Emblaze Ltd (LSE:BLZ) ("Emblaze" or "the Company") Proposed acquisition of a controlling stake in WFI Tel Aviv, Israel, 3 March, 2014 The Company announces that on 2 March 2014, it signed an agreement (the " Agreement") to acquire a controlling stake in Willi-Food Investments Ltd. ("WFI "), a company listed on the Tel Aviv Stock Exchange, subject to the satisfaction of the condition precedent and the additional terms referred to below (the "Transaction"). The Agreement was signed with Zwi Williger ("ZW") and Joseph Williger ("JW" and, together with ZW, the "Sellers") to acquire up to their entire interests in WFI. WFI in turn, owns approximately 58% of G Willi-Food International Ltd. ("WFINT", together with WFI, "Willi-Food"), a company listed on NASDAQ. WFINT is the principal operating entity within the WFI group of companies. The Agreement also governs the ongoing relationship of the Company with the Sellers both before and after completion of the Transaction. The Transaction The Transaction is structured as follows: The Transaction is subject to the receipt of Israeli anti-trust authorities approval. The Company and the Sellers will endeavour to obtain the approval following signing of the Agreement (the "Condition Precedent"). Subject to fulfilment of the Condition Precedent: a. The Company will acquire shares carrying 44.99% of the voting rights in WFI, from the Sellers or companies controlled by the Sellers. b. The Company will then, within seven business days of fulfilment of the Condition Precedent, publish a special tender offer (the "Special Tender Offer") addressed to all shareholders of WFI pursuant to Israeli companies law in order to acquire shares carrying 5% of the voting rights in WFI. The Sellers have undertaken to participate in the Special Tender Offer in relation to their remaining shares in WFI not sold by them pursuant to (a) above (the "Remaining Shares"). c. Subject to the successful completion of the Special Tender Offer, the Company will make a further purchase from the Sellers of their remaining shares in WFI, such that the Sellers will have sold, in aggregate, approximately 58% of the shares of WFI (or approximately 55% on a fully diluted basis), comprising their entire holding of shares in WFI (and which includes any such shares sold by them pursuant to ?(a) and ?(b) above). d. If the Company fails to complete the Special Tender Offer, the Sellers may elect, within seven business days of such date on which the Special Tender Offer lapsed to rescind the Agreement unless the Company elects, within a nine business day period starting from the date on which the Special Tender Offer lapsed, to purchase from the Sellers their Remaining Shares (the " Call Option") (in which case the Agreement will not be rescinded). If the Company elects to purchase the Remaining Shares in these circumstances, then pursuant to Israeli companies law, any shares in WFI held by the Company or any person connected with it for the purposes of the Israeli companies law, which would give the Company or such persons an interest in more than 44.99% of the voting rights in WFI will be treated as "dormant" and would not entitle them to exercise or enjoy any voting or economic rights for as long as the Company and such persons continue to hold, in aggregate, more than 44.99% of the voting rights in WFI or if and when the holding of such voting rights would no longer cause a breach of Israeli companies law with regard to any requirement on the Company and such persons, to make a Special Tender Offer. Alternatively, if the Company fails to complete the Special Tender Offer and the Sellers have not elected to rescind the Agreement within the seven business day period referred to above and provided that the Company has not exercised the Call Option the Company will grant the Sellers a put option (the "WFI Put Option") exercisable at any time during a period of five years from completion of the Transaction, to sell all or some of the Remaining Shares to the Company. Exercise of the WFI Put Option by the Sellers will be subject to such exercise not breaching Israeli companies law with regard to any requirement on the Company to make a Special Tender Offer. The WFI Put Option relates to the number of Remaining Shares less any shares of WFI sold by the Sellers between the date of completion of the Transaction and the exercise of the WFI Put Option. During the WFI Put Option exercise period, the Company will hold the benefit of a power of attorney which would enable it to procure the Sellers to sell their Remaining Shares to a third party, subject to compliance with applicable laws. The power of attorney may be cancelled by the Sellers at any time during that period, although such cancellation would lead to the immediate cancellation of the WFI Put Option in relation to such Remaining Shares in relation to which the power of attorney was cancelled. e. The Sellers also hold shares and employee options in relation to approximately 7% of the shares of WFINT on a fully diluted basis (the " WFINT Put Option Shares"). The Company has granted the Sellers a put option to sell all or some of such shares as vested from time to time (the "WFINT Put Option") exercisable for a period of four years (commencing on the first anniversary of completion of the Transaction) at a price of US$12 per share. The WFINT Put Option relates to the WFINT Put Option Shares less any shares sold by the Sellers between the date of completion of the Transaction and exercise of the WFINT Put Option. During the WFINT Put Option exercise period, the Company will hold the benefit of a power of attorney which would enable it to procure the Sellers to sell their WFINT shares to a third party at a price per share not below US$12, subject to compliance with applicable laws. The power of attorney may be cancelled by the Sellers at any time during that period, although such cancellation would lead to the immediate cancellation of the WFINT Put Option in respect of such WFINT Put Option shares in relation to which the power of attorney was cancelled. As from completion of the Transaction and until the exercise or expiry of the WFINT Put Option, the Sellers will each grant the Company an irrevocable proxy with respect to their holdings in WFINT, so as to allow the Company to vote such shares at general meetings of WFINT. f. ZW and JW will continue to be engaged by WFINT and will serve as chairman of the board (in respect of ZW) and as president (in respect of JW), or as joint chief executive officers of Willi-Food for an additional period, commencing upon termination of ZW and JW's current service agreements with WFINT (September 2014), of between 18 months and three years therefrom. Subject to further agreement between the parties and to applicable law, ZW and JW may continue their respective engagement also following such period. g. Each of the Sellers will be prohibited from competing against Willi-Food in any material way, subject to certain agreed exceptions described below, for an additional period commencing on the termination of his respective engagement with WFINT and terminating up to six years from completion of the Transaction. In consideration of such non-compete undertakings, each of the Sellers will be entitled to an additional annual payment of NIS1,500,000 (approximately �250,000) per year following termination of his respective engagement, to be paid by the Company, or, subject to applicable law. Willi-Food. Under the Agreement, each of the Sellers shall have the rights to be released from his engagement, in which case (except in the case of (viii) below) the non-compete undertaking shall cease to apply in relation to him, where: (i) Willi-Food's accounts will include a `going concern' provision as a result of any activity which is not within the Willi-Food's business operations in the field of import, export, marketing and distribution of food products (the " Current Business Activity"); (ii) the board of directors of WFI, WFINT or any other organ of the Willi-Food group materially disrupts ZW or JW's ability to operate in the Current Business Activity as part of said engagement; (iii) ZW or JW are not reappointed as directors in WFI or WFINT during said engagement period; (iv) WFI or the Company, as the case may be, have not voted, as shareholders of WFINT, in favour or extending ZW and JW's service contracts; (v) ZW or JW's engagements were terminated for unreasonable reasons by WFI or WFINT; (vi) sale of control in the Current Business Activity, WFI or WFINT to a third party; (vii) introduction of a third party as a partner in the Current Business Activity or in the control in WFI or WFINT unless previously approved by the Sellers, such approval not to be unreasonably withheld; or (viii) incapacity of ZW or JW. h. The Transaction is expected to be completed soon after the successful completion of the Special Tender Offer or, alternatively, following its lapse. This is expected to occur during Q2, 2014. Background on Willi-Food WFI, through its operating subsidiary WFINT, is engaged, directly and through subsidiaries, in the development, import, export, marketing and distribution of a wide variety of over 600 food products world-wide. Most of WFINT's sales are made in Israel with widespread demand in the Israeli marketplace, as well as products which cater to more select groups. WFINT purchases food products from over 150 suppliers located in Israel and throughout the world, including from the Far East (China, India, the Philippines and Thailand), Ethiopia, Eastern Europe (Poland, Lithuania, Bulgaria and Latvia), South America (Ecuador and Costa Rica), the United States, Canada, Western and Central Europe (the Netherlands, Belgium, Monaco, Germany, Sweden, Switzerland, Denmark, and France) and Southern Europe (Spain, Portugal, Italy, Turkey, Greece). WFINT's products are marketed and sold to approximately 1,500 customers in Israel and around the world (for example, to the United States, the United Kingdom and France), including to supermarket chains, wholesalers and institutional consumers, but its current operations outside Israel are small in comparison to its Israeli operations. As at 30 September 2013, Willi-Food's principal consolidated financial figures are as follows: Cash and cash NIS301,242,000 equivalent Total assets NIS476,379,000 Equity NIS257,081,000 Operational profit NIS24,244,000 Net profit NIS43,107,000 Consideration The aggregate consideration for the shares in WFI to be acquired from the Sellers (including the Remaining Shares and whether or not such shares are acquired pursuant to the WFI Put Option or not) is approximately NIS268,000,000 (approximately �45,800,000). The consideration to be offered to WFI's shareholders as part of the Special Tender Offer represents the same price per share as paid to the Sellers for their shares in WFI, and is expected to be, in aggregate, approximately NIS23,000,000 (approximately �3,900,000). Assuming, therefore, that all the shareholders of WFI other than the Seller participate in the Special Tender Offer in relation to their entire shareholdings, then the Company expects to acquire up to 61.80% (though the actual number may be lower, depending on the breakdown of shareholder acceptances under the Special Tender Offer) of the shares in WFI for an aggregate consideration of approximately up to NIS285,500,000 (approximately � 48,804,000). Background on the Sellers ZW, age 58, has served as the active chairman of WFINT since January 1997. From January 1997 until September 2011 he also served as chief operating officer of WFINT and from the inception of WFINT in January 1994 until January 1997, as a director and manager of marketing development of WFINT. ZW has also served as a director of WFINT's subsidiaries, W.F.D. (Import, Marketing and Trading) Ltd. ("W.F.D.") and Gold Frost Ltd. ("Gold Frost") since November 1996 and April 2001, respectively. In addition, ZW has served as a director of WFI since December 1992 and as a director of Titanic Food Ltd. ("Titanic"), a company he owns together with JW, since April 1990. ZW attended Fresno University in California. ZW is the brother of JW, president and a director of WFINT. JW, age 56, has served as president of WFINT since September 2011 and a director of WFINT since WFINT's inception. Since WFINT's inception until September 2011 he served as the chief executive officer (or general manager) of WFINT. He has also served as a chairman of WFINT's subsidiaries, W.F.D. and Gold Frost, since November 1996 and April 2001, respectively. JW has also served as a director and as chairman of the board of WFI, the controlling shareholder of WFINT, since December 1992 and June 1994, respectively. JW has served as director of Titanic since April 1990. JW attended Bar-Ilan University in Israel and Northridge University in Los Angeles. JW is the brother of ZW, chairman of the board of directors of WFINT. Commercial rational and the expected effect of the Transaction on the Company Following completion of the Transaction, the Company will exercise control over WFI by means of (i) its ability to exercise control over between 44.99% and 61.80% of the votes exercisable at shareholder meetings of WFI; and (ii) its right to appoint the majority of board members of WFI and WFINT at completion of the Transaction. The Company intends to be actively involved in the management of Willi-Food through, amongst other things, the appointment of directors to the boards of WFI and WFINT and through involvement in the nomination of Willi-Food's senior management. Through such involvement, the Company hopes to be able to improve the results and profitability of Willi-Food, thereby creating value to the Company and its shareholders. Among other things, the Company is considering various options for the expansion of Willi-Food's operations, both in Israel and internationally. The board considers that the acquisition of a controlling interest in WFI represents an attractive opportunity for the Company and its shareholders as a whole and is aligned with the intentions of the Company's management which are aimed at maximizing value for the Company's shareholders. No obligation to seek shareholder approval As set out in the Company's circular of October 2013 in relation to its move to a Standard Listing, a standard listed company is not required to comply with the provisions of Listing Rule 10 which sets out requirements for shareholders to be notified of certain transactions and to have the opportunity to vote on proposed significant transactions. As such, the Company is able to undertake significant transactions (including the Transaction) without requiring shareholder approval. Share suspension and re-admission Given the Transaction by the Company would constitute a reverse takeover under the Listing Rules and after consultation with the UK Listing Authority, the Company has requested that trading in its shares be temporarily suspended with effect from 7.30 a.m. today pending either (i) the publication of a prospectus by Company in connection with the requirement on it to re-apply for the listing of its shares following completion of the Transaction; or (ii) the termination of the Agreement in accordance with their respective terms. Until the Company has completed the formal application process and satisfied the UKLA as to its eligibility, there is no certainty that the UKLA will approve the re-listing of the Company's shares to trading on the Standard List. In such circumstances, the Company would cease to be listed although the board would actively explore the possibility of moving to AIM or an alternative listing or admission venue. Furthermore, there can be no guarantee that the completion of the Transaction will occur before the date on which the Company is able to publish a prospectus in connection to its re-application for the listing of its shares. In this regard, the UKLA have confirmed that trading in the Company's shares will continue to be suspended pending publication of a prospectus by Company in connection with the application for relisting of its shares following completion of the Transaction. Enquiries: Eyal Merdler, CFO: Eyal.Merdler@emblaze.com The Emblaze Group has been traded on the London Stock Exchange (LSE: BLZ) since 1996. www.emblaze.com
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