, 2018 and to run for approximately ten (10) weeks. The Offeror reserves the right to extend the offer period from time to time in accordance with the terms and conditions of the Tender Offer. The Tender Offer is currently expected to be completed during the second quarter of 2019 at the latest.
Background for the Statement
Pursuant to the Finnish Securities Markets Act, the Amer Sports Board must prepare a public statement regarding the Tender Offer.
The statement must include a well-founded assessment of the Tender Offer from the perspective of Amer Sports and its shareholders as well as of the strategic plans presented by the Offeror in the Tender Offer Document and their likely effects on the operations of, and employment at, Amer Sports.
For the purposes of issuing this statement, the Offeror has submitted to the Amer Sports Board a draft version of the Finnish language Tender Offer Document in the form in which the Offeror has filed it with the Finnish Financial Supervisory Authority for approval on December 11, 2018 (the “Draft Tender Offer Document“).
In preparing its statement, the Amer Sports Board has relied on information provided in the Draft Tender Offer Document by the Offeror and certain other information provided by the Offeror and has not independently verified this information. Accordingly, the Amer Sports Board`s assessments of the consequences of the Tender Offer on Amer Sports` business and employees should be treated with caution.
Assessment Regarding Strategic Plans Presented by the Offeror in the Draft Tender Offer Document and Their Likely Effects on the Operations of, and Employment at, Amer Sports
Information given by the Offeror in the Draft Tender Offer Document
The Amer Sports Board has assessed the Offeror`s strategic plans based on the statements made in the Company`s and the Offeror`s announcement regarding the Tender Offer published on December 7, 2018 and the Draft Tender Offer Document.
The Investor Consortium believes that the proposed transaction is underpinned by a very compelling business rationale:
- The Investor Consortium intends to invest significant time, resources and effort in helping Amer Sports to accelerate several important ongoing and new strategic initiatives under private ownership, including expanding Amer Sports` businesses in the Chinese market.
- This includes investing capital and resources in product development and human talent on a global basis to provide Amer Sports` existing management team and employees with the optimal platform from which to implement its medium- to long-term strategic plans, with a view to accelerating Amer Sports` growth, improving Amer Sports` competitive positioning in the global market, enhancing Amer Sports` ability to respond quickly to the demands of a fast-changing marketplace, and optimizing Amer Sports` products and services offerings to its customers. In doing so, Amer Sports will not only grow into a broader platform for Amer Sports` employees to thrive on, but will also form stronger, mutually beneficial partnerships with all its stakeholders.
- The Investor Consortium intends to provide Amer Sports with access to ANTA Sports` extensive distribution network, R&D resources and manufacturing and sourcing capabilities in China, such that Amer Sports will have a significant opportunity to accelerate the expansion of its businesses in the Chinese market.
After the completion of the Tender Offer, the Investor Consortium plans for Amer Sports to be operated independently from ANTA Sports, with a separate Board of Directors. The Investor Consortium has invited Mr. Heikki Takala (President and CEO of Amer Sports) and his key executives to continue leading the business. Under the new ownership, Amer Sports` management team would have the autonomy to execute on its business plan under the strategic direction of the Board of Directors.
The Investor Consortium has confirmed that the Tender Offer is not expected to have an immediate material effect on the operations or assets, the position of the management or employees or the business locations of Amer Sports and the Investor Consortium currently expects to retain Amer Sports` corporate head office in Helsinki after the completion of the Tender Offer. The Offeror, however, intends to change the composition of the Board of Directors of Amer Sports after the completion of the Tender Offer.
Board Assessment
The Amer Sports Board believes that the Investor Consortium`s potential to contribute further capital and resources to the business of Amer Sports will benefit the activities of Amer Sports in the future. With the support and experience of the Investor Consortium, the Amer Sports Board believes that Amer Sports can accelerate the expansion of its businesses in the Chinese market in particular. The Amer Sports Board also notes the Investor Consortium`s statements in relation to investing capital and resources in product development and human talent on a global basis.
The Investor Consortium has stated that it plans for Amer Sports to be operated independently from ANTA Sports, with a separate Board of Directors. Under the new ownership, Amer Sports` management team would have the autonomy to execute on its business plan under the strategic direction of the Board of Directors.
The Amer Sports Board considers that the information on the Offeror`s strategic plans concerning Amer Sports included in the Draft Tender Offer Document is of a general nature. However, based on the information presented to Amer Sports and the Amer Sports Board, the Amer Sports Board believes that the completion of the Tender Offer is not expected to have any immediate material effects on Amer Sports` operations and business locations or the position of the employees of Amer Sports.
On the date of this statement, the Amer Sports Board has not received any formal statements as to the effects of the Tender Offer to the employment at Amer Sports from Amer Sports` employees.
Assessment Regarding Financing Presented by the Offeror in the Draft Tender Offer Document
Information given by the Offeror in the Draft Tender Offer Document
The Amer Sports Board has assessed the Offeror`s financing based on the below statements made in the Company`s and the Offeror`s announcement regarding the Tender Offer published on December 7, 2018 and the Draft Tender Offer Document. Further, the Company`s legal counsel White & Case LLP has reviewed the Offeror`s principal financing documents.
Pursuant to the Draft Tender Offer Document, the Offeror has, and will have on the Closing Date of the Tender Offer, access to debt and equity funding in sufficient amounts, as evidenced in equity commitment letters executed by Investor Consortium members and/or their affiliates, to finance the payment of the aggregate Offer Price for all of the Shares in connection with the Tender Offer (including any mandatory redemption proceedings in accordance with the Finnish Companies Act). The Offeror`s obligation to complete the Tender Offer is not conditional upon availability of financing (assuming that all the offer conditions are otherwise satisfied or waived by the Offeror).
The Offeror`s Representations and Warranties in the Combination Agreement
In the Combination Agreement, the Offeror and the members of the Investor Consortium represent and warrant to Amer Sports that the Offeror has secured necessary and adequate financing such that, on the Closing Date it will have sufficient funds (in the form of cash available under credit facilities, equity subscription agreements and shareholder loans, which are not subject to any availability or draw down conditions (other than conditions that are customary for a UK acquisition financing on a “certain funds” basis in relation to transactions governed by the City Code on Takeovers and Mergers, a condition that all the conditions for the completion of the Tender Offer are satisfied (or waived by the Offeror), or a condition the satisfaction of which is within the control of the Offeror), in order to pay the aggregate Offer Price for all of the Shares in connection with the Tender Offer and in connection with the mandatory redemption proceedings. The Offeror`s obligation to complete the Tender Offer is not conditional upon availability of financing (assuming that all the conditions for the completion of the Tender Offer are otherwise satisfied (or waived by the Offeror)).
Board Assessment
Based on the information made available by the Offeror to the Company, the Amer Sports Board believes that the Offeror has secured necessary and adequate financing such that the Offeror will have sufficient funds in the form of cash available under credit facilities, equity subscription agreements and shareholder loans in order to pay the aggregate Offer Price in connection with the Tender Offer and in connection with the mandatory redemption proceedings.
Assessment of the Tender Offer from the Perspective of Amer Sports and its Shareholders
When evaluating the Tender Offer, analyzing alternative opportunities available to Amer Sports and concluding on its statement, the Amer Sports Board has considered several factors, including, but not limited to, Amer Sports` recent financial performance, current position and future prospects, the historical performance of the trading price of Amer Sports` share, the conditions for the Company and the Offeror to complete the Tender Offer, and the Offeror`s obligation to pay liquidated damages in case of the Offeror`s failure to commence or to complete the Tender Offer.
The Amer Sports Board`s assessment of continuing the business operations of Amer Sports as an independent company has been based on reasonable future-oriented estimates, which include various uncertainties, whereas the Offer Price and the premium included therein is not subject to any uncertainty other than the fulfillment of the conditions to completion of the Tender Offer.
In order to support its assessment of the Tender Offer, the Amer Sports Board has received a fairness opinion, dated December 7, 2018, concerning the Offer Price (the “Fairness Opinion“) from Amer Sports` financial advisor, Goldman Sachs International. The Fairness Opinion is attached as Appendix 1 to this statement.
The Amer Sports Board believes that the consideration offered by the Offeror to the shareholders is fair to the shareholders based on its assessment of the matters and factors, which the Amer Sports Board has concluded to be material in evaluating the Tender Offer. These matters and factors include, but are not limited to:
- the information and assumptions on the business operations and financial condition of Amer Sports as at the date of this statement and their expected future development;
- the premium being offered for the Shares;
- the historical trading price of Amer Sports` share;
- valuation multiples of Amer Sports` share compared to the industry multiples before the announcement of the Tender Offer;
- valuations and analysis made and commissioned by the Amer Sports Board as well as discussions with external financial advisors; and
- the Fairness Opinion issued by Goldman Sachs International.
In addition, the Amer Sports Board considers the Offer Price level to positively affect the ability of the Offeror to gain control of more than 90 percent of the Shares and thereby help successfully complete the Tender Offer.
Furthermore, the Amer Sports Board considers that the reverse break fee payable by the Offeror under the Combination Agreement in certain circumstances provides reasonable protection for Amer Sports in the event the Combination Agreement is terminated in certain circumstances.
The Amer Sports Board has concluded that the relevant business prospects of Amer Sports would provide opportunities for Amer Sports to develop its business as an independent company for the benefit of Amer Sports and its shareholders. However, taking into consideration the risks and uncertainties associated with such stand-alone approach as well as the terms and conditions of the Tender Offer included in the Draft Tender Offer Document, the Amer Sports Board has concluded that the Tender Offer is a favorable alternative for the shareholders.
Recommendation of the Amer Sports Board
The Amer Sports Board has carefully assessed the Tender Offer and its terms and conditions based on the Draft Tender Offer Document, the Fairness Opinion, and other available information.
Based on the foregoing, the Amer Sports Board considers that the Tender Offer and the amount of the Offer Price are, under the prevailing circumstances, fair to Amer Sports` shareholders.
Given the above-mentioned viewpoints, the Amer Sports Board unanimously recommends that the shareholders of Amer Sports accept the Tender Offer.
All members of the Amer Sports Board have participated in the decision-making concerning this statement. The evaluation of independence of the members of the Amer Sports Board is available on the website of Amer Sports.
Certain Other Matters
The Amer Sports Board notes that the transaction may, as is common in such processes, involve unforeseeable risks.
The Amer Sports Board notes that the shareholders of Amer Sports should also take into account the potential risks related to non-acceptance of the Tender Offer. If the acceptance condition of more than 90 percent of the Shares and votes is waived, the completion of the Tender Offer would reduce the number of Amer Sports` shareholders and the number of shares, which would otherwise be traded on Nasdaq Helsinki. Depending on the number of Shares validly tendered in the Tender Offer, this could have an adverse effect on the liquidity and value of the shares in Amer Sports. Furthermore, pursuant to the Finnish Companies Act, a shareholder that holds more than two-thirds of the shares and voting rights carried by the shares in a company has sufficient voting rights to decide upon certain corporate transactions, including, but not limited to, a merger of the company into another company, an amendment of the articles of association of the company and an issue of shares in the company in deviation from the shareholders` pre-emptive subscription rights.
Pursuant to Chapter 18 of the Finnish Companies Act, a shareholder that holds more than 90 percent of all shares and votes in a company shall have the right to acquire and, subject to a demand by other shareholders, also be obligated to redeem the shares owned by the other shareholders. In such case, the Shares held by Amer Sports` shareholders, who have not accepted the Tender Offer, may be redeemed through redemption proceedings under the Finnish Companies Act in accordance with the conditions set out therein.
Amer Sports has undertaken to comply with the Helsinki Takeover Code referred to in Chapter 11, Section 28 of the Finnish Securities Markets Act.
This statement of the Amer Sports Board does not constitute investment or tax advice, and the Amer Sports Board does not specifically evaluate herein the general price development or the risks relating to the shares in general. Shareholders must independently decide whether to accept the Tender Offer, and they should take into account all the relevant information available to them, including information presented in the Tender Offer Document and this statement as well as any other factors affecting the value of the shares.
Amer Sports has appointed Goldman Sachs International as financial adviser and White & Case LLP as legal adviser in connection with the Tender Offer.
The Board of Directors of Amer Sports Corporation
