The offer received from ARC involves the acquisition of both AZA and AEL by way of separate schemes of arrangement. The schemes are not interdependent.
In respect of the AZA Scheme, ARC and AZA have executed a Merger Implementation Deed to effect the merger between ARC and AZA. Based on the merger ratio of 1.175 ARC shares for every AZA share, the merger values AZA at approximately $708 million (1) or $1.87 per share based on ARC's closing share price of $1.595 on October 19, 2007.
A meeting of AEL Shareholders is expected to be convened in January 2008 to consider a resolution to approve the AEL Board voting in favor of the merger between AZA and ARC. A shareholder circular is expected to be dispatched to shareholders in December 2007 in which, the Board of AEL will recommend the merger to its shareholders.
In respect of the AEL Scheme, AEL and ARC have entered into a Merger Implementation Deed to effect the acquisition of AEL by ARC. Under the terms of the AEL MID, shareholders in AEL will receive ARC shares in exchange for their AEL shares. As AEL's only material asset is its investment in AZA, the merger ratio for the AEL Scheme will be set with reference to the AZA Merger Ratio, adjusted for AEL's net cash position. This implies an AEL Merger Ratio of 2.00 ARC shares for every AEL share, which, based on ARC's closing price of A$1.595 on October 19, 2007 and an AUD:GBP exchange rate of 0.4358, values AEL on a fully diluted basis at approximately £178 million or £1.39 per share(2). A summary of the other key terms of the AEL MID forms Annexure C. The Board of AEL has resolved to recommend this offer to its shareholders, subject to the conclusions of the Independent Expert and in the absence of a superior proposal.
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