SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
AUGUST 25, 1998
(Date of earliest event reported)
Marsh & McLennan Companies, Inc.
(Exact name of Registrant as specified in its charter)
Delaware 1-5998 36-2668272
(State of (Commission File No.) (IRS Employer
Incorporation) Identification No.)
1166 Avenue of the Americas
New York, New York
(Address of principal executive offices)
10036
(zip code)
(212) 345-5000
(Registrant's telephone number, including area code)
Item 5. Other Events
On August 25, 1998, Marsh & McLennan Companies, Inc. (the
"Registrant") announced that it and Sedgwick Group plc ("Sedgwick") had
reached agreement on the terms of a recommended offer (the "Offer") to be
made on behalf of the Registrant to acquire the entire issued share capital
of Sedgwick in a cash transaction with a total value of pound sterling 1.25
billion (approximately $2 billion). Pursuant to the Offer, which was
approved by the board of directors of both companies, the Registrant will
pay 225 pence for each ordinary share of Sedgwick and pound sterling 1.25
for each American Depositary Share of Sedgwick.
The Registrant has indicated that it anticipates ultimately
achieving as a result of the transaction pre-tax cost savings of
approximately $200 million per year, with the most significant impact
occurring in the year 2000. The Registrant also reported that it expects
the acquisition to be accretive to its earnings per share, beginning in the
year 2000.
The foregoing description of the Offer is qualified in its
entirety by reference to the Registrant's press release and the press
announcement of the Registrant and Sedgwick both dated August 25, 1998,
copies of which are attached as exhibits hereto and are incorporated by
reference herein in their entirety.
The Registrant cautions that certain forward looking statements
contained in this Current Report on Form 8-K and the exhibits attached
hereto or other statements which may be made about the transaction,
including, without limitation, the effect of the combination of the
Registrant and Sedgwick on the Registrant's earnings and cash flows, are
qualified by important factors that could cause actual operating results to
differ materially from those described herein or in any such statements.
Factors that may cause actual results to differ materially from those
contemplated by any such forward looking statements, include, among others,
the following: (i) unanticipated events and circumstances may occur
rendering the transaction less beneficial to the Registrant than projected;
(ii) the Registrant and Sedgwick face intense competition in their markets,
and there is, accordingly, no guarantee that after consummation of the
transaction the Registrant will achieve the expected financial and
operating results and synergies; and (iii) the ability of the Registrant
and Sedgwick to successfully integrate their operations and thereby achieve
the anticipated cost savings and be in a position to take advantage of
potential opportunities for growth. Results actually achieved thus may
differ materially from the expected results described herein or in any such
statements.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
(c) Exhibits
99(a) Registrant's press release dated August 25, 1998.
99(b) Press announcement of the Registrant and Sedgwick Group
plc dated August 25, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
MARSH & McLENNAN COMPANIES, INC.
By: /s/ Gregory Van Gundy
----------------------------
Name: Gregory Van Gundy
Title: Secretary
Date: August 26, 1998
EXHIBIT INDEX
Exhibit No.
99(a) Registrant's press release dated August 25, 1998.
99(b) Press announcement of the Registrant and Sedgwick Group plc
dated August 25, 1998.
EXHIBIT 99(a)
NEWS RELEASE Marsh & McLennan Companies, Inc.
1166 Avenue of the Americas
New York, NY 10036-2774
Telephone 212 345 5000
Telefax 212 345 4838
www.marshmac.com
FOR IMMEDIATE RELEASE
Contact: Barbara Perlmutter Jim Fingeroth
Marsh & McLennan Cos. Tracey Stearns
(212) 345-5585 Kekst and Company
(212) 521-4800
MARSH & MCLENNAN COMPANIES AGREES TO ACQUIRE SEDGWICK
FOR TOTAL CASH CONSIDERATION OF APPROXIMATELY $2 BILLION
NEW YORK, NEW YORK, August 25, 1998 -- Marsh & McLennan Companies, Inc. and
Sedgwick Group plc today announced that they have reached an agreement to
the terms of a recommended offer to be made on behalf of Marsh & McLennan
Companies to acquire the entire issued share capital of Sedgwick for total
cash consideration of pound sterling1.25 billion (approximately $2
billion). The acquisition of Sedgwick, the largest European-based
independent insurance broker, will enhance Marsh & McLennan Companies'
position as one of the world's leading providers of professional services,
particularly in its risk and insurance services and consulting businesses.
Under the terms of the offer, which was approved by the boards of directors
of both companies, Marsh & McLennan Companies will pay 225 pence for each
Sedgwick share and pound sterling11.25 (approximately $18.34 at pound
sterling1:$1.63) for each Sedgwick ADS.
Marsh & McLennan Companies said it expects the acquisition to be accretive
to its earnings per share, beginning in the year 2000.
J.P. Morgan and Donaldson, Lufkin & Jenrette are serving as financial
advisors to Marsh & McLennan Companies, and NM Rothschild & Sons Limited
and Credit Suisse First Boston are serving as financial advisors to
Sedgwick. The offer is subject to customary regulatory approvals and other
conditions, and it is anticipated that the transaction will close in the
fourth quarter.
The directors of Sedgwick and certain other persons have irrevocably
undertaken to accept the offer in respect of their holdings of Sedgwick
shares, amounting in aggregate to approximately 225.7 million Sedgwick
shares, representing approximately 41 percent of Sedgwick's issued share
capital.
A.J.C. Smith, chairman and chief executive officer of Marsh & McLennan
Companies, stated, "We believe the combination of Marsh & McLennan
Companies and Sedgwick will be beneficial for our clients, employees and
shareholders. This transaction, which joins together two of the best-known
names in risk and insurance services and consulting, will strengthen
further our ability to meet the increasing global demand for professional
services. In particular, it will enable us to improve the breadth and
quality of service to our clients while providing substantial operational
efficiencies.
"From a strategic standpoint, we believe this transaction will enhance
shareholder value through a combination of stronger insurance broking
practices, global reach and operating efficiencies. The addition of
Sedgwick will increase our presence in the United Kingdom and in
continental Europe and Asia, where the Sedgwick brand name is recognized
and respected. With the addition of Sedgwick's excellent professional
staff, we will be able to respond more effectively to the increasingly
complex risks our clients encounter and be able to compete successfully
with all potential competitors in our market.
"We are also very excited about the opportunity to combine Sedgwick's
consulting business, which is a leading employee benefits consulting firm,
with our own consulting firm, which we expect will provide growth
opportunities."
Sax Riley, chairman of Sedgwick, said, "I am delighted that Sedgwick and
Marsh & McLennan Companies have come together to form the world's leading
insurance broker and employee benefits consultancy, and I look forward to
working with Marsh & McLennan Companies for the development of our
business. The combination of our two groups, together with the retention
of the Sedgwick brand name internationally, will enhance our global service
and will offer our people new opportunities in a much enlarged group."
Mr. Riley and Rob White-Cooper, chief executive officer of Sedgwick, have
been invited to join the board of Marsh & McLennan Companies upon closing.
The terms and conditions of this offer will be described in a Current
Report on Form 8-K to be filed with the Securities and Exchange Commission
later today.
Sedgwick is the London-based holding company of one of the world's leading
insurance, reinsurance and consulting groups. This group provides
insurance and reinsurance broking services, risk consulting, employee
benefits consulting and related financial services from more than 290
offices in 70 countries.
Marsh & McLennan Companies is a professional services firm providing risk
and insurance services, investment management and consulting. More than
36,000 employees worldwide provide analysis, advice and transactional
capabilities to clients in over 100 countries. Marsh & McLennan Companies'
stock (ticker symbol; MMC) is listed on the New York, Chicago, Pacific and
London stock exchanges. Its Web site address is www.marshmac.com
###
This press release contains certain statements relating to future results,
which are forward-looking statements as that term is defined in the Private
Securities Litigation Reform Act of 1995. Such statements may include,
without limitation, discussions concerning future results. Such statements
are qualified by important factors that may cause actual results to differ
from those contemplated, including as a result of those factors detailed
from time to time in the Company's Securities and Exchange Commission
filings, as well as factors affecting the successful integration of Marsh &
McLennan Companies and Sedgwick. Please refer to Marsh & McLennan
Companies' 1997 Annual Report on Form 10-K for "Information Concerning
Forward-looking Statements," its reports on Form 8-K and quarterly reports
on Form 10-Q.
EXHIBIT 99(b)
25 August 1998
Not for release, publication or distribution in or into Canada, Australia
or Japan.
MARSH & MCLENNAN COMPANIES, INC.
RECOMMENDED CASH OFFER
FOR
SEDGWICK GROUP PLC
o Marsh & McLennan and Sedgwick announce a recommended cash offer
to be made by J.P. Morgan and Donaldson, Lufkin & Jenrette on behalf of
Marsh & McLennan for Sedgwick at 225 pence per Sedgwick Share and
(pound)11.25 per Sedgwick ADS.
o The Offer values the entire issued share capital of Sedgwick at
(pound)1,247 million.
o Sedgwick Shareholders (other than persons who are citizens or
residents of the United States and certain other overseas shareholders)
may elect to receive Loan Notes as an alternative to the cash
consideration.
o The Offer represents a 57.9 per cent. premium over the closing
middle-market price of a Sedgwick Share on 24 August 1998, the last
business day prior to this announcement, and a multiple of 17.6 times
Sedgwick's earnings per share for the year ended 31 December 1997.
o Sedgwick Shareholders are entitled to the interim dividend of 3.0
pence (net) per Sedgwick Share.
o Marsh & McLennan expects that the acquisition will lead to
enhanced shareholder value, and will be accretive to earnings from the
year ending 31 December 2000.
o Directors of Sedgwick and certain other persons have irrevocably
undertaken to accept the Offer in respect of their holdings of Sedgwick
Securities, representing in aggregate 225,743,233 Sedgwick Shares, and
representing 40.7 per cent. of Sedgwick's issued share capital.
o Sax Riley, Chairman of Sedgwick, and Rob White-Cooper, Chief
Executive of Sedgwick, have been invited to join the Board of Marsh &
McLennan upon the Offer becoming or being declared unconditional in all
respects.
Commenting on the Offer, A.J.C. Smith, Chairman of Marsh & McLennan, said
today: "We believe the combination of Marsh & McLennan and Sedgwick will be
beneficial for our clients, employees and shareholders. This transaction,
which joins together two of the best-known names in risk and insurance
services and consulting, will strengthen further our ability to meet the
increasing global demand for professional services. In particular, it will
enable us to improve the breadth and quality of service to our clients
while providing substantial operational efficiencies."
Sax Riley, Chairman of Sedgwick, said: "I am delighted that Sedgwick and
Marsh & McLennan have come together to form the world's leading insurance
broker and employee benefits consultancy and I look forward to working with
Marsh & McLennan for the development of our business. The combination of
our two groups, together with the retention of the Sedgwick brand name
internationally, will enhance our global service and will offer our people
new opportunities in a much enlarged group. This Offer represents good
value for shareholders."
This summary should be read in conjunction with the full text of this
announcement.
PRESS ENQUIRIES:
Marsh & McLennan
Barbara Perlmutter +1 212 345 5585
J.P. Morgan
Terry Eccles +44 171 600 2300
Edward J. Kelly +1 212 483 2323
Donaldson, Lufkin & Jenrette
Cliff Hampton +44 171 655 7500
Alison Carnwath +1 212 892 7699
Cazenove +44 171 588 2828
David Mayhew
Kekst & Company +1 212 521 4800
James Fingeroth
Michael Freitag
Brunswick +44 171 404 5959
Alison Hogan
Sedgwick +44 171 377 3456
Sax Riley
Rob White-Cooper
Julia Fish
Rothschild +44 171 280 5000
Richard Davey
Jonathan Eddis
CSFB +44 171 888 8888
Mark Seligman
Henry Lloyd
AN ANALYSTS' BRIEFING WILL TAKE PLACE AT 12 NOON TODAY, TUESDAY 25 AUGUST
1998, AT THE OFFICES OF J.P.
MORGAN AT 60 VICTORIA EMBANKMENT, LONDON EC4Y 0JP.
J.P. Morgan and Donaldson, Lufkin & Jenrette, which are regulated in the
United Kingdom by The Securities and Futures Authority Limited, are acting
for Marsh & McLennan and no one else in connection with the Offer and will
not be responsible to anyone other than Marsh & McLennan for providing the
protections afforded to customers of J.P. Morgan and Donaldson, Lufkin &
Jenrette nor for giving advice in relation to the Offer. Cazenove are
acting as brokers to Marsh & McLennan in relation to the Offer.
Rothschild and CSFB, which are regulated in the United Kingdom by The
Securities and Futures Authority Limited, are acting for Sedgwick and no
one else in connection with the Offer and will not be responsible to anyone
other than Sedgwick for providing the protections afforded to customers of
Rothschild and CSFB nor for giving advice in relation to the Offer.
The Offer is not being made, directly or indirectly, in or into, Canada,
Australia or Japan. Accordingly, neither copies of this announcement nor
any related offering documents are to be mailed or otherwise distributed or
sent in or into Canada, Australia or Japan.
The Loan Notes that may be issued pursuant to the Offer will not be listed
on any stock exchange and have not been, and will not be, registered under
the US Securities Act or under any relevant securities laws of any state of
the United States and the relevant clearances will not be obtained from the
regulatory authority of any province or territory of Canada. The Loan Notes
are not being offered, sold or delivered, directly or indirectly, to US
Persons or into Canada, Australia or Japan, or into any other jurisdiction
if to do so would constitute a violation of relevant laws in such
jurisdiction.
Marsh & McLennan cautions that certain forward looking statements contained
in this announcement or other statements which may be made about the
transaction, including, without limitation, the effect of the combination
of Marsh & McLennan and Sedgwick on Marsh & McLennan's earnings and cash
flows, are qualified by important factors that could cause actual operating
results to differ materially from those described herein or any such
statements, including, among others, the following: (i) unanticipated
events and circumstances may occur rendering the transaction less
beneficial to Marsh & McLennan than projected; (ii) Marsh & McLennan and
Sedgwick face intense competition in their markets, and there is,
accordingly, no guarantee that after consummation of the transaction Marsh
& McLennan will achieve the expected financial and operating results and
synergies; and (iii) the ability of Marsh & McLennan and Sedgwick to
integrate successfully their operations and thereby achieve the anticipated
cost savings and be in a position to take advantage of potential
opportunities for growth. Results actually achieved thus may differ
materially from the expected results described herein or any such
statements.
25 August 1998
Not for release, publication or distribution in or into Canada, Australia
or Japan.
MARSH & MCLENNAN COMPANIES, INC.
RECOMMENDED CASH OFFER
FOR
SEDGWICK GROUP PLC
INTRODUCTION
The Boards of Marsh & McLennan and Sedgwick announce that they have reached
agreement on the terms of a recommended cash offer to be made by J.P.
Morgan and Donaldson, Lufkin & Jenrette, on behalf of Marsh & McLennan, to
acquire the whole of the issued and to be issued share capital of Sedgwick.
The Offer of 225 pence for each Sedgwick Share and (pound)11.25 for each
Sedgwick ADS values the whole of the issued share capital of Sedgwick at
(pound)1,247 million.
The directors of Sedgwick and certain other persons have irrevocably
undertaken to accept the Offer in respect of their holdings of Sedgwick
Securities, representing in aggregate 225,743,233 Sedgwick Shares, and
representing 40.7 per cent. of Sedgwick's issued share capital.
The definition of certain expressions used in this announcement are
contained in Appendix III.
SEDGWICK RECOMMENDATION
The directors of Sedgwick, who have been so advised by Rothschild and CSFB,
consider the terms of the Offer to be fair and reasonable and have resolved
to recommend that Sedgwick Securityholders accept the Offer. In providing
advice to the directors of Sedgwick, Rothschild and CSFB have taken into
account the directors' commercial assessments. Irrevocable undertakings to
accept, or procure the acceptance of, the Offer have been received from
directors of Sedgwick in respect of their holdings of Sedgwick Securities.
THE OFFER
The Offer, which will be subject to the conditions and further terms set
out in Appendix I and in the Offer Document, will be made on the following
basis:
for each Sedgwick Share 225 pence in cash
for each Sedgwick ADS (pound)11.25 in cash.
The Offer represents a premium of 57.9 per cent. over the closing
middle-market price of a Sedgwick Share on the London Stock Exchange of
142.5 pence on 24 August 1998, the last business day prior to this
announcement. The Offer represents a multiple of 17.6 times Sedgwick's
earnings per share of 12.8 pence for the year ended 31 December 1997. In
addition, Sedgwick Shareholders who were on the register at the close of
business on 21 August 1998 will be entitled to the interim dividend of 3.0
pence (net) per Sedgwick Share.
THE LOAN NOTE ALTERNATIVE
Accepting Sedgwick Shareholders (other than persons who are citizens or
residents of the United States and certain other overseas shareholders)
will be entitled to elect to receive Loan Notes to be issued by Marsh &
McLennan instead of some or all of the cash consideration which would
otherwise be receivable under the Offer on the following basis:
for every (pound)1 of cash
consideration under the Offer (pound)1 nominal of Loan Notes.
The Loan Notes will bear interest at a rate of one half of one per cent.
below LIBOR and payable six monthly in arrears. The Loan Notes will be
transferable, but no application will be made for them to be listed or
dealt in on any stock exchange. The Loan Notes will be redeemable at the
holder's option on 31 December 1999 and six monthly thereafter until
redemption.
J.P. Morgan has advised that, in its opinion, based on current market
conditions, the value of the Loan Notes, if they had been in issue on 24
August 1998, would have been approximately 98.5 pence per (pound)1 in
nominal value.
If valid elections for the Loan Note Alternative have not been received in
respect of at least (pound)5 million nominal value of Loan Notes by the
time the Offer becomes or is declared unconditional in all respects no Loan
Notes will be issued, and Sedgwick Shareholders who have elected for the
Loan Note Alternative will then receive cash in accordance with the terms
of the Offer.
The Loan Note Alternative will be conditional upon the Offer becoming or
being declared unconditional in all respects, and will remain open for
election for so long as the Offer remains open for acceptance. A summary of
the principal terms of the Loan Notes is set out in Appendix II.
REASONS FOR THE OFFER
As one of the world's leading providers of professional services, Marsh &
McLennan is confident that its chosen strategies in risk and insurance
services, investment management and consulting will continue to yield
strong results for the future. Consistent with these strategies, Marsh &
McLennan is determined to pursue opportunities which it believes will allow
it to enhance further the service it offers its clients and to increase its
operational efficiencies, together leading to greater shareholder value.
The Board of Marsh & McLennan believes that the acquisition of Sedgwick
will provide such opportunities.
Marsh & McLennan seeks to benefit from growing demand worldwide for
professional services, through a combination of businesses, depth of
services and breadth of global professional capabilities through which to
serve clients. Marsh & McLennan expects that the addition of Sedgwick to
its portfolio of businesses will position it to achieve these objectives.
Marsh & McLennan believes that the acquisition will give it an opportunity
to expand in two out of its three business areas, risk and insurance
services and consulting, which it expects to provide strong future growth
and to contribute to earnings.
Sedgwick is the largest independent European-based broker and the third
largest broker in the world, with a recognised brand name, particularly in
the United Kingdom, continental Europe and Asia Pacific, excellent
professional staff and operations, and a substantial client base. In the
United Kingdom, a combination with Sedgwick increases Marsh & McLennan's
presence and provides Marsh & McLennan with access to Sedgwick's important
client base. In the United States, the transaction expands Marsh &
McLennan's activities in a number of areas. Sedgwick is well positioned in
continental European markets such as Belgium, the Netherlands, Italy and
the Scandinavian countries. Marsh & McLennan expects that the acquisition
of Sedgwick will strengthen its position in Asia Pacific markets such as
Hong Kong and Singapore, as well as providing it with a well-established
business in South Africa. Accordingly, Marsh & McLennan currently intends
to retain the Sedgwick brand name in various relevant marketplaces
throughout the world.
Sedgwick Noble Lowndes is among the world's leading employee benefits
consulting firms, with operations in the United States, the United Kingdom
and elsewhere and Marsh & McLennan expects that, together with Marsh &
McLennan's consulting firm Mercer Consulting Group, Inc., it will provide
growth opportunities.
The Offer provides an opportunity for the Sedgwick Group to compete more
effectively in the increasingly competitive insurance services business as
part of a larger international group. The Board of Marsh & McLennan expects
that substantial benefits will arise from being able to offer Sedgwick's
clients a much broader range of products.
In addition, a combination of the two companies would provide an
opportunity further to increase earnings through the realisation of
significant consolidation savings from combining operations. Marsh &
McLennan believes that the combination will also allow increased
operational efficiency across their businesses, leading to stronger service
to clients and therefore to enhanced shareholder value. Marsh & McLennan
expects the acquisition to be accretive to earnings from the year ending 31
December 2000.
MANAGEMENT AND EMPLOYEES
Whilst there will inevitably be redundancies in the course of the
consolidation of the two businesses, Marsh & McLennan attaches great
importance to the skills and experience of the management and employees of
Sedgwick and believes that the career opportunities available will be
enhanced as a result of being part of the Marsh & McLennan organisation.
Marsh & McLennan has agreed to put in place incentive arrangements for key
Sedgwick employees, including certain executive directors, to enable them
to participate in the performance of the combined group.
Marsh & McLennan has given assurances to the Board of Sedgwick that the
existing employment rights, including pension rights and entitlements under
the existing employment related policies adopted by Sedgwick, of all
present directors, management and employees of Sedgwick will be honoured.
Sax Riley, Chairman of Sedgwick, and Rob White-Cooper, Chief Executive of
Sedgwick, have been invited to join the Board of Marsh & McLennan upon the
Offer becoming or being declared unconditional in all respects. Rob
White-Cooper will be chairman of those insurance broking activities which
operate principally outside the Americas. In addition, Marsh & McLennan has
agreed that the heads of Sedgwick's broking businesses in Asia Pacific,
continental Europe and North America, as well as the head of Sedgwick Noble
Lowndes, will hold positions of influence in the new organisation.
OPTIONS UNDER THE SEDGWICK SHARE OPTION SCHEMES
The Offer will extend to the holders of any Sedgwick Securities which are
unconditionally allotted or issued while the Offer remains open for
acceptance (or such earlier date as Marsh & McLennan may, subject to the
City Code, determine) including any Sedgwick Shares unconditionally
allotted or issued pursuant to the exercise of Options under the Sedgwick
Share Option Schemes.
Appropriate proposals, which will include a cash cancellation, will, in due
course, be put to Optionholders who do not, or who are unable to, exercise
the Options granted to them under the Sedgwick Share Option
Schemes.
SEDGWICK CONVERTIBLE BONDS
It is intended that appropriate proposals will be put to holders of Sedgwick
Convertible Bonds at the time
of posting the Offer Document.
FURTHER DETAILS OF THE OFFER
The Sedgwick Securities will be acquired by Marsh & McLennan under the
Offer fully paid and free from all liens, equities, charges, encumbrances,
rights of pre-emption and other third party rights or interests of any
nature whatsoever and together with all rights now or hereafter attaching
thereto, including the right to receive and retain in full all dividends
and other distributions declared, made or paid hereafter, save that
Sedgwick Shareholders will be entitled to receive and retain the interim
dividend of 3.0 pence (net) per Sedgwick Share to be paid in respect of the
year ended 31 December 1998, irrespective of whether or not the Offer
becomes unconditional.
IRREVOCABLE UNDERTAKINGS
Irrevocable undertakings to accept, or procure the acceptance of, the Offer
have been received from directors of Sedgwick in respect of securities
representing 2,054,394 Sedgwick Shares, and from:
o Phillips & Drew Fund Management Limited in respect of 122,955,977
Sedgwick Shares;
o Schroder Investment Management (UK) Limited in respect of
76,732,862 Sedgwick Shares; and
o Silchester International Investors Limited in respect of 24,000,000
Sedgwick Shares.
Accordingly, Marsh & McLennan has received irrevocable undertakings to
accept the Offer in respect of securities representing a total of
225,743,233 Sedgwick Shares, and representing in aggregate 40.7 per cent.
of Sedgwick's issued share capital.
The irrevocable undertakings to accept the Offer given by Phillips & Drew
Fund Management Limited, Schroder Investment Management (UK) Limited and
Silchester International Investors Limited will cease to be binding in the
event that a competing offer is made for Sedgwick at a price of not less
than 250.5 pence per Sedgwick Share, or if the Offer lapses or is
withdrawn. All other irrevocable undertakings to accept the Offer will
continue to be binding in the event of a competing offer being made for
Sedgwick by a third party unless the Offer lapses or is withdrawn.
HOLDINGS IN SEDGWICK SECURITIES
Neither Marsh & McLennan, nor any of its directors nor, so far as Marsh &
McLennan is aware, any person acting in concert with Marsh & McLennan, owns
or controls any Sedgwick Securities or has any option to acquire any
further Sedgwick Securities, or has entered into any derivative referenced
to securities of Sedgwick which remains outstanding or (other than as
disclosed above) has received any irrevocable commitment to accept the
Offer.
INFORMATION ON SEDGWICK
Sedgwick is one of the world's leading consulting, insurance and
reinsurance groups, operating in 70 countries from over 290 offices. The
company has particular expertise in risk management and employee benefits.
For the year ended 31 December 1997 the Sedgwick Group reported profit
before tax of (pound)101 million on turnover of (pound)975 million and, as
at 31 December 1997, the Sedgwick Group had net assets of (pound)200
million. As at 31 December 1997, Sedgwick and its subsidiaries employed
approximately 15,985 employees.
Based on a closing price of 142.5 pence on 24 August 1998 (the last
business day prior to the announcement of the Offer), the market
capitalisation of Sedgwick was (pound)790 million.
INFORMATION ON MARSH & MCLENNAN
Marsh & McLennan is a professional services firm providing risk and
insurance services, investment management and consulting. Marsh & McLennan,
with over 36,000 employees worldwide (as at 6 March 1998), provides
analysis, advice and transactional capabilities to clients in over one
hundred countries.
For the year ended 31 December 1997, Marsh & McLennan generated revenues of
US$6,009 million and income before taxes of US$662 million. As at 31
December 1997, Marsh & McLennan had net assets, on a US GAAP accounting
basis, of US$3,199 million.
Marsh & McLennan's common stock is listed on the New York, Chicago, Pacific
and London stock exchanges. As at the close of trading on the New York
Stock Exchange on 24 August 1998, Marsh & McLennan had a market
capitalisation of US$ 14.5 billion.
GENERAL
(a) The Offer will be subject to the applicable requirements of both
the City Code and US federal securities laws, except to the extent
that exemptive relief from the US federal securities laws has been
granted by the SEC.
(b) The availability of the Offer to persons not resident in the UK
or the US may be affected by the laws of the relevant jurisdiction.
Any persons who are subject to the laws of any jurisdiction other
than the UK or the US should inform themselves about and observe any
applicable requirements.
(c) The Offer Document will be posted to Sedgwick Securityholders as
soon as practicable.
(d) The Offer will be open for at least 20 Business Days from the
date of the Offer Document.
(e) It is Marsh & McLennan's intention, following the Offer becoming
or being declared unconditional in all respects and subject to
applicable requirements of the Chicago, London, New York and Pacific
stock exchanges, that Sedgwick should apply to those exchanges for
the Sedgwick Securities to be delisted. Delisting would significantly
reduce the liquidity and marketability of any Sedgwick Securities not
assented to the Offer.
(f) This announcement does not constitute an invitation to purchase any
securities.
J.P. Morgan and Donaldson, Lufkin & Jenrette, which are regulated in the
United Kingdom by The Securities and Futures Authority Limited, are acting
for Marsh & McLennan and no one else in connection with the Offer and will
not be responsible to anyone other than Marsh & McLennan for providing the
protections afforded to customers of J.P. Morgan and Donaldson, Lufkin &
Jenrette nor for giving advice in relation to the Offer. Cazenove are
acting as brokers to Marsh & McLennan in relation to the Offer.
Rothschild and CSFB, which are regulated in the United Kingdom by The
Securities and Futures Authority Limited, are acting for Sedgwick and no
one else in connection with the Offer and will not be responsible to anyone
other than Sedgwick for providing the protections afforded to customers of
Rothschild and CSFB nor for giving advice in relation to the Offer.
The Offer is not being made, directly or indirectly, in or into, Canada,
Australia or Japan. Accordingly, neither copies of this announcement nor
any related offering documents are to be mailed or otherwise distributed or
sent in or into Canada, Australia or Japan.
The Loan Notes that may be issued pursuant to the Offer will not be listed
on any stock exchange and have not been, and will not be, registered under
the US Securities Act or under any relevant securities laws of any state of
the United States and the relevant clearances will not be obtained from the
regulatory authority of any province or territory of Canada. The Loan Notes
are not being offered, sold or delivered, directly or indirectly, to US
Persons or into Canada, Australia or Japan, or into any other jurisdiction
if to do so would constitute a violation of relevant laws in such
jurisdiction.
Marsh & McLennan cautions that certain forward looking statements contained
in this announcement or other statements which may be made about the
transaction, including, without limitation, the effect of the combination
of Marsh & McLennan and Sedgwick on Marsh & McLennan's earnings and cash
flows, are qualified by important factors that could cause actual operating
results to differ materially from those described herein or any such
statements, including, among others, the following: (i) unanticipated
events and circumstances may occur rendering the transaction less
beneficial to Marsh & McLennan than projected; (ii) Marsh & McLennan and
Sedgwick face intense competition in their markets, and there is,
accordingly, no guarantee that after consummation of the transaction Marsh
& McLennan will achieve the expected financial and operating results and
synergies; and (iii) the ability of Marsh & McLennan and Sedgwick to
integrate successfully their operations and thereby achieve the anticipated
cost savings and be in a position to take advantage of potential
opportunities for growth. Results actually achieved thus may differ
materially from the expected results described herein or any such
statements.
APPENDIX I
CONDITIONS OF THE OFFER
The Offer, which will be made by J.P. Morgan and Donaldson, Lufkin &
Jenrette on behalf of Marsh & McLennan, will comply with the applicable
rules and regulations of the London Stock Exchange and the City Code and
with US federal securities laws (except to the extent that exemptive relief
has been granted by the SEC). In addition, the Offer will be governed by
English law and will be subject to the jurisdiction of the courts of
England and to the terms and conditions set out in the Offer Document and
related Acceptance Forms.
The Offer will be subject to the following conditions:
(a) valid acceptances being received (and not, where permitted,
withdrawn) by not later than 3.00 p.m. (London time) on the first
closing date of the Offer (or such later time(s) and/or date(s) as
Marsh & McLennan may, with the consent of the Panel or in accordance
with the rules of the City Code, decide) in respect of not less than
90 per cent. (or such lower percentage as Marsh & McLennan may
decide) in nominal value of the Sedgwick Securities to which the
Offer relates, provided that this condition will not be satisfied
unless Marsh & McLennan and/or its wholly-owned subsidiaries shall
have acquired or agreed (unconditionally or subject only to
conditions which will be fulfilled upon the Offer becoming or being
declared unconditional in all respects) to acquire (whether pursuant
to the Offer or otherwise) Sedgwick Securities carrying, in
aggregate, more than 50 per cent. of the voting rights then normally
exercisable at general meetings of Sedgwick, including for this
purpose (to the extent, if any, required by the Panel) any such
voting rights attaching to any Sedgwick Securities that are
unconditionally allotted or issued before the Offer becomes or is
declared unconditional as to acceptances, whether pursuant to the
exercise of any outstanding subscription or conversion rights or
otherwise and, for this purpose:
(i) the expression "Sedgwick Securities to which the Offer
relates" shall be construed in accordance with sections 428
to 430F of the Companies Act 1985;
(ii) Sedgwick Securities which have been unconditionally allotted
shall be deemed to carry the voting rights which they will
carry upon their being entered in the register of members of
Sedgwick; and
(iii) valid acceptances shall be treated as having been received in
respect of any Sedgwick Securities which Marsh & McLennan
shall, pursuant to section 429(8) of the Companies Act 1985,
be treated as having acquired or contracted to acquire by
virtue of acceptances of the Offer,
provided that, unless Marsh & McLennan otherwise determines, this
condition (a) can only be treated as satisfied at a time when all of
the other conditions in paragraphs (b) to (i) inclusive are either
satisfied or (if capable of waiver) waived;
(b) no Relevant Authority having intervened in a manner which would
or might reasonably be expected to:
(i) make the Offer, its implementation or the acquisition or
proposed acquisition by Marsh & McLennan or any member of the
Wider Marsh & McLennan Group of any shares or other securities
in, or control of, Sedgwick void, illegal and/or unenforceable
in or under the laws of any relevant jurisdiction, or
otherwise directly or indirectly restrain, prevent, prohibit,
materially restrict or materially delay the Offer or such
acquisition or impose additional materially adverse conditions
or obligations with respect to the Offer or such acquisition,
or otherwise materially impede, challenge or interfere with
the Offer or such acquisition, or require material amendment
to the terms of the Offer or the proposed acquisition of any
Sedgwick Securities or the acquisition of control of Sedgwick
by Marsh & McLennan;
(ii) require, prevent or delay the divestiture by any member of the
Wider Marsh & McLennan Group of any shares or other securities
(or the equivalent) in Sedgwick where the same is materially
adverse to the Marsh & McLennan Group;
(iii) require, prevent or delay the divestiture by any member of the
Wider Marsh & McLennan Group or by any member of the Wider
Sedgwick Group of all or any portion of their respective
businesses, assets or properties or impose any limitation on
the ability of any of them to conduct any of their respective
businesses or to own any of their respective assets or
properties or any part thereof (in any case, to an extent
which is material in the context of the Wider Marsh & McLennan
Group or the Wider Sedgwick Group, as appropriate, taken as a
whole);
(iv) impose any limitation on, or result in a delay in, the ability
of any member of the Wider Marsh & McLennan Group or any
member of the Wider Sedgwick Group to acquire or to hold or to
exercise effectively, directly or indirectly, all or any
rights of ownership in respect of shares or other securities
(or the equivalent) in, or to exercise management control
over, any member of the Wider Marsh & McLennan Group or any
member of the Wider Sedgwick Group (in any such case, to an
extent which is material in the context of the Wider Marsh &
McLennan Group or the Wider Sedgwick Group, as the case may
be, taken as a whole);
(v) require any member of the Wider Marsh & McLennan Group or the
Wider Sedgwick Group to acquire, or to offer to acquire, any
shares or other securities (or the equivalent) in any member
of the Wider Marsh & McLennan Group or any member of the Wider
Sedgwick Group owned by any third party, in any such case, to
an extent which is material in the context of the Wider Marsh
& McLennan Group or the Wider Sedgwick Group, as the case may
be, taken as a whole;
(vi) impose any limitation on the ability of any member of the
Wider Marsh & McLennan Group or any member of the Wider
Sedgwick Group to integrate or co-ordinate its business, or
any material part of it, with the businesses of any other
member of the Wider Marsh & McLennan Group or the Wider
Sedgwick Group (in each case, to an extent which is material
in the context of the Wider Marsh & McLennan Group or the
Wider Sedgwick Group, as the case may be, taken as a whole);
(vii) result in any member of the Wider Marsh & McLennan Group or
the Wider Sedgwick Group ceasing to be able to carry on
business under any name under which it presently does so (the
consequences of which would be material in the context of the
Wider Marsh & McLennan Group or the Wider Sedgwick Group, as
the case may be, taken as a whole);
(viii) otherwise adversely affect any or all of the businesses,
assets, profits or prospects of any member of the Wider
Sedgwick Group or any member of the Wider Marsh & McLennan
Group (to an extent which is material in the context of the
Wider Marsh & McLennan Group or the Wider Sedgwick Group, as
the case may be, taken as a whole);
and all applicable waiting and other time periods during which any
Relevant Authority could intervene in such a way under the laws of
any relevant jurisdiction having expired, lapsed or been terminated;
(c) without limitation to condition (b) above:
(i) the European Commission indicating in terms satisfactory to
Marsh & McLennan that it does not intend to initiate
proceedings under Article 6(1)(c) of Council Regulation (EEC)
4064/89 (the "Regulation") in respect of the proposed
acquisition of Sedgwick by Marsh & McLennan or any matters
arising therefrom (the "Merger") and that in any event there
will not be a referral to a competent authority or a dealing
with the Merger by the European Commission pursuant to Article
9(3) of the Regulation; and
(ii) all necessary filings having been made and all or any
applicable waiting periods (including any extensions thereof)
under the United States Hart-Scott-Rodino Antitrust
Improvements Act 1976 and the regulations thereunder having
expired, lapsed or been terminated as appropriate in each case
in respect of the proposed acquisition of Sedgwick by Marsh &
McLennan, or any matters arising therefrom;
(d) without limitation to condition (b) above:
(i) the consent of the HM Treasury ("HMT") having been obtained,
in terms reasonably satisfactory to Marsh & McLennan, to the
new controllers (having the definition ascribed in section 96C
of the Insurance Companies Act 1982) of any relevant regulated
member of the Sedgwick Group or all applicable waiting periods
having expired without HMT having served any notice of
objection in relation to any of the new controllers of any
relevant regulated member of the Sedgwick Group;
(ii) the consent of The Society and Corporation of Lloyd's
("Lloyd's") having been obtained, in terms reasonably
satisfactory to Marsh & McLennan, to the new controllers
(having the definition ascribed in the Lloyd's Brokers Byelaw
(No.5 of 1998) as amended) of the companies within the
Sedgwick Group which are registered with Lloyd's as brokers;
(iii) the consent of Lloyd's having been obtained, in terms
reasonably satisfactory to Marsh & McLennan, to the new
controllers (having the definition ascribed in The
Underwriting Agents Byelaw (No.4 of 1984) as amended) of the
companies within the Sedgwick Group which are registered with
Lloyd's as underwriting agents;
(iv) appropriate notifications of the proposed change of control of
each relevant company within the Sedgwick Group having been
made to Lloyd's and/or to the Insurance Brokers Registration
Council (as appropriate);
(v) each of the Personal Investment Authority Limited ("PIA") and
The Securities and Futures Authority Limited ("SFA") having
confirmed, in terms reasonably satisfactory to Marsh &
McLennan, that it has no objection to the change of control of
each relevant company within the Sedgwick Group or all
applicable waiting periods during which the PIA or the SFA (as
the case may be) could raise any enquiries and/or objections
to the proposed change of control having expired;
(vi) if relevant, the Treasurer of the Commonwealth of Australia
(the "Treasurer") becoming precluded under section 25 of the
Foreign Acquisitions and Takeovers Act 1975 (the "Act") from
being empowered to make an order under Part II of the Act in
relation to the Offer, or the issue by or on behalf of the
Treasurer of a notice in writing under the Act indicating, in
terms reasonably satisfactory to Marsh & McLennan, that he has
no objection to the proposed acquisition of Sedgwick pursuant
to the Offer;
(vii) all necessary notifications and filings having been made, all
necessary waiting and other time periods under any applicable
legislation or regulation of any relevant jurisdiction having
expired, lapsed or been terminated and all statutory or
regulatory obligations in any relevant jurisdiction having
been complied with in each case in connection with the Offer
or the acquisition of any shares or other securities (or the
equivalent) in, or control of, Sedgwick or any other member of
the Wider Sedgwick Group by any member of the Wider Marsh &
McLennan Group; and
(viii) all Authorisations necessary in any relevant jurisdiction for
or in respect of the Offer or the acquisition or proposed
acquisition of any shares or other securities (or the
equivalent) in, or control of, Sedgwick or any other member of
the Wider Sedgwick Group by any member of the Wider Marsh &
McLennan Group or the carrying on by any member of the Wider
Sedgwick Group of its business (where the absence of such
Authorisations would be expected to have an adverse effect
which is material to the Wider Sedgwick Group) having been
obtained, in terms and in a form reasonably satisfactory to
Marsh & McLennan, from all appropriate Relevant Authorities
and all such Authorisations remaining in full force and effect
at the time when the Offer becomes otherwise unconditional in
all respects and there being no notice or intimation of any
intention to revoke or not to renew any of the same;
(e) there being no provision of any arrangement, agreement, licence,
permit, franchise or other instrument to which any member of the
Wider Sedgwick Group is a party, or by or to which any such member or
any of its assets is or are or may be bound, entitled or subject or
any circumstance, which, in each case as a consequence of the Offer
or the acquisition or proposed acquisition of any shares or other
securities (or the equivalent) in, or control of, Sedgwick or any
other member of the Wider Sedgwick Group by any member of the Wider
Marsh & McLennan Group or otherwise, could or might reasonably be
expected to result in (to an extent which would be material in the
context of the Wider Sedgwick Group taken as a whole):
(i) any monies borrowed by or any other indebtedness or
liabilities, actual or contingent, of, or grant available to,
any member of the Wider Sedgwick Group being or becoming
repayable or capable of being declared repayable immediately
or prior to its stated repayment date, or the ability of any
member of the Wider Sedgwick Group to borrow monies or incur
any indebtedness being withdrawn or inhibited or becoming
capable of being withdrawn;
(ii) the creation or enforcement of any mortgage, charge or other
security interest over the whole or any part of the business,
property, assets or interests of any member of the Wider
Sedgwick Group or any such mortgage, charge or other security
interest becoming enforceable;
(iii) any such arrangement, agreement, licence, permit, franchise or
instrument, or the rights, liabilities, obligations or
interests of any member of the Wider Sedgwick Group
thereunder, being, or becoming capable of being, terminated or
adversely modified or affected or any adverse action being
taken or any obligation or liability arising thereunder;
(iv) any asset or interest of any member of the Wider Sedgwick
Group being or falling to be disposed of or charged or any
right arising under which any such asset or interest could be
required to be disposed of or charged, in each case otherwise
than in the ordinary course of business;
(v) any member of the Wider Sedgwick Group ceasing to be able to
carry on business under any name under which it presently does
so;
(vi) the creation of liabilities actual or contingent by any such
member, otherwise than in the ordinary course of business;
(vii) the rights, liabilities or interests of any member of the
Wider Sedgwick Group under any such arrangement, agreement,
licence, permit, franchise or other instrument or the
interests or business of any such member in or with any other
person, firm, company or body (or any arrangement or
arrangements relating to any such interests or business) being
terminated, adversely modified or affected; or
(viii) the financial or trading position of any member of the Wider
Sedgwick Group being adversely prejudiced or affected;
and no event having occurred which, under any provision of any such
arrangement, agreement, licence, permit or other instrument, could
result in any of the events or circumstances which are referred to in
paragraphs (i) to (viii) of this condition (e) in any case where such
result would be material in the context of the Wider Sedgwick Group
taken as a whole;
(f) since 31 December 1997 and except as disclosed in Sedgwick's annual
report and accounts for the year then ended or as disclosed in the
interim statement of Sedgwick for the six months ended on 30 June
1998 or as otherwise publicly announced by Sedgwick (by the delivery
of an announcement to the Company Announcements Office of the London
Stock Exchange) prior to 25 August 1998, no member of the Wider
Sedgwick Group having:
(i) issued or agreed to issue additional shares of any class, or
securities convertible into, or rights, warrants or options to
subscribe for or acquire, any such shares or convertible
securities (save as between Sedgwick and wholly-owned
subsidiaries of Sedgwick and except for any options granted
under the Sedgwick Share Option Schemes prior to 25 August
1998);
(ii) recommended, declared, paid or made any bonus, dividend or
other distribution (save as between Sedgwick and wholly-owned
subsidiaries of Sedgwick) whether in cash or otherwise;
(iii) made or committed to make any change in its share or (save as
between Sedgwick and wholly-owned subsidiaries of Sedgwick)
loan capital;
(iv) merged with or demerged or acquired any body corporate or
acquired or disposed of or transferred, mortgaged or charged
or created any security interest over any material assets or
(other than in the ordinary course of business) any right,
title or interest in any material assets (including shares and
trade investments) (other than in the ordinary course of
business), which is material in the context of the Wider
Sedgwick Group taken as a whole;
(v) issued or agreed to issue any debentures or (save in the
ordinary course of business) incurred or increased any
indebtedness or contingent liability (save as between Sedgwick
and wholly-owned subsidiaries of Sedgwick);
(vi) purchased, redeemed or repaid any of its own shares or other
securities or reduced or made any other change to any part of
its share capital, which is material in the context of the
Wider Sedgwick Group taken as a whole;
(vii) entered into or varied any contract, transaction, arrangement
or commitment (whether in respect of capital expenditure or
otherwise) which:
(A) is of a long term, onerous or unusual nature or
magnitude; or
(B) could reasonably be expected to be restrictive on the
business of any member of the Wider Sedgwick Group or
any member of the Wider Marsh & McLennan Group; or
(C) involves or would involve an obligation of a long term,
onerous or unusual nature or magnitude or which could be
restrictive on the business of any member of the Wider
Sedgwick Group or any member of the Wider Marsh &
McLennan Group;
in each case, which is material in the context of the Wider Sedgwick
Group taken as a whole;
(viii) entered into or varied or made any offer (which remains open
for acceptance) to enter into or vary the terms of any
contract with any of the directors or senior executives of
Sedgwick or, to an extent which is material in the context of
the Wider Sedgwick Group taken as a whole, of any member of
the Wider Sedgwick Group;
(ix) taken or proposed any corporate action or had any legal
proceedings instituted or threatened against it or petition
(not of a frivolous or vexatious nature) presented for its
winding-up (voluntarily or otherwise), dissolution or
reorganisation or for the appointment of a receiver,
administrator, administrative receiver, trustee or similar
officer of all or any of its assets and revenues or for any
analogous proceedings or steps in any jurisdiction or for the
appointment of any analogous person in any jurisdiction and
which is material in the context of the Wider Sedgwick Group
taken as a whole;
(x) been unable or admitted in writing that it is unable to pay
its debts or having stopped or suspended (or threatened to
stop or suspend) payment of its debts generally or ceased or
threatened to cease carrying on all or a substantial part of
its business and which is material in the context of the Wider
Sedgwick Group taken as a whole;
(xi) waived or compromised any claim which is material in the
context of the Wider Sedgwick Group taken as a whole;
(xii) made any alteration to its memorandum or articles of
association, or other incorporation documents; or
(xiii) entered into any agreement, contract or commitment or made any
offer (which remains open for acceptance) with respect to any
of the transactions, matters or events referred to in this
condition (f);
(g) since 31 December 1997 and except as disclosed in Sedgwick's annual
report and accounts for the year then ended or as disclosed in the
interim statement of Sedgwick for the six months ended on 30 June
1998 or as otherwise publicly announced by Sedgwick (by the delivery
of an announcement to the Company Announcements Office of the London
Stock Exchange) prior to 25 August 1998:
(i) there having been no adverse change or deterioration in the
business, assets, financial or trading position or profits or
assets of any member of the Wider Sedgwick Group which is (in
the aggregate) material in the context of the Wider Sedgwick
Group taken as a whole;
(ii) no litigation, arbitration proceedings, prosecution or other
legal proceedings to which any member of the Wider Sedgwick
Group is or may become a party (whether as plaintiff or
defendant or otherwise) or any investigation (save as a result
of the Offer) by any Relevant Authority having been
threatened, announced or instituted by or against or in
respect of any member of the Wider Sedgwick Group or remaining
outstanding against or in respect of any member of the Wider
Sedgwick Group which, in any such case, is material in the
context of the Wider Sedgwick Group taken as a whole;
(iii) no contingent or other liability having arisen or become
apparent or increased which would or could reasonably be
expected materially and adversely to affect the Wider Sedgwick
Group taken as a whole; and
(iv) there having been no inquiry or investigation (save as a
result of the Offer) by, or complaint, or reference to, any
Relevant Authority of a material nature to Sedgwick in respect
of any member of the Wider Sedgwick Group and no such enquiry,
investigation, complaint or reference having been threatened,
announced, implemented, instituted or remaining outstanding
which, in any such case, is material in the context of the
Wider Sedgwick Group taken as a whole;
(h) Marsh & McLennan not having discovered:
(i) that any financial or business or other information concerning
the Wider Sedgwick Group disclosed at any time by or on behalf
of any member of the Wider Sedgwick Group, whether publicly,
to any member of the Wider Marsh & McLennan Group or
otherwise, is misleading or contains a misrepresentation of
fact or omits to state a fact necessary to make any
information contained therein not misleading in any case which
has not subsequently been corrected by such disclosure and, in
any case, to an extent which is material in the context of the
Wider Sedgwick Group taken as a whole; or
(ii) that any member of the Wider Sedgwick Group or partnership,
company or other entity in which any member of the Wider
Sedgwick Group has an interest and which is not a subsidiary
undertaking of Sedgwick is subject to any liability
(contingent or otherwise) which is not disclosed in Sedgwick's
annual report and accounts for the financial year ended 31
December 1997 or as disclosed in the interim statement for the
six months ended 30 June 1998 or as otherwise publicly
announced by Sedgwick (by delivery of an announcement to the
Company Announcements Office of the London Stock Exchange)
prior to 25 August 1998 and which is material in the context
of the Wider Sedgwick Group taken as a whole;
(i) Marsh & McLennan not having discovered:
(i) that any past or present member of the Wider Sedgwick Group
has not complied with all applicable legislation or
regulations of any jurisdiction with regard to the disposal,
discharge, spillage, leak or emission of any waste or
hazardous substance or any substance likely to impair the
environment or harm human health, or otherwise relating to
environmental matters, or that there has otherwise been any
such disposal, discharge, spillage, leak or emission (whether
or not the same constituted a non-compliance by any person
with any such legislation or regulations and wherever the same
may have taken place) which, in any such case, would be likely
to give rise to any liability (whether actual or contingent)
on the part of any member of the Wider Sedgwick Group which
would be material in the context of the Wider Sedgwick Group
taken as a whole;
(ii) that there is, or is likely to be, any liability, whether
actual or contingent, to make good, repair, reinstate or clean
up any property now or previously owned, occupied or made use
of by any past or present member of the Wider Sedgwick Group
or in which any such member may have or previously have had or
be deemed to have had an interest under any environmental
legislation, regulation, notice, circular or order of any
relevant authority or Relevant Authority or otherwise, which,
in any such case, would be material in the context of the
Wider Sedgwick Group taken as a whole; or
(iii) that circumstances exist whereby a person or class of persons
would be likely to have any claim or claims in respect of any
product or process of manufacture or materials used therein
now or previously manufactured, sold or carried out by any
past or present member of the Wider Sedgwick Group which, in
any such case, would be material in the context of the Wider
Sedgwick Group taken as a whole.
For the purpose of these conditions:
(a) "Relevant Authority" means any government, government department or
governmental, quasi-governmental, supranational, statutory,
regulatory, administrative or investigative body, authority
(including any national anti-trust or merger control authorities),
court, trade agency, association, institution or professional or
environmental body or any other person or body whatsoever in any
relevant jurisdiction;
(b) a Relevant Authority shall be regarded as having "intervened" if it
has decided to take, institute, implement or threaten any action,
proceedings, suit, investigation, inquiry or reference or made,
proposed or enacted any statute, regulation, decision or order or
taken any measures or other steps or required any action to be taken
or information to be provided or otherwise having done anything and
"intervene" shall be construed accordingly;
(c) "Authorisations" means authorisations, orders, grants, recognitions,
determinations, certificates, confirmations, consents, licences,
clearances, permissions, exemptions and approvals;
(d) "the Wider Sedgwick Group" means Sedgwick and its subsidiary
undertakings and any other undertakings in which Sedgwick and such
undertakings (aggregating their interests) have a substantial
interest and "the Wider Marsh & McLennan Group" means Marsh &
McLennan and its subsidiary undertakings and any other undertakings
in which Marsh & McLennan and such undertakings (aggregating their
interests) have a substantial interest and, for these purposes,
"subsidiary undertaking" and "undertaking" have the meanings given by
the Companies Act 1985 and "substantial interest" means a direct or
indirect interest in 20 per cent. or more of the equity capital of an
undertaking.
Subject to the requirements of the Panel, Marsh & McLennan reserves the
right to waive all or any of the above conditions, in whole or in part,
except condition (a).
Conditions (b) to (i) (inclusive) must be fulfilled or (if capable of
waiver) waived by midnight on the 21st day after the later of the first
closing date of the Offer and the date on which condition (a) is fulfilled
or is declared fulfilled (or, in each case, such later date as the Panel
may agree), failing which the Offer will lapse. Marsh & McLennan shall be
under no obligation to waive (if capable of waiver) or treat as fulfilled
any of conditions (b) to (i) (inclusive) by a date earlier than the latest
date specified above for the fulfilment thereof notwithstanding that the
other conditions of the Offer may at such earlier date have been waived or
fulfilled and that there are at such earlier date no circumstances
indicating that any of such conditions may not be capable of fulfilment.
Marsh & McLennan will not invoke any of the conditions (e) to (i)
(inclusive) in relation to circumstances which would otherwise give rise to
the right to invoke such condition where there has been fair disclosure of
such circumstances to Marsh & McLennan or its advisers by or on behalf of
Sedgwick prior to 25 August 1998.
If Marsh & McLennan is required by the Panel to make an offer for Sedgwick
Securities under the provisions of Rule 9 of the Code, Marsh & McLennan may
make such alterations to the conditions of the Offer, including condition
(a), as are necessary to comply with the provisions of that Rule.
The Offer will lapse if the European Commission either initiates
proceedings under Article 6(1)(c) of the Regulation or makes a referral to
a competent authority of the United Kingdom under Article 9(1) of the
Regulation before, in each case, the later of 3.00 p.m. on the first
closing date of the Offer and the date when the Merger becomes or is
declared unconditional as to acceptances.
If the Offer lapses, the Offer will cease to be capable of further
acceptance and Sedgwick shareholders accepting the Offer and Marsh &
McLennan shall upon the Offer lapsing cease to be bound by acceptances
delivered on or before the date on which the Offer lapses.
The Offer and all contracts arising under it will be governed by English
law.
APPENDIX II
PRINCIPAL TERMS OF THE LOAN NOTES
The Loan Notes will be created by a resolution of the board of directors of
Marsh & McLennan (or a duly authorised committee thereof) and will be
constituted by the Loan Note Instrument. The issue of the Loan Notes will
be conditional on the Offer becoming or being declared
unconditional in all respects.
If valid elections for the Loan Note Alternative have not been received in
respect of at least (pound)5 million nominal value of Loan Notes by the
time the Offer becomes or is declared unconditional in all respects, no
Loan Notes will be issued, in which event all Sedgwick Shareholders
accepting the Offer will receive cash in accordance with the terms of the
Offer. The Loan Note Alternative is not available to any person who is a
citizen or resident of the United States, Canada, Australia or Japan or
certain other jurisdictions. The Loan Note Instrument will contain
provisions, inter alia, to the effect set out below.
1. FORM AND STATUS
The Loan Notes will be issued by Marsh & McLennan in amounts and integral
multiples of (pound)1 and will constitute unsecured obligations of Marsh &
McLennan. The Loan Note Instrument will not contain any restrictions on
borrowing, disposals or charging of assets by Marsh & McLennan.
2. INTEREST
(a) Interest on the Loan Notes will be payable (subject to any
requirement to deduct tax therefrom) in arrears on 30 June and 31
December in each year (or, if such a day is not a business day, on
the next following business day) ("interest payment dates") in
respect of the interest periods (as defined below) at a rate
calculated as provided in paragraph (b) below, except that the first
payment of interest on the Loan Notes, which will be made on 31
December 1998, will be in respect of the period from (and including)
the first date of issue of any of the Loan Notes to (and including)
31 December 1998. The period from (and including) the first date of
issue of any of the Loan Notes to (and including) 31 December 1998
and the period from (but excluding) 31 December 1998, or any
subsequent interest payment date, to (and including) the next
following interest payment date, is referred to as an "interest
period".
(b) The rate of interest on the Loan Notes for each interest period will
be the rate per annum calculated by Marsh & McLennan to be one half
of one per cent. below LIBOR at or about 11.00 a.m. on the first day
of the relevant interest period or, if such a day is not a business
day, on the next succeeding business day.
(c) If a rate of interest cannot be established in accordance with the
provisions of this paragraph 2 for any interest period, then the rate
of interest on the Loan Notes for such interest period shall be
calculated by reference to such rate as Marsh & McLennan shall
reasonably determine on the basis of quotations made for six month
sterling deposits of similar size in any other appropriate inter-bank
market or markets as Marsh & McLennan may reasonably select.
(d) Each instalment of interest shall be calculated on the basis of a 365
day year and the actual number of days elapsed in the relevant
interest period.
3. REPAYMENT AND REDEMPTION
(a) A holder of Loan Notes ("Noteholder") shall be entitled to require
Marsh & McLennan to repay the whole (whatever the amount) or any part
(being (pound)100 nominal amount or any integral multiple thereof) of
the principal amount of his holding of Loan Notes at par, together
with accrued interest thereon (subject to any requirement to deduct
tax therefrom) up to (and including) the date of repayment, on any
interest payment date falling on or after 31 December 1999, by giving
not less than 30 days' prior notice in writing to the Registrars
accompanied by certificate(s) for all the Loan Notes to be repaid and
a notice of redemption (duly completed) in the prescribed form
endorsed on the Loan Notes to be repaid.
(b) If, at any time, the principal amount of the Loan Notes outstanding
is 20 per cent. or less of the total nominal amount of Loan Notes
which have been issued prior to that time, Marsh & McLennan shall
have the right, on giving to the remaining Noteholders not less than
30 days' notice in writing expiring on 31 December 1999 or on any
subsequent interest payment date, to redeem all (but not some only)
of the Loan Notes at their principal amount together with accrued
interest thereon (subject to any requirement to deduct tax therefrom)
up to (and including) the date of redemption.
(c) Marsh & McLennan will have the right to redeem on any interest
payment date the Loan Notes at par together with accrued interest up
to (and including) the date of redemption (subject to any requirement
to deduct tax therefrom) on 30 days' written notice to the
Noteholders if Marsh & McLennan is advised by legal counsel that
interest payable under the Loan Notes will fall to be treated as
non-deductible for US federal income tax purposes due to a change in
law after the date on which the Offer is made.
(d) Any Loan Notes not previously repaid, redeemed or purchased will be
repaid in full at par on 31 December 2003 together with accrued
interest thereon (subject to any requirement to deduct tax therefrom)
up to (and including) that date.
(e) Each holder of the Loan Notes shall have the right to acquire (by
subscription at nominal value of an amount up to or equal to such
Noteholder's holding of Loan Notes, such amount to be payable in full
on subscription) additional loan notes to be issued by a subsidiary
of Marsh & McLennan ("Additional Notes") on terms and conditions
substantially the same as those applicable to the Loan Notes, except
as follows:
(i) the rate of interest on the Additional Notes shall be one half
of one per cent. below the rate per annum referred to in
paragraph 2 above; and
(ii) the Additional Notes shall not carry any rights to acquire
additional securities.
(f) Each Noteholder shall be entitled to require all of the Loan Notes
held by him to be repaid at par together with accrued interest
(subject to any requirement to deduct any tax therefrom) immediately
if:
(i) any principal or interest on any of the Loan Notes held by
that Noteholder shall not have been paid in full within 14
days after the due date for payment thereof;
(ii) Marsh & McLennan commences a voluntary case concerning itself
under Title 11 of the United States Code entitled "Bankruptcy"
as now or hereafter in effect or any successor thereto (the
"Bankruptcy Code");
(iii) an involuntary case is commenced against Marsh & McLennan and
the petition is not controverted within 10 days or is not
dismissed within 60 days after commencement of the case;
(iv) a custodian (as defined in the Bankruptcy Code) is appointed
for, or takes charge of, all or substantially all of the
property of Marsh & McLennan;
(v) Marsh & McLennan commences (including by way of applying for
or consenting to the appointment of, or the taking of
possession by, a rehabilitator, receiver, custodian, trustee,
conservator or liquidator (collectively, a "Conservator") of
itself or all or any substantial proportion of its property)
any other proceeding under any reorganisation, arrangement,
adjustment of debt, relief of debtors, dissolution,
insolvency, liquidation, rehabilitation, conservatorship or
similar law of any jurisdiction whether now or hereafter in
effect relating to Marsh & McLennan;
(vi) any such proceeding is commenced against Marsh & McLennan to
the extent that such proceeding is consented to by such person
or remains undismissed for a period of 60 days;
(vii) Marsh & McLennan is adjudicated insolvent or bankrupt or an
order of relief or other order approving any such case or
proceeding is entered or Marsh & McLennan suffers any
appointment of any Conservator or the like for it or any
substantial part of its property which continues undischarged
or unstated for a period of 60 days;
(viii) Marsh & McLennan makes a general assignment for the benefit of
creditors; or
(ix) any corporate action is taken by Marsh & McLennan for the
purpose of effecting any of the foregoing.
4. PURCHASE OF LOAN NOTES
Marsh & McLennan will be entitled at any time to purchase any Loan Notes at
any price by tender (available to all Noteholders alike), private treaty or
otherwise by agreement with the relevant Noteholder(s).
5. CANCELLATION
Any Loan Notes repaid or redeemed under paragraph 3 above or purchased
under paragraph 4 above shall be cancelled and shall not be available for
re-issue.
6. SUBSTITUTION AND EXCHANGE
The Loan Note Instrument will contain provisions entitling Marsh & McLennan
to substitute any other member of the Marsh & McLennan Group as the
principal debtor under the Loan Notes, or to require Noteholders to
exchange the Loan Notes for loan notes issued on the same terms, mutatis
mutandis, by one or more of such members provided that (a) Marsh & McLennan
guarantees such member's obligations thereunder, and (b) Marsh & McLennan's
right to require substitution by such member as a principal debtor will be
exercisable only if prior clearance has been obtained from the Inland
Revenue to the effect that the substitution will not be treated as a
disposal of the Loan Notes for the purpose of United Kingdom taxation of
chargeable gains. References to Marsh & McLennan in this summary except in
(a) shall be construed to apply to the substitute or substitutes (if any)
from time to time of Marsh & McLennan.
7. MODIFICATIONS
The provisions of the Loan Note Instrument and the rights of the
Noteholders will be subject to modification, abrogation or compromise in
any respect with the sanction of an Extraordinary Resolution (as defined in
the Loan Note Instrument) of the Noteholders, and the consent of Marsh &
McLennan. Marsh & McLennan may amend the provisions of the Loan Note
Instrument without such sanction or consent if such amendment is of a
formal, minor or technical nature and is not materially adverse to
Noteholders or is to correct a manifest error.
8. REGISTRATION AND TRANSFER
The Loan Notes will be in registered form and transferable in amounts or
integral multiples of (pound)100 provided that transfers will not be
registered during the 21 days immediately preceding an interest payment
date or while the register of Noteholders is closed.
9. PRESCRIPTION
Noteholders will cease to be entitled to amounts in respect of interest
which remain unclaimed for a period of five years and to amounts due in
respect of principal which remain unclaimed for a period of ten years, in
each case from the date on which the relevant payment first becomes due,
and such amounts shall revert to Marsh & McLennan upon the giving of 30
days' written notice.
10. RESTRICTIONS ON OWNERSHIP AND TRANSFER
The Loan Notes have not been and will not be registered under the US
Securities Act and no steps have been taken to qualify the Loan Notes for
distribution in any province or territory of Canada and no prospectus in
relation to the Loan Notes has been, or will be, lodged with or registered
by the Australian Securities Commission. Accordingly, unless an exemption
under the US Securities Act or other applicable securities laws is
available, the Loan Note Alternative is not available in the United States,
Canada, Australia or Japan or to Restricted Overseas Persons and the Loan
Notes may not be directly or indirectly offered, sold or delivered in or
into the United States, Canada, Australia or Japan or to or for the account
or benefit of any Restricted Overseas Persons.
For these purposes, "Restricted Overseas Person" means either a person
(including an individual, partnership, unincorporated syndicate, limited
liability company, unincorporated organisation, trust, trustee,
administrator or other legal representative) in or resident in the United
States, Canada, Australia or Japan, or a US Person (as defined in
Regulation S under the US Securities Act).
11. NO LISTING
No application has been made or is intended to be made to any stock
exchange for the Loan Notes to be listed or otherwise traded.
12. GOVERNING LAW
The Loan Notes and the Loan Note Instrument will be governed by and
construed in accordance with the laws of England.
APPENDIX III
DEFINITIONS
The following definitions apply throughout this announcement, unless the
context requires otherwise:
"Acceptance Form" the Form of Acceptance and, in respect of
Sedgwick ADS holders only, the letter of
transmittal and the notice of guaranteed
delivery to accompany the Offer Document.
"Business Day" any day, other than a Saturday or Sunday or a
US federal holiday or UK Bank Holiday, and
consisting of the time period from 12.01 a.m.
until and including 12.00 midnight (New York
City time).
"Cazenove" Cazenove & Co.
"City Code" the City Code on Takeovers and Mergers.
"CSFB" Credit Suisse First Boston (Europe) Limited.
"Donaldson, Lufkin &
Jenrette" Donaldson, Lufkin & Jenrette International.
"Exchange Act" the US Securities and Exchange Act of 1934, as
amended, and the rules and regulations
promulgated thereunder.
"Form of Acceptance" the Form of Acceptance, Authority and Election
relating to the Offer for use by Sedgwick
Shareholders.
"J.P. Morgan" Morgan Guaranty Trust Company of New York.
"LIBOR" the rate of interest determined on the basis
of the arithmetic mean of the respective rates
at which any two London clearing banks,
selected by Marsh & McLennan, offer six-month
pound sterling deposits of (pound)1,000,000 to
leading banks in the London inter-bank market
at or about 11 a.m. (London time) on the first
business day of the relevant interest period
as defined in paragraph 2 of Appendix II.
"Loan Notes" the unsecured loan notes to be issued by Marsh
& McLennan as described in this announcement.
"Loan Note Alternative" the alternative whereby Sedgwick Shareholders
(other than persons who are citizens or
residents of the United States and certain
other overseas shareholders) validly accepting
the Offer may elect to receive Loan Notes
instead of all or part of the cash
consideration to which they would otherwise be
entitled under the Offer.
"Loan Note Instrument" the loan note instrument constituting the Loan
Notes.
"London Stock Exchange" London Stock Exchange Limited.
"Marsh & McLennan" Marsh & McLennan Companies, Inc.
"Marsh & McLennan Group" Marsh & McLennan and its subsidiaries and
subsidiary undertakings.
"Offer" the recommended offer to be made by J.P.
Morgan and Donaldson, Lufkin & Jenrette, on
behalf of Marsh & McLennan, on the terms and
conditions set out in this announcement and
the Offer Document and the relevant Acceptance
Form including, where the context requires,
the Loan Note Alternative and any subsequent
revision, variation, extension or renewal of
such offer and such alternative for all the
issued and to be issued Sedgwick Securities.
"Offer Document" any document containing the Offer.
"Optionholders" holders of Options.
"Options" options granted pursuant to the terms of the
Sedgwick Share Option Schemes.
"Panel" the Panel on Takeovers and Mergers.
"Rothschild" NM Rothschild & Sons Limited.
"Sedgwick" Sedgwick Group plc.
"Sedgwick ADS" an American Depositary Share representing five
Sedgwick Shares.
"Sedgwick Convertible
Bonds" the Sedgwick 7.25% Convertible Bonds 2008.
"Sedgwick Group" Sedgwick and its subsidiaries and subsidiary
undertakings.
"Sedgwick Security" a Sedgwick Share or a Sedgwick ADS.
"Sedgwick Securityholder" a holder of Sedgwick Shares or Sedgwick ADSs.
"Sedgwick Share" an ordinary share of 10 pence in the capital
of Sedgwick.
"Sedgwick Share Option
Schemes" the 1984 Executive Share Option Scheme, the
1995 Executive Share Schemes" Option Scheme,
the 1984 Employee Savings-Related Share
Options Scheme, the 1995 Employee
Savings-Related Share Options Scheme and the
1995 Overseas Savings-Related Share Options
Scheme.
"Sedgwick Shareholder" a holder of a Sedgwick Share.
"SEC" the United States Securities and Exchange
Commission.
"subsidiary" and
"subsidiary undertaking" have the meanings given by the Companies Act
1985.
"UK" or "United Kingdom" the United Kingdom of Great Britain and
Northern Ireland.
"US" or "United States" the United States of America, its possessions
and territories, all areas subject to its
jurisdiction or any subdivision thereof, any
State of the United States and the District of
Columbia.
"US$" or "US dollar" the lawful currency of the United States.
"US Holder" (i) an individual who is a citizen or resident
of the United States, (ii) a corporation or
partnership created or organised in or under
the laws of the US or any political
subdivision thereof, (iii) an estate the
income of which is subject to US federal
income taxation regardless of its source or
(iv) a trust which is subject to the
supervision of a court within the US and the
control of a US fiduciary as described in
section 7701(a) (30) of the Inland Revenue
Code.
"US Persons" US persons as described in Regulation S of the
US Securities Act.
"US Securities Act" the US Securities Act of 1933, amended, and
the rules and regulations promulgated
thereunder.
"(pound)" or "pounds
sterling" or "pence" the lawful currency of the United Kingdom.
