Allianz SE: PRESS RELEASE RELATING TO THE FILING OF THE DRAFT SIMPLIFIED TENDER OFFER FOR THE SHARES OF THE COMPANY EULER HERMES

Not for distribution in the United States, Canada, Japan, Australia, South Africa or Italia. This press release does not constitute an offer to purchase any securities. The offer described hereinafter may only be opened after the clearance of the French financial markets authority (Autorité des marchés financiers)  

PRESS RELEASE RELATING TO THE FILING OF THE DRAFT SIMPLIFIED TENDER OFFER

FOR THE SHARES OF THE COMPANY

EULER HERMES

INITIATED BY ALLIANZ

PRESENTED BY ROTHSCHILD MARTIN MAUREL  

PRESENTING BANK

AND SOCIETE GENERALE

PRESENTING AND GUARANTEEING BANK

The draft offer document is available on the websites of the AMF (www.amf-france.org) and Allianz SE (www.allianz.com) and may be obtained free of charge from:

The information relating to, in particular, the legal, financial and accounting characteristics of Allianz will be made available to the public, pursuant to Article 231-28 of the AMF general regulations, no later than the day before the opening of the simplified tender offer.

1.                  Presentation of the offer

Pursuant to Title III of Book II and more specifically Articles 233-1 et seq. of the AMF general regulations, including its Article 233-1, 1°, Allianz SE, a European company organized under the laws of the European Union and Germany, having its registered office at Koeniginstrasse 28, 80802 Munich, Germany, registered with the Commercial Register of the local court of Munich under number HRB 164232 ("Allianz" or the "Offeror"), makes an irrevocable offer to the shareholders of Euler Hermes Group, a société anonyme à directoire et conseil de surveillance organized under the laws of France with a share capital of 13,645,323.20 Euros, having its registered office at 1 place des Saisons, 92048 Paris-La-Défense Cedex, France, registered with the Nanterre Trade and Companies Register under number 552 040 594 ("Euler Hermes" or the "Company") and whose shares are admitted to trading on Compartment A of the regulated market of Euronext in Paris ("Euronext Paris") under ISIN code FR0004254035, mnemonic "ELE", to acquire all of their shares of Euler Hermes, at the price of 122 Euros per share, under the conditions described hereafter (the "Offer").

The Offer, which would be followed, as the case may be, by a squeeze-out ("retrait obligatoire") procedure pursuant to Articles L. 433-4 III of the French Monetary and Financial Code and 237-14 et seq. of the AMF general regulations, will be made under the simplified procedure in accordance with Article 233-1 et seq. of the AMF general regulations, including its Article 233-1, 1°. The Offer will be open for a period of twenty-two (22) trading days.

As of the date of filing of the draft offer document, the Offeror holds, indirectly through the companies it controls, 31,702,566 shares of the Company, representing 74.35% of the share capital and theoretical voting rights of the Company.

The Offer covers all of the existing shares of the Company which are not held by the Offeror (directly or indirectly through the companies it controls), excluding the treasury shares held by the Company[1], i.e. a maximum aggregate number of 10,320,680 shares[2], representing, as of the date of filing of the draft offer document, 24.20% of the share capital and theoretical voting rights of the Company, on the basis of a total of 42,641,635 shares and 42,641,635 theoretical voting rights.

To the Offeror's knowledge, there exists no other equity security or any other financial instrument or right giving access, immediately or in the future, to the share capital or the voting rights of the Company other than the shares of the Company. It is specified that the Restricted Stock Units ("RSUs") granted to certain employees and to members of the Board of Management (Directoire) of the Company (and/or its subsidiaries) as part of the Euler Hermes Group Long Term Incentive plans, which are described in the draft response document prepared by the Company, will not give rise to any issuance or allocation of shares of the Company.

Pursuant to Article 231-13 of the AMF general regulations, Rothschild Martin Maurel and Société Générale, acting as presenting banks for the Offer (the "Presenting Banks"), filed with the AMF, on December 21, 2017, the Offer and the draft offer document, on behalf of the Offeror. It is specified that only Société Générale guarantees the content and the irrevocable nature of the undertakings made by the Offeror in connection with the Offer.

1.1              Context and rationale of the Offer

1.1.1  Historic shareholding of the Offeror

The shareholding of Allianz in the Company dates back more than two decades. In 1996, Allianz acquired a controlling stake in the German credit insurer Hermes Kreditversicherungs-AG. In 1998, through the acquisition of the company Assurances Générales de France S.A. (AGF), Allianz indirectly acquired a controlling stake in Euler-SFAC. Both businesses were merged upon the acquisition of Hermes Kreditversicherungs-AG by Euler in 2002. Since 2003, the group and its subsidiaries adopt the name Euler Hermes.

As at December 31, 2015, the Allianz group held, through Allianz Vie and Allianz France, 30,744,048 shares of the Company, representing 67.8% of the share capital and theoretical voting rights of the Company.

On May 19, 2016, Allianz Vie announced that it has completed the sale of 3,879,818 shares of the Company, representing its entire stake, i.e. 8.56%, of the share capital of the Company, through a private placement to institutional investors via an accelerated bookbuilt offer (the "Share Placement"). The price of the Share Placement was equal to 75.94 Euros per share.

As part of the Share Placement, Euler Hermes repurchased 2,200,000 shares representing 4.9% of the share capital of the Company, at a price equal to the price of the Share Placement (the "Repurchase"). The Repurchase has been completed pursuant to the share buyback program approved by the shareholders' meeting of May 27, 2015.

Following completion of the Share Placement and the Repurchase, the Company cancelled, on May 23, 2016, the 2,200,000 shares so repurchased, together with 500,542 treasury shares it already owned, i.e. 2,700,542 shares in aggregate, representing 6.33% of the share capital of the Company post cancellation.

Following such transactions, the Allianz group's aggregate shareholding was reduced from 67.80% to 63.00% of the share capital and theoretical voting rights of the Company.

The Share Placement was a capital optimization transaction benefiting all stakeholders: Euler Hermes shareholders through EPS and DPS accretion and Allianz Vie policyholders with full liquidity. From Allianz Vie standpoint it was intended to optimize and diversify policyholders' investments portfolio. From Allianz shareholders standpoint, there was no disposal nor reduction of exposure. On the contrary, Allianz increased its economic interests in Euler Hermes post transaction and cancelation and reiterated at that time the strategic nature of its long-term participation in Euler Hermes.

Pursuant to share purchase agreements dated November 24, 2017, Allianz Argos 14 GmbH, a wholly owned subsidiary of Allianz, acquired (i) 3,399,258 shares of the Company (representing 7.97% of its share capital and theoretical voting rights) from funds managed by Silchester International Investors LLP, and (ii) 1,438,278 shares of the Company (representing 3.37% of its share capital and theoretical voting rights) from funds managed by Kiltearn Partners LLP[3], i.e. a total of 4,837,536 shares of the Company (representing 11.34% of its share capital and theoretical voting rights), for a price of 122 Euros per Euler Hermes share in cash, without any possible price supplement mechanism.

As a result of the completion of such transactions[4], the Allianz group's aggregate shareholding was increased from 63.00% to 74.35% of the share capital and theoretical voting rights of the Company.

1.1.2  Company's share capital and voting rights allocation

As of the date of filing of the draft offer document, to the Offeror's knowledge, the share capital of the Company amounts to 13,645,323.20 Euros divided into 42,641,635 ordinary shares.

For information purpose, and to the Offeror's knowledge, as of the date of filing of the draft offer document, the share capital and theoretical voting rights of the Company are allocated as follows: [5]

Within the Allianz group, the share capital of the Company is held through the following entities (simplified scheme)[7]:

                                                                            Allianz SE                                                 100%                          I__________100% __     _                                                 I                                                                              I                             Allianz Europe BV                                       Allianz Argos 14 GmbH                100%                   I_______  _100%_                I                                                         I Allianz Holding France                            Allianz S.p.A.                I                                                         I    100%   I                                             100%   I   Allianz France S.A.                            Investitori SGR S.p.a.

1.1.3       Regulatory authorisations

The Offer is not subject to the obtaining of any regulatory authorisation.

1.1.4       Rationale of the Offer

Euler Hermes is the leading global trade credit insurer and a core component of Allianz global lines business. Underwriting excellence proven through the cycle, risk analysis and integrated global structure together with a strong and experienced management team provides the basis for the pursuit of Euler Hermes' development in trade credit insurance, bonding and selected other specialties.

Increasing ownership in Euler Hermes is therefore a logical step for Allianz to deploy capital in strategic businesses delivering solid operating performance, and to strengthen positions in core home markets and in property and casualty in particular.

Allianz has been and remains supportive of the strategy of the Board of Management of Euler Hermes and does not intend to change, as a result of the Offer, the composition of the Euler Hermes Supervisory Board and Euler Hermes operating model beyond ordinary course of business.

Allianz intends, should the conditions be met upon completion of the Offer, to implement a squeeze-out ("retrait obligatoire") procedure pursuant to Articles L. 433-4 III of the French Monetary and Financial Code and 237-14 et seq. of the AMF general regulations in order to acquire the shares of the Company not tendered into the Offer in exchange for a compensation of 122 Euros per Euler Hermes share, equal to the Offer price, net of costs and fees.

In this context, the Offeror has mandated the Presenting Banks, which have carried out the valuation of the Euler Hermes shares. Pursuant to Articles 261-1 et seq. of the AMF general regulations, the Supervisory Board of Euler Hermes decided on November 26, 2017, to appoint Finexsi, represented by Olivier Péronnet, as independent expert in order to prepare a report regarding the financial terms of the Offer followed, as the case may be, by a squeeze-out.

The information used to determine the Offer price per share is presented in Section 3 of the draft offer document. The report of the independent expert appointed by the Company will be fully reproduced in the draft response document prepared by the Company.

1.2              Offeror's intentions for the next 12 months

1.2.1       Strategy and industrial and financial policy

Since Euler Hermes is already being part of the Allianz group, the Offeror does not anticipate, as a result of the Offer, any change in the industrial and financial policy and strategic orientations currently implemented by Euler Hermes, beyond ordinary course of business.

1.2.2       Composition of Euler Hermes management and corporate bodies

Upon completion of the Offer, the Offeror does not anticipate any change in the composition of the Supervisory Board or in the composition of the management team of the Company, beyond ordinary course of business and subject to changes resulting, as the case may be, from the delisting of the shares of the Company on Euronext Paris.

1.2.3       Intentions regarding employment

Since Euler Hermes is already being part of the Allianz group, the Offeror does not expect, as a result of the Offer, any particular impact on the Euler Hermes group's workforce, employment policy or human resources relationships. In particular, Allianz intends to maintain Euler Hermes' operational headquarters' location in France.

1.2.4       Dividend distribution policy

Allianz reserves the possibility to review Euler Hermes' dividend distribution policy upon completion of the Offer in accordance with law and the Company's articles of association, as well as according to the Company's distribution capacity and financing requirements.

1.2.5       Squeeze-out and delisting

In the event that, upon completion of the Offer, the number of shares not tendered into the Offer by minority shareholders represents no more than 5% of the share capital or voting rights of the Company, the Offeror intends to request from the AMF, within three (3) months after the closing of the Offer, pursuant to Articles L. 433-4 III of the French Monetary and Financial Code and 237-14 et seq. of the AMF general regulations, the implementation of a squeeze-out ("retrait obligatoire") procedure in order to acquire the shares of the Company not tendered into the Offer in exchange for a compensation of 122 Euros per Euler Hermes share, equal to the Offer price, net of costs and fees. It is specified that, as a result of such squeeze-out procedure, the shares of the Company would be delisted from Euronext Paris.

The Offeror also reserves the right, in the event that it would not be able to implement a squeeze-out upon completion of the Offer, to increase its shareholding in Euler Hermes and, if it comes to hold, alone or in concert, directly or indirectly, at least 95% of the voting rights of the Company, to later file with the AMF a buy-out offer followed, in the event that the Offeror holds at least 95% of the Company's share capital and voting rights, by a squeeze-out of the shares of the Company which, as of this date, will not be held, directly or indirectly, by the Offeror, alone or in concert, in accordance with Articles 236-1 et seq. and 237-1 et seq. of the AMF general regulations. In the latter case, the squeeze-out will be subject to the review of the AMF, which shall rule on the squeeze-out's compliance in light notably of the evaluation report which the Offeror will have to provide in accordance with Article 237-2 of the AMF general regulations and of the report of the independent expert to be appointed in accordance with the provisions of Article 261-1 of the AMF general regulations.

The Offeror also reserves the right, in the event that it would not be able to implement a squeeze-out upon completion of the Offer, to request from Euronext Paris the delisting of the shares of the Company on Euronext Paris. Euronext Paris will be able to accept this request only if the conditions of such delisting comply with its market regulations.

1.2.6       Intentions regarding merger

In the event that a squeeze-out could not be implemented in the conditions referred to in Section 1.2.5 above, the Offeror would examine the possibility of a merger of the Company with Allianz or with any other entity of the Allianz group and would then inform the AMF in the context of article 236-6 of the AMF general regulation relating to the potential implementation of a buy out offer.

1.2.7       Synergies - economic gains

The advantages expected from the transaction are described in Section 1.1 above. Euler Hermes belonging to the Allianz group since 1998, except for the saving of listing costs that would result from the delisting of the shares of the Company from Euronext Paris in case of implementation of a squeeze-out, no synergies are expected from the Offer since the Offeror does not anticipate any change in the strategy and the operating model of Euler Hermes, beyond ordinary course of business.

1.2.8       Advantages of the transaction for the Company and its shareholders

The Offeror proposes to the shareholders of the Company who will tender their shares into the Offer an immediate liquidity for the entirety of their shares at a price of 122 Euros per share, i.e. a premium corresponding to 20.7% over the closing price per share of the Company on November 24, 2017, 22.9% over the volume-weighted average price for three months, 22.2% over the volume-weighted average price for six months, and 30.8% over the volume-weighted average price for twelve months.

The information used to determine the Offer price per share is presented in Section 3 of the draft offer document.

1.3              Agreements likely to have an impact on the valuation or outcome of the Offer

As of the date of filing of the draft offer document, the Offeror is not party to any agreement likely to have a significant impact on the assessment of the Offer or its outcome, and the Offeror is not aware of the existence of such agreement, except for the agreements described in Section 1.1.1 of the draft offer document.

2.                  Terms and Conditions of the Offer

2.1              Terms of the Offer

Pursuant to Articles 231-13 et seq. of the AMF general regulations, Rothschild Martin Maurel and Société Générale, as Presenting Banks acting on behalf of the Offeror, filed with the AMF, on December 21, 2017, the Offer in the form of a simplified cash tender offer and the draft offer document relating to the Offer. It is specified that only Société Générale guarantees the content and the irrevocable nature of the undertakings made by the Offeror in connection with the Offer.

In the context of this Offer which will be made under the simplified procedure in accordance with Articles 233-1 et seq. of the AMF general regulations, including its Article 233-1, 1°, the Offeror irrevocably undertakes to acquire from Euler Hermes shareholders, all the shares of Euler Hermes which will be tendered into the Offer, at the price of 122 Euros per share, during a minimum period of twenty-two (22) trading days. The attention of Euler Hermes shareholders is drawn on the fact that, the Offer, being made under the simplified procedure, will not be re-opened following the publication of the final results of the Offer.

It is specified, for the avoidance of doubt, that the Offer price covers the Euler Hermes shares cum dividend and that, in the event that the ex-dividend date would be prior to the closing date of the Offer (pursuant to, as the case may be, the approval by the Euler Hermes shareholders' general meeting of a dividend distribution with respect to 2017 financial year), the Offer price would be adjusted to take into account the detachment of the coupon.

From the filing of the Offer within the AMF, and until the opening of the Offer, the Offeror reserves the right to acquire shares of the Company on the market, within the limits of Article 231-38 IV of the AMF general regulations.

2.2              Number and type of shares covered by the Offer

As of the date of filing of the draft offer document, the Offeror holds, indirectly through the companies it controls, 31,702,566 shares of the Company, representing 74.35% of the share capital and theoretical voting rights of the Company, in accordance with Article 223-11 of the AMF general regulations.

Pursuant to Article 231-6 of the AMF general regulations, the Offer covers all of the existing shares of the Company which are not held by the Offeror (directly or indirectly through the companies it controls), excluding the treasury shares held by the Company[8], i.e. to the Offeror's knowledge, a maximum aggregate number of 10,320,680 shares[9], representing, as of the date of filing of the draft offer document, 24.20% of the share capital and theoretical voting rights of the Company, on the basis of a total of 42,641,635 shares and 42,641,635 theoretical voting rights.

To the Offeror's knowledge, there exists no other equity security or any other financial instrument or right giving access, immediately or in the future, to the share capital or the voting rights of the Company other than the shares of the Company. It is specified that the RSUs granted to certain employees and to members of the Board of Management (Directoire) of the Company (and/or its subsidiaries) as part of the Euler Hermes Group Long Term Incentive plans, which are described in the draft response document prepared by the Company, will not give rise to any issuance or allocation of shares of the Company.

2.3              Conditions of the Offer

The Offer was filed with the AMF on December 21, 2017. A notice of filing will be published by the AMF on its website (www.amf-france.org).

Pursuant to Article 231-16 of the AMF general regulations, the French version of the draft offer document, as filed with the AMF, is made available to the public free of charge at the registered offices of Rothschild Martin Maurel and Société Générale, and is made available on the websites of the AMF (www.amf-france.org) and Allianz (www.allianz.com).

This press release disclosing the main terms of the draft offer document and specifying the means by which it will be made available has been established by Allianz SE and was released on December 22, 2017, in accordance with the provisions of article 231-16 of the general regulation of the AMF.

This Offer and the draft offer document remain subject to the review of the AMF.

The AMF will publish on its website a reasoned compliance statement for the draft Offer, after having ensured its compliance with the applicable legislative and regulatory provisions. In accordance with Article 231-23 of the AMF general regulations, the compliance statement will constitute approval of the Offeror's offer document.

Pursuant to Article 231-28 of the AMF general regulations, the offer document as approved by the AMF, as well as the information relating to, in particular, the legal, financial and accounting characteristics of the Offeror will be filed with the AMF and made available to the public free of charge at the registered offices of Rothschild Martin Maurel and Société Générale, no later that the day before the opening of the Offer. These documents will also be made available on the websites of the AMF (www.amf-france.org) and Allianz (www.allianz.com).

Pursuant to Articles 231-27 and 231-28 of the AMF general regulations, a press release specifying the means by which these documents will be made available will be published by the Offeror.

Prior to the opening of the Offer, the AMF will publish an opening notice and the timetable of the Offer, and Euronext Paris will publish a notice announcing the terms and the timetable of the Offer.

The Offer will be open for a period of twenty-two (22) trading days, pursuant to Article 233-2 of the AMF general regulations.

2.4              Offer tender procedure

Holders of shares of the Company held in an account managed by a financial intermediary (e.g. bank, credit institution, investment company) and who wish to tender their shares into the Offer shall send an order to their financial intermediary at the latest at the closing date (included) of the Offer, using the standard forms made available to them by such financial intermediary.

Shares of the Company held in registered form must be converted and held in bearer form to be tendered into the Offer. Therefore, holders of shares held in registered form who wish to tender the shares of the Company into the Offer will have to ask for the conversion of these shares to hold them in bearer form as soon as possible. The financial intermediaries managing account will have, prior to the sale, to convert in bearer form the shares of the Company tendered into the Offer. The holders of shares held in registered form will therefore lose the benefits attached to the registered form for those shares then converted into bearer form.

The shares of the Company tendered into the Offer must be freely transferable and free of any and all liens, pledges, charges and restrictions of any kind whatsoever restricting the free transfer of ownership. The Offeror reserves the right, in its sole discretion, to reject any tendered share of the Company which does not comply with this condition.

The Offer will be completed through purchases on the Euronext Paris market, pursuant to Article 233-2 of the AMF general regulations. The settlement-delivery will take place on an ongoing basis as the tender orders are executed, two (2) trading days after each execution of the tender orders. Société Générale, an investment service provider authorised as a buying market-maker (membre du marché acheteur), will acquire, on behalf of the Offeror, all the shares of the Company tendered to the Offer.

The brokerage fees, increased by the corresponding VAT costs, will remain payable by the selling shareholders.

This Offer is governed by French law. Any disagreement or dispute of any nature relating to this Offer will be brought before the relevant courts.

2.5              Indicative timetable of the Offer

An indicative timetable is proposed below:

2.6              Cost and financing of the Offer

The overall amount of all fees, costs and external expenses incurred in connection with the Offer by the Offeror, including the fees and expenses of their financial, legal and accounting advisers, as well as publicity costs, is estimated at approximately 9 million Euros[10] (excluding tax).

In the event that all of the shares of the Company covered by the Offer were to be tendered into the Offer, the total cash consideration to be paid by the Offeror to shareholders of the Company having tendered their shares into the Offer (excluding fees and related expenses) would amount to 1,259 million Euros.

The Offer will be financed through available funds and resources of Allianz.

2.7              Restrictions concerning the Offer abroad

The Offer is made to shareholders in France and outside France, provided that the law and regulation to which they are subject permits them to do so without imposing the Offeror to make further formalities.

The shareholders of Euler Hermes are invited to refer to the draft offer document for more details relating to the restrictions applicable to the Offer outside France.

3.                  Summary of valuation criteria for the Offer

Valuation rationale of the Offer Price of 122 Euros per Euler Hermes share has been prepared by the Presenting Banks, in agreed form and on behalf of the Offeror (especially regarding valuation methodologies and assumptions retained), based on public information and on information provided by the Company or on behalf of it. Information received is considered as realistic and reasonable and the presenting banks relied upon without assuming responsibility or liability for independent verification.

The following table summarises the multi-criteria valuation of Euler Hermes:

4.                   Contacts

Thomas Atkins                              Tel. +49 89 3800 2960, e-mail: thomas.atkins@allianz.com

Daniela Markovic                           Tel. +49 89 3800 2063, e-mail: daniela.markovic@allianz.com

[1]  The Offer does not cover the 619,189 treasury shares owned by the Company which, pursuant to the decision of the Supervisory Board of Euler Hermes dated December 21, 2017, will not be tendered into the Offer.

[2]  Including the 800 Euler Hermes shares held by Investitori SGR S.p.a., on behalf of its clients.

[3]   The companies Silchester International Investors LLP and Kiltearn Partners LLP, acting in their capacity of investment managers of funds, have sold all the shares they held in Euler Hermes and they no longer hold any shares or voting rights of the Company. 

[4]  These transactions have been completed off market pursuant to instructions given by the parties to their respective brokers on November 27, 2017.

[5]  Based on the declaration of thresholds made by Allianz and Allianz Argos 14 GmbH on November 30, 2017, and on the declaration of the total number of shares and voting rights of the Company as of November 30, 2017.

[6]  It is contemplated that the 4,837,536 Euler Hermes shares held by Allianz Argos 14 GmbH be sold on December 22, 2017 to Allianz for a price of 122 Euros per Euler Hermes share, equal to the Offer price, pursuant to a share purchase agreement entered into between Allianz Argos 14 GmbH and Allianz dated December 19, 2017.

[7]  Allianz Holding France SAS holds precisely 99.99% of Allianz France SA.

[8]  The Offer does not cover the 619,189 treasury shares owned by the Company which, pursuant to the decision of the Supervisory Board of Euler Hermes dated December 21, 2017, will not be tendered into the Offer.

[9]  Including the 800 Euler Hermes shares held by Investitori SGR S.p.a., on behalf of its clients.

[10]  Amount calculated based on the assumption that all of the shares of the Company covered by the Offer were to be tendered into the Offer.