Press release archive

Targetti Sankey S.P.A. acquires 92.5% of Louis Poulsen A/S

28 June 2007

PRESS RELEASE TARGETTI SANKEY S.P.A.: Has reached an agreement to acquire 92.5% of the Danish company Louis Poulsen Lighting A/S (“Louis Poulsen”).
Targetti’s acquisition of Louis Poulsen creates one of the leading European players in the lighting market.
Value of transaction: 155 million Euros.Yesterday Targetti Sankey S.p.A. entered into an agreement to indirectly acquire a shareholding of 92.5% of the share capital of the Danish company Louis Poulsen. The transaction involves the acquisition of a direct interest of 100% in Holdingselskabet af 3.
November 2005 A/S (“Holding”), a Danish company which holds a shareholding of 85% in Louis Poulsen, and 50% in LAMP Invest ApS, which in turn owns the remaining 15% of Louis Poulsen.
The remaining 7.5% stake in Louis Poulsen is owned by Peter Thorsen (CEO of Louis Poulsen) through a 50% indirect stake in LAMP Invest ApS. Moreover Mr Peter Thorsen holds an option to sell his shares in LAMP Invest ApS to Targetti for 12.6 million Euros. In the event that the option is exercised, Targetti will indirectly own 100% of Louis Poulsen. The option will be exercisable by February 2008.
Louis Poulsen is one of the leaders in the high-end European architectural lighting sector. During 2006 it posted consolidated turnover of 111.0 million Euros, EBITDA1 of 13.4 million Euros (12.1% on turnover) and Net Income of 5.4 million Euros. The Net Financial Position2 as at 31st December 2006 was 15.6 millions Euros negative. The consolidated financial statements3 for Louis Poulsen were prepared in accordance with Danish accounting principles.
The shareholders of Holding are P-LP 1999 A/S and H&D Invest A/S, each with a 50% stake. The total investment for the acquisition of the indirect interest of 92.5% in Louis Poulsen is approximately 155.4 million Euros, before costs related to the transaction. The consideration, which is payable on closing, refers to the equity value plus the consolidated net cash balance of the Holding at closing date. The final consideration will be determined by an adjustment in line with market practice.
The transaction, realized trough an auction, will be entirely financed by debt, mainly by a medium-long term credit facility provided by Fortis Bank.
1 The gross operating margin (EBITDA) is an intermediate operational indicator obtained from the operating margin adjusted for depreciation, allocations and write-downs.
2 The Net Financial Position is arrived at by subtracting financial debt owed to banks and other lending institutions from cash and bank balances.
3 These financial data, originally showed in Danish Crowns (DKK), were translated in Euros utilizing the average yearly exchange rate for the Income Statement items and the year-end exchange rate for the Balance Sheet ones.The execution of the transaction is expected to take place at the beginning of September 2007 following the fulfilment of usual legal conditions and any necessary authorizations from antitrust authorities.Cazenove acted as Sole Advisor to Targetti in the transaction, while the legal counsel was
Pavia & Ansaldo.The acquisition of Louis Poulsen enables Targetti to significantly strengthen its position in continental Europe and create a European leader in the lighting sector, especially in the architectural segment, a core business of Targetti’s. Targetti group will be the 3rd largest European player in terms of sales in the architectural lighting segment.
The acquisition will create commercial and industrial synergies in complementary production facilities and reference markets. In particular, Targetti will have the opportunity to expand its presence in Northern of Europe, where Louis Poulsen has a strong market share, as well as consolidate its presence in the US and Japan, where Louis Poulsen is one of the leading independent operators.
“With the acquisition of Louis Poulsen, we make a significant step towards growing the scale of our business and further building our international footprint.” – stated Lorenzo Targetti, the CEO of Targetti Sankey S.p.A.
“We are sure that Louis Poulsen is a perfect partner, not only in terms of management expertise, competitive position and quality of products, but also in terms of its complementary fit with Targetti. We believe that this transaction will create significant value.” – continued Targetti The Targetti Group is one of the European leaders in the sector of interior and exterior lighting. A network of nine highly specialised companies, it draws its strength from its long history and from its natural talent for research. Thanks to its perfect blend of technology and design, Targetti equipment lights universal masterpieces of art such as Michelangelo's David, Leonardo's Last Supper, and the
Notre Dame Cathedral, and is used in a wide range of environments: the Singapore Opera House, Madrid, Canton, and Paris airports, the Bulgari, Benetton, Celine, Diesel showrooms, the Formula 1 McLaren boxes, corporations such as Peugeot, Citröen, and Alfa Romeo, the world's most prestigious hotel chains, and over 4000 large and small urban environments, all places where light...means Targetti.

RELATED TO THE BUSINESS COMBINATION OF 68.5% OF TARGETTI SANKEY S.P.A.’S SHARES AND SUBSEQUENT TAKEOVER BID
Florence/Milan, June 28, 2007

• Following the acquisition completed by Targetti Sankey S.p.A. (“Targetti”) of Louis Poulsen Lighting A/S, “Louis Poulsen”, (a group operating in the lighting market),
  Giampaolo Targetti, Lorenzo Targetti, Stella Targetti, Antonio Orlandi, Domenico Neri S.r.l., Carlo Marchi, Federico Marchi, Filippo Marchi, Gioia Falck and Ferruccio
  Marchi, reached a strategic agreement with private equity funds managed by 3i Investments Plc and by 3i Gestion SA (jointly “3i”) to invest into a newly-incorporated
  special purpose vehicle (“Newco”), in which will be transferred the shareholdings in Targetti Sankey S.p.A. owned by the said subjects; these represent the majority of
  Targetti share capital
• Upon completion of the agreement, Newco will promote a mandatory takeover bid on
  Targetti free- float at a price of 7.40 euros per share.

Today, further to the signing of a sale and purchase agreements of Louis Poulsen on behalf of Targetti Sankey S.p.A. (“Targetti”, the “Issuer” or the “Company”), Targetti shareholders representing about 68.5% of the relative share capital, Giampaolo Targetti (38.73%), Lorenzo Targetti (3.71%), Stella Targetti (3.34%), Antonio Orlandi (5.34%), Domenico Neri S.r.l. (14.20%), Carlo Marchi (0.63%), Federico Marchi (0.62%), Gioia Falck (0.63%), Filippo
Marchi (0.63%) e Ferruccio Marchi (0.63%) (jointly referred to as “Targetti’s Shareholders”) entered into a strategic agreement (the “Investment Agreement”) with private equity funds managed by 3i Investments Plc and 3i Gestion SA (jointly referred to as “3i”), with the aim of allowing Targetti to benefit of the managerial and operating know-how of 3i; this through a transaction resolved in the legal requirement of promoting a mandatory takeover bid on all Targetti’s share. The agreement was signed to de-list Targetti pursuant to a takeover bid followed by a residual bid at the appropriate conditions. If the conditions not exist, Issuer will be de-listed by merger
into a non-listed company. According to the Investment Agreement, Targetti’s Shareholders will transfer 13,020,756 common shares in Targetti, representing about 68.5% of the share capital (the “Transfer”) by means of a share capital increase in a newly-incorporated special purpose vehicle (“Newco”). The conventional value of each common share transferred shall be 0.52 euros.

Concurrent with the transfer, Newco will resolve upon a further share capital increase to be paid up in cash by 3i, for a total amount of 56 million euros. Within said increase, the value of Targetti’s shares is 7.40 euros each. Pursuant to the transfer by Targetti’s Shareholders and the share capital increase reserved to 3i, 63.2% of Newco’s share capital will be held by Targetti’s Shareholders and about 36.8% by 3i. Moreover, the Investment Agreement sets forth that the Parties undertake to enter into a shareholders’ agreement (the “Shareholders’ Agreement”) by the execution date of the transaction and with effectiveness from that date in Newco that will inter alia provide for:

 - the right of 3i to appoint a number of minority directors in Newco and Targetti;
-  the veto right of the directors appointed by 3i and of 3i itself as shareholder (where applicable), on major issues such as budget approval, business plans and amendments  to the company by-laws;
 - co-sale rights in favour of 3i and of Domenico Neri S.r.l. and pre-emptive rights in favour of all shareholders, as well as joint-sale rights and obligations should the Issuer not be listed again on a regulated market, after the de-listing.
The Execution of the Investment Agreement and the fulfilment of all the abovementioned obligations and negotiations are subject to the following conditions:
- Any relevant Antitrust Authority at a domestic or international level has granted its own full and unconditional authorization to the completion of the transaction;
- The acquisition of Louis Poulsen Lighting A/S has been completed;
- The Shareholders’ Agreement has been signed;
- The certified report as per Article 2465 of the Italian Civil Code confirms that the value of the shares being transferred is at least 0.52 euros per Share;
- up to the execution date, neither Targetti nor its subsidiaries (i) have acquired any shareholdings in joint stock companies and/or other entities and/or companies or going
concerns, other than Louis Poulsen Lighting A/S; (ii) have considerably changed their business activities as it was carried out to date; (iii) have taken any actions not falling
within ordinary operations and capable of: jeopardising or considerably damaging or rendering difficult and/or expensive the activity of Targetti and /or its subsidiaries;
entailing a significant drop in economic results of the Company’s and/or its subsidiaries’ operations; and/or implying for Targetti and/or its subsidiaries considerable obligations, save for those provided for in the Loan, concerning related renegotiation and/or payment of the financial debt existing on the date of execution of this Agreement; and - Upon the date of execution, one member of Targetti’s board of directors resigns. Execution of the Investment Agreement is scheduled for the first half of September 2007. Should the above conditions occur, upon the date of execution the transfer will be carried out and the Shareholder’s Agreement will be signed. Therefore, either directly or through another company, Newco will make a takeover bid on the entire share capital of Targetti (the “Bid” or the “Takeover Bid”) at a price of 7.40 euros (the “Takeover Bid Price”) per common share. The unit price per share of 7.40 euros will be totally paid in cash. The price offered for Targetti’s shares was determined by applying the price paid by 3i to pay up the capital increase in Newco reserved to the same.
This price exceeds by 8.0% the price that will come out from the application of the calculation criteria ex art. 106 paragraph 2 of Consolidated Text. It is also 17.3% higher than the weighted average prices of the last twelve months, 14.4% higher than the weighted average prices of the last six months, 10.2% higher than the weighted average prices of the last three months and 5.0% higher than the last official price.
At the end of the Bid on Targetti, if Newco hold a shareholding greater than 90% of the Company’s shares, it will launch a residual takeover bid as per and for the effects and purposes of article 108 of the Consolidated Text, in order to de-list the Issuer’s shares.
If Newco holds more than 98% of the Company’s shares after the Bid on Targetti, it will exercise its right to purchase the residual outstanding shares as per and for the effects and purposes of Article 111 of the Consolidated Text.
If all the shares are subscribed, the Bid’s maximum total value on Targetti will be about 43 million euros.
The Offer will be financed through the risk capital 3i will transferred into Newco. The Bid completion is scheduled by the end of November 2007. The Bid’s schedule will be
agreed upon with the market authorities, in compliance with regulations in force. Due its mandatory nature, the Bid will not be contingent on reaching minimum subscription threshold. If the threshold of the residual takeover bid is not be reached, the parties may proceed to Targetti’s de-listing, possibly through a merger by incorporation of the Issuer into a non-listed company.
Chiomenti Studio Legale acts as legal consultant of 3i, while Pavia & Ansaldo is the legal counsel of Targetti’s Shareholders.
* * * * *
"We decided to start the partnership with 3i - stated Lorenzo Targetti – because the acquisition of Louis Poulsen A/S by Targetti Sankey will have a significant impact both on the industrial and financial level. This is the reason why we have considered appropriate and prudent to relay to the expertise and the funding capabilities of a partner of international spending. In addition, the decision of de-listing - closed Targetti – is driven by the need of pursuing the future phase of growth of the Group, which is exciting but also delicate".

* * * * *
Targetti Sankey S.p.A. is listed on Milan Stock Exchange and operates in the sector of indoor and outdoor architectural lighting in Italy and internationally.
2006 consolidated turnover was approximately 176.9 million euros, EBITDA was about 19.9 million euros and the group net profit for the year was about 4.9 million euros.
At the end of 2006, the Group had 992 employees, 695 of which in Italy.

* * * *
3i Group – 3i Investments Plc e 3i Gestion SA refers to 3i Group plc, listed on London Stock Exchange from 1994. 3i Group is one of the world leaders in Private Equity and Venture Capital sectors. It is on the market from 1945 and is among the top 100 joint-stock companies for capitalization of FTSE100. Since its creation, its investments all over the world exceeded 25 billion euros and actually it manages investments exceeding 10 billion euros.
3i operates directly on the major international markets in Europe; in the USA and in Asia.