(23/12/2004) New Almanij - KBC Group structure

Brussels, Antwerp, 23 December 2004 Today, 23 December 2004, the Boards of Directors of Almanij and KBC decided to submit to their respective extraordinary shareholder meetings on 2 March 2005, a proposal for the legal merger of Almanij and KBC through the acquisition of Almanij by KBC. Almanij shareholders will receive new (registered or bearer) shares proportionate to their existing shareholding in Almanij (exchange ratio: 1.35 KBC Bank and Insurance Holding Company shares for 1 Almanij share). Prior to the merger, Almanij will make an unconditional public cash tender offer for the ordinary shares (at 150 euros per share) and preference shares (at 135 euros per share) of Kredietbank S.A. Luxembourgeoise (KBL). The objective of the new structure is, on the one hand, to achieve complete unity of strategy, capital and management, enhance visibility and increase the free float and consequently share liquidity, and, on the other, to streamline the organizational structure, harness synergies between group companies, and ensure management continuity. The core shareholders of the group have renewed their commitment to the independent strategy, and will continue to ensure the stability that is necessary to realize this strategy. Provided the shareholders approve the merger, and subject to permission being obtained from the relevant governing bodies and regulatory authorities, the new KBC Group NV will come into being on 2 March 2005. Legal highlights The new Almanij-KBC structure has been proposed by both companies and will be achieved by means of a legal merger by acquisition (fusion juridique), with Almanij being acquired by the KBC Bank and Insurance Holding Company. Almanij shareholders will receive new (registered or bearer) shares proportionate to their existing shareholding in Almanij (exchange ratio : 1.35 KBC Bank and Insurance Holding Company shares for 1 Almanij share). There will be no cash consideration. Prior to the merger, Almanij will make an unconditional public cash tender offer in the Grand-Duchy of Luxembourg for the ordinary shares (at 150 euros per share) and preference shares (at 135 euros per share) of Kredietbank S.A. Luxembourgeoise (KBL) that are not already owned by the Group. The Almanij cash bid for KBL shares is a logical step in streamlining the Group structure. By way of the KBL tender offer, Almanij aims to give KBL shareholders the opportunity to sell their shares before the merger takes place. After the merger, KBC Group NV, via KBL, will apply for a delisting of KBL shares from the Luxembourg Stock Exchange. The offer period for the KBL tender offer is expected to begin on 31 January 2005 and to end on 14 February 2005. Application will be made for a listing of KBC Group NV on the Luxemburg Stock Exchange. If successful, the new structure will result in one integrated company, listed on Euronext, which will be called KBC Group NV. Its main entities will be: KBC Bank, KBC Insurance, KBL European Private Bankers, KBC Asset Management and Gevaert. KBC GROUP NV Over the past few months, Almanij and KBC have examined the possibility of carrying out structural changes within the Group. The conviction has grown that the companies involved, together with their customers, staff, agents, brokers, shareholders and partners, stand to gain significant advantages from a merger. The objective behind the new structure is, on the one hand, to achieve complete unity of strategy, capital and management, enhance visibility and increase the free float and consequently the liquidity of the share, and, on the other, to streamline the organizational structure, harness synergies between Group companies, and ensure management continuity. The core shareholders of the group have renewed their commitment to the independent strategy and will continue to foster the stability that is necessary to realize this strategy. The new structure will enhance the Group's profile by tying both private banking and private equity expertise more closely into an already successful bancassurance model. KBC Group NV will continue to maintain its core geographic focus on Belgium, Central Europe and the private banking network throughout Europe, with Central Europe and the European private banking network expected to remain long-term earnings drivers on the back of both macro growth in the region and further efficiency improvements. In order to support growth and profitability per activity and geographical area, the new legal structure will make optimal capital allocation possible within the Group, while aiming to maintain solid solvency levels and credit ratings. Strong solvency combined with enhanced profitability will help make it possible to pay a steadily growing dividend to all shareholders. KBC Group NV will have per 30 September 2004 pro forma net profit of 1 210 million euros, shareholders' equity of 12 billion euros, and an ROE of 14%. Its 52 000 employees will serve approximately 11 million customers. With an estimated market capitalization of around 21 billion euros, KBC Group NV will be one of the leading financial groups in Europe and one of the top Belgian companies. With the free float being increased from around 30% to around 47% and the liquidity of the KBC Group NV share being enhanced as a result, the KBC Group NV share will be more attractive to investors. This will in turn increase KBC Group NV's visibility both in the equity and debt capital markets and firmly put KBC Group NV in the select group of the top 10 banking shares in Euroland. Unity of management The new structure will result in the complete unity of management by streamlining the organizational structure and overall corporate governance. KBC Group NV's Executive Committee will consist initially of the CEOs of the three main group entities - KBC Insurance, KBC Bank, and KBL - and it will oversee the unity of strategy of the Group and provide for a group-wide risk management and ICT policy. Going forward, the Executive Committee will be organized along the main business lines, supported by a limited number of corporate staff functions. Mr. Willy Duron will be nominated for appointment as CEO, and Messrs. André Bergen and Etienne Verwilghen as members of the Executive Committee of KBC Group NV. Mr. Jan Huyghebaert will be nominated for appointment as Chairman of KBC Group NV's Board of Directors. Mr. Willy Breesch, currently Chairman of the Board of Directors of the KBC Bank and Insurance Holding Company, has reached retirement age and will step down in 2005. The main benefits of the new structure are expected to result from general strategy and policy being set by the unified management of KBC Group NV. Currently, the role of Almanij as a financial holding company controlling the individual corporate entities, KBC, KBL and Gevaert, is one of guidance and coordination of overall policy and resource allocation. The new unified management structure of KBC Group NV will enable much more direct management of these entities and will harness synergies in a number of areas. Synergy opportunities From the effective date of the merger, the management of KBC Group NV will launch projects to realize synergies in four areas where business overlaps exist: 1. First and foremost, the risk management, capital allocation and control functions will be organized at group level. In addition, other corporate staff functions will also be repositioned at group level. 2. The private banking activities of KBC Group NV will be put under a common management to ensure optimal leverage of available resources. Currently, private banking is the core business of KBL, through the European Private Bankers concept, whereas KBC Bank has developed its own branch-based private banking activities in Belgium. Cost synergies are expected in a limited number of functional areas, while additional revenue potential is anticipated, based upon the enlarged client base of KBC Group NV, the product complementarity and the brand-name recognition in certain geographic areas. 3. Likewise, the private equity activities of the Group will be reviewed, to assess the benefits from combining Gevaert's activities with those of KBC Investco in this field. It is KBC Group NV's intention to determine what financial and human resources need to be allocated to the field of private equity. 4. Finally, the real-estate activities of the Group will be reviewed. Here again, both Gevaert, through its Almafin subsidiary, and KBC, through its real-estate division, engage in activities in the same field. A comprehensive real-estate strategy will be developed, to determine what the specific focus areas will be, and the necessary means will be allocated to ensure the continued success of this business. All these projects are primarily focused on better deployment of existing resources and on creating additional revenue. Continued operational and shareholder stability KBC Group NV will continue to rely on its existing experienced management team and employees to deliver on its strategic ambitions as well as financial targets. Through the creation of a small executive committee with oversight of all the operating companies as well as centralized risk management and ICT policy, the overall risk profile of KBC GROUP NV will be improved through further diversification and a unified management. Upon the merger, Cera, Almancora, and the other committed shareholders will be joined by MRBB, which will become a party to the shareholders agreement. These core shareholders will continue to provide an anchor of stability, guaranteeing KBC Group NV's continued independence and allowing it to implement and execute its stated strategy. Management and the core shareholders share the conviction that the long-term commitment to KBC Group NV will continue to create the best possible conditions for the future strategic development of the activities of the Group. Therefore, the core shareholders wish to preserve the shareholder stability of KBC Group NV by maintaining their shareholding in KBC Group NV at a level representing a comfortable majority, i.e. upwards of 50%. Now that information on the merger is in the public domain, KBC Bank and Insurance Holding Company and Almanij - and KBC Group NV after the merger - may re-activate their existing (and approved) share repurchase programmes, within the applicable legal and regulatory framework. For further details, please contact: - May Van Bedts, Investor Relations, Almanij Tel. (32) 3.202.87.13 May.vanbedts@almanij.be - Philippe Verly, Press Contacts, Almanij Tel. (32) 3.202.87.14 Philippe.verly@almanij.be - Luc Cool, Investor Relations, KBC Tel. (32) 2.429.40.51 Luc.cool@kbc.com - Viviane Huybrecht, Press Contacts, KBC Tel. (32) 2.429.85.45 Viviane.huybrecht@kbc.be Attachements to the press release is available on http://www.companynewsgroup.com With regard to the proposed new structure, Almanij has been advised by Goldman Sachs and KBC by Citigroup Global Markets. KBL has been advised by JP Morgan. Indicative timetable Expected early January 2005 Approval by supervisory authorities and publication prospectus for cash bid for KBL Expected, starting 31 January 2005 Almanij's cash bid for KBL shares Expected, 14 February 2005 Publication of result of Almanij cash bid for KBL shares Expected, February 2005 Approval by supervisory authorities and publication of KBC Group NV listing prospectus 2 March 2005 EGMs: merger of Almanij N.V. and KBC Bank and Insurance Holding Company NV 28 April 2005 Annual Shareholders' Meeting of KBC Group NV Note for the editors: company profiles Almanij N.V. Almanij N.V. ("Almanij") is a diversified financial services group whose mission is to achieve profitable long-term growth for its shareholders through its ownership stakes in group companies. Almanij currently has three subsidiary companies and holds majority interests in each. The subsidiaries are KBC Bank and Insurance Holding Company ("KBC"), Gevaert and Kredietbank SA Luxembourgeoise ("KBL"). Almanij has a committed and stable group of shareholders: Almancora, Cera (a co-operative with close to half a million individual members), other committed shareholders and the Belgian farmers league (MRBB). Almanij is listed on Euronext. KBC Bank & Insurance Holding Company N.V. KBC, in which Almanij holds, directly and indirectly, a 69.40% interest at 30 September 2004, is a financial services group active in the fields of banking, insurance and asset management. Its target clients are individuals and small and medium-sized businesses. One of the top bancassurers in Belgium, KBC also has a key position in Central Europe, its second home market. KBC employs some 48 000 people and serves 11 million customers. KBL European Private Bankers KBL, in which Almanij holds, directly and indirectly, a 78.70% interest and controls 84.60% of the total voting rights at 30 September 2004, is a Luxembourg-based private banking group, with some 4 000 employees. At the end of 1996 and the beginning of 1997, KBL initiated a program of expansion and now has a presence in eleven European countries: Luxembourg (KBL), Germany (Merck Finck & Co, Privatbankiers), France (KBL France), Spain (Banco Urquijo), the United Kingdom (Brown, Shipley & Co), Ireland (KBL Bank Ireland), Italy (Fumagalli Soldan), Switzerland (Kredietbank (Suisse)), the Netherlands (Theodoor Gilissen Bankiers), Monaco (KB Luxembourg (Monaco)) and Belgium (Puilaetco Bankers). KBL Group European Private Bankers is an international network of banks and financial companies specialized in Private Banking. In support of and complementary to this activity, the KBL Group also offers investment fund services, and is also developing several niche activities in its various markets. Gevaert Almanij owns 100% of Gevaert, a well-known investment company in Belgium, whose largest current investment is in Agfa-Gevaert, a leader in the imaging industry. Gevaert has recently increasingly focused on investment opportunities in small to mid-cap companies (in Europe) and on providing private equity financing. Gevaert also holds a 100% participation in Almafin, a diversified financial services and real estate company. (C) CompanynewsGroup