-- 40.3 per cent. to the volume-weighted average Closing Price of US$23.53 per Jardine Strategic Share over the six-month period ended 5 March 2021, being the last Business Day prior to this announcement.

It is expected that the Acquisition price will be paid by the end of April 2021.

Under the terms of the Implementation Agreement Jardine Strategic has undertaken not to declare or pay any dividend prior to the Acquisition Effective Date. 


   3.   Background to and reasons for the Acquisition

Jardine Matheson has today also announced its plans for the simplification of the parent company structure of the Group. This will result in a single holding company with a conventional ownership structure and a further increase in the Group's operational efficiency and financial flexibility.

In addition to the acquisition by Jardine Matheson, for cash, of the 15 per cent. of Jardine Strategic's issued share capital that Jardine Matheson or its wholly-owned subsidiaries do not already own, Jardine Matheson also announces its intention to subsequently cancel Jardine Strategic's 59 per cent. shareholding in Jardine Matheson.

Following the Acquisition, Jardine Matheson will own 100 per cent. of Jardine Strategic. Jardine Strategic currently owns 59 per cent. of Jardine Matheson.

Jardine Matheson intends to implement the cancellation of Jardine Strategic's 59 per cent. shareholding in Jardine Matheson following completion of the Acquisition (the "Share Cancellation"). The Share Cancellation will involve a separate legal process in relation to Jardine Matheson and the wholly-owned subsidiaries through which Jardine Strategic holds its interest in Jardine Matheson.

The origins of the current structure, in the form of cross-holdings in dual holding companies and majority interests in listed subsidiaries, lie in a series of restructurings in the 1980s. Since the formation of the cross-holding structure, Jardine Matheson has pursued a long term approach to the creation of shareholder value and further enhancing the Group's ownership positions through a series of share purchases and buybacks. This has been achieved while, at the same time, maintaining Jardine Matheson's financial strength and funding capacity.

The result is that, from a starting point of largely minority shareholding positions:

-- Jardine Matheson now owns 84.9 per cent. of Jardine Strategic while Jardine Strategic owns 59.3 per cent. of Jardine Matheson; and

-- Jardine Strategic owns 50.4 per cent. of Hongkong Land , 77.6 per cent. of Dairy Farm, 79.5 per cent. of Mandarin Oriental and 75 per cent. of Jardine Cycle & Carriage, the majority owner of Astra.

Both Jardine Matheson and Jardine Strategic have also developed other material businesses, both directly and indirectly owned.

Against this background, and with the benefits of attractive long term growth prospects in the Group's core businesses and strong financial resources, the board of directors of Jardine Matheson believes that the simplification of the Group's structure by way of the Acquisition and subsequent Share Cancellation (the "Simplification") is the next appropriate step in the evolution of Jardine Matheson's structure.

The board of directors of Jardine Matheson believes that the acquisition of the minority shareholdings in Jardine Strategic is the next appropriate step in the evolution of the Group and is in the interests of Jardine Strategic Shareholders as it will enable them to realise all of their investment in Jardine Strategic at an attractive premium in cash.

The Simplification will also bring significant benefits for Jardine Matheson shareholders by:

-- streamlining the Group's parent company structure to allow for a more transparent ownership model;

-- delivering a material enhancement in Jardine Matheson's earnings per share and supporting Jardine Matheson's dividend-paying capacity; and

-- increasing the Group's financial and operational flexibility by removing the cross-holding structure. 


   4.   Jardine Strategic Transaction Committee

The Jardine Strategic Transaction Committee, which has been so advised by Evercore Partners International LLP ("Evercore") as to the financial terms of the Acquisition, considers the terms of the Acquisition to be fair and reasonable insofar as Independent Jardine Strategic Shareholders are concerned. In providing financial advice to the Jardine Strategic Transaction Committee, Evercore has taken into account the commercial assessment of the Jardine Strategic Transaction Committee. The Jardine Strategic Transaction Committee is unanimously in favour of the Acquisition. 


   5.   Jardine Matheson's Undertaking

Under Bermuda law and Jardine Strategic's Bye-laws, the Acquisition must be approved by a majority of at least 75 per cent. of the votes cast by Jardine Strategic Shareholders. Jardine Matheson and its subsidiaries are entitled to vote on the Amalgamation Resolution and Jardine Matheson has undertaken to Jardine Strategic that it will vote, and will procure that its wholly-owned subsidiaries vote, the 940,903,135 Jardine Strategic Shares (representing 84.89 per cent. of the existing issued share capital of Jardine Strategic), held by Jardine Matheson and its wholly-owned subsidiaries in favour of the Amalgamation Resolution at the Special General Meeting. Hence the requisite Jardine Strategic Shareholders' approval is certain to be secured. 


   6.   2020 Preliminary Results Announcement

Jardine Matheson and Jardine Strategic will announce their 2020 Preliminary Results on 11 March 2021. Jardine Strategic's results are expected to be in line with market expectations, with Jardine Strategic's full year underlying net profit of US$1,094 million(1) .

The outlook for 2021 is uncertain, given the continuing impact of the pandemic. The Group's performance in the first part of the year is expected to be affected in particular by the continuing headwinds faced by our businesses in Southeast Asia and the ongoing low levels of Chinese mainland and other visitors to Hong Kong. While the full year impact on the Group's performance is unclear, we remain confident of our long term strategy which is rooted in the growth markets of Asia. 


   7.   Implementation Agreement

Jardine Matheson and Jardine Strategic have entered into an Implementation Agreement in relation to the implementation of the Acquisition and other related matters. The Implementation Agreement contains certain assurances and confirmations between the parties, including with respect to the implementation of the Amalgamation and regarding the conduct of the business of the Jardine Strategic Group in the period prior to the Acquisition Effective Date. The Implementation Agreement, together with the Amalgamation Agreement to be entered into between Jardine Strategic, JMH Investments and JMH Bermuda, also sets out the terms and conditions and means of effecting the Amalgamation as required by the Bermuda Companies Act. Completion of the Amalgamation is subject to satisfaction of the Conditions to the Acquisition set out in Appendix I. Certain key provisions of the Implementation Agreement are summarised below:

Conditionality

The Acquisition will be subject to the Conditions, including the approval of the Amalgamation Agreement by Jardine Strategic Shareholders at the Special General Meeting. Jardine Matheson and Jardine Strategic have agreed that if any of the Conditions set out in paragraph 1 of Appendix I are not satisfied before the Long-Stop Effective Date the Acquisition will not proceed. There is no unilateral right for either Jardine Matheson or Jardine Strategic to terminate the Implementation Agreement.

Pursuant to the Implementation Agreement, each of Jardine Matheson and Jardine Strategic has agreed, inter alia, to take or cause to be taken all such steps as are within its power and necessary to implement the Acquisition in accordance with, and subject to the terms and conditions of, the Implementation Agreement and, so far as is reasonably practicable, in accordance with an agreed indicative timetable.

Undertaking to vote in favour of Amalgamation Resolution

Jardine Matheson has also undertaken to Jardine Strategic that it will vote, and will procure that its wholly-owned subsidiaries vote, the 940,903,135 Jardine Strategic Shares (representing 84.89 per cent. of the existing issued share capital of Jardine Strategic) held by Jardine Matheson and its wholly-owned subsidiaries in favour of the Amalgamation Resolution at the Special General Meeting. 


   8.   Financing

Jardine Matheson intends to finance the Acquisition through an acquisition financing facility that it has put in place, as well as existing cash resources and available lines of credit. 


   9.   Description of the Amalgamation

The Acquisition will be effected by means of an amalgamation of JMH Bermuda (being an indirectly wholly-owned subsidiary of Jardine Matheson) and Jardine Strategic under the Bermuda Companies Act.

The Amalgamation will be subject to the Conditions and further terms referred to in Appendix I of this announcement and to be set out in the Circular.

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03-08-21 0215ET