Transaction Details
Ralph Sonnenberg and 3G Capital have entered into a definitive agreement (the "Block Trade Agreement") for the sale of a controlling interest of 75% in a holding vehicle (the “HoldCo”) through which Ralph Sonnenberg currently holds 93.59% of the issued and outstanding shares in Hunter Douglas. The Block Trade Agreement values the Ordinary Shares at €175 per share, and the preferred shares of Hunter Douglas (the "Preferred Shares") held by Ralph Sonnenberg at their nominal value of €0.24 per share (the “Nominal Preferred Share Price”).
The Board of Directors of Hunter Douglas, comprising for this purpose only its independent directors (the "Independent Directors"), unanimously supports the transaction, and Hunter Douglas, Ralph Sonnenberg and 3G Capital and certain of their affiliates have entered into a support agreement in relation to the transaction (the "Support Agreement"). The parties to the Support Agreement have agreed that, following consummation of the Block Trade Agreement and completion of the Asset Sale (as described below), statutory squeeze out proceedings in accordance with applicable Curacao law and Hunter Douglas' articles of association will be initiated in respect of any remaining shares in Hunter Douglas (the “Buy-Out”). In these proceedings, the position will be taken that the price of such Hunter Douglas shares will be the same as pursuant to the Block Trade Agreement for each Ordinary Share, being €175, and €0.43 for each Preferred Share in the capital of Hunter Douglas other than the Preferred Shares held by Ralph Sonnenberg (the “Preferred Share Price”), representing the latest closing preferred share price prior to this announcement. This will allow minority shareholders to benefit from the same cash price for their ordinary shares as the controlling shareholder and a better cash price for their preferred shares than the controlling shareholder, in line with the Support Agreement.
In order to obtain full ownership of the Hunter Douglas business, and as requested as an essential part of the transaction by 3G Capital, Hunter Douglas and 3G Capital have agreed that immediately upon completion of the Block Trade Agreement, Hunter Douglas will sell and transfer its entire business to HoldCo (or any designated wholly-owned subsidiaries of HoldCo) (the "Asset Sale"). The purchase price payable by HoldCo to Hunter Douglas pursuant to the Asset Sale (the "Purchase Price"), which will remain indebted in the form of a note, equals the value of all Hunter Douglas’ outstanding shares based on the Ordinary Share Price, the Nominal Preferred Share Price, for the Preferred Shares held by Ralph Sonnenberg, and the Preferred Share Price for the Preferred Shares held by minority shareholders.
The transaction is subject to only limited conditions including anti-trust approvals and is not subject to any financing or material adverse effect condition. An extraordinary general meeting of Hunter Douglas' shareholders will be convened in connection with the transaction to adopt, among other things, certain resolutions relating to the Asset Sale.
Together with its own independent financial and legal external advisors, the Independent Directors reviewed the strategic, social, financial, and operational consequences of the proposed transaction for Hunter Douglas and its various stakeholders. Rabobank in its capacity as independent financial advisor to the Independent Directors, has issued a fairness opinion confirming that the Purchase Price and the Ordinary Share Price are fair from a financial point of view. On the basis of such review, and the agreed terms for the protection of Hunter Douglas’ stakeholders, including minority shareholders as laid down in the Support Agreement, the Board of Directors has unanimously concluded and resolved that providing support to the transaction supports the ongoing, sustainable success of the business and is in the interest of Hunter Douglas and all of its stakeholders. Ralph Sonnenberg, the controlling shareholder and Executive Chairman of Hunter Douglas, did not partake in any deliberations or decision-making in the Hunter Douglas Board of Directors relating to the transaction.
3G Capital has obtained, subject to customary conditions, fully committed financing for the transaction from reputable global financial institutions along with its existing equity commitments for the consideration payable under the Block Trade Agreement as well as the Buy-Out. As part of the Support Agreement HoldCo has agreed to certain non-financial covenants.
Ralph Sonnenberg has committed to vote in favor of the required resolutions at the extraordinary general meeting of Hunter Douglas. It is expected that the block trade and the Asset Sale will close in the first quarter of 2022.
Trading Update and Outlook
In Q4, consumer confidence and trading conditions remained constructive, and Hunter Douglas expects sales to be in line with Q3. Q4 EBITDA is expected to be between USD 195 – 205 million.
The outlook for 2022 is positive, but uncertainties remain as to when consumer discretionary spending will normalize. Hunter Douglas continues to be in a strong position. Assuming continuation of current market conditions, management anticipates delivering full-year 2022 sales and EBITDA growth of mid-single digits percent versus full-year 2021, excluding the impact from acquisitions and divestments, with an EBITDA margin in excess of 18%.