Background
GUS was a long-established UK conglomerate founded in 1900 and, for many years, was one of the best performing stocks on the London Stock Exchange. In 2000, the company embarked on a new strategy aimed at delivering long-term shareholder value by focusing on a small number of businesses with above-average growth potential. Other parts of GUS were to be disposed of over time and the proceeds reinvested. By 2003, GUS had been successfully repositioned around three major businesses Experian, Home Retail Group (formerly Argos Retail Group, the UK's leading home and general merchandise retailer) and Burberry (an international luxury brand).
GUS recognised that there were no compelling synergies between these businesses and that their eventual separation was likely to create the most value for shareholders. In December 2005, GUS completed the demerger of Burberry and, in March 2006, announced the separation of its two remaining businesses, Experian and Home Retail Group.
Rationale
The Board of GUS believed that Experian and Home Retail Group would achieve their greatest potential and value by becoming independent businesses. GUS announced a number of expectations of the demerger:
- Enhanced shareholder value.
- Creation of two separately listed companies offering discrete investment propositions, each with clear market valuations.
- Greater flexibility for Experian and Home Retail Group to manage their own resources and pursue strategies appropriate to their markets.
- Sharpened management focus, helping the two businesses maximise their performance and make full use of their available resources.
- Alignment of management rewards more directly with the business and stock market performances, helping to attract, retain and motivate the best people.
- A transparent capital structure and efficient balance sheet for each business.
Timetable
| 2006 |
|
| 28 March |
Announcement by GUS of intention to demerge Experian and Home Retail Group. |
| 26 July |
Publication of Shareholder Circular containing demerger proposals. |
| 29 August |
Approval of demerger by GUS shareholders. |
| 14 September |
Publication of Experian and Home Retail Group prospectuses. |
| 6 October |
Suspension of trading in GUS shares. |
| 10 October |
Completion of demerger. |
| 11 October |
Commencement of trading in Experian and Home Retail Group shares. |
Terms
Under the terms of the demerger, two new holding companies were created. Experian Group Limited became the holding company for Experian's businesses. Home Retail Group plc became the holding company for Home Retail Group's businesses. GUS became a subsidiary of Experian Group.
Experian and Home Retail Group shares were admitted to the Official List and began trading on the London Stock Exchange on 11 October 2006. Trading in GUS shares was suspended on 6 October 2006.
For every one GUS share that they held, GUS shareholders received one Experian share and one Home Retail Group share. GUS shares were cancelled.
Holders of GUS American Depository Receipts (ADRs) received one Experian ADR and the net proceeds of a sale of their pro rata entitlement to Home Retail Group shares. Their shares in GUS were cancelled.
Advisors
Merrill Lynch and UBS acted as financial advisors to GUS in connection with the demerger. GUS was also financially advised by JPMorgan Cazenove on certain aspects of the proposals.
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