Statement from the Board of Peab Industri AB regarding Peab AB's offer Peab AB (publ) (”Peab”) has in a press release dated November 10, 2008, announced an offer to acquire all shares and convertibles in Peab Industri AB (publ) (the ”Offer”). Further to OMX Nordic Exchange Stockholm AB's rules concerning public takeover offers in the stock market (”the Takeover Rules”) the board through its independent members (the ”Board”) of Peab Industri AB (publ) (“Peab Industri”) issues below statement. ¹ The Board has, in accordance with the Takeover Rules, obtained a valuation report, a so called fairness opinion. The report indicates that when the initiators proposal was made public, the Offer concerning shares and consideration for them would per October 15, 2008, probably have been deemed fair from a financial perspective, but the prerequisites in the stock market have thereafter changed and the conclusion in the report is that as per November 21, 2008, the Offer concerning shares and consideration for them was not fair from a financial perspective. In light of the above, the Board recommends the shareholders in Peab Industri not to accept the Offer concerning the shares. The Board, however, recommends holders of convertibles in Peab Industri to accept the Offer concerning convertibles. Background Peab offers three new iclass A shares in Peab for two class A shares in Peab Industri, and three new class B shares in Peab for two class B shares in Peab Industri. The Offer entailed a bid premium of approximately 25 percent based on the latest price paid for each company's class B share on October 14, 2008,which was the day before the day that the initiators of the Offer made their plans public. The Offer entailed a bid premium of approximately 22 percent based on the average latest price paid for each company's class B share during the last 10 trading days before October 15, 2008. The Offer entails a bid premium of approximately 6 percent based on the latest price paid for each company's class B share on November 21, 2008, and entailed a bid premium of approximately 3 percent based on the average latest price paid for each company's class B share during the last 10 trading days before November 10, 2008. ¹ Note: This is a translation into the English language of the original statement and its attachments in the Swedish language. In case of any discrepancy them between, the Swedish versions shall prevail. Peab also offers SEK 66.15 in cash for each convertible issued by Peab Industri, which corresponds to the nominal amount including accrued interest for the convertible. Shareholders corresponding to approximately 71 percent of the votes and approximately 42 percent of the share capital in Peab Industri have committed themselves to accept the Offer. The acceptance period started on November 13 and runs to December 3, 2008. The Offer is among other things conditional upon that it is accepted to such extent that Peab becomes the owner of more than 90 percent of the total number of shares in Peab Industri. The Board has taken notice of the information in Peab's offer document which was drawn up in view of the Offer that was issued on November 10, 2008. Statement On October 15, 2008, the Board made the assessment that the Offer at the time of the announcement of the initiators' intention appeared to be of interest to the shareholders and the holders of convertibles in Peab Industri, particularly when considering the market situation that each company may face in the current general economy. The Board however observes that the stock market thereafter has been characterized by very high volatility, and that no investor on October 15, 2008, could reasonably have predicted such development. Since the announcement of the planned Offer, the market price for Peab's share has had a negative development of approximately 55 percent. This means that the value of the Offer concerning the shares has correspondingly decreased in value and today falls below the latest price paid for Peab Industri's class B share on October 14, 2008, with approximately 43 percent. During the same period, Affärsvärlden's General Index has dropped by approximately 19 percent and during the same period, Affärsvärlden's Building and Construction related Index has dropped by approximately 28 percent. According to clause III.3 of the Takeover Rules, the Board's recommendation shall be preceded by an evaluation of the Offer and the consideration. Prior to its statement, the Board has therefore obtained a so called fairness opinion from an independent financial advisor. A fairness opinion is typically based on the company being evaluated in a stand-alone observation that presupposes that the company is continued to be operated in its current form. Evli Bank Plc (”Evli Bank”) has been engaged to issue a fairness opinion concerning the Offer and the consideration (”Evli's Opinion”). In its assignment, Evli Bank has considered public information and has had discussions with the management of Peab and Peab Industri concerning historical and current business operations, financial position, investment needs and future prospects for each company. As regards the Offer concerning the shares and consideration for them, Evli Bank has in the light of among other things recent stock market conditions, stated that the Offer and the consideration at the time of the assessment according to the Takeover Rules, i.e. per November 21 2008, is not fair from a financial perspective. As further set forth in Evli's Opinion, Evli Bank made the assessment that it could have been probable that the Offer concerning the shares and consideration for them per October 15, 2008 had been deemed to be fair from a financial perspective, but that the stock market conditions has changed thereafter and that the assessment per November 21, 2008 according to the Takeover Rules is different, i.e. that the Offer concerning the shares and consideration for them is not fair from a financial perspective. As regards the Offer concerning the convertibles, Evli Bank, has however stated that the Offer concerning the convertibles at the time of the assessment, i.e. per November 21, 2008, is fair from a financial perspective. The Opinion from Evli Bank in its entirety is enclosed to this statement (Appendix A). In order to further substantiate the assessment of the Offer and the consideration, the Board has concluded that it serves the interest of shareholders to also instruct SET Revisionsbyrå AB (”SET”) to review and objectively assess Evli's Opinion. In its review, SET has come to the conclusion that the methods, the assumptions, prognoses and calculations that Evli Bank has used, do not depart from what SET would have applied when drawing up a fairness opinion or from market practice in general with customary methods for assessment of public offers that substantially consist of share-exchange offers. SET has confirmed the assessment that the Offer concerning shares and the consideration for them had been deemed to be fair per October 15, 2008, but also deemed that Evli's Opinion per November 21, 2008 presents a true picture to the effect that the Offer and the consideration for the shares in Peab Industri is now insufficient from a financial perspective. In light of this, SET has made the assessment that Evli Bank's conclusion is reasonable. The opinion from SET in its entirety is enclosed to this statement (Appendix B). The Board does not consider that the Board in its statement according to clause II.14 of the Takeover Rules can or should depart from the obtained valuation report, a so called fairness opinion. According to above, a report indicates that the Offer concerning shares and consideration for them per October 15, 2008 would probably have been deemed to be fair from a financial perspective, but the prerequisites in the stock market have thereafter changed and the conclusion in Evli's Opinion is that as per November 21, 2008, the Offer concerning shares and consideration for them was not fair from a financial perspective. In light of the above, the Board of Peab Industri recommends the shareholders in Peab Industri not to accept the Offer concerning shares. The Board, however, recommends holders of convertibles in Peab Industri to accept the Offer concerning convertibles. Notwithstanding the Board's recommendation above, the Board wishes to draw the shareholders' attention to the following conditions and risks, which are not considered in Evli's Opinion, but which should also be observed by a shareholder who contemplates not to accept the Offer concerning shares. - The Offer mainly consists of a share exchange offer, in which the value of the consideration offered is important. The recent strong turbulence on the stock market has complicated the assessment of the value of the consideration. The share price in Peab has been subject to high volatility and will ultimately be affected by a number of factors which are particularly difficult for Peab Industri to assess in the current stock market situation. The Board does not in this context have access to any more information regarding Peab than information made public by Peab in the market. - It cannot be ruled out that in a deteriorated general economy a merger could make it possible to improve the group's financial position through co-ordinating both companies financial resources (see further below under The effect of the Offer on Peab Industri) - The ownership situation in Peab Industri has the risk of becoming more concentrated after a realization of the Offer. By way of information, the Board notes that this could be presumed to entail deteriorated liquidity in the PeabIndustri-share, which could negatively affect the share price in the future. By way of information, the Board also notes that such ownership concentration could mean that the shareholders distribution requirement for a listing on the Nordic Exchange Stockholm AB could not be maintained, which could lead to a delisting if the shareholders distribution requirement is not maintained. The Board intends to, as long as the requirements are met, seek to maintain the listing of Peab Industri's class B shares on the OMX Nordic Exchange Stockholm AB. - Peab has in its offer document stated: ”As soon as possible after Peab's acquisition of shares representing more than 90 percent of the shares in Peab Industri, Peab intends to request compulsory redemption of the remaining shares in Peab Industri in accordance with the Swedish Companies Act. In connection therewith, Peab intends to seek a delisting of Peab Industri shares from OMX, provided that such delisting may take place in accordance with applicable Swedish laws and rules. Shareholders who choose not to accept the offer but to remain as shareholders in Peab Industri should, in light of the above, note that after a possible delisting no effective market for trading of Peab Industri's shares will exist.”² By way of information, the Board notes that if a compulsory redemption procedure has been preceded by a public offer, the cash consideration shall according to the Swedish Companies Act as a general rule correspond to the consideration that was offered in the take-over offer. The Board correspondingly notes that in case of consideration in the form of listed shares as in the case in question, the prevailing arbitration practice is that the consideration share normally is valued to its average value (volume weighted average price) during the entire offer period. ² Office translation of Peab's offer document. For further details of the Offer see the translated Summary made available by Peab. The effect of the Offer on Peab Industri In accordance with the Takeover Rules, the Board shall also, based on what Peab has stated in the offer document, account for its opinion on the effect that the realization of the Offer would have on Peab Industri, particularly as regards employment, and for Peab's strategic plans for Peab Industri and the effects that they may have on Peab Industri. In the offer document it is i.a. stated that: ”Peab does not, as a result of the acquisition, intend to carry out any restructurings that could entail a reduction of the number of employees or material changes of the employment conditions or employment on the locations where Peab Industri conducts its business. It is Peab's assessment that the competitiveness of both companies in the current market situation will be strengthened and provide improved possibilities to increase the market shares on the markets on which the companies operate.… A central administration for the New group means further cost savings. The Board's assessment is that the yearly co-ordination benefits will amount to approximately 10 million SEK as from 2009.”³ The Board notes that Peab has expressed that cost savings shall be possible to carry out in Peab Industri without staff cuts resulting from the acquisition, and that there are no fixed plans for material changes of employment conditions or employment on the locations where Peab Industri operates. The Board shares the assessment made by Peab concerning the effects that a realization of the Offer may have in that it can be possible to through a merger improve the financial position of the group by co-ordinating the financial resources of the two companies, which in a deteriorated general economy cannot be ruled out as giving an improved competitiveness and improved possibilities to increase the market shares nationally and internationally. A merger may also entail a possibility to increase the degree of industrialization in the building process. In addition to that, the Board has nothing to add regarding the effect that a realization of the Offer would have on Peab Industri or regarding Peab's strategic plans for Peab Industri and the expected effects that these may have on employment and the locations where Peab Industri operates. Unanimity, the members' acceptance etc The Board's decisions in the matter have been unanimous, and the chairman of the board, Mats Paulsson, and board members Sara Karlsson, Fredrik Paulsson and Mats O Paulsson have, due to a conflict of interest through holdings in Peab, not participated in the handling process or in decisions. All other Board members who themselves own shares or convertibles in Peab Industri have noticed the conditions in the Offer as well as the above mentioned conditions and risks, whereafter they, notwithstanding the recommendation from the Board accounted for above, on their own part as private individuals will accept to change Peab Industri shares for Peab shares and to accept the Offer concerning convertibles. ³ Office translation of Peab's offer document. For further details of the Offer see the translated Summary made available by Peab. Ängelholm, 24 November, 2008 Peab Industri AB (publ) The Board of Directors For further information, please contact: Jan Segerberg, member of the board Peab Industri, +46 431 44 96 04 Peab Industri AB discloses the information provided herein pursuant to the Securities Markets Act and/or the Financial Instruments Trading Act. The information was submitted for publication at 08.50 am on 24 November 2008. Previous press releases from Peab Industri are available at www.peabindustri.com. Peab Industri is a leading producer of products and provider of services for the Nordic construction and civil engineering market. The net sales exceed SEK 7 billion and the number of employees is approximately 2 400. Business is conducted in Sweden, Norway and Finland. The share is listed on Nasdaq OMX Stockholm. The main office is located in Ängelholm in Skåne, Sweden.
Statement from the Board of Peab Industri AB regarding Peab AB's offer
| Source: Peab Industri AB