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Filed by the Limited, Inc.
Pursuant to Rule 425 under the
Securities Act of 1933 and deemed
filed pursuant to Rule 14a-12 under
the Securities Exchange Act of 1934
Subject Company: Intimate Brands, Inc.
Commission File No. 1-13814
Date: February 6, 2002
The following information, which is posted on The Limited Inc.'s website,
consists of a Q&A addressed to The Limited, Inc.'s associates, and relates to
its exchange offer involving Intimate Brands, Inc.
Associate Questions & Answers
1. What exactly is being announced?
We are announcing a plan to recombine IBI with The Limited, Inc.
2. What are the mechanics of the transaction?
Through the exchange offer, The Limited will acquire up to all of the
Intimate Brands' common stock that it does not currently own (this means
up to all of the 16.3% of outstanding shares that are publicly traded
today). If we increase our ownership to at least 90% of the outstanding
common stock through this offer, as soon as practicable after the
completion of the offer, The Limited, Inc will effect a short-form merger
of Intimate Brands to exchange any shares that were not tendered during
the offer. As a result of the offer and the merger, Intimate Brands will
become a wholly owned subsidiary of The Limited, and the former public
shareholders of Intimate Brands will own shares in the Limited.
3. Why does The Limited want to recombine the two companies?
The Limited, Inc. undertook the initial public offering of a minority
interest in Intimate Brands in 1995 to achieve a number of objectives,
including allowing for enhanced management focus on its businesses and
providing for greater market understanding and recognition of Intimate
Brands' strategy and the value of its businesses. We believe that these
objectives have been substantially achieved and that it is now appropriate
to recombine Intimate Brands and The Limited. We believe that the combined
entity will provide all shareholders with greater upside potential.
In deciding to pursue the offer, we considered, among other things, the
following:
o Our increasing focus on maximizing the potential of a smaller number
of key brands across merchandise categories and distribution channels
will be enhanced by recombining Intimate Brands and The Limited. We
believe that a recombination will provide greater flexibility in
allocating resources and expertise and coordinating our businesses
and thereby put us in a better position to maximize the potential of
our brands.
o Our belief that the strength and prospect of Intimate Brands' brands
and businesses are now more clearly recognized by investors.
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o Our belief that investors are increasingly viewing The Limited and
Intimate Brands as very similar companies as a result of, among other
things, the convergence of the growth rates of the two companies. In
this regard, the market capitalizations of the two companies have
become substantially similar and the overlap between the shareholders
of the two companies has increased significantly.
o Our belief that a recombination will eliminate uncertainty on the
part of rating agencies and lenders as to our plans for Intimate
Brands.
o Management focus.
4. Why is the company announcing this action now?
We continue to pursue a strategy of building a family of the world's best
fashion brands in order to create sustained growth of shareholder value.
Over the past 6 years, we have unlocked shareholder value through
successful public offerings of Brylane, IBI, A&F and TOO, through the sale
of Lane Bryant and through strategic partnerships with Galyan's and
Alliance Data Systems. We believe that numerous opportunities exist to
leverage competencies and resources across The Limited apparel and
Intimate Brands' Victoria Secret businesses. Additionally, operating the
businesses as two separate companies carries an excess cost burden (and
opportunity cost), which we hope to eliminate with the combination. We
believe the combination will allow management the most flexibility to
pursue these opportunities.
5. How will shareholders benefit?
o LTD shareholders will benefit from cost savings and increased
management focus on 360 degree brand management, as well as numerous
opportunities to leverage IBI competencies (e.g. catalogue and
Internet sales) in its other businesses, creating opportunities for
future growth.
o IBI shareholders will realize the same cost benefits and strategic
opportunities as Limited shareholders. Additionally, by virtue of the
exchange ration offered in the exchange offer, they will maintain
their ownership in the IBI businesses through their ownership in LTD.
Through their new ownership in LTD, IBI shareholders will also own
slightly greater than 16% interest in The Limited's apparel
businesses and portfolio of public equity stakes.
o IBI shareholders will also benefit from substantially greater
liquidity (due to increased float) and the elimination of uncertainty
on the part of the lenders and rating agencies.
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6. How large are the cost savings; what comprises them? Why aren't there
more?
We estimate that we spend about $5 million annually to maintain IBI as a
separate public company. The majority of these costs are paid to third
parties (annual report, external audit fees, board of directors' fees,
NYSE listing fees, etc.)
One might think that the cost savings potential is greater but in
connection with our efficiency efforts over the last year, we have
increased the emphasis on sharing internal resources.
7. Do you have plans to monetize any of the apparel brands?
Although we have no plans to monetize any of the apparel brands, we are
always reviewing the performance of our businesses. We believe we have
solid plans in place to improve the performance of our apparel businesses.
We'll review the results against our expectations periodically.
8. How will the recombination affect strategic alliances with contractors/
vendors?
We anticipate no material changes.
9. Why does this transaction require Limited, Inc. shareholder approval?
What will you do if it doesn't pass?
Under the rules of the New York Stock Exchange, Limited, Inc. shareholder
approval is required because The Limited will be issuing more than 20% of
its shares to IBI shareholders in the offer and merger. Although we are
confident that we will get the required approval, if we do not - or if any
other condition to the offer is not satisfied - we will evaluate our
options at that time.
10. What would IBI shareholder receive in exchange for their shares?
For each outstanding share of Intimate Brands Class A common stock that
you validly tender and do not properly withdraw, you will receive 1.046
shares of Limited common stock. You will not receive any fractional
Limited shares. Instead, the exchange agent for the offer, acting as your
agent, will aggregate any fractional shares issuable and sell them for
your accounts. Any proceeds realized by the exchange agent on the sale of
fractional shares will be distributed to you on a pro rata basis, net of
commissions. In addition, any IBI public shareholders remaining after the
offer will receive the same payment in
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the second step merger. IBI shareholders will not have appraisal rights in
the offer, but will have appraisal rights in the merger (see question 22).
11. When do you expect to complete the offer and merger?
We hope to complete the exchange offer by March 11, 2002, the initial
scheduled expiration date. However, we may extend the exchange offer if
the conditions to the offer have not been satisfied at the scheduled
expiration date or if we are required to extend the exchange offer by the
rules of the SEC. We expect to complete the merger shortly after we
complete the offer.
12. Has the Board of Directors of Intimate Brands made a recommendation
concerning the offer?
The Board of Directors of Intimate Brands has not yet made any
recommendation. The exchange offer will be evaluated by IBI's independent
directors who will then make a formal recommendation to IBI shareholders
on or before February 19, 2002.
13. How do I participate in the offer?
To tender your shares of Intimate Brands' stock, you should do one of the
following:
o If you hold your shares in your own name, complete and sign the
letter of transmittal and return it with your share certificates to
DF King, the exchange agent for the offer, at the appropriate address
specified on the back cover of the prospectus before the expiration
date of the offer.
o If you hold your shares in "street name" through a broker or other
nominee, instruct such broker or nominee to tender your shares before
the expiration date of the offer.
o If you hold your shares in the Savings and Retirement Plan or the
Intimate Brands' Stock Purchase Plan, instruct the agent or trustee
for the relevant plan to tender your shares before the expiration
date of the offer.
14. Will I be taxed on The Limited shares I receive?
Your receipt of Limited common stock will be tax-free for United States
federal income tax purposes. However, you will be subject to tax upon any
cash received instead of fractional shares of Limited common stock and for
cash received if you perfect appraisal rights.
15. Will there be jobs lost as a result of today's announcements?
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Some individual job responsibilities may change, but we do not anticipate
overall headcount changes associated with this transaction.
16. Does this have any implication for our IBI joint venture partners
(Shiseido)?
None whatsoever.
17. What impact will the proposed tender offer and merger have on the
operating businesses of IBI and The Limited? Will this change how any of
your brands do business?
No - it will merely facilitate cross-organizational development of
products and direct support.
18. Will participants in the Savings and Retirement Plan be able to
participate in the offer?
Yes. Each participant in the Savings and Retirement Plan may instruct the
trustee of the plan to tender some or all of the Intimate Brands' shares
attributable to his or her plan account. Separate forms will be sent to
each plan participant for use in directing the trustee.
19. Will participants in Intimate Brands' Stock Purchase Plan be able to
participate in the offer?
Yes. Each participant in the Stock Purchase Plan may instruct the agent
for such plan to tender some or all of the Intimate Brands' shares
attributable to his or her plan account. Separate forms will be sent to
each plan participant for use in directing the agent.
20. Will I have to pay any fees or commissions for tendering into the offer?
If you are the record owner of your shares and you tender your shares
directly to the exchange agent, you will not have to pay any fees or
commissions. If you hold your shares through a broker, bank or other
nominee, and your broker tenders the shares on your behalf, your broker
may charge you a fee for doing so. You should consult your broker or
nominee to determine whether any charges will apply. If you hold your
shares in the Savings and Retirement Plan or the Intimate Brands' Stock
Purchase Plan, you will not have to pay any fees or commissions.
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21. What do I do if I want to withdraw my shares from your offer?
To withdraw your shares from the offer, send a written or facsimile
transmission notice of withdrawal to the exchange agent at the appropriate
address specified on the back cover of the prospectus prior to the date we
accept your shares for payment pursuant to the offer. Your notice of
withdrawal must comply as to form with the requirements set forth in the
prospectus.
22. What are appraisal rights?
Appraisal rights are rights granted to shareholders of Delaware
corporations who elect to object to certain transactions. Assuming
numerous requirements are satisfied, in certain cases objecting
shareholders are entitled to have a court determine the value of their
shares and then be paid that value. IBI shareholders will not have
appraisal rights in connection with the offer, but will have appraisal
rights in connection with the second-step merger. This is a very complex
issue and you should read the description of appraisal rights included in
the tender offer documents completely.
23. How will Intimate Brands' employee stock options be treated in connection
with the offer and merger if completed?
If the offer and merger are completed, outstanding Intimate Brands'
employee stock options and shares of restricted stock will be converted
into Limited, Inc. stock options and restricted stock on the date of the
merger based on the same exchange ratio extended to public shareholders in
the tender offer to prevent dilution or enlargement of the rights under
such options and restricted shares.
24. Who do I call if I have any questions on how to tender my shares of
Intimate Brands common stock or any other questions relating to the
exchange offer?
Questions and requests for assistance may be directed to D.F. King, the
information agent for the offer or to Goldman, Sachs & Co., Banc of
America, the dealer managers of the offer, at their respective addresses
and telephone numbers set forth on the back cover of the prospectus.
Requests for additional copies of the prospectus and the letter of
transmittal may be directed to D.F. King or to brokers, dealers,
commercial banks, trust companies or other nominees.
25. How will we handle March option awards?
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We will issue LTD stock options.
26. Can I buy or sell LTD stock in the interim?
Yes, unless you have been notified otherwise by the company's General
Counsel.
27. Can I buy or sell IBI stock in the interim?
Yes, unless you have been notified otherwise by the company's General
Counsel.
28. How does this impact my retirement savings?
Participants in the Company's Savings and Retirement Plan who have a
portion of their account invested in Intimate Brands stock will have an
opportunity to tender their shares through the plan trustee during the
tender offer period the same as any other shareholder. If the offer is
completed, shares not tendered will be exchanged in the short-form merger
for the same consideration received in the offer. Thereafter, Intimate
Brands stock will cease to be an investment option under the plan.
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Forward Looking Statements
This communication contains certain "forward-looking statements" within
the meaning of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, including, among others, estimates of fiscal
year 2001 and 2002 results. Investors are cautioned that such forward looking
statements are subject to risks and uncertainties, many of which are beyond The
Limited's control. Accordingly, actual results may differ materially from those
expressed or implied in any such forward looking statements. Words such as
"estimate," "project," "plan," "believe," "expect," "anticipate," "intend" and
similar expressions may identify forward-looking statements.
The following factors, among others, in some cases have affected and in
the future could affect The Limited's (including, Intimate Brands') financial
performance and actual results and could cause actual results for 2001, 2002
and beyond to differ materially from those expressed or implied in any
forward-looking statements included in this press release and related
conference call: changes in consumer spending patterns, consumer preferences
and overall economic conditions; the potential impact of national and
international security concerns on the retail environment; the impact of
competition and pricing; changes in weather patterns; political stability;
postal rate increases and charges; paper and printing costs; risks associated
with the seasonality of the retail industry; risks related to consumer
acceptance of the products sold and the ability to develop new merchandise; the
ability to retain, hire and train key personnel; risks associated with the
possible inability of manufacturers to deliver products in a timely manner;
risks associated with relying on foreign sources of production and availability
of suitable store locations on appropriate terms. In addition, a number of
risks relate to the offer and the merger, including declines in the value of
the consideration offered because the exchange ratio is fixed; the risks and
liabilities associated with The Limited's non-Intimate Brands businesses that
are different from those associated with Intimate Brands' businesses; and the
risk that the anticipated benefits of the transaction will not be achieved.
Investors should read The Limited's prospectus and proxy statement
relating to the proposed exchange offer and merger and the documents
incorporated therein for a more detailed discussion of these risks and
uncertainties. The Limited is under no obligation and does not intend to update
any of these forward-looking statements, even if experience or future charges
make it clear that any proposed results experienced or implied therein will not
be realized. The Limited is scheduled to report January sales on February 7,
2002 and fourth quarter earnings on February 28, 2002.
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Additional Information
In connection with the proposed transaction, The Limited, Inc. has filed
an exchange offer prospectus and a proxy statement with the Securities and
Exchange Commission. INVESTORS AND STOCKHOLDERS ARE ADVISED TO READ THESE AND
ALL RELATED DOCUMENTS BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Investors and
stockholders may obtain a free copy of the exchange offer prospectus, the proxy
statement and related documents from the Securities and Exchange Commission's
web site at http://www.sec.gov. Free copies of these documents may also be
obtained from The Limited by directing a request to The Limited, Inc.,
Investors Relations, Three Limited Parkway, Columbus, Ohio 43216, (614)
415-7076.
The Limited and its directors, executive officers and other members of its
management and employees may be soliciting proxies from its stockholders in
connection with the proposed transaction. Information concerning The Limited's
participants in the solicitation is contained in a filing made by The Limited
with the Securities and Commission pursuant to Rule 14a-12 on February 4, 2002.