LONDON (Dow Jones)--Java Acquisitions said Wednesday that it has agreed with the Whittard of Chelsea board the terms of a recommended cash offer, to be made by Teather & Greenwood and Landsbanki on behalf of Java, for Whittard (other than the 650,000 Whittard Shares already held by the Baugur Group), valuing it at GBP21.5 million.

The offer is 90 pence in cash for each Whittard share, which represents a premium of 20.8% to the closing price of 74.5 pence per Whittard share on Dec. 5 and a 37.4% premium to the closing price of 65.5 pence per Whittard share on Nov. 4.

Java, a wholly owned subsidiary of Barney Holdings, has received undertakings to support the offer in respect of a total of 14,584,407 Whittard shares (61.04%).

Barney Holdings is the holding company for Julian Graves, a leading U.K. speciality food retailer with over 260 stores in the U.K. and Ireland, selling products including nuts, seeds, dried fruit, nostalgic sweets, baking ingredients, luxury snacks and fruit and nut mixes. Barney Holdings' majority shareholder is Baugur Group. Its other shareholders are Julian Graves' founder Nicholas Shutts and private investment companies, Thera S.A. and Arev Management Limited.

With the U.K. retail market remaining tough, trading at Whittard in the current year has been disappointing. The company announced on Oct. 19 that like for like sales for the first 20 weeks of the year to Oct. 16 were down 3.9%.

The retail climate in the U.K. continues to be challenging and the Whittard board anticipates a sustained period of difficult trading conditions which it believes will adversely affect sales during the important Christmas trading period.

As a pre-condition of Java proceeding with the offer, Whittard entered into an agreement with Java on Dec. 13, pursuant to which Whittard has agreed to pay to Java an inducement fee of 100,000 (0.5% of the value of the offer) in the event that, after announcement of the offer pursuant to Rule 2.5 of the code (and provided that the offer document is posted to Whittard shareholders within 48 hours of such announcement):

(a) a competing offer or proposal is announced before the offer is made or before the offer lapses or is withdrawn which subsequently becomes or is declared unconditional in all respects or completes (as relevant);

(b) the Whittard board fails to recommend the offer or withdraws or adversely changes its recommendation of the offer; or

(c) the Whittard board takes or (where a condition to the offer requires action to be taken by the Whittard board) omits to take any action which prevents a condition to the offer from being fulfilled in a material way.

Nothing in the inducement fee agreement obliges Whittard to pay any amount which the panel determines would not be permitted by Rule 21.2 of the code.

Whittard also entered into an agreement with Barney Holdings on Nov. 22, pursuant to which Barney Holdings agreed to pay Whittard a break fee of GBP100,000 in certain circumstances prior to announcing a firm intention to make an offer for Whittard. The break fee agreement ceases to be binding upon this announcement.

The cash consideration payable to Whittard shareholders will be financed out of Java's own resources and from committed loan facilities made available for the purpose of the offer by Landsbanki.

(END) Dow Jones Newswires