The Boards of Directors of SanomaWSOY Corporation and Rautakirja Oyj have approved a plan to merge Rautakirja into SanomaWSOY. Rautakirja is a subsidiary of SanomaWSOY since 1999, and the SanomaWSOY Group's holding in Rautakirja before the merger is approximately 57%. The merger will enable full usage of the Group's resources in international expansion projects and simplify the ownership structure.
According to the merger plan, Rautakirja's shareholders will receive a merger consideration of 5.3 new SanomaWSOY B-shares for each Rautakirja A- or B-share held by them.
The extraordinary general meetings of SanomaWSOY and Rautakirja, to be held on 18 September 2002, will take a decision on the merger, whose approval will require three fourths (3/4) of all votes cast at the general meeting of SanomaWSOY in addition to the qualified majority of two thirds (2/3) as required by the Companies Act. Rautakirja's largest minority shareholders Kesko Food Ltd, Oy Karl Fazer Ab, Pohjola Group and Suomi Group that together hold about 31.33% of Rautakirja's shares and about 35.59% of its votes, have announced that they will support the merger at Rautakirja's extraordinary general meeting provided that a statement obtained from the auditor acting as an independent expert and the content of the so-called fairness opinion provided by an investment bank chosen by Rautakirja's Board of Directors support the approval of the merger plan. The content of the received fairness opinion supports the merger. The independent expert's opinion will be received on August. SanomaWSOY and Rautakirja's minority shareholders have no mutual business agreements or other unusual agreements connected with the merger.
The intended time for the registration of the enforcement of the merger is 1 March 2003. In connection with the merger, Rautakirja's operations will be incorporated into a new Rautakirja Oy that will continue operations on the present basis. In the merger, SanomaWSOY will issue not more than 33,551,120 SanomaWSOY B-shares, of which not more than 18,773,018 shares will be issued to SanomaWSOY subsidiaries Sanoma Corporation and Werner Söderström Corporation as merger consideration. Those of Rautakirja's existing shareholders that are external to SanomaWSOY Group will receive a merger consideration of not more than 14,778,101 shares that after the merger will represent about 8.25% of the total number of SanomaWSOY A- and B-shares. SanomaWSOY Corporation will receive no merger consideration in the merger.
"The SanomaWSOY/Rautakirja merger will enable full usage of all the Group's resources in international expansion projects, and simplify Rautakirja's ownership structure. This will give us more flexibility in possible internal reorganisation of our business and restructuring of the Group, while enhancing efficient financing and capital planning", says SanomaWSOY's President, Hannu Syrjänen.
"A simplified ownership structure will enhance Rautakirja's possibilities of internationalisation and development of operations", says Rautakirja's President, Erkki Järvinen.
Rautakirja will be merged into SanomaWSOY by applying the acquisition cost method so that SanomaWSOY Group's consolidated goodwill will not increase as a result of the merger. The merger will have a positive impact on SanomaWSOY's earnings per share (EPS) in 2003, when the merger becomes effective. Neither the merging companies nor their shareholders will have any tax consequences as a result of the merger.
The signatories of SanomaWSOY's shareholder agreement, who hold more than 50% of all shares and votes in SanomaWSOY, have agreed to vote for and also otherwise operate in a way to ensure that SanomaWSOY will take a decision in the annual general meeting to be held in 2003 to distribute a dividend of at least EUR 0.26 per share for the 2002 financial year.
Rautakirja is a retail and service company whose shares are listed on the Helsinki Exchanges. Its operations include kiosk and convenience retail, press wholesale and distribution, bookshops, movie theatre operations and restaurants. The Group's core business consists of the distribution, wholesale and retail of press and specialised retail operations. In 2001 approximately 94% of sales were generated in Finland. In recent years, Rautakirja has significantly extended its activities in the Baltic countries. The company's operations include kiosk and convenience retail, press wholesale and distribution, movie theatre operations, bookshops, and sports betting in Estonia; kiosk and convenience retail, movie theatre operations, and press wholesale and distribution in Latvia; it also has a subsidiary which operates movie theatres in Lithuania.
Rautakirja's net sales 2001 totalled EUR 696.5 million and are expected to rise in 2002 approximately 5%. Operating profit for this year is expected not to match the record level of 2001 (EUR 42.6 million), when the results was swelled by EUR 8.4 million in profits arising from sale of shares. The result on operations is anticipated to reach the same level as in 2001. Rautakirja's equity ratio in 2001 was 61.5% (64%).
SanomaWSOY is the leading Nordic media group with operations in 14 European countries. In addition to Rautakirja, the Group has four other divisions: Sanoma, Sanoma Magazines, SWelcom and WSOY. About 40% of the Group's net sales are generated outside Finland. In addition to Rautakirja's press wholesale and distribution, SanomaWSOY is involved in press distribution through Sanoma Magazines' subsidiary Aldipress, which is the leading Dutch magazine distributor with pro forma net sales of EUR 206.5 million in 2001.
SanomaWSOY Group's net sales are projected to increase to approximately EUR 2,400 (1,730) million in 2002. Operating profit is projected to increase by one third from year 2001 (EUR 96.5 million in) provided that no unexpected changes occur in the economic situation.
The entire merger plan is enclosed to this release. SanomaWSOY will publish a merger memorandum of the Rautakirja merger. The scheduled date of publication is 10 September 2002.
Press and analyst conference will be held in Finnish today at 12.30 (Finnish time) in Sanoma House, Töölönlahdenkatu 2. There will be no phone conference in English at this point. The overhead presentation set of President Hannu Syrjänen is available on SanomaWSOY's website, www.sanomawsoy.fi .
SANOMAWSOY CORPORATION
Raija Kariola
Vice President
Investor Relations and Group Communications
DISTRIBUTION
Helsinki Exchanges
Principal media
MERGER PLAN
1. the merging companies
SanomaWSOY Corporation (organisation number 1524361-1)
Domicile Helsinki
Address Ludviginkatu 6-8,
00130 HELSINKI
Finland
(hereinafter "SanomaWSOY")
Rautakirja Oyj (organisation number 0124284-5)
Domicile Vantaa
Address Koivuvaarankuja 2,
01640 VANTAA
Finland
(hereinafter "Rautakirja")
(SanomaWSOY and Rautakirja both jointly referred to as the "Merging Companies")
2. merger
The Boards of Directors of the Merging Companies have resolved to merge Rautakirja into SanomaWSOY by absorption merger as provided for in the chapter 14, section 1 of Finnish Companies Act and under the terms and conditions set out in this merger plan.
3. information required by the finnish companies act 3.1 A proposal to amend the Articles of the Association of the receiving company
The Articles of the Association of SanomaWSOY are proposed to be amended as set out in Schedule 1. 3.2 Merger Consideration
Merger consideration to the shareholders of Rautakirja will be given in new B-shares issued by SanomaWSOY and as cash consideration as described below.
The shareholders of Rautakirja will receive shares of SanomaWSOY as merger consideration as follows: for each A- or B-share of Rautakirja (with equivalent bookkeeping value of EUR 3.40 per share) 5.3 new B-shares of SanomaWSOY (with equivalent bookkeeping value of EUR 0.43 per share).
To the extent the number of shares to be given as a merger consideration should not be a round number compared with the number of shares owned by a shareholder of Rautakirja and thus the shareholder would not receive full merger consideration in shares of SanomaWSOY, the remaining fraction will be compensated as a cash consideration. The cash consideration shall be calculated on the basis of the weighted average price quoted for the A- and B-shares of Rautakirja at the HEX Helsinki Stock Exchange during the last three months' trading period, which expires one week prior to the effective date of the merger. In the event it is a question of a fraction of shares of Rautakirja, the merger consideration shall be corresponding fraction of the average price determining the basis of the consideration.
SanomaWSOY owns directly 117,600 A-shares and 32,000 B-shares of Rautakirja. Merger consideration is not given to these shares owned by SanomaWSOY. 3.3 Clearance of subordinated loans
Rautakirja does not have subordinated loans governed in the chapter 14, section 4, subsection 2, paragraph 4 of the Finnish Companies Act.
SanomaWSOY issued on 31 August 2001 a convertible subordinated loan for the amount of EUR 200,000,000. 3.4 Shareholdings of Rautakirja and its subsidiaries
Rautakirja nor its subsidiaries do not own any shares of SanomaWSOY. 3.5 A proposal to increase the share capital in order to pay the merger consideration
In order to pay the merger consideration SanomaWSOY will increase its share capital at minimum with EUR 0.43 and at maximum with EUR 14,426,981.60 by issuing at least one and at maximum 33,551,120 new B-shares, with a equivalent bookkeeping value of EUR 0.43 per share. The shares given as merger consideration will entitle their holders to dividend for the financial year which ends on 31 December 2002 and entitle their holders all other rights of a shareholder starting from the moment the increase of share capital has been registered.
The A- and B-shares of SanomaWSOY differ from each other so that each A-share entitles its holder to 20 votes in the shareholders' meeting and each B-share entitles its holder to one vote in the shareholders' meeting. According to the Articles of Association A-share can be converted into a B-share. 3.6 A proposal regarding the time and other terms of the distribution of merger consideration
Distribution of the merger consideration will be commenced on the day of the merger or on the following banking day if the day of the merger is not a banking day.
The merger consideration will be distributed in the book-entry system so, that on the date of registration of the implementation of the merger at the trade register, the shares entered in the shareholders' book-entry accounts according to the shareholders register of Rautakirja are converted into shares SanomaWSOY at an exchange rate and manner given in this merger plan.
For those shareholders who have not delivered their share certificates to the book-entry system by the day prior to the date of the registration of the implementation of the merger, the consideration will be paid by registering the shares given as merger consideration to their book-entry accounts according to the exchange ratio of the shares.
The cash consideration will be paid to the bank account connected to the book-entry account of the shareholder or to another bank-account nominated by the shareholder. 3.7 Description of the special benefits and rights to be granted in connection to the merger
The members of the Boards of Directors, the Managing Directors or the auditors of the Merging Companies are not granted any special benefits or rights. Neither are such benefits or rights granted to the auditors acting as independent consultants mentioned later on in the merger plan. Merging Companies do not have Supervisory Boards.
Auditors acting as independent consultants are paid according to an accepted invoice. 3.8 The reasons and causes of the merger, according to which the merger consideration is to be determined.
The business operations of Rautakirja and SanomaWSOY are merged as a part of the restructuring of the group in order to increase the efficiency of the operations and in order to reduce the total costs of the group. The merger also enables full usage of the resources of the SanomaWSOY group inter alia in international expansion projects.
The merger consideration is based on the ratio of the values of SanomaWSOY and Rautakirja. The value of the companies and their shares has been estimated on the basis of the market value of the companies, on the basis of the cash flow value of the business and on other commonly used evaluation methods.
As a merger consideration for the A- and B-shares of Rautakirja will be given B-shares of SanomaWSOY.
The Boards of Directors of both Rautakirja and SanomaWSOY have obtained fairness opinions from investment banks regarding the suggested merger consideration. Inter alia on the basis of these fairness opinions the Boards of Directors of the Merging Companies consider the suggested consideration justifiable and correct. 3.9 Proposal for the date of the registration of the enforcement of the merger
The intended time for the registration of the implementation of the merger is 1 March 2003. In the event the implementation of the merger is not registered by 30 April 2003 this merger plan can be terminated by either party. Written notice of termination has to be served by the Board of Directors to the other party's Board of Directors and the termination shall be effective from the receipt of the notice.
4. other TERMS AND conditions 4.1
Paid dividends have been taken into account in the merger plan. The new shares of SanomaWSOY to be received by the shareholders as merger consideration entitle their holders to a full dividend from the financial year of 2002. The amount of dividend is resolved in the ordinary shareholders' meeting of SanomaWSOY following the registration of the implementation of the merger and registration of the increase of share capital relating to the payment of merger consideration. For the financial year of 2002, the Board of Directors of SanomaWSOY will propose a dividend of at least EUR 0.26 per share. 4.2
Both companies agree to operate according to the aim and purpose of this merger plan and to take it into account in all decisions unless otherwise agreed in this merger plan. Neither company shall take any unusual or far-reaching measures and shall not before the enforcement of the merger
- change its share capital,
- acquire company's own shares,
- issue convertible bonds or options, or
- resolve to distribute other dividend than mentioned in 4.1.
Above restrictions can be deviated from only in a manner approved by the Boards of Directors of both companies. 4.3
It is separately agreed that regardless of the limitations mentioned above in section 4.2, (i) the Board of Directors of Rautakirja may resolve to incorporate its business or parts of its business or carry out other kind of reorganisation of its corporate structure; and that (ii) the share capital of SanomaWSOY may change in the event the EUR 200,000,000 convertible capital notes, issued by the company on 31 August 2001, is being converted in to shares according to the terms of the loan.
4.4
The merger is subject to the fact that no permanent material adverse change occurs in the current financial preconditions of either company, other than due to changes in the economic trend or similar, prior to the shareholders' meeting deciding on the approval of the merger plan. 4.5
If the merger is not being completed according to this merger plan due to the merger plan not being approved in the shareholders' meeting of either of the companies or because this merger plan is terminated according to the section 3.9 or 4.4 of this merger plan, both of the parties shall bear their own costs occurred due to the preparations of this matter unless the other party has breached this agreement. 4.6
The Board of Directors of the Merging Companies are jointly authorised to make possible necessary amendments and technical modifications to the merger plan or to its schedules, required by authorities or otherwise deemed necessary.
5. other matters
This merger plan has been drawn up in five (5) counterparts, one (1) for SanomaWSOY, one (1) for Rautakirja and three (3) for the authorities.
Helsinki, 19 June 2002
SanomaWSOY Corporation
Rautakirja Oyj
SCHEDULES TO the merger plan:
Schedule 1 Proposal to amend the Articles of Association of the receiving company Schedule 1 to the Merger Plan of SanomaWSOY and Rautakirja
In relation to the merger plan of SanomaWSOY and Rautakirja the sections 2 and 4 of the Articles of the Association of SanomaWSOY are proposed to be amended as follows:
2 § The field of business of the company is to engage in publication, marketing and distribution of books, newspapers, magazines and other publications, other communications, kiosk business activity, entertainment business activity, and affiliated industrial and commercial business, either by itself or by its subsidiaries or associated companies. In addition to that, the Company can engage in rental and investment activity.
4 § The minimum share capital of the company is EUR 50 million (50,000,000) and the maximum share capital is EUR 300 million (300,000,000) within which limits the share capital of the company can be increased or decreased without amending the Articles of the Association of the company.
The amount of the A-shares of the company can be at most 120,000,000 and the amount of the B-shares of the Company is at least 100,202,620 and at maximum 720,000,000.
SCHEDULES to be FILED after the registration of the merger plan:
Schedule 2 Statements of independent consultants
Schedule 3 Copies of SanomaWSOY's:
(i) Last three financial statements
(ii) Intermediate financial statement 30 June 2002
(iii) A summary by the Board of Directors of the post intermediate financial statement events which have a significant effect on the status of the company
(iv) Statement of the auditors regarding the above summary
Schedule 4 Copies of Rautakirja's:
(i) Last three financial statements
(ii) Intermediate financial statement 30 June 2002
(iii) A summary by the Board of Directors of the post intermediate financial statement events which have a significant effect on the status of the company
(iv) Statement of the auditors regarding the above summary