Recommended Mandatory Cash Offer by KSE, UK, Inc. ("KSE") for Arsenal Holdings PLC ("Arsenal")

Summary
The Boards of KSE and Arsenal are pleased to announce that they have agreed the terms of a recommended mandatory cash offer to be made by KSE for Arsenal (the "Offer").

  • For each Arsenal Share, Arsenal Shareholders will receive £11,750 in cash.
  • The Offer values the entire issued share capital of Arsenal at approximately £731 million.
  • KSE is a Delaware corporation wholly-owned by Mr E. Stanley Kroenke.
  • KSE has entered into a call and put option agreement with DF Nominees (the company holding Mr Daniel David Fiszman's interests in Arsenal Shares) in respect of 10,025 Arsenal Shares, representing approximately 16.11 per cent. of the issued share capital of Arsenal.
  • In addition, KSE has received irrevocable undertakings to accept the Offer from Lady Nina Bracewell-Smith and the Arsenal Directors who hold Arsenal Shares (other than Mr Fiszman and Mr Kroenke) in respect of all the Arsenal Shares which they hold, representing in aggregate 10,448 Arsenal Shares (approximately 16.79 per cent. of the issued share capital of Arsenal).
  • Taking into account KSE's existing holding of 18,656 Arsenal Shares (representing approximately 29.99 per cent. of the issued share capital of Arsenal), the call and put option agreement referred to above, and the irrevocable undertakings it has received, KSE now has an interest in or commitments over a total of 39,129 Arsenal Shares, representing approximately 62.89 per cent. of the issued share capital of Arsenal.
  • The Offer will be made in accordance with Rule 9 of the Takeover Code and will be conditional only upon KSE receiving acceptances which will result in KSE and its concert parties holding more than 50 per cent. of the Arsenal Shares. 
  • The Offer will include a Loan Note Alternative.

Mr Kroenke, President of KSE, said:
"We are excited about the opportunity to increase our involvement with and commitment to Arsenal. Arsenal is a fantastic Club with a special history and tradition and a wonderful manager in Arsène Wenger. We intend to build on this rich heritage and take the Club to new success. I am delighted that Peter Hill-Wood has agreed to support us by continuing as Chairman.

We especially wish to acknowledge and thank the Board, Danny Fiszman and the Fiszman family as well as Lady Nina Bracewell-Smith and her family for the confidence they have had in me over the past years and in allowing us to move forward in this more prominent role."

Peter Hill-Wood, Chairman of Arsenal, said:
"The Board of Directors and I consider it a key responsibility to protect the ethos and spirit of the Club. Mr Kroenke, although relatively new to Arsenal, has shown himself to be a man who values and respects the history and traditions of this very special Club that we cherish. We are confident that he will be a safe custodian of its future.

At this time of transition I would like to pay particular tribute to Danny Fiszman for his immense contribution. Danny's vision and drive led the relocation to our new stadium, an historic move which will benefit the Club and its many passionate fans long into the future.

I would like to pay tribute to the important and long-standing role that the Bracewell-Smith family have played in Arsenal's history. The family have been staunch supporters of the Club for over 70 years and the Club is significantly indebted to them for the role that they have played in its development and success. We will be considering appropriate ways to mark this long and valued contribution."

Arsène Wenger, Manager of Arsenal, said:
"I have worked with Stan Kroenke at board meetings over the past couple of years and I believe he has the best interests of Arsenal at heart. He understands the Club's heritage and traditions and our ambition to run the Club in a way which protects our long term future."

This summary should be read in conjunction with the following announcement and the Appendices. The Offer will be subject to the condition set out in Appendix 1.

This announcement is not intended to, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities pursuant to the Offer or otherwise. The Offer will be made solely by the Offer Documentation, when issued, which will contain the full terms of the Offer, including details of how the Offer may be accepted. Any decision in respect of, or other response to, the Offer should be made only on the basis of information contained in the Offer Documentation.

The condition to, and certain further terms of, the Offer are set out in Appendix 1. Details of undertakings received by KSE are set out in Appendix 2. Certain definitions and terms used in this announcement are set out in Appendix 3.

Deutsche Bank AG is authorised under German Banking Law (competent authority: BaFin - Federal Financial Supervisory Authority) and authorised and subject to limited regulation by the Financial Services Authority. Details about the extent of Deutsche Bank AG's authorisation and regulation by the Financial Services Authority are available on request. Deutsche Bank AG, London Branch is acting as financial adviser to Mr Kroenke and KSE and no one else in connection with the contents of this announcement and the Offer and will not be responsible to anyone other than Mr Kroenke and KSE for providing the protections afforded to clients of Deutsche Bank AG, London Branch, nor for providing advice in relation to the Offer or any matters referred to herein.

Rothschild, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Arsenal and no one else in connection with the Offer and will not be responsible to anyone other than Arsenal for providing the protections afforded to clients of Rothschild nor for giving advice in relation to the Offer or any matter or arrangement referred to in this announcement.

In accordance with Rule 2.10 of the Takeover Code, the current issued equity share capital of Arsenal comprises 62,217 ordinary shares of £1 each. The ISIN for those securities is GB0030895238.

Please be aware that addresses and certain other information provided by Arsenal Shareholders, persons with information rights and other relevant persons for the receipt of communications from Arsenal may be provided to KSE during the Offer Period as required under Section 4 of Appendix 4 of the Takeover Code.

Disclosure requirements of the Takeover Code
Under Rule 8.3(a) of the Takeover Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any paper offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any paper offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any paper offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a paper offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Takeover Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any paper offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any paper offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a paper offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. If you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure, you should contact the Takeover Panel's Market Surveillance Unit on +44 (0)20 7638 0129.

Overseas jurisdictions
This announcement has been prepared in accordance with English law and the Takeover Code and information disclosed may not be the same as that which would have been prepared in accordance with the laws of jurisdictions outside England.

The Offer will be subject to the applicable rules and regulations of the Takeover Panel and the PLUS Stock Exchange.

The distribution of this announcement in jurisdictions other than the United Kingdom and the availability of the Offer to Arsenal Shareholders who are not resident in the United Kingdom may be affected by the laws of relevant jurisdictions. Therefore any persons who are subject to the laws of any jurisdiction other than the United Kingdom or Arsenal Shareholders who are not resident in the United Kingdom will need to inform themselves about, and observe, any applicable requirements.

Unless otherwise determined by KSE or required by the Takeover Code and permitted by applicable law and regulation, the Offer is not being, and will not be, made, directly or indirectly, in or into or by the use of the mails of, or by any other means or instrumentality (including, without limitation, electronic mail, facsimile transmission, telex, telephone, internet or other forms of electronic communication) of interstate or foreign commerce of, or any facility of a national state or other securities exchange of any Restricted Jurisdiction and will not be capable of acceptance by any such use, means, instrumentality or facility or from within any Restricted Jurisdiction.

Accordingly, unless otherwise determined by KSE or required by the Takeover Code and permitted by applicable law and regulation, copies of this announcement are not being, and must not be, directly or indirectly, mailed, transmitted or otherwise forwarded, distributed or sent in, into or from any Restricted Jurisdiction and persons receiving this announcement (including, without limitation, custodians, nominees and trustees) must not mail or otherwise forward, distribute or send it in, into or from such jurisdiction. Any person (including, without limitation, any custodian, nominee and trustee) who would, or otherwise intends to, or who may have a contractual or legal obligation to, forward this announcement and/or the Offer Document and/or any other related document to any jurisdiction outside the United Kingdom should inform themselves of, and observe, any applicable legal or regulatory requirements of their jurisdiction.

The Loan Notes to be issued pursuant to the Loan Note Alternative have not been, and 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 laws of any state, district or other jurisdiction, of the United States, nor have clearances been, nor will they be, obtained from the securities commission or similar authority of any province or territory of Canada and no prospectus has been, or will be, filed, or registration made, under any securities law of any province or territory of Canada, nor has a prospectus in relation to the Loan Notes been, nor will one be, lodged with, or registered by, the Australian Securities and Investments Commission, nor have any steps been taken, nor will any steps be taken, to enable the Loan Notes to be offered in compliance with applicable securities laws of Japan and no regulatory clearances in respect of the Loan Notes have been, or will be, applied for in any other jurisdiction. Accordingly, unless an exemption under relevant securities laws is available, the Loan Notes are not being, and may not be, offered, sold, resold, delivered or distributed, directly or indirectly, in, into or from the United States or any other Loan Note Restricted Jurisdiction or to, or for the account or benefit of, any US Person or resident of any other Loan Note Restricted Jurisdiction. The Offer does not constitute an offer of Loan Notes in the United States. Neither the US Securities and Exchange Commission nor any US state securities commission has approved or disapproved of the Loan Notes, or determined if this announcement is accurate or complete. Any representation to the contrary is a criminal offence.

Forward-looking statements
This announcement, including information included or incorporated by reference in this announcement, may contain "forward looking statements" concerning Mr Kroenke, KSE and the Arsenal Group. Generally, the words "will", "may", "should", "continue", "believes", "expects", "intends", "anticipates" or similar expressions identify forward looking statements. The forward looking statements involve risks and uncertainties that could cause actual results to differ materially from those suggested by them. Many of these risks and uncertainties relate to factors that are beyond the companies' abilities to control or estimate precisely, such as future market conditions and the behaviours of other market participants, and therefore undue reliance should not be placed on such statements which speak only as at the date of this announcement. None of Mr Kroenke, KSE nor the Arsenal Group assume any obligation to, and do not intend to, update these forward looking statements, except as required pursuant to applicable law.

Nothing in this announcement is intended, or is to be construed, as a profit forecast or to be interpreted to mean that earnings per Arsenal Share for the current or future financial years will necessarily match or exceed the historical published earnings per Arsenal Share.

Publication on website
This announcement will be available on KSE's website at www.pepsicenter.com/kseukinc and Arsenal's website at www.arsenal.com/home by no later than 12 noon on 12 April 2011 and will remain there during the course of the Offer. The contents of the websites referred to in this announcement are not incorporated into and do not form part of this announcement.

Recommended Mandatory Cash Offer by KSE, UK, Inc. ("KSE") for Arsenal Holdings PLC ("Arsenal")

1. Introduction
The Boards of KSE and Arsenal are pleased to announce that they have agreed the terms of a recommended mandatory cash offer to be made by KSE for Arsenal.

KSE, a Delaware corporation wholly-owned by Mr E. Stanley Kroenke, has entered into a call and put option agreement with DF Nominees, (the company holding Mr Daniel David Fiszman's interests in Arsenal Shares) in respect of 10,025 Arsenal Shares, representing approximately 16.11 per cent. of the issued share capital of Arsenal.

In addition, KSE has received irrevocable undertakings to accept the Offer from Lady Nina Bracewell-Smith and the Arsenal Directors who hold Arsenal Shares (other than Mr Fiszman and Mr Kroenke) in respect of all the Arsenal Shares which they hold, representing in aggregate 10,448 Arsenal Shares (approximately 16.79 per cent. of the issued share capital of Arsenal).

Taking into account KSE's existing holding of 18,656 Arsenal Shares (representing approximately 29.99 per cent. of the issued share capital of Arsenal), the call and put option agreement referred to above, and the irrevocable undertakings it has received, KSE now has an interest in or commitments over a total of 39,129 Arsenal Shares, representing approximately 62.89 per cent. of the issued share capital of Arsenal.

2. The Offer
The Offer, which will be on the terms and subject to the condition set out below and in Appendix 1, and to be set out in the Offer Document and the Form of Acceptance, will be made on the following basis:

THE OFFER
For each Arsenal share £11,750 in cash

The Offer values the entire issued share capital of Arsenal at approximately £731 million.

As KSE and its concert party are interested in excess of 30 per cent. of the issued share capital of Arsenal, the Offer will be made in accordance with Rule 9 of the Takeover Code. Accordingly, the Offer will be conditional only upon KSE receiving acceptances which will result in KSE and its concert party holding more than 50 per cent. of the Arsenal Shares.

3. The Loan Note Alternative
As an alternative to any or all of the cash consideration of £11,750 per Arsenal Share to which they would otherwise be entitled under the Offer, Arsenal Shareholders who validly accept the Offer (other than US Persons and certain overseas shareholders) will be able to elect to receive Loan Notes to be issued by KSE on the following basis:

The Loan Note Alternative
For every £1 of cash consideration £1 nominal of Loan Notes

The Loan Notes, which will be issued by KSE and governed by English law, will be unsecured and issued, credited as fully paid, in amounts and integral multiples of £1 nominal value. The Loan Notes will constitute direct, unsecured, general and unconditional obligations of KSE, and the Loan Notes will be guaranteed for a certain period.

The Loan Notes will bear interest (from the date of issue to the relevant holder of Loan Notes), at a rate of 0.25 per cent. per annum below LIBOR, payable semi annually in arrears on 30 June and 31 December in each year (or in either case if not a business day, on the next business day) (each, an "Interest Payment Date").

The Loan Notes will on not less than 30 days' notice be redeemable at par (together with accrued interest) and at the holder's option, in part or in whole, on (a) the later of 12 months following the date on which the Offer is declared unconditional and the date falling 6 months from the date of issue of the relevant Loan Notes, and (b) on each Interest Payment Date thereafter. Unless previously redeemed or purchased, the Loan Notes will be redeemed on the fifth anniversary of the issue of the first Loan Note (or, if not a business day, on the first business day thereafter).

The Loan Notes will not be transferable and no application will be made for the Loan Notes to be listed or dealt in on any stock exchange.

The Loan Note Alternative is conditional on the Offer becoming or being declared unconditional.

Deutsche Bank has advised that, based on market conditions on 8 April 2011, being the Business Day prior to the date of this announcement, their estimate of the value of the Loan Notes (had they been in issue on that day) would have been not less than 98 pence per £1 nominal value.

The Loan Note Alternative will remain open for so long as the Offer remains open for acceptance.

4. Confirmations to the Board of Arsenal
Mr Kroenke and KSE have confirmed to the Board of Arsenal that:

  • it is their current intention that, if the Offer becomes or is declared unconditional, KSE will not seek to delist the Arsenal Shares from the PLUS markets, even if it acquires sufficient shares pursuant to the Offer to enable it to do so (unless Arsenal's PLUS corporate adviser advises at any time there is not sufficient liquidity in Arsenal Shares to maintain an orderly market in the shares);
  • there is no current expectation that sufficient acceptances of the Offer will be received such that the statutory thresholds in the Companies Act for squeezing-out minority shareholders will be reached (in which case non-accepting shareholders would not be required to sell their Arsenal Shares); however, KSE recognises that, in the event that the relevant statutory thresholds are reached, it may be required to buy out minority shareholders, and in these circumstances it may enforce the compulsory acquisition provisions which would force minority shareholders to sell their shares;
  • it is their current intention that, if the Offer becomes or is declared unconditional, they will continue to support and adhere to the self-sustaining business model hitherto pursued by the Board of Arsenal;
  • it is their current intention that, if the Offer becomes or is declared unconditional, existing employment rights of the executive management team and the employees of Arsenal will be fully safeguarded, and the current Board of Arsenal will be invited to remain in place, to assist in ensuring future success on and off the pitch; and
  • the Offer will not be funded by way of any debt finance (banks loans, payment in kind loans or other debt or quasi-debt interest bearing obligations) for which the payment of interest on, repayment of or security for any liability (contingent or otherwise) will depend on the business of Arsenal.

5. Information relating to Mr Kroenke
Mr Kroenke is an American businessman who has a portfolio of high-performing, well managed sporting assets. These teams include the St. Louis Rams of the National Football League ("NFL"), the Denver Nuggets of the National Basketball Association ("NBA"), the Colorado Avalanche of the National Hockey League ("NHL") and the Colorado Rapids of Major League Soccer, in all of which Mr Kroenke has been a long-term investor or owner.

Mr Kroenke acquired a 40 per cent. stake in the St. Louis Rams in 1995, as the NFL returned to St. Louis. He received unanimous approval by NFL owners in 2010 to purchase the remaining 60 per cent. of the franchise. The St. Louis Rams were one of the most improved teams in the NFL this past season.

Mr Kroenke has owned the Denver Nuggets and the Colorado Avalanche since 2000. Under Mr Kroenke's ownership the Colorado Avalanche won the NHL Stanley Cup championship in 2001, sold out more than 400 consecutive contests at one point and reached the postseason in seven of the past 10 years. The Denver Nuggets are one of only three NBA teams to make the playoffs over the past eight seasons, whilst the Colorado Rapids are the defending Major League Soccer Champions. All Mr Kroenke's sports investments have enjoyed stability and growth under his ownership.

Mr Kroenke has always made it a priority to invest not only in the sports teams themselves, but also the communities which surround and support them. This has included constructing the state-of-the-art Dick's Sporting Goods Park sports complex in the metropolitan Denver area, acquiring the Pepsi Center, the home arena for the Denver Nuggets and the Colorado Avalanche, and creating Altitude Sports & Entertainment, a 24-hour regional sports and entertainment network which televises nearly every regular-season game for the Denver Nuggets, the Colorado Avalanche and the Colorado Rapids. The award-winning network has 3.3 million subscribers in its 10-state territory.

Mr Kroenke originally invested in Arsenal in April 2007, and has built his stake through further acquisitions of shares. He became a member of the Board of Arsenal in September 2008, and has been a director since then. Mr Kroenke believes that, should the Offer be accepted by Arsenal Shareholders, it will provide Arsenal with continued stability from an individual who not only understands and greatly respects the history and traditions of Arsenal, but who also has a proven record of successful long-term investment in sport.

Throughout his sports investments, Mr Kroenke has made a priority of working hard to ensure that his teams compete for postseason appearances and championships in a responsible and self-sustaining economic manner. He is focussed on maintaining Arsenal's position as a top-flight football club, and he intends to use his experience to help Arsenal continue to grow its global brand and fanbase, and to enjoy further success on the pitch.

6. Information relating to KSE
KSE is a corporation incorporated in the State of Delaware, USA, for the purposes of acting as a holding company for the ownership of Arsenal Shares and shares in Arsenal Broadband Limited, and is wholly-owned and controlled by Mr Kroenke. Mr Kroenke is the sole director of KSE. Further details in relation to KSE will be contained in the Offer Document.

7. Information relating to Arsenal
Arsenal is an English professional football club based in North London. The Club is one of the most famous teams in Europe, and boasts a record of sporting success. Arsenal has been Champions of the top tier of English football on 13 occasions, including 3 times during the Premier League era. The Club has won the FA Cup 10 times, the last of which was in 2005, and the League Cup twice. In European competition the Club won the European Fairs Cup in 1970 and the European Cup Winners' Cup in 1994, whilst finishing runners up in the UEFA Champions League in 2006 and qualifying for the last 16 of the UEFA Champions League in each of the last 11 seasons. Arsenal also boasts two particular domestic records of note: being the Club with the longest unbroken period in the top division of English football (84 seasons as at season 2010/11), and the longest run of league matches unbeaten (49, which included the famous "Invincibles" season of 2003/04).

In recent years the Club has become renowned for playing a particularly stylish brand of football and has developed a reputation for finding and developing young players who go on to become internationally renowned footballers either at Arsenal or at other clubs.

In 2006, Arsenal moved from their historic Highbury Stadium to a new development at Ashburton Grove, which has become known as Emirates Stadium. The stadium has become a fitting stage for the quality of football which Arsenal continue to play, and the recent "Arsenalisation" of the stadium has been well-received by supporters who have been helped to feel at home in the new arena.

Arsenal's consistently high levels of playing performance, in part helped by the revenue generated by the new stadium, has generated financial results which have ensured that the Club remains at the top tier of global club football.

8. Background to and reasons for the Offer
Mr Kroenke originally invested in Arsenal in April 2007. Since that initial investment Mr Kroenke has increased both his stake and his involvement, and was invited to join the Board of Arsenal in September 2008.

Mr Kroenke's experience at Arsenal and his relationships with its Board and management team have given him first-hand knowledge of the Club, and a sound understanding of the underlying business. Mr Kroenke believes that the self-sustaining model which is currently followed is the most effective way to ensure the longevity of Arsenal, whilst maintaining its unique history and traditions.

By virtue of entering into the Option Agreement, as at the date of this announcement KSE and its concert party are interested in approximately 46.10 per cent. of the issued share capital of Arsenal. Rule 9 of the Takeover Code requires a person who (together with its concert parties) is interested in 30 per cent. or more of a public company to make a mandatory cash offer in accordance with the terms of Rule 9.

9. Financing of the Offer
Full acceptance of the Offer would involve payment by KSE of approximately £394 million in cash (if all Arsenal shareholders elect not to accept the Loan Note Alternative).

Deutsche Bank, financial adviser to Mr Kroenke and KSE, is satisfied that sufficient resources are available to KSE to satisfy in full the cash consideration payable to Arsenal Shareholders under the terms of the Offer.

10. Further terms of the Offer
The Arsenal Shares will be acquired pursuant to the Offer fully paid and free from all liens, charges, equities, encumbrances, rights of pre emption and any other interests of any nature whatsoever and together with all rights now or hereafter attaching thereto, including without limitation voting rights and the right to receive and retain in full all dividends and other distributions (if any) declared, made or paid on or after 11 April 2011.

11. The Option Agreement
Pursuant to the terms of the Option Agreement, DF Nominees has granted to KSE a call option (the "Call Option") to purchase all the Arsenal Shares held by DF Nominees (the "Option Shares"), and KSE has granted to DF Nominees a put option (the "Put Option", and, together with the Call Option, the "Options") to sell, and to require KSE to acquire, the Option Shares. The Call Option would be exercisable within twenty business days following the death of Mr Fiszman, and if such call option is not exercised within the prescribed period, such call option will lapse. The Put Option is exercisable within twenty days of the lapse of the Call Option, and will lapse if not exercised within the prescribed period. The purchase price of each of the Option Shares, under both the Call Option and the Put Option, is £11,750. Mr Kroenke has guaranteed the obligations of KSE, and Mr Fiszman has guaranteed the obligations of DF Nominees, in each case under the Option Agreement.

If, by the third anniversary of the date of the Option Agreement, neither Option has been exercised or has not lapsed pursuant to the foregoing, the Options shall automatically terminate.

DF Nominees and Mr Fiszman have agreed (a) not to acquire any Arsenal Shares (or make any agreement or arrangement to acquire any Arsenal Shares) until 6 months after the Offer becomes or is declared unconditional or lapses; and (b) to certain restrictions on the transfer or encumbrance of the Option Shares in the period until the Options are exercised or lapse. KSE's rights to acquire the Option Shares would survive any such transfer or encumbrance. KSE has agreed to a 12 month lock-up in respect of any Option Shares it acquires pursuant to the Option Agreement from the date on which the Offer closes for acceptance.

12. Irrevocable undertakings
KSE has received irrevocable undertakings to accept (or procure acceptances of) the Offer, including from Lady Nina Bracewell-Smith and the Arsenal Directors who hold Arsenal Shares (other than Mr Fiszman and Mr Kroenke) in respect of all the Arsenal Shares which they hold, representing in aggregate 10,448 Arsenal Shares (approximately 16.79 per cent. of the issued share capital of Arsenal). These irrevocable undertakings cease to be binding only in the event that:

  • the Offer Document is not published within 28 days of this announcement;
  • the Offer closes, lapses or is withdrawn; or
  • the Offer has not become or been declared unconditional by a specified long-stop date.

Further details of these irrevocable undertakings to accept (or procure acceptances of) the Offer are set out in Appendix 2 of this announcement.

The lock-down agreement between certain of the Arsenal Directors has been terminated.

13. Confirmation regarding Opening Position Disclosure
KSE confirms that it is, on the date of this announcement, making an Opening Position Disclosure, setting out the details required to be disclosed by it under Rule 8.1(a) of the Takeover Code. The Opening Position Disclosure does not include all relevant details in respect of KSE's concert parties and KSE confirms that, in the event further disclosure is required in accordance with Rule 8.1(a) and Note 2(a)(i) on Rule 8, it will be made as soon as possible.

14. Recommendation
In deciding whether or not to recommend the Offer, the Arsenal Independent Directors have considered the confirmations provided by Mr Kroenke and KSE as well as the Offer price. In light of all of these factors the Arsenal Independent Directors, who have been so advised by Rothschild, consider the terms of the Offer to be fair and reasonable. In providing advice to the Arsenal Independent Directors, Rothschild has taken into account the commercial assessments of the Arsenal Independent Directors.

Accordingly, the Arsenal Independent Directors intend to unanimously recommend that Arsenal Shareholders accept the Offer, as the Arsenal Independent Directors have irrevocably undertaken to do in respect of their own shareholdings amounting, in aggregate, to 555 Arsenal Shares (representing 0.89 per cent. of Arsenal's existing issued share capital).

15. General
The Offer will be on the terms and subject to the condition set out herein and in Appendix 1, and to be set out in the Offer Document and Form of Acceptance. The formal Offer Document giving financial and other information in relation to KSE will be sent to shareholders of Arsenal in due course at no cost to them.

This announcement does not constitute an offer or an invitation to purchase or subscribe for any securities nor shall there be any purchase solicitation, sale or exchange of securities in any jurisdiction in which such offer, solicitation, sale or exchange would be unlawful prior to the registration or qualification under the laws of such jurisdiction. The Offer will be made solely by the Offer Documentation, when issued, which will contain the full terms of the Offer, including details of how the Offer may be accepted. Any decision in respect of, or other response to, the Offer should be made only on the basis of the information in the Offer Documentation.

Deutsche Bank AG is authorised under German Banking Law (competent authority: BaFin - Federal Financial Supervisory Authority) and authorised and subject to limited regulation by the Financial Services Authority. Details about the extent of Deutsche Bank AG's authorisation and regulation by the Financial Services Authority are available on request. Deutsche Bank AG, London Branch is acting as financial adviser to Mr Kroenke and KSE and no one else in connection with the contents of this announcement and the Offer and will not be responsible to anyone other than Mr Kroenke and KSE for providing the protections afforded to clients of Deutsche Bank AG, London Branch, nor for providing advice in relation to the Offer or any matters referred to herein.

Rothschild, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Arsenal and no one else in connection with the Offer and will not be responsible to anyone other than Arsenal for providing the protections afforded to clients of Rothschild nor for giving advice in relation to the Offer or any matter or arrangement referred to in this announcement.

Please be aware that addresses and certain other information provided by Arsenal Shareholders, persons with information rights and other relevant persons for the receipt of communications from Arsenal may be provided to KSE during the Offer Period as required under Section 4 of Appendix 4 of the Takeover Code.

Disclosure requirements of the Takeover Code
Under Rule 8.3(a) of the Takeover Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any paper offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any paper offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any paper offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a paper offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Takeover Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any paper offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any paper offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a paper offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. If you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure, you should contact the Takeover Panel's Market Surveillance Unit on +44 (0)20 7638 0129.

Overseas jurisdictions
This announcement has been prepared in accordance with English law and the Takeover Code and information disclosed may not be the same as that which would have been prepared in accordance with the laws of jurisdictions outside England.

The Offer will be subject to the applicable rules and regulations of the Takeover Panel and the PLUS Stock Exchange.

The distribution of this announcement in jurisdictions other than the United Kingdom and the availability of the Offer to Arsenal Shareholders who are not resident in the United Kingdom may be affected by the laws of relevant jurisdictions. Therefore any persons who are subject to the laws of any jurisdiction other than the United Kingdom or Arsenal Shareholders who are not resident in the United Kingdom will need to inform themselves about, and observe, any applicable requirements.

Unless otherwise determined by KSE or required by the Takeover Code and permitted by applicable law and regulation, the Offer is not being, and will not be, made, directly or indirectly, in or into or by the use of the mails of, or by any other means or instrumentality (including, without limitation, electronic mail, facsimile transmission, telex, telephone, internet or other forms of electronic communication) of interstate or foreign commerce of, or any facility of a national state or other securities exchange of any Restricted Jurisdiction and will not be capable of acceptance by any such use, means, instrumentality or facility or from within any Restricted Jurisdiction.

Accordingly, unless otherwise determined by KSE or required by the Takeover Code and permitted by applicable law and regulation, copies of this announcement are not being, and must not be, directly or indirectly, mailed, transmitted or otherwise forwarded, distributed or sent in, into or from any Restricted Jurisdiction and persons receiving this announcement (including, without limitation, custodians, nominees and trustees) must not mail or otherwise forward, distribute or send it in, into or from such jurisdiction. Any person (including, without limitation, any custodian, nominee and trustee) who would, or otherwise intends to, or who may have a contractual or legal obligation to, forward this announcement and/or the Offer Document and/or any other related document to any jurisdiction outside the United Kingdom should inform themselves of, and observe, any applicable legal or regulatory requirements of their jurisdiction.

The Loan Notes to be issued pursuant to the Loan Note Alternative have not been, and 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 laws of any state, district or other jurisdiction, of the United States, nor have clearances been, nor will they be, obtained from the securities commission or similar authority of any province or territory of Canada and no prospectus has been, or will be, filed, or registration made, under any securities law of any province or territory of Canada, nor has a prospectus in relation to the Loan Notes been, nor will one be, lodged with, or registered by, the Australian Securities and Investments Commission, nor have any steps been taken, nor will any steps be taken, to enable the Loan Notes to be offered in compliance with applicable securities laws of Japan and no regulatory clearances in respect of the Loan Notes have been, or will be, applied for in any other jurisdiction. Accordingly, unless an exemption under relevant securities laws is available, the Loan Notes are not being, and may not be, offered, sold, resold, delivered or distributed, directly or indirectly, in, into or from the United States or any other Loan Note Restricted Jurisdiction or to, or for the account or benefit of, any US Person or resident of any other Loan Note Restricted Jurisdiction. The Offer does not constitute an offer of Loan Notes in the United States. Neither the US Securities and Exchange Commission nor any US state securities commission has approved or disapproved of the Loan Notes, or determined if this announcement is accurate or complete. Any representation to the contrary is a criminal offence.

Forward-looking statements
This announcement, including information included or incorporated by reference in this announcement, may contain "forward looking statements" concerning Mr Kroenke, KSE and the Arsenal Group. Generally, the words "will", "may", "should", "continue", "believes", "expects", "intends", "anticipates" or similar expressions identify forward looking statements. The forward looking statements involve risks and uncertainties that could cause actual results to differ materially from those suggested by them. Many of these risks and uncertainties relate to factors that are beyond the companies' abilities to control or estimate precisely, such as future market conditions and the behaviours of other market participants, and therefore undue reliance should not be placed on such statements which speak only as at the date of this announcement. None of Mr Kroenke, KSE nor the Arsenal Group assume any obligation to, and do not intend to, update these forward looking statements, except as required pursuant to applicable law.
Nothing in this announcement is intended, or is to be construed, as a profit forecast or to be interpreted to mean that earnings per Arsenal Share for the current or future financial years will necessarily match or exceed the historical published earnings per Arsenal Share.

Publication on website
This announcement will be available on KSE's website at www.pepsicenter.com/kseukinc and Arsenal's website at www.arsenal.com/home by no later than 12 noon on 12 April 2011, and will remain there during the course of the Offer. The contents of the websites referred to in this announcement are not incorporated into and do not form part of this announcement.

Consent
Deutsche Bank has given and not withdrawn its consent to the issue of this announcement with the inclusion of the references to its name in the form and context in which they appear.
Rothschild has given and not withdrawn its consent to the issue of this announcement with the inclusion of the references to its name in the form and context in which they appear.

APPENDIX 1

CONDITION OF THE OFFER AND FURTHER TERMS OF THE OFFER
The Offer will comply with the applicable rules and regulations of the Takeover Panel and the PLUS Stock Exchange, will be governed by English law and will be subject to the exclusive jurisdiction of the courts of England. In addition it will be subject to the condition to be set out in the Offer Document and related Form of Acceptance.

Part A - Condition of the Offer
The Offer will be subject to the following condition:

Valid acceptances of the Offer being received (and not, where permitted, withdrawn) by not later than 1.00 p.m. (London time) on the first closing date of the Offer (or such later time(s) and/or date(s) as KSE may, subject to the rules of the Takeover Code or with the consent of the Takeover Panel, decide) in respect of such number of Arsenal Shares which, when aggregated with the Arsenal Shares held by KSE and any person acting in concert with KSE at the date of the Offer and any Arsenal Shares acquired or contracted to be acquired by KSE or any person acting in concert with KSE on or after such date, carry more than 50 per cent. of the voting rights then normally exercisable at a general meeting of Arsenal including for this purpose any such voting rights attaching to Arsenal Shares which have been unconditionally allotted or issued before the Offer becomes or is declared unconditional (whether pursuant to the exercise of any outstanding subscription or conversion rights or otherwise).

For the purposes of this condition Arsenal Shares which have been unconditionally allotted but not issued shall be deemed to carry the voting rights they will carry on issue.

Part B - Further Terms of the Offer
The Offer will lapse if it is referred to the UK Competition Commission before 1.00 p.m. (London time) on the first closing date of the Offer. If the Offer so lapses, the Offer will cease to be capable of further acceptance and persons accepting the Offer and KSE will cease to be bound by forms of acceptance submitted on or before the time when the Offer lapses.

APPENDIX 2

DETAILS OF IRREVOCABLE UNDERTAKINGS

Directors
The following Arsenal Independent Directors have given irrevocable undertakings to accept (or procure acceptances of) the Offer in respect of their own beneficial holdings of Arsenal Shares (or those Arsenal Shares over which they have control):

DIRECTORS
Name Total number of Arsenal shares Percentage of issued share capital
Lord Philip Charles Harris (held by Pershing Nominees Limited KSCLT Acct) 53 0.09
Sir John Chippendale Lindley Keswick (held by Giltspur Nominees Limited Buns Acct) 40 0.06
Sir John Chippendale Lindley Keswick 15 0.02
Peter Denis Hill-Wood 400 0.64
Kenneth John Friar 47 0.08

These irrevocable undertakings cease to be binding only in the event that (a) the Offer Document is not published within 28 days of this announcement (b) the Offer closes, lapses or is withdrawn; or (c) the Offer has not become or been declared unconditional by the date 4 months from the date of the undertaking.

Lady Nina Bracewell-Smith
Lady Nina Bracewell-Smith has given an irrevocable undertaking to accept the Offer in respect of her own beneficial holdings of Arsenal Shares (or those Arsenal Shares over which she has control):

LADY NINA BRACEWELL-SMITH
Name Total number of Arsenal Shares Percentage of issued share capital
Lady Nina Bracewell-Smith 9,893 15.90

This irrevocable undertaking ceases to be binding only in the event that (a) the Offer Document is not published within 28 days of this announcement (b) the Offer closes, lapses or is withdrawn; or (c) the Offer has not become or been declared unconditional by the date 6 months from the date of the undertaking.

KSE has given an undertaking to Lady Nina Bracewell-Smith that it will not, for a period of 12 months after the Offer is declared unconditional, transfer its shares in Arsenal, other than to Mr Kroenke or his family.

APPENDIX 3

DEFINITIONS
The following definitions apply throughout this announcement unless the context otherwise requires:

"Arsenal" Arsenal Holdings PLC

"Arsenal Directors" the directors of Arsenal

"Arsenal Group" Arsenal and its subsidiary undertakings and where the context permits, each of them

"Arsenal Independent Directors" the Arsenal Directors (other than Mr Fiszman and Mr Kroenke)

"Arsenal Shareholder(s)" holders of Arsenal Shares

"Arsenal Share(s)" the existing unconditionally allotted or issued and fully paid ordinary shares of £1.00 each in the capital of Arsenal and any further shares which are unconditionally allotted or issued before the date on which the Offer closes (or such earlier date or dates, not being earlier than the first closing date of the Offer, as KSE may decide) but excluding in both cases any such shares held or which become held in treasury

"Board" board of directors

"Business Day" a day, not being a public holiday, Saturday or Sunday, on which clearing banks in London are open for normal business

"Companies Act" the Companies Act 2006, as amended from time to time

"Deutsche Bank" Deutsche Bank AG, London Branch

"DF Nominees" DF Nominees Limited

"Form of Acceptance" the Form of Acceptance, Authority and Election for use by Arsenal Shareholders in connection with the Offer

"KSE" KSE, UK, Inc.

"LIBOR" the rate per annum which is the offered rate for twelve month sterling deposits on the relevant Reuters page

"Loan Note Alternative" the alternative under the Offer whereby Arsenal Shareholders (other than US Persons and certain overseas Arsenal Shareholders) who validly accept the Offer may elect to receive Loan Notes instead of all or part of the cash consideration to which they would otherwise have been entitled under the Offer

"Loan Note Restricted Jurisdiction" any jurisdiction in which an offer of Loan Notes would constitute a violation of relevant laws or require registration of the Loan Notes

"Loan Notes" the variable rate unsecured loan notes of KSE to be issued pursuant to the Loan Note Alternative

"Offer" the recommended offer made by KSE to acquire all the Arsenal Shares (excluding all Arsenal Shares which are owned by KSE and the Option Shares) on the terms and subject to the condition to be set out in the Offer Document and the Form of Acceptance including, where the context so permits, the Loan Note Alternative and, where the context so requires, any subsequent revision, variation, extension or renewal of such offer and includes any election available in connection with it

"Offer Document" the document containing and setting out the terms and condition of the Offer

"Offer Documentation" the Offer Document and the Form of Acceptance

"Offer Period" the offer period (as defined in the Takeover Code) relating to Arsenal, which commenced on (and includes) 11 April 2011

"Option Agreement" the option agreement entered into between KSE, DF Nominees, Mr Kroenke and Mr Fiszman

"PLUS Stock Exchange" the PLUS-quoted stock exchange operated by PLUS Markets PLC

"Restricted Jurisdiction" any jurisdiction where extension or acceptance of the Offer would violate the law of that jurisdiction or where local laws or regulations may result in a significant risk of civil, regulatory or criminal exposure if information concerning the Offer is sent or made available to Arsenal Shareholders in that jurisdiction

"Rothschild" NM Rothschild & Sons Limited

"subsidiary", "subsidiary undertaking" and "undertaking" shall be construed in accordance with the Companies Act

"Takeover Code" the Takeover Code issued by the Takeover Panel on Takeovers and Mergers, as amended from time to time

"Takeover Panel" the Panel on Takeovers and Mergers

"US Person" a US person as defined in Regulation S under the US Securities Act

"US Securities Act" the US Securities Act of 1933, as amended and the rules and regulations promulgated thereunder

All times referred to are London time unless otherwise stated.

Copyright 2014 The Arsenal Football Club plc. Permission to use quotations from this article is granted subject to appropriate credit being given to www.arsenal.com as the source 11 Apr 2011