TIDMINS
RNS Number : 8700O
Instem plc
05 October 2023
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR
REGULATIONS OF SUCH JURISDICTION
FOR IMMEDIATE RELEASE
Instem plc
("Instem" or "the Company")
Publication of Presentation re. Recommended Cash Offer
On 30 August 2023, the board of directors of Ichor Management
Limited ("Bidco") and the board of directors of Instem plc
announced that they had reached agreement on the terms of a
recommended cash offer by Bidco for the entire issued and to be
issued share capital of Instem (the "Offer").
In order to help shareholders further understand the background
to and reasons for the Board's unanimous recommendation of the
Offer, the Board has published a short presentation which has been
made available on the Company's website
https://investors.instem.com/.
The presentation provides additional commentary to explain why,
as stated in the announcement of the Offer on 30 August 2023 (the
"Offer Announcement"), the Board is of the view that the Offer
represents an attractive valuation for the Company. The Board notes
in particular:
-- FY23 Adjusted EBITDA is expected to be no greater than
GBP11.1m(1) , as highlighted in the Company's interim results for
the six months ended 30 June 2023 ("H1 FY23") published on 15
September 2023.
-- The equity research analysts covering the Company withdrew
their forecasts and target prices following publication of the
Offer Announcement. Consensus market expectations have not been
updated for the Company's H1 FY23 interim results. Market consensus
FY23 Adjusted EBITDA immediately prior to the Offer Announcement
was GBP12.0m(2) .
-- The Board expects that the softer market conditions referred
to in the Company's H1 FY23 interim results will continue at least
into FY24. This includes slower transition of Instem's larger and
more material on-premise customers to SaaS delivery. As disclosed
in the Company's H1 FY23 interim results, there were no transitions
of material on-premise customers to SaaS delivery during H1
FY23.
-- The analysis in the presentation of (i) peer group valuation
metrics showing that the Offer ascribes a significantly higher
Adjusted EV/EBITDA multiple to the Company than the average FY23
trading multiples for other UK-listed Pharmaceutical Services and
Software/IT Services businesses in its peer group; and (ii)
precedent transactions showing that the FY22 EV/EBITDA multiple
ascribed to the Company by the Offer compares favourably with other
multiples paid for UK-listed Pharmaceutical Services
businesses.
-- The all-time high share price of 910p was first reached on 17
September 2021(2) before the widely publicised deterioration in
macro-economic conditions which has adversely affected investor
sentiment, particularly towards UK-listed companies in the
small-cap arena.
-- There are delivery risks associated with Toxhub, which is in
the early stages of generating revenue and has a meaningful
start-up investment requirement. Given its current stage of
development, Toxhub's valuation was assessed on a discounted cash
flow basis and the result of this analysis was not considered
material to the Board's overall assessment of the Company's
valuation.
-- The 41% premium to the undisturbed share price of 590p(3)
implied by the 833p Offer is based on an undisturbed share price
prior to Instem's update to the market which indicated a
deteriorating financial outlook for FY23.
Having regard to the above factors and the commentary regarding
the background to and reasons for the Board's recommendation of the
Offer as set out in the Offer Announcement, the Board continues to
be of the view that, in the absence of the Offer, the Company's
share price would be unlikely to reach 833p in the foreseeable
future.
As such, the Board continues to believe that the Offer
represents an attractive valuation and provides Shareholders with
the certainty of realising their investments in full for cash and
accordingly, unanimously recommends that Shareholders vote in
favour of (or procure votes in favour of) the Scheme at the Court
Meeting and the Resolution to be proposed at the General
Meeting.
The Board will be seeking to continue its programme of proactive
engagement with Shareholders ahead of the Court Meeting and General
Meeting on 19 October 2023.
1 This statement constitutes a profit forecast for the purposes
of Rule 28 of the Takeover Code. Please see related disclosures in
the Scheme Document published on 25 September 2023
(2) Source: FactSet
3 Source: FactSet - Closing mid-price as at 29 August 2023
Capitalised terms used in this announcement shall, unless
otherwise defined, have the meanings set out in Part 8 of the
Scheme Document published 25 September 2023.
This announcement contains material new information and
significant new opinions and is being published pursuant to Rule
20.1(b)(i) of the Takeover Code. The presentation referred to in
this announcement is being made available on the Company's website
pursuant to Rule 20.1(c)(i) of the Takeover Code.
This announcement contains inside information for the purposes
of the retained UK version of the EU Market Abuse Regulation (EU)
596/2014 ("UK MAR").
Instem
Phil Reason Via Walbrook
Nigel Goldsmith
Rothschild & Co (Financial Adviser to Instem)
Alistair Allen Tel: +44 (0) 161 827 3800
Julian Hudson
Tom Palmer
Singer Capital Markets Advisory LLP (Nominated Adviser, Joint
Financial Adviser and Joint Broker to Instem)
Peter Steel Tel: +44 (0) 20 7496 3000
Alex Bond
Oliver Platts
Stifel Nicolaus Europe Limited (Joint Broker to Instem)
Ben Maddison Tel: +44 (0) 20 7710 7600
Richard Short
Walbrook Financial PR (Public Relations Adviser to Instem)
Tom Cooper Tel: +44 (0) 20 7933 8780
Nick Rome
Joe Walker
Disclaimers
Rothschild & Co, which is authorised and regulated by the
FCA in the United Kingdom, is acting exclusively as joint financial
adviser to Instem and for no one else in connection with the
matters referred to in this Announcement and will not be
responsible to anyone other than Instem for providing the
protections afforded to clients of Rothschild & Co, nor for
providing advice in relation to the acquisition of Instem or any
other matters referred to in this Announcement. Neither Rothschild
& Co nor any of its subsidiaries, branches or affiliates (nor
their respective directors, officers, employees or agents) owes or
accepts any duty, liability or responsibility whatsoever (whether
direct or indirect, whether in contract, in tort, under statute or
otherwise) to any person who is not a client of Rothschild & Co
in connection with this Announcement, any statement contained in
this Announcement, the acquisition of Instem or otherwise. No
representation or warranty, express or implied, is made by
Rothschild & Co as to the contents of this Announcement.
Singer Capital Markets, which is authorised and regulated by the
FCA in the United Kingdom, is acting exclusively as joint financial
adviser and nominated adviser to Instem and no one else in
connection with the matters referred to in this Announcement and
will not be responsible to anyone other than Instem for providing
the protections afforded to clients of Singer Capital Markets, nor
for providing advice in relation to the acquisition of Instem or
any other matters referred to in this Announcement. Neither Singer
Capital Markets nor any of its affiliates (nor their respective
directors, partners, officers, employees or agents) owes or accepts
any duty, liability or responsibility whatsoever (whether direct or
indirect, whether in contract, in tort, under statute or otherwise)
to any person who is not a client of Singer Capital Markets in
connection with this Announcement, any statement contained in this
Announcement, the acquisition of Instem or otherwise. No
representation or warranty, express or implied, is made by Singer
Capital Markets as to the contents of this Announcement.
Moelis, which is authorised and regulated by the FCA in the
United Kingdom, is acting exclusively for ARCHIMED and Bidco and no
one else in connection with the matters referred to in this
Announcement and will not be responsible to anyone other than
ARCHIMED and Bidco for providing the protections afforded to
clients of Moelis, nor for providing advice in relation to the
acquisition of Instem or any other matters referred to in this
Announcement. Neither Moelis nor any of its affiliates (nor their
respective directors, officers, employees or agents) owes or
accepts any duty, liability or responsibility whatsoever (whether
direct or indirect, whether in contract, in tort, under statute or
otherwise) to any person who is not a client of Moelis in
connection with this Announcement, any statement contained in this
Announcement, the acquisition of Instem or otherwise.
Further information
This Announcement is for information purposes only and is not
intended to and does not constitute, or form any part of, an offer
to sell or subscribe for or any invitation to purchase or subscribe
for any securities or the solicitation of any vote or approval in
any jurisdiction pursuant to the Acquisition or otherwise. The
Acquisition will be made solely through and on the terms set out in
the Scheme Document (or, in the event that the Acquisition is to be
implemented by means of a Takeover Offer, the Offer Document) and
the accompanying Forms of Proxy, which contain the full terms and
conditions of the Acquisition, including details of how to vote in
respect of the Acquisition. Any vote, approval, decision or other
response to the Acquisition should be made only on the basis of the
information in the Scheme Document (or, if the Acquisition is
implemented by way of a Takeover Offer, the Offer Document) .
Scheme Shareholders are strongly advised to read the formal
documentation in relation to the Acquisition once it has been
despatched.
This Announcement does not constitute a prospectus or prospectus
exempted document.
The statements contained in this Announcement are made as at the
date of this Announcement, unless some other time is specified in
relation to them, and service of this Announcement shall not give
rise to any implication that there has been no change in the facts
set forth in this Announcement since such date.
Overseas shareholders
This Announcement has been prepared for the purpose of complying
with English law, the AIM Rules and the Code and the information
disclosed may not be the same as that which would have been
disclosed if this Announcement had been prepared in accordance with
the laws of jurisdictions outside the United Kingdom.
The laws of the relevant jurisdictions may affect the
availability of the Acquisition to persons who are not resident in
the United Kingdom . Persons who are not resident in the United
Kingdom, or who are subject to laws of any jurisdiction other than
the United Kingdom, should inform themselves about, and observe any
applicable requirements. Any person (including, without limitation,
nominees, trustees and custodians) who would, or otherwise intends
to, forward this Announcement, the Scheme Document or any
accompanying document to any jurisdiction outside the United
Kingdom should refrain from doing so and seek appropriate
professional advice before taking any action. In particular, the
ability of persons who are not resident in the United Kingdom to
vote their Instem Shares at the Court Meeting or the General
Meeting, or to execute and deliver Forms of Proxy appointing
another to vote their Instem Shares in respect of the Court Meeting
or the General Meeting on their behalf, may be affected by the laws
of the relevant jurisdiction in which they are located.
Any failure to comply with the applicable legal or regulatory
requirements may constitute a violation of the laws and/or
regulations of any such jurisdiction . To the fullest extent
permitted by applicable law, the companies and persons involved in
the Acquisition disclaim any responsibility and liability for the
violation of such restrictions by any person.
Unless otherwise determined by Bidco or required by the Code and
permitted by applicable law and regulation, the Acquisition will
not be made, directly or indirectly, in or into or by use of the
mails or any other means or instrumentality (including, without
limitation, telephonic or electronic) of interstate or foreign
commerce of, or any facility of a national, state or other
securities exchange of, a Restricted Jurisdiction, and the
Acquisition will not be capable of acceptance by any such use,
means, instrumentality or facility or from within a Restricted
Jurisdiction . Accordingly, copies of this Announcement and formal
documentation relating to the Acquisition are not being, and must
not be, directly or indirectly, mailed or otherwise forwarded or
distributed in, into or from a Restricted Jurisdiction and persons
receiving this Announcement (including custodians, nominees and
trustees) must not distribute or send it into or from a Restricted
Jurisdiction. In the event that the Acquisition is implemented by
way of a Takeover Offer and extended into the US, Bidco will do so
in satisfaction of the procedural and filing requirements of US
securities laws at that time, to the extent applicable thereto. The
Acquisition relates to the shares of a company incorporated in
England and it is proposed to be made by means of a scheme of
arrangement provided for under English law. The Scheme will relate
to the shares of a UK company that is a "foreign private issuer" as
defined under Rule 3b-4 under the US Exchange Act. A transaction
effected by means of a scheme of arrangement is not subject to any
shareholder vote, proxy solicitation and tender offer rules under
the US Exchange Act. Accordingly, the Scheme is subject to the
disclosure requirements and practices applicable in the UK to
schemes of arrangement, which differ from the disclosure
requirements and practices of US shareholder vote, proxy
solicitation or tender offer rules. Financial information included
in the relevant documentation will have been prepared in accordance
with accounting standards applicable in the UK and may not be
comparable to the financial information of, or the accounting
standards applicable to, US companies. However, if Bidco were to
elect to implement the Acquisition by means of a Takeover Offer,
such Takeover Offer shall be made in compliance with all applicable
laws and regulations, including section 14(e) of the US Exchange
Act and Regulation 14E thereunder, if applicable. Such Takeover
Offer would be made in the US by Bidco and no one else. In addition
to any such Takeover Offer, Bidco, certain affiliated companies and
the nominees or brokers (acting as agents) may make certain
purchases of, or arrangements to purchase, shares in Instem outside
such Takeover Offer during the period in which such Takeover Offer
would remain open for acceptance. If such purchases or arrangements
to purchase are made they would be made outside the United States
in compliance with applicable law, including the US Exchange Act.
It may be difficult for a US-based investor to enforce his or her
rights and any claim he or she may have arising under US securities
laws, since the Scheme relates to the shares of a company located
in the UK, and some or all of its officers and directors may be
residents of non-US jurisdictions. A US-based investor may not be
able to sue a company located in the UK, or its officers or
directors, in a foreign court for alleged violations of US
securities laws, and it may be difficult to compel a foreign
company and its affiliates to subject themselves to a US court's
judgment.
Forward-looking statements
This Announcement, oral statements made regarding the
Acquisition, and other information published by Instem, Bidco and
ARCHIMED may contain certain "forward-looking statements" with
respect to Instem, Bidco and ARCHIMED. These forward-looking
statements can be identified by the fact that they do not relate
only to historical or current facts. Forward-looking statements
often use words such as "anticipate", "target", "expect",
"estimate", "intend", "plan", "goal", "believe", "will", "may",
"should", "would", "could" or other words or terms of similar
meaning or the negative thereof. Forward-looking statements
include, for example, statements relating to the following: (i)
future capital expenditures, expenses, revenues, earnings,
synergies, economic performance, indebtedness, financial condition,
dividend policy, losses and future prospects; (ii) business and
management strategies of ARCHIMED and/or Bidco and the expansion
and growth of Instem and potential synergies resulting from the
Acquisition; and (iii) the effects of government regulation on the
business of Instem.
These forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause actual
results, performance or developments to differ materially from
those expressed in or implied by such forward-looking statements.
These forward-looking statements are based on numerous assumptions
regarding present and future strategies and environments. None of
ARCHIMED, Bidco or Instem, nor any of their respective associates,
directors, officers, employees or advisers, provides any
representation, assurance or guarantee that the occurrence of the
events expressed or implied in any forward-looking statements in
this Announcement will actually occur. You are cautioned not to
place undue reliance on such forward-looking statements, which
speak only as of the date hereof. All subsequent oral or written
forward-looking statements attributable to ARCHIMED, Bidco or
Instem or any person acting on their behalf are expressly qualified
in their entirety by the cautionary statement above. Should one or
more of these risks or uncertainties materialise, or should
underlying assumptions prove incorrect, actual results may vary
materially from those described in this Announcement. None of
ARCHIMED, Bidco or Instem assume any obligation to update publicly
or revise forward-looking or other statements contained in this
Announcement, whether as a result of new information, future events
or otherwise, except to the extent legally required.
No profit forecasts, estimates or quantified financial benefits
statements
With the exception of the statement "FY23 Adjusted EBITDA is
expected to be no greater than GBP11.1m", no other st atement in
this Announcement is intended as a profit forecast or estimate for
ARCHIMED, Bidco or Instem in respect of any period and no statement
in this Announcement should be interpreted to mean that earnings or
earnings per Instem Share for the current or future financial years
would necessarily match or exceed the historical published earnings
or earnings per Instem Share.
Right to switch to a Takeover Offer
Subject to the terms of the Co-operation Agreement, Bidco
reserves the right to elect, with the consent of the Takeover
Panel, to implement the Acquisition by way of a Takeover Offer for
the entire issued and to be issued ordinary share capital of Instem
as an alternative to the Scheme. In such an event, the Takeover
Offer will be made in accordance with the terms and conditions set
out in this Announcement which would apply to the Scheme (with any
modifications or amendments to such terms and conditions as may be
required by the Takeover Panel or which are necessary as a result
of Bidco's election to implement the Acquisition by way of a
Takeover Offer), in accordance with the Co-operation Agreement and
subject to the amendment referred to in Appendix I to this
Announcement.
Publication on website
In accordance with Rule 26.1 of the Code, a copy of this
Announcement will be made available (subject to certain
restrictions relating to persons resident in Restricted
Jurisdictions), free of charge, on Instem's website at
https://investors.instem.com and on Bidco's website at
www.Ichor-offer.com by no later than 12:00 noon on the Business Day
following the date of this Announcement. Neither the contents of
this website nor the content of any other website accessible from
hyperlinks on such websites is incorporated into, or forms part of,
this Announcement.
Requesting hard copies
In accordance with Rule 30.3 of the Code, a person so entitled
may request a hard copy of this Announcement, free of charge, by
contacting Instem's registrar, Computershare Investor Services PLC
during business hours (8.30 a.m. to 5.30 p.m.) on +44 (0)370 703
6041 or by submitting a request in writing to Computershare
Investor Services PLC at The Pavilions, Bridgwater Road, Bristol,
BS13 8AE . For persons who receive a copy of this Announcement in
electronic form or via a website notification, a hard copy of this
Announcement will not be sent unless so requested. In accordance
with Rule 30.3 of the Code, a person so entitled may also request
that all future documents, announcements and information to be sent
to them in relation to the Acquisition should be in hard copy
form.
Electronic communications - information for Instem
Shareholders
Please be aware that addresses, electronic addresses and certain
information provided by Instem Shareholders, persons with
information rights and other relevant persons for the receipt of
communications from Instem may be provided to Bidco during the
Offer Period as required under section 4 of Appendix 4 of the Code
to comply with Rule 2.11(c) of the Code.
Rounding
Certain figures included in this Announcement have been
subjected to rounding adjustments. Accordingly, figures shown for
the same category presented in different tables may vary slightly
and figures shown as totals in certain tables may not be an
arithmetic aggregation of the figures that precede them.
Disclosure requirements of the Code
Under Rule 8.3(a) of the Code, any person who is interested in 1
per cent. or more of any class of relevant securities of Instem or
of any securities exchange 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 securities
exchange 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) Instem and (ii) any securities exchange 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 p.m. (London time) on
the 10th Business Day following the commencement of the Offer
Period and, if appropriate, by no later than 3.30 p.m. (London
time) on the 10th Business Day following the announcement in which
any securities exchange offeror is first identified. Relevant
persons who deal in the relevant securities of Instem or of a
securities exchange offeror prior to the deadline for making an
Opening Position Disclosure must instead make a Dealing
Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes,
interested in 1 per cent. or more of any class of relevant
securities of Instem or of any securities exchange offeror must
make a Dealing Disclosure if the person deals in any relevant
securities of Instem or of any securities exchange 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) Instem and
(ii) any securities exchange 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 p.m. (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 Instem or a securities exchange
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 Instem and by
any offeror, and Dealing Disclosures must also be made by Instem,
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. You should contact the Takeover Panel's Market
Surveillance Unit on +44 (0) 20 7638 0129 if you are in any doubt
as to whether you are required to make an Opening Position
Disclosure or a Dealing Disclosure.
General
If you are in any doubt about the contents of this Announcement
or the action you should take, you are recommended to seek your own
independent financial advice immediately from your stockbroker,
bank manager, solicitor or independent financial adviser duly
authorised under FSMA if you are resident in the United Kingdom or,
if not, from another appropriate authorised independent financial
adviser.
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END
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