TIDMSERV
RNS Number : 2991X
Scarlet Bidco Limited
23 November 2017
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN
PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH
JURISDICTION
23 November 2017
RECOMMED CASH OFFER
for
Servelec Group plc
by
Scarlet Bidco Limited
(a newly formed company indirectly held by the Montagu
Funds)
to be effected by means of a scheme of arrangement under Part 26
of the Companies Act 2006
Summary of the recommended cash offer
-- The boards of directors of Scarlet Bidco and Servelec are
pleased to announce that they have reached agreement on the terms
of a recommended cash offer pursuant to which Scarlet Bidco will
acquire the entire issued and to be issued ordinary share capital
of Servelec. The Offer is to be effected by means of a scheme of
arrangement under Part 26 of the Companies Act 2006.
-- Under the terms of the Offer, Servelec Shareholders at the
Scheme Record Time will be entitled to receive 313.1 pence in cash
for each Servelec Share held, representing:
-- a premium of approximately 19.8 per cent. to the Closing
Price per Servelec Share of 261.4 pence on 22 November 2017 (being
the latest practicable date prior to the publication of this
Announcement);
-- a premium of approximately 27.1 per cent. to the Volume
Weighted Average Price per Servelec Share of 246.4 pence for the
three months ended 22 November 2017 (being the latest practicable
date prior to the publication of this Announcement); and
-- a premium of approximately 22.5 per cent. to the Volume
Weighted Average Price per Servelec Share of 255.7 pence for the
six months ended 22 November 2017 (being the latest practicable
date prior to the publication of this Announcement).
-- The Offer values the entire issued and to be issued ordinary
share capital of Servelec at approximately GBP223.9 million.
-- The Offer is conditional on, amongst other things, the
approval of Servelec Shareholders and sanction of the Scheme by the
Court. The Offer is further subject to the Conditions and further
terms set out in Appendix I to this Announcement and to be set out
in the Scheme Document.
Background to Montagu, Scarlet Bidco and Servelec
-- Montagu is one of Europe's longest-standing private equity
firms and has been successfully investing in leading mid-market
businesses for nearly fifty years. Since its formation in 1968,
Montagu has invested in over 400 companies, across many different
industry sectors including software, technology, transport,
logistics, healthcare, business services, manufacturing and others.
As at 31 October 2017, Montagu had EUR5.8 billion of assets under
management.
-- Scarlet Bidco is a newly incorporated company which is
indirectly held by the Montagu Funds. Scarlet Bidco was formed for
the purpose of implementing the Offer. It has not traded prior to
the date of this Announcement nor has it entered into any
obligations other than in connection with the Offer.
-- Servelec is a UK-headquartered technology group, with
significant intellectual property, providing software, hardware and
services to the healthcare, social care and education, oil and gas,
energy and utilities sectors. Servelec was founded in 1977 and has
a strong technology and engineering heritage.
-- Servelec completed its initial public offering, listing on
the Official List of the UKLA and being admitted to trading on the
Main Market of the London Stock Exchange, on 2 December 2013 at a
share price of 179 pence per Servelec Share, valuing the Servelec
Group at GBP122.3 million. Since then, the Servelec Group has
pursued a combined organic and acquisitive growth strategy,
completing four acquisitions, funded by internally generated cash
and bank debt.
-- The Servelec Group operates internationally and employs a
highly skilled and knowledgeable workforce of approximately 600
people across its two divisions: Servelec HSC and Servelec
Automation.
Background to and reasons for the Offer
-- Scarlet Bidco believes that the Servelec Group is one of the
UK's leading technology businesses with strong, diverse product
sets and market positions in both of its divisions. The Servelec
Group has established and brought together a number of
complementary businesses in Servelec HSC and has established
specialist capabilities in Servelec Automation.
-- Scarlet Bidco, supported by Montagu, believes that it would
be the best partner for the Servelec Group through its next stage
of development as it seeks to capitalise on future growth
opportunities. Montagu has significant experience of working with
software and technology companies, bringing the benefits of its
financial resources to help them achieve their longer term goals.
Scarlet Bidco and Montagu believe that private ownership will
enable Servelec to pursue opportunities that it would not be able
to on the public markets. Scarlet Bidco will explore all options to
support further growth by investing in operations, expanding the
Servelec Group's domestic and international footprint and pursuing
acquisition opportunities.
Background to and reasons for the recommendation
-- The Servelec Directors, in conjunction with Servelec's
financial adviser, Investec, conducted a comprehensive review of
the Servelec Group's strategic position. This review considered,
amongst other options, the sale of the Servelec Group as a whole
and the sale of one or both of the divisions. The review concluded
that a sale of Servelec HSC would leave a sub-scale Servelec
Automation business, whereas the sale of Servelec Automation would
not provide sufficient additional financing to pursue Servelec
HSC's organic and acquisitive growth strategy and as such a sale of
the Servelec Group as a whole would be in the best interests of
Servelec Shareholders.
-- The Servelec Directors have evaluated the Offer on behalf of
Servelec Shareholders as a whole and have held detailed discussions
regarding the terms of the potential acquisition of Servelec by
Scarlet Bidco. These discussions have resulted in the Offer at a
price of 313.1 pence in cash for each Servelec Share.
-- Whilst the Servelec Directors believe there is potential for
future growth in the equity value of the Servelec Group for
Servelec Shareholders, they recognise that the Servelec Group
operates in a number of distinct markets, each of which is
competitive and requires a different strategy. Given this context
and the Servelec Group's business models, the Servelec Directors
recognise the benefits to Servelec in having a partner like Scarlet
Bidco, supported by Montagu's international presence, relevant
industry network and commitment to the ongoing investment
requirements of the Servelec Group.
-- The Offer will provide the Servelec Group with enhanced
financial and operational flexibility as it seeks to execute its
strategy.
-- The Servelec Directors have assessed the benefits of
maintaining an independent public markets listing and the potential
future growth in equity value for Servelec Shareholders against the
inherent uncertainty of delivering this future value that exists in
any business. The Servelec Directors have further considered the
certainty for Servelec Shareholders of realising the value of their
investment in cash and at an attractive premium to both the current
share price and the share price of 179 pence per Servelec Share at
the time of its initial public offering on 2 December 2013.
Recommendation
-- The Servelec Directors, who have been so advised by Investec
as to the financial terms of the Offer, consider the terms of the
Offer to be fair and reasonable and in the best interests of
Servelec Shareholders as a whole. In providing advice to the
Servelec Directors, Investec has taken into account the commercial
assessments of the Servelec Directors.
-- Accordingly, the Servelec Directors intend to recommend
unanimously that Servelec Shareholders vote in favour of the Scheme
at the Court Meeting and that Servelec Shareholders vote in favour
of the resolution to be proposed at the General Meeting as the
Servelec Directors have irrevocably undertaken to do in respect of
their own beneficial holdings amounting, in aggregate, to 1,522,374
Servelec Shares representing approximately 2.2 per cent. of the
issued ordinary share capital of Servelec as at 22 November 2017
(being the latest practicable date prior to the publication of this
Announcement).
Irrevocable undertakings and letters of intent
-- Scarlet Bidco has, in total, received irrevocable
undertakings and letters of intent to vote in favour of the Scheme
in respect of 22,957,294 Servelec Shares representing, in
aggregate, approximately 32.9 per cent. of the issued ordinary
share capital of Servelec as at 22 November 2017 (being the latest
practicable date prior to the publication of this
Announcement).
Next steps
-- The Offer will be put to Servelec Shareholders at the Court
Meeting and at the General Meeting. In order to become effective,
the Scheme must be approved by a majority in number of the Servelec
Shareholders voting at the Court Meeting, either in person or by
proxy, representing at least 75 per cent. in value of the Servelec
Shares voted. In addition, a special resolution implementing
certain matters in connection with the Scheme must be passed by
Servelec Shareholders representing at least 75 per cent. of votes
cast at the General Meeting.
-- The Scheme Document, containing further information about the
Offer and notices of the Court Meeting and the General Meeting,
will be published as soon as practicable and, in any event, (save
with the consent of the Panel) within 28 days of this
Announcement.
Commenting on the Offer, Edward Shuckburgh, Director of Scarlet
Bidco, said:
"Servelec has two high quality divisions with significant growth
opportunities, both organically and through potential acquisitions.
We are excited to work with management and employees to support the
Servelec Group's growth by investing in and expanding its strong
market positions domestically and internationally, leveraging
Montagu's experience, network and resources to strengthen the
business."
Commenting on the Offer, Richard Last, Chairman and
Non-Executive Director of Servelec, said:
"Servelec Group has made good progress in the four years since
its IPO, growing both organically and through acquisition. The
offer from Montagu represents an attractive and certain value, in
cash, today for our shareholders. Investors who invested at the IPO
will have achieved a total return of approximately 185% on that
investment, including dividends. We are pleased that Montagu will
continue to support the ongoing organic and acquisitive growth
strategy in place. I would like to take this opportunity to thank
all the employees at Servelec Group for all their hard work and
support."
This summary should be read in conjunction with the full text of
this Announcement. The Offer will be subject to the Conditions and
further terms set out in Appendix I to this Announcement and to the
full terms and conditions which will be set out in the Scheme
Document. Appendix II to this Announcement contains the sources of
information and bases of calculations of certain information
contained in this Announcement, Appendix III contains a summary of
the irrevocable undertakings and letters of intent received in
relation to the Offer and Appendix IV contains definitions of
certain expressions used in this summary and in this
Announcement.
Enquiries:
Scarlet Bidco via Greenbrook
Edward Shuckburgh / Neil Graham
Raymond James (financial adviser +44 (0) 20
to Scarlet Bidco and Montagu) 3798 5700
Dominic Emery / Joel Greenwood
Joseph Donnelly / Max Vandewall
Greenbrook Communications (PR adviser +44 (0) 20
to Scarlet Bidco and Montagu) 7952 2000
Andrew Honnor / Alex Jones / Ryan
Smith
Servelec via Tulchan
Richard Last, Chairman and Non-Executive
Director
Alan Stubbs, Chief Executive Officer
Mike Cane, Chief Financial Officer
Pamela Weeks, Head of Corporate
Communications
Investec Bank plc (Rule 3 financial
adviser and corporate broker to +44 (0) 20
Servelec) 7597 5970
Corporate Finance
Andrew Pinder / Sebastian Lawrence
Corporate Broking
Patrick Robb / Matt Lewis / Rob
Baker
Tulchan Communications (PR adviser +44 (0) 20
to Servelec) 7353 4200
James Macey White / Matt Low
Important notices
Raymond James Financial International Limited is authorised and
regulated by the Financial Conduct Authority in the UK. Raymond
James is acting exclusively as financial adviser to Scarlet Bidco
and Montagu and no one else in connection with the Offer and will
not be responsible to anyone other than Scarlet Bidco and Montagu
for providing the protections afforded to clients of Raymond James
nor for providing advice in connection with the Offer or any matter
referred to in this Announcement.
Investec Bank plc is authorised by the Prudential Regulation
Authority and regulated by the Financial Conduct Authority and the
Prudential Regulation Authority in the UK. Investec is acting
exclusively for Servelec and no one else in connection with the
Offer and will not be responsible to anyone other than Servelec for
providing the protections afforded to clients of Investec nor for
providing advice in connection with the Offer or any matter
referred to in this Announcement.
This Announcement is for information purposes only and does not
constitute an offer to sell or an invitation to purchase or
subscribe for any securities or the solicitation of an offer to buy
any securities or the solicitation of any vote or approval in any
jurisdiction, pursuant to the Offer or otherwise. The Offer will be
made solely by means of the Scheme Document (or, if Scarlet Bidco
so elects, any document by which the Offer is made by way of a
takeover offer) which will contain the full terms and conditions of
the Offer, including details of how to vote in respect of the
acquisition.
This Announcement has been prepared for the purpose of complying
with English law and the Takeover Code and the information
disclosed may not be the same as that which would have been
disclosed if this Announcement had been prepared in accordance with
the laws of jurisdictions outside of England.
Servelec will prepare the Scheme Document to be distributed to
Servelec Shareholders. Servelec and Scarlet Bidco urge Servelec
Shareholders to read the Scheme Document when it becomes available
because it will contain important information relating to the
Offer.
This Announcement does not constitute a prospectus or prospectus
equivalent document.
Overseas Shareholders
The release, publication or distribution of this Announcement in
certain jurisdictions may be restricted by law. Persons who are not
resident in the United Kingdom or who are subject to other
jurisdictions should inform themselves of, and observe, any
applicable requirements.
Unless otherwise determined by Scarlet Bidco or required by the
Takeover Code, and permitted by applicable law and regulation, the
Offer 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
Offer by any 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 documents relating to the Offer 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 of
that jurisdiction, and persons receiving this Announcement and all
documents relating to the Offer (including custodians, nominees and
trustees) must not mail or otherwise distribute or send them in,
into or from such jurisdictions where to do so would violate the
laws of that jurisdiction.
The availability of the Offer to Servelec Shareholders who are
not resident in the United Kingdom may be affected by the laws of
the relevant jurisdiction in which they are resident. Persons who
are not resident in the United Kingdom should inform themselves of,
and observe, any applicable requirements. Any failure to comply
with the applicable restrictions may constitute a violation of the
securities laws of any such jurisdiction. To the fullest extent
permitted by applicable law, the companies and persons involved in
the Offer disclaim any responsibility or liability for the
violation of such restrictions by any person.
The Offer will be subject to the applicable requirements of the
Takeover Code, the Panel, the London Stock Exchange, the Financial
Conduct Authority and the UKLA.
Notice to US Shareholders
The Offer relates to shares of an English incorporated and
registered company and is proposed to be effected by means of a
scheme of arrangement under English law. A transaction effected by
means of a scheme of arrangement is not subject to proxy
solicitation or tender offer rules under the US Securities Exchange
Act of 1934 (the "US Exchange Act"). Accordingly, the Offer is
subject to the disclosure requirements, rules and practices
applicable in the United Kingdom to schemes of arrangement, which
differ from the requirements of US proxy solicitation or tender
offer rules. However, if Scarlet Bidco were to elect to implement
the Offer by means of a takeover offer, such takeover offer will be
made in compliance with all applicable US laws and regulations.
Such a takeover would be made in the United States by Scarlet Bidco
and no one else.
In accordance with normal UK practice and pursuant to Rule
14e-5(b) of the US Exchange Act, Scarlet Bidco, certain affiliated
companies and their respective nominees or brokers (acting as
agents) may make certain purchases of, or arrangements to purchase,
Servelec Shares, other than pursuant to the Offer, until the date
on which the Offer and/or Scheme becomes effective, lapses or is
otherwise withdrawn. 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.
The information contained in this Announcement has neither been
approved nor disapproved by the US Securities and Exchange
Commission (the "SEC") or any US state securities commission.
Neither the SEC, nor any state securities commission, has passed
upon or determined the fairness or merits of the proposal described
in, nor upon the accuracy or adequacy of the information contained
in, this Announcement.
The financial information included in this Announcement has been
prepared in accordance with accounting standards applicable in the
United Kingdom that may not be comparable to the financial
statements of US companies. US generally accepted accounting
principles differ in certain respects from IFRS used in the United
Kingdom. None of the financial information in this Announcement has
been audited in accordance with auditing standards generally
accepted in the United States or the auditing standards of the
Public Accounting Oversights Board (United States).
The receipt of cash pursuant to the Offer by a US Shareholder as
consideration pursuant to the terms of the Offer may be a taxable
transaction for US federal income tax purposes and under applicable
US state and local, as well as foreign and other, tax laws. Each US
Shareholder is urged to consult his independent professional
adviser immediately regarding the tax consequences of the Offer
applicable to him or her.
It may be difficult for US Shareholders to enforce their rights
and claims arising out of the US federal securities laws, since
Scarlet Bidco and Servelec are located in countries other than the
US and some or all of their officers and directors may be residents
of countries other than the US. US Shareholders 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 judgement.
Forward-looking statements
This Announcement contains statements about Scarlet Bidco and
Servelec that are or may be forward-looking statements. All
statements other than statements of historical facts included in
this Announcement may be forward-looking statements. Without
limitation, any statements preceded or followed by or that include
the words "targets", "plans", "believes", "expects", "aims",
"intends", "will", "shall", "may", "anticipates", "estimates",
"projects" 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; (ii) business and management
strategies and the expansion and growth of Scarlet Bidco's or
Servelec's operations and potential synergies resulting from the
Offer; and (iii) the effects of government regulation on Scarlet
Bidco's or Servelec's business.
Such forward-looking statements involve risks and uncertainties
that could significantly affect expected results and are based on
certain key assumptions. Many factors could cause actual results to
differ materially from those projected or implied in any
forward-looking statements. Due to such uncertainties and risks,
readers are cautioned not to place undue reliance on such
forward-looking statements, which speak only as of the date of this
Announcement. Other than in accordance with their legal or
regulatory obligations (including, to the extent applicable, under
the Listing Rules and the Disclosure Guidance and Transparency
Rules, each of the Financial Conduct Authority), Scarlet Bidco and
Servelec each disclaim any obligation to update any forward-looking
or other statements contained in this Announcement, whether as a
result of new information, future events or otherwise.
No profit forecasts or estimates
No statement in this Announcement is intended as a profit
forecast or estimate for any period and no statement in this
Announcement should be interpreted to mean that earnings or
earnings per share for Servelec for the current or future financial
years would necessarily match or exceed the historical published
earnings or earnings per share for Servelec.
Disclosure requirements of the Takeover Code
Under Rule 8.3(a) of the Takeover Code, any person who is
interested in one 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) applies must be
made by no later than 3.30 p.m. (London time) on the 10th business
day following the commencement of the offer period and, if
appropriate, by no later than 3.30 p.m. (London time) on the 10th
business day following the announcement in which any securities
exchange offeror is first identified. Relevant persons who deal in
the relevant securities of 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 one 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. A Dealing Disclosure
by a person to whom Rule 8.3(b) applies must be made by no later
than 3.30 p.m. (London time) on the business day following the date
of the relevant dealing.
If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire or control an
interest in relevant securities of an offeree company or a
securities exchange offeror, they will be deemed to be a single
person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree
company and by any offeror and Dealing Disclosures must also be
made by the offeree company, by any offeror and by any persons
acting in concert with any of them (see Rules 8.1, 8.2 and
8.4).
Details of the offeree and offeror companies in respect of whose
relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on
the Panel's website at http://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.
In accordance with Rule 2.9 of the Takeover Code, Servelec
confirms that as at the date of this Announcement, it has in issue
and admitted to trading on the Main Market of the London Stock
Exchange 69,843,173 ordinary shares of 18 pence each (and holds no
shares in treasury). The International Securities Identification
Number (ISIN) of the ordinary shares is GB00BFRBTP86.
Electronic communications
Please be aware that addresses, electronic addresses and certain
information provided by Servelec Shareholders, persons with
information rights and other relevant persons for the receipt of
communications from Servelec may be provided to Scarlet Bidco
during the Offer Period if requested under Section 4 of Appendix 4
of the Takeover Code to comply with Rule 2.11(c) of the Takeover
Code.
Publication on website and availability of hard copies
A copy of this Announcement will be made available subject to
certain restrictions relating to persons resident in Restricted
Jurisdictions on Servelec's website at
www.servelec-group.com/investor-relations and Scarlet Bidco's
website at www.montagu.com/news/ by no later than 12 noon (London
time) on 24 November 2017. For the avoidance of doubt, the contents
of those websites are not incorporated into and do not form part of
this Announcement.
Servelec Shareholders may request a hard copy of this
Announcement by contacting Link Asset Services at 34 Beckenham
Road, Beckenham, Kent, BR3 4TU or on 0371 664 0300 or if calling
from outside the UK on +44 (0) 371 664 0300. 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. Link Asset Services is open between 9.00 a.m.
to 5.30 p.m., Monday to Friday excluding public holidays in England
and Wales. You may also request that all future documents,
announcements and information to be sent to you in relation to the
Offer should be in hard copy form.
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.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN
PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH
JURISDICTION
23 November 2017
RECOMMED CASH OFFER
for
Servelec Group plc
by
Scarlet Bidco Limited
(a newly formed company indirectly held by the Montagu
Funds)
to be effected by means of a scheme of arrangement
under Part 26 of the Companies Act 2006
1 Introduction
The boards of directors of Scarlet Bidco and Servelec are
pleased to announce that they have reached agreement on the terms
of a recommended cash offer pursuant to which Scarlet Bidco will
acquire the entire issued and to be issued ordinary share capital
of Servelec (the "Offer"). The Offer is to be effected by means of
a scheme of arrangement under Part 26 of the Companies Act.
2 The Offer
Under the terms of the Offer, which will be subject to the
Conditions and further terms set out in Appendix I to this
Announcement and to be set out in the Scheme Document, Servelec
Shareholders at the Scheme Record Time will be entitled to
receive:
for each Servelec Share 313.1 pence in cash
The Offer values the entire issued and to be issued ordinary
share capital of Servelec at approximately GBP223.9 million and
represents:
-- a premium of approximately 19.8 per cent. to the Closing
Price per Servelec Share of 261.4 pence on 22 November 2017 (being
the latest practicable date prior to the publication of this
Announcement);
-- a premium of approximately 27.1 per cent. to the Volume
Weighted Average Price per Servelec Share of 246.4 pence for the
three months ended 22 November 2017 (being the latest practicable
date prior to the publication of this Announcement); and
-- a premium of approximately 22.5 per cent. to the Volume
Weighted Average Price per Servelec Share of 255.7 pence for the
six months ended 22 November 2017 (being the latest practicable
date prior to the publication of this Announcement).
If, after the date of this Announcement, any dividend and/or
other distribution and/or other return of capital is declared, made
or paid or becomes payable in respect of the Servelec Shares,
Scarlet Bidco reserves the right to reduce the Offer Price by an
amount up to the amount of such dividend and/or distribution and/or
return of capital.
It is expected that the Scheme Document will be published as
soon as practicable and, in any event, (save with the consent of
the Panel) within 28 days of this Announcement and that the Scheme
will become effective by the middle of January 2018, subject to the
satisfaction or waiver of the Conditions and certain other terms
set out in Appendix I to this Announcement.
3 Background to the Offer
Scarlet Bidco believes that the Servelec Group is one of the
UK's leading technology businesses with strong, diverse product
sets and market positions in both of its divisions. The Servelec
Group has established and brought together a number of
complementary businesses in Servelec HSC and has established
specialist capabilities in Servelec Automation.
Scarlet Bidco, supported by Montagu, believes that it would be
the best partner for the Servelec Group through its next stage of
development as it seeks to capitalise on future growth
opportunities. Montagu has significant experience of working with
software and technology companies, bringing the benefits of its
financial resources to help them achieve their longer term goals.
Scarlet Bidco and Montagu believe that private ownership will
enable Servelec to pursue opportunities that it would not be able
to on the public markets. Scarlet Bidco will explore all options to
support further growth by investing in operations, expanding the
Servelec Group's domestic and international footprint and pursuing
acquisition opportunities.
4 Recommendation
The Servelec Directors, who have been so advised by Investec as
to the financial terms of the Offer, consider the terms of the
Offer to be fair and reasonable and in the best interests of
Servelec Shareholders as a whole. In providing advice to the
Servelec Directors, Investec has taken into account the commercial
assessments of the Servelec Directors.
Accordingly, the Servelec Directors intend to recommend
unanimously that Servelec Shareholders vote in favour of the Scheme
at the Court Meeting and the resolution to be proposed at the
General Meeting as the Servelec Directors have irrevocably
undertaken to do in respect of their own beneficial holdings
amounting, in aggregate, to 1,522,374 Servelec Shares representing
approximately 2.2 per cent. of the issued ordinary share capital of
Servelec as at 22 November 2017 (being the latest practicable date
prior to the publication of this Announcement).
5 Background to and reasons for the recommendation
The Servelec Directors, in conjunction with Servelec's financial
adviser, Investec, conducted a comprehensive review of the Servelec
Group's strategic position. This review considered, amongst other
options, the sale of the Servelec Group as a whole and the sale of
one or both of the divisions. The review concluded that a sale of
Servelec HSC would leave a sub-scale Servelec Automation business,
whereas the sale of Servelec Automation would not provide
sufficient additional financing to pursue Servelec HSC's organic
and acquisitive growth strategy and as such a sale of the Servelec
Group as a whole would be in the best interests of Servelec
Shareholders.
The Servelec Directors have evaluated the Offer on behalf of
Servelec Shareholders as a whole and have held detailed discussions
regarding the terms of the potential acquisition of Servelec by
Scarlet Bidco. These discussions have resulted in the Offer at a
price of 313.1 pence in cash for each Servelec Share.
In evaluating the Offer, the Servelec Directors have considered
the interests of Servelec's employees and customers, as well as the
economic benefits to Servelec Shareholders.
Whilst the Servelec Directors believe there is potential for
future growth in the equity value of the Servelec Group for
Servelec Shareholders, they recognise that the Servelec Group
operates in a number of distinct markets, each of which is
competitive and requires a different strategy. Given this context
and the Servelec Group's business models, the Servelec Directors
recognise the benefits to Servelec in having a partner like Scarlet
Bidco, supported by Montagu's international presence, relevant
industry network and commitment to the ongoing investment
requirements of the Servelec Group.
The Offer will provide the Servelec Group with enhanced
financial and operational flexibility as it seeks to execute its
strategy.
The Servelec Directors have assessed the benefits of maintaining
an independent public markets listing and the potential future
growth in equity value for Servelec Shareholders against the
inherent uncertainty of delivering this future value that exists in
any business. The Servelec Directors have further considered the
certainty for Servelec Shareholders of realising the value of their
investment in cash and at an attractive premium to both the current
share price and the share price of 179 pence per Servelec Share at
the time of its initial public offering on 2 December 2013.
6 Irrevocable undertakings and letters of intent
Scarlet Bidco has received irrevocable undertakings from each of
the Servelec Directors to vote in favour of the Scheme at the Court
Meeting and the resolution to be proposed at the General Meeting,
in respect of their entire beneficial holdings amounting to, in
aggregate, 1,522,374 Servelec Shares, representing approximately
2.2 per cent. of the issued ordinary share capital of Servelec as
at 22 November 2017 (being the latest practicable date prior to the
publication of this Announcement).
Scarlet Bidco has also received irrevocable undertakings to vote
in favour of the Scheme at the Court Meeting and the resolution to
be proposed at the General Meeting from Herald Investment
Management Limited (on behalf of Herald Investment Trust plc),
LOIM, Marlborough Fund Managers Limited and NFU Mutual Insurance
Society Limited in respect of, in aggregate, 7,602,938 Servelec
Shares representing approximately 10.9 per cent. of the issued
ordinary share capital of Servelec as at 22 November 2017 (being
the latest practicable date prior to the publication of this
Announcement).
Further, Scarlet Bidco has received non-binding letters of
intent from GVQ Investment Management Limited, Harwood Capital LLP
(on behalf of Oryx International Growth Fund Limited) and Schroder
Investment Management Limited to vote in favour of the Scheme at
the Court Meeting and the resolution to be proposed at the General
Meeting in respect of, in aggregate, 13,821,982 Servelec Shares,
representing approximately 19.8 per cent. of the issued ordinary
share capital of Servelec as at 22 November 2017 (being the latest
practicable date prior to the publication of this
Announcement).
Scarlet Bidco has therefore received irrevocable undertakings or
letters of intent in respect of a total of 22,957,294 Servelec
Shares representing, in aggregate, approximately 32.9 per cent. of
the issued ordinary share capital of Servelec as at 22 November
2017 (being the latest practicable date prior to the publication of
this Announcement).
Further details of these irrevocable undertakings (including the
circumstances in which they will fall away) and these letters of
intent are set out in Appendix III to this Announcement.
7 Information on Montagu
Montagu is one of Europe's longest standing private equity firms
and has been successfully investing in leading mid-market
businesses for nearly fifty years. Since its formation in 1968,
Montagu has invested in over 400 companies, across many different
industry sectors including software, technology, transport,
logistics, healthcare, business services, manufacturing and others.
As at 31 October 2017, Montagu had EUR5.8 billion of assets under
management.
Montagu's investment model involves developing a company's
strategy in cooperation with management and providing the
financial, strategic and operational support necessary to realise
it. Montagu focuses on supporting incumbent management teams and
has significant experience in helping businesses execute on a range
of growth strategies, for instance in supporting M&A, expanding
internationally and investing into core operations.
Montagu has a long track record of investing in software,
healthcare and industrial technology businesses similar to
Servelec. Previous and current examples include: Clinisys, a
clinical laboratory information management company; Open GI, an
insurance software company; and ADB, an industrial technology
company.
8 Information on Scarlet Bidco
Scarlet Bidco is a newly incorporated company which is
indirectly held by the Montagu Funds. Scarlet Bidco was formed for
the purpose of implementing the Offer. It has not traded prior to
the date of this Announcement nor has it entered into any
obligations other than in connection with the Offer.
9 Information on Servelec
Servelec is a UK-headquartered technology group, with
significant intellectual property, providing software, hardware and
services to the healthcare, social care and education, oil and gas,
energy and utilities sectors. Servelec was founded in 1977 and has
a strong technology and engineering heritage.
Servelec completed its initial public offering, listing on the
Official List of the UKLA and being admitted to trading on the Main
Market of the London Stock Exchange, on 2 December 2013 at a share
price of 179 pence per Servelec Share, valuing the Servelec Group
at GBP122.3 million. Since then, the Servelec Group has pursued a
combined organic and acquisitive growth strategy, completing four
acquisitions, funded by internally generated cash and bank
debt.
The Servelec Group operates internationally and employs a highly
skilled and knowledgeable workforce of approximately 600 people
across its two divisions: Servelec HSC and Servelec Automation.
Servelec HSC specialises in the design, development, deployment
and support of software in healthcare together with social care and
education within local government. Servelec HSC has over 20 years'
experience in developing clinically-driven, enterprise-wide
solutions for use within the NHS and private healthcare
organisations and has a software suite that covers Electronic
Patient Records, Patient Administration Systems, Patient Flow Bed
Management, Clinical Information Systems, e-Observations and
e-Prescribing technologies which are fully supported on mobile and
portal solutions. Within a social care setting, Servelec provides
its case management system across adults, children and finance,
supporting all the activities of a social care practice (case
notes, reviews and demographic details) and also includes financial
management systems (contract management, budget reviews, payments)
to control effectively all financial elements related to the
delivery of social care - all of which are fully supported on
mobile and portal solutions. Supporting education services within
local government, the Synergy suite records and manages all aspects
of children's services to enable information sharing and provide
full visibility of each and every individual giving users the
insight they need to make key decisions, resulting in improved
outcomes for children and young people.
Servelec Automation provides complex, mission-critical control
systems and standalone products to large, blue-chip companies in
industries essential to national infrastructure. Servelec
Automation operates through two distinct businesses.
-- Servelec Controls develops and integrates mission-critical
systems for blue-chip clients in national infrastructure sectors by
bringing together specialist hardware, software and world-class
engineering to provide control, monitoring and safety solutions.
Vendor independent solutions save organisations time and money,
minimising risk in hazardous and volatile settings.
-- Servelec Technologies provides a range of hardware and
software that delivers end-to-end data acquisition, management,
control and optimisation, to make customer operations more
efficient and effective. Working across global infrastructure
sectors including water, rail, energy, navigation and broadcast,
Servelec Technologies sells telemetry products, including remote
telemetry units ("RTUs") and associated software solutions through
a global distribution network.
10 Servelec trading update
On 11 September 2017, Servelec released its Interim Results for
the six month period ended 30 June 2017, a copy of which can be
found at
www.servelec-group.com/investor-relations/results-reports/. Since
30 June 2017, Servelec has continued to trade in line with revised
expectations.
In Servelec HSC, Corelogic has recently signed a large Mosaic
contract which helps to underpin the current year's expectations,
however there are delays in decisions on other Social Care
procurements, which had previously been anticipated for Q4 2017. In
Servelec Automation, large AMP-6 RTU opportunities have not yet
materialised and the Servelec Board continues to monitor the
previously advised GBP2.6 million debt position in Turkey where
there has been no material progress.
11 Employees, management and locations
Scarlet Bidco attaches importance to the skills, experience and
industry knowledge of the existing management and employees of
Servelec. It has worked closely with the Servelec management team
to understand the key areas of their strategy and plans for the
business.
Following completion of the Offer, Scarlet Bidco intends to
support the Servelec Group and its employees in executing
management's existing strategy, which entails:
-- in Servelec HSC, continuing to support the existing product
range and customer base, as well as continuing to invest in
development of the product range; and
-- in Servelec Automation, continuing to invest in the
division's hardware and software products and further building on
the division's sales and distribution infrastructure.
Under Servelec management's existing plans, Scarlet Bidco
understands that there is no expectation of changes that would
materially impact the number of Servelec employees or their
conditions of employment (including their entitlement to pensions
contributions), the locations of Servelec's places of business or
its fixed assets.
Following completion of the Offer, Scarlet Bidco intends to work
with Servelec management to complete a full evaluation of the
Servelec Group and its strategy, operations and organisational
structure, which will consider both the short and long-term
objectives for the business. The evaluation will focus on all
aspects of the Servelec business and the opportunities available to
it, including:
-- investing in existing product ranges across the Servelec
Group to ensure that they meet the needs of existing and future
clients;
-- developing new product ranges to take advantage of growth
opportunities fitting the capabilities of the business,
particularly where Servelec's expertise and extensive intellectual
property brings a competitive advantage;
-- both investing in existing, and developing new, distribution
channels to expand the addressable market both domestically and
internationally; and
-- making bolt-on acquisitions of companies that support the
overall strategy of expanding the product range and the addressable
customer base across both divisions.
Scarlet Bidco does not reasonably expect that this evaluation
will lead to any changes that would materially impact the number of
Servelec employees or their conditions of employment (including
their entitlement to pensions contributions), the locations of
Servelec's places of business or its fixed assets.
As part of the evaluation of the Servelec Group, Scarlet Bidco
will consider whether to maintain both divisions as part of the
Servelec Group or to move towards a business model of two separate
stand-alone companies. In the event of a split into two separate
companies, each company would cease to be part of a single Servelec
Group. Scarlet Bidco does not reasonably expect that this would
result in any changes that would materially impact the number of
employees within each company or their conditions of employment
(including their entitlement to pensions contributions), the
locations of each company's existing and future places of business
or each company's fixed assets.
Following completion of the Offer, the existing employment
rights, including pension rights, of the management and employees
of Servelec will be fully safeguarded.
Each of Richard Last and Roger McDowell has confirmed that he
intends to resign from the Servelec Board conditional upon, and
with effect from, the Scheme becoming effective.
Following the Effective Date, it is likely that Scarlet Bidco
will put in place incentivisation scheme(s) for certain members of
the Servelec management team. Scarlet Bidco envisages that the
incentivisation under these scheme(s) would allow, subject to the
performance of the Servelec Group, such persons and other senior
employees to participate in an element of the proceeds on any
future sale of the Servelec Group. At the time of this
Announcement, there have been no discussions in respect of the
terms of any such arrangements with any person.
The Servelec Board welcomes Scarlet Bidco's intention to support
the existing strategy of the Servelec management team and to
continue investing in developing the Servelec Group.
The Servelec Directors acknowledge that Scarlet Bidco will
evaluate the business following completion of the Offer and
understand the likely areas of focus of such evaluation. The
Servelec Directors do not expect this will result in any changes
materially impacting the number of employees within the Servelec
Group or their conditions of employment (including their
entitlement to pensions contributions), the locations of Servelec
Group's existing and future places of business or Servelec Group's
fixed assets.
12 Servelec Share Schemes
Participants in the Servelec Share Schemes will be contacted
regarding the effect of the Offer on their rights under the
Servelec Share Schemes and appropriate proposals will be made to
such participants in due course. The outstanding options under the
Servelec SAYE will become exercisable on the sanction of the Scheme
by the Court and will remain exercisable for the following six
months. Outstanding options under the Servelec SAYE will be
exercisable to the extent savings have been made up to the relevant
exercise date. The Scheme will extend to any Servelec Shares which
are unconditionally allotted, issued or transferred to satisfy the
exercise of existing options or vesting of awards under the
Servelec Share Schemes prior to the Scheme Record Time.
Further details of the terms of such proposals will be included
in the Scheme Document and in separate letters to be sent to
participants in the Servelec Share Schemes.
13 Financing
The cash consideration payable under the Offer is being financed
by equity to be invested indirectly by the Montagu Funds.
Pursuant to a subscription agreement entered into between (among
others) the Montagu Funds, Scarlet Topco Limited and Scarlet Bidco
dated 23 November 2017 (the "Subscription Agreement"), the Montagu
Funds have entered into commitments to subscribe for securities in,
or otherwise to provide financing to, Scarlet Topco Limited, the
ultimate parent undertaking of Scarlet Bidco and certain
intermediate holding companies of Scarlet Bidco, conditional upon
the Scheme becoming effective or, if the Offer is implemented by
way of a takeover offer, such takeover offer being declared
unconditional as to acceptances. Scarlet Topco Limited and the
intermediate holding companies of Scarlet Bidco have each given
corresponding commitments to ensure that the cash proceeds of such
commitments are provided to Scarlet Bidco.
Raymond James, financial adviser to Scarlet Bidco and Montagu,
is satisfied that sufficient resources are available to satisfy in
full the cash consideration payable to Servelec Shareholders under
the terms of the Offer.
14 Offer-related arrangements
Confidentiality Agreement
Montagu and Servelec have entered into the Confidentiality
Agreement pursuant to which Montagu has undertaken to keep
confidential information relating to Servelec and not to disclose
it to third parties (other than to permitted disclosees) unless
required by law or regulation. These confidentiality obligations
will remain in force until the earlier of completion of the Offer
and 30 September 2018. The Confidentiality Agreement further
includes customary non-solicitation and standstill obligations on
Montagu.
Cooperation Agreement
Scarlet Bidco and Servelec have entered into the Cooperation
Agreement pursuant to which: (i) Scarlet Bidco has undertaken to
cooperate with Servelec in providing it with necessary information
and assistance in connection with preparation of the Scheme
Document; (ii) Scarlet Bidco and Servelec have agreed to take
actions necessary to implement certain proposals in relation to the
Servelec Share Schemes; and (iii) Scarlet Bidco has reserved its
right, with the consent of the Panel, to implement the Offer by way
of a takeover offer in certain circumstances.
The Cooperation Agreement will terminate in certain
circumstances, including if: (a) the Offer is not or ceases to be
recommended by the Servelec Directors; (b) a competing proposal is
recommended by the Servelec Directors; (c) the Offer is withdrawn
or lapses (other than as a result of Scarlet Bidco switching to a
takeover offer to acquire the issued and to be issued share capital
of Servelec, or where such withdrawal or lapse is followed by an
announcement by Scarlet Bidco or a person acting in concert with
Scarlet Bidco of a firm intention to implement an offer on
substantially the same or improved terms); (d) the Effective Date
has not occurred on or before the Long Stop Date; or (e) Scarlet
Bidco and Servelec otherwise agree.
15 Structure of the Offer
It is intended that the Offer will be effected by means of a
Court-approved scheme of arrangement between Servelec and Servelec
Shareholders under Part 26 of the Companies Act.
The purpose of the Scheme is to provide for Scarlet Bidco to
become the holder of the entire issued and to be issued ordinary
share capital of Servelec. This is to be achieved by the transfer
of the Servelec Shares to Scarlet Bidco, in consideration for which
the Servelec Shareholders will receive cash consideration on the
basis set out in paragraph 2 above.
The Scheme is subject to the Conditions and further terms set
out in Appendix I to this Announcement and to be set out in the
Scheme Document. In particular, the Scheme will be subject to the
following conditions:
(i) its approval by a majority in number of the Servelec
Shareholders who are present and vote, whether in person or by
proxy, at the Court Meeting, representing 75 per cent. or more in
value of the Servelec Shares voted by those Servelec Shareholders
at that meeting;
(ii) the resolution required to implement certain matters in
connection with the Scheme (including: (i) amendments to Servelec's
articles of association to ensure that any Servelec Shares issued
between approval of the Scheme at the Court Meeting and the Scheme
Record Time will be subject to the Scheme and that any Servelec
Shares issued after the Scheme Record Time will automatically be
acquired by Scarlet Bidco; and (ii) the approval of the
re-registration of Servelec as a private limited company and
related change of name of Servelec Group plc, each conditional on
the cancellation of trading in Servelec Shares on the Main Market
of the London Stock Exchange as described in paragraph 17 below)
being duly passed by Servelec Shareholders representing 75 per
cent. or more of votes cast at the General Meeting; and
(iii) the approval of the Scheme by the Court (with or without
modification but subject to any modification being on terms
acceptable to Servelec and Scarlet Bidco) and the delivery of an
office copy of the Court Order to the Registrar of Companies.
Subject to satisfaction of the Conditions, the Scheme is
expected to become effective by the middle of January 2018.
The Offer will lapse if:
(i) the approvals of the requisite majorities of Servelec
Shareholders at the Court Meeting and the General Meeting are not
obtained on or before the 22nd day after the expected date of each
such meeting as set out in the Scheme Document (or, in each case,
such later date as may be agreed between Scarlet Bidco and Servelec
and, in the case of the Court Meeting, the Court may allow);
(ii) the Scheme is not sanctioned by the Court by the 22nd day
after the expected date of such hearing as set out in the Scheme
Document (or such later date as may be agreed between Scarlet Bidco
and Servelec); or
(iii) the Scheme does not become effective by the Long Stop Date,
provided however that the deadlines for the timing of the Court
Meeting, the General Meeting and the Court hearing to approve the
Scheme as set out above may be waived by Scarlet Bidco and the
deadline for the Scheme to become effective may be extended by
agreement between Servelec and Scarlet Bidco (with the consent of
the Panel).
Upon the Scheme becoming effective, it will be binding on all
Servelec Shareholders, irrespective of whether or not they attended
or voted at the Court Meeting or the General Meeting.
Further details of the Scheme, including an indicative timetable
for its implementation, will be set out in the Scheme Document. It
is expected that the Scheme Document and the Forms of Proxy
accompanying the Scheme Document will be published as soon as
practicable and, in any event, (save with the consent of the Panel)
within 28 days of this Announcement. The Scheme Document and Forms
of Proxy will be made available to all Servelec Shareholders at no
charge to them.
16 Conditions to the Offer
The Offer will be subject to the Conditions and further terms
set out in Appendix I to this Announcement and to be set out in the
Scheme Document.
17 De-listing
Prior to the Scheme becoming effective, Servelec will make an
application for the cancellation of the listing of Servelec Shares
on the Official List of the UKLA and for the cancellation of
trading of the Servelec Shares on the London Stock Exchange's Main
Market for listed securities, in each case to take effect shortly
after the Effective Date. The last day of dealings in Servelec
Shares on the Main Market of the London Stock Exchange is expected
to be the business day immediately prior to the Effective Date and
no transfers will be registered after 6.00 p.m. on that date.
On the Effective Date, share certificates in respect of Servelec
Shares will cease to be valid and entitlements to Servelec Shares
held within the CREST system will be cancelled.
18 Disclosure of interests in Servelec
Save in respect of the irrevocable undertakings and letters of
intent referred to in paragraph 6 above, as at the close of
business on 22 November 2017 (being the latest practicable date
prior to the publication of this Announcement) neither Scarlet
Bidco nor any of its directors nor, so far as Scarlet Bidco is
aware, any person acting in concert (within the meaning of the
Takeover Code) with it has:
(i) any interest in or right to subscribe for any relevant securities of Servelec; nor
(ii) any short positions in respect of relevant Servelec Shares
(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; nor
(iii) provided or procured an irrevocable commitment or letter
of intent to accept or vote in favour of the Offer in respect of
relevant securities of Servelec; nor
(iv) borrowed or lent any relevant Servelec Shares (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 had been either on-lent or sold;
nor
(v) any dealing arrangement of the kind referred to in Note 11
of the definition of 'acting in concert' in the Code in relation to
Servelec Shares.
'Interests in securities' for these purposes arise, in summary,
when a person has long economic exposure, whether absolute or
conditional, to changes in the price of securities (and a person
who only has a short position in securities is not treated as
interested in those securities). In particular, a person will be
treated as having an 'interest' by virtue of the ownership, voting
rights or control of securities, or by virtue of any agreement to
purchase, option in respect of, or derivative referenced to,
securities.
19 General
Scarlet Bidco reserves the right to elect (subject to the
consent of the Panel) to implement the Offer by way of a takeover
offer as an alternative to the Scheme. In such event, the
acquisition will be implemented on substantially the same terms, so
far as applicable, as those which would apply to the Scheme
(subject to appropriate amendments, including an acceptance
condition set at 90 per cent. of the Servelec Shares to which such
offer relates or such lesser percentage, being more than 50 per
cent., as Scarlet Bidco may decide or the Panel may require).
If the Offer is effected by way of a takeover offer and such
takeover offer becomes or is declared unconditional in all respects
and sufficient acceptances are received in respect of such Offer,
Scarlet Bidco intends to: (i) procure that Servelec makes an
application for the cancellation of the listing of Servelec Shares
on the Official List and to the London Stock Exchange to cancel the
trading of Servelec Shares on the London Stock Exchange's Main
Market for listed securities; and (ii) exercise its rights (to the
extent such rights are available) to apply the provisions of
Chapter 3 of Part 28 of the Companies Act to acquire compulsorily
the remaining Servelec Shares in respect of which such Offer has
not been accepted.
The bases and sources of certain financial information contained
in this Announcement are set out in Appendix II to this
Announcement. A summary of the irrevocable undertakings and letters
of intent given in relation to the Offer is contained in Appendix
III to this Announcement. Certain terms used in this Announcement
are defined in Appendix IV to this Announcement.
20 Documents available on website
Copies of the following documents will be made available on
Servelec's website at www.servelec-group.com/investor-relations and
Scarlet Bidco's website at www.montagu.com/news/ until the end of
the Offer:
(i) the irrevocable undertakings and letters of intent referred
to in paragraph 6 above and summarised in Appendix III to this
Announcement;
(ii) the documents relating to the financing of the Scheme referred to in paragraph 13 above;
(iii) the Confidentiality Agreement;
(iv) the Cooperation Agreement; and
(v) this Announcement.
Enquiries:
Scarlet Bidco via Greenbrook
Edward Shuckburgh / Neil Graham
Raymond James (financial adviser +44 (0) 20
to Scarlet Bidco and Montagu) 3798 5700
Dominic Emery / Joel Greenwood
Joseph Donnelly / Max Vandewall
Greenbrook Communications (PR adviser +44 (0) 20
to Scarlet Bidco and Montagu) 7952 2000
Andrew Honnor / Alex Jones / Ryan
Smith
Servelec via Tulchan
Richard Last, Chairman and Non-Executive
Director
Alan Stubbs, Chief Executive Officer
Mike Cane, Chief Financial Officer
Pamela Weeks, Head of Corporate Communications
Investec Bank plc (Rule 3 financial +44 (0) 20
adviser and corporate broker to Servelec) 7597 5970
Corporate Finance
Andrew Pinder / Sebastian Lawrence
Corporate Broking
Patrick Robb / Matt Lewis / Rob Baker
Tulchan Communications (PR adviser +44 (0) 20
to Servelec) 7353 4200
James Macey White / Matt Low
Important notices
Raymond James Financial International Limited is authorised and
regulated by the Financial Conduct Authority in the UK. Raymond
James is acting exclusively as financial adviser to Scarlet Bidco
and Montagu and no one else in connection with the Offer and will
not be responsible to anyone other than Scarlet Bidco and Montagu
for providing the protections afforded to clients of Raymond James
nor for providing advice in connection with the Offer or any matter
referred to in this Announcement.
Investec Bank plc is authorised by the Prudential Regulation
Authority and regulated by the Financial Conduct Authority and the
Prudential Regulation Authority in the UK. Investec is acting
exclusively for Servelec and no one else in connection with the
Offer and will not be responsible to anyone other than Servelec for
providing the protections afforded to clients of Investec nor for
providing advice in connection with the Offer or any matter
referred to in this Announcement.
This Announcement is for information purposes only and does not
constitute an offer to sell or an invitation to purchase or
subscribe for any securities or the solicitation of an offer to buy
any securities or the solicitation of any vote or approval in any
jurisdiction, pursuant to the Offer or otherwise. The Offer will be
made solely by means of the Scheme Document (or, if Scarlet Bidco
so elects, any document by which the Offer is made by way of a
takeover offer) which will contain the full terms and conditions of
the Offer, including details of how to vote in respect of the
acquisition.
This Announcement has been prepared for the purpose of complying
with English law and the Takeover Code and the information
disclosed may not be the same as that which would have been
disclosed if this Announcement had been prepared in accordance with
the laws of jurisdictions outside of England.
Servelec will prepare the Scheme Document to be distributed to
Servelec Shareholders. Servelec and Scarlet Bidco urge Servelec
Shareholders to read the Scheme Document when it becomes available
because it will contain important information relating to the
Offer.
This Announcement does not constitute a prospectus or prospectus
equivalent document.
Overseas Shareholders
The release, publication or distribution of this Announcement in
certain jurisdictions may be restricted by law. Persons who are not
resident in the United Kingdom or who are subject to other
jurisdictions should inform themselves of, and observe, any
applicable requirements.
Unless otherwise determined by Scarlet Bidco or required by the
Takeover Code, and permitted by applicable law and regulation, the
Offer 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
Offer by any 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 documents relating to the Offer 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 of
that jurisdiction and persons receiving this Announcement and all
documents relating to the Offer (including custodians, nominees and
trustees) must not mail or otherwise distribute or send them in,
into or from such jurisdictions where to do so would violate the
laws of that jurisdiction.
The availability of the Offer to Servelec Shareholders who are
not resident in the United Kingdom may be affected by the laws of
the relevant jurisdiction in which they are resident. Persons who
are not resident in the United Kingdom should inform themselves of,
and observe, any applicable requirements. Any failure to comply
with the applicable restrictions may constitute a violation of the
securities laws of any such jurisdiction. To the fullest extent
permitted by applicable law, the companies and persons involved in
the Offer disclaim any responsibility or liability for the
violation of such restrictions by any person.
The Offer will be subject to the applicable requirements of the
Takeover Code, the Panel, the London Stock Exchange, the Financial
Conduct Authority and the UKLA.
Notice to US Shareholders
The Offer relates to shares of an English incorporated and
registered company and is proposed to be effected by means of a
scheme of arrangement under English law. A transaction effected by
means of a scheme of arrangement is not subject to proxy
solicitation or tender offer rules under the US Securities Exchange
Act of 1934 (the "US Exchange Act"). Accordingly, the Offer is
subject to the disclosure requirements, rules and practices
applicable in the United Kingdom to schemes of arrangement, which
differ from the requirements of US proxy solicitation or tender
offer rules. However, if Scarlet Bidco were to elect to implement
the Offer by means of a takeover offer, such takeover offer will be
made in compliance with all applicable US laws and regulations.
Such a takeover would be made in the United States by Scarlet Bidco
and no one else.
In accordance with normal UK practice and pursuant to Rule
14e-5(b) of the US Exchange Act, Scarlet Bidco, certain affiliated
companies and their respective nominees or brokers (acting as
agents) may make certain purchases of, or arrangements to purchase,
Servelec Shares, other than pursuant to the Offer, until the date
on which the Offer and/or Scheme becomes effective, lapses or is
otherwise withdrawn. 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.
The information contained in this Announcement has neither been
approved nor disapproved by the US Securities and Exchange
Commission (the "SEC") or any US state securities commission.
Neither the SEC, nor any state securities commission, has passed
upon or determined the fairness or merits of the proposal described
in, nor upon the accuracy or adequacy of the information contained
in, this Announcement.
The financial information included in this Announcement has been
prepared in accordance with accounting standards applicable in the
United Kingdom that may not be comparable to the financial
statements of US companies. US generally accepted accounting
principles differ in certain respects from IFRS used in the United
Kingdom. None of the financial information in this Announcement has
been audited in accordance with auditing standards generally
accepted in the United States or the auditing standards of the
Public Accounting Oversights Board (United States).
The receipt of cash pursuant to the Offer by a US Shareholder as
consideration pursuant to the terms of the Offer may be a taxable
transaction for US federal income tax purposes and under applicable
US state and local, as well as foreign and other, tax laws. Each US
Shareholder is urged to consult his independent professional
adviser immediately regarding the tax consequences of the Offer
applicable to him or her.
It may be difficult for US Shareholders to enforce their rights
and claims arising out of the US federal securities laws, since
Scarlet Bidco and Servelec are located in countries other than the
US and some or all of their officers and directors may be residents
of countries other than the US. US Shareholders 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 judgement.
Forward-looking statements
This Announcement contains statements about Scarlet Bidco and
Servelec that are or may be forward-looking statements. All
statements other than statements of historical facts included in
this Announcement may be forward-looking statements. Without
limitation, any statements preceded or followed by or that include
the words "targets", "plans", "believes", "expects", "aims",
"intends", "will", "shall", "may", "anticipates", "estimates",
"projects" 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; (ii) business and management
strategies and the expansion and growth of Scarlet Bidco's or
Servelec's operations and potential synergies resulting from the
Offer; and (iii) the effects of government regulation on Scarlet
Bidco's or Servelec's business.
Such forward-looking statements involve risks and uncertainties
that could significantly affect expected results and are based on
certain key assumptions. Many factors could cause actual results to
differ materially from those projected or implied in any
forward-looking statements. Due to such uncertainties and risks,
readers are cautioned not to place undue reliance on such
forward-looking statements, which speak only as of the date of this
Announcement. Other than in accordance with their legal or
regulatory obligations (including, to the extent applicable, under
the Listing Rules and the Disclosure Guidance and Transparency
Rules, each of the Financial Conduct Authority), Scarlet Bidco and
Servelec each disclaim any obligation to update any forward-looking
or other statements contained in this Announcement, whether as a
result of new information, future events or otherwise.
No profit forecasts or estimates
No statement in this Announcement is intended as a profit
forecast or estimate for any period and no statement in this
Announcement should be interpreted to mean that earnings or
earnings per share for Servelec for the current or future financial
years would necessarily match or exceed the historical published
earnings or earnings per share for Servelec.
Disclosure requirements of the Takeover Code
Under Rule 8.3(a) of the Takeover Code, any person who is
interested in one 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) applies must be
made by no later than 3.30 p.m. (London time) on the 10th business
day following the commencement of the offer period and, if
appropriate, by no later than 3.30 p.m. (London time) on the 10th
business day following the announcement in which any securities
exchange offeror is first identified. Relevant persons who deal in
the relevant securities of 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 one 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. A Dealing Disclosure
by a person to whom Rule 8.3(b) applies must be made by no later
than 3.30 p.m. (London time) on the business day following the date
of the relevant dealing.
If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire or control an
interest in relevant securities of an offeree company or a
securities exchange offeror, they will be deemed to be a single
person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree
company and by any offeror and Dealing Disclosures must also be
made by the offeree company, by any offeror and by any persons
acting in concert with any of them (see Rules 8.1, 8.2 and
8.4).
Details of the offeree and offeror companies in respect of whose
relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on
the Panel's website at http://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.
In accordance with Rule 2.9 of the Takeover Code, Servelec
confirms that as at the date of this Announcement, it has in issue
and admitted to trading on the Main Market of the London Stock
Exchange 69,843,173 ordinary shares of 18 pence each (and holds no
shares in treasury). The International Securities Identification
Number (ISIN) of the ordinary shares is GB00BFRBTP86.
Electronic communications
Please be aware that addresses, electronic addresses and certain
information provided by Servelec Shareholders, persons with
information rights and other relevant persons for the receipt of
communications from Servelec may be provided to Scarlet Bidco
during the Offer Period if requested under Section 4 of Appendix 4
of the Takeover Code to comply with Rule 2.11(c) of the Takeover
Code.
Publication on website and availability of hard copies
A copy of this Announcement will be made available subject to
certain restrictions relating to persons resident in Restricted
Jurisdictions on Servelec's website at
www.servelec-group.com/investor-relations and Scarlet Bidco's
website at www.montagu.com/news/ by no later than 12 noon (London
time) on 24 November 2017. For the avoidance of doubt, the contents
of those websites are not incorporated into and do not form part of
this Announcement.
Servelec Shareholders may request a hard copy of this
Announcement by contacting Link Asset Services at 34 Beckenham
Road, Beckenham, Kent, BR3 4TU or on 0371 664 0300 or if calling
from outside the UK on +44 (0) 371 664 0300. 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. Link Asset Services is open between 9.00 a.m.
to 5.30 p.m., Monday to Friday excluding public holidays in England
and Wales. You may also request that all future documents,
announcements and information to be sent to you in relation to the
Offer should be in hard copy form.
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.
APPIX I
CONDITIONS AND FURTHER TERMS OF THE OFFER
Part A: Conditions of the Offer
The Offer will be conditional upon the Scheme becoming
unconditional and effective, subject to the Takeover Code, by not
later than the Long Stop Date or such later date (if any) as
Scarlet Bidco and Servelec may agree and (if required) the Panel
and the Court may allow.
1 The Scheme will be subject to the following conditions:
1.1 its approval by a majority in number of Servelec
Shareholders, who are present and vote, whether in person or by
proxy, at the Court Meeting, representing 75 per cent. or more in
value of the Servelec Shares voted by those Servelec Shareholders,
on or before the 22nd day after the expected date of the Court
Meeting as set out in the Scheme Document (or such later date as
may be agreed between Scarlet Bidco and Servelec and the Court may
allow);
1.2 the resolution required to implement certain matters in
connection with the Scheme being duly passed by Servelec
Shareholders representing 75 per cent. or more of votes cast at the
General Meeting on or before the 22nd day after the expected date
of the General Meeting as set out in the Scheme Document (or such
later date as may be agreed by Scarlet Bidco and Servelec); and
1.3 the sanction of the Scheme by the Court (with or without
modification but subject to any modification being on terms
acceptable to Servelec and Scarlet Bidco) on or before the 22nd day
after the expected date of the Court sanction hearing as set out in
the Scheme Document (or such later date as may be agreed by Scarlet
Bidco and Servelec and the Court may allow) and the delivery of a
copy of the Court Order to the Registrar of Companies.
2 In addition, subject as stated in Part B below and to the
requirements of the Panel, the Offer will be conditional upon the
following Conditions and, accordingly, the Court Order will not be
delivered to the Registrar of Companies unless such Conditions (as
amended if appropriate) have been satisfied or, where relevant,
waived:
(a) other than the matters referred to in Condition 1, all
notifications, notices, filings or applications which, in the
reasonable opinion of Scarlet Bidco, are necessary or required
under any applicable legislation or regulation of any relevant
jurisdiction having been made in connection with the Offer or any
aspect of the Offer or its financing and all necessary waiting
periods (including any extensions thereof) under any applicable
legislation or regulation of any jurisdiction having expired,
lapsed or been waived (as appropriate) and all applicable statutory
and regulatory obligations in any relevant jurisdiction having been
complied with in each case in respect of the Offer and all
Authorisations necessary or required in any jurisdiction for or in
respect of the Offer and the acquisition or the proposed
acquisition of any shares or other securities in, or control or
management of, Servelec or any other member of the Wider Servelec
Group by any member of the Wider Scarlet Bidco Group having been
obtained, or deemed by effluxion of time to have been given, in
terms and in a form satisfactory to Scarlet Bidco (acting
reasonably) from all appropriate Third Parties or (without
prejudice to the generality of the foregoing) from any person or
bodies with whom any member of the Wider Servelec Group has entered
into contractual arrangements, and all such Authorisations
necessary or appropriate to carry on the business of any member of
the Wider Servelec Group in any jurisdiction having been obtained
and all such Authorisations which are material in the context of
the Wider Servelec Group (taken as a whole) remaining in full force
and effect at the time at which the Offer becomes otherwise wholly
unconditional and there being no notice or intimation of an
intention to revoke, suspend, restrict, modify or not to renew such
Authorisations;
(b) other than the matters referred to in Condition 1, no
anti-trust regulator or Third Party having given notice of a
decision to take, institute, implement or threaten any action,
proceeding, suit, investigation, enquiry or reference (and in each
case, not having withdrawn the same), or having required any action
to be taken or otherwise having done anything, or having enacted,
made or proposed any statute, regulation, decision, order or change
to published practice (and in each case, not having withdrawn the
same) and there not continuing to be outstanding any statute,
regulation, decision or order which would or might reasonably be
expected to:
(i) require, prevent or delay the divestiture or alter the terms
envisaged for such divestiture by any member of the Wider Scarlet
Bidco Group or by any member of the Wider Servelec Group of all or
any material part of its businesses, assets or property or impose
any material limitation on the ability of all or any of them to
conduct their businesses (or any part thereof) or to own, control
or manage any of their assets or properties (or any part
thereof);
(ii) except pursuant to Chapter 3 of Part 28 of the Companies
Act, require any member of the Wider Scarlet Bidco Group or the
Wider Servelec Group to acquire or offer to acquire any shares,
other securities (or the equivalent) or interest in any member of
the Wider Servelec Group or any asset owned by any Third Party
(other than in the implementation of the Offer);
(iii) impose any material limitation on, or result in a material
delay in, the ability of any member of the Wider Scarlet Bidco
Group directly or indirectly to acquire, hold or to exercise
effectively all or any rights of ownership in respect of shares or
other securities in Servelec or on the ability of any member of the
Wider Servelec Group or any member of the Wider Scarlet Bidco Group
directly or indirectly to hold or exercise effectively 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 Servelec Group;
(iv) otherwise materially adversely affect any or all of the
business, assets, profits or prospects of any member of the Wider
Servelec Group or any member of the Wider Scarlet Bidco Group;
(v) result in any member of the Wider Servelec Group or any
member of the Wider Scarlet Bidco Group ceasing to be able to carry
on business under any name under which it presently carries on
business;
(vi) make the Offer, its implementation or the acquisition or
proposed acquisition of any shares or other securities in, or
control or management of, Servelec by any member of the Wider
Scarlet Bidco Group void, unenforceable and/or illegal under the
laws of any relevant jurisdiction, or otherwise, directly or
indirectly materially prevent or materially prohibit, restrict or
restrain, or materially delay or otherwise interfere with the
implementation of, or impose material additional conditions or
obligations with respect to, or otherwise challenge, impede,
interfere or require amendment of the Offer or the acquisition or
proposed acquisition of any shares or other securities in, or
control or management of, Servelec by any member of the Wider
Scarlet Bidco Group;
(vii) require, prevent or materially delay a divestiture by any
member of the Wider Scarlet Bidco Group of any shares or other
securities (or the equivalent) in any member of the Wider Servelec
Group or any member of the Wider Scarlet Bidco Group; or
(viii) impose any material limitation on the ability of any
member of the Wider Scarlet Bidco Group or any member of the Wider
Servelec Group to conduct, integrate or co-ordinate all or any part
of its business with all or any material part of the business of
any other member of the Wider Scarlet Bidco Group and/or the Wider
Servelec Group,
and all applicable waiting and other time periods (including any
extensions thereof) during which any such antitrust regulator or
Third Party could decide to take, institute, implement or threaten
any such action, proceeding, suit, investigation, enquiry or
reference or take any other step under the laws of any jurisdiction
in respect of the Offer or the acquisition or proposed acquisition
of any Servelec Shares or otherwise intervene having expired,
lapsed or been terminated;
(c) except as Disclosed, there being no provision of any
arrangement, agreement, lease, licence, franchise, permit or other
instrument to which any member of the Wider Servelec Group is a
party or by or to which any such member or any of its material
assets is or may be bound, entitled or be subject or any event or
circumstance which, as a consequence of the Offer or the
acquisition or the proposed acquisition by any member of the Wider
Scarlet Bidco Group of any shares or other securities (or the
equivalent) in Servelec or because of a change in the control or
management of any member of the Wider Servelec Group or otherwise,
would or might reasonably be expected to, to an extent which is
material in the context of the Wider Servelec Group (taken as a
whole), result in:
(i) any monies borrowed by, or any other indebtedness, actual or
contingent, of, or any grant available to, any member of the Wider
Servelec Group being or becoming repayable, or capable of being
declared repayable, immediately or prior to its or their stated
maturity date or repayment date, or the ability of any such member
to borrow monies or incur any indebtedness being withdrawn or
inhibited or being capable of becoming or being withdrawn or
inhibited;
(ii) the creation, save in the ordinary and usual course of
business, or enforcement of any mortgage, charge or other security
interest over the whole or any part of the business, property or
assets of any member of the Wider Servelec Group or any such
mortgage, charge or other security interest (whenever created,
arising or having arisen) becoming enforceable;
(iii) any such arrangement, agreement, lease, licence,
franchise, permit or other instrument being terminated or the
rights, liabilities, obligations or interests of any member of the
Wider Servelec Group being adversely modified or adversely affected
or any obligation or liability arising or any adverse action being
taken or arising thereunder;
(iv) any liability of any member of the Wider Servelec Group to
make any severance, termination, bonus or other payment to any of
its directors, or other officers;
(v) the rights, liabilities, obligations, interests or business
of any member of the Wider Servelec Group under any such
arrangement, agreement, licence, permit, lease or instrument or the
interests or business of any member of the Wider Servelec Group in
or with any other person or body or firm or company (or any
arrangement or arrangement relating to any such interests or
business) being or becoming capable of being terminated, or
adversely modified or affected or any onerous obligation or
liability arising or any adverse action being taken thereunder;
(vi) any member of the Wider Servelec Group ceasing to be able
to carry on business under any name under which it presently
carries on business;
(vii) the value of, or the financial or trading position or
prospects of, any member of the Wider Servelec Group being
prejudiced or adversely affected; or
(viii) the creation or acceleration of any liability (actual or
contingent) by any member of the Wider Servelec Group other than
trade creditors or other liabilities incurred in the ordinary
course of business,
and no event having occurred which, under any provision of any
arrangement, agreement, licence, permit, franchise, lease or other
instrument to which any member of the Wider Servelec Group is a
party or by or to which any such member or any of its assets are
bound, entitled or subject, would or might reasonably be expected
to result in any of the events or circumstances as are referred to
in Conditions (c)(i) to (viii);
(d) except as Disclosed, no member of the Wider Servelec Group having since 30 June 2017:
(i) issued or agreed to issue or authorised or proposed or
announced its intention to authorise or propose the issue, of
additional shares of any class, or securities or securities
convertible into, or exchangeable for, or rights, warrants or
options to subscribe for or acquire, any such shares, securities or
convertible securities or transferred or sold or agreed to transfer
or sell or authorised or proposed the transfer or sale of Servelec
Shares out of treasury (except, where relevant, as between Servelec
and wholly owned subsidiaries of Servelec or between the wholly
owned subsidiaries of Servelec and except for the issue or transfer
out of treasury of Servelec Shares on the exercise of employee
share options or vesting of employee share awards in the ordinary
course under the Servelec Share Schemes);
(ii) recommended, declared, paid or made or proposed to
recommend, declare, pay or make any bonus issue of shares, dividend
or other distribution (whether payable in cash or otherwise) other
than dividends (or other distributions whether payable in cash or
otherwise) lawfully paid or made by any wholly owned subsidiary of
Servelec to Servelec or any of its wholly owned subsidiaries;
(iii) other than pursuant to the Offer (and except for
transactions between Servelec and its wholly owned subsidiaries or
between the wholly owned subsidiaries of Servelec and transactions
in the ordinary course of business) implemented, effected,
authorised or announced its intention to implement, effect,
authorise or propose any merger, demerger, reconstruction,
amalgamation, scheme, binding commitment or acquisition or disposal
of assets or shares or loan capital (or the equivalent thereof) in
any undertaking or undertakings;
(iv) except for transactions between Servelec and its wholly
owned subsidiaries or between the wholly owned subsidiaries of
Servelec and for disposals of assets in the ordinary course of
business, disposed of, or transferred, mortgaged or created any
security interest over any asset or any right, title or interest in
any asset or authorised, proposed or announced any intention to do
so;
(v) except for transactions between Servelec and its wholly
owned subsidiaries or between the wholly owned subsidiaries of
Servelec, issued, authorised or proposed or announced an intention
to authorise or propose, the issue of or made any change in or to
the terms of any debentures or incurred or materially increased any
indebtedness or, except in the ordinary course of business, become
subject to any contingent liability;
(vi) entered into or materially varied or authorised or
announced its intention to enter into or materially vary any
contract, arrangement, agreement, transaction or binding commitment
(whether in respect of capital expenditure or otherwise) except in
the ordinary course of business on terms which are (a) of a long
term, unusual or onerous nature or magnitude or which are or (b)
which involve or could involve an obligation of a nature or
magnitude which is likely to be materially restrictive on the
business of any member of the Wider Servelec Group;
(vii) entered into or materially varied the terms of, or made
any offer (which remains open for acceptance) to enter into or
materially vary the terms of any contract, service agreement,
commitment or arrangement with any director or senior executive of
any member of the Wider Servelec Group;
(viii) 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 employee of the
Wider Servelec Group;
(ix) purchased, redeemed or repaid or announced any proposal to
purchase, redeem or repay any of its own shares or other securities
or reduced or, except in respect of the matters mentioned in
sub-paragraph (i) above, made any other change to any part of its
share capital;
(x) except in the ordinary course of business, waived,
compromised or settled any claim which is material in the context
of the Wider Servelec Group (taken as a whole);
(xi) terminated or varied the terms of any agreement or
arrangement between any member of the Wider Servelec 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 of the Wider Servelec Group (taken as a whole) or in the
context of the Offer;
(xii) made any alteration to its memorandum or articles of
association or other incorporation documents;
(xiii) except in relation to changes made or agreed as a result
of, or arising from, changes to legislation, made or agreed or
consented to any change to:
(a) the terms of the trust deeds and rules constituting the
pension scheme(s) established by any member of the Wider Servelec
Group for its directors, employees or their dependants;
(b) the contributions payable to any such scheme(s) or to the
benefits which accrue, or to the pensions which are payable,
thereunder;
(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, valued, made, agreed or consented
to;
(xiv) been unable, or admitted in writing that it is unable, to
pay its debts or commenced negotiations with one or more of its
creditors with a view to rescheduling or restructuring any of its
indebtedness, or having stopped or suspended (or threatened to stop
or suspend) payment of its debts generally or ceased or threatened
to cease carrying on all or a substantial part of its business;
(xv) (other than in respect of a member of the Wider Servelec
Group which is dormant and was solvent at the relevant time) taken
or proposed any steps, corporate action or had any legal
proceedings instituted or threatened against it in relation to the
suspension of payments, a moratorium of any indebtedness, its
winding-up (voluntary or otherwise), dissolution, reorganisation or
for the appointment of a receiver, administrator, manager,
administrative receiver, trustee or similar officer of all or any
of its assets or revenues or any analogous or equivalent steps or
proceedings in any jurisdiction or appointed any analogous person
in any jurisdiction or had any such person appointed;
(xvi) (except for transactions between Servelec and its wholly
owned subsidiaries or between the wholly owned subsidiaries), made,
authorised, proposed or announced an intention to propose any
change in its loan capital;
(xvii) entered into, implemented or authorised the entry into,
any joint venture, asset or profit sharing arrangement, partnership
or merger of business or corporate entities; or
(xviii) entered into any agreement, arrangement, binding
commitment or contract or passed any resolution or made any offer
(which remains open for acceptance) with respect to or announced an
intention to, or to propose to, effect any of the transactions,
matters or events referred to in this Condition (d);
(e) except as Disclosed, since 30 June 2017 there having been:
(i) no adverse change and no circumstance having arisen which
would or might reasonably be expected to result in any adverse
change in, the business, assets, financial or trading position or
profits or prospects or operational performance of any member of
the Wider Servelec Group which is material in the context of the
Wider Servelec Group or in the context of the Offer;
(ii) no litigation, arbitration proceedings, prosecution or
other legal proceedings having been threatened, announced or
instituted by or against or remaining outstanding against or in
respect of, any member of the Wider Servelec Group or to which any
member of the Wider Servelec Group is or may become a party
(whether as claimant, defendant or otherwise) having been
threatened, announced, instituted or remaining outstanding by,
against or in respect of, any member of the Wider Servelec Group,
in each case which might reasonably be expected to have a material
adverse effect on the Wider Servelec Group (taken as a whole) or in
the context of the Offer;
(iii) no enquiry, review or investigation by, or complaint or
reference to, any Third Party against or in respect of any member
of the Wider Servelec Group having been threatened, announced or
instituted or remaining outstanding by, against or in respect of
any member of the Wider Servelec Group, in each case which might
reasonably be expected to have a material adverse effect on the
Wider Servelec Group (taken as a whole) or in the context of the
Offer;
(iv) no contingent or other liability having arisen or become
apparent to Scarlet Bidco or increased other than in the ordinary
course of business which is reasonably likely to affect adversely
the business, assets, financial or trading position or profits or
prospects of any member of the Wider Servelec Group to an extent
which is material in the context of the Wider Servelec Group (taken
as a whole) or in the context of the Offer; and
(v) no steps having been taken and no omissions having been made
which are likely to result in the withdrawal, cancellation,
termination or modification of any licence held by any member of
the Wider Servelec Group which is necessary for the proper carrying
on of its business and the withdrawal, cancellation, termination or
modification of which might reasonably be expected to have a
material adverse effect on the Wider Servelec Group (taken as a
whole) or in the context of the Offer;
(f) except as Disclosed, Scarlet Bidco not having discovered:
(i) that any financial, business or other information concerning
the Wider Servelec Group publicly announced prior to this date of
the announcement or disclosed at any time to any member of the
Wider Scarlet Bidco Group by or on behalf of any member of the
Wider Servelec Group prior to the date of this announcement is
misleading, contains a material misrepresentation of any fact, or
omits to state a fact necessary to make that information not
misleading, in any such case to a material extent in the context of
the Wider Servelec Group (taken as a whole) or in the context of
the Offer;
(ii) that any member of the Wider Servelec Group or any
partnership, company or other entity in which any member of the
Wider Servelec Group has a significant economic interest and which
is not a subsidiary undertaking of Servelec is subject to any
liability, contingent or otherwise and which is material in the
context of the Wider Servelec Group (taken as a whole) or in the
context of the Offer;
(iii) that any past or present member of the Wider Servelec
Group has not complied in all material respects with all applicable
legislation, regulations or other requirements of any jurisdiction
or any Authorisations relating to the use, treatment, storage,
carriage, disposal, discharge, spillage, release, leak or emission
of any waste or hazardous substance or any substance likely to
impair the environment (including property) or harm human health or
otherwise relating to environmental matters or the health and
safety of humans, which non-compliance would be likely to give rise
to any material liability including any penalty for non-compliance
(whether actual or contingent) on the part of the Wider Servelec
Group (taken as a whole);
(iv) that there is or is likely to be any obligation or
liability (whether actual or contingent) or requirement to make
good, remediate, repair, reinstate or clean up any property or
asset currently or previously owned, occupied, operated or made use
of or controlled by any past or present member of the Wider
Servelec Group (or on its behalf), or in which any such member may
have or previously have had or be deemed to have had an interest,
under any environmental legislation, common law, regulation,
notice, circular, Authorisation or order of any Third Party in any
jurisdiction or to contribute to the cost thereof or associated
therewith or indemnify any person in relation thereto, in each case
which is material in the context of the Wider Servelec Group (taken
as a whole) or in the context of the Offer;
(v) that circumstances exist (whether as a result of making the
Offer or otherwise) which would be likely to lead to any Third
Party taking any steps which would in any such case be reasonably
likely to result in any actual or contingent liability to improve
or install new plant or equipment or to make good, repair,
reinstate or clean up any property of any description or any asset
now or previously owned, occupied or made use of by any past or
present member of the Wider Servelec Group (or on its behalf) or by
any person for which a member of the Wider Servelec Group is or has
been responsible, or in which any such member may have or
previously have had or be deemed to have had an interest, which is
material in the context of the Wider Servelec Group (taken as a
whole) or in the context of the Offer;
(vi) that circumstances exist whereby a person or class of
persons would be likely to have a claim in respect of any product
or process of manufacture or materials used therein now or
previously manufactured, sold or carried out by any past or present
member of the Wider Servelec Group which is or would be material in
the context of the Servelec Group (taken as a whole);
(g) no member, director or officer of the Wider Servelec Group
nor any person that performs or has performed services for or on
behalf of any such company is or has engaged in any activity,
practice or conduct which would constitute an offence under the
Bribery Act 2010, the U.S. Foreign Corrupt Practices Act of 1977 or
any other applicable anti-corruption legislation or regulation
(including, without limitation the Organisation for Economic
Co-operation and Development's Convention on Combating Bribery of
Foreign Public Officials in International Business Transactions and
any laws or regulations implementing the same);
(h) no past or present member, director or officer of the Wider
Servelec Group is or has engaged in any activity or business with,
or made any investments in, or made any payments to any government,
entity or individual covered by any of the economic sanctions
administered by the United Nations or the European Union (or any of
their respective member states) or the United States Office of
Foreign Assets Control or any other governments or supranational
body or authority in any jurisdiction;
(i) no member of the Servelec Group has engaged in any
transaction which would cause Scarlet Bidco to be in breach of any
law or regulation upon its acquisition of Servelec, including the
economic sanctions of the United States Office of Foreign Assets
Control, or HM Treasury, or any government, entity or individual
targeted by any of the economic sanctions of the United Nations,
the United States, the European Union or any of its member
states;
(j) no asset of any member of the Wider Servelec 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
(k) Scarlet Bidco not having discovered that circumstances have
arisen or events have occurred since the date of this Announcement
in relation to any intellectual property owned, used or licensed by
the Wider Servelec Group or to any third parties, including:
(i) any member of the Wider Servelec Group losing its title to
any intellectual property or any intellectual property owned by the
Wider Servelec Group being revoked, cancelled or declared
invalid;
(ii) any agreement regarding the use of any intellectual
property licensed to or by any member of the Wider Servelec Group
being terminated or varied; or
(iii) any claim being filed suggesting that any member of the
Wider Servelec Group infringed the intellectual property rights of
a third party or any member of the Wider Servelec Group being found
to have infringed the intellectual property rights of a third
party,
in each case, which is material in the context of the Wider
Servelec Group (taken as a whole) or in the context of the
Offer.
Part B: Certain further terms of the Offer
1 Subject to the requirements of the Panel, Scarlet Bidco reserves the right to waive:
(a) any of the Conditions set out in Condition 1 for the timing
of the Court Meeting, General Meeting, and the Court hearing to
sanction the Scheme and the effectiveness of the Scheme. If any
such deadline is not met, Scarlet Bidco will 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
with Servelec to extend the deadline in relation to the relevant
Condition; and
(b) in whole or in part, all or any of the above Conditions 2(a) to (k) (inclusive).
2 If Scarlet Bidco is required by the Panel to make an offer for
Servelec Shares under the provisions of Rule 9 of the Takeover
Code, Scarlet Bidco may make such alterations to any of the above
Conditions and terms of the Offer as are necessary to comply with
the provisions of that Rule.
3 The Offer will lapse if:
(a) in so far as the Offer or any matter arising from or
relating to the Scheme or Offer constitutes a concentration with a
Community dimension within the scope of the Regulation, the
European Commission either initiates proceedings under Article
6(1)(c) of the Regulation or makes a referral to a competent
authority in the United Kingdom under Article 9(1) of the
Regulation and there is then a CMA Phase 2 Reference; or
(b) in so far as the Offer or any matter arising from the Scheme
or Offer does not constitute a concentration with a Community
dimension within the scope of the Regulation, the Scheme or Offer
or any matter arising from or relating to the Offer becomes subject
to a CMA Phase 2 Reference,
in each case, before the date of the Court Meeting.
4 Conditions 2(a) to 2(k) (inclusive) must be fulfilled, or be
or remain satisfied or (if capable of waiver) be waived, prior to
the commencement of the Court hearing to sanction the Scheme,
failing which the Offer will lapse and the Scheme will not proceed.
Scarlet Bidco will be under no obligation to waive (if capable of
waiver), to determine to be or remain satisfied or to treat as
fulfilled any of Conditions 2(a) to (k) (inclusive) by a date
earlier than the latest date for the fulfilment of that Condition
notwithstanding that the other Conditions of the Offer may at such
earlier date have been waived or fulfilled and that there are at
such earlier date no circumstances indicating that any of such
Conditions may not be capable of fulfilment.
5 If, on or after the date of this Announcement, but prior to
the Effective Date, any dividend or other distribution or other
return of capital is declared, made or paid or becomes payable by
Servelec (a "relevant distribution"), Scarlet Bidco reserves the
right (without prejudice to any right of Scarlet Bidco, with the
consent of the Panel, to invoke Condition 2(d)(ii)) to reduce the
consideration payable under the Offer in respect of a Servelec
Share by an amount up to the aggregate amount of such dividend or
distribution or return of capital.
If any such dividend or distribution or return of capital
occurs, any reference in this Announcement to the Offer Price will
be deemed to be a reference to the Offer Price as so reduced. If
such reduction occurs, notwithstanding the terms on which the
Servelec Shares are expressed to be acquired by Scarlet Bidco
pursuant to the Offer in this Appendix I, the Servelec Shares will
be acquired by or on behalf of Scarlet Bidco pursuant to the Offer
fully paid and free from all liens, equities, charges,
encumbrances, options, rights of pre-emption and any other third
party rights and interests of any nature and together with all
rights now and hereafter attaching to such shares, including,
without limitation, voting rights and the right to receive and
retain in full all dividends and other distributions (if any)
declared, made or paid, or any other return of capital (whether by
reduction of share capital or share premium account or otherwise)
made, on or after the date of this Announcement.
To the extent that such a dividend, distribution or return of
capital has been declared, paid, made or is payable and is or will
be: (i) transferred pursuant to the Offer on a basis which entitles
Scarlet Bidco to receive the dividend or distribution and to retain
it; or (ii) cancelled, the Offer Price will not be subject to
change in accordance with this paragraph.
Any exercise by Scarlet Bidco of its rights referred to in this
paragraph will be the subject of an announcement and, for the
avoidance of doubt, will not be regarded as constituting any
revision or variation of the Offer.
6 Scarlet Bidco reserves the right to elect (with the consent of
the Panel) to implement the Offer by way of a takeover offer as it
may determine in its absolute discretion. In such event, the
acquisition will be implemented on substantially the same terms, so
far as applicable, subject to appropriate amendments, including
(without limitation) an acceptance condition set at 90 per cent.
(or such lesser percentage, being more than 50 per cent., as
Scarlet Bidco may decide or the Panel may require) of the Servelec
Shares to which such offer relates, so far as applicable, as those
which would apply to the Scheme.
7 The Servelec Shares acquired under the Offer (whether by way
of the Scheme or a takeover offer) will be acquired fully paid and
free from all liens, equities, charges, encumbrances, options,
rights of pre-emption and any other third party rights and
interests of any nature and together with all rights now or
hereafter attaching or accruing to them, including, without
limitation, voting rights and the right to receive and retain in
full all dividends and other distributions (if any) declared, made
or paid, or any other return of capital (whether by reduction of
share capital or share premium account or otherwise) made, on or
after the date of this Announcement.
8 The availability of the Offer to persons not resident in the
United Kingdom may be affected by the laws of the relevant
jurisdiction. Persons who are not resident in the United Kingdom
should inform themselves about and observe any applicable
requirements.
9 The Offer 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.
10 The Offer is governed by the law of England and Wales and is
subject to the jurisdiction of the English courts and to the
Conditions and further terms set out in this Appendix I and to be
set out in the Scheme Document. The Offer will be subject to the
applicable requirements of the Takeover Code, the Panel, the London
Stock Exchange, the Financial Conduct Authority and the UKLA.
11 Each of the Conditions will be regarded as a separate
Condition and will not be limited by reference to any other
Condition.
12 Under Rule 13.5 of the Takeover Code, Scarlet Bidco may not
invoke a condition to the Offer so as to cause the Offer not to
proceed, to lapse or to be withdrawn unless the circumstances which
give rise to the right to invoke the Condition are of material
significance to Scarlet Bidco in the context of the Offer.
Condition 1 is not subject to this provision of the Takeover
Code.
APPIX II
SOURCES OF INFORMATION AND BASES OF CALCULATION
1 The value placed by the Offer on the existing issued and to be
issued share capital of Servelec is based on a fully diluted figure
of 71,503,988 Servelec Shares consisting of:
(a) 69,843,173 Servelec Shares in issue as at 22 November 2017,
being the latest practicable date prior to the publication of this
Announcement; and
(b) 1,660,815 Servelec Shares in respect of which options may
become exercisable as a result of the Offer.
2 The Closing Price on 22 November 2017 is taken from the Daily Official List.
3 The Volume Weighted Average Prices for Servelec Shares are derived from FactSet.
4 Unless otherwise stated, the financial information relating to
Servelec is extracted from the audited consolidated financial
statements of Servelec for the financial year ended 31 December
2016, prepared in accordance with IFRS or the unaudited interim
financial statements for the financial year ending 31 December
2017.
5 The number of Servelec Shares in respect of which options may
become exercisable as a result of the Offer is 1,660,815 Servelec
Shares. Vesting of options under the Servelec Share Schemes is
dependent on the time for which they have been held (unless the
remuneration committee of Servelec in its discretion determines
otherwise) and the degree to which performance targets are
satisfied. This figure is calculated as at 22 November 2017 (being
the latest practicable date prior to the publication of this
Announcement) and assumes: (i) that the remuneration committee of
Servelec will waive the requirement to calculate the number of
option shares by reference to the time which has elapsed since the
date of grant; (ii) that all options will be exercised to the
maximum possible extent; and (iii) no options are excercised where
the exercise price is above the Offer price.
APPIX III
IRREVOCABLE UNDERTAKINGS AND LETTERS OF INTENT
Servelec Directors' irrevocable undertakings
Number of Servelec
Shares in respect % of Servelec
Name of Servelec of which undertaking issued ordinary
Director is given share capital
Richard Last 418,994 0.6%
Roger McDowell 186,053 0.3%
Alan Stubbs 838,000 1.2%
Mike Cane 79,327 0.1%
Each irrevocable undertaking outlined above binds the relevant
Servelec Director to, amongst other things, vote in favour of the
Scheme at the Court Meeting and the resolution to be proposed at
the General Meeting, in respect of his entire beneficial holding of
Servelec Shares. The irrevocable undertakings will cease to have
effect if:
(a) the Scheme Document is not despatched within 28 days of the
date of this Announcement (or such longer period as the Panel may
agree) or, if Scarlet Bidco elects to implement the Offer by way of
a takeover offer, within 28 days of the date of the announcement
that the Offer will be implemented by way of a takeover offer;
(b) Scarlet Bidco announces that it does not intend to proceed
with the Offer and no new, revised or replacement Scheme or
takeover offer (on no less favourable terms) is announced by
Scarlet Bidco within three business days' of such announcement;
or
(c) the Offer does not become effective, lapses or is withdrawn
and no new, revised or replacement Scheme or takeover offer is
announced by Scarlet Bidco within three business days of such lapse
or withdrawal.
These irrevocable undertakings remain binding in the event of a
competing offer.
Other Servelec Shareholders' irrevocable undertakings
% of Servelec
Number of Servelec Higher issued
Shares in respect Competing ordinary
Name of Servelec of which undertaking Offer share
Shareholder is given Price capital
NFU Mutual Insurance
Society Limited 4,125,200 330 pence 5.9%
Marlborough
Fund Managers
Limited 2,000,000 344 pence 2.9%
Herald Investment
Management Limited
(on behalf of
Herald Investment
Trust plc) 1,007,025 345 pence 1.4%
LOIM 470,713 330 pence 0.7%
Each irrevocable undertaking outlined above binds the relevant
shareholder to, amongst other things, vote in favour of the Scheme
at the Court Meeting and the resolution to be proposed at the
General Meeting, in respect of its entire beneficial holding of
Servelec Shares. The irrevocable undertakings will cease to have
effect if:
(a) Scarlet Bidco announces that it does not intend to proceed
with the Offer and no new, revised or replacement Scheme or
takeover offer is announced by Scarlet Bidco at or about the same
time;
(b) the Offer lapses or is withdrawn and no new, revised or
replacement Scheme or takeover offer is announced by Scarlet Bidco
at or about the same time; or
(c) a third party announces a firm intention to make an offer
for the Servelec Shares where the cash price offered for each
Servelec Share is at least the Higher Competing Offer Price (as set
out opposite the name of the relevant shareholder in the table
above) unless an equivalent or higher offer is announced by Scarlet
Bidco.
Servelec Shareholders' letters of intent
The following holders, controllers, or beneficial owners of
Servelec Shares have delivered to Scarlet Bidco non-binding letters
of intent to vote in favour of the Scheme:
Number of Servelec
Shares in respect % of Servelec
Name of Servelec of which the letter issued ordinary
Shareholder is given share capital
Schroder Investment
Management Limited 7,849,055 11.2%
GVQ Investment Management
Limited 5,082,927 7.3%
Harwood Capital
LLP on behalf of
Oryx International
Growth Fund Limited 900,000 1.3%
If a third party announces a firm intention to make an offer for
the Servelec Shares, each of Harwood Capital LLP (on behalf of Oryx
International Growth Fund) and Schroder Investment Management
Limited has indicated that it would remain supportive of the Offer
unless the consideration offered by such third party was, in such
shareholder's opinion, at least 5 per cent. higher than the Offer
Price. In such circumstances, it is expected that each of Harwood
Capital LLP (on behalf of Oryx International Growth Fund) and
Schroder Investment Management Limited would no longer intend to
vote in favour of the Scheme at the Court Meeting and the
resolution to be proposed at the General Meeting.
APPIX IV
DEFINITIONS
The following definitions apply throughout this Announcement
unless the context requires otherwise:
"Announcement" this announcement dated 23
November 2017;
"Authorisations" regulatory authorisations,
orders, recognitions, grants,
consents, clearances, confirmations,
certificates, licences, permissions,
approvals or notifications
of no objection;
"business day" a day (other than Saturdays,
Sundays and public holidays
in England) on which clearing
banks are generally open for
business in the City of London;
"Closing Price" the closing middle market price
of a Servelec Share on a particular
trading day as derived from
the Daily Official List;
"CMA Phase 2 Reference" a reference of the Offer to
the chair of the Competition
and Markets Authority for the
constitution of a group under
Schedule 4 to the Enterprise
and Regulatory Reform Act 2013;
"Companies Act" the Companies Act 2006, as
amended from time to time;
"Competition and a UK statutory body established
Markets Authority" under the Enterprise and Regulatory
or "CMA" Reform Act 2013;
"Conditions" the conditions to the implementation
of the Offer and the Scheme,
as set out in Appendix I to
this Announcement and to be
set out in the Scheme Document;
"Confidentiality the confidentiality agreement
Agreement" entered into by Montagu and
Servelec on 30 September 2017;
"Cooperation Agreement" the cooperation agreement dated
23 November 2017 entered into
between Montagu and Servelec;
"Court" the High Court of Justice in
England and Wales;
"Court Meeting" the meeting(s) of Servelec
Shareholders to be convened
pursuant to an order of the
Court under the Companies Act
for the purpose of considering
and, if thought fit, approving
the Scheme, including any adjournment
of it;
"Court Order" the order of the Court sanctioning
the Scheme;
"CREST" the relevant system (as defined
in the Uncertificated Securities
Regulations 2001 (SI 2001/3755))
for the paperless settlement
of trades in securities and
the holding of uncertificated
securities operated by Euroclear;
"Daily Official the Daily Official List published
List" by the London Stock Exchange;
"dealing day" a day on which dealing in domestic
securities may take place on,
and with the authority of,
the London Stock Exchange;
"Dealing Disclosure" has the same meaning as in
Rule 8 of the Takeover Code;
"Disclosed" the information fairly disclosed
by or on behalf of Servelec
(i) in the annual report and
accounts of Servelec for the
financial year ended 31 December
2016; (ii) the interim results
of Servelec for the six month
period ended on 30 June 2017;
(iii) in this Announcement;
(iv) in any other announcement
to a Regulatory Information
Service by or on behalf of
Servelec prior to the publication
of this Announcement; or (v)
as otherwise fairly disclosed
to Scarlet Bidco (or its respective
officers, employees or advisers)
in sufficient detail to enable
such person(s) to make a reasonable
assessment of the nature and
scope of the matter disclosed,
in each case before the date
of this Announcement;
"Effective Date" the date on which the Scheme
becomes effective in accordance
with its terms;
"Euroclear" Euroclear UK & Ireland Limited;
"Forms of Proxy" the form of proxy in connection
with each of the Court Meeting
and the General Meeting, which
will accompany the Scheme Document;
"General Meeting" the general meeting of Servelec
Shareholders to be convened
in connection with the Scheme,
including any adjournment of
it;
"IFRS" International Financial Reporting
Standards, as adopted in the
European Union;
"Investec" Investec Bank plc of 2 Gresham
Street, London EC2V 7QP, Rule
3 financial adviser and corporate
broker to Servelec for the
purposes of Rule 3 of the Takeover
Code;
"Listing Rules" the rules and regulations made
by the Financial Conduct Authority
in its capacity as the UKLA
under the Financial Services
and Markets Act 2000 and contained
in the UKLA's publication of
the same name;
"LOIM" Lombard Odier Investment Managers
Group (LOIM) entity for and
on behalf of funds and/or accounts
for which it acts as investment
manager;
"London Stock Exchange" London Stock Exchange Group
plc;
"Long Stop Date" 28 February 2018, or such later
date (if any) as Scarlet Bidco
and Servelec may agree and
(if required) the Panel and
the Court may allow;
"Montagu" Montagu Private Equity LLP,
together with its affiliates
as the context may require;
"Montagu Funds" the limited partnerships being
Montagu V LP, Montagu V (Non-US)
LP, Montagu V (US) LP and Montagu
V (D) LP;
"Offer" the recommended cash offer
being made by Scarlet Bidco
to acquire the entire issued
and to be issued ordinary share
capital of Servelec to be effected
by means of the Scheme and,
where the context admits, any
subsequent revision, variation,
extension or renewal of it;
"Offer Period" the offer period (as defined
by the Takeover Code) relating
to Servelec, which commences
on the date of this Announcement;
"Offer Price" the consideration of 313.1
pence payable under the Offer
in respect of a Servelec Share
"Official List" the Official List maintained
by the UKLA;
"Opening Position has the same meaning as in
Disclosure" Rule 8 of the Takeover Code;
"Overseas Shareholders" Servelec Shareholders (or nominees
of, or custodians or trustees
for Servelec Shareholders)
not resident in, or nationals
or citizens of the United Kingdom;
"Panel" the Panel on Takeovers and
Mergers;
"Raymond James" Raymond James Financial International
Limited of 56 Conduit Street,
London W1S 2YZ, financial adviser
to Scarlet Bidco and Montagu;
"Registrar of Companies" the Registrar of Companies
in England and Wales;
"Regulation" Council Regulation (EC) 139/2004;
"Regulatory Information any of the services set out
Service" in Appendix III to the Listing
Rules;
"Restricted Jurisdiction" any jurisdiction where local
laws or regulations may result
in a significant risk of civil,
regulatory or criminal exposure
if information concerning the
Offer is sent or made available
to Servelec Shareholders in
that jurisdiction;
"Scarlet Bidco" Scarlet Bidco Limited, a private
limited company incorporated
in England and Wales with registered
number 11073051 and with its
registered office at 2 More
London Riverside, London SE1
2AP;
"Scheme" the scheme of arrangement proposed
to be made under Part 26 of
the Companies Act between Servelec
and the Servelec Shareholders
in connection with the Offer,
with or subject to any modification,
addition or condition approved
or imposed by the Court and
agreed by Servelec and Scarlet
Bidco;
"Scheme Document" the document to be sent to
Servelec Shareholders containing,
amongst other things, the Scheme
and the notices convening the
Court Meeting and the General
Meeting;
"Scheme Record Time" the time and date specified
in the Scheme Document, expected
to be 6.00 p.m. on the date
of the Court Order;
"Servelec" Servelec Group plc;
"Servelec Automation" a division of the Servelec
Group which provides complex,
mission-critical control systems
and standalone products to
large, blue-chip companies
in industries essential to
national infrastructure;
"Servelec Board" the Servelec board of directors;
"Servelec Directors" the directors of Servelec;
"Servelec Share the Servelec Long Term Incentive
Schemes" Plan, the Servelec SAYE, the
Servelec Deferred Share Bonus
Plan and the Servelec Executive
Share Option Plan;
"Servelec Group" Servelec and its subsidiary
undertakings and, where the
context permits, each of them;
"Servelec HSC" a division of the Servelec
Group which specialises in
the design, development, deployment
and support of software in
healthcare together with social
care and education within local
government;
"Servelec SAYE" the Servelec Save-As-You-Earn
Option Plan;
"Servelec Shares" the existing unconditionally
allotted or issued and fully
paid ordinary shares of 18
pence each in the capital of
Servelec and any further such
ordinary shares which are unconditionally
allotted or issued before the
Scheme becomes effective;
"Servelec Shareholders" holders of Servelec Shares;
or "Shareholders"
"Significant Interest" in relation to an undertaking,
a direct or indirect interest
of 20 per cent. or more of
the total voting rights conferred
by the equity share capital
(as defined in section 548
of the Companies Act) of such
undertaking;
"Subscription Agreement" the subscription agreement
dated 23 November 2017 entered
into between, among others,
the Montagu Funds, Scarlet
Topco Limited and Scarlet Bidco;
"Takeover Code" the City Code on Takeovers
and Mergers;
"Third Party" each of a central bank, government
or governmental, quasi-governmental,
supranational, statutory, regulatory,
environmental, administrative,
fiscal or investigative body,
court, trade agency, association,
institution, environmental
body, employee representative
body or any other body or person
whatsoever in any jurisdiction;
"UKLA" the UK Listing Authority, being
the Financial Conduct Authority
acting in its capacity as the
competent authority for the
purposes of Part VI of the
Financial Services and Markets
Act 2000;
"United Kingdom" the United Kingdom of Great
or "UK" Britain and Northern Ireland;
"United States" the United States of America,
or "US" its territories and possessions,
any state of the United States
of America, the District of
Columbia and all other areas
subject to its jurisdiction
and any political sub-division
thereof;
"US Shareholders" holders of Servelec Shares
ordinarily resident in the
United States or with a registered
address in the US and any custodian,
nominee or trustee holding
Servelec Shares for persons
in the United States or with
a registered address in the
United States;
"Volume Weighted for any period is calculated
Average Price" using the daily Closing Price
of each day in the period and
the total shares traded for
that day;
"Wider Scarlet Bidco Scarlet Bidco, its parent undertakings,
Group" subsidiary undertakings and
associated undertakings and
any other body corporate, partnership,
joint venture or person in
which Scarlet Bidco and all
such undertakings (aggregating
their interests) have a Significant
Interest; and
"Wider Servelec Servelec, its parent undertakings,
Group" subsidiary undertakings and
associated undertakings and
any other body corporate, partnership,
joint venture or person in
which Servelec and 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 to those terms by the Companies Act.
All references to "pounds", "pounds Sterling", "Sterling",
"GBP", "pence" and "p" are to the lawful currency of the United
Kingdom.
All the times referred to in this Announcement are London,
England times unless otherwise stated.
References to the singular include the plural and vice
versa.
This information is provided by RNS
The company news service from the London Stock Exchange
END
OFFOKNDNNBDKODB
(END) Dow Jones Newswires
November 23, 2017 02:01 ET (07:01 GMT)
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