adidas AG successfully places equity-neutral convertible bond
NOT FOR DISTRIBUTION OR RELEASE IN OR INTO THE UNITED STATES OF AMERICA, AUSTRALIA, CANADA OR JAPAN, OR ANY OTHER JURISDICTION IN WHICH OFFERS OR SALES OF THE SECURITIES WOULD BE PROHIBITED BY APPLICABLE LAW.
Today, adidas AG successfully placed a € 500 million equity-neutral convertible bond. The convertible bond has a term of five years and has a coupon of 0.05%. The offering was 2.7 times oversubscribed. The proceeds of the offering will be used for general corporate purposes and, as previously announced, to finance a portion of the multi-year share buyback program. Under the current program announced in March 2018, the company intends to buy back shares of up to € 3.0 billion in total until May 2021. Up until and including August 31, adidas has bought back 3.5 million shares worth € 677 million under the current program.
The issue price was fixed at 104% of the nominal value, corresponding to an annual yield to maturity of -0.73%. The nominal value of each convertible bond is € 200,000. The initial conversion price will represent a conversion premium of 40% above adidas’ share reference price. The share reference price will be determined as the arithmetic average of adidas’ daily volume-weighted average ordinary share price on XETRA over a period of ten consecutive trading days, from September 6 to September 19, 2018. The initial conversion price will be determined after market close at the end of the share reference price period. The share reference price and the initial conversion price will be announced through a final press release at the end of the share reference price period, expected to take place on or around September 19, 2018.
Through the convertible bond, investors can benefit from a positive performance of adidas’ ordinary shares. Investors will have conversion rights in respect to the convertible bond which will be settled in cash by reference to the share price. Due to the cash settlement, the issue and conversion of the convertible bond will not result in the issuance of any new shares of adidas nor will adidas be required to deliver existing shares. Concurrently, adidas is purchasing call options over adidas ordinary shares to fully hedge the economic exposure of adidas to pay cash amounts under the convertible bond upon any exercise of conversion rights by investors.
The convertible bond was offered through an accelerated book building process. Settlement and closing are expected on September 12, 2018. adidas intends to apply for the convertible bond to be included in the Open Market (Freiverkehr) segment of the Frankfurt Stock Exchange.
Citigroup Global Markets Limited is acting as Sole Global Coordinator, and, together with HSBC, Deutsche Bank AG, BofAMerrill Lynch and Unicredit AG, as Joint Bookrunners for the offering.
It is anticipated that adidas’ counterparties to the call options will hedge their positions through the purchase or sale of adidas shares, or any other transactions.
ADDITIONAL NOTE
This announcement is for information purposes only and does not constitute, contain or form part of, and should not be construed as, an offer or an invitation to sell, or issue or the solicitation of any offer to buy or subscribe for, any securities. In connection with this transaction there has not been, nor will there be, any public offering of the Bonds. No prospectus will be prepared in connection with the offering of the Bonds. The Bonds may not be offered to the public in any jurisdiction under circumstances which would require the issuer of the Bonds to prepare or register any prospectus or offering document relating to the Bonds in such jurisdiction.
The distribution of this announcement and the offer and sale of the Bonds in certain jurisdictions may be restricted by law. Any persons reading this announcement should inform themselves of and observe any such restrictions.
This announcement does not constitute an offer to sell or a solicitation of an offer to purchase any securities in the United States. Any securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), or the laws of any state within the U.S., and may not be offered or sold in the United States absent registration or an applicable exemption from registration or in a transaction not subject to the registration requirements of the Securities Act. There will be no offering of the securities in the United States. This announcement and the information contained herein may not be distributed or sent into the United States, or in any other jurisdiction in which offers or sales of the securities described herein would be prohibited by applicable laws and should not be distributed to publications with a general circulation in the United States. The Bonds are being offered and sold outside the United States only in reliance on Regulation S under the Securities Act.
The offer referred to herein when made in member states of the European Economic Area ("EEA") which have implemented the Prospectus Directive (each, a "relevant member state"), is only addressed to and directed at persons who are "qualified investors" as defined in the Prospectus Directive ("Qualified Investors"). For these purposes, the expression "Prospectus Directive" means Directive 2003/71/EC (and amendments thereto, including by Directive 2010/73/EU, as amended).
In the United Kingdom, this announcement is only being distributed to and is only directed at (i) persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") and (ii) high net worth entities falling within Article 49(2) of the Order and (iii) persons to whom it would otherwise be lawful to distribute it (all such persons together being referred to as "relevant persons"). The Bonds are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such Bonds will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this announcement or any of its contents.
Solely for the purposes of each manufacturer’s product approval process, the target market assessment in respect of the Bonds has led to the conclusion that: (i) the target market for the Bonds is eligible counterparties and professional clients only, each as defined in Directive 2014/65/EU (as amended, "MiFID II"); and (ii) all channels for distribution of the Bonds to eligible counterparties and professional clients are appropriate. Any person subsequently offering, selling or recommending the Bonds (a "distributor") should take into consideration the manufacturer’s target market assessment; however, a distributor subject to MiFID II is responsible for undertaking its own target market assessment in respect of the Bonds (by either adopting or refining the manufacturer’s target market assessment) and determining appropriate distribution channels.
The Bonds are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the EEA. For these purposes, a "Retail Investor" means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU ("MIFID II"); (ii) a customer within the meaning of Directive 2002/92/EC ("IMD"), where that customer would not qualify as a professional client as defined in point (10) of article 4(1) of MIFID II; or (iii) not a Qualified Investor as defined in the Prospectus Directive.
None of the Joint Bookrunners or any of their respective directors, officers, employees, advisers or agents accepts any responsibility or liability whatsoever for or makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to adidas or any of its subsidiaries or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of this announcement or its contents or otherwise arising in connection therewith.
The Joint Bookrunners are acting exclusively for adidas and no one else in connection with the offering. They will not regard any other person as their respective clients in relation to the offering and will not be responsible to anyone other than adidas for providing the protections afforded to their respective clients, nor for providing advice in relation to the offering, the contents of this announcement or any transaction, arrangement or other matter referred to herein.
In connection with the offering, the Joint Bookrunners and any of their affiliates, acting as investors for their own accounts, may subscribe for or purchase bonds of adidas and in that capacity may retain, purchase, sell, offer to sell or otherwise deal for their own accounts in such Bonds and other securities of adidas or related investments in connection with this Bonds offering or otherwise. The Joint Bookrunners do not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.