TIDMTNG
RNS Number : 3765P
Tangent Communications PLC
24 October 2012
THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR
DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, BY ANY
MEANS OR MEDIA, IN OR INTO OR FROM THE UNITED STATES OF AMERICA,
CANADA, AUSTRALIA, JAPAN, THE REPUBLIC OF IRELAND OR THE REPUBLIC
OF SOUTH AFRICAOR JAPAN OR ANY OTHER JURISDICTION IN WHICH RELEASE,
PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL
TANGENT COMMUNICATIONS PLC
("Tangent" or the "Company")
Acquisition of Goodprint UK Limited ("Goodprint")
Placing of 100,000,000 Placing Shares at 10.00 pence per share
(the "Placing")
Proposal for approval of a waiver of obligation under Rule 9 of
the City Code on Takeovers and Mergers ("Rule 9 Waiver")
Notice of General Meeting
TANGENT ANNOUNCES A PLACING TO RAISE GBP10 MILLION TO ACQUIRE
GOODPRINT AND TRANSFORM ITS PRESENCE IN THE RAPIDLY GROWING ONLINE
CUSTOMISATION MARKET
Summary
-- Tangent announces the Acquisition of the entire issued share
capital of the multi-national online company Goodprint for GBP10.2
million (assuming GBP3.4 million of cash on Goodprint's balance
sheet at Completion). The consideration net of cash is therefore
approximately GBP6.8 million;
-- The Acquisition provides access to Goodprint's 120,000
existing customers, boosts Tangent's international profile with
immediate presence in 17 countries, including Germany, France, and
the Netherlands, and gives access to Goodprint's innovative mobile
technology. Goodprint delivered underlying operating profit of
GBP1.2m for the year ended September 2012;
-- The Acquisition is to be partly funded by way of a GBP10
million placing, in which Tangent directors will subscribe for over
30% of the Placing Shares. The Placing was 51% over subscribed at
10.00 pence per share and attracted both existing and new
institutional support;
-- The Placing proceeds will also be used to accelerate
investment in online growth for the printed.com, goodprint.co.uk
and smileprint (pan European domain) brands;
-- Tangent, earlier today, published its interim results for the
half year ended 31 August 2012, which were in-line with
expectations;
-- Tangent announces a proposal for shareholders to waive an
obligation that would arise under Rule 9 of the City Code on
Takeovers and Mergers upon the exercise of share options to be
issued to certain directors;
-- Tangent gives notice of the General Meeting of the Company to
be held at the offices of Slaughter and May, which are located at
One Bunhill Row, London, EC1Y 8YY, at 11.00 a.m. on 9 November
2012. The acquisition, the Placing and the Rule 9 Waiver are
conditional on, inter alia, the passing of the resolutions to be
proposed at the General Meeting.
Timothy Green, Chief Executive Officer of Tangent,
commented:
"Goodprint will sit alongside the existing printed.com business
to create a multi brand web division. Printed.com has seen revenues
grow by more than 100% in the six months to the end of August 2012.
We believe that the combined company will be a major force in the
rapidly growing market of small businesses and consumers who value
the convenience online customisation and personalisation
offers.
"Through the acquisition, Tangent will gain instant access to an
international market since Goodprint already operates in 17
countries, including Germany, France, and the Netherlands. The deal
will also boost Tangent's portfolio with access to a greater range
of creative templates for marketing materials, over 120,000 new
customers across Europe and an immediate presence on mobile.
"This acquisition represents a step change for our business.
This industry is expanding and we intend to be amongst the
leaders".
This summary should be read in conjunction with the full
announcement that follows below.
A full copy of the circular (the "Circular") providing further
details on, inter alia, the Acquisition and the Placing is
available at the Company's website
(http://tangentplc.com/reports)
For further information, please contact:
Tangent Communications plc
Timothy Green, CEO 020 7462 6100
Canaccord Genuity Limited
Bruce Garrow, Cameron Duncan, Emma Gabriel 020 7523 8350
Portland Communications 020 7842 0123
Louise Rutter
All capitalised terms used in this announcement shall (unless
stated otherwise) have the same meaning as is given to them in the
Circular which is available at the Company's website
(http://tangentplc.com/reports)
Details of the Acquisition of Goodprint
The Company announces today that it will acquire the entire
issued share capital of Goodprint (the "Acquisition"). The
aggregate consideration for the Acquisition is GBP10,225,647.40,
which has been calculated on the assumption that Goodprint's
balance sheet includes GBP3,400,000 of cash at Completion (subject
to the payment of certain tax liabilities totalling no more than
GBP78,000). Accordingly, the net consideration is
GBP6,825,647.40.
Goodprint is an online publisher based in the United Kingdom,
offering the creation and delivery of marketing material to
businesses and personal customers. Goodprint was incorporated in
1992 and has approximately 20 employees
Goodprint operates online through the brand name "Goodprint" in
the UK and US markets, and "Smileprint" in other international
markets.
The Acquisition Agreement is conditional on (inter alia): (i)
the passing of the Resolutions at the General Meeting; (ii) the
Placing Agreement not having been terminated in accordance with its
terms; and (iii) receipt of the proceeds of the Placing by the
Company.
Summary financials for Goodprint are set out below:
Financial year ended Audited 2012 Unaudited 2011
30 September
Revenues (GBP) 4,049,495 3,744,325
------------- ---------------
Gross margin 81% 82%
------------- ---------------
Operating profit (GBP) 1,171,470(1) 925,842
------------- ---------------
Profit after tax (GBP) 611,176 693,257
------------- ---------------
Orders 107,125 91,259
------------- ---------------
(1) Underlying adjusted operating profits
Strategic rationale for the Acquisition
The Directors believe that the Acquisition will provide Tangent
with the following strategic benefits to facilitate the expansion
of its online business:
(a) International access: the Enlarged Group will be immediately
active in 17 international markets. Goodprint has demonstrated
strong growth in overseas markets, with a 43% year-on-year increase
in revenues between September 2011 to September 2012 and 37% of
revenues coming from international markets for the year ended 30
September 2012;
(b) Design and content: the Enlarged Group will be immediately
active in the retail market and Goodprint's existing technology and
content will provide the Enlarged Group with a basis from which to
offer an expanded range of products to customers;
(c) Customers: access to 120,000 online customers to drive
loyalty programs and the cross selling of products;
(d) Mobile: the Enlarged Group will have the opportunity to
capitalise on the mobile market through Goodprint's mobile site;
and
(e) Increased profitability: Goodprint's underlying operating
margin increased to 29% for the year ended 30 September 2012 from
25% for the year ended 30 September 2011. The Directors intend to
draw on Goodprint's profile to improve Tangent's margin in its
online business.
Details of the Placing
The Company proposes to raise gross proceeds of GBP10,000,000
through the issue of the 100,000,000 Placing Shares at the Placing
Price of 10.00 pence per share to institutional and other
investors. The Placing Price represents a discount of approximately
1.2 per cent. to the closing middle market price of 10.125 pence on
23 October 2012. The Placing Shares will represent approximately
36.2 per cent. of the Enlarged Share Capital.
The Placing Shares will rank pari passu with the existing
Ordinary Shares and application will be made for the Placing Shares
to be admitted to trading on AIM. It is expected that dealings in
the First Placing Shares will commence on AIM on 12 November 2012.
It is expected that dealings in the Second Placing Shares will
commence on AIM on 13 November 2012.
In order to fall within the requirements of the legislation
governing VCTs and EISs, the Placing will be carried out in two
tranches. The First Placing Shares will be offered to those
investors who may seek relief under the VCT and EIS legislation.
The Second Placing Shares will be offered to non-EIS investors and
to other investors who will not be seeking relief under the VCT and
EIS legislation.
Use of proceeds of the Placing
The Company intends to use the gross proceeds from the Placing
(and cash available following the acquisition) to:
-- Partly fund the acquisition of Goodprint;
-- Expand the Enlarged Group's online business, in particular
the brands printed.com, Goodprint and Smileprint (the brand name
through which Goodprint operates in certain international markets)
and for the general working capital purposes of the Enlarged Group;
and
-- Pay fees and expenses of approximately GBP780,000 (including
VAT) incurred in connection with the Acquisition and the
Placing.
Concert Party
The Company's largest Shareholder is Michael Green, who
currently owns approximately 30.1 per cent. of the Company.
Additionally, Nicholas Green (Tangent's Executive Director) owns
approximately 1.5 per cent. of the Company and Timothy Green
(Tangent's Chief Executive Officer) (together with his wife, Vicki
Green) owns approximately 1.5 per cent. of the Company. Nicholas
Green and Timothy Green are Michael Green's nephews.
These persons (the "Concert Party") are considered to be acting
in concert for the purposes of the City Code and their aggregate
shareholding is 58,538,464 Ordinary Shares, representing
approximately 33.2 per cent. of the current issued share capital of
the Company.
The participation of the Concert Party in the Placing will be
pro rata to or proportionately lower than its members' existing
holdings (the Concert Party will only participate in the Second
Placing), as shown below.
The Panel on Takeovers and Mergers has confirmed that the
Concert Party, or its individual members, will be able to subscribe
for Placing Shares without triggering an obligation under Rule 9 of
the City Code on Takeovers and Mergers provided that the resultant
aggregate percentage interest of the Concert Party in the Ordinary
Shares, following the completion of the Placing, does not exceed
the Concert Party's current percentage interest in the Ordinary
Shares of the Company.
Related Party Transactions
The participation of the Concert Party in the Placing will be a
related party transaction for the purposes of Rule 13 of the AIM
Rules for Companies as (i) each of Michael Green, Nicholas Green
and Timothy Green are Directors of the Company and Vicki Green is
the wife of Timothy Green, and (ii) the subscription by the Concert
Party pursuant to the Placing for 32,628,925 Placing Shares at the
Placing Price for a cash consideration of GBP3,262,892.50 will
exceed 5 per cent. in certain of the class tests (as that term is
defined in the AIM Rules for Companies). The resulting shareholding
of the Concert Party, following its participation in the Placing,
will be 33.0 per cent. of the Enlarged Share Capital of
Tangent.
Additionally, ISIS Equity Partners ("ISIS") currently holds
17,923,077 Ordinary Shares, representing 10.2 per cent. of the
current issued share capital of Tangent. As this holding is more
than 10 per cent. of the issued share capital of Tangent, ISIS is a
substantial shareholder, and consequently a related party, for the
purposes of the AIM Rules for Companies. The subscription by ISIS
for 10,750,000 Placing Shares at the Placing Price for a cash
consideration of GBP1,075,000.00 will exceed 5 per cent. in certain
of the class tests and therefore will also be classified as a
related party transaction for the purposes of Rule 13 of the AIM
Rules for Companies. The resulting shareholding of ISIS, following
its participation in the Placing, will be 10.4 per cent. of the
Enlarged Share Capital of Tangent.
The Independent Directors, having consulted with the Company's
nominated adviser, Canaccord Genuity, consider the terms on which
Ordinary Shares are to be allotted to such persons pursuant to the
Placing to be fair and reasonable insofar as Shareholders are
concerned, and in the best interests of Shareholders and of the
Company as a whole.
Directors' Dealings
The following directors have committed to acquire Ordinary
Shares pursuant to the Placing at the Placing Price of 10.00
pence:
Director Number of Ordinary Number of new Number of Ordinary
Shares prior to Ordinary Shares Shares after
the Placing (% to be acquired the Placing (%
of issued share pursuant to the of issued share
capital) Placing (% of capital)
Placing Shares)
Michael Green 53,076,924 (30.1%) 30,081,266 (30.1%) 83,158,190 (30.1%)
Nicholas Green 2,730,770 (1.5%) 1,000,000 (1.0%) 3,730,770 (1.3%)
Timothy Green(1) 2,730,770 (1.5%) 1,547,659 (1.5%) 4,278,429 (1.5%)
Kevin Cameron 722,524 (0.4%) 151,706 (0.2%) 874,230 (0.3%)
Alan Smith 500,000 (0.3%) 100,000 (0.1%) 600,000 (0.2%)
David Steyn 150,853 (0.1%) 149,147 (0.1%) 300,000 (0.1%)
Total Issued Share
Capital 176,445,113 (100%) 276,445,113 (100%)
(1) For the purposes of this table, Timothy Green's holding is
taken together with that of his wife (Vicki Green). Vicki Green
holds 2,500,000 Ordinary Shares. Each of Timothy Green and Vicki
Green will participate in the Placing pro rata to their respective
shareholdings.
Rule 9 Waiver
Introduction
The Company currently operates a number of share options schemes
under which employees, managers and executives are awarded an
option over Ordinary Shares, with such awards being subject to time
and performance conditions. In addition to the Placing, the Company
proposes that the Independent Shareholders waive the obligation on
the Concert Party to make a mandatory offer under Rule 9 of the
City Code which would otherwise arise as a result of any exercise
of share options which are issued to either of Nicholas Green and
Timothy Green pursuant to the Concert Party Proposed Option
Awards.
The exercise of any share options issued pursuant to the Concert
Party Proposed Option Awards by either Nicholas Green or Timothy
Green would increase the percentage shareholding of the Concert
Party, that are together already interested in Ordinary Shares
representing in aggregate over 30 per cent. of the current issued
share capital of the Company, and as such prompt a mandatory offer
under Rule 9 of the City Code.
Proposed Executive Option Scheme
In order to ensure that its key executive directors remain
appropriately incentivised, the Company would like to secure the
flexibility to grant additional share options to Nicholas Green,
Timothy Green and Kevin Cameron in the future as follows:
Director Maximum number Exercise Exercise Period
of options Price
Nicholas Green 6,000,000 Nil 4 years following
grant
Timothy Green 6,000,000 Nil 4 years following
grant
Kevin Cameron 2,000,000 Nil 4 years following
grant
Total 14,000,000
The options to be awarded pursuant to the Proposed Executive
Option Scheme would be exercisable for nil consideration and
settled via an employee benefit trust. The options would be subject
to share price performance conditions and only be exercisable after
four years from the date of grant. Any options which have not been
exercised after ten years would lapse. The options would be capable
of vesting at 24 months and 36 months from the date of grant. At
each such vesting date, the weighted average share price for the 28
days prior to such vesting date would be compared to the base share
price of 10.00 pence (set at such level to reflect the Placing
Price) and the following performance criteria would apply:
Percentage by which the weighted Proportion of options which
average share price has increased vest
against the base price
20.0% 1/3
35.0% 1/3
50.0% 1/3
Assuming that the Company awarded the options pursuant to the
Proposed Executive Option Scheme immediately after the date of the
General Meeting and all price performance conditions are met at the
vesting dates, the earliest possible date of exercise of such
options would be 10 November 2016 for all such options.
Waiver of the obligation to make a mandatory offer under Rule 9
of the City Code
The exercise of any share options issued pursuant to the Concert
Party Proposed Option Awards by either Nicholas Green or Timothy
Green would increase the percentage shareholding of the Concert
Party, that are together already interested in Ordinary Shares
representing in aggregate over 30 per cent. of the current issued
share capital of the Company, and as such prompt a mandatory offer
under Rule 9 of the City Code.
As a result, the Company announces a proposal for the
Independent Shareholders to waive an obligation on the Concert
Party to make a mandatory offer for the shares in the Company not
already owned by it which would otherwise arise under Rule 9 of the
City Code upon exercise of the Concert Party Proposed Option
Awards. It is proposed that the waiver be effected by the passing
of the Whitewash Resolution by the Independent Shareholders.
The Panel has agreed to the Rule 9 Waiver on the basis that the
Independent Directors, who have been so advised by the Company's
nominated adviser, Canaccord Genuity, consider the terms of the
Rule 9 Waiver to be fair and reasonable.
Whitewash Resolution
The Company will seek the approval of the Independent
Shareholders pursuant to the Whitewash Resolution to a waiver of
the obligation on the Concert Party to make a mandatory offer under
Rule 9 in respect of the exercise of any share options granted
pursuant to the Concert Party Proposed Option Awards.
The Whitewash Resolution will be conditional on approval by the
Shareholders of the Share Authority Resolutions. This means that,
if the Shareholders do not approve the resolutions necessary to
effect the Placing, the Company will not make the Concert Party
Proposed Option Awards.
Potential voting rights of the Concert Party
If the Share Authority Resolutions and the Whitewash Resolution
are passed at the General Meeting, on the assumption that:
(a) 100,000,000 Placing Shares are issued pursuant to the Placing
(b) the Concert Party (Michael Green, Nicholas Green and Tim
Green) participates in the Placing as detailed above;
(c) the 2005 Options are exercised in full;
(d) the Concert Party Proposed Option Awards are granted and exercised in full;
(e) no other options are awarded under the Proposed Executive Option Scheme,
the Company's issued share capital would increase to 298,445,113
Ordinary Shares, the number of Ordinary Shares held by the Concert
Party would increase to 113,167,389 Ordinary Shares and the Concert
Party's holding would constitute 37.9 per. cent of all the voting
rights in the Company. Full details of the Concert Party's holding
are included in the Circular, which is available on the Company's
website.
If the Whitewash Resolution is not passed at the General
Meeting, the Concert Party Proposed Option Awards will not be
granted. On the assumption that the Placing proceeds and the 2005
Options are exercised in full, the Company's issued share capital
would then increase to 286,445,113 Ordinary Shares, the number of
Ordinary Shares held by the Concert Party would increase to
101,167,389 Ordinary Shares and the Concert Party's holding would
constitute 35.3 per cent. of all the voting rights in the
Company.
If options are awarded to Kevin Cameron (or any other person who
is not a member of the Concert Party) under the Proposed Executive
Option Scheme, then the Concert Party's proportionate holding of
voting rights in the Company would be reduced. Accordingly, the
figures set out above show the Concert Party's maximum potential
holding of voting rights in the Company.
Rule 9 fairness opinion
Canaccord Genuity has provided advice to the Independent
Directors in relation to the Rule 9 Waiver in accordance with the
requirements of paragraph 4(a) of Appendix 1 to the City Code.
This advice was provided by Canaccord Genuity to the Independent
Directors only and, in providing such advice, Canaccord Genuity has
taken into account the Independent Directors' commercial
assessments as well as, but not limited to, the confirmations of
the future intentions of the Concert Party as set out in the
Circular.
The Independent Directors, who have been so advised by Canaccord
Genuity, consider that the approval of the waiver by the Panel of
any requirement for the members of the Concert Party to make a
general offer to shareholders under Rule 9 of the City Code, is
fair and reasonable and in the best interests of the Independent
Shareholders and the Company as a whole.
Notice of General Meeting
A General Meeting of the Company is to be held at the offices of
Slaughter and May, which are located at One Bunhill Row, London,
EC1Y 8YY, at 11.00 a.m. on 9 November 2012, at which the
Resolutions, included in the Circular, will be proposed.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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