TIDMRWS TIDMSDL
RNS Number : 3108X
RWS Holdings PLC
27 August 2020
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 THAT JURISDICTION.
THIS ANNOUNCEMENT IS DEEMED BY RWS AND SDL TO CONTAIN INSIDE
INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATION NO
596/2014. UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A
REGULATORY INFORMATION SERVICE, THIS INSIDE INFORMATION IS NOW
CONSIDERED TO BE IN THE PUBLIC DOMAIN.
THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS OR
PROSPECTUS EQUIVALENT DOCUMENT AND INVESTORS SHOULD NOT MAKE ANY
INVESTMENT DECISION IN RELATION TO THE NEW RWS SHARES EXCEPT ON THE
BASIS OF INFORMATION IN THE SCHEME DOCUMENT AND THE RWS CIRCULAR
WHICH ARE PROPOSED TO BE PUBLISHED IN DUE COURSE.
FOR IMMEDIATE RELEASE
27 August 2020
Recommended All-Share Combination
of
RWS Holdings plc ("RWS") and SDL plc ("SDL")
Creating the world's leading language services and technology
group
The RWS Board and the SDL Board are pleased to announce that
they have reached agreement on the terms of a recommended all-share
combination of RWS and SDL, pursuant to which RWS will acquire the
entire issued and to be issued share capital of SDL, to be effected
by means of a court-sanctioned scheme of arrangement between SDL
and SDL Scheme Shareholders under Part 26 of the Companies Act (the
"Combination" to form the "Combined Group").
The Combination will create a truly global provider of language
services and technology. The Combined Group will be a broad-based,
well-funded business benefitting from increased scale, superior
capabilities, an expanded geographic footprint and a highly
experienced management team.
The RWS Board and the SDL Board believe the Combination has
compelling strategic logic with the potential to deliver
substantial benefits to the shareholders, customers, employees and
other stakeholders of both RWS and SDL.
Key terms of the Combination
Under the terms of the Combination, SDL Scheme Shareholders will
be entitled to receive:
1.2246 New RWS Shares in exchange for each SDL Share (the
"Exchange Ratio").
Based on the Exchange Ratio and the Closing Price of 741 pence
per RWS Share on the Latest Practicable Date, the Combination
values each SDL Share at 907 pence and SDL's existing issued and to
be issued share capital at approximately GBP854 million,
representing a premium of:
-- 52 per cent. to SDL's closing share price of 598 pence on 26 August 2020.
On the basis of the Exchange Ratio and the volume-weighted
average share price per RWS Share over the six month period ended
26 August 2020 of 562 pence, the Combination values each SDL Share
at 688 pence, representing a premium of 40 per cent. to SDL's
volume-weighted average share price over the same period.
Immediately following Completion, SDL Shareholders will own
approximately 29.5 per cent. and RWS Shareholders approximately
70.5 per cent. of the Combined Group on a fully diluted basis.
Strategic rationale for the Combination
The Combination will create the world's leading language
services and technology group. The Combined Group will have broad
capabilities across a range of language services, language and
content software and IP services, combining the complementary
strengths of RWS' specialist technical translation and localisation
capabilities with SDL's software, machine translation and AI
capabilities.
The Combined Group will be the largest language services and
software company in the world and will have an expanded
geographical footprint across the US, UK, continental Europe, Asia,
Canada and South America. The greater scale and capabilities of the
Combined Group will create an enhanced product and service
proposition for both companies' customers around the world. The
Combined Group will serve an expanded blue chip customer base with
limited overlap across its core markets, including 90 of the
world's top 100 brands by value, all the top 10 pharmaceutical
companies globally, many of the major West Coast technology
businesses, and approximately half of the top 20 patent filers
worldwide.
The highly complementary nature of the two companies' existing
customer bases and product service offerings, combining SDL's
proprietary technology and translation workflow software with RWS'
specialist capabilities, are expected to generate increased
translation volumes for the Combined Group through leveraging the
two companies' significant investments in their respective
technologies and capabilities, as well as through cross-selling and
up-selling to customers.
Financial rationale for the Combination
The Combination will result in a Combined Group with attractive
margins, a highly cash generative profile and a strong balance
sheet.
The RWS Board expects that the Combination will result in
significant run-rate annual cost synergies of at least GBP15
million by the end of the first full financial year post Completion
through combining corporate and support functions, optimising the
Combined Group's sales and marketing activities, aligning certain
third party spend and maximising operating efficiencies in
overlapping language translation activities.
In addition, the RWS Board expects that the Combination will,
over time, provide the opportunity for further margin improvements
and revenue synergies due to increased utilisation of SDL's market
leading technology and the exploitation of cross-selling
opportunities, particularly in relation to RWS' IP Services and
SDL's content technologies.
The RWS Board expects that the Combination will result in double
digit earnings per share accretion in the first full financial year
post Completion.
The SDL Board believes that the Combination will result in
enhanced value for SDL Shareholders reflecting a combination of the
agreed Exchange Ratio, participation in the continuation of RWS'
dividend policy post Completion and the significant synergy
potential of the proposed transaction.
The Combined Group
Upon Completion, the Combined Group will be called RWS,
headquartered in Chalfont St Peter and listed on AIM.
The Combined Group will draw on the significant talent in both
companies to optimise the benefits of the Combination for
customers, shareholders and other stakeholders.
Upon Completion it is intended that:
-- Andrew Brode, Chairman of RWS, will become Chairman of the Board of the Combined Group;
-- Richard Thompson, CEO of RWS, will become CEO of the Combined Group;
-- Desmond Glass, CFO of RWS, will become CFO of the Combined Group;
-- The rest of the Board of the Combined Group will comprise four non-executive directors;
-- Two of these will be existing non-executive directors of RWS,
David Shrimpton, who will not stand for re-election at the first
Annual General Meeting of the Combined Group and will be replaced
by a new externally appointed non-executive director, and Lara Boro
who will become senior independent director when David Shrimpton
stands down; and
-- Two of these will be existing non-executive directors of SDL,
one of which will be David Clayton, non-executive Chairman of
SDL.
In addition, upon Completion it is intended that Azad Ootam, CTO
of SDL, will become CTO of the Combined Group.
With effect from Completion, it is intended that the service
agreement of each SDL Executive Director (being Adolfo Hernandez
and Xenia Walters ) will be terminated and each SDL Executive
Director will enter into a settlement agreement with SDL, which
will include payment to each SDL Executive Director of an agreed
amount in lieu of notice. It is intended that each SDL Executive
Director will enter into a new service or consultancy agreement
with RWS with effect from Completion, further details of which are
set out at paragraph 20.
Any executive or non-executive directors of RWS or SDL not
appointed to the Board of the Combined Group will step down from
the RWS Board or the SDL Board (as applicable) upon Completion. The
RWS Board and the SDL Board note with thanks the contribution of
those departing directors to their respective companies in recent
years.
Capital structure and dividend policy of the Combined Group
At Completion, the Combined Group will have a strong balance
sheet and significant financing available to it, and is expected to
have a net cash position. The Combined Group will be well
positioned to invest in organic growth opportunities and to pursue
the most attractive, value-enhancing acquisitions in the highly
fragmented and competitive global language services sector. It is
expected that these acquisitions would be complementary to the
capabilities of the Combined Group and would either extend its
range of services or increase its geographical coverage.
The RWS Board expects that the Combined Group will maintain RWS'
progressive dividend policy, which has delivered uninterrupted
dividend growth since RWS listed in 2003. The RWS Board believes
that this would result in a significant uplift in dividend payments
to SDL Shareholders, with the scale and balance sheet strength of
the Combined Group further underpinning its ability to maintain
growth in future dividend payments.
Recommendations
SDL Board
The SDL Directors, who have been so advised by Rothschild &
Co as to the financial terms of the Combination, consider the terms
of the Combination to be fair and reasonable. In providing its
advice to the SDL Directors, Rothschild & Co has taken into
account the commercial assessments of the SDL Directors. Rothschild
& Co is providing independent financial advice to the SDL
Directors for the purposes of Rule 3 of the Takeover Code.
Accordingly, the SDL Directors intend to recommend unanimously that
SDL Shareholders vote in favour of the Scheme at the SDL Court
Meeting, and in favour of the SDL Resolution to be proposed at the
SDL General Meeting.
RWS Board
In order to allot the New RWS Shares, RWS will be required to
seek the approval of the RWS Shareholders at the RWS General
Meeting. The Combination is accordingly conditional on such
approval being obtained.
The RWS Directors have received financial advice from Canaccord
Genuity and Gleacher Shacklock in relation to the Combination. In
providing their advice to the RWS Directors, Canaccord Genuity and
Gleacher Shacklock have taken into account the RWS Directors'
commercial assessment of the Combination.
The RWS Directors consider the Combination to be in the best
interests of RWS Shareholders as a whole and intend to recommend
unanimously that RWS Shareholders vote in favour of the RWS
Resolution to be proposed at the RWS General Meeting, as those RWS
Directors who are interested in RWS Shares have irrevocably
undertaken to do in respect of their own beneficial holdings (and
the beneficial holdings which are under their control) of
90,494,140 RWS Shares representing, in aggregate, approximately
32.9 per cent. of RWS' issued ordinary share capital as at the
close of business on the Latest Practicable Date.
Further details of the above irrevocable undertakings, including
the circumstances in which they cease to be binding, are set out in
Appendix 3 to this Announcement.
Irrevocable undertakings and letters of support
The SDL Directors who are interested in SDL Shares have
irrevocably undertaken to vote in favour of the Scheme at the SDL
Court Meeting, and in favour of the SDL Resolution to be proposed
at the SDL General Meeting, in respect of their own beneficial
holdings (and the beneficial holdings which are under their
control) of 391,965 SDL Shares representing, in aggregate,
approximately 0.4 per cent. of SDL's issued ordinary share capital
as at the close of business on the Latest Practicable Date.
RWS has also received non-binding letters of support from
certain SDL Shareholders to vote in favour of the Scheme at the SDL
Court Meeting, and in favour of the SDL Resolution to be proposed
at the SDL General Meeting, in respect of 30,515,552 SDL Shares
representing, in aggregate, approximately 33.4 per cent. of SDL's
issued ordinary share capital as at the close of business on the
Latest Practicable Date.
RWS has therefore received irrevocable undertakings and letters
of support in respect of a total number of 30,907,517 SDL Shares
representing, in aggregate, approximately 33.9 per cent. of SDL's
issued ordinary share capital as at the close of business on the
Latest Practicable Date.
Further details of these irrevocable undertakings and letters of
support (and the circumstances in which the irrevocable
undertakings will cease to be binding) are set out in Appendix
3.
General
The Combination is expected to be effected by means of a
court-sanctioned scheme of arrangement between SDL and SDL Scheme
Shareholders under Part 26 of the Companies Act, further details of
which are contained in the full text of this Announcement (and will
be included in the Scheme Document). RWS reserves the right to
implement the Combination by way of a Takeover Offer, subject to
the Panel's consent and the terms of the Co-operation
Agreement.
The Combination will also be subject to the conditions and
further terms set out in Appendix 1 to this Announcement and to be
set out in the Scheme Document. It is expected that the Scheme
Document (including notices of the SDL Meetings) together with the
relevant Forms of Proxy will be sent to SDL Shareholders within 28
days of the date of this Announcement (or on such later date as may
be agreed by RWS and SDL with the consent of the Panel).
It is expected that the RWS Circular, which will contain notice
of the RWS General Meeting, will be published and mailed to RWS
Shareholders at or around the same time as the Scheme Document is
posted to SDL Shareholders.
The Scheme Document and the RWS Circular will each be made
available by RWS on its website at
https://www.RWS.com/investor-relations/ and by SDL on its website
at https://www.SDL.com/about/investor-relations.
The RWS General Meeting will be held on the same day as the SDL
Meetings, which are expected to be held in early October 2020. The
Scheme is expected to be effective in Q4 2020, subject to
satisfaction or (where applicable) waiver of the Conditions and
certain further terms set out in Appendix 1 to this
Announcement.
Commenting on the Combination, Andrew Brode, Chairman of RWS
said:
"Bringing together our two businesses creates the world's
leading language services and technology group, allowing us to
provide a broader and enhanced offer to an expanded client base. As
a Combined Group we will have comprehensive capabilities across a
range of language services, language and content software and
solutions, and IP services, further enhancing the two companies'
customer propositions.
"We have a proven track record of creating shareholder value
through the successful integration of businesses and we are
confident that the Combined Group will deliver compelling strategic
and financial benefits, as well as generating significant synergies
for shareholders of both companies.
"The Combined Group will have an attractive cash generative
profile and is expected to have a net cash position at Completion,
which will enable future investment in organic and acquisitive
growth opportunities, alongside the continuation of our progressive
dividend policy.
"We look forward to working with the SDL team to maximise the
significant opportunities ahead. "
Commenting on the Combination, David Clayton, Non-Executive
Chairman of SDL said:
"Having served as Chairman of SDL for seven years, I have been
particularly delighted to see the growth of our business, with SDL
now recognised as having market leading technology. On behalf of
the SDL Board, I would like to thank the management team under the
leadership of Adolfo and Xenia and our employees worldwide for
making SDL the company it is today. The implied premium of 52 per
cent. for SDL Shareholders is a reflection of this achievement. The
Combination will create the world's largest language services and
technology group, leveraging the strengths of both businesses for
the benefits of our customers as well as our shareholders, and I am
particularly excited by the opportunity to lever our market leading
technology and workflow solutions across the Combined Group. I
believe that the scale of the Combined Group will provide
significant opportunities for our employees to play a significant
role in transforming our industry for the benefit of our
customers."
This summary should be read in conjunction with, and is subject
to, the full text of this Announcement (including the Appendices).
The Combination will be subject to the Conditions and further terms
set out in Appendix 1 to this Announcement and to the full terms
and conditions which will be set out in the Scheme Document.
Appendix 2 contains the bases and sources of certain information
used in this summary and this Announcement. Appendix 3 contains
details of the irrevocable undertakings and letters of support
received in relation to the Combination which are referred to in
this Announcement. Appendix 4 contains details of and bases of
calculation of the quantified financial benefits of the
Combination. Appendix 5 contains definitions of certain terms used
in this summary and this Announcement.
For the purposes of Rule 28 of the Takeover Code, quantified
financial benefits statements contained in this Announcement are
the responsibility of RWS and the RWS Directors. Appendix 4 sets
out the quantified financial benefits statements relating to cost
savings and synergies arising out of the Combination and provides
underlying information and bases of belief. Appendix 4 also
includes reports from RWS' reporting accountant,
PricewaterhouseCoopers, and its joint financial advisers, Canaccord
Genuity and Gleacher Shacklock, in connection with quantified
financial benefits statements, as required pursuant to Rule 28.1(a)
of the Takeover Code, and provides underlying information and bases
for the accountant's and advisers' respective reports. Each of
PricewaterhouseCoopers, Canaccord Genuity and Gleacher Shacklock
has given and not withdrawn its consent to the publication of its
report in this Announcement in the form and context in which it is
included.
Analyst and investor presentation
RWS and SDL will host a joint conference call for analysts on 27
August 2020 at 8.30 a.m.. Participants may join the call by dialing
one of the following numbers, approximately 10 minutes before the
start of the call.
Dial in: 0203 7696819
Conference Code: 592967
Link: http://bit.ly/Webinar_27_8_20
Webinar ID: 845-931-587
A copy of RWS' and SDL's joint presentation will be available at
8.00 a.m. today at https://www.RWS.com/investor-relations/.
This Announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation. The person responsible
for this Announcement on behalf of RWS is Desmond Glass, Chief
Financial Officer and Company Secretary. The person responsible for
this Announcement on behalf of SDL is Xenia Walters, Chief
Financial Officer.
Enquiries
RWS Holdings plc
Andrew Brode , Chairman + 44 (0)17 5348
Richard Thompson , Chief Executive Officer 0200
Canaccord Genuity Limited (Joint Financial Adviser
to RWS) +44 (0)20 7523
Simon Bridges, Hanan Lee 8000
Gleacher Shacklock LLP (Joint Financial Adviser
to RWS) + 44 (0)20 7484
Dominic Lee, Tom Quinn, Lewis Robinson 1150
Berenberg (Joint Broker to RWS) + 44 (0)20 3207
Ben Wright, Toby Flaux, Alix Mecklenburg-Solodkoff 7800
Numis Securities (Nominated Adviser and Joint Broker +44 (0)20 7260
to RWS) 1000
Stuart Skinner, Kevin Cruickshank, William Baunton
MHP (Financial PR Adviser to RWS) +44 (0)20 3128
Katie Hunt, Simon Hockridge, Catherine Chapman 8794
SDL plc
David Clayton , Non-Executive Chairman +44 (0)16 2841
Adolfo Hernandez , Chief Executive Officer 0100
+44 (0)20 7280
5000
Rothschild & Co. (Financial Adviser to SDL)
Warner Mandel, Anton Black, Avalon de Paravicini
+44 (0)20 7597
Investec (Joint Broker to SDL) 1234
David Flin, Andrew Pinder, Ben Griffiths
N+1 Singer (Joint Broker to SDL) +44 (0)20 7496
Shaun Dobson, Steve Pearce, Ben Farrow 3000
Luther Pendragon (Financial PR Adviser to SDL) +44 (0)20 7618
Harry Chathli, Claire Norbury, Alexis Gore 9100
CMS Cameron McKenna Nabarro Olswang LLP are retained as legal
adviser for RWS.
DLA Piper UK LLP are retained as legal adviser for SDL.
Important notices relating to financial advisers
Canaccord Genuity Limited ("Canaccord Genuity"), which is
authorised and regulated in the United Kingdom by the Financial
Conduct Authority, is acting exclusively for RWS and no one else in
connection with the matters set out in this Announcement and will
not be responsible to anyone other than RWS for providing the
protections offered to clients of Canaccord Genuity or for
providing advice in relation to the contents of this Announcement
or any matters referred to herein.
Gleacher Shacklock LLP ("Gleacher Shacklock"), which is
authorised and regulated in the United Kingdom by the Financial
Conduct Authority, is acting exclusively for RWS and no one else in
connection with the matters set out in this Announcement and will
not be responsible to anyone other than RWS for providing the
protections offered to clients of Gleacher Shacklock or for
providing advice in relation to the contents of this Announcement
or any matters referred to herein.
Joh. Berenberg, Gossler & Co. KG, London Branch
("Berenberg"), which is regulated by the German Federal Financial
Supervisory Authority (BaFin) and subject to limited regulation in
the United Kingdom by the Financial Conduct Authority, is acting
exclusively for RWS and no one else in connection with the matters
set out in this Announcement and will not be responsible to anyone
other than RWS for providing the protections offered to clients of
Berenberg or for providing advice in relation to the contents of
this Announcement or any matters referred to herein.
Numis Securities Limited ("Numis"), which is authorised and
regulated in the United Kingdom by the Financial Conduct Authority,
is acting exclusively for RWS and no one else in connection with
the matters set out in this Announcement and will not be
responsible to anyone other than RWS for providing the protections
offered to clients of Numis or for providing advice in relation to
the contents of this Announcement or any matters referred to
herein.
N.M. Rothschild & Sons Limited ("Rothschild & Co"),
which is authorised and regulated by the Financial Conduct
Authority in the United Kingdom, is acting exclusively for SDL and
for no one else in connection with the subject matter of this
Announcement and will not be responsible to anyone other than SDL
for providing the protections afforded to its clients or for
providing advice in connection with the subject matter of this
Announcement.
Investec Bank plc ("Investec"), which is authorised by the
Prudential Regulation Authority and regulated in the United Kingdom
by the Prudential Regulation Authority and the Financial Conduct
Authority in the United Kingdom, is acting exclusively for SDL and
for no one else in connection with the subject matter of this
Announcement and will not be responsible to anyone other than SDL
for providing the protections afforded to its clients or for
providing advice in connection with the subject matter of this
Announcement.
Nplus1 Singer Advisory LLP ("N+1 Singer"), which is authorised
and regulated by the Financial Conduct Authority in the United
Kingdom, is acting exclusively for SDL and for no one else in
connection with the subject matter of this Announcement and will
not be responsible to anyone other than SDL for providing the
protections afforded to its clients or for providing advice in
connection with the subject matter of this Announcement.
Further information
This Announcement is for information purposes only. It 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, or the solicitation of any vote or approval in any
jurisdiction, pursuant to the Combination or otherwise, nor shall
there be any sale, issuance or transfer of securities of SDL
pursuant to the Combination or otherwise in any jurisdiction in
contravention of applicable law. The Combination will be
implemented solely by means of the Scheme Document (or, in the
event that the Combination is to be implemented by means of a
Takeover Offer, the offer document) or any document by which the
Combination is made which will contain the full terms and
conditions of the Combination, including details of how to vote in
respect of the Combination.
SDL will prepare the Scheme Document to be distributed to SDL
Shareholders. SDL and RWS urge SDL Shareholders to read the Scheme
Document carefully as it will contain important information
relating to the Combination, the New RWS Shares and the Combined
Group. Any vote in respect of resolutions to be proposed at the SDL
Shareholders Meetings to approve the Combination, the Scheme or
related matters, should be made only on the basis of the
information contained in the Scheme Document. Each SDL Shareholder
is urged to consult its independent professional advisers
immediately regarding the tax consequences of the Combination
applicable to them.
It is expected that the Scheme Document (including notices of
the SDL Meetings) together with the relevant Forms of Proxy will be
sent to SDL Shareholders within 28 days of the date of this
Announcement (or on such later date as may be agreed by RWS and SDL
with the consent of the Panel) . RWS will prepare the RWS Circular
to be distributed to RWS Shareholders and which will be available
on RWS' website at https://www.RWS.com/investor-relations/ and
SDL's website at https://www.SDL.com/about/investor-relations. RWS
urges RWS Shareholders to read the RWS Circular when it becomes
available. Any vote in respect of the RWS Resolution should be made
only on the basis of the information in the RWS Circular. It is
expected that the RWS Circular (including the notice of the RWS
General Meeting) together with the RWS Form of Proxy, will be
posted to RWS Shareholders as soon as is reasonably practicable and
in any event within 28 days of this Announcement, unless otherwise
agreed with the Panel.
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.
This Announcement does not constitute a prospectus or prospectus
equivalent document. The New RWS Shares to be issued pursuant to
the Combination are not being offered to the public by means of
this Announcement. The Combination will be subject to the
applicable requirements of the Takeover Code, the Panel, the London
Stock Exchange and the FCA.
Please be aware that addresses, electronic addresses and certain
other information provided by SDL Shareholders, persons with
information rights and other relevant persons for the receipt of
communication by SDL may be provided to RWS during the Offer Period
as required by Section 4 of Appendix 4 of the Takeover Code.
Overseas Shareholders
This Announcement has been prepared for the purpose of complying
with English law, the Takeover Code, the Market Abuse Regulation,
the AIM Rules, the Listing Rules and the Disclosure Guidance and
Transparency Rules 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 of the United Kingdom.
The release, publication or distribution of this Announcement in
jurisdictions other than the United Kingdom may be restricted by
law and/or regulation. Persons who are not resident in the United
Kingdom, or who are subject to the laws of other jurisdictions
should inform themselves of, and observe, any applicable legal or
regulatory requirements. In particular, the ability of persons who
are not resident in the United Kingdom or who are subject to the
laws of another jurisdiction to participate in the Combination or
to vote their SDL Shares in respect of the Scheme at the SDL Court
Meeting, or to execute and deliver Forms of Proxy appointing
another to vote at the SDL Court Meeting on their behalf, may be
affected by the laws of the relevant jurisdictions in which they
are located or to which they are subject. Any failure to comply
with the applicable 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 Combination disclaim any responsibility or
liability for the violation of such restrictions by any person.
Unless otherwise determined by RWS or required by the Takeover
Code and permitted by applicable law and regulation, participation
in the Combination will not be made available, directly or
indirectly, in, into or from a Restricted Jurisdiction where to do
so would violate the laws in that jurisdiction and no person may
vote in favour of the Combination by any such use, means,
instrumentality or form within a Restricted Jurisdiction or any
other jurisdiction if to do so would constitute a violation of the
laws of that jurisdiction. Accordingly, copies of this Announcement
and all documentation relating to the Combination are not being,
and must not be, directly or indirectly, mailed or otherwise
forwarded, distributed or sent in, into or from a Restricted
Jurisdiction where to do so would violate the laws in that
jurisdiction, and persons receiving this Announcement and all
documents relating to the Combination (including custodians,
nominees and trustees) must not mail or otherwise distribute or
send them in, into or from such jurisdictions as doing so may
invalidate any purported vote in respect of the Combination.
If the Combination is implemented by way of a Takeover Offer
(unless otherwise permitted by applicable law and regulation), the
Takeover Offer may not be made, directly or indirectly, in or into
or by use of the mails or any other means or instrumentality
(including, without limitation, facsimile, e-mail or other
electronic transmission, telex or telephone) of interstate or
foreign commerce of, or any facility of a national, state or other
securities exchange of any Restricted Jurisdiction and the Takeover
Offer will not be capable of acceptance by any such use, means,
instrumentality or facilities or from within any Restricted
Jurisdiction.
The availability of the New RWS Shares under the Combination to
SDL Shareholders who are not resident in the United Kingdom may be
affected by the laws of the relevant jurisdictions in which they
are resident or to which they are subject. Persons who are not
resident in the United Kingdom or who are subject to the laws of
other jurisdictions should inform themselves of, and observe, any
applicable legal or regulatory requirements.
Further details in relation to Overseas Shareholders will be
contained in the Scheme Document.
Notice to US investors
SDL Shareholders in the United States should note that the
Combination relates to the securities of an English company with a
listing on the London Stock Exchange and is proposed to be made by
means of a scheme of arrangement provided for under, and governed
by, English law. A transaction effected by means of a scheme of
arrangement is not subject to the tender offer rules or the proxy
solicitation rules under the US Exchange Act. Accordingly, the
Scheme is subject to procedural and disclosure requirements and
practices applicable in the United Kingdom to a scheme of
arrangement involving a target company in England listed on the
London Stock Exchange, which are different from the disclosure
requirements of the tender offer and proxy solicitation rules under
the US Exchange Act. RWS reserves the right, subject to the prior
written consent of the Panel and the terms of the Co-operation
Agreement, to elect to implement the Combination by way of a
Takeover Offer. If in the future RWS exercises its right to
implement the Combination by way of a Takeover Offer, such Takeover
Offer will be made in compliance with all applicable laws and
regulations, including, without limitation, to the extent
applicable, Section 14(e) of the US Exchange Act and Regulation 14E
thereunder. Such Takeover Offer would be made in the United States
by RWS and no one else. In addition to any such Takeover Offer,
RWS, certain affiliated companies and the nominees or brokers
(acting as agents) may make certain purchases of, or arrangements
to purchase, shares in SDL outside such Takeover Offer during the
period in which such Takeover Offer would remain open for
acceptance. If such purchases or arrangements to purchase were to
be made, they would be made outside the United States and would
comply with applicable law, including the US Exchange Act. Any
information about such purchases will be disclosed as required in
the United Kingdom, will be reported to a Regulatory Information
Service of the FCA and will be available on the London Stock
Exchange website: http://www.londonstockexchange.com/.
The financial information included in this Announcement and
other documentation related to the Combination has been or will
have been prepared in accordance with International Financial
Reporting Standards and thus may not be comparable to financial
information of US companies or companies whose financial statements
are prepared in accordance with US generally accepted accounting
principles.
The New RWS Shares to be issued under the Scheme have not been
and will not be registered under the US Securities Act or under any
laws or with any securities regulatory authority of any state or
other jurisdiction of the United States and may only be offered or
sold in the United States in reliance on an exemption from the
registration requirements of the US Securities Act. The New RWS
Shares are expected to be issued in reliance upon the exemption
from the registration requirements of the US Securities Act
provided by Section 3(a)(10) thereof. SDL Shareholders who are or
will be "affiliates" (within the meaning of Rule 144 of the US
Securities Act) of RWS or SDL prior to, or of RWS after, the
Effective Date will be subject to certain US transfer restrictions
relating to the New RWS Shares received pursuant to the Scheme as
will be further described in the Scheme Document.
For the purposes of qualifying for the exemption from the
registration requirements of the US Securities Act provided by
Section 3(a)(10) thereunder, SDL will advise the Court that the
Court's sanctioning of the Scheme will be relied on by RWS as an
approval of the Scheme following a hearing on the fairness of the
terms and conditions of the Scheme to SDL Shareholders at which all
SDL Shareholders are entitled to appear in person or through
counsel to support or oppose the sanctioning of the Scheme and with
respect to which notification is given to all SDL Shareholders.
None of the securities referred to in this Announcement have
been approved or disapproved by the SEC or any US state securities
commission, nor have any such authorities passed judgment upon the
fairness or the merits of the Combination or determined if this
Announcement is accurate or complete. Any representation to the
contrary is a criminal offence in the United States.
SDL Shareholders in the United States also should be aware that
the transaction contemplated herein may have tax consequences in
the United States and that such consequences, if any, are not
described herein. SDL Shareholders in the United States are urged
to consult with independent professional advisors regarding the
legal, tax and financial consequences of the Combination applicable
to them.
It may be difficult for SDL Shareholders in the United States to
enforce their rights and claims arising out of the US federal
securities laws since RWS and SDL are organised in countries other
than the United States and some or all of their officers and
directors may be residents of, and some or all of their assets may
be located in, jurisdictions other than the United States. SDL
Shareholders in the United States may have difficulty effecting
service of process within the United States upon those persons or
recovering against judgments of US courts, including judgments
based upon the civil liability provisions of the US federal
securities laws. SDL Shareholders in the United States may not be
able to sue a non-US company or its officers or directors in a
non-US court for violations of US securities laws. Further, it may
be difficult to compel a non-US company and its affiliates to
subject themselves to a US court's judgment.
Further details in relation to US investors will be contained in
the Scheme Document.
Forward looking statements
This Announcement (including information incorporated by
reference into this Announcement), any oral statements made by RWS
or SDL in relation to the Combination and other information
published by RWS or SDL may contain statements about RWS, SDL and
the Combined Group that are or may be forward looking statements.
All statements other than statements of historical fact included in
this Announcement may be forward looking statements. Without
limitation, any statements preceded or followed by or that include
the words "targets", "plans", "goals", "believes", "expects",
"aims", "intends", "will", "may", "anticipates", "estimates",
"projects", hopes", "continues", "would", "could", "should" or
words or terms of similar substance or the negative thereof, are
forward looking statements. Forward looking statements include
statements relating to the following: (i) future capital
expenditures, expenses, revenues, earnings, synergies, economic
performance, indebtedness, financial condition, dividend policy,
losses and future prospects; and (ii) business and management
strategies and the expansion and growth of RWS' or SDL's or the
Combined Group's operations and potential synergies resulting from
the Combination.
Such forward looking statements involve risks and uncertainties
that could significantly affect expected results and/or the
operations of RWS, SDL or the Combined Group and are based on
certain assumptions and assessments made by RWS and SDL in light of
their experience and their perception of historical trends, current
conditions, future developments and other factors they believe
appropriate. Except as expressly provided in this Announcement,
they have not been reviewed by the auditors of RWS or SDL. Although
it is believed that the expectations reflected in such forward
looking statements are reasonable, no assurance can be given that
such expectations will prove to have been correct and you are
therefore cautioned not to place reliance on these forward looking
statements which speak only as at the date of this Announcement.
Neither SDL nor RWS, nor any of their respective members,
directors, officers, employees, advisers and any person acting on
behalf of one or more of them assumes any obligation to update or
correct the information contained in this Announcement (whether as
a result of new information, future events or otherwise) except as
required by applicable law (including as required by the Takeover
Code, the AIM Rules, the Listing Rules and the Disclosure Guidance
and Transparency Rules).
There are several factors which could cause actual results to
differ materially from those expressed or implied in forward
looking statements. Among the factors that could cause actual
results to differ materially from those described in the forward
looking statements are changes in the global, political, economic,
business, competitive, market and regulatory forces, future
exchange and interest rates, changes in tax rates and future
business acquisitions or disposals. Such statements are qualified
in their entirety by the inherent risks and uncertainties
surrounding future expectations.
No member of the RWS Group or the SDL Group, 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.
Quantified Financial Benefits Statement
Statements of estimated cost savings and synergies relate to
future actions and circumstances which, by their nature, involve
risks, uncertainties and contingencies. As a result, the cost
savings and synergies referred to may not be achieved, may be
achieved later or sooner than estimated, or those achieved could be
materially different from those estimated. Neither the Quantified
Financial Benefits Statement nor any other statement in this
Announcement should be construed as a profit forecast or
interpreted to mean that the Combined Group's earnings in the
financial year ended 30 September 2022, being the first full
financial year following Completion, or in any subsequent period,
would necessarily match or be greater than or be less than those of
RWS or SDL for the relevant preceding financial period or any other
period. For the purposes of Rule 28 of the Takeover Code, the
Quantified Financial Benefits Statement contained in this
Announcement is the responsibility of RWS and the RWS
Directors.
Profit forecasts and estimates
No statement in this Announcement is intended to constitute a
profit forecast or profit estimate and no statement in this
Announcement should be interpreted to mean that the earnings or
future earnings per share of or dividends or future dividends per
share of RWS or SDL for current or future financial years will
necessarily match or exceed the historical or published earnings or
dividends per share of RWS or SDL, as appropriate.
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 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 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) the offeree
company; and (ii) any securities exchange offeror(s). An Opening
Position Disclosure by a person to whom Rule 8.3(a) of the Takeover
Code applies must be made by no later than 3.30 pm on the 10th
Business Day following the commencement of the Offer Period and, if
appropriate, by no later than 3.30 pm 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 the offeree company 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 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 securities exchange
offeror must make a Dealing Disclosure if the person deals in any
relevant securities of the offeree company 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) the offeree company; and (ii) any securities exchange
offeror, save to the extent that these details have previously been
disclosed under Rule 8 of the Takeover Code. A Dealing Disclosure
by a person to whom Rule 8.3(b) of the Takeover Code applies must
be made by no later than 3.30 pm 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
securities exchange offeror, they will be deemed to be a single
person for the purpose of Rule 8.3 of the Takeover Code.
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 either of them (see Rules 8.1, 8.2 and 8.4
of the Takeover Code).
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 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 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.
Rule 2.9 Disclosure
In accordance with Rule 2.9 of the Takeover Code, SDL announces
that, as at close of business on the Latest Practicable Date, it
has 91,248,003 SDL Shares in issue and admitted to trading on the
London Stock Exchange. SDL has no SDL Shares held in Treasury. The
International Securities Identification Number (ISIN) of the SDL
Shares is GB0009376368.
In accordance with Rule 2.9 of the Takeover Code, RWS announces
that as at close of business on the Latest Practicable Date, it has
275,188,492 RWS Shares in issue and admitted to trading on AIM. RWS
has no RWS Shares held in Treasury. The ISIN of the RWS Shares is
GB00BVFCZV34.
Requesting Hard Copy Documents
Pursuant to Rule 30.3 of the Takeover Code, a person so entitled
may request a copy of this Announcement and any information
incorporated into it by reference to another source in hard copy
form. A person may also request that all future documents,
announcements and information to be sent to that person in relation
to the Combination should be in hard copy form.
RWS Shareholders may request a hard copy of this Announcement
(and any information incorporated by reference in this
Announcement) by writing to Link Asset Services, The Registry, 34
Beckenham Road, Beckenham, Kent, BR3 4TU or by calling Link Asset
Services on +44 (0)371 664 0321. Calls are charged at the standard
geographic rate and will vary by provider. Calls outside the United
Kingdom will be charged at the applicable international rate. The
helpline is open between 9.00 am - 5.30 pm, Monday to Friday
excluding public holidays in England and Wales. Please note that
Link Asset Services cannot provide any financial, legal or tax
advice and calls may be recorded and monitored for security and
training purposes. It is important that you note that unless you
make such a request, a hard copy of this Announcement and any such
information incorporated by reference in it will not be sent to
you. You may also request that all future documents, announcements
and information to be sent to you in relation to the Combination
should be in hard copy form.
SDL Shareholders may request a hard copy of this Announcement
(and any information incorporated by reference in this
Announcement) by writing to Link Asset Services, The Registry, 34
Beckenham Road, Beckenham, Kent, BR3 4TU or by calling Link Asset
Services on +44 (0)371 664 0321. Calls are charged at the standard
geographic rate and will vary by provider. Calls outside the United
Kingdom will be charged at the applicable international rate. The
helpline is open between 9.00 am - 5.30 pm, Monday to Friday
excluding public holidays in England and Wales. Please note that
Link Asset Services cannot provide any financial, legal or tax
advice and calls may be recorded and monitored for security and
training purposes. It is important that you note that unless you
make such a request, a hard copy of this Announcement and any such
information incorporated by reference in it will not be sent to
you. You may also request that all future documents, announcements
and information to be sent to you in relation to the Combination
should be in hard copy form.
Publication on website
A copy of this Announcement will be made available, free of
charge subject to certain restrictions relating to persons resident
in Restricted Jurisdictions, on RWS' website at
https://www.RWS.com/investor-relations/ and on SDL's website at
https://www.SDL.com/about/investor-relations by no later than 12
noon on the Business Day following the date of this
Announcement.
Neither the content of the websites referred to in this
Announcement nor the content of any website accessible from
hyperlinks on RWS' website or SDL's website (or any other website)
is incorporated into, or forms part of, this Announcement.
The Combination is subject to the provisions of the Takeover
Code.
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 THAT JURISDICTION.
THIS ANNOUNCEMENT IS DEEMED BY RWS AND SDL TO CONTAIN INSIDE
INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATION NO
596/2014. UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A
REGULATORY INFORMATION SERVICE, THIS INSIDE INFORMATION IS NOW
CONSIDERED TO BE IN THE PUBLIC DOMAIN.
THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS OR
PROSPECTUS EQUIVALENT DOCUMENT AND INVESTORS SHOULD NOT MAKE ANY
INVESTMENT DECISION IN RELATION TO THE NEW RWS SHARES EXCEPT ON THE
BASIS OF INFORMATION IN THE SCHEME DOCUMENT AND THE RWS CIRCULAR
WHICH ARE PROPOSED TO BE PUBLISHED IN DUE COURSE
FOR IMMEDIATE RELEASE
27 August 2020
Recommended All-Share Combination
of
RWS Holdings plc ("RWS") and SDL plc ("SDL")
1. Introduction
The RWS Board and the SDL Board are pleased to announce that
they have reached agreement on the terms of a recommended all-share
combination of RWS and SDL, pursuant to which RWS will acquire the
entire issued and to be issued share capital of SDL, to be effected
by means of a court-sanctioned scheme of arrangement between SDL
and SDL Scheme Shareholders under Part 26 of the Companies Act (the
"Combination" to form the "Combined Group").
2. The Combination
Under the terms of the Combination, SDL Scheme Shareholders will
be entitled to receive:
1.2246 New RWS Shares in exchange for each SDL Share.
Based on this Exchange Ratio and the Closing Price of 741 pence
per RWS Share on the Latest Practicable Date, the Combination
values each SDL Share at 907 pence and SDL's existing issued and to
be issued share capital at approximately GBP854 million,
representing a premium of:
-- 52 per cent. to SDL's closing share price of 598 pence on 26 August 2020.
On the basis of the Exchange Ratio and the volume-weighted
average share price per RWS Share over the six month period ended
26 August 2020 of 562 pence, the Combination values each SDL Share
at 688 pence, representing a premium of 40 per cent. to SDL's
volume-weighted average share price over the same period.
Immediately following Completion, SDL Shareholders will own
approximately 29.5 per cent. and RWS Shareholders approximately
70.5 per cent. of the Combined Group on a fully diluted basis.
The New RWS Shares will be issued credited as fully paid and
will rank pari passu in all respects with the RWS Shares in issue
at the time the New RWS Shares are issued pursuant to the
Combination, including the right to receive and retain dividends
and other distributions declared, made or paid by reference to a
record date falling after the Effective Date. Application will be
made for the New RWS Shares to be admitted to AIM.
In the event that the Combination is to be implemented by way of
a Takeover Offer, the SDL Shares will be acquired pursuant to such
offer fully paid and free from all liens, charges, equitable
interests, encumbrances and rights of pre-emption and any other
interests of any nature whatsoever and together with all rights
attaching thereto.
3. Background to and reasons for the Combination
Summary
The RWS Board and SDL Board believe that the Combination will
deliver material value for both sets of shareholders and that there
is a compelling strategic rationale for the Combination. In
summary, the RWS Board and the SDL Board believe that the
Combination will create the world's leading language services and
technology group which will have a number of competitive
advantages, achieved through:
-- Bringing together RWS' specialist technical language services
and SDL's language technology expertise;
-- Enhancing the customer proposition of the Combined Group and,
over time, generating margin improvements and revenue synergy
opportunities;
-- Substantially strengthening the Combined Group's language
services positions in the life sciences and technology sectors;
-- Positioning the Combined Group with attractive margins and a highly cash generative profile;
-- Creating an enlarged group with a strong balance sheet and
providing a platform from which to invest in organic and inorganic
growth opportunities; and
-- Generating substantial value from at least GBP15 million of cost synergies.
Bringing together RWS' specialist technical language services
and SDL's language technology expertise
The Combined Group will have broad capabilities across a range
of language services, language and content software and IP
services, combining the strengths of RWS' specialist technical
translation and localisation capabilities with SDL's software,
machine translation and AI capabilities.
The Combination will bring together the technology-enabled
language services of SDL with RWS' translation and localisation
business, creating a highly attractive customer proposition with
pro forma revenue of over GBP700 million in the high growth
language services market. With a global market opportunity of
approximately $57 billion currently served by a highly fragmented
and competitive industry of over 18,000 language services
providers, the Combined Group is expected to have a number of
competitive advantages from its reputation for quality, specialist
capabilities, scale and the breadth of its services.
The Combined Group will also have a highly attractive technology
proposition enhanced by SDL's leading software, machine translation
and AI capabilities. As globalisation, technological developments
and the value of data drive the need for process optimisation
across all industries in which RWS' and SDL's clients operate, the
Combined Group will provide the bandwidth to manage its clients'
data securely on tech-enabled scalable platforms which will drive
further innovation, agility, and efficiency.
Enhancing the customer proposition of the Combined Group and,
over time, generating margin improvements and revenue synergy
opportunities
The Combined Group will be the largest language services and
technology company in the world and will have an expanded
geographical footprint across the US, UK, continental Europe, Asia,
Canada and South America. The greater scale and capabilities of the
Combined Group will create an enhanced product and service
proposition for both companies' customers around the world.
The Combined Group will serve an expanded blue chip customer
base with limited overlap across its core markets, and will benefit
from the complementary nature of the two companies' existing
customer bases. Clients include some of the largest global
companies in the technology, life sciences, pharmaceutical,
medical, chemical, automotive and telecoms industries, including 90
of the world's top 100 brands by value, all the top 10
pharmaceutical companies globally, many of the major West Coast
technology businesses, and approximately half of the top 20 patent
filers worldwide.
The highly complementary nature of the two companies' existing
customer bases and product service offerings, combining SDL's
proprietary technology and translation workflow software with RWS'
specialist capabilities, are expected to generate increased
translation volumes for the Combined Group through leveraging the
two companies' significant investments in their respective
technologies and capabilities, as well as through cross-selling and
up-selling to customers.
The RWS Board expects that the Combination will, over time,
provide opportunity for revenue synergies. For example, the
Combination will create the opportunity to cross-sell RWS' IP
Services to the SDL customer base and SDL's content technologies to
the RWS customer base.
Substantially strengthening the Combined Group's language
services positions in the life sciences and technology sectors
The Combination will bring together RWS' Life Sciences division
with SDL's equivalent Life Sciences focused operations, creating a
significant customer proposition in the $1.9 billion high growth
language services segment of the $1.4 trillion Life Sciences
industry. By bringing together the blue-chip life science client
bases of the two companies and harnessing RWS' reputation for
quality and SDL's technological capabilities, the Combined Group
expects this segment to be a key driver of long term growth,
supported by significant cross-selling and up-selling
opportunities.
The Combination will also create a compelling customer
proposition serving the technology industry by bringing together
the large enterprise clients of Moravia and SDL, which will benefit
customers through an enhanced service, a streamlined delivery
channel and additional innovative products, and the Combined Group
through efficiencies and economies of scale. The Combined Group
will also benefit from existing long term relationships with many
of the major West Coast technology businesses, and the Combination
will provide a full suite of services to help its technology
clients continue to grow their brands globally and make content
relevant and understandable to audiences worldwide, whilst
maintaining a consistent and relevant brand voice.
Positioning the Combined Group with attractive margins and a
highly cash generative profile
The Combination will create a Combined Group with pro forma
FY2019 revenues of GBP732 million, FY2019 adjusted operating profit
of GBP116 million, implying an attractive margin profile of over 15
per cent, before synergies, and FY2019 adjusted profit before tax
of GBP109 million. RWS' management believes this can be further
improved in the long term, as expected increases in translation
volumes leverage previous significant investments in both
companies' technologies and capabilities.
The Combined Group will also have a highly cash generative
profile assisted by its limited capital requirements.
The RWS Board expects that the Combination will result in double
digit earnings per share accretion in the first full financial year
post Completion.
The SDL Board believes that the Combination will result in
enhanced value for SDL Shareholders reflecting a combination of the
agreed Exchange Ratio, participation in the continuation of RWS'
dividend policy post Completion and the significant synergy
potential of the proposed transaction.
Creating an enlarged group with a strong balance sheet and
providing a platform from which to invest in organic and inorganic
growth opportunities
At Completion, the Combined Group will have a strong balance
sheet and significant financing available to it under RWS' US$120
million banking facility, and is expected to have a net cash
position.
The Combined Group will be well positioned to invest in organic
growth opportunities and to pursue the most attractive,
value-enhancing acquisitions in the highly fragmented and
competitive global language services sector. It is expected that
these acquisitions would be complementary to the capabilities of
the Combined Group and would either extend its range of services or
increase its geographical coverage.
Generating substantial value from at least GBP15 million of cost
synergies
The RWS Board, having reviewed and analysed the potential
synergies of the Combination, and based on its experience of
operating in the translation services, software and localisation
sectors, is confident that as a direct result of the Combination,
the Combined Group will generate attractive cost synergies and
create additional shareholder value.
The RWS Board has consulted with the SDL management team on the
scale of available cost synergies, and with the benefit of their
experience of running a software business, as well as taking into
account the factors it can influence, believes that the Combination
will generate significant run-rate annual cost synergies of at
least GBP15 million by the end of the financial year ended 30
September 2022, the first full year post Completion.
These anticipated cost synergies will accrue as a direct result
of the Combination and would not be achieved on a standalone basis.
The potential sources of quantified cost synergies are in addition
to any savings previously targeted and already underway by either
RWS or SDL.
The constituent elements of these quantified cost synergies,
which are expected to originate from the cost bases of both RWS and
SDL, comprise:
-- Combining corporate and support functions: Approximately 40
per cent. of the cost savings are expected to be generated from the
rationalisation and consolidation of corporate and support
functions, including the removal of duplicate public company costs,
the consolidation and rationalisation of the Combined Group's Board
and executive leadership teams, and the combination of other group
support functions;
-- Optimising the Combined Group's sales and marketing
activities: Approximately 40 per cent. of the cost savings are
expected to be generated from the optimisation of the sales and
marketing functions of the Combined Group, including by sharing
best practices and removing duplicate activities;
-- Aligning certain third party spend: Approximately 15 per
cent. of the cost savings are expected to be generated from the
alignment of expenses policies across the Combined Group and the
removal of duplicative third party costs; and
-- Maximising operating efficiencies in overlapping language
translation activities: The balance of the cost savings is expected
to be generated from limited actions to rationalise overlapping
teams within the Combined Group's language translation
activities.
In achieving these cost synergies, the Combined Group expects to
incur aggregate cash implementation costs of approximately GBP17
million, which are all expected to be one-off in nature and
incurred in the financial year in which Completion occurs.
Whilst there is pricing and volume risk in certain areas of
customer overlap, based on the analysis to date and aside from the
one-off integration cash costs referred to above, the RWS Directors
do not expect material dis-synergies to arise as a result of the
Combination.
Further information on the bases of belief supporting the
Quantified Financial Benefits Statement, including the principal
assumptions and sources of information, is set out in Appendix 4 to
this Announcement. These estimated synergies have been reported on
under the Takeover Code by PricewaterhouseCoopers, and by RWS'
joint financial advisers, Canaccord Genuity and Gleacher Shacklock.
Copies of their letters are included in Parts B and C of Appendix
4. References in this Announcement to those estimated cost savings
should be read in conjunction with Appendix 4.
In addition the board of RWS has identified further cost
savings, which have not been quantified and therefore have not been
reported on under the Takeover Code.
4. Recommendations
SDL Board
The SDL Directors, who have been so advised by Rothschild &
Co as to the financial terms of the Combination, consider the terms
of the Combination to be fair and reasonable. In providing its
advice to the SDL Directors, Rothschild & Co has taken into
account the commercial assessments of the SDL Directors. Rothschild
& Co is providing independent financial advice to the SDL
Directors for the purposes of Rule 3 of the Takeover Code.
Accordingly, the SDL Directors intend to recommend unanimously that
SDL Shareholders vote in favour of the Scheme at the SDL Court
Meeting, and in favour of the SDL Resolution to be proposed at the
SDL General Meeting.
RWS Board
In order to allot the New RWS Shares, RWS will be required to
seek the approval of the RWS Shareholders at the RWS General
Meeting. The Combination is accordingly conditional on such
approval being obtained.
The RWS Directors have received financial advice from Canaccord
Genuity and Gleacher Shacklock in relation to the Combination. In
providing their advice to the RWS Directors, Canaccord Genuity and
Gleacher Shacklock have taken into account the RWS Directors'
commercial assessment of the Combination.
The RWS Directors consider the Combination to be in the best
interests of RWS Shareholders as a whole and intend to recommend
unanimously that RWS Shareholders vote in favour of the RWS
Resolution to be proposed at the RWS General Meeting, as those RWS
Directors who are interested in RWS Shares have irrevocably
undertaken to do in respect of their own beneficial holdings (and
the beneficial holdings which are under their control) of
90,494,140 RWS Shares representing, in aggregate, approximately
32.9 per cent. of RWS' issued ordinary share capital as at the
close of business on the Latest Practicable Date.
Further details of the above irrevocable undertakings, including
the circumstances in which they cease to be binding, are set out in
Appendix 3 to this Announcement.
5. Background to and reasons for the recommendation
The Board of SDL remains confident in the standalone prospects
of SDL and is pleased with the substantive progress made over the
last few years across its strategic priorities. The strong delivery
against strategic and operational initiatives saw SDL generate
record revenues of GBP376.3 million and further Adjusted Operating
Profit growth to a total of GBP37.2 million in its financial year
ending 31 December 2019.
The rationale for, and benefits of, the Combination are set out
in paragraph 3 of this Announcement. While the Board of SDL
considers the standalone prospects for SDL to be strong, there are
clear and compelling benefits to RWS, SDL and their customers in a
combination of the two companies.
SDL has developed strong specialist capabilities focusing on
higher growth customers and segments through its solutions and
differentiated offerings including its highly specialised
technology portfolio. SDL works with many of the world's largest
companies across a variety of industries including high-tech, life
sciences, retail/travel, automotive/manufacturing, financial
services and government/defence. With increased scale and larger
business, the Combined Group can enhance its service offering to
its existing customers and drive SDL towards its stated aim of
becoming a leader in language services and language and content
technologies and solutions. Similarly, RWS is one of the largest
specialist technical translation and localisation companies which,
augmented with the machine translation and artificial intelligence
capabilities of SDL, will provide a complementary and adjacent
product offering. Combining some of the operational aspects of the
respective businesses will unlock value and extend the product and
service reach, enhance operational capability and create a
compelling and highly attractive customer proposition in language
services and technology.
In addition, the Board of SDL believes the Combination provides
an opportunity to build a platform to deliver more innovative
future solutions and a strong balance sheet to invest in organic
and inorganic growth opportunities. SDL believes that the scale and
reach of the Combined Group will position the business across a
number of markets which it will be well placed to serve and
grow.
Based on the Closing Price of 741 pence per RWS Share on the
Latest Practicable Date, the Combination values each SDL Share at
907 pence, comprising an equity value of GBP854 million which
represents a premium of approximately 52 per cent over SDL's
ordinary share price of 598 pence as at the Latest Practicable
Date.
For the reasons outlined above, the SDL Board believes the
strategic and financial rationale of the Combination to be
particularly compelling. The Combination is expected to result in
enhanced value for SDL Shareholders, reflecting a combination of
the agreed Exchange Ratio, participation in the continuation of
RWS' dividend policy post-Completion and significant synergy
potential of the proposed transaction.
Furthermore, the Board of SDL believes that the terms of the
Combination fairly reflect SDL and RWS' respective standalone
businesses and their prospects, an appropriate sharing of the
expected synergies resulting from the Combination, and the proposed
balance of the Board and management team of the Combined Group. The
share for share Combination enables SDL Shareholders to participate
fully in the potential value creation of the Combination and
benefit from future shareholder returns, including participating in
the continuation of RWS' stated dividend policy following
Completion. The Board of SDL is pleased that two of its
non-executive directors will join the Board of the Combined Group
and that SDL's CTO will join the management team of the Combined
Group in delivering the successful integration of SDL and RWS and
the resulting synergies.
6. Dividends and RWS dividend policy
Under the Co-operation Agreement, RWS has committed, subject to
certain exceptions, not to announce, declare, make or pay any
dividend or any other distribution on or after the date of this
Announcement and prior to Completion. If RWS announces, declares,
makes or pays any dividend (other than, or in excess of, an RWS
Equalising Dividend) or other distribution or return of capital on
or after the date of this Announcement and prior to Completion,
there will be no change to the Exchange Ratio; however, SDL
reserves the right to pay an equalising dividend to its
shareholders in this event ("SDL Equalising Dividend").
If any dividend (other than, or in excess of, an SDL Equalising
Dividend) or other distribution or return of capital is proposed,
declared, made, paid or becomes payable by SDL in respect of an SDL
Share on or after the date of this Announcement and with a record
date on or before the Scheme Record Time, RWS reserves the right to
pay an equalising dividend to its shareholders ("RWS Equalising
Dividend"). Any exercise by RWS of its rights referred to in this
Condition shall be the subject of an Announcement and shall not be
regarded as constituting any revision or variation of the terms of
the Scheme .
Dividend policy post Completion
The RWS Board expects that the Combined Group will maintain RWS'
progressive dividend policy, which has delivered uninterrupted
dividend growth since RWS listed in 2003. The RWS Board believes
that this would result in a significant uplift in dividend payments
to SDL Shareholders, with the scale and balance sheet strength of
the Combined Group further underpinning its ability to maintain
growth in future dividend payments.
7. Information on RWS
RWS is one of the world's largest providers of intellectual
property support services (patent translations, international
patent filing solutions and searches), a significant provider of
life sciences translations and linguistic validation, a highly
experienced localisation provider, and a high-level specialist
language service provider in other technical areas, providing for
the diverse needs of a blue-chip multinational client base spanning
Europe, North America and Asia. Its clients include all the top 10
pharmaceutical companies globally, many of the major West Coast
technology businesses, and approximately half of the top 20 patent
filers worldwide.
RWS has a 16 year track record of unbroken growth since its IPO,
which has resulted in material value creation for its shareholders.
RWS reported revenues of GBP356 million and adjusted profit before
tax of GBP74 million for the twelve months ended 30 September 2019,
increases of 16% and 20% respectively versus the prior financial
year. More recently, RWS reported revenues of GBP170 million and
adjusted profit before tax of GBP33 million for the six months
ended 31 March 2020, followed by strong trading performance in
April and strong sales in May.
RWS has a successful track record of combining with businesses,
including having successfully integrated RWS Moravia following its
acquisition in 2017. Most recently, RWS announced the acquisitions
of Iconic and Webdunia in June 2020, which complement RWS' existing
translation, localisation and technology services and strengthen
RWS' machine translation capabilities.
RWS is based in the UK, with 36 offices across five continents.
It translates over 2 billion words annually and supports the
translation of over 260 languages. The company is listed on AIM
(RWS.L).
8. Information on SDL
SDL is a top 3 language service provider by revenue, highly
experienced in language technologies and web and structured content
management, and has been operating for over 25 years. The markets
that SDL addresses remain attractive in the long term, underpinned
by strong digital content growth and its customers' expansion into
new markets.
SDL has built competitive differentiation by innovation in
language services, providing advanced technology and artificial
intelligence, and combining services and technology into
solutions.
SDL is also developing its operating model to automate and
streamline its processes and build a data-rich and scalable
operation. SDL's development focuses on areas where it has real
market strength to build a business that has the potential to grow
faster and generate higher returns. The impact of technology, in
particular neural machine translation is changing the landscape of
localisation, and SDL's scale and advanced technology solutions
provide a meaningful competitive advantage and a resilient business
and operating model.
SDL sells to a significant number of the largest companies in
its target sectors, as well as over 1,500 language service
providers and 14,000 freelance translators, and its customers
include 90 of the world's top 100 brands by value.
SDL operates through a network of 63 offices around the world
with over 4,300 employees (including over 1,500 linguists),
translating approximately 1.3 billion words a year via human
translation.
SDL is listed on the premium list of the Main Market of the
London Stock Exchange (LSE: SDL).
9. Current trading
Current trading for both RWS and SDL continues in line with
statements made in their respective half-year trading announcements
on 9 June 2020 and 11 August 2020.
10. Employees, management and locations
Strategic plans for the Combined Group
The Combination will create the world's leading global language
services and technology group which will have a number of
competitive advantages. RWS believes that the Combined Group will
be able to maximise its future growth and profitability potential
by capitalising on the expanded and complementary product portfolio
and geographic footprint, and by harnessing the teams, best
practices and assets of both companies.
The Combined Group intends to move quickly to combine the
existing businesses and upon Completion, the Combined Group will
initiate a detailed review of the operations of both businesses to
assess how they can work most effectively and efficiently together.
The detailed review will define the target operating structure for
the Combined Group, including evaluating opportunities to combine
existing RWS and SDL divisions and support functions.
The detailed review, which is expected to take approximately
three months following Completion, will provide the basis for the
development of an integration programme designed to minimise
disruption to customers and employees whilst delivering the
expected opportunities and benefits of the Combination for the
Combined Group's stakeholders. This detailed review will seek to
identify the optimal structure for the Combination making the most
of the expanded scale, footprint and capabilities the Combination
will enjoy.
As part of this detailed review, the Board of RWS will consider
combining the RWS Life Sciences division with SDL's Regulated
Industries business, which includes Life Sciences, to create a
stronger combined franchise. In addition, the Board of RWS will
consider bringing together those operations of SDL and RWS which
serve certain large enterprise customers (in SDL Language Services
and RWS Moravia respectively) in order to drive the best possible
customer service. The Board of RWS intends to leave RWS IP Services
as a separate business unit. The Board of RWS intends to continue
to run SDL Language Technologies and SDL Content Technologies as
they are today. The detailed review will also consider
opportunities for the Combined Group to provide more of its
services through SDL's leading technology and translation workflow
software in order to maximise efficiencies.
A key benefit of the Combination is the combination of SDL's
proprietary technology and translation workflow software with RWS'
specialist technical translation and localisation capabilities. In
order to fully capture this benefit RWS expects the Combined Group
will have an increased focus on technology and plans to create a
new group CTO role. This role will take full responsibility for the
Group's IT roadmap and resource.
In respect of corporate and support functions, including the
board and executive leadership team, where overlap and duplication
does exist, it is intended that, following a detailed review of the
options available, activities will be consolidated to better
support the future strategy of the Combined Group.
Governance
The Combined Group will draw on the significant talent in both
companies to optimise the benefits of the Combination for
customers, shareholders and other stakeholders.
Under the terms of the Combination, it is intended that:
-- Andrew Brode, Chairman of RWS, will become Chairman of the Board of the Combined Group;
-- Richard Thompson, CEO of RWS, will become CEO of the Combined Group;
-- Desmond Glass, CFO of RWS, will become CFO of the Combined Group;
-- The rest of the Board of the Combined Group will comprise four non-executive directors;
-- Two of these will be existing non-executive directors of RWS,
David Shrimpton, who will not stand for re-election at the first
Annual General Meeting of the Combined Group and will be replaced
by a new externally appointed non-executive director, and Lara Boro
who will become senior independent director when David Shrimpton
stands down; and
-- Two of these will be existing non-executive directors of SDL,
one of which will be David Clayton, non-executive Chairman of
SDL.
In addition, upon Completion it is intended that Azad Ootam, CTO
of SDL, will become CTO of the Combined Group.
With effect from Completion, it is intended that the service
agreement of each SDL Executive Director (being Adolfo Hernandez
and Xenia Walters ) will be terminated and each SDL Executive
Director will enter into a settlement agreement with SDL, which
will include payment to each SDL Executive Director of an agreed
amount in lieu of notice. It is intended that each SDL Executive
Director will enter into a new service or consultancy agreement
with RWS with effect from Completion, further details of which are
set out at paragraph 20.
Any executive or non-executive directors of RWS or SDL not
appointed to the Board of the Combined Group will step down from
the RWS Board or the SDL Board (as applicable) upon Completion. The
RWS Board and the SDL Board note with thanks the contribution of
those departing directors to their respective companies in recent
years.
The Combined Group will continue to prioritise its ESG agenda
and is committed to achieving and maintaining high standards of
corporate responsibility in its business activities.
Management and employees
RWS attaches great importance to the skills and experience of
the existing employees of SDL and RWS and believes that they will
benefit from greater opportunities within the Combined Group
following the Combination. RWS confirms that it intends to
safeguard fully the existing statutory and contractual employment
and pension rights of SDL's employees and management and to make no
material changes to the conditions of employment or change to the
balance of skills and functions of employees across SDL.
The Board of RWS recognises that in order to achieve the
expected benefits of the Combination, it will be necessary to
perform a detailed review of how best to integrate the two
businesses. RWS believes that there is the potential to generate
cost savings in the Combined Group following Completion. As part of
the preparation of the Quantified Financial Benefits Statement,
RWS' initial analysis has identified that there is likely to be an
opportunity to rationalise certain corporate overheads and support
functions, including public company related costs, costs relating
to executive and divisional management, certain support functions
and sales and marketing activities, as well as where there are
overlapping teams within the Combined Group's activities, without
impacting customers. At this stage RWS has not yet developed a
final proposal as to how such integration and restructuring would
be implemented and will only be able to develop and implement such
proposals once the Combined Group has completed its detailed review
referred to in the Strategic plans for the Combined Group section
above.
Subject to the outcome of the detailed review of the integration
options, it is likely that there will be a low single digit
percentage reduction in the Combined Group's headcount where there
is duplication across the Combined Group. At this early stage, RWS
has not yet developed any specific proposals as to how any such
headcount reductions might be implemented, although in the first
instance RWS will seek to address these reductions through fewer
hires to replace employees who leave the businesses as a result of
natural attrition. RWS will only develop and implement such
proposals once the detailed review referred to above has been
completed and discussions have been undertaken with the people
concerned. RWS is fundamentally a people business and intends to
treat its teams fairly and with dignity.
Locations, headquarters and research and development
The Board of RWS considers that it is in the Combined Group's
best interest for certain head office and corporate functions of
both RWS and SDL to be combined. For example, a combination of RWS'
and SDL's IT functions will create an industry leader in technology
solutions for the language services sector and the Board of RWS
believes that this will allow technological developments to
accelerate.
An initial assessment has been undertaken as part of the
preparation of the Quantified Financial Benefits Statement and
following Completion it is intended that the Combined Group will
consider the combination of certain head office and corporate
functions to allow for the better integration of both businesses,
which may result in the rationalisation of the Combined Group's
head office and corporate function footprint. Whilst it is
confirmed that the Combined Group will be headquartered in Chalfont
St Peter, RWS' existing headquarters, a number of options for the
combination of certain head office and corporate functions are
under consideration. The Combined Group will only develop and
implement any such options once each has been considered as part of
the detailed review referred to above.
The Board of RWS also recognises the importance of a global
office network for the Combined Group. As part of its due
diligence, RWS has had sight of the future real estate plan that
SDL announced as part of its half-year trading announcement on 11
August 2020 to right-size its property portfolio over the next five
years and RWS expects to continue with this plan. In addition, RWS
believes that there may be future opportunities to optimise the
office network of the Combined Group, however no benefits have been
included from this as part of the preparation of the Quantified
Financial Benefits Statement. As part of any future considerations
regarding the Combined Group's office network, the Combined Group
will take into account both businesses successful record of staff
working from home during the COVID19 pandemic.
Beyond the potential changes identified above in relation to
certain head office and corporate functions of the Combined Group,
there are no further plans to redeploy the fixed assets of SDL.
Given the importance of SDL's technology capability to the
Combined Group, there are no plans to alter the research and
development function of SDL.
Pensions
Following Completion, the Combined Group does not intend to make
any changes with regard to the agreed employer contributions into
SDL's existing pension scheme(s) or the accrual of benefits to
existing members or the admission of new members to such pension
schemes.
Name and Branding of the Combined Group
Upon Completion, it is intended that the name of the Combined
Group will be RWS. To avoid any potential market confusion a
rebranding program for the SDL business will be carried out so that
over a period of time the SDL business will be rebranded as
RWS.
Listing locations
Prior to the Scheme becoming Effective, it is intended that
applications will be made to the Financial Conduct Authority to
cancel the listing of the SDL Shares on the Official List and to
the London Stock Exchange for the cancellation of trading of the
SDL Shares on the London Stock Exchange's main market for listed
securities, with effect from or shortly following the Effective
Date, and to re-register SDL as a private company.
RWS will seek approval for the New RWS Shares to be admitted to
AIM.
Other
The statements in this paragraph 10 or paragraph 3 which
constitute "post-offer intention statements" for the purposes of
Rule 19.6 of the Takeover Code will apply for 12 months from
Completion.
Views of the SDL Board
In considering the intention to recommend the Combination to SDL
Shareholders, the Board of SDL has given due consideration to the
assurances that RWS has given in relation to management and
employees within the Combined Group.
The SDL Board acknowledges that, following Completion, RWS will
carry out a detailed assessment of the Combined Group's executive,
divisional and local management and this may lead to changes in the
structure and/or composition of the combined team including
potentially removal of overlaps and fewer hires to replace
employees who leave the businesses as a result of natural
attrition. The SDL Board acknowledges that there may be a limited
reduction in the Combined Group's headcount including in corporate
and support functions at SDL's head office where there is
duplication with RWS' existing functions or where the function was
required to support SDL's status as a publicly traded company
listed on the premium segment of the Official List. However, the
Boards of RWS and SDL are committed to determining the employees of
the Combined Group on a best-fit approach and the SDL Board
supports the statement that RWS has no plans to alter the research
and development function of SDL, which will be critical to
delivering value to shareholders by combining both RWS and SDL's
distinct propositions following Completion.
The SDL Board expects that this integration process and any
headcount reductions that might occur will involve engagement and
consultation with the relevant employees, any employee
representatives and other stakeholders.
The Board of SDL welcomes the Combined Group's intentions with
respect to the future operations of the business and its employees
as part of a larger business combined with RWS, in particular, RWS'
confirmation of its intention to safeguard fully the existing
statutory and contractual employment and pension rights of the SDL
Group's employees and management and to make no change to the
balance of skills and functions of employees across the SDL
Group.
11. Irrevocable undertakings and letters of support
The SDL Directors who are interested in SDL Shares have
irrevocably undertaken to vote in favour of the Scheme at the SDL
Court Meeting, and in favour of the SDL Resolution to be proposed
at the SDL General Meeting, in respect of their own beneficial
holdings (and the beneficial holdings which are under their
control) of 391,965 SDL Shares representing, in aggregate,
approximately 0.4 per cent. of SDL's issued ordinary share capital
as at the close of business on the Latest Practicable Date.
RWS has also received non-binding letters of support from the
SDL Shareholders listed in Part B of Appendix 3 to vote in favour
of the Scheme at the SDL Court Meeting, and in favour of the SDL
Resolution to be proposed at the SDL General Meeting, in respect of
30,515,552 SDL Shares representing, in aggregate, approximately
33.4 per cent. of SDL's issued ordinary share capital as at the
close of business on the Latest Practicable Date.
RWS has therefore received irrevocable undertakings and letters
of support in respect of a total number of 30,907,517 SDL Shares
representing, in aggregate, approximately 33.9 per cent. of SDL's
issued ordinary share capital as at the close of business on the
Latest Practicable Date.
Further details of these irrevocable undertakings and letters of
support (and the circumstances in which the irrevocable
undertakings will cease to be binding or otherwise fall away) are
set out in Appendix 3.
12. Scheme of Arrangement and Conditions
It is intended that the Combination will be effected by means of
a court-approved scheme of arrangement between SDL and SDL Scheme
Shareholders under Part 26 of the Companies Act. The procedure
involves, among other things, an application by SDL to the Court to
sanction the Scheme, in consideration for which SDL Shareholders
who are on the register of members at the Scheme Record Time will
receive consideration on the basis set out in paragraph 2 above.
The purpose of the Scheme is to provide for RWS to become the owner
of the entire issued and to be issued ordinary share capital of
SDL.
Upon the Scheme becoming Effective, it will be binding on all
SDL Shareholders, irrespective of whether or not they attended or
voted at the SDL Meetings (and if they attended and voted, whether
or not they voted in favour).
The New RWS Shares will be issued in registered form and will be
capable of being held in both certificated and uncertificated form.
The New RWS Shares will be issued by RWS to SDL Shareholders no
later than 14 days after the Effective Date. Fractions of the New
RWS Shares will not be allotted or issued pursuant to the
Combination, but entitlements of SDL Shareholders will be rounded
down to the nearest whole number of New RWS Shares and all
fractions of New RWS Shares will be aggregated and sold in the
market as soon as practicable after the Effective Date. The net
proceeds of such sale (after deduction of all expenses and
commissions incurred in connection with the sale) will be
distributed in due proportions to SDL Shareholders who would
otherwise have been entitled to such fractions (rounded down to the
nearest penny), save that individual entitlements to amounts of
less than GBP5.00 will be retained for the benefit of the Combined
Group.
The implementation of the Scheme will be subject to the
conditions and further terms which are set out in Appendix 1 of
this Announcement and the further terms and conditions to be set
out in the Scheme Document (and the related Forms of Proxy when
issued) including, amongst other things, the:
1. Scheme becoming Effective by 11:59 p.m. on the Long-stop
Date, failing which the Scheme will lapse and the Combination will
not take place (unless the Panel otherwise consents);
2. approval of the Scheme by a majority in number of the SDL
Shareholders, representing not less than 75 per cent. in value of
the SDL Shares held by those SDL Shareholders, present and voting,
either in person or by proxy, at the SDL Court Meeting or at any
adjournment thereof on or before the 22nd day after the expected
date of the SDL Court Meeting to be set out in the Scheme Document
in due course (or such later date as may be agreed between RWS and
SDL and the Court may allow);
3. passing of the SDL Resolution by the requisite majority at
the SDL General Meeting to be held on or before the 22nd day after
the expected date of the SDL General Meeting to be set out in the
Scheme Document in due course (or such later date as may be agreed
between RWS and SDL and the Court may allow);
4. passing of the RWS Resolution by the requisite majority at the RWS General Meeting;
5. sanction of the Scheme by the Court on or before the 22nd day
after the expected date of the Court Hearing to be set out in the
Scheme Document in due course (or such later date as may be agreed
between RWS and SDL and the Court may allow);
6. in so far as the Combination satisfies the thresholds for
notification and premerger authorisation under the German Act
against Restraints of Competition (the "German Act"), the German
Federal Cartel Office ("FCO") either having cleared or not
prohibited the Combination through the occurrence of any of the
following events:
a. clearance of the Combination pursuant to section 40 (2) sentence 1 of the German Act; or
b. notice of the FCO to the parties within the one-month waiting
period pursuant to section 40 (1) of the German Act that the
criteria for prohibiting the Combination pursuant to section 36 of
the German Act are not satisfied; or
c. expiration of the one-month waiting period pursuant to
section 40 (1) of the German Act without the FCO notifying the
parties to the Combination of the main examination proceedings
(Hauptprüfverfahren) pursuant to section 40 (1) sentence 2 of the
German Act; or
d. expiration of the four-month prohibition period pursuant to
section 40 (2) sentence 2 of the German Act, if applicable extended
by
i. the period of a suspension pursuant to section 40 (2)
sentence 5 of the German Act; and/or;
ii. one month pursuant to section 40 (2) sentence 7 of the
German Act; and/or
iii. a period agreed between the parties and the FCO pursuant to
section 40 (2) sentence 4 no 1 of the German Act;
unless
iv. there is no longer an authorized domestic recipient pursuant
to section -- 39 (3) sentence 2 no 6 of the German Act ; and
v. the FCO has decided to not prohibit the Combination;
7. in so far as the Combination satisfies the Russian thresholds
for notification and premerger authorisation identified in Russian
Federal Law No. 135-FZ on Protection of Competition of 2006 (as
amended) (the "Russian Act"), the Russian Federal Antimonopoly
Service ("FAS") having issued and not revoked or amended consent,
in terms satisfactory to RWS, for the Combination under the Russian
Act; or the FAS providing official written response confirming that
the Combination is not subject to merger control in Russia;
8. in so far as the Combination satisfies the thresholds for
notification and premerger authorisation under the United Kingdom
Enterprise Act 2002 either:
a. by the time all other Conditions have been satisfied or
(where applicable) waived, (i) the CMA having indicated, in terms
satisfactory to RWS acting reasonably, and in response to a
briefing paper submitted by RWS and SDL, that it has no further
questions or that it does not intend to open a CMA Merger
Investigation in relation to the Combination or any matters arising
therefrom; and (ii) not having subsequently opened such an
investigation or indicated that it may do so; or
b. confirmation having been received in writing from the CMA, in
terms satisfactory to RWS acting reasonably, that the CMA does not
intend to make a CMA Phase 2 Reference in connection with the
Combination or any matters arising therefrom; or
c. the period within which the CMA is required to decide whether
the duty to make a CMA Phase 2 Reference applies with respect to
the Combination or any matters arising therefrom has expired
without such a decision having been made;
9. in so far as the Combination satisfies the premerger
notification thresholds identified in the United States
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), the notifications and filings required under the
HSR Act having been made and the applicable HSR waiting period or
any extensions thereof shall have expired or been terminated;
and
10. Admission of the New RWS Shares.
Once the necessary approvals from SDL Shareholders have been
obtained and the other Conditions have been satisfied, or (where
applicable) waived, to become Effective, the Scheme must be
sanctioned by the Court. The Scheme will become Effective in
accordance with its terms upon a copy of the Court Order being
delivered to the Registrar of Companies for registration. Upon the
Scheme becoming Effective, it will be binding on all SDL
Shareholders, irrespective of whether or not they attended or voted
at the SDL Court Meeting or the SDL General Meeting (and if they
attended and voted, whether they voted in favour).
The Combination is subject to the terms and conditions in
Appendix 1 to this Announcement and on the further terms and
conditions that will be set out in the Scheme Document.
Further details of the Scheme, including an indicative timetable
for its implementation, will be set out in the Scheme Document,
which is expected to be despatched to SDL Shareholders as soon as
reasonably practicable and, in any event, within 28 days of the
date of this Announcement. The timing of events which relate to the
implementation of the Combination is, however, subject to the
approval of the Court and is therefore subject to change.
13. Election to switch
Subject to obtaining the consent of the Panel and the terms of
the Co-operation Agreement, RWS reserves the right to elect to
implement the Combination by way of a Takeover Offer as an
alternative to the Scheme. In any such event a Takeover Offer would
be implemented on the same terms, so far as applicable, as those
which apply to the Scheme. Further details relating to this right
are set out in the terms and conditions in Appendix 1 to this
Announcement. If RWS does elect to implement the Combination by way
of a Takeover Offer, and if sufficient acceptances of such Takeover
Offer are received and/or sufficient SDL Shares are otherwise
acquired, it is the intention of RWS to apply the provisions of
sections 979 to 982 (inclusive) of the Companies Act to acquire
compulsorily any outstanding SDL Shares to which such Combination
relates.
14. Indicative timing
The Scheme Document will include the anticipated timetable and
will specify the necessary actions to be taken by SDL Shareholders.
However it is expected that the Combination will have an Effective
Date in Q4 2020.
15. Offer-related arrangements
Confidentiality Agreement
RWS and SDL have entered into a mutual confidentiality agreement
dated 5 March 2020 pursuant to which each of RWS and SDL has
undertaken, among other things, to keep certain information
relating to the Combination and the other party confidential and
not to disclose it to third parties (other than to permitted
parties) unless required by law or regulation.
The confidentiality obligations of each party under the
Confidentiality Agreement continue until the earlier of Completion
and 5 March 2023. The Confidentiality Agreement also contains
customary (a) non-solicit provisions, subject to customary
carve-outs, until 5 March 2021; and (b) standstill provisions,
subject to customary carve-outs, until 5 September 2020.
Co-operation Agreement
On the date of this Announcement, RWS and SDL entered into the
Co-operation Agreement, under which RWS and SDL have agreed to
co-operate and provide each other with reasonable information,
assistance and access in relation to the filings, submissions and
notifications to be made for the process of obtaining regulatory
approvals and clearances required to implement the Combination. RWS
has also agreed to provide SDL with reasonable information,
assistance and access for the preparation of the key shareholder
documentation.
The Co-operation Agreement records the intention of RWS and SDL
to implement the Combination pursuant to the Scheme. However, RWS
may, subject to the consent of the Panel, elect to implement the
Combination by way of a Takeover Offer if:
-- SDL provides its consent;
-- a third party announces an independent competing transaction
(including a firm intention to make an offer and the acquisition of
a significant proportion of the SDL Group's business); or
-- the SDL Directors: (i) do not include a unanimous and
unconditional recommendation of the Scheme in the Scheme Document;
or (ii) withdraw, qualify or adversely modify their recommendation
of the Scheme or intention to recommend the Scheme.
The Co-operation Agreement also contains provisions that will
apply in respect of the SDL Share Plans and certain other
arrangements for the benefit of SDL's employees.
The Co-operation Agreement will terminate:
-- if agreed in writing between RWS and SDL;
-- upon service of written notice by RWS to SDL if, among other
things: (i) any Condition which has not been waived is (or has
become) incapable of satisfaction by the Long-stop Date; (ii) any
Condition which is incapable of waiver is (or has become) incapable
of satisfaction by the Long-stop Date; (iii) the Court refuses to
sanction the Scheme; (iv) (unless otherwise agreed by RWS and SDL)
the Effective Date has not occurred by the Long-stop Date; (v) the
Scheme Document or Takeover Offer document (as the case may be)
does not contain a unanimous and unconditional recommendation of
the Scheme or the Takeover Offer (as applicable) by the SDL Board;
or (vi) SDL makes an announcement that: (a) the SDL Directors no
longer intend to unanimously and unconditionally recommend the
Scheme or the Takeover Offer (as applicable); (b) it will not
convene the SDL Court Meeting or the SDL General Meeting; (c) it
does not intend to publish the Scheme Document; or (d) it
recommends or intends to recommend an independent competing
transaction;
-- upon service of written notice by SDL to RWS if, among other
things: (i) the RWS Circular does not include the unanimous and
unconditional recommendation from the RWS Directors to approve the
RWS Resolution; (ii) RWS makes an announcement that: (a) the RWS
Directors no longer intend to make such recommendation or intend
adversely to qualify or modify such recommendation; (b) it will not
convene the RWS General Meeting; or (c) it does not intend to
publish the RWS Circular;
-- upon service of written notice by RWS or SDL on the other if:
(i) the resolutions proposed at either or both the SDL Court
Meeting or the SDL General Meeting are not passed; or (ii) the
resolutions proposed at the RWS General Meeting is not passed;
-- if the Scheme or Takeover Offer (as applicable) is withdrawn
or lapses prior to the Long-stop Date (other than where such lapse
or withdrawal: (i) is as a result of RWS' election to implement the
Combination by way of a Takeover Offer; or (ii) it is otherwise
followed within five Business Days by an announcement under Rule
2.7 of the Takeover Code made by RWS or a person acting in concert
with it to implement the Combination by a different offer or scheme
on substantially the same or improved terms);
-- an independent competing transaction becomes effective, or
becomes or is declared unconditional in all respects or is
completed; or
-- upon the occurrence of the Effective Date.
Clean Team Agreement
RWS and SDL have entered into a clean team agreement dated 3
August 2020, pursuant to which each of RWS and SDL has agreed to
certain rules for and restrictions on the sharing of certain
commercially sensitive information. Under the Clean Team Agreement,
the relevant information and other materials may be shared with
only specified clean team members, comprising a limited number of
senior management and executives within each of SDL and RWS and
their respective legal and financial advisers. All clean team
members will be bound by the confidentiality obligations under the
agreement for a period of six months following its termination. The
Clean Team Agreement must be read in conjunction with and is
supplemental to the Confidentiality Agreement and the
Confidentiality and Joint Defence Agreement.
Confidentiality and Joint Defence Agreement
RWS and SDL have entered into a confidentiality and joint
defence agreement dated 3 August 2020, pursuant to which each of
RWS and SDL has agreed to certain rules for and restrictions on the
sharing of certain confidential documents. Under the
Confidentiality and Joint Defence Agreement, information and other
materials containing highly commercially sensitive information may
be shared with only the other party's specified outside legal
counsel or other retained experts and not with the other party.
Each party will be bound by the confidentiality obligations under
the agreement for a period of two years. The Confidentiality and
Joint Defence Agreement must be read in conjunction with and is
supplemental to the Confidentiality Agreement and the Clean Team
Agreement.
16. RWS Shareholder approval to issue New RWS Shares
The Combination involves the issue of New RWS Shares to SDL
Shareholders. Accordingly, RWS will be required to seek the
approval of RWS Shareholders for the allotment and issue of New RWS
Shares at the RWS General Meeting. The Combination will be
conditional on, among other things, the RWS Resolution being passed
by the requisite majority of RWS Shareholders at the RWS General
Meeting.
RWS will prepare the RWS Circular which will contain a notice
convening the RWS General Meeting. It is expected that the RWS
Circular will be published and posted to RWS Shareholders at the
same time as the Scheme Document is posted to SDL Shareholders. The
RWS Circular will be made available by RWS on its website at
https://www.RWS.com/investor-relations/ and by SDL on its website
at https://www.SDL.com/about/investor-relations.
17. Admission of New RWS Shares
Prior to the Effective Date, an application will be made to the
London Stock Exchange for the New RWS Shares to be admitted to AIM.
It is expected that Admission will become effective and that
unconditional dealings in the New RWS Shares will commence at 8.00
a.m. on the first Business Day following the Effective Date. The
New RWS Shares will not be listed on any stock exchange other than
AIM, and have not been, and will not be, registered under the US
Securities Act or under any laws of any state or other jurisdiction
of the United States.
18. Delisting and re-registration
Prior to the Scheme becoming Effective, applications will be
made to the FCA to cancel the listing of the SDL Shares on the
Official List, and to the London Stock Exchange to cancel the
trading of the SDL Shares on the Main Market of the London Stock
Exchange, in each case to take effect from or shortly after the
Effective Date. The last day of dealings in SDL Shares on the Main
Market is expected to be the Business Day immediately prior to the
Court Hearing and no transfers will be registered after 6.00 p.m.
on that date.
On the Effective Date, SDL will become a subsidiary of RWS and
share certificates in respect of SDL Shares will cease to be valid
and should be destroyed. In addition, entitlements to SDL Shares
held within the CREST system will be cancelled on the Effective
Date.
Upon the Scheme becoming Effective, RWS will acquire the SDL
Shares fully paid and free from all liens, equitable interests,
charges, encumbrances and other third party rights of any nature
whatsoever and together with all rights attaching to them including
the right to receive and retain all dividends and distributions (if
any) declared, made or paid by reference to a record date after the
Effective Date.
19. Overseas Shareholders
The distribution of this Announcement to, and the availability
of the New RWS Shares to be issued pursuant to the Combination to,
persons who are not resident in the United Kingdom may be affected
by the laws of their relevant jurisdiction. Such persons should
inform themselves of and observe any applicable legal or regulatory
requirements of their jurisdiction. Further details in relation to
Overseas Shareholders of SDL will be found in the Scheme
Document.
This Announcement is provided for information purposes only.
This Announcement is not intended to, and does not constitute, or
form part of, an offer, invitation or the solicitation of an offer
to purchase, otherwise acquire, subscribe for, exchange, sell or
otherwise dispose of any securities, nor is it a solicitation of
any vote or approval in any jurisdiction, nor will there be any
purchase or transfer of the securities referred to in this
Announcement in any jurisdiction in contravention of applicable law
or regulation.
The New RWS Shares to be issued under the Combination have not
been and will not be registered under the US Securities Act or
under any laws or with any securities regulatory authority of any
state or other jurisdiction of the United States. Accordingly,
unless an exemption under relevant securities laws is available,
including the exemption from the registration requirements of the
US Securities Act provided by Section 3(a)(10) thereof, the New RWS
Shares are not being, and may not be, offered, sold, resold,
delivered or distributed, directly or indirectly, in, into or from
the United States. Neither the US Securities and Exchange
Commission nor any US state securities commission has approved or
disapproved of the New RWS Shares, or determined if this
Announcement is accurate or complete. Any representation to the
contrary is a criminal offence.
20. SDL Share Plans
The Combination will affect options and awards granted under the
various SDL Share Plans. Participants in the SDL Share Plans will
be contacted regarding the effect of the Combination on their
rights under the SDL Share Plans and appropriate proposals in
accordance with Rule 15 of the Takeover Code where required will be
made to them in due course, which will set out their choices in the
context of the Combination. Details of the proposals will be set
out in the Scheme Document and in Rule 15 letters to be sent to
participants in the SDL Share Plans.
Unvested awards and options under the SDL Share Plans will
generally vest and become exercisable in consequence of the
Combination.
Awards under the SDL LTIP 2016 will vest subject to the
satisfaction of applicable performance conditions (to be determined
by the SDL Remuneration Committee). In addition, certain awards
under that plan will be reduced to reflect early vesting.
The SDL Executive Directors have each agreed with RWS that they
will enter into a new service or consultancy agreement with RWS for
a maximum period of 12 months commencing on the Effective Date to
assist RWS in achieving a successful integration of the two
businesses. These new arrangements may be on a part-time basis, but
will otherwise be on terms that are no more favourable than the
terms of the relevant SDL Executive Director's existing service
agreement with SDL (the " Executive Directors' Arrangements ").
Each SDL Executive Director has also agreed to enter into a
non-divestment agreement under which a number of shares equal to an
agreed percentage of the New RWS Shares (the " Retained Shares ")
that they are expected to receive in respect of the exercise of
their respective awards under the SDL LTIP 2016 will be held until
the termination or expiry of their new service or consultancy
agreement. Under the terms of the non-divestment agreement if the
SDL Executive Director's new service or consultancy agreement
terminates before the date falling 12 months after the Effective
Date for reasons other than his or her resignation or for gross
misconduct, the Retained Shares will be released to the SDL
Executive Director only at the end of such 12 month period. If,
before the date falling 12 months after the Effective Date, the SDL
Executive Director resigns or his or her new service or consultancy
agreement is terminated for gross misconduct, he or she will
forfeit the Retained Shares.
RWS will offer UK participants in the SDL Sharesave Scheme the
opportunity to exchange their unvested options over SDL Shares
granted under that plan for equivalent options over RWS Shares in
accordance with the terms of the SDL Sharesave Scheme (the "
Rollover ").
For the purpose of Rule 16.2 of the Takeover Code, Rothschild
& Co has confirmed to the SDL Directors that, in its opinion,
the terms of the Executive Directors' Arrangements and the terms of
the Rollover are fair and reasonable.
21. Disclosure of interests
Save in respect of the irrevocable undertakings referred to in
paragraph 11 above, as at the close of business on the Latest
Practicable Date neither RWS, nor any of its directors, nor, so far
as RWS is aware, any person acting in concert (within the meaning
of the Takeover Code) with it:
-- had any interest in or right to subscribe for any relevant securities of SDL;
-- had any short positions in respect of relevant securities of
SDL (whether conditional or absolute and whether in the money or
otherwise), including any short position under a derivative, any
agreement to sell or any delivery obligation or right to require
another person to purchase or take delivery;
-- had borrowed or lent any relevant securities of SDL
(including, for these purposes, any financial collateral
arrangements of the kind referred to in Note 4 on Rule 4.6 of the
Takeover Code) save for any borrowed shares which have been either
on-lent or resold; or
-- was a party to any dealing arrangement of the kind referred
to in Note 11 on the definition of acting in concert in the
Takeover Code.
22. Opening position disclosures
Each of SDL and RWS confirm that it will make an Opening
Position Disclosure, setting out the details required to be
disclosed by it under Rule 8 of the Takeover Code, by no later than
12 noon on 11 September 2020.
23. Documents available on website
Copies of the following documents will be made available on RWS'
and SDL's websites at https://www.RWS.com/investor-relations/ and
https://www.SDL.com/about/investor-relations respectively, by no
later than 12 noon on the Business Day following the date of this
Announcement until the end of the Offer Period:
-- this Announcement;
-- the Confidentiality Agreement;
-- the Co-operation Agreement;
-- the Clean Team Agreement;
-- the Confidentiality and Joint Defence Agreement;
-- the irrevocable undertakings referred to in paragraph 11
above and summarised in Appendix 3 to this Announcement; and
-- the consent letters referred to in paragraph 24 and Appendix 4 below.
None of the contents of SDL's website, the contents of RWS'
website, or the content of any other website accessible from
hyperlinks on either such website, is incorporated into or forms
part of, this Announcement.
24. General
The Scheme will be governed by English law and will be subject
to the jurisdiction of the courts of England and Wales. The Scheme
will be subject to the applicable requirements of the Takeover
Code, the Panel, the London Stock Exchange and the FCA.
The bases and sources for certain financial information
contained in this Announcement are set out in Appendix 2. Details
of the irrevocable undertakings and letters of support received in
relation to the Combination which are referred to in this
Announcement are set out in Appendix 3. Information relating to the
quantified financial benefits of the Combination is set out in
Appendix 4. Certain definitions and terms used in this Announcement
are set out in Appendix 5.
For the purposes of Rule 28 of the Takeover Code, the Quantified
Financial Benefits Statement is the responsibility of RWS and the
RWS Directors. Appendix 4 sets out the Quantified Financial
Benefits Statement relating to cost savings and synergies arising
out of the Combination and provides underlying information and
bases of belief. Appendix 4 also includes reports from RWS'
reporting accountant, PricewaterhouseCoopers, and its joint
financial advisers, Canaccord Genuity and Gleacher Shacklock, in
connection with the Quantified Financial Benefits Statement, as
required pursuant to Rule 28.1(a) of the Takeover Code, and
provides underlying information and bases for the accountant's and
advisers' respective reports.
Each of Canaccord Genuity, Gleacher Shacklock, Berenberg, Numis,
Rothschild & Co, Investec and N+1 Singer have given and not
withdrawn their consent to the publication of this Announcement
with the inclusion herein of the references to their opinions and
names (as applicable) in the form and context in which they are
included.
Enquiries
RWS Holdings plc
Andrew Brode , Chairman + 44 (0)17 5348
Richard Thompson , Chief Executive Officer 0200
Canaccord Genuity Limited (Joint Financial Adviser
to RWS) +44 (0)20 7253
Simon Bridges, Hanan Lee 8000
Gleacher Shacklock LLP (Joint Financial Adviser
to RWS) + 44 (0)20 7484
Dominic Lee, Tom Quinn, Lewis Robinson 1150
Berenberg (Joint Broker to RWS) + 44 (0)20 3207
Ben Wright, Toby Flaux, Alix Mecklenburg-Solodkoff 7800
Numis Securities (Nominated Adviser and Joint Broker +44 (0)20 7260
to RWS) 1000
Stuart Skinner, Kevin Cruickshank, William Baunton
MHP (Financial PR Adviser) +44 (0)20 3128
Katie Hunt, Simon Hockridge, Catherine Chapman 8794
SDL plc
David Clayton , Non-Executive Chairman +44 (0)16 2841
Adolfo Hernandez , Chief Executive Officer 0100
+44 (0)20 7280
5000
Rothschild & Co (Financial Adviser to SDL)
Warner Mandel, Anton Black, Avalon de Paravicini
+ 44 (0)20 7597
Investec (Joint Broker to SDL) 1234
David Flin, Andrew Pinder, Ben Griffiths
N+1 Singer (Joint Broker to SDL) +44 (0)20 7496
Shaun Dobson, Steve Pearce, Ben Farrow 3000
Luther Pendragon (Financial PR Adviser to SDL) +44 (0)20 7618
Harry Chathli, Claire Norbury, Alexis Gore 9100
CMS Cameron McKenna Nabarro Olswang LLP are retained as legal
adviser for RWS.
DLA Piper UK LLP are retained as legal adviser for SDL.
Important notices relating to financial advisers
Canaccord Genuity Limited ("Canaccord Genuity"), which is
authorised and regulated in the United Kingdom by the Financial
Conduct Authority, is acting exclusively for RWS and no one else in
connection with the matters set out in this Announcement and will
not be responsible to anyone other than RWS for providing the
protections offered to clients of Canaccord Genuity or for
providing advice in relation to the contents of this Announcement
or any matters referred to herein.
Gleacher Shacklock LLP ("Gleacher Shacklock"), which is
authorised and regulated in the United Kingdom by the Financial
Conduct Authority, is acting exclusively for RWS and no one else in
connection with the matters set out in this Announcement and will
not be responsible to anyone other than RWS for providing the
protections offered to clients of Gleacher Shacklock or for
providing advice in relation to the contents of this Announcement
or any matters referred to herein.
Joh. Berenberg, Gossler & Co. KG, London Branch
("Berenberg"), which is regulated by the German Federal Financial
Supervisory Authority (BaFin) and subject to limited regulation in
the United Kingdom by the Financial Conduct Authority, is acting
exclusively for RWS and no one else in connection with the matters
set out in this Announcement and will not be responsible to anyone
other than RWS for providing the protections offered to clients of
Berenberg or for providing advice in relation to the contents of
this Announcement or any matters referred to herein.
Numis Securities Limited ("Numis"), which is authorised and
regulated in the United Kingdom by the Financial Conduct Authority,
is acting exclusively for RWS and no one else in connection with
the matters set out in this Announcement and will not be
responsible to anyone other than RWS for providing the protections
offered to clients of Numis or for providing advice in relation to
the contents of this Announcement or any matters referred to
herein.
N.M. Rothschild & Sons Limited ("Rothschild & Co"),
which is authorised and regulated by the Financial Conduct
Authority in the United Kingdom, is acting exclusively for SDL and
for no one else in connection with the subject matter of this
Announcement and will not be responsible to anyone other than SDL
for providing the protections afforded to its clients or for
providing advice in connection with the subject matter of this
Announcement.
Investec Bank plc ("Investec"), which is authorised by the
Prudential Regulation Authority and regulated in the United Kingdom
by the Prudential Regulation Authority and the Financial Conduct
Authority in the United Kingdom, is acting exclusively for SDL and
for no one else in connection with the subject matter of this
Announcement and will not be responsible to anyone other than SDL
for providing the protections afforded to its clients or for
providing advice in connection with the subject matter of this
Announcement.
Nplus1 Singer Advisory LLP ("N+1 Singer"), which is authorised
and regulated by the Financial Conduct Authority in the United
Kingdom, is acting exclusively for SDL and for no one else in
connection with the subject matter of this Announcement and will
not be responsible to anyone other than SDL for providing the
protections afforded to its clients or for providing advice in
connection with the subject matter of this Announcement.
Further information
This Announcement is for information purposes only. It 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, or the solicitation of any vote or approval in any
jurisdiction, pursuant to the Combination or otherwise, nor shall
there be any sale, issuance or transfer of securities of SDL
pursuant to the Combination or otherwise in any jurisdiction in
contravention of applicable law. The Combination will be
implemented solely by means of the Scheme Document (or, in the
event that the Combination is to be implemented by means of a
Takeover Offer, the offer document) or any document by which the
Combination is made which will contain the full terms and
conditions of the Combination, including details of how to vote in
respect of the Combination.
SDL will prepare the Scheme Document to be distributed to SDL
Shareholders. SDL and RWS urge SDL Shareholders to read the Scheme
Document carefully as it will contain important information
relating to the Combination, the New RWS Shares and the Combined
Group. Any vote in respect of resolutions to be proposed at the SDL
Shareholders Meetings to approve the Combination, the Scheme or
related matters, should be made only on the basis of the
information contained in the Scheme Document. Each SDL Shareholder
is urged to consult its independent professional advisers
immediately regarding the tax consequences of the Combination
applicable to them.
It is expected that the Scheme Document (including notices of
the SDL Meetings) together with the relevant Forms of Proxy will be
sent to SDL Shareholders within 28 days of the date of this
Announcement (or on such later date as may be agreed by RWS and SDL
with the consent of the Panel).
RWS will prepare the RWS Circular to be distributed to RWS
Shareholders and which will be available on RWS' website at
https://www.RWS.com/investor-relations/ and SDL's website at
https://www.SDL.com/about/investor-relations. RWS urges RWS
Shareholders to read the RWS Circular when it becomes available.
Any vote in respect of the RWS Resolution should be made only on
the basis of the information in the RWS Circular. It is expected
that the RWS Circular (including the notice of the RWS General
Meeting) together with the RWS Form of Proxy, will be posted to RWS
Shareholders as soon as is reasonably practicable and in any event
within 28 days of this Announcement, unless otherwise agreed with
the Panel.
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.
This Announcement does not constitute a prospectus or prospectus
equivalent document. The New RWS Shares to be issued pursuant to
the Combination are not being offered to the public by means of
this Announcement. The Combination will be subject to the
applicable requirements of the Takeover Code, the Panel, the London
Stock Exchange and the FCA.
Please be aware that addresses, electronic addresses and certain
other information provided by SDL Shareholders, persons with
information rights and other relevant persons for the receipt of
communication by SDL may be provided to RWS during the Offer Period
as required by Section 4 of Appendix 4 of the Takeover Code
Overseas Shareholders
This Announcement has been prepared for the purpose of complying
with English law, the Takeover Code, the Market Abuse Regulation,
the AIM Rules, the Listing Rules and the Disclosure Guidance and
Transparency Rules 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 of the United Kingdom.
The release, publication or distribution of this Announcement in
jurisdictions other than the United Kingdom may be restricted by
law and/or regulation. Persons who are not resident in the United
Kingdom, or who are subject to the laws of other jurisdictions
should inform themselves of, and observe, any applicable legal or
regulatory requirements. In particular, the ability of persons who
are not resident in the United Kingdom or who are subject to the
laws of another jurisdiction to participate in the Combination or
to vote their SDL Shares in respect of the Scheme at the SDL Court
Meeting, or to execute and deliver Forms of Proxy appointing
another to vote at the SDL Court Meeting on their behalf, may be
affected by the laws of the relevant jurisdictions in which they
are located or to which they are subject. Any failure to comply
with the applicable 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 Combination disclaim any responsibility or
liability for the violation of such restrictions by any person.
Unless otherwise determined by RWS or required by the Takeover
Code and permitted by applicable law and regulation, participation
in the Combination will not be made available, directly or
indirectly, in, into or from a Restricted Jurisdiction where to do
so would violate the laws in that jurisdiction and no person may
vote in favour of the Combination by any such use, means,
instrumentality or form within a Restricted Jurisdiction or any
other jurisdiction if to do so would constitute a violation of the
laws of that jurisdiction. Accordingly, copies of this Announcement
and all documentation relating to the Combination are not being,
and must not be, directly or indirectly, mailed or otherwise
forwarded, distributed or sent in, into or from a Restricted
Jurisdiction where to do so would violate the laws in that
jurisdiction, and persons receiving this Announcement and all
documents relating to the Combination (including custodians,
nominees and trustees) must not mail or otherwise distribute or
send them in, into or from such jurisdictions as doing so may
invalidate any purported vote in respect of the Combination.
If the Combination is implemented by way of a Takeover Offer
(unless otherwise permitted by applicable law and regulation), the
Takeover Offer may not be made, directly or indirectly, in or into
or by use of the mails or any other means or instrumentality
(including, without limitation, facsimile, e-mail or other
electronic transmission, telex or telephone) of interstate or
foreign commerce of, or any facility of a national, state or other
securities exchange of any Restricted Jurisdiction and the Takeover
Offer will not be capable of acceptance by any such use, means,
instrumentality or facilities or from within any Restricted
Jurisdiction.
The availability of the New RWS Shares under the Combination to
SDL Shareholders who are not resident in the United Kingdom may be
affected by the laws of the relevant jurisdictions in which they
are resident or to which they are subject. Persons who are not
resident in the United Kingdom or who are subject to the laws of
other jurisdictions should inform themselves of, and observe, any
applicable legal or regulatory requirements.
Further details in relation to Overseas Shareholders will be
contained in the Scheme Document.
Notice to US investors
SDL Shareholders in the United States should note that the
Combination relates to the securities of an English company with a
listing on the London Stock Exchange and is proposed to be made by
means of a scheme of arrangement provided for under, and governed
by, English law. A transaction effected by means of a scheme of
arrangement is not subject to the tender offer rules or the proxy
solicitation rules under the US Exchange Act. Accordingly, the
Scheme is subject to procedural and disclosure requirements and
practices applicable in the United Kingdom to a scheme of
arrangement involving a target company in England listed on the
London Stock Exchange, which are different from the disclosure
requirements of the tender offer and proxy solicitation rules under
the US Exchange Act. RWS reserves the right, subject to the prior
consent of the Panel and the terms of the Co-operation Agreement to
elect to implement the Combination by way of a Takeover Offer. If
in the future RWS exercises its right to implement the Combination
by way of a Takeover Offer, such Takeover Offer will be made in
compliance with all applicable laws and regulations, including,
without limitation, to the extent applicable, Section 14(e) of the
US Exchange Act and Regulation 14E thereunder. Such Takeover Offer
would be made in the United States by RWS and no one else. In
addition to any such Takeover Offer, RWS, certain affiliated
companies and the nominees or brokers (acting as agents) may make
certain purchases of, or arrangements to purchase, shares in SDL
outside such Takeover Offer during the period in which such
Takeover Offer would remain open for acceptance. If such purchases
or arrangements to purchase were to be made, they would be made
outside the United States and would comply with applicable law,
including the US Exchange Act. Any information about such purchases
will be disclosed as required in the United Kingdom, will be
reported to a Regulatory Information Service of the FCA and will be
available on the London Stock Exchange website:
http://www.londonstockexchange.com/.
The financial information included in this Announcement and
other documentation related to the Combination has been or will
have been prepared in accordance with International Financial
Reporting Standards and thus may not be comparable to financial
information of US companies or companies whose financial statements
are prepared in accordance with US generally accepted accounting
principles.
The New RWS Shares to be issued under the Scheme have not been
and will not be registered under the US Securities Act or under any
laws or with any securities regulatory authority of any state or
other jurisdiction of the United States and may only be offered or
sold in the United States in reliance on an exemption from the
registration requirements of the US Securities Act. The New RWS
Shares are expected to be issued in reliance upon the exemption
from the registration requirements of the US Securities Act
provided by Section 3(a)(10) thereof. SDL Shareholders who are or
will be "affiliates" (within the meaning of Rule 144 of the US
Securities Act) of RWS or SDL prior to, or of RWS after, the
Effective Date will be subject to certain US transfer restrictions
relating to the New RWS Shares received pursuant to the Scheme as
will be further described in the Scheme Document.
For the purposes of qualifying for the exemption from the
registration requirements of the US Securities Act provided by
Section 3(a)(10) thereunder, SDL will advise the Court that the
Court's sanctioning of the Scheme will be relied on by RWS as an
approval of the Scheme following a hearing on the fairness of the
terms and conditions of the Scheme to SDL Shareholders at which all
SDL Shareholders are entitled to appear in person or through
counsel to support or oppose the sanctioning of the Scheme and with
respect to which notification is given to all SDL Shareholders.
None of the securities referred to in this Announcement have
been approved or disapproved by the SEC or any US state securities
commission, nor have any such authorities passed judgment upon the
fairness or the merits of the Combination or determined if this
Announcement is accurate or complete. Any representation to the
contrary is a criminal offence in the United States.
SDL Shareholders in the United States also should be aware that
the transaction contemplated herein may have tax consequences in
the United States and that such consequences, if any, are not
described herein. SDL Shareholders in the United States are urged
to consult with independent professional advisors regarding the
legal, tax and financial consequences of the Combination applicable
to them.
It may be difficult for SDL Shareholders in the United States to
enforce their rights and claims arising out of the US federal
securities laws since RWS and SDL are organised in countries other
than the United States and some or all of their officers and
directors may be residents of, and some or all of their assets may
be located in, jurisdictions other than the United States. SDL
Shareholders in the United States may have difficulty effecting
service of process within the United States upon those persons or
recovering against judgments of US courts, including judgments
based upon the civil liability provisions of the US federal
securities laws. SDL Shareholders in the United States may not be
able to sue a non-US company or its officers or directors in a
non-US court for violations of US securities laws. Further, it may
be difficult to compel a non-US company and its affiliates to
subject themselves to a US court's judgment.
Further details in relation to US investors will be contained in
the Scheme Document.
Forward looking statements
This Announcement (including information incorporated by
reference into this Announcement), any oral statements made by RWS
or SDL in relation to the Combination and other information
published by RWS or SDL may contain statements about RWS, SDL and
the Combined Group that are or may be forward looking statements.
All statements other than statements of historical fact included in
this Announcement may be forward looking statements. Without
limitation, any statements preceded or followed by or that include
the words "targets", "plans", "goals", "believes", "expects",
"aims", "intends", "will", "may", "anticipates", "estimates",
"projects", hopes", "continues", "would", "could", "should" or
words or terms of similar substance or the negative thereof, are
forward looking statements. Forward looking statements include
statements relating to the following: (i) future capital
expenditures, expenses, revenues, earnings, synergies, economic
performance, indebtedness, financial condition, dividend policy,
losses and future prospects; and (ii) business and management
strategies and the expansion and growth of RWS' or SDL's or the
Combined Group's operations and potential synergies resulting from
the Combination.
Such forward looking statements involve risks and uncertainties
that could significantly affect expected results and/or the
operations of RWS, SDL or the Combined Group and are based on
certain assumptions and assessments made by RWS and SDL in light of
their experience and their perception of historical trends, current
conditions, future developments and other factors they believe
appropriate. Except as expressly provided in this Announcement,
they have not been reviewed by the auditors of RWS or SDL. Although
it is believed that the expectations reflected in such forward
looking statements are reasonable, no assurance can be given that
such expectations will prove to have been correct and you are
therefore cautioned not to place reliance on these forward looking
statements which speak only as at the date of this Announcement.
Neither SDL nor RWS, nor any of their respective members,
directors, officers, employees, advisers and any person acting on
behalf of one or more of them assumes any obligation to update or
correct the information contained in this Announcement (whether as
a result of new information, future events or otherwise) except as
required by applicable law (including as required by the Takeover
Code, the AIM Rules, the Listing Rules and the Disclosure Guidance
and Transparency Rules).
There are several factors which could cause actual results to
differ materially from those expressed or implied in forward
looking statements. Among the factors that could cause actual
results to differ materially from those described in the forward
looking statements are changes in the global, political, economic,
business, competitive, market and regulatory forces, future
exchange and interest rates, changes in tax rates and future
business acquisitions or disposals. Such statements are qualified
in their entirety by the inherent risks and uncertainties
surrounding future expectations.
No member of the RWS Group or the SDL Group, 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.
Quantified Financial Benefits Statement
Statements of estimated cost savings and synergies relate to
future actions and circumstances which, by their nature, involve
risks, uncertainties and contingencies. As a result, the cost
savings and synergies referred to may not be achieved, may be
achieved later or sooner than estimated, or those achieved could be
materially different from those estimated. Neither the Quantified
Financial Benefits Statement nor any other statement in this
Announcement should be construed as a profit forecast or
interpreted to mean that the Combined Group's earnings in the
financial year ended 30 September 2022, being the first full year
following Completion, or in any subsequent period, would
necessarily match or be greater than or be less than those of RWS
or SDL for the relevant preceding financial period or any other
period. For the purposes of Rule 28 of the Takeover Code, the
Quantified Financial Benefits Statement contained in this
Announcement is the responsibility of RWS and the RWS
Directors.
Profit forecasts and estimates
No statement in this Announcement is intended to constitute a
profit forecast or profit estimate and no statement in this
Announcement should be interpreted to mean that the earnings or
future earnings per share of or dividends or future dividends per
share of RWS and/or SDL for current or future financial years will
necessarily match or exceed the historical or published earnings or
dividends per share of RWS or SDL, as appropriate.
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 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 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) the offeree
company; and (ii) any securities exchange offeror(s). An Opening
Position Disclosure by a person to whom Rule 8.3(a) of the Takeover
Code applies must be made by no later than 3.30 pm on the 10th
Business Day following the commencement of the Offer Period and, if
appropriate, by no later than 3.30 pm 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 the offeree company 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 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 securities exchange
offeror must make a Dealing Disclosure if the person deals in any
relevant securities of the offeree company 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) the offeree company; and (ii) any securities exchange
offeror, save to the extent that these details have previously been
disclosed under Rule 8 of the Takeover Code. A Dealing Disclosure
by a person to whom Rule 8.3(b) of the Takeover Code applies must
be made by no later than 3.30 pm 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
securities exchange offeror, they will be deemed to be a single
person for the purpose of Rule 8.3 of the Takeover Code.
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 either of them (see Rules 8.1, 8.2 and 8.4
of the Takeover Code).
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 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 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.
Rule 2.9 Disclosure
In accordance with Rule 2.9 of the Takeover Code, SDL announces
that, as at close of business on the Latest Practicable Date, it
has 91,248,003 SDL Shares in issue and admitted to trading on the
London Stock Exchange. SDL has no SDL Shares held in Treasury. The
International Securities Identification Number (ISIN) of the SDL
Shares is GB0009376368.
In accordance with Rule 2.9 of the Takeover Code, RWS announces
that as at close of business on the Latest Practicable Date, it has
275,188,492 RWS Shares in issue and admitted to trading on AIM. RWS
has no RWS Shares held in Treasury. The ISIN of the RWS Shares is
GB00BVFCZV34.
Requesting Hard Copy Documents
Pursuant to Rule 30.3 of the Takeover Code, a person so entitled
may request a copy of this Announcement and any information
incorporated into it by reference to another source in hard copy
form. A person may also request that all future documents,
announcements and information to be sent to that person in relation
to the Combination should be in hard copy form.
RWS Shareholders may request a hard copy of this Announcement
(and any information incorporated by reference in this
Announcement) by writing to Link Asset Services, The Registry, 34
Beckenham Road, Beckenham, Kent, BR3 4TU or by calling Link Asset
Services on +44 (0)371 664 0321. Calls are charged at the standard
geographic rate and will vary by provider. Calls outside the United
Kingdom will be charged at the applicable international rate. The
helpline is open between 9.00 am - 5.30 pm, Monday to Friday
excluding public holidays in England and Wales. Please note that
Link Asset Services cannot provide any financial, legal or tax
advice and calls may be recorded and monitored for security and
training purposes. It is important that you note that unless you
make such a request, a hard copy of this Announcement and any such
information incorporated by reference in it will not be sent to
you. You may also request that all future documents, announcements
and information to be sent to you in relation to the Combination
should be in hard copy form.
SDL Shareholders may request a hard copy of this Announcement
(and any information incorporated by reference in this
Announcement) by writing to Link Asset Services, The Registry, 34
Beckenham Road, Beckenham, Kent, BR3 4TU or by calling Link Asset
Services on +44 (0)371 664 0321. Calls are charged at the standard
geographic rate and will vary by provider. Calls outside the United
Kingdom will be charged at the applicable international rate. The
helpline is open between 9.00 am - 5.30 pm, Monday to Friday
excluding public holidays in England and Wales. Please note that
Link Asset Services cannot provide any financial, legal or tax
advice and calls may be recorded and monitored for security and
training purposes. It is important that you note that unless you
make such a request, a hard copy of this Announcement and any such
information incorporated by reference in it will not be sent to
you. You may also request that all future documents, announcements
and information to be sent to you in relation to the Combination
should be in hard copy form.
Publication on website
A copy of this Announcement will be made available, free of
charge subject to certain restrictions relating to persons resident
in Restricted Jurisdictions, on RWS' website at
https://www.RWS.com/investor-relations/ and on SDL's website at
https://www.SDL.com/about/investor-relations by no later than 12
noon on the Business Day following the date of this
Announcement.
Neither the content of the websites referred to in this
Announcement nor the content of any website accessible from
hyperlinks on RWS' or SDL's website (or any other website) is
incorporated into, or forms part of, this Announcement.
The Combination is subject to the provisions of the Takeover
Code.
APPIX 1
Conditions to and Further Terms of the Combination
Part A: The Conditions
1. The Combination will be conditional upon the Scheme becoming
unconditional and becoming Effective, subject to the Takeover Code,
by not later than 11.59 pm on the Long-stop Date.
2. The Scheme will be conditional upon:
(a) the approval of the Scheme by a majority in number
representing 75 per cent. or more in value of the SDL Scheme
Shareholders entitled to vote and present and voting, either in
person or by proxy, at the SDL Court Meeting and at any separate
class meeting which may be required by the Court or at any
adjournment of any such meeting;
(b) the SDL Court Meeting and any separate class meeting which
may be required by the Court or any adjournment of any such meeting
being held on or before the 22nd day after the expected date of the
SDL Court Meeting, to be set out in the Scheme Document (or such
later date, if any, as may be agreed by RWS and SDL in writing and
the Court may allow);
(c) all resolutions necessary to approve and implement the
Scheme being duly passed by the requisite majority or majorities at
the SDL General Meeting, or at any adjournment of that meeting;
(d) the SDL General Meeting or any adjournment of that meeting
being held on or before the 22nd day after the expected date of the
SDL General Meeting, to be set out in the Scheme Document (or such
later date, if any, as may be agreed by RWS and SDL in writing and
the Court may allow);
(e) the sanction of the Scheme (without modification, or with
such modifications as are agreed by RWS and SDL) by the Court;
and
(f) the Court Hearing being held on or before the 22nd day after
the expected date of the Court Hearing, to be set out in the Scheme
Document (or such later date, if any, as may be agreed by RWS and
SDL in writing and the Court may allow).
3. In addition, subject to Part B of this Appendix 1 and to the
requirements of the Panel, the Combination will be conditional upon
the following conditions and, accordingly, the necessary actions to
make the Scheme Effective will only be taken on the satisfaction
or, where relevant, waiver of the following conditions:
(a) the passing at the RWS General Meeting (or at any
adjournment thereof) of the RWS Resolution to authorise the
allotment and issue of the New RWS Shares to SDL Scheme
Shareholders (and any other SDL Shareholders whose SDL Shares are
issued after the Scheme becomes Effective); and
(b) the London Stock Exchange having acknowledged to RWS or its
agent (and such acknowledgement not having been withdrawn) that the
New RWS Shares will be admitted to trading on AIM;
(c) in so far as the Combination satisfies the thresholds for
notification and premerger authorisation under the German Act
against Restraints of Competition (the "German Act"), the German
Federal Cartel Office ("FCO") either having cleared or not
prohibited the Combination through the occurrence of any of the
following events:
i. clearance of the Combination pursuant to section 40 (2)
sentence 1 of the German Act; or
ii. n otice of the FCO to the parties within the one-month
waiting period pursuant to section 40 (1) of the German Act that
the criteria for prohibiting the Combination pursuant to section 36
of the German Act are not satisfied; or
iii. expiration of the one-month waiting period pursuant to
section 40 (1) of the German Act without the FCO notifying the
parties to the Combination of the main examination proceedings
(Hauptprüfverfahren) pursuant to section 40 (1) sentence 2 of the
German Act; or
iv. expiration of the four-month prohibition period pursuant to
section 40 (2) sentence 2 of the German Act, if applicable extended
by
a. the period of a suspension pursuant to section 40 (2)
sentence 5 of the German Act; and/or
b. one month pursuant to section 40 (2) sentence 7 of the German Act; and/or
c. a period agreed between the parties and the FCO pursuant to
section 40 (2) sentence 4 no 1 of the German Act;
unless
d. there is no longer an authorized domestic recipient pursuant
to section -- 39 (3) sentence 2 no 6 of the German Act; and
e. the FCO has decided to not prohibit the Combination;
(d) in so far as the Combination satisfies the Russian
thresholds for notification and premerger authorisation identified
in Russian Federal Law No. 135-FZ on Protection of Competition of
2006 (as amended) (the "Russian Act"), either:
i. the Russian Federal Antimonopoly Service ("FAS") having
issued and not revoked or amended consent, in terms satisfactory to
RWS, for the Combination under the Russian Act; or
ii. the FAS providing official written response confirming that
the Combination is not subject to merger control in Russia;
(e) in so far as the Combination satisfies the thresholds for
notification and premerger authorisation under the United Kingdom
Enterprise Act 2002 either:
i. by the time all other Conditions have been satisfied, or
(where applicable) waived (i) the CMA having indicated, in terms
satisfactory to RWS acting reasonably, and in response to a
briefing paper submitted by RWS and SDL, that it has no further
questions or that it does not intend to open a CMA Merger
Investigation in relation to the Combination or any matters arising
therefrom; and (ii) not having subsequently opened such an
investigation or indicated that it may do so; or
ii. confirmation having been received in writing from the CMA,
in terms satisfactory to RWS acting reasonably, that the CMA does
not intend to make a CMA Phase 2 Reference in connection with the
Combination or any matters arising therefrom; or
iii. the period within which the CMA is required to decide
whether the duty to make a CMA Phase 2 Reference applies with
respect to the Combination or any matters arising therefrom has
expired without such a decision having been made;
(f) in so far as the Combination satisfies the premerger
notification thresholds identified in the United States
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), the notifications and filings required under the
HSR Act having been made and the applicable HSR waiting period or
any extensions thereof shall have expired or been terminated;
(g) no Third Party having given notice of a decision to take,
institute, implement or threaten any action, proceeding, suit,
investigation, enquiry or reference, or having enacted, made or
proposed any statute, regulation, decision, order or change to
published practice and there not continuing to be outstanding any
statute, regulation, decision or order which would or might
reasonably be expected to:
i. make the Combination, its implementation or the acquisition
or the proposed acquisition by RWS or any member of the Wider RWS
Group of any shares or other securities in, or control or
management of, SDL or any member of the Wider SDL Group void,
illegal or unenforceable in any jurisdiction, or otherwise directly
or indirectly restrain, prevent, prohibit, restrict, delay or
otherwise materially adversely interfere with the same or, in each
case which is material in the context of the Wider RWS Group or the
Wider SDL Group taken as a whole, impose additional conditions or
obligations with respect to the Combination (or its implementation)
or such acquisition, or otherwise impede, challenge or interfere
with the Combination (or its implementation) or such acquisition,
or require material adverse amendment to the terms of the
Combination or the acquisition or proposed acquisition of any SDL
Shares or the acquisition of control or management of SDL or any
member of the Wider SDL Group by RWS or any member of the Wider RWS
Group;
ii. materially limit or delay the ability of any member of the
Wider RWS Group or any member of the Wider SDL Group to acquire or
to hold or to exercise effectively, directly or indirectly, all or
any rights of ownership in respect of shares or other securities
(or the equivalent) in, or to exercise voting or management control
over, any member of the Wider SDL Group or any member of the Wider
RWS Group, as the case may be, taken as a whole, in any such case
to an extent which is material in the context of the Combination or
the Wider RWS Group or the Wider SDL Group, as the case may be,
taken as a whole, or in the context of the Combined Group;
iii. require, prevent or materially delay any divestiture or
alter the terms envisaged for any proposed divestiture by any
member of the Wider RWS Group of any shares or other securities in
SDL or any member of the Wider SDL Group, in any such case to an
extent which is material in the context of the Combination or the
Wider RWS Group or the Wider SDL Group, as the case may be, taken
as a whole, or in the context of the Combined Group;
iv. require, prevent or materially delay any divestiture or
alter the terms envisaged for any proposed divestiture by any
member of the Wider RWS Group or by any member of the Wider SDL
Group of all or any part of their respective businesses, assets or
properties or limit the ability of any of them to conduct all or
any part of their respective businesses or to own or control any of
their respective assets or properties or any part thereof (in any
case to an extent which is material in the context of the
Combination, the Wider RWS Group or the Wider SDL Group, as the
case may be, taken as a whole, or in the context of the Combined
Group);
v. require (save as pursuant to sections 974 to 991 of the
Companies Act and the implementation of the Combination), any
member of the Wider RWS Group or of the Wider SDL Group to
subscribe for or acquire, or to offer to subscribe for or acquire,
any shares or other securities (or the equivalent) or interest in
any member of the Wider SDL Group or the Wider RWS Group, in each
case which is material in the context of the Wider RWS Group or the
Wider SDL Group taken as a whole;
vi. materially limit the ability of any member of the Wider RWS
Group or of the Wider SDL Group to integrate or co-ordinate its
business, or any part of it, with the businesses or any part of the
businesses of any other member of the Wider RWS Group and/or of the
Wider SDL Group in each case in a manner which is material in the
context of the Combination, or as the case may be, in the context
of the Wider RWS Group or the Wider SDL Group, as the case may be,
taken as a whole, or in the context of the Combined Group;
vii. result in any member of the Wider RWS Group or the Wider
SDL Group ceasing to be able to carry on business under any name
under which it presently does so (in any case to an extent which is
material in the context of the Combination, the Wider RWS Group or
the Wider SDL Group, as the case may be, taken as a whole, or in
the context of the Combined Group); or
viii. otherwise adversely affect the business, assets, profits,
financial or trading position or prospects of any member of the
Wider RWS Group or of any member of the Wider SDL Group to an
extent which is adverse to and material in the context of the
Combination, the Wider RWS Group or the Wider SDL Group, as the
case may be, in either case, taken as a whole, or in the context of
the Combined Group;
and all applicable waiting and other time periods during which
any such Third Party could take, institute, implement or threaten
such actions, proceedings, suit, investigation, enquiry or
reference or take any other step under any applicable legislation
or regulation of any relevant jurisdiction having expired, lapsed
or been terminated (as the case may be);
(h) all material notifications, filings and/or applications
which are necessary having been made, all applicable waiting and
other time periods (including any extensions of such waiting and
other time periods) under any applicable legislation or regulation
of any relevant jurisdiction having expired, lapsed or terminated
(as appropriate) and all material statutory or regulatory
obligations in any relevant jurisdiction having been complied with,
in each case in connection with the Combination or the acquisition
or proposed acquisition of any shares or other securities in, or
control of, SDL or any other member of the Wider SDL Group by any
member of the Wider RWS Group or the carrying on by any member of
the Wider SDL Group of its business and in each case which is
material in the context of the Wider RWS Group or the Wider SDL
Group taken as a whole;
(i) all Authorisations which are necessary in any relevant
jurisdiction for or in respect of the Combination (or its
implementation) or the acquisition or proposed acquisition of any
shares or other securities in, or control or management of, SDL or
any other member of the Wider SDL Group by RWS or any member of the
Wider RWS Group or the carrying on by any member of the Wider SDL
Group of its business having been obtained, in terms and in a form
reasonably satisfactory to RWS from all appropriate Third Parties
or from any persons or bodies with whom any member of the Wider RWS
Group or any member of the Wider SDL Group has entered into
contractual arrangements and such Authorisations together with all
authorisations necessary for any member of the Wider SDL Group to
carry on its business remaining in full force and effect, and there
being no notice or other intimation of any intention to revoke,
suspend, restrict, modify or not to renew any of the same having
been made in connection with the Combination or any other matter
directly, or indirectly, arising from the Combination (or its
implementation), in each case where the absence of such
Authorisation would have a material adverse effect on the Wider SDL
Group or the Wider RWS Group taken as a whole and all necessary
statutory or regulatory obligations in any relevant jurisdiction
having been complied with;
(j) save as Disclosed, there being no provision of any
arrangement, agreement, lease, licence, permit, franchise or other
instrument to which any member of the Wider SDL Group, is a party,
or by or to which any such member or any of its assets is or may be
bound, entitled or subject, or any circumstance, which, in each
case as a consequence of the Combination or the acquisition or
proposed acquisition by RWS or any member of the Wider RWS Group or
otherwise of any shares or other securities (or the equivalent) in,
or control or management of, SDL or any other member of the Wider
SDL Group, could reasonably be expected to result in, in any case
to an extent which is or would be material in the context of the
Wider SDL Group taken as a whole:
i. any monies borrowed by or any other indebtedness or
liabilities (actual or contingent) of, or any grant available to,
any member of the Wider SDL Group, being or becoming repayable or
being capable of being declared repayable immediately or prior to
their or its stated maturity or the ability of any member of the
Wider SDL Group to borrow monies or incur any indebtedness being
withdrawn or inhibited or becoming capable of being withdrawn or
inhibited;
ii. the creation or enforcement of any mortgage, charge or other
security interest over the whole or any part of the business,
property, assets or interests of any member of the Wider SDL Group
or any such mortgage, charge or other security interest (wherever
and whenever created, arising or having arisen) becoming
enforceable;
iii. any such arrangement, agreement, lease, licence, permit,
franchise or instrument, or the rights, liabilities, obligations or
interests of any member of the Wider SDL Group, thereunder, being,
or becoming capable of being, terminated or adversely modified or
affected or any adverse action being taken or arising thereunder or
any onerous obligation or liability arising thereunder;
iv. any asset or interest of any member of the Wider SDL Group
or any asset the use of which is enjoyed by any member of the Wider
SDL Group being or falling to be disposed of or charged or ceasing
to be available to any member of the Wider SDL Group or any right
arising under which any such asset or interest could be required to
be disposed of or charged or could cease to be available to any
member of the Wider SDL Group otherwise than in the ordinary course
of business;
v. any member of the Wider SDL Group ceasing to be able to carry
on business under any name under which it presently does so;
vi. the creation or assumption of any liabilities (actual or
contingent) by any member of the Wider SDL Group, other than trade
creditors in the ordinary course of business;
vii. the rights, liabilities, obligations or interests of any
member of the Wider SDL Group under any such arrangement,
agreement, lease, licence, permit, franchise or other instrument or
the interests or business of any such member in or with any other
person, firm, company or body (or any agreements or arrangements
relating to any such interests or business) being terminated,
adversely modified or affected;
viii. the financial or trading position of SDL or of any member
of the Wider SDL Group being prejudiced or adversely affected;
or
ix. any member of the Wider SDL Group being required to acquire
or repay any shares in and/or indebtedness of any member of the
Wider SDL Group owed by or owed to any third party;
and no event having occurred which, under any provision of any
such arrangement, agreement, lease, license, permit, franchise or
other instrument to which any member of the Wider SDL Group is a
party, or by or to which any such member or any of its assets may
be found entitled or subject, could result in any of the events or
circumstances which are referred to in sub-paragraphs (i) to (ix)
of this Condition 3(j) in any case to an extent which is or would
be material in the context of the Wider SDL Group as a whole;
(k) save as Disclosed, no member of the Wider SDL Group having since 31 December 2019:
i. issued or agreed to issue, or authorised or proposed or
announced its intention to authorise or propose the issue of,
additional shares or securities of any class, or securities
convertible into or exchangeable for, or rights, warrants or
options to subscribe for or acquire, any such shares or convertible
securities (save as between SDL and its wholly-owned subsidiaries
or between such wholly-owned subsidiaries or pursuant to the SDL
Share Plans);
ii. purchased or redeemed or repaid or proposed the purchase,
redemption or repayment of any of its own shares or other
securities (or the equivalent) or reduced or, made or authorised
any other change to any part of its share capital other than
pursuant to the implementation of the Combination;
iii. recommended, declared, paid or made or proposed to
recommend, declare, pay or make any bonus issue, dividend or other
distribution, whether payable in cash or otherwise save for and any
dividend declared before the Effective Date by any wholly-owned
subsidiary of SDL to SDL or any of their respective wholly-owned
subsidiaries;
iv. save for transactions between SDL and its respective
wholly-owned subsidiaries, or between such wholly-owned
subsidiaries, made, authorised, proposed or announced an intention
to make, propose or authorise any change in its loan capital;
v. save for transactions between SDL and its respective
wholly-owned subsidiaries, or between such wholly-owned
subsidiaries, merged with, demerged or acquired any body corporate,
partnership or business or acquired or disposed of or transferred,
mortgaged or charged or created any security interest over any
material assets or any right, title or interest in any material
assets (including shares in any undertaking and trade investments)
or authorised, proposed or announced the same, in each case which
is material in the context of the Wider SDL Group taken as a
whole;
vi. issued, authorised or proposed or announced an intention to
authorise or propose the issue of, or made any change in or to, any
debentures or, other than trade credit incurred in the ordinary
course of business, incurred or increased any indebtedness or
liability (actual or contingent) except as between SDL and any of
its wholly-owned subsidiaries, or between such wholly-owned
subsidiaries, which in any case is material in the context of the
Wider SDL Group taken as a whole;
vii. entered into, varied, authorised, proposed or announced an
intention to enter into or vary any contract, agreement,
transaction, arrangement or commitment (whether in respect of
capital expenditure or otherwise) which:
(a) is of a long term, onerous or unusual nature or magnitude or
which involves or is or is reasonably likely to involve an
obligation of such a nature or magnitude;
(b) restricts or could reasonably be expected to restrict the
business of any member of the Wider SDL Group; or
(c) is other than in the ordinary course of business,
and which is, in any such case, material in the context of the
Wider SDL Group taken as a whole;
viii. entered into, implemented, effected or authorised any
merger, demerger, reconstruction, amalgamation, scheme, commitment
or other transaction or arrangement in respect of itself or another
member of the Wider SDL Group;
ix. entered into or varied or made an offer (which remains open
for acceptance) to vary the terms of any contract, agreement,
letter of appointment, commitment or arrangement with any of the
directors of any member of the Wider SDL Group as appropriate or
entered into any commitment to change the terms of any of the SDL
Share Plans, save for fee increases and bonuses not resulting in
total annual remuneration of any individual exceeding the
immediately preceding year's remuneration by more than three per
cent. or other bonuses or variations of terms in the ordinary
course of business, which are not material in the context of the
Wider SDL Group taken as a whole;
x. taken any corporate action or had any step, application,
filing in court, notice or legal proceedings started, served,
instituted or threatened against it or petition presented or order
made for its winding-up (voluntarily or otherwise), dissolution or
reorganisation or for the appointment of a receiver, administrator,
administrative receiver, trustee or similar officer of all or any
material part of its assets and revenues or any analogous
proceedings in any jurisdiction which in any case is material in
the context of the Wider SDL Group taken as a whole;
xi. been unable, or admitted in writing that it is unable, to
pay its debts or having stopped or suspended (or threatened to stop
or suspend) payment of its debts generally or having entered into
or taken steps to enter into a moratorium, composition, compromise
or arrangement with its creditors in respect of its debts or ceased
or threatened to cease carrying on all or a substantial part of its
business;
xii. waived, settled or compromised any claim (other than in the
ordinary and usual course of business) to an extent which is
material in the context of the Wider SDL Group taken as a
whole;
xiii. terminated or varied the terms of any agreement or
arrangement between any member of the Wider SDL Group and any other
person in a manner which would or might reasonably be expected to
have a material adverse effect on the financial position or
prospects of the Wider SDL Group taken as a whole;
xiv. made any alteration to its articles of association other
than as required to implement the Combination;
xv. put in place any pension schemes for its directors or their
dependents or made or agreed or consented to any change to:
(a) the terms of the trust deeds constituting the pension
schemes (if any) established for its directors or their dependents;
or
(b) the benefits which accrue, or to the pensions which are payable, thereunder; or
(c) the basis on which qualification for, or accrual or
entitlement to, such benefits or pensions are calculated or
determined; or
(d) the basis upon which the liabilities (including pensions) of
such pension schemes are funded or made,
or agreed or consented to any change to the trustees involving
the appointment of a trust corporation; and
xvi. proposed, agreed to provide or modified the terms of any
share option scheme incentive scheme or other benefit relating to
the employment or termination of employment of any person employed
by the Wider SDL Group, as appropriate, in a manner which is
material in the context of the Wider SDL Group taken as a
whole;
xvii. entered into any contract, agreement, commitment or
arrangement or passed any resolution or made any offer (which
remains open for acceptance) or proposed or announced any intention
with respect to any of the transactions, matters or events referred
to in this Condition (k);
(l) save as Disclosed, since, in the case of SDL, 31 December
2019 or in the case of RWS, 30 September 2019:
i. no adverse change or deterioration having occurred in the
business, assets, financial or trading position or profits or
prospects of any member of the Wider SDL Group or the Wider RWS
Group which in any case is material in the context of the Wider SDL
Group or the Wider RWS Group taken as a whole;
ii. no litigation, arbitration proceedings, prosecution or other
legal proceedings to which any member of the Wider SDL Group is or
may become a party (whether as plaintiff, defendant or otherwise)
having been threatened, announced, implemented or instituted by or
against or remaining outstanding against or in respect of any
member of the Wider SDL Group or the Wider RWS Group which in any
case is material in the context of the Wider SDL Group or the Wider
RWS Group taken as a whole;
iii. no enquiry or investigation by, or complaint or reference
to, any Third Party having been threatened, announced, implemented,
instituted by or against or remaining outstanding against or in
respect of any member of the Wider SDL Group or the Wider RWS Group
which in any such case might reasonably be expected to be material
in the context of the Wider SDL Group or the Wider RWS Group taken
as a whole;
iv. no contingent or other liability having arisen or become
apparent to any member of the RWS Group or increased which might
reasonably be expected to adversely affect any member of the Wider
SDL Group or the Wider RWS Group which is material in the context
of the Wider SDL Group or the Wider RWS Group taken as a whole;
v. no claim being made and no circumstance having arisen which
might reasonably be expected to lead to a claim being made under
the insurance of any member of the Wider SDL Group or the Wider RWS
Group where such claim would not be covered by such insurance and
where such claim is material in the context of the Wider SDL Group
or the Wider RWS Group taken as a whole; and
vi. no steps having been taken which are reasonably likely to
result in the withdrawal, cancellation or termination or
modification of any licence, permit or consent held by any member
of the Wider SDL Group or the Wider RWS Group which is necessary
for the proper carrying on by such member of its business and which
is material in the context of the Wider SDL Group or the Wider RWS
Group;
(m) save as Disclosed, RWS not having discovered:
i. that any financial or business or other information
concerning the Wider SDL Group disclosed at any time by or on
behalf of any member of the Wider SDL Group, whether publicly, to
any member of the Wider RWS Group or otherwise, is materially
misleading or contains any material misrepresentation of fact or
omits to state a fact necessary to make any information contained
therein not materially misleading; or
ii. that any member of the Wider SDL Group, is subject to any
liability (actual or contingent) which is material in the context
of the Wider SDL Group taken as a whole; or
iii. any information which affects the import of any information
disclosed to RWS at any time by or on behalf of any member of the
Wider SDL Group to an extent which is material and adverse in the
context of the Wider SDL Group taken as a whole;
(n) RWS not having discovered that:
i. any past or present member, director, officer or employee of
the Wider SDL Group is or has at any time engaged in any activity,
practice or conduct which would constitute an offence under the
Bribery Act 2010, the US Foreign Corrupt Practices Act of 1977 or
any other applicable anti-corruption legislation or any person that
performs or has performed services for or on behalf of the Wider
SDL Group is or has at any time engaged in any activity, practice
or conduct in connection with the performance of such services
which would constitute an offence under the Bribery Act 2010, the
US Foreign Corrupt Practices Act of 1977 or any other applicable
anti-corruption legislation; or
ii. any asset of any member of the Wider SDL Group constitutes
criminal property as defined by section 340(3) of the Proceeds of
Crime Act 2002 (but disregarding paragraph (b) of that definition);
or
iii. any past or present member, director, officer or employee
of the Wider SDL Group, or any other person for whom any such
person may be liable or responsible, has engaged in any business
with, made any investments in, made any funds or assets available
to or received any funds or assets from: (a) any government, entity
or individual in respect of which European Union persons, or
persons operating in those territories, are prohibited from
engaging in activities or doing business, or from receiving or
making available funds or economic resources, by European Union
laws or regulations, including the economic sanctions administered
by HM Treasury in the United Kingdom; or (b) any government, entity
or individual targeted by any of the economic sanctions of the
United Nations or the European Union or any of its member states;
or
iv. a member of the Wider SDL Group being engaged in any
transaction which would cause RWS to be in breach of any law or
regulation upon its acquisition of SDL, including the economic
sanctions of HM Treasury in the United Kingdom, or any government,
entity or individual targeted by any of the economic sanctions of
the United Nations, the European Union or any of its member states;
and
(o) save as Disclosed, RWS not having discovered that:
i. any past or present member of the Wider SDL Group has failed
to comply with any applicable legislation, regulations or common
law of any jurisdiction or any notice, order or requirement of any
Third Party with regard to the use, treatment, handling, storage,
transport, release, disposal, discharge, presence, spillage, leak
or emission of any waste or hazardous or harmful substance or any
substance likely to impair the environment or harm human or animal
health, or otherwise relating to environmental matters or the
health and safety of any person, or that there has otherwise been
any such use, treatment, handling, storage, transport, release,
disposal, discharge, presence, spillage, leak or emission (whether
or not the same constituted non-compliance by any person with any
legislation, regulations or law and wherever the same may have
taken place) which, in any case, would be reasonably likely to give
rise to any liability (whether actual or contingent) or cost on the
part of any member of the Wider SDL Group which in any case is
material in the context of the Wider SDL Group taken as a whole;
or
ii. there is, or is reasonably likely to be, any obligation or
liability, whether actual or contingent, to make good, repair,
reinstate, remedy or clean up any property now or previously owned,
occupied, operated or made use of or controlled by any past or
present member of the Wider SDL Group or any other property or
controlled waters under any environmental legislation, regulation,
common law, notice, circular, order or other lawful requirement of
any relevant authority or Third Party in any jurisdiction or
otherwise which in any case is material in the context of the Wider
SDL Group taken as a whole.
Part B: Waiver of Conditions and further terms of the
Combination and the Scheme
1. Subject to the requirements of the Panel or, if required, by the Court:
(a) RWS reserves the right to waive all or any of the conditions
in Part A above in whole or in part save for (i) the conditions
contained in Conditions 1, 2(a), 2(c), 2(e), 3(a) and 3(b) which
cannot be waived, and (ii) Condition 3(l) insofar as it relates to
the Wider RWS Group or any part thereof. If any of the deadlines in
Conditions 2(b), 2(d) and 2(f) are not met, RWS shall make an
announcement by 8.00 a.m. on the Business Day following such
deadline confirming whether it has invoked or waived the relevant
Condition or agreed to extend the deadline; and
(b) SDL reserves the right to waive, in whole or in part,
Condition 3(l), except insofar as it relates to the Wider SDL Group
or any part thereof.
Conditions 2(a), 2(b), 2(c), 2(d) and 3(a) to 3(o) (inclusive)
in Part A above must each be fulfilled by, or (if capable of
waiver) be waived by, RWS or SDL (as the case may be) by no later
than 11.59 pm on the date immediately preceding the date of the
Court Hearing (or such later date as RWS, SDL, the Panel and, if
required, the Court may allow) failing which the Combination will
lapse.
2. The Combination will lapse if the Scheme does not become
Effective by no later than 11.59 pm on the Long-stop Date.
3. Neither RWS nor SDL (as the case may be) shall be under any
obligation to waive (if capable of waiver), to determine to be or
remain satisfied or to treat as fulfilled any of the Conditions by
a date earlier than the latest date of the fulfilment of that
Condition notwithstanding that the other Conditions to the
Combination may at such earlier date have been waived or fulfilled
and that there are at such earlier date no circumstances indicating
that any such conditions may not be capable of fulfilment.
4. If RWS is required by the Panel to make an offer for SDL
Shares under the provisions of Rule 9 of the Takeover Code, RWS may
make such alterations to the Conditions and certain further terms
of the Combination as are necessary to comply with the provisions
of that Rule.
5. The Combination will lapse (unless otherwise agreed with the Panel) if:
(a) in so far as the Combination or any matter arising from or
relating to the Scheme or Combination constitutes a concentration
with a Community dimension within the scope of the EC Merger
Regulation, the European Commission either initiates proceedings
under Article 6(1)(c) of the EC Merger Regulation or makes a
referral to a competent authority in the United Kingdom under
Article 9(1) of the EC Merger Regulation and there is then a CMA
Phase 2 Reference; or
(b) the Combination or any matter arising from or relating to
the Scheme or Combination becomes subject to a CMA Phase 2
Reference,
in either case, before the date of the SDL Court Meeting.
6. RWS reserves the right to elect to implement the Combination
by way of a Takeover Offer (subject to the Panel's consent and the
terms of the Co-operation Agreement) as an alternative to the
Scheme. In such event, such offer will be implemented on the same
terms and conditions (subject to appropriate amendments, including
(without limitation) an acceptance condition set at 90 per cent.
(or such lower percentage (being more than 50 per cent.) as RWS may
decide (subject to the Panel's consent) of the shares to which such
offer relates)), so far as applicable, as those which would apply
to the Scheme (the "Takeover Offer Acceptance Condition ").
Further, if sufficient acceptances of such Takeover Offer are
received and/or sufficient SDL Shares are otherwise acquired, it is
the intention of RWS to apply the provisions of section 979 of the
Companies Act to compulsorily acquire any outstanding SDL Shares to
which such Takeover Offer relates.
7. The SDL Shares will be acquired pursuant to the Combination
fully paid and free from all liens, charges, equitable interests,
security interests, encumbrances, rights of pre-emption and any
other rights and interests of any nature whatsoever and together
with all rights now and hereafter attaching thereto, including
voting rights and the right to receive and retain in full all
dividends and other distributions (if any) declared, or made on or
after the Effective Date (excluding any SDL Equalising
Dividend).
8. The New RWS Shares will be issued credited as fully paid and
will rank pari passu in all respects with the RWS Shares in issue
at the time the New RWS Shares are issued pursuant to the
Combination, including the right to receive and retain dividends
and other distributions declared, made or paid by reference to a
record date falling after the Effective Date.
9. Under Rule 13.5 of the Takeover Code, RWS may only invoke a
condition to the Combination so as to cause the Combination not to
proceed, to lapse or to be withdrawn where the circumstances which
give rise to the right to invoke the condition are of material
significance to RWS in the context of the Combination. The
conditions contained in Condition 1, 2, 3(a) and 3(b) of Part A and
the Takeover Offer Acceptance Condition are not subject to this
provision of the Takeover Code.
10. Under Rule 13.6 of the Takeover Code, SDL may not invoke, or
cause or permit RWS to invoke any condition to the Combination
unless the circumstances which give rise to the right to invoke the
condition are of material significance to SDL Shareholders in the
context of the Combination.
11. The Combination and the Scheme will be governed by English
law and be subject to the jurisdiction of the Court and to the
conditions and further terms set out in this Appendix 1 and to be
set out in the Scheme Document. The Combination will also be
subject to the applicable requirements of the Companies Act, the
Court, the London Stock Exchange and the Takeover Code. This
Announcement does not constitute, or form part of, an offer or
invitation to purchase SDL Shares or any other securities.
12. The availability of the Combination to persons not resident
in the United Kingdom may be affected by the laws of the relevant
jurisdictions. Persons who are not resident in the United Kingdom
should inform themselves about and observe any applicable
requirements. Further details in relation to Overseas Shareholders
will be contained in the Scheme Document. The New RWS Shares to be
issued under the Combination have not been and will not be
registered under the US Securities Act or under any laws or with
any securities regulatory authority of any state or other
jurisdiction of the United States or under any of the relevant
securities laws of any other Restricted Jurisdiction. Accordingly,
the New RWS Shares may not be offered, sold or delivered, directly
or indirectly, in or into the United States, or any other
Restricted Jurisdiction, except pursuant to exemptions from
applicable requirements of any such jurisdiction, including the
exemption from the registration requirements of the US Securities
Act provided by Section 3(a)(10) thereof.
13. The Combination is not being made, directly or indirectly,
in, into or from, or by use of the mails of, or by any means of
instrumentality (including, but not limited to, facsimile, e-mail
or other electronic transmission, telex or telephone) of interstate
or foreign commerce of, or of any facility of a national, state or
other securities exchange of, any jurisdiction where to do so would
violate the laws of that jurisdiction.
14. If any dividend (other than, or in excess of, an SDL
Equalising Dividend) or other distribution or return of capital is
proposed, declared, made, paid or becomes payable by SDL in respect
of an SDL Share on or after the date of this Announcement and with
a record date on or before the Scheme Record Time, RWS reserves the
right to pay an RWS Equalising Dividend. Any exercise by RWS of its
rights referred to in this Condition shall be the subject of an
Announcement and shall not be regarded as constituting any revision
or variation of the terms of the Scheme .
15. If RWS announces, declares, makes or pays any dividend
(other than, or in excess of, an RWS Equalising Dividend) or other
distribution or return of capital on or after the date of this
Announcement and prior to Completion, SDL reserves the right to pay
an SDL Equalising Dividend. Any exercise by SDL of its rights
referred to in this Condition shall be the subject of an
Announcement and shall not be regarded as constituting any revision
or variation of the terms of the Scheme.
16. Fractions of the New RWS Shares will not be allotted or
issued pursuant to the Combination, but entitlements of SDL
Shareholders will be rounded down to the nearest whole number of
New RWS Shares and all fractions of New RWS Shares will be
aggregated and sold in the market as soon as practicable after the
Combination becomes Effective. The net proceeds of such sale (after
deduction of all expenses and commissions incurred in connection
with the sale) will be distributed in due proportions to SDL
Shareholders who would otherwise have been entitled to such
fractions (rounded down to the nearest penny), save that individual
entitlements to amounts of less than GBP5.00 will be retained for
the benefit of the Combined Group .
17. Each of the Conditions shall be regarded as a separate
Condition and shall not be limited by reference to any other
Condition.
APPIX 2
Sources of Information and Bases of Calculation
In this Announcement, unless otherwise stated or the context
otherwise requires, the following bases and sources have been
used.
1. All Closing Prices for SDL Shares and RWS Shares have been
derived from the Daily Official List and represent the Closing
Price of the relevant shares on the relevant date.
2. The offer value of GBP854 million attributed to the issued
and to be issued share capital of SDL is based upon:
i. the 91,248,003 SDL Shares in issue as at close of business on
the Latest Practicable Date;
ii. a maximum of 2,844,112 SDL Shares which may be issued on the
exercise of options or vesting of awards granted or agreed to be
granted under the existing share plans of SDL (calculated using the
Treasury Stock Method); and
iii. the Exchange Ratio.
3. The fully diluted share capital of RWS (being 275,357,693 RWS Shares) is based upon:
i. the 275,188,492 RWS Shares in issue as at the close of
business on the Latest Practicable Date; and
ii. 169,201 RWS Shares which may be issued on or after the date
of this Announcement on the exercise of options or vesting of
awards granted or agreed to be granted under the existing share
plans of RWS (calculated using the Treasury Stock Method).
4. The fully diluted share capital of the Combined Group and the
percentage of the share capital that RWS Shareholders and SDL
Shareholders will own on a fully diluted basis upon Completion is
based upon:
i. the fully diluted share capital of RWS referred to in
paragraph 3 above; and
ii. the 115,225,203 New RWS Shares that SDL Shareholders will
receive under the terms of the Combination, based on the fully
diluted share capital of SDL and the Exchange Ratio referred to in
paragraph 2 above.
5. Unless otherwise stated, the financial information relating
to SDL is extracted (without adjustment) from the:
i. audited consolidated financial statements of SDL for the year
ended 31 December 2019; and
ii. unaudited consolidated interim financial statements
contained in the interim results of SDL for the period ended 30
June 2020.
6. Unless otherwise stated, the financial information relating
to RWS is extracted (without adjustment) from the:
i. audited consolidated financial statements of the RWS Group
for the year ended 30 September 2019; and
ii. unaudited consolidated interim financial statements
contained in the interim results of the RWS Group for the period
ended 31 March 2020.
7. Certain figures in this Announcement have been subject to rounding adjustments.
8. The synergy numbers are unaudited. Further information
underlying the Quantified Financial Benefits Statement contained in
this Announcement is provided in Appendix 4.
9. The volume-weighted average price of an SDL Share and of an
RWS Share is derived from data provided by Bloomberg.
10. Statements about the pro forma financials of the Combination
have been based on audited information obtained from (i) RWS'
annual report for the financial year ended 30 September 2019 and
(ii) SDL's annual report for the financial year ended 31 December
2019.
11. Statements about the expected net cash position of the Combined Group are based on GAAP, pre-implementation of IFRS 16 and conversion of RWS' US dollar-denominated debt into sterling based on spot FX rates as at the Latest Practicable Date.
APPIX 3
Details of Irrevocable Undertakings and Letters of Support
PART A - Irrevocable undertakings in respect of SDL Shares from
SDL Directors
The following SDL Directors have given irrevocable undertakings
in respect of their entire beneficial holdings (and the beneficial
holdings which are under their control) of SDL Shares to vote or
procure votes in favour of the resolutions relating to Scheme at
the SDL Meetings (or in the event that the Combination is
implemented by way of a Takeover Offer, accept or procure the
acceptance of the Takeover Offer), amounting in aggregate to
391,965 SDL Shares, representing approximately 0.4 per cent. of
SDL's existing issued ordinary share capital as at the Latest
Practicable Date:
Percentage of issued share capital of SDL as at the Latest Practicable
Name Number of SDL Shares Date
---------------------- --------------------- -----------------------------------------------------------------------
David Clayton 133,950 0.15%
Glenn Collinson 53,373 0.06%
Amanda Gradden 7,500 0.01%
Adolfo Hernandez 162,500 0.18%
Christopher Humphrey 20,000 0.02%
Gordon Stuart 4,152 0.00%
Xenia Walters 10,490 0.01%
These irrevocable undertakings will continue to be binding in
the event that a higher competing offer is made for SDL.
Each irrevocable undertaking will lapse if, amongst other
things:
-- in the event the Combination is implemented by way of a
Scheme, if the Scheme Document is not posted to SDL Shareholders
within the permitted period under the Takeover Code or as otherwise
agreed with the Panel;
-- in the event the Combination is implemented by way of a
Scheme, if the Scheme or any resolution to be proposed is not
approved by the requisite majority of the SDL Shareholders at the
SDL General Meeting or the SDL Court Meeting;
-- in the event the Combination is implemented by way of a
Takeover Offer, if the offer document is not posted to SDL
Shareholders within the permitted period under the Takeover Code or
as otherwise agreed with the Panel;
-- on the date on which the Combination is withdrawn or lapses
in accordance with its terms (except where the Combination is
withdrawn or lapses as a result of RWS exercising its right to
implement the Combination by way of a Takeover Offer in accordance
with the Takeover Code rather than by way of a Scheme or vice
versa); or
-- if any event occurs or becomes known to RWS before despatch
of the Scheme Document or the offer document (as the case may be)
as a result of which the Panel requires or agrees that RWS need not
make the Combination.
PART B - Letters of support in respect of SDL Shares from other
SDL Shareholders
The following SDL Shareholders (being SDL Shareholders that are
not also SDL Directors), have given non-binding letters of support
to vote or procure votes in favour of the resolutions relating to
Scheme at the SDL Meetings (or in the event that the Combination is
implemented by way of a Takeover Offer, accept or procure the
acceptance of the Takeover Offer), amounting in aggregate to
30,515,552 SDL Shares, representing approximately 33.4 per cent. of
SDL's existing issued ordinary share capital as at the Latest
Practicable Date.
Percentage of existing
issued share capital of
SDL as at the Latest Practicable
Name Number of SDL Shares Date
---------------------- --------------------- ----------------------------------
AXA Investment
Managers UK Limited 3,306,511 3.62%
JO Hambro Capital
Management Ltd 2,902,289 3.18%
Marlborough Special
Situations Fund 4,750,000 5.21%
River and Mercantile
Asset Management
LLP 3,706,036 4.06%
Schroder Investment
Management Limited 8,497,745 9.31%
RGM Capital LLC 7,352,971 8.06%
PART C - Irrevocable undertakings in respect of RWS Shares from
RWS Directors
The following RWS Directors have given irrevocable undertakings
in respect of their entire beneficial holdings ( and the beneficial
holdings which are under their control ) of RWS Shares to vote or
procure votes in favour of the RWS Resolution to be proposed at the
RWS General Meeting , amounting in aggregate to 90,494,140 RWS
Shares, representing approximately 32.9 per cent. of RWS' existing
issued ordinary share capital as at close of business on the Latest
Practicable Date:
Percentage of existing
issued share capital of
RWS as at the Latest Practicable
Name Number of RWS Shares Date
------------------ --------------------- ----------------------------------
Andrew Brode 90,159,060 32.76%
Richard Thompson 282,480 0.1%
Lara Boro 2,600 0.00%
Elisabeth Lucas 50,000 0.02%
Each irrevocable undertaking will lapse if, amongst other
things:
-- in the event the Combination is implemented by way of a
Scheme, if the Scheme Document is not posted to SDL Shareholders
within the permitted period under the Takeover Code or as otherwise
agreed with the Panel;
-- in the event the Combination is implemented by way of a
Scheme, if the Scheme or any resolution to be proposed is not
approved by the requisite majority of the SDL Shareholders at the
SDL General Meeting or the SDL Court Meeting;
-- in the event the Combination is implemented by way of a
Takeover Offer, if the offer document is not posted to SDL
Shareholders within the permitted period under the Takeover Code or
as otherwise agreed with the Panel;
-- on the date on which the Combination is withdrawn or lapses
in accordance with its terms (except where the Combination is
withdrawn or lapses as a result of RWS exercising its right to
implement the Combination by way of a Takeover Offer in accordance
with the Takeover Code rather than by way of a Scheme or vice
versa); or
-- if any event occurs or becomes known to RWS before despatch
of the Scheme Document or the offer document (as the case may be)
as a result of which the Panel requires or agrees that RWS need not
make the Combination.
APPIX 4
Quantified Financial Benefits Statement
PART A - QUANTIFIED FINANCIAL BENEFITS STATEMENT
Paragraph 3 of this Announcement contains statements of
estimated cost savings and synergies expected to arise from the
Combination (together, the " Quantified Financial Benefits
Statement ").
A copy of the Quantified Financial Benefits Statement is set out
below:
"The RWS Board, having reviewed and analysed the potential
synergies of the Combination, and based on its experience of
operating in the translation services, software and localisation
sectors, is confident that as a direct result of the Combination,
the Combined Group will generate attractive cost synergies and
create additional shareholder value.
The RWS Board has consulted with the SDL management team on the
scale of available cost synergies, and with the benefit of their
experience of running a software business, as well as taking into
account the factors it can influence, believes that the Combination
will generate significant run-rate annual cost synergies of at
least GBP15 million by the end of the financial year ended 30
September 2022, the first full year post Completion.
These anticipated cost synergies will accrue as a direct result
of the Combination and would not be achieved on a standalone basis.
The potential sources of quantified cost synergies are in addition
to any savings previously targeted and already underway by either
RWS or SDL.
The constituent elements of these quantified cost synergies,
which are expected to originate from the cost bases of both RWS and
SDL, comprise:
-- Combining corporate and support functions: Approximately 40
per cent. of the cost savings are expected to be generated from the
rationalisation and consolidation of corporate and support
functions, including the removal of duplicate public company costs,
the consolidation and rationalisation of the Combined Group's Board
and executive leadership teams, and the combination of other group
support functions;
-- Optimising the Combined Group's sales and marketing
activities: Approximately 40 per cent. of the cost savings are
expected to be generated from the optimisation of the sales and
marketing functions of the Combined Group, including by sharing
best practices and removing duplicate activities;
-- Aligning certain third party spend: Approximately 15 per
cent. of the cost savings are expected to be generated from the
alignment of expenses policies across the Combined Group and the
removal of duplicative third party costs; and
-- Maximising operating efficiencies in overlapping language
translation activities: The balance of the cost savings is expected
to be generated from limited actions to rationalise overlapping
teams within the Combined Group's language translation
activities.
In achieving these cost synergies, the Combined Group expects to
incur aggregate cash implementation costs of approximately GBP17
million, which are all expected to be one-off in nature and
incurred in the financial year in which Completion occurs.
Whilst there is pricing and volume risk in certain areas of
customer overlap, based on the analysis to date and aside from the
one-off integration cash costs referred to above, the RWS Directors
do not expect material dis-synergies to arise as a result of the
Combination.
Further information on the bases of belief supporting the
Quantified Financial Benefits Statement, including the principal
assumptions and sources of information, is set out in Appendix 4 to
this Announcement."
Further information on the basis of belief supporting the
Quantified Financial Benefits Statement, including the principal
assumptions and sources of information, is set out below:
Bases of belief and principal assumptions
Following commencement of discussions regarding the Combination,
a synergy development team (the " Synergy Team ") was established
at RWS to evaluate and assess the potential synergies available for
the integration and undertake an initial planning exercise. The
Synergy Team worked in consultation with SDL's management team to
identify areas of potential savings.
In preparing the Quantified Financial Benefits Statement, both
RWS and SDL have shared certain operating and financial information
to facilitate a detailed analysis in support of evaluating the
potential cost benefits available from the creation of the Combined
Group. In circumstances where data has been limited for commercial
or other reasons, the Synergy Team has made estimates and
assumptions to aid its development of individual cost benefit
initiatives.
The assessment and qualification of the potential synergies
have, in turn, been informed by the RWS management's industry
experience and knowledge of the existing businesses, as well as its
experience of executing and integrating past acquisitions, together
with consultation with SDL.
In general, the cost benefit assumptions have in turn been risk
adjusted, exercising a degree of prudence in the calculation of the
estimated cost benefits set out above.
In arriving at the Quantified Financial Benefits Statement, RWS
has, in addition, made the following assumptions:
-- No material change in macroeconomic, political, legal or
regulatory conditions in the markets and regions in which RWS and
SDL operate;
-- No material change in accounting standards;
-- No significant impact on the underlying operations of either
business from the creation of the Combined Group;
-- No impact on the underlying operations of either business
from the COVID19 pandemic other than as already disclosed by RWS
and SDL in statements made in their respective half-year trading
announcements on 9 June 2020 and 11 August 2020;
-- No material change in foreign exchange rates; and
-- No material divestments from either the RWS or SDL existing businesses.
The baselines used for the quantified cost synergies were:
-- For RWS: full year operating expenses for the financial year ended 30 September 2019; and
-- For SDL : full year operating expenses for the financial year ended 31 December 2019.
Reports
As required by Rule 28.1(a) of the Takeover Code,
PricewaterhouseCoopers, as reporting accountants to RWS, and
Canaccord Genuity and Gleacher Shacklock, as joint financial
advisers to RWS, have provided the opinions required under that
Rule. Copies of these reports are included at Parts B and C of this
Appendix 4. Each of PricewaterhouseCoopers, Canaccord Genuity and
Gleacher Shacklock has given and not withdrawn its consent to the
publication of its report in this Announcement in the form and
context in which it is included.
Notes
These statements are not intended as a profit forecast and
should not be interpreted as such. These statements of estimated
synergies relate to future actions and circumstances which, by
their nature, involve risks, uncertainties and contingencies. As a
result, the estimated synergies referred to may not be achieved, or
may be achieved later or sooner than estimated, or those achieved
could be materially different from those estimated. Neither the
Quantified Financial Benefits Statement nor any other statement in
this Announcement should be construed as a profit forecast or
interpreted to mean that RWS' earnings in the financial year ended
30 September 2022, being the first full year following the
Effective Date, or in any subsequent period, will necessarily match
or be greater than or be less than those of RWS or SDL for the
relevant preceding financial period or any other period.
Due to the scale of the Combined Group, there may be additional
changes to the Combined Group's operations. As a result, and given
the fact that the changes relate to the future, the resulting
synergies may be materially greater or less than those
estimated.
PART B - REPORT FROM PRICEWATERHOUSECOOPERS
The Directors
RWS Holdings plc
Europa House
Chiltern Park
Chiltern Hill
Chalfont St Peter
SL9 9FG
Gleacher Shacklock LLP ("Gleacher Shacklock")
Cleveland House
33 King Street
London
SW1Y 6RJ
Canaccord Genuity Limited ("Canaccord")
88 Wood Street
London
EC2V 7QR
(Gleacher Shacklock and Canaccord, together the "Financial
Advisers")
27 August 2020
Dear Ladies and Gentlemen,
Quantified Financial Benefits Statement by RWS Holdings plc
We report on the quantified financial benefits statement (the
"Statement") by the Directors included in Part A of Appendix 4 of
the announcement dated 27 August 2020 (the "Announcement") to the
effect that:
"The RWS Board, having reviewed and analysed the potential
synergies of the Combination, and based on its experience of
operating in the translation services, software and localisation
sectors, is confident that as a direct result of the Combination,
the Combined Group will generate attractive cost synergies and
create additional shareholder value.
The RWS Board has consulted with the SDL management team on the
scale of available cost synergies, and with the benefit of their
experience of running a software business, as well as taking into
account the factors it can influence, believes that the Combination
will generate significant run-rate annual cost synergies of at
least GBP15 million by the end of the financial year ended 30
September 2022, the first full year post Completion.
These anticipated cost synergies will accrue as a direct result
of the Combination and would not be achieved on a standalone basis.
The potential sources of quantified cost synergies are in addition
to any savings previously targeted and already underway by either
RWS or SDL.
The constituent elements of these quantified cost synergies,
which are expected to originate from the cost bases of both RWS and
SDL, comprise:
-- Combining corporate and support functions: Approximately 40
per cent. of the cost savings are expected to be generated from the
rationalisation and consolidation of corporate and support
functions, including the removal of duplicate public company costs,
the consolidation and rationalisation of the Combined Group's Board
and executive leadership teams, and the combination of other group
support functions;
-- Optimising the Combined Group's sales and marketing
activities: Approximately 40 per cent. of the cost savings are
expected to be generated from the optimisation of the sales and
marketing functions of the Combined Group, including by sharing
best practices and removing duplicate activities;
-- Aligning certain third party spend: Approximately 15 per
cent. of the cost savings are expected to be generated from the
alignment of expenses policies across the Combined Group and the
removal of duplicative third party costs; and
-- Maximising operating efficiencies in overlapping language
translation activities: The balance of the cost savings is expected
to be generated from limited actions to rationalise overlapping
teams within the Combined Group's language translation
activities.
In achieving these cost synergies, the Combined Group expects to
incur aggregate cash implementation costs of approximately GBP17
million, which are all expected to be one-off in nature and
incurred in the financial year in which Completion occurs.
Whilst there is pricing and volume risk in certain areas of
customer overlap, based on the analysis to date and aside from the
one-off integration cash costs referred to above, the RWS Directors
do not expect material dis-synergies to arise as a result of the
Combination.
Further information on the bases of belief supporting the
Quantified Financial Benefits Statement, including the principal
assumptions and sources of information, is set out in Appendix 4 to
this Announcement."
This Statement has been made in the context of disclosure in the
Announcement setting out the bases of belief of the Directors
supporting the Statement and their analysis and explanation of the
underlying constituent elements.
This report is required by Rule 28.1(a)(i) of the City Code on
Takeovers and Mergers (the "Code") and is given for the purpose of
complying with that rule and for no other purpose.
Responsibilities
It is the responsibility of the RWS Holdings plc Board to make
the Statement in accordance with the Code.
It is our responsibility to form our opinion as required by Rule
28.1(a)(i) of the Code, as to whether the Statement has been
properly compiled on the basis stated.
Save for any responsibility which we may have to those persons
to whom this report is expressly addressed or to the shareholders
of RWS Holdings plc as a result of the inclusion of this report in
the Announcement, and for any responsibility arising under Rule
28.1(a)(i) of the Code to any person as and to the extent therein
provided, to the fullest extent permitted by law we do not assume
any responsibility and will not accept any liability to any other
person for any loss suffered by any such other person as a result
of, arising out of, or in connection with this report or our
statement, required by and given solely for the purposes of
complying with Rule 23.2 of the Code, consenting to its inclusion
in the Announcement.
Basis of Opinion
We conducted our work in accordance with the Standards for
Investment Reporting issued by the Auditing Practices Board in the
United Kingdom. We have discussed the Statement together with the
relevant bases of belief (including sources of information and
assumptions) with the RWS Holdings plc Board and with the Financial
Advisers. Our work did not involve any independent examination of
any of the financial or other information underlying the
Statement.
Since the Statement and the assumptions on which it is based
relate to the future and may therefore be affected by unforeseen
events, we can express no opinion as to whether the actual benefits
achieved will correspond to those anticipated in the Statement and
the differences may be material.
Our work has not been carried out in accordance with auditing or
other standards and practices generally accepted in the United
States of America or other jurisdictions and accordingly should not
be relied upon as if it had been carried out in accordance with
those standards and practices.
Opinion
In our opinion, on the basis of the foregoing, the Statement has
been properly compiled on the basis stated.
Yours faithfully
PricewaterhouseCoopers LLP
Chartered Accountants
PricewaterhouseCoopers LLP, 1 Embankment Place, London, WC2N
6RH
T: +44 (0) 2075 835 000, F: +44 (0) 2072 124 652,
www.pwc.co.uk
PricewaterhouseCoopers LLP is a limited liability partnership
registered in England with registered number OC303525. The
registered office of PricewaterhouseCoopers LLP is 1 Embankment
Place, London WC2N 6RH. PricewaterhouseCoopers LLP is authorised
and regulated by the Financial Conduct Authority for designated
investment business.
PART C - REPORTS FROM CANACCORD GENUITY AND GLEACHER
SHACKLOCK
The Board of Directors
RWS Holdings plc
Europa House Chiltern Park
Chiltern Hill, Chalfont St Peter
Buckinghamshire, SL9 9FG
27 August 2020
Dear Sirs
Recommended All-Share Combination of RWS Holdings plc ("RWS")
and SDL plc ("SDL") - Quantified Financial Benefits Statement made
by RWS
We refer to the Quantified Financial Benefits Statement, the
bases of belief thereof and the notes thereto (together, the
"Statement") made by RWS as set out in Part A of Appendix 4 to the
announcement dated 27 August 2020 of which this letter forms part
(the "Announcement"), for which the board of directors of RWS (the
"RWS Board") are solely responsible under Rule 28.1(a)(ii) of the
City Code on Takeovers and Mergers (the "Code").
We have discussed the Statement (including the assumptions and
sources of information referred to therein), with the RWS Board and
those officers and employees of RWS who developed the underlying
plans as well as with PricewaterhouseCoopers LLP. The Statement is
subject to uncertainty as described in the Announcement and our
work did not involve an independent examination of any of the
financial or other information underlying the Statement.
We have also reviewed the work carried out by
PricewaterhouseCoopers LLP in connection with the Statement and
have discussed with them their opinion set out in Part B of
Appendix 4 to the Announcement addressed to yourselves and
ourselves on this matter and the accounting policies and bases of
calculation for the Statement.
We have relied upon the accuracy and completeness of all the
financial and other information provided to us by, or on behalf of,
RWS, or otherwise discussed with or reviewed by us, and we have
assumed such accuracy and completeness for the purposes of
providing this letter.
We do not express any opinion as to the achievability of the
quantified financial benefits identified by the RWS Board.
This letter is provided to you solely in connection with Rule
28.1(a)(ii) of the Code and for no other purpose. We accept no
responsibility to RWS or its shareholders or any person (including,
without limitation, the board and shareholders of SDL) other than
the RWS Board in respect of the contents of this letter. Each of us
is acting exclusively as financial adviser to RWS and no one else
in connection with the transaction between RWS and SDL referred to
in the Announcement and it was solely for the purpose of complying
with Rule 28.1(a)(ii) of the Code that RWS requested us to prepare
this letter relating to the Statement. No person other than the RWS
Board can rely on the contents of, or the work undertaken in
connection with, this letter, and to the fullest extent permitted
by law, we exclude all liability (whether in contract, tort or
otherwise) to any other person, in respect of this letter, its
contents, or the work undertaken in connection with this letter, or
any of the results or conclusions that can be derived from this
letter or any written or oral information provided in connection
with this letter, and any such liability is expressly disclaimed
except to the extent that such liability cannot be excluded by
law.
On the basis of the foregoing, we consider that the Statement,
for which you as the RWS Board are solely responsible for the
purposes of the Code, has been prepared with due care and
consideration.
Yours faithfully
For and on behalf of For and on behalf of
Canaccord Genuity Limited Gleacher Shacklock LLP
APPIX 5
Definitions
The following definitions apply throughout this Announcement
unless the context requires otherwise:
Adjusted Operating Profit means operating profit before charging
amortization of acquired intangibles, acquisition costs and share
based payment expenses;
Admission means admission of the New RWS Shares to trading on
AIM;
AIM means the Alternative Investment Market of the London Stock
Exchange;
AIM Rules means the rules of AIM as set out in the publication
entitled 'AIM Rules for Companies' published by the London Stock
Exchange from time to time;
Announcement means this announcement made pursuant to Rule 2.7
of the Takeover Code , including its Appendices;
Appendices means the appendices to this Announcement and the
Appendix has a corresponding meaning;
Authorisations means authorisations, orders, grants,
recognitions, determinations, certificates, confirmations,
consents, licences, clearances, provisions, permissions and
approvals;
Berenberg means Joh. Berenberg, Gossler & Co. KG, London
Branch;
Board of the Combined Group means the proposed board of directors of the Combined Group;
Business Day means a day, (other than a Saturday, Sunday, public
or bank holiday) on which banks are generally open for business in
London;
Canaccord Genuity means Canaccord Genuity Limited;
Clean Team Agreement means the clean team agreement dated 3
August 2020 between (1) RWS and (2) SDL;
Closing Price means the closing middle market quotation of a
share derived from the Daily Official List of the London Stock
Exchange;
CMA Merger Investigation means an investigation by the CMA to
determine whether to make a reference under Article 33 of the
Enterprise Act 2002;
CMA Phase 2 Reference means a reference of the Combination to
the chair of the United Kingdom Competition and Markets Authority
under Article 33 of the Enterprise Act 2002 for the constitution of
a group under schedule 4 to the Enterprise and Regulatory Reform
Act 2013;
Co-operation Agreement means the co-operation agreement dated 27
August 2020 between (1) RWS and (2) SDL;
Combination means the recommended all-share combination of RWS
and SDL, pursuant to which RWS will acquire the entire issued and
to be issued share capital of SDL (other than SDL Shares already
held by the RWS Group) to be implemented by way of the Scheme or
(should RWS so elect, subject to the consent of the Panel (where
necessary)) by way of a Takeover Offer;
Combined Group means RWS and its subsidiaries, including SDL
following Completion;
Companies Act means the Companies Act 2006 (as amended);
Completion means the Combination becoming Effective;
Conditions means the conditions to the Combination set out in
Part A of Appendix 1;
Confidentiality Agreement means the confidentiality agreement
dated 5 March 2020 between (1) RWS and (2) SDL;
Confidentiality and Joint Defence Agreement means the
confidentiality and joint defence agreement dated 3 August 2020
between (1) RWS, (2) SDL, (3) DLA Piper UK LLP and (4) CMS Cameron
McKenna Nabarro Olswang LLP;
Court means the High Court of Justice in England and Wales;
Court Hearing means the hearing by the Court of the application
to sanction the Scheme;
Court Order means the order of the Court sanctioning the Scheme
under section 899 of the Companies Act;
CREST means the computerised settlement system (as defined in
the CREST Regulations) operated by Euroclear UK & Ireland
Limited which facilitates the transfer of title to shares in
uncertificated form;
CREST Regulations means the Uncertificated Securities
Regulations 2001 (SI 2001/3755);
Daily Official List means the daily official list of the London
Stock Exchange;
Dealing Disclosure means an announcement pursuant to Rule 8 of
the Takeover Code containing details of dealings in the relevant
securities of a party to an offer;
Disclosed means:
(a) in the case of SDL, the information fairly disclosed by or
on behalf of SDL: (i) in the annual report and accounts of SDL for
the financial year ended 31 December 2019 and/or in the interim
results of SDL for the period ended 30 June 2020; (ii) in any other
public announcement made by SDL in accordance with the Market Abuse
Regulation or the Disclosure Guidance and Transparency Rules before
the date of the Announcement; (iii) in this Announcement; (iv) in
the information made available to RWS in the data room established
by SDL (or SDL's advisers) for the purposes of the Combination on
or before 6.30 p.m. on 26 August 2020; or (v) as otherwise fairly
disclosed in writing by or on behalf of SDL to RWS (or its
officers, employees, agents or advisers) before the date of this
Announcement; and
(b) in the case of RWS, the information fairly disclosed by or
on behalf of RWS: (i) in the annual report and accounts of RWS for
the financial year ended 30 September 2019 and/or in the interim
results of RWS for the period ended 31 March 2020; (ii) in any
other public announcement made by RWS in accordance with the Market
Abuse Regulation or the Disclosure Guidance and Transparency Rules
before the date of this Announcement; (iii) in this Announcement;
(iv) in the information made available to SDL in the data room
established by RWS (or RWS' advisers) for the purposes of the
Combination on or before 6.30 p.m. on 26 August 2020; or (v) as
otherwise fairly disclosed in writing by or on behalf of RWS to SDL
(or its officers, employees, agents or advisers) before the date of
this Announcement;
Disclosure Guidance and Transparency Rules means the disclosure
rules and transparency rules made by the FCA pursuant to section
73A of FSMA;
EC or European Commission means the European Commission of the
European Union;
Effective means:
(a) if the Combination is implemented by way of the Scheme, the
Scheme having become effective pursuant to its terms; or
(b) if the Combination is implemented by way of a Takeover
Offer, the Takeover Offer having been declared or become
unconditional in all respects in accordance with the requirements
of the Takeover Code ;
Effective Date means the date on which the Combination becomes
Effective;
Exchange Ratio means the ratio of 1.2246 New RWS Shares for each
SDL Scheme Share;
FCA means the UK Financial Conduct Authority;
Forms of Proxy means the forms of proxy which will accompany the
Scheme Document;
FSMA means the Financial Services and Markets Act 2000;
Gleacher Shacklock means Gleacher Shacklock LLP;
Investec means Investec Bank plc;
Latest Practicable Date means 26 August 2020, being the latest
practicable date before the date of this Announcement ;
Link Asset Services is the trading name of Link Market Services
Limited;
Listing Rules means the listing rules, made by the FCA under
Part 6 of FSMA;
London Stock Exchange means London Stock Exchange plc;
Long-stop Date means the date falling nine months after the date
of the Scheme Document, or such later date (if any) as RWS and SDL
may agree ;
Main Market means the Main Market of the London Stock
Exchange;
Market Abuse Regulation means the Market Abuse Regulation (EU)
(No 596/2014);
Merger Regulation means Council Regulation (EC) No 139/2004;
N+1 Singer means Nplus1 Singer Advisory LLP;
New RWS Shares means the RWS Shares to be issued credited as
fully paid to the SDL Scheme Shareholders pursuant to the Scheme
(and any other SDL Shareholders whose SDL Shares are issued after
the Scheme becomes Effective);
Numis means Numis Securities Limited;
Offer Period means the period commencing on 27 August 2020 and
ending on (i) the earlier of the date on which the Scheme becomes
Effective and/or the date on which the Scheme lapses or is
withdrawn (or such other date as the Panel may decide) or (ii) the
earlier of the date on which the Takeover Offer has become or has
been declared unconditional as to acceptances and/or the date on
which the Takeover Offer lapses or is withdrawn (or such other date
as the Panel may decide), in each case other than where such
lapsing or withdrawal is a result of RWS exercising its right to
implement the Combination by way of a Takeover Offer;
Official List means the official list maintained by the FCA
pursuant to Part 6 of FSMA;
Opening Position Disclosure means an announcement containing
details of interests or short positions in, or rights to subscribe
for, any relevant securities of a party to the offer if the person
concerned has such a position, as defined in Rule 8 of the Takeover
Code ;
Overseas Shareholders means SDL Shareholders who have a
registered address in a jurisdiction outside the UK, or whom RWS
reasonably believes to be citizens, residents or nationals of a
jurisdiction outside the UK;
Panel means the UK Panel on Takeovers and Mergers;
PricewaterhouseCoopers means PricewaterhouseCoopers LLP;
Proposals means the Combination, the issue and allotment of the
New RWS Shares in connection with the Combination and
Admission;
Quantified Financial Benefits Statement means the statement
described as such and set out in Appendix 4;
Registrar of Companies means the Registrar of Companies in
England and Wales;
Regulatory Information Service means a regulatory information
service as defined in the FCA's Handbook of rules and guidance as
amended from time to time;
Restricted Jurisdiction means any jurisdiction where the
relevant action would constitute a violation of the relevant laws
and regulations of such jurisdiction or would result in a
requirement to comply with any governmental or other consent or any
registration, filing or other formality which RWS or SDL regards as
unduly onerous;
Rothschild & Co means N.M. Rothschild & Sons Limited;
RWS means RWS Holdings plc, a public limited company
incorporated under the laws of England and Wales with registration
number 03002645 ;
RWS Board or the Board of RWS means the board of directors of
RWS as at the date of this Announcement;
RWS Circular means the circular to be published by RWS and to be
sent to RWS Shareholders including the notice convening the RWS
General Meeting to approve the issue of New RWS Shares in
connection with the Combination;
RWS Directors means the directors of RWS as at the date of this Announcement;
RWS Equalising Dividend has the meaning given in paragraph 6
(Dividends and RWS dividend policy) of this Announcement;
RWS Form of Proxy means the form of proxy which will accompany
the RWS Circular;
RWS General Meeting means the general meeting of RWS to be
convened to consider and, if thought fit, approve the RWS
Resolution, including any adjournment thereof, and expected to be
held on the same day as the SDL Meetings;
RWS Group means RWS and its subsidiary undertakings and, where
the context permits, each of them;
RWS Moravia means RWS Moravia IT s.r.o.;
RWS Resolution means the resolution to be proposed to RWS
Shareholders at the RWS General Meeting to the approve the issue
and allotment of the New RWS Shares in connection with the
Combination;
RWS Share Plans means the share incentive plans of RWS;
RWS Shareholders means the holders of RWS Shares;
RWS Shares means the ordinary shares of GBP0.01 each in the
capital of RWS;
Scheme means the proposed scheme of arrangement under Part 26 of
the Companies Act between SDL and the SDL Scheme Shareholders the
terms of which are to be set out in the Scheme Document;
Scheme Document means the document to be dispatched to (amongst
others) SDL Shareholders including, among other things, the Scheme
and the notices convening the SDL Court Meeting and the SDL General
Meeting;
Scheme Record Time means the time and date specified in the
Scheme Document by reference to which the entitlements of SDL
Shareholders under the Scheme will be determined, expected to be
6.00 pm on the Business Day before the Scheme becomes
Effective;
SDL means SDL plc, a public limited company incorporated under
the laws of England and Wales with registration number 02675207
;
SDL Board or Board of SDL means the board of directors of SDL as
at the date of this Announcement;
SDL Court Meeting means the meeting of the SDL Scheme
Shareholders to be convened by order of the Court pursuant to
section 896 of the Companies Act, for the purpose of approving the
Scheme, including any adjournment thereof, notice of which shall be
contained in the Scheme Document;
SDL DABS Plan means the SDL Deferred Annual Bonus Share
Plan;
SDL Directors means the directors of SDL as at the date of this Announcement;
SDL Equalising Dividend has the meaning given in paragraph 6
(Dividends and RWS dividend policy) of this Announcement;
SDL Executive Directors means Adolfo Hernandez and Xenia Walters
;
SDL General Meeting means the general meeting of the SDL to be
convened in connection with the Scheme, including any adjournment
thereof, and expected to be held immediately following the SDL
Court Meeting;
SDL Group means SDL and its subsidiary undertakings and, where
the context permits, each of them;
SDL LTIP 2011 means the SDL Long Term Incentive Plan (2011);
SDL LTIP 2016 means the SDL Long Term Incentive Plan 2016;
SDL Meetings means the SDL Court Meeting and the SDL General
Meeting;
SDL Remuneration Committee means the remuneration committee of
the SDL Board;
SDL Resolution means the resolution (or resolutions) to be
proposed at the SDL General Meeting in connection with authorising
the SDL Directors to take all required action in relation to the
Scheme and amending SDL's articles of association and such other
matters as may be necessary to implement the Scheme;
SDL RSP means the SDL Retention Share Plan;
SDL Scheme Shareholders means the holders of SDL Scheme Shares
from time to time;
SDL Scheme Shares means the ordinary shares of GBP0.01 each in
the capital of SDL:
(a) in issue at the date of the Scheme Document;
(b) (if any) issued after the date of the Scheme Document and
before the Voting Record Time; and
(c) (if any) issued at or after the Voting Record Time but at or
before the Scheme Record Time, either on terms that the original or
any subsequent holders of such shares are to be bound by the Scheme
or in respect of which their holders are, or shall by such time
have agreed in writing to be, bound by the Scheme,
and, in each case, remaining in issue at the Scheme Record Time
but excluding any SDL Scheme Shares held as treasury shares at any
relevant date or time and any SDL Scheme Shares registered in the
name of, or beneficially owned by, RWS or its nominees or any other
member of the RWS Group at any relevant date or time;
SDL Share Plans means the SDL LTIP 2016, the SDL LTIP 2011, the
SDL RSP, the SDL DABS Plan, the SDL SOS, the SDL Sharesave Scheme
and the SDL (International) Sharesave Scheme;
SDL Shareholder Meetings means, together, the SDL Court Meeting
and the SDL General Meeting;
SDL Shareholders means the holders of SDL Shares from time to
time;
SDL Shares means the ordinary shares of GBP0.01 each in the
capital of SDL;
SDL SOS means the SDL Share Option Scheme (2010);
SEC means the US Securities and Exchange Commission;
Significant Interest means, in relation to an undertaking, a
direct or indirect interest of 20 per cent. or more of: (i) the
total voting rights conferred by the equity share capital (as
defined in section 548 of the Companies Act) of such undertaking or
(ii) the relevant partnership interest;
Takeover Code means the City Code on Takeovers and Mergers;
Takeover Offer means, should the Combination be implemented by
way of a takeover offer as defined in section 974 of the Companies
Act, the offer to be made by or on behalf of RWS to acquire the
entire issued and to be issued share capital of SDL and, where the
context requires, any subsequent revision, variation, extension or
renewal of such offer;
Third Party means any government, government department or
governmental, quasi-governmental, supranational, statutory,
regulatory, environmental or investigative body or association,
institution or agency (including, without limitation, any trade
agency) or authority (including, without limitation, any anti-trust
or merger control authority), any court or professional or
environmental body or any other person or body whatsoever in any
relevant jurisdiction;
UK or United Kingdom means the United Kingdom of Great Britain
and Northern Ireland;
US or the United States means the United States of America, its
territories and possessions, any state of the United States of
America and the District of Columbia;
US Exchange Act means the US Securities Exchange Act of
1934;
US Securities Act means the United States Securities Act of
1933;
Voting Record Time means the time and date specified in the
Scheme Document by reference to which entitlement to vote at the
SDL Court Meeting will be determined, expected to be 6.00 p.m. on
the day two days prior to the SDL Court Meeting or any adjournment
thereof (as the case may be);
Wider RWS Group means RWS and its subsidiary undertakings and
associated undertakings and any other body corporate partnership,
joint venture or person in which RWS and all such undertakings
(aggregating their interests) have a Significant Interest (other
than any member of the Wider SDL Group); and
Wider SDL Group means SDL and its subsidiaries, subsidiary
undertakings, associated undertakings and any other body corporate,
partnership, joint venture or person in which SDL and all such
undertakings (aggregating their interests) have a Significant
Interest.
For the purposes of this Announcement, "subsidiary", "subsidiary
undertaking", "undertaking" and "associated undertaking" have the
respective meanings given by the Companies Act.
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ACQGSGDIBUDDGGR
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