Demerger of Italgas and Snam
The Demerger consists of the separation of the activities pertaining to local distribution of gas in Italy – the sector in which Italgas operates with its Subsidiaries and Affiliates – from the activities pertaining to transport and dispatching, regasification and storage of gas in Italy and abroad.
In order to separate these activities, the entire shareholding currently held by Snam in Italgas, corresponding to 100% of the Italgas company capital, will be transferred to a Beneficiary Company which will then be listed on the Milan Stock Exchange (MTA) .
As a result of the demerger, the Snam shareholders will be assigned shares in the Beneficiary Company in proportion to the shares currently held in Snam.
The company purpose of the Demerged Company (Snam) will remain the same and the Beneficiary Company will adopt the same company purpose as the Demerged Company.
The Shareholders' Meeting called to approve the demerger is set for 1 August 2016.
The expected times for the Operation mean that the Demerger is to presumably take effect by the end of 2016.
The start date for the negotiations in the shares of the Beneficiary Company on the MTA will be set by the Italian Stock Exchange in a special notice and will be the same as the Demerger Validity Date.
Following the Demerger, the Snam shares will continue to be listed on the MTA.
Italgas, directly and through its subsidiaries, operates in the natural gas distribution sector.
Italgas, a company established in 1837, which Snam acquired from Eni S.p.A. in 2009, with the subsidiaries Napoletanagas and ACAM Gas, operates in the distribution of methane gas within urban networks in Italy. The distribution service consists of the conveyance of gas through local gas pipelines, from the connection points with the transport networks to the delivery points for the end customers (domestic or industrial customers). The service is carried out on behalf of the sales companies authorised to market gas.
The main purpose of the Operation is business-related and aims to separate the activities of the Snam Group pertaining to the distribution of gas in Italy from the activities pertaining to transport and dispatching, regasification and storage of gas in Italy and abroad.
The operation has come about because the business profile of the local distribution of gas, as it is currently configured, has characteristics which are substantially different from the characteristics of the other activities Snam is involved in, in terms of operating organisation, competitive context, regulation and the investment requirements.
With the completion of the operation, both companies may focus on their core-business, with objectives which are clearly identified and understood by the market as well as have an ideal operating and financial structure for exploiting the respective opportunities for strategic development, with clear benefits for all the stakeholders.
Following the demerger, Snam can concentrate its energies on the development of the transport, storage and regasification activities in Italy and abroad in order to maximise the current asset portfolio value and offer new services for satisfying a market which is developing continuously. A strategy which will be pursued by maintaining – as always – rigorous financial discipline, a solid balance sheet structure and a low risk profile, to ensure the profitable and sustainable growth which the Shareholders have always appreciated over time.
On the other hand, Italgas can focus more on the development opportunities related to the implementation of new tenders for the assigning of licences for local gas distribution expected over the coming years and can aim for a higher market share. As an independent company listed on the Milan Stock Exchange, Italgas can also benefit from direct access to the capital market in order to finance its growth plans more efficiently and flexibly.
Following the demerger snam shares will continue to trade on the Mercato Telematico Azionario (MTA) of Milan.
Snam’s shareholders will be allocated shares in the beneficiary company in proportion to the number of shares held by each shareholder in Snam, those shares will trade separately from Snam’s shares on the Mercato Telematico Azionario (MTA) of Milan
Following the demerger, Snam’s shareholders will be allocated shares in the beneficiary company in proportion to the number of shares held by each shareholder in Snam at the effective date of the demerger. The allocation will take place based on a ratio of one beneficiary company share for every five Snam shares held.
This ratio may mean that individual shareholders are entitled to a number of new shares that is not a whole number. Therefore, to facilitate the transactions, Snam will engage an authorized intermediary to purchase at market prices the fractional shares of the beneficiary company through the depositary intermediaries enrolled with Monte Titoli S.p.A., within the limits required to enable shareholders to round the number of shares to which they are entitled to. The beneficiary company’s shares will trade separately from Snam’s shares on the Mercato Telematico Azionario (MTA) of Milan and will operate separately as an independent company, having its own management and its own Board of Directors.
The ordinary shares in the Beneficiary Company will have no nominal value.
No cash adjustments will be required of the Snam shareholders.
The Beneficiary Company shares will be assigned from the Demerger Validity Date, with the times and methods to be notified within the publication of a special notice.
It is an essential condition and premise of the Demerger that the Beneficiary Company shares, when assigned to the shareholders of the Demerged Company (Snam), are admitted for trading on the MTA, organised and run by the Italian Stock Exchange.
In a demerger operation, the Beneficiary Company is the company (pre-existing or newly-established) which receives the entire amount or part of the capital originating from a demerged company.
In this operation, the Beneficiary Company will hold 100% of the Italgas company capital.
In a demerger operation, the demerged company is the company which assigns part of the capital to one or more beneficiary companies. The shares in the beneficiary company or companies are also assigned to the shareholders of the demerged company.
In this operation, the demerged company is Snam.
The Demerger must be approved by the Snam Shareholders at the Shareholders' Meeting set for 1 August 2016.
The Beneficiary Company shares assigned to the Snam shareholders will be registered, freely transferable and issued following centralised uncertificated procedures, with centralised management by Monte Titoli.
The shares are indivisible and each share gives the right to one vote.
Shares granting special rights will not be issued, nor are there any management and employee share participation systems.
As a result of the Demerger, all the Snam (Demerged Company) shareholders will receive shares in the Beneficiary Company in proportion to their shareholdings. 86.5% of the Beneficiary Company shares will be assigned to the Demerged Company (Snam) shareholders, while the remaining 13.5% will remain with the Demerged Company (Snam).
Assuming that there are no changes to the shareholding structure of the Demerged Company (Snam), on the Demerger Validity Date, the shareholders with a shareholding of higher than or equal to 3% of the Beneficiary Company capital are as follows (note: update): Declarant Direct Shareholder % share of ordinary capital
Declarant Direct Shareholder % share of ordinary capital CDP CDP Reti S.p.A. 25.08% CDP Gas s.r.l 0.97% SNAM SNAM 13.5%
The demerger will also result in an increase of Euro 1,569,211,964.76 in the beneficiary company’s shareholders’ equity, attributed to share capital in the amount of Euro 961,181,518,44, thereby increasing the share capital from Euro 40,050,000 to Euro 1,001,231,518.44, via the issue of 700,127,659 new ordinary shares; and the share premium reserve by Euro 608,030,446.32.
The demerger will result in a proportional reduction of Euro 1,569,211,964.76 in Snam’s shareholders’ equity, by way of a reduction of Euro 961,181,518.44 in share capital and a reduction of Euro 608,030,446.32 in reserves. Since Snam shares have no par value, the aforementioned share capital reduction will not result in any shares being cancelled.
Snam’s shareholders will not have the right to exercise the withdrawal right as a result of the demerger, also in light of the fact that the beneficiary company’s shares will be admitted to trading at the effective date of the demerger.
The Demerger is not an “Operation with Affiliated Parties” (see CONSOB Note no. DEM/10078683 of 24 September 2010) and the Transfer and the Sale are covered by the exemption stated by art. 14, clause 2, of the Consob Regulation on 'Operations with Affiliated Parties' and art. X, paragraph 8, of the Snam 'Operations with Affiliated Parties' Procedure, which states that the procedures to be applied to Operations with Affiliated Parties do not apply in the event of operations concluded with subsidiary companies (Beneficiary Company).
The unitary transaction, as a whole, will be carried out by means of the following steps, which will occur in a substantially simultaneous manner:
- the transfer in kind by Snam to the beneficiary company of a stake equal to 8.23% of the share capital of Italgas in exchange for the allocation to Snam of 108,957,843 newly issued shares of beneficiary company, in order to enable Snam to hold, post-demerger, a stake of 13.50% in the beneficiary company;
- the sale by Snam to the beneficiary company of 98,054,833 shares in Italgas, equal to 38.87% of the share capital of Italgas for a price of Euro 1,503 million, the payment of which shall include a Vendor Loan on the part of the beneficiary company, thus generating an adequate level of financial debt for the beneficiary company, taking into account the activity, risk and cash flow generation profile;
- the partial and proportional demerger of Snam with the allocation to the beneficiary company of a stake equal to 52.90% held by Snam in Italgas and consequent allocation to Snam shareholders of the remaining 86.50% of the beneficiary company’s share capital.
The effectiveness of the transaction is therefore subject to the conditions of law, including in particular the favourable vote of Snam’s Shareholders’ Meeting, and to the following:
- the issuance of Borsa Italiana’s order admitting the shares of the beneficiary company to trading on the MTA;
- the issuance of the judgment of equivalence by Consob; and the approval by Snam’s bondholders.
With regard to the effects of the Demerger for the Snam shareholders, the change in the original shareholdings does not constitute disposal or the distribution of capital gains or losses. With reference to each shareholder, the subdivision of the fiscally-recognised value of the shareholding originally held in the Demerged Company (Snam) must comply with the proportion between the actual value of the shareholdings received in the Beneficiary Company and the actual value of the shareholding held by each shareholder in the Demerged Company itself (Snam). However, with reference to the Demerged Company (Snam) shareholders who do not have tax residence in Italy, we advise you to consult with your local advisors in relation to the current tax regime in your country of residence.
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05 August 2016 - 16:17 CEST