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Communication in accordance with Article 102 of Legislative Decree No. 58 of February 24, 1998 concerning the full mandatory public purchase offer promoted by Mitsubishi Electric Corporation on the totality of DeLclima SpA shares

Communication in accordance with Article 102 of Legislative Decree No. 58 of February 24, 1998 concerning the full mandatory public purchase offer promoted by Mitsubishi Electric Corporation on the totality of DeLclima SpA shares

Publish date: 23/12/2015

Tokyo, December 23, 2015

Communication in accordance with Article 102 of Legislative Decree No. 58 of February 24, 1998, as subsequently amended, and Article 37 of the Regulation adopted by CONSOB with resolution No. 11971 of May 14, 1999, as subsequently amended, concerning the full mandatory public purchase offer promoted by Mitsubishi Electric Corporation on the totality of DeLclima S.p.A. shares (the “Communication”).

Following that announced to the market in the press release of August 25, 2015, in accordance with Article 102 of Legislative Decree No. 58 of February 24, 1998, as subsequently amended and supplemented (the “CFA”) and Article 37 of the Regulation adopted by CONSOB with resolution No. 11971 of May 14, 1999, as subsequently amended and supplemented (the “Issuers’ Regulation”), Mitsubishi Electric Corporation (the “Bidder”), hereby communicates that on December 23, 2015 the legal requirements for the promotion by the Bidder of a mandatory public purchase offer (the “Offer”) were fulfilled in accordance with Articles 102 and 106, paragraph 1 of the CFA.

The Offer concerns the totality of the ordinary shares of DeLclima S.p.A. (“DeLclima” or the “Issuer”), a company listed on the Mercato Telematico Azionario (“MTA”) organised and managed by Borsa Italiana S.p.A. (“Borsa Italiana”), excluding the ordinary shares of DeLclima held, directly or indirectly, by the Bidder at the date of the present Communication.

In particular, at the date of the present Communication, the Bidder holds directly 112,134,660 ordinary shares, comprising 74.97% of the share capital of DeLclima.

The Offer therefore concerns 37,445,340 ordinary shares, comprising 25.03% of the share capital of the Issuer (the “Shares”), with a par value of Euro 1.50, full rights and fully paid-up.

At the date of the present Communication, the Issuer does not hold treasury shares.

The terms and conditions and the key features of the Offer are outlined below.

The offer document (the “Offer Document”), which will be filed at CONSOB according to the timelines established under the applicable regulations, will be published at the end of the review period by CONSOB, in accordance with Article 102, paragraph 4 of the CFA. Ahead of publication of the Offer Document, reference should be made to the present Communication, published on the Issuers´ website at http://www.del-clima.com, for further details of the principal Offer conditions.

  1. Legal basis of the Offer

The obligation to proceed with the Offer follows the acquisition (the “Acquisition”) on December 23, 2015 by the Bidder of a holding in the Issuer (the “Majority Holding”) comprising 112,134,660 DeLclima shares from De’ Longhi Industrial S.A. (“DLI”) at a price of Euro 4.5271 per share.

In particular:

  • on August 25, 2015, DLI, as seller, and Melco, as purchaser, signed a purchase and sales contract (the “SPA”) under which Melco committed to purchase from DLI, which committed to sell to Melco, the Shares.

The parties agreed, in accordance with the above SPA, a price per share of Euro 4.44, which will be increased by a further amount established on a daily basis (at a 4% annual rate) in the period between June 30, 2015 and December 23, 2015. The obligation to complete the purchase of the Majority Holding was subject to the obtaining of authorisations for the Acquisition from the relevant Anti-trust Authorities and the sale of the entire share capital of DL Radiators S.r.l. (held by De’ Longhi Professional S.A.);

  • the Acquisition authorisations from the relevant authorities were obtained: on October 7, 2015 in Germany; on October 13, 2015 in Austria; on October 21, 2015 in Russia; and on December 15 2015 in China (i.e. the final authorisation obtained);
  • on December 10, 2015 De’ Longhi Professional S.A. transferred to Veneto S.p.A., a subsidiary of DLI, the entire share capital of DL Radiators S.r.l., a company indirectly held by DeLclima, for payment of consideration of Euro 15,000,000;
  • on December 14, 2015 DLI sent to Melco the Opinion of the Related Parties Committee of DeLclima, through which this latter declared the corporate interest of DeLclima in completing the sale of DL Radiators S.r.l. for payment of consideration of not less than Euro 15,000,000;
  • on December 23, 2015, following the satisfaction of the Acquisition conditions, Melco completed the Acquisition.

In accordance with Article 101-bis, paragraph 3, letter c) of the CFA, the Bidder is not subject to the disclosure obligations to employees or their representatives under the CFA as it currently holds the majority of voting rights exercisable at the Issuers’ Ordinary Shareholders’ Meeting.

  1. Key features of the offer
    1. The Bidder and the holding companies

The name of the Bidder is “Mitsubishi Electric Corporation”.

The Bidder was incorporated on January 15, 1921 and is subject to Japanese law, with registered office in Tokyo Building, 2-7-3, Marunouchi, Chiyoda-ku, Tokyo 100-8310, Japan, enrolled at the Japanese Companies Registration Office at No. 0100-01-008772.

At the date of the present Communication, according to the latest data available at September 30, 2015, the share capital of the Bidder is held by the following and in the following proportions:

Shareholder

No. of Shares (‘000)

%

THE MASTER TRUST BANK OF JAPAN, LTD (TRUST ACCOUNT)

138,247

6.44

JAPAN TRUSTEE SERVICES BANK LTD (TRUST ACCOUNT)

90,565

4.22

STATE STREET BANK AND TRUST COMPANY

88,653

4.13

Meiji Yasuda Life Insurance Company (Private)

81,862

3.81

Nippon Life Insurance Company (Private)

61,639

2.87

MITSUBISHI ELECTRIC GROUP EMPLOYEES'

43,032

2.00

THE BANK OF NEW YORK MELLON SA/NV 10

38,704

1.80

The Bank of Tokyo-Mitsubishi UFJ Ltd (Private)

36,822

1.71

JAPAN TRUSTEE SERVICES BANK, LTD. (TRUST ACCOUNT 4)

34,459

1.60

JP MORGAN CHASE BANK 385632

33,004

1.54

Other shareholders

Residual

 

At the date of the present Communication, no shareholder has control of the Bidder in accordance with Article 93 of the CFA.

  1. Persons acting in concert with the Bidder

There are no persons acting in concert with the Bidder, in accordance with Article 101-bis, paragraphs 4 and 4-bis, letter b) of the CFA.

  1. The Issuer

The name of the Issuer is “DeLclima S.p.A.”.

The Issuer is a limited liability company incorporated according to Italian law, with registered office in Via L. Seitz No. 47, 31100, Treviso, enrolled at the Treviso Companies Registration Office at No. 06830580962 and subject to the management and coordination of Melco.

The shares of the Issuer are listed on the MTA segment organised and managed by Borsa Italiana.

In accordance with Article 3 of the By-Laws, the duration of the Issuer concludes on December 31, 2100 and may be extended by Shareholders’ Meeting motion.

At the date of the present Communication, the share capital of the Issuer amounts to Euro 224,370,000.00, fully subscribed and paid-in, comprising 149,580,000 ordinary shares and with a par value of Euro 1.50.

The shares of the Issuer have been listed on the Mercato Telematico Azionario since 2012 and are dematerialised in accordance with Article 83-bis of the CFA.

The Issuer has not issued classes of shares other than ordinary shares, nor bonds convertible into shares, nor has committed to issue convertible bonds or granted the Board of Directors of the Issuer the power to approve the issue of bonds convertible into DeLclima shares.

On April 28, 2015, the Shareholders’ Meeting of the Issuer renewed the authorisation to purchase, for a period of 18 months (i.e. until October 28, 2016), treasury shares numbering not more than 28,000,000 ordinary shares at a par value of Euro 1.50 and, therefore, at a price not greater than one-fifth of the share capital of the Issuer, taking account also of the shares held by investee companies and, however in any case, within the limits of the retained earnings, in addition to the reserves available according to the latest approved statutory financial statements, at a price per share, including accessory purchase commissions, of not less than 20% or greater than 10%, of the official current price on the MTA on the day preceding the purchase.   These purchases should be made within the limits established by law and regulations and, in any case, up to a maximum amount equal to the retained earnings and the reserves available according to the last regularly approved financial statements.

At the date of the present Communication, no acquisition of treasury shares had been made in accordance with the above-mentioned authorisation. The Issuer therefore does not hold treasury shares in portfolio.

  1. Classes and quantity of securities subject to the Offer

The Offer concerns in total 37,445,340 ordinary shares, comprising 25.03% of the share capital of the Issuer, representing the totality of the ordinary shares issued by DeLclima, with a par value of Euro 1.50, with normal rights, excluding the ordinary shares already held, directly or indirectly, by the Bidder at the date of the present Communication.

In particular, at the date of the Communication, the Bidder directly holds 112,134,660 ordinary shares, comprising 74.97% of the share capital of DeLclima (i.e. the Majority Holding).

The Shares extended under the Offer should be freely transferrable to the Bidder and free from restrictions and encumbrancers of any kind and type, whether secured, obligatory or personal.

During the Subscription Period, which may be reopened following the Reopening of Subscription Period (as defined below) or extended, the Bidder is reserved the right to purchase ordinary shares of the Issuer outside of the Offer, within the limits permitted by the applicable regulation. Any purchases made outside of the Offer will be communicated to the market in accordance with Article 41 paragraph 2, letter c) of the Issuers’ Regulation.

The Offer is addressed individually and at equal conditions to all Shareholders.

  1. Individual consideration and total value of the Offer

The Bidder will pay to each participant to the Offer consideration in cash of Euro 4.5271 for each Share contributed to the Offer (the “Consideration”).

The Consideration is net of stamp duties due and reimbursements, commissions and expenses, which will be payable by the Bidder, while the substitution tax on gains, where due, is borne by the Offer participants.

Considering the obligatory nature of the Offer and taking account of the structure of the operation which gave rise to the obligation to promote the Offer, the Consideration is fixed in accordance with Article 106, paragraph 2 of the CFA, whereby the Offer must be promoted at a price not lower than the highest price paid by the Bidder for the purchase of DeLclima shares in the twelve months prior to the date of the present Communication.

In particular, the Consideration equals the price paid by the Bidder under the SPA. The Bidder has not purchased any other shares of the Issuer in the last 12 months.

The Consideration includes (i) a market premium of approx. 115.6% on the average weighted price of the Shares in the year before the announcement of the Acquisition on August 25, 2015 and (ii) a market premium of approx. 93.5% on the average weighted price of the shares in the half-year prior to the announcement of the Acquisition on August 25, 2015.

Finally, except for that described in the present Communication, no further agreements have been signed, nor further consideration paid, also in kind, which may alter the calculation of the Consideration.

The total maximum value of the Offer, in the case of the full subscription of the Offer by all holders of Shares, will be Euro 169,627,390.20 (after the rounding of the full price paid to each shareholder to the nearest tenth).

  1. Subscription period

In accordance with Article 40 of the Issuers’ Regulation, the subscription period of the Offer will be agreed with Borsa Italiana as between a minimum of 15 and a maximum of 25 open trading days (the “Subscription Period”), excluding any extension or reopening of the subscription period in accordance with Article 40-bis of the Issuers’ Regulation (“Reopening of the Subscription Period”).

  1. Payment date

The payment of Consideration to holders of Shares contributed to the Offer, together with the transfer of ownership of the Shares to the Bidder, will be made in cash on the fifth open trading day following closure of the Subscription Period, with the exception of any extensions or amendments to the Offer required in accordance with the applicable legal or regulatory provisions.

  1. Efficacy conditions of the Offer

The Offer, as mandatory in accordance with Article 106, paragraph 1 of the CFA, is not subject to any efficacy conditions.

In particular, the Offer is not subject to the reaching of a minimum subscription threshold and is addressed individually and at equal conditions to all Shareholders.

In addition, there are no legally applicable efficacy conditions to the Offer.

  1. Distribution options

As the Offer is a full mandatory public purchase offer in accordance with Article 106, paragraph 1of the CFA, no distribution options have been established.

  1. Reasons for the Offer
    1. Reasons for the Offer and the event giving rise to the obligation to promote the Offer

The obligation to promote the Offer derives from the acquisition by the Bidder of the Majority Holding.

The Offer is undertaken in order to acquire the entire share capital of the Issuer, therefore Delisting the shares of the Issuer and allowing the Melco Group to fully incorporate the operations of the DeLclima Group in an incisive and effective manner.

Therefore, the Bidder will assess also the possibility to carry out in the twelve months subsequent to the payment date, as per paragraph 2.7, inter-company operations between DeLclima and a number of Melco Group companies, in order to reach, among others, centralised treasury agreements, agreements for the preparation of the consolidated financial statements of the Melco Group and inter-company contracts to ensure streamlined group operations.

In the case in which Delisting is not achieved following the Offer, the Bidder will merge by incorporation DeLclima into a non-listed company of the Melco Group, with the consequent Delisting of the Issuer (the “Merger”). A Merger by incorporation of the Issuer into a Melco Group company may take place also where the shares of the Issuer are no longer listed on the Mercato Telematico Azionario. The Bidder will also take into consideration, in order to integrate the operations of the two groups, other corporate operations (business combinations) such as inter-company mergers or the transfer of assets or companies or business units concerning companies both of the Melco Group and of DeLclima Group.

The Acquisition and the Offer are part of a major strategic operation by the Melco Group in order to ensure the sustainable growth of its heating, ventilation and air conditioning business in Europe. The Bidder expects that the operation will enable the Melco Group to majorly penetrate the refrigerators (chillers) business, thus extending its business portfolio - a key element to ensure continuous growth and increase market presence.  The operation, in addition, will allow the Melco Group to adequately comply with environmental regulations (F-GAS regulations), which will assume a more important role in the coming years.

Through the Acquisition and the Offer, the Bidder may fully integrate the DeLclima business and thus optimise costs and resources, including the costs and resources engaged in research and development, the capitalisation of current expenses, the production chain, the product offer, administration and production.

  1. Withdrawal of Shares from listing on the MTA and scenarios subsequent to the Offer

The Delisting is one of the Offer objectives, in view of the reasons for the Offer and the future plans of the Bidder.

  1. Purchase Obligations in accordance with Article 108, paragraph 2 of the CFA

 

In the case in which, following the Offer, including any Reopening of the Subscription Period or any extension of the Subscription Period, the Bidder will hold, following subscriptions to the Offer and any purchases made outside of such in accordance with the applicable regulation, a total holding of greater than 90%, but less than 95% of the share capital of the Issuer, the Bidder will declare its intension not to reconstitute a sufficient free float to ensure the regular trading of shares.

Where the requirements have been fulfilled, the Bidder will meet in addition the obligation to purchase the remaining shares from the Shareholders of the Issuer, in accordance with Article 108, paragraph 2 of the CFA (the “Purchase Obligation in accordance with Article 108, paragraph 2 of the CFA”) at a consideration per Share established in accordance with Article 108, paragraph 3 of the CFA (therefore at a price equal to the Offer Consideration). The Bidder will communicate fulfilment of the requirements for the Purchase Obligation in accordance with Article 108, paragraph 2 of the CFA as per the applicable regulation.

In accordance with Article 2.5.1, paragraph 6 of the Regulation of Markets Organised and Managed by Borsa Italiana, in force at the date of the present Communication (the “Stock Exchange Regulation”), where the requirements have been fulfilled, the shares of the Issuer will be withdrawn from listing from the trading day subsequent to the last payment day of Consideration for the Purchase Obligation in accordance with Article 108, paragraph 2 of the CFA, except for that indicated at the subsequent point b). In this case, the holders of the Shares who decide not to participate in the Offer and who do not request the Bidder to purchase their shares under the Purchase Obligation in accordance with Article 108, paragraph 2 of the CFA, will be holders of financial instruments not traded on any regulated market and will therefore assume the consequent difficulty in liquidating their investment.

  1. Purchase Obligations in accordance with Article 108, paragraph 1 of the CFA and the Purchase Right in accordance with Article 111 of the CFA

 

Where, following the Offer, including any Reopening of the Subscription Period or any extension of the Subscription Period, due to subscriptions to the Offer and any purchases made outside of the offer in accordance with the applicable regulations and/or fulfilment of the Purchase Obligation as per Article 108, paragraph 1 of the CFA, the Bidder holds a total investment of at least 95% of the share capital of the Issuer at that date, the Bidder will declare its intention to exercise the right to purchase the remaining shares in accordance with Article 111 of the CFA (the “Purchase Right”) at a consideration per Share established in accordance with Article 108, paragraph 3 of the CFA, as restated in Article 111 of the CFA (therefore at a price equal to the Offer Consideration). The Bidder will communicate fulfilment of the requirements for the Purchase Right in accordance with Article 111, paragraph 1 of the CFA in accordance with the applicable regulation.

The Bidder, exercising the Purchase Right, will meet in addition the obligation to purchase in accordance with Article 108, paragraph 1 of the CFA shares from requesting shareholders of the Issuer (the “Purchase Obligation in accordance with Article 108, paragraph 1 of the CFA”) under a specific procedure.

The Purchase Right will be exercised as soon as is possible after the conclusion of the Offer or the Purchase Obligation in accordance with Article 108, paragraph 2 of the CFA.

In accordance with Article 2.5.1, paragraph 6 of the Stock Exchange Regulation, in the case of the exercise of the Purchase Right, Borsa Italiana will suspend and/or Delist the shares of the Issuer, taking account of the timelines established for the exercise of the Purchase Right.

  1. Markets on which the Offer is promoted

The Offer is addressed individually and at equal conditions to all holders of Shares and is promoted in Italy.

The Offer has not been and will not be promoted or circulated in any other country as this Offer is not permitted in the absence of authorisation by the relevant authorities or the meeting of other requirements by the Bidder (collectively the “Other Countries”), nor using national or international communication or commercial instruments of the Other Countries (including, for example purposes, the postal network, fax, telex, electronic mail, telephone and internet), nor through any structure of financial intermediaries in the other countries, nor in any other manner.

Copies of the Offer Document, or extracts of such, and equally copies of any subsequent document which the Bidder may issue in relation to the Offer, are not and should not be sent, nor transmitted by any means, or distributed, directly or indirectly, in the Other Countries. Those receiving the above-stated documents should not distribute or send them (either by post or any other means or communication or commercial instruments) in the Other Countries.

No subscriptions to the Offer will be accepted on the basis of solicitations made in violation of the above restrictions.

The Offer Document does not constitute and should not be interpreted as an offer of financial instruments addressed to parties resident in the Other Countries. No instrument may be offered, purchased or sold in the Other Countries in the absence of specific authorisations in compliance with the applicable provisions of the local law of such countries or in derogation of such provisions.

The subscription to the Offer by parties resident in countries other than Italy may be subject to specific obligations or restrictions established by law or regulations. It is the exclusive responsibility of the addressees of the Offer to comply with these rules and therefore, before subscribing to the Offer, verify its applicability together with their consultants.

  1. Authorisations

The promotion of the Offer is not subject to the obtaining of any authorisations.

The Acquisition constitutes a concentration operation in accordance with the applicable competition rules.

Therefore, the Bidder has notified in advance the Anti-trust Authorities in Germany, Austria, Russia and China of the Acquisition.

At the date of the present Communication, the Bidder had attained authorisation for the Acquisition from the relevant authorities in Germany, Austria, Russia and China.

  1. Investments

At the date of the present Communication, the Bidder directly holds a Majority Holding, therefore 112,134,660 ordinary shares, of the Issuer, corresponding to 74.97% of the share capital of the Issuer.

  1. Publication of the communications and the documents concerning the Offer

The communications and the documents concerning the Offer will be made available for consultation on the Issuer’s website http://www.del-clima.com.

 

Mitsubishi Electric Corporation

Name: Takeshi Sugiyama

Office: Executive Chairman of the Living Environment & Digital Media Equipment Group

***

Communication issued by Mitsubishi Electric Corporation and circulated by DeLclima S.p.A. on the request of Mitsubishi Electric Corporation.