Näckebro makes cash offer of SEK 85 per share in Fabege

Näckebro makes cash offer of SEK 85 per share in Fabege · The Board of Directors of Näckebro AB (publ) has decided to make a public offer, against cash payment, to acquire all shares and convertible debentures in Fabege AB (publ) for SEK 85 per share and convertible respectively, corresponding to a total offer value of approximately SEK 2.2 billion. · This offer represents a 26 per cent premium based on the closing price on 14 May 1997, i.e. the day before stock exchange trading in Fabege's shares was suspended as a result of Hufvudstaden's non-cash offer, and 15 per cent based on the closing price on 3 June 1997. Näckebro's cash offer represents a premium of 16 per cent based on 3 June 1997. Näckebro's cash offer represents a premium of 16 per cent based on the average closing price during the period 14 May to 3 June 1997. · On 15 May 1997, Hufvudstaden announced an offer to pay 11 newly issued class A shares in Hufvudstaden for every five shares in Fabege, regardless of class of share. Based on the closing price for Hufvudstaden's share on 14 May 1997 and 3 June 1997, and on the average closing price during the period 14 May - 3 June 1997, respectively, Näckebro's cash offer exceeds Hufvudstaden's bid by 12 per cent, 14 per cent and 13 per cent respectively. · Acquisition of Fabege would provide Näckebro with a high quality, commercial property portfolio concentrated in the Stockholm area. The acquisition is expected to entail considerable positive effects. The new group will be one of the largest property owners in Stockholm with a leading market position and efficient property management. Motives for the offer Näckebro's strategy is to have a concentrated portfolio of high-grade properties. Näckebro has focused its operations on a number of geographical markets and segments. The geographical markets are Stockholm, Malmö, Gothenburg and London. Approximately two-thirds of the property portfolio will be office premises with residential property accounting for the remaining third. Näckebro's intention is to grow in the Stockholm market and increase the proportion of office properties. Fabege's property holdings are mainly concentrated to commercial properties in Stockholm. An acquisition of Fabege therefore fits in well with Näckebro's adopted strategy and it is against this background that Näckebro's Board has decided to propose a merger between the property operations of Näckebro and Fabege through Näckebro acquiring all the shares in Fabege. The acquisition is expected to have considerable positive effects. The new group will be one of the largest property owners in the Stockholm area with leading market positions. Following the acquisition, approximately 51 per cent of the Group's property portfolio will comprise commercial properties, primarily office properties, and approximately 49 per cent of the properties will be situated in Stockholm. Due to the its size, the new group will be able to act effectively on the property markets and offer competitive alternatives to solve customers' premises requirements. The property portfolio will contain wellsited and well-maintained properties as well as a suitable number of projects and properties with good development potential. Since Näckebro's and Fabege's property holdings are similar in character and geographical spread, rational management units can be created. It should be possible to achieve significant economies of scale in property management by raising the efficiency of letting and financial and technical management. Offer The Board of Directors of Näckebro has decided to make a public offer, against cash payment, to achieve all shares and convertible debentures in Fabege AB for SEK 85 per share and convertible debenture with a par value of SEK 60, respectively. The total acquisition payment will amount to approximately SEK 2.2 billion. At the time this offer was announced, Näckebro owned no shares in Fabege. Fabege's Board has been informed of the offer. The acquisition of Fabege will be financed with loans and cash. Näckebro expects to be able to obtain a mediumterm loan facility, which together with existing liquid assets in Näckebro will finance the entire acquisition. No brokerage will be payable. Based on the closing price for Fabege's B share on 3 June 1997, which was SEK 74, Näckebro'' bid represents a premium of 15 per cent. The closing price on 14 May 1997, i.e. the day before the Stockholm Stock Exchange suspended trading due to the imminent offer from Hufvudstaden, was SEK 67.50. Based on 67.50, Näckebro's offer corresponds to a premium of 26 per cent. The average closing price for Fabege's B share during the period 14 May to 3 June 1997 was SEK 73.10. Based on the average price during this period, Näckebro's offer represents a premium of 16 per cent. On 15 May 1997, Hufvudstaden announced an offer to pay 11 newly issued class A shares in Hufvudstaden for every five shares in Fabege, regardless of class of share. Based on the closing price for Hufvudstaden's A share on 14 May 1997, 3 June 1997 and the average price during the period 14 May - 3 June 1997, respectively, Näckebro's offer exceeds Hufvudstaden's bid by 12 per cent, 14 per cent and 13 per cent, respectively. Furthermore, Näckebro's acquisition payment will be made in cash. Näckebro's offer applies subject to the following reservations: · that the offer is accepted to such an extent that Näckebro becomes the owner of more than 90 per cent of the total number of shares in Fabege, representing more than 90 per cent of the total number of votes for all shares in Fabege, calculated after full conversion of outstanding convertible debentures. Näckebro reserves the right, however, to complete the offer in the event of lower participation. · that the offer, prior to completion of the offer being publicised, is not assessed by Näckebro as being rendered wholly or partly impossible or significantly difficult due to legislation, court ruling, official decision or similar in Sweden or abroad, which at the time of assessment has occurred or can be expected, or by another circumstance outside Hufvudstaden's control. · that the requisite credit is obtained to finance the acquisition. Preliminary financial effects of the acquisition Following the acquisition, Näckebro will report rental income of approximately SEK 1,200 M. The market value of the properties is expected to be more than SEK 13,000 M. The property portfolio will comprise over 1,4 million sq.m., of which 49 per cent, corresponding to some 705,000 sq.m., is located in the Stockholm region. Commercial properties, primarily office properties, will account for approximately 51 per cent or the property portfolio, residential properties for approximately 20 per cent and industrial/storage properties, etc., for the remainder. The acquisition of Fabege is expected to have negative impact on earnings per share in Näckebro in 1997 and 1998 which will improve thereafter. NäckeFabeNew bro ge Näckebro Rental income, SEK M 712 495 1,207 Properties, market 7,6115,40 13,011 value, SEK M 0 Properties, lettable 910,0535,1,445,00 space, sq.m. 00 000 0 Following the acquisition Näckebro's visible equity/assets ratio will amount to approximately 25 per cent. This equity/assets ratio is below Näckebro's long-term target. The Board of Näckebro therefore intends in autumn 1997 to propose that an extraordinary general meeting decides on a new issue with preferential rights for shareholders. The issue is expected to amount to approximately SEK 650 M, which would improve the equity/assets ratio by an additional approximately 5 percentage points. Näckebro has also announced that the company intends to sell non-strategic properties for approximately SEK 2 billion within the next two to three years. This will release capital and strengthen the equity/assets ratio by an additional approximately 5 percentage points. Näckebro's property holdings before and after the acquisition of Fabege are shown below. Näckebro Näckebro - total lettable space By geographical area: Stockholm, 27% Malmö, 22% Gothenburg, 16% Rest of Sweden, 11% Abroad, 24% Näckebro - total lettable space by type of premises: Office/retail, 45% Industrial/storage, 25% Residential, 30% The new Näckebro New Näckebro - total lettable space by geographical area Stockholm, 49% Malmö, 14% Gothenburg, 10% Rest of Sweden, 7% Abroad, 20% New Näckebro - total lettable space by type of premises Office/retail, 51% Industrial/storage, 21% Residential, 20% Other, 8% Timetable The prospectus is expected to be published on 20 June 1997. The application period is expected to run from 23 June - 18 July 1997. Accounting for settlement is expected to start on 30 June 1997. Näckebro reserves the right, however, to extend the application period and to postpone the date of accounting for settlement. E. Öhman J:or Fondkommission AB and Handelsbanken Markets are joint advisers to Näckebro. Press conference By reason of Näckebro's public offer to shareholders in Fabege, a press conference will be held today at 11 a.m. at Scandic Hotel Park, Karlavägen 43 in Stockholm. Näckebro AB (publ) Board of Directors Please direct any questions to: Lennart Schönning, Chief Executive of Näckebro, tel. +46 8 459 20 00 or tel. +46 70 645 02 50. Näckebro is an innovative property company characterised by a modern organisational philosophy, active property development and an open information policy. The property portfolio is of high quality and in the process of being concentrated to office and residential properties in Stockholm, Malmö, Gothenburg and London. At the end of the first quarter of 1997 the property portfolio comprised approximately 900,000 sq.m. with a book value of SEK 7,600 M. Näckebro is listed on the O-list of the Stockholm Stock Exchange. This press release may not be distributed or published in the United States of America or Canada. This offer is not directed at persons whose participation requires additional prospectus, registration or other measures than those required by Swedish law.