Daily Mail and General Trust plc: Major reorganisation of DMGT and recommended cash offer

DJ MAJOR REORGANISATION OF DMGT AND RECOMMENDED CASH OFFER

Daily Mail and General Trust plc (DMGT) MAJOR REORGANISATION OF DMGT AND RECOMMENDED CASH OFFER 03-Nov-2021 / 13:32 GMT/BST Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group. The issuer is solely responsible for the content of this announcement.

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Not for release, publication or distribution, in whole or in part, in or into any Restricted Jurisdictions or jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction.

This announcement contains inside information. 3 November 2021

MAJOR REORGANISATION OF DMGT

comprising

RECOMMENDED CASH OFFER

for DAILY MAIL AND GENERAL TRUST PLC ("DMGT") by ROTHERMERE CONTINUATION LIMITED ("RCL")

and

PROPOSED DISTRIBUTION TO ALL SHAREHOLDERS

As announced on 12 July 2021, the DMGT Board has decided to implement a major reorganisation of DMGT, including the sale of its insurance risk business, Risk Management Solutions, Inc. ("RMS"), a special distribution to all shareholders of substantially all of the cash in the Group and its stake in Cazoo Group and, subject to the satisfaction of certain pre-conditions, an offer for DMGT by its controlling shareholder, RCL.

The Non-conflicted DMGT Directors and RCL are pleased to announce that all the pre-conditions are now satisfied and that they have reached agreement on the definitive terms of the special distribution and on a recommended cash offer (the "Offer") to be made by RCL to acquire all the issued and to be issued DMGT A Shares not already owned by RCL (the "Offer Shares").

Summary of the Reorganisation

-- Under the terms of the Offer, DMGT A Shareholders (being all DMGT Shareholders that hold DMGT A Sharesother than RCL) will be entitled to receive:

255 pence in cash for each DMGT A Share (the "Offer Price").

The Offer Price has been increased from that announced on 12 July 2021 to reflect a decrease in the fair value of DMGT's long term debt.

-- In conjunction with the Offer, the Non-conflicted DMGT Directors intend to declare a single distributionto all DMGT Shareholders (being all holders (including RCL) of DMGT A Shares and DMGT Ordinary Shares (together, "DMGT Shares")) who are on the register of members of DMGT at 6.00 p.m. (London time) on the Record Date (being theday on which the Offer becomes or is declared unconditional) comprising: 568 pence in cash for each DMGT Sharei (the "Cash Element of the Special Dividend")

and

0.5749 Cazoo Shares for each DMGT Sharei,

subject to the Tax Adjustment Mechanism and rounding for each DMGT Shareholder (the "Share Element of the Special Dividend"),

the Cash Element of the Special Dividend and the Share Element of the Special Dividend together being the "Special Dividend".

-- The Offer will be conditional on (amongst other things) the declaration of the Special Dividend; andsettlement of the Special Dividend will be conditional upon the Offer becoming or being declared unconditional. Therefore, in the event that the Offer does not become or is not declared unconditional, there will be no SpecialDividend.

-- Based on the closing price of a Cazoo Share of USD10.01 on 2 November 2021 (being the last business day inNew York before the date of this announcement) and the Announcement Exchange Rate, the Special Dividend has anaggregate value of 991 pence per DMGT Share.

-- In addition, RCL has agreed that the DMGT Board should recommend for approval, in accordance with itsexisting dividend policy, a final dividend in respect of FY 2021 of 17.3 pence per DMGT Share (the "2021 ProposedFinal Dividend").ii If approved, the 2021 Proposed Final Dividend is expected to be paid on or about 4 February2022 to DMGT Shareholders on the register on 26 November 2021, regardless of whether the Offer becomes or isdeclared unconditional.

-- At the time of the Possible Offer Announcement, the estimated value of the Cash Element of the SpecialDividend was 610 pence per DMGT Share. As a result of a number of deductions (the most significant of which aresummarised below), the cash DMGT A Shareholders will receive under the Cash Element of the Special Dividend will be568 pence per DMGT A Share.

-- However, this overall reduction in the Cash Element of the Special Dividend will be offset by a greaternumber of Cazoo Shares being distributed to DMGT Shareholders as part of the Share Element of the Special Dividend(as explained below) and by the payment of the 2021 Proposed Final Dividend of 17.3 pence per DMGT Share, which RCLhas agreed that the DMGT Board should recommend for approval. This will have the effect of increasing the cashdistribution over and above the anticipated cash on balance sheet by approximately GBP40 million, the cost of whichwill be borne by RCL if its Offer is accepted.

-- The change in the amount of cash available to pay DMGT Shareholders under the Special Dividend is due tothe following: - a lower number of Cazoo Shares having been sold or redeemed by DMGT under the Cazoo IPO than hadbeen expected at the time of the Possible Offer Announcement. This reduction in cash of approximately GBP62 million,which represents approximately 27 pence of cash per DMGT Share, will be offset by a greater number of Cazoo Shareshaving been received under the Cazoo IPO and distributed to DMGT Shareholders as part of the Share Element of theSpecial Dividend. As at the Business Day before the date of this announcement, the value of such shares representsapproximately 27 pence per DMGT Share; - additional pension contributions of GBP40 million over and above that which had been assumed at thetime of the Possible Offer Announcement in connection with the Reorganisation (as explained in section 8 below). This reduction represents approximately 17 pence of cash per DMGT Share; and - a positive adjustment of approximately GBP5 million, representing 2 pence per DMGT Share, addressesthe expected underlying change in the cash position of DMGT from FY 2021 to the declaration of the SpecialDividend.

-- Calculated on the basis described above, the aggregate value DMGT A Shareholders would therefore receiveunder the terms of the Offer, the Special Dividend and the 2021 Proposed Final Dividend (if approved) would be 1263pence per DMGT A Share (the "Transaction Value").

-- The Transaction Value represents:

-> a premium of 21.5 per cent. to the Closing Price of 1040 pence per DMGT A Share on 9 July 2021 (being the last Business Day before the date of the Possible Offer Announcement)

-> a premium of 39 per cent. to the three month volume weighted average Closing Price of 909 pence per DMGT A Share on 9 July 2021 (being the last Business Day before the date of the Possible Offer Announcement)

-> a premium of 42 per cent. to the six month volume weighted average Closing Price of 890 pence per DMGT A Share on 9 July 2021 (being the last Business Day before the date of the Possible Offer Announcement)

Recommendation

-- The Non-conflicted DMGT Directors, who have been so advised by J.P. Morgan Cazenove and Credit Suisse asto the financial terms of the Offer taking into account the Special Dividend, consider the terms of the Offer to befair and reasonable. In providing its financial advice to the Non-conflicted DMGT Directors, J.P. Morgan Cazenoveand Credit Suisse have taken into account the commercial assessments of the Non-conflicted DMGT Directors. J.P.Morgan Cazenove is providing independent financial advice to the Non-conflicted DMGT Directors for the purposes ofRule 3 of the Code.

-- Accordingly, the Non-conflicted DMGT Directors intend unanimously to recommend that DMGT A Shareholdersaccept or procure acceptance of the Offer. In light of the tax considerations described below and, in the case ofTim Collier and Kevin Beatty, to make use of unused capital losses which they have carried forward from thetransactions surrounding DMGT's distribution of its shares in Euromoney Institutional Investor plc in 2019, each ofKevin Parry, Tim Collier, and Kevin Beatty are considering selling some or all of their beneficial holdings of12,565, 452,259 and 607,128 Offer Shares, respectively, in the market following the publication by the Group of theaudited results for FY 2021 on 18 November 2021. To the extent they do not sell all of their Offer Shares in themarket, Kevin Parry, Tim Collier and Kevin Beatty have also irrevocably undertaken to accept or procure theacceptance of the Offer in respect of their own beneficial holdings not sold in the market up to a maximum of1,071,952 Offer Shares in aggregate, representing approximately 0.509 per cent of the DMGT A Shares (and 0.465 percent of the entire issued share capital of DMGT) on 2 November 2021 (being the last Business Day before thisannouncement).

-- A general description concerning certain limited aspects of the taxation consequences of accepting theOffer and of the Special Dividend and the 2021 Proposed Final Dividend for DMGT Shareholders resident in the UK andthe US for tax purposes will be set out in the Offer Document. DMGT A Shareholders resident in the UK or the US fortax purposes should read this description in the Offer Document carefully, bearing in mind that, based on theassumptions set out above, the Transaction Value to DMGT A Shareholders is split between 568 pence in cash for eachDMGT Share in the form of the Cash Element of the Special Dividend, 0.5749 Cazoo Shares for each DMGT Share in theform of the Share Element of the Special Dividend, 17.3 pence per DMGT Share in the form of the 2021 Proposed FinalDividend, and 255 pence per DMGT A Share as consideration for the sale of their DMGT A Shares to RCL. Depending ontheir personal circumstances, DMGT A Shareholders resident in the UK for tax purposes are likely to be taxed athigher rates of tax on the receipt of a dividend than on the receipt for the sale of their shares to RCL. Similarconsiderations may apply for DMGT A Shareholders that are US Holders.

DMGT A Shareholders are strongly recommended to consult their own tax and financial advisers before accepting the Offer.

Shareholdings and Irrevocable Undertakings

-- Based on information currently held by DMGT and RCL, RCL and its concert parties are together interestedin approximately 63,772,905 DMGT A Shares, representing approximately 30.3 per cent. of the DMGT A Shares in issue,and 19,890,364 DMGT Ordinary Shares, being all the DMGT Ordinary Shares in issue.

-- RCL has received irrevocable undertakings from relevant Non-conflicted DMGT Directors to accept, orprocure the acceptance of, the Offer in respect of a maximum of 1,071,952 Offer Shares, representing approximately0.509 per cent. of the DMGT A Shares in issue, and approximately 0.465 per cent of all DMGT Shares in issue, ineach case on 2 November 2021 (being the last Business Day before the date of this announcement).

Comments on the Offer

-- Commenting on today's announcement, Viscount Rothermere, director of RCL, said:

"The sale of RMS and the Cazoo IPO have delivered excellent shareholder returns, but inevitably DMGT is now a considerably smaller group of businesses, with significantly greater exposure to consumer media. This has led RCL and the DMGT Board to decide to implement a major reorganisation of the Group by distributing the value created by the RMS sale and the Cazoo IPO in conjunction with the Offer. RCL's proposal will now have the effect of increasing the aggregate cash distribution by some GBP40 million, the cost of which will be borne by RCL if its Offer is accepted. We believe the terms of our Offer to be fair, particularly bearing in mind not only the existing level of debt within DMGT at a time of increasingly difficult market conditions, but also the restrictions imposed on the operation of the business as part of the settlement with the pension trustees."

-- Commenting on the Offer, Kevin Parry on behalf of the Non-conflicted DMGT Directors said:

"DMGT has delivered very significant value for all shareholders through the execution of its strategy. This was demonstrated most recently by the sale of RMS for approximately GBP1,425 million and the Cazoo IPO.

In assessing the Offer, the Non-conflicted DMGT Directors carefully considered the prospects of DMGT following the fulfilment of its strategy. It is now a smaller group with a much higher weighting than recently to consumer media with limited near-term opportunities to deploy cash at attractive returns.

We also considered the implication of the dual share structure and DMGT's standard (i.e. non-premium) listing and believe the value of the Offer cannot be readily reproduced in the market.

So whilst we believe in the future of a standalone DMGT, we believe there are risks associated with continuing as a smaller listed group whereas the Offer from RCL together with the Special Dividend allows DMGT A Shareholders to realise an aggregate value in the near term that we believe to be fair and reasonable."

The Special Dividend

-- The settlement mechanism of the Share Element of the Special Dividend remains as announced on 12 July2021 (see Share Element of the Special Dividend in section 2).

-- The Cash Element of the Special Dividend, being 568 pence in cash per DMGT Share, reflects the estimatedcash resources of the Group immediately prior to the declaration of the Special Dividend (having already receivedthe net cash proceeds on completion of the disposal of RMS), as reduced for: (i) tax liabilities arising inconnection with the sale of RMS; (ii) liabilities to or in respect of DMGT's pension schemes; (iii) liabilitiesunder various employee incentives arrangements; and (iv) estimated DMGT transaction costs associated with theReorganisation; and as increased by drawings under the existing revolving credit facilities. The total cash of theGroup as at 30 September 2021 was approximately GBP1.7 billion.

-- It is intended that, subject to the Offer becoming or being declared unconditional, settlement of theCash Element of the Special Dividend will take place within 14 days of the Record Date.

-- It is intended that, subject to the Offer becoming or being declared unconditional, settlement of theShare Element of the Special Dividend will take place following the later of: (i) the expiry of the constitutionallock-up period to which the Cazoo Shares are subject (being up to 6 months following Cazoo Completion on 27 August2021); and (ii) the expiry of any US securities law restrictions, including customary blackout periods relating toreleases of Cazoo Group's results and other material non-public information, which may apply to the transfer byDMGT of the Cazoo Shares at the expiry of the period referred to in (i) above. DMGT cannot provide more specificsettlement timings with certainty at the date of this announcement, but based on the information currentlyavailable, it is expected that settlement of the Share Element of the Special Dividend will take place in the firsthalf of 2022. DMGT will make a further announcement on the expected timing for settlement when there is greatercertainty.

-- After the Record Date, settlement of any outstanding claims in relation to DMGT A Shares and the ShareElement of the Special Dividend will no longer be supported by Euroclear. As a result, settlement of any claimsrelating to DMGT A Shares and the Share Element of the Special Dividend will need to be processed separately andbilaterally between the trading counterparties.

-- In the event that the Offer does not become or is not declared unconditional, there will be no SpecialDividend. However, if approved, the 2021 Proposed Final Dividend would be paid on or about 4 February 2022.

Structure and Level of Acceptances

-- It is intended that the Offer will be effected by means of a takeover offer as defined in Chapter 3 ofPart 28 of the Companies Act 2006.

-- The Offer will be conditional upon RCL having received valid acceptances (which have not been withdrawn)by no later than 1.00 p.m. (London time) on the Unconditional Date (or such later time(s) and/or date(s) as RCL mayspecify, subject to the rules of the Code and, where applicable, with the consent of the Panel) in respect of notless than 90 per cent. (90%) (or such lower percentage as RCL may decide) in value of the total Offer Shares (the "Acceptance Condition"), provided that, without the consent of the Non-conflicted DMGT Directors, this conditionshall not be satisfied unless, taken together with DMGT Shares which it already holds, RCL has acquired or agreedto acquire pursuant to the Offer or otherwise more than 50 per cent. (50%) of all DMGT Shares (the "MinimumAcceptance Threshold").

Notices

This summary should be read in conjunction with the following full announcement and the Appendices. The Offer will be subject to the Acceptance Condition, the Special Dividend Condition and other conditions set out in Appendix 1 and to the full terms and conditions which will be set out in the Offer Document. Appendix 2 contains unaudited adjusted pro forma financial information on DMGT prepared to illustrate the effect on DMGT's income statement of the disposal of the EdTech business, Hobsons, and the disposal of the Insurance Risk business, RMS, which were disposed of in March 2021 and September 2021 respectively. Appendix 3 contains bases and sources of certain information contained in this announcement. Details of irrevocable undertakings received by RCL are set out in Appendix 4. Certain terms used in this announcement are defined in Appendix 5.

A copy of this announcement is available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, for inspection on DMGT's website at https://www.dmgt.com/investors while the Offer remains open for acceptance. For the avoidance of doubt, the contents of this website and of any other website accessible by hyperlinks on this website, are not incorporated by reference into, and do not form part of, this announcement.

Advisers

Lazard is acting as lead financial adviser and Goldman Sachs International is acting as joint financial adviser and corporate broker, in each case to RCL in respect of the Offer. Addleshaw Goddard LLP is acting as legal adviser to RCL in respect of the Offer. Sanctuary Counsel is acting as public relations adviser to RCL in respect of the Offer.

J.P. Morgan Cazenove is acting as lead financial adviser and joint corporate broker, and Credit Suisse is acting as joint financial adviser and joint corporate broker, in each case to DMGT in respect of the Offer. Slaughter and May is acting as legal adviser to DMGT in respect of the Offer and the Special Dividend. Teneo is acting as public relations and media adviser to DMGT in respect of the Offer and the Special Dividend.

_______________________________________ i Excludes DMGT Shares held as treasury shares.

ii The amount of the 2021 Proposed Final Dividend which will be recommended for approval will be confirmed by the DMGT Board at the time of the announcement of the Group's results for FY 2021 on 18 November 2021.

Enquiries:

DMGT 
Tim Collier, Group Chief Financial Officer                       [phone] 
Adam Webster, Head of Investor Relations                        [phone] 
 
J.P. Morgan Cazenove                                  [phone] 
(Lead Financial Adviser to DMGT in connection with the Offer; Joint Corporate Broker) 
Hugo Baring, Bill Hutchings 
Jonty Edwards, James Summer 
 
Credit Suisse International                              [phone] 
(Joint Financial Adviser to DMGT in connection with the Offer; Joint Corporate Broker) 
Antonia Rowan, James Green 
Gillian Sheldon (Senior Adviser) 
 
Teneo 
(PR/Media Adviser to DMGT) 
Jesse Matthews                                     [phone] 
Doug Campbell                                     [phone] 
Tim Burt                                        [phone] 
 
Lazard                                         [phone] 
(Lead Financial Adviser to RCL in connection with the Offer) 
Nicholas Shott, William Lawes 
Fariza Steel, Caitlin Martin 
 
Goldman Sachs International                              [phone] 
(Joint Financial Adviser and Corporate Broker to RCL in connection with the Offer) 
Charlie Lytle, Alex Garner, Owain Evans 
 
Sanctuary Counsel 
(PR/Media Adviser to RCL) 
Robert Morgan                                     [phone] 
Ben Ullmann                                      [phone] 

The person responsible for arranging the release of this announcement for and on behalf of DMGT and RCL is Fran Sallas, DMGT Company Secretary ([phone]).