TRS Tarsus Group Plc

TIDMTRS

RNS Number : 8824G

Tarsus Group PLC

19 May 2011

19 May 2011

THIS ANNOUNCEMENT (AND THE INFORMATION CONTAINED HEREIN) IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA, NEW ZEALAND, REPUBLIC OF SOUTH AFRICA OR JAPAN OR ANY JURISDICTION IN WHICH SUCH PUBLICATION OR DISTRIBUTION IS UNLAWFUL

Tarsus Group plc

Acquisition of stake in IFO and Placing

Tarsus Group (LSE: TRS), the international business-to-business media group has agreed conditionally to acquire 75 per cent. of the issued share capital of Istanbul based IFO, one of the largest independent exhibition businesses in Turkey, for up to GBP10 million in aggregate payable in cash. The acquisition is in-line with the Group's "Project 50/13" strategy of expansion into emerging markets and specifically the fast-growing Turkish economy.

In addition, Investec has conditionally placed 11,347,517 new Ordinary Shares with new and existing institutional investors at the Placing Price of 141.0 pence per Share to raise approximately GBP16.0 million (approximately GBP15.0 million net of expenses) for the Company.

Commenting on the Acquisition and Placing, Tarsus Managing Director Douglas Emslie said:

"The acquisition of IFO is an important step in the realisation of our 50/13 strategy to increase Tarsus' revenues from fast growing, emerging markets to 50 per cent. of our total by 2013.

"IFO's events are market leaders in their domestic market. The Turkish economy is projected to grow at a rate of approximately 5 per cent. between 2011 and 2013. Moreover, given Turkey's unique geographical position on the crossroads between East and West, we believe there is a significant opportunity to develop the existing IFO portfolio into world leading events and bring existing Tarsus assets into this vibrant market.

"We continue to see more interesting M&A opportunities in our market. The additional capital raised will also mean that a short term reduction in the Group's debt levels will provide additional flexibility, allowing us to continue with our growth strategy and take advantage of further potential opportunities."

Highlights of the Acquisition

- IFO is one of the largest independent exhibition businesses in Turkey;

- The Acquisition, in-line with the Group's "Project 50/13" strategy of expansion into emerging markets, represents the expansion into an established but fast-growing economy;

- The portfolio of events includes three market leading events;

o ASANSOR (an odd year biennial event held in April for the lifts industry),

o REW (an annual international event for recycling, environmental technologies and waste management); and

o Sign (an annual international event for the outdoor advertising and visual communications sector);

- Potential to utilise IFO as a platform to consolidate other exhibitions in the region and the opportunity to import key Tarsus Group events into Turkey; and

- 75 per cent. of the issued ordinary share capital of IFO to be acquired for up to an amount equal to 75 per cent. of eight times the adjusted IFO pre-tax profit for the financial year to 31 December 2011, capped at Turkish Lira 25.0 million (equal to approximately GBP10 million) payable in three instalments. The consideration will also be adjusted for the net cash in IFO at completion of the Acquisition and for the net proceeds of sale by IFO of an investment property.

Details of the Placing

- Placing of 11,347,517 Placing Shares at 141.0 pence per share representing a discount of:

o approximately 2.4 per cent. to the Closing Price of 148.5 pence per Ordinary Share on 18 May 2011 less the final dividend of 4.0 pence per share in respect of the year ended 31 December 2010 as announced by the Company on 7 March 2011 and for which the Placing Shares will not qualify; and

o approximately 5.1 per cent. to Closing Price of 148.5 pence per Ordinary Share on 18 May 2011;

- Approximately GBP16.0 million raised, approximately GBP15.0 million net of expenses;

- Approximately GBP10.0 million will be used to satisfy the aggregate consideration payable pursuant to the Acquisition Agreement; and

- Approximately GBP5.0 million will be used to reduce the Group's indebtedness and provide additional working capital in order to provide the Group with a more flexible capital structure to enable the Group to pursue its "Project 50/13" growth strategy.

Shareholder approval is being sought to approve the Resolutions to enable the Placing at the Extraordinary General Meeting due to be held on 6 June 2011 at 1.00 p.m. A circular, comprising the Prospectus and notice of general meeting, will shortly be posted to Shareholders and will also be submitted to the National Storage Mechanism and will shortly be available for inspection at http://www.hemscott.com/nsm.do.

For further information contact:

Tarsus Group plc

 
 Douglas Emslie, Group Managing 
  Director                         020 8846 2700 
 Ashley Milton, Group Finance 
  Director                         020 8846 2764 
 

Investec Investment Banking (Sponsor, Financial Adviser and Broker)

 
 Bruce MacInnes    020 7597 5970 
 Patrick Robb 
 David Anderson 
 

Madano Partnership

 
 Matthew Moth    020 7593 4000 
 

Certain statements made in this announcement constitute forward-looking statements. Forward-looking statements can be identified by the use of words such as "may", "will", "should", "predict", "assurance", "aim", "hope", "risk", "expect", "intend", "estimate", "anticipate", "believe", "plan", "seek", "continue" or other similar expressions that are predictive or indicative of future events. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding the Group's expectations, intentions and beliefs concerning, amongst other things, the Group's results of operations, financial position, growth strategy, prospects, dividend policy and the industries in which the Group operates, are forward-looking statements. By their nature, such forward-looking statements involve known and unknown risks, uncertainties and other factors, many of which are outside the control of the Group and the Directors, which may cause the actual results, performance, achievements, dividends of the Group or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. As such, forward-looking statements are no guarantee of future performance.

This announcement has been issued by, and is the sole responsibility of, the Company. No representation or warranty express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by Investec or by any of its affiliates or agents as to or in relation to, the accuracy or completeness of this announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.

Investec, which is authorised and regulated by the FSA, is acting exclusively for Tarsus solely in connection with the Placing and for no one else and will not be responsible to anyone other than Tarsus for providing the protections afforded to the customers of Investec or for providing advice in relation to the Placing or any other matter referred to in this announcement.

The distribution of this announcement in certain jurisdictions may be restricted by law. This announcement is for information purposes only and does not constitute or form part of any offer to issue or sell, or the solicitation of an offer to acquire, purchase or subscribe for, any securities in the United States, Australia, New Zealand, Canada, Japan or South Africa or in any jurisdiction in which such offer or solicitation would be unlawful and should not be relied upon in connection with any decision, or as any inducement, to subscribe for or acquire any new Ordinary Shares. In particular, this announcement does not constitute or form part of any offer to issue or sell, or the solicitation of an offer to acquire, purchase or subscribe for, any securities in the United States. No public offer of securities is being made in the United Kingdom or elsewhere.

This announcement is not an offer of securities for sale or a solicitation of any offer to purchase securities in the United States. Placing Shares may not be offered or sold in the United States absent registration under the US Securities Act of 1933, as amended (the 'US Securities Act') or an exemption therefrom. The Company has not and does not intend to register any securities under the US Securities Act and does not intend to offer any securities to the public in the United States. No money, securities or other consideration from any person inside the United States is being solicited and, if sent in response to the information contained in this announcement, will not be accepted. The Placing Shares have not been and will not be registered with any regulatory authority of any state within the United States.

This summary should be read in conjunction with the full text of this announcement.

Tarsus Group plc

Acquisition of stake in IFO and Placing

Background to the Acquisition

During the last few years the Group's strategy has focused on building operational scale through developing what the Board believes is a portfolio of key events that is diverse by both industry and geography. As part of its strategy of portfolio diversification, risk mitigation and expansion, the Group is targeting a significant increase in revenue from emerging markets and is hopeful that these economies will represent half of Group revenue by 2013 - the Group's "Project 50/13" strategy. As part of the Group's overall growth strategy, it is seeking to consolidate and expand its activities within its existing media channels, but with greater emphasis on increasing the Group's scale in emerging markets, as the Board believes these to be high growth markets.

As part of this strategy, Tarsus has conditionally agreed to acquire 75 per cent. of the issued share capital of IFO.

Taking into account the aggregate cash consideration cap of Turkish Lira 25.0 million (equal to approximately GBP10 million) for the Acquisition, the Directors expect the Acquisition itself to be earnings neutral in the current financial year. However, taking into account the total number of new Ordinary Shares to be issued pursuant to the Placing, the Directors expect the Acquisition and the Placing together to be earnings dilutive in the current financial year. This is mainly due to the fact that only a portion of the proceeds arising from the Placing are being used to finance the Acquisition. The remaining proceeds will be applied to reduce the Group's indebtedness and provide additional working capital.

Information on IFO

IFO, one of the largest independent exhibition businesses in Turkey, is an Istanbul based exhibition organiser that runs the following events:

-- REW, which was launched in 2005, is an annual international event for recycling, environmental technologies and waste management and represents approximately 8,000 net square metres;

-- ASANSOR, which was launched in 1992, is a biennial event held in odd years for the lifts industry and represents approximately 13,500 net square metres; and

-- SIGN is an annual international event for the outdoor advertising and visual communications sector and represents approximately 13,500 net square metres.

All three shows are well established and are market leaders in their respective sectors in the Turkish market and have strong international exhibitor and visitor participation. All three shows will fit into the Group's top ten events by volume.

As extracted without material adjustment from IFO's internal unaudited accounting records which were prepared under Turkish Generally Accepted Accounting Principles for the year ended 31 December 2010, IFO recorded turnover of approximately Turkish Lira 3.2 million and adjusted net profit before tax of approximately Turkish Lira 0.7 million. As at 31 December 2010 IFO had gross assets of approximately Turkish Lira 4.5 million.

Details of terms of Acquisition

On 19 May 2011, the Company entered into an agreement with Mr Selahattin Durak to acquire conditionally 75 per cent. of the issued ordinary share capital of IFO. Mr Durak will retain ownership of the remaining 25 per cent. of the share capital of IFO.

Completion of the Acquisition is conditional upon the Resolutions being approved by Shareholders and Admission occurring not later than 30 June 2011.

The consideration for the Acquisition will be an amount equal to 75 per cent. of eight times the adjusted IFO pre-tax profits for the financial year to 31 December 2011, capped at Turkish Lira 25.0 million (equal to approximately GBP10 million). A payment of Turkish Lira 7.0 million (approximately GBP2.8 million) will be made on completion with further payments when the results of the ASANSOR and REW shows are known and following approval of IFO's 2011 audited financial statement. The consideration will also be adjusted so that Mr Durak will be paid a further sum equal to 75 per cent. of (i) the net cash in IFO as at completion of the Acquisition (capped at Turkish Lira 3.0 million, being approximately GBP1.2 million) and (ii) the net proceeds of sale by IFO of an investment property valued at Turkish Lira 1.7 million (being approximately GBP0.7 million) which Mr Durak has agreed to purchase from IFO for this sum after 25 November 2011 (capped at Turkish Lira 1.28 million, being approximately GBP0.5 million).

Tarsus and Mr Durak have entered into certain put and call options over the remaining 25 per cent. shareholding in IFO retained by Mr Durak. These options may only be exercised by mutual agreement and are thus not legally enforceable.

On completion of the Acquisition, the Company will enter into a shareholders' agreement with Mr Durak to govern their relationship, rights and obligations and the governance of IFO following the date of completion of the Acquisition.

Principal terms and conditions of the Placing

Tarsus is proposing to raise gross proceeds of approximately GBP16.0 million (approximately GBP15.0 million net of expenses) by the issue of 11,347,517 new Placing Shares through the Placing at 141.0 pence per Placing Share. The Placing Shares have been conditionally placed with new and existing institutional investors by Investec.

Investec has agreed, pursuant to the Placing Agreement, subject to certain conditions, to use its reasonable endeavours to procure, as agent for the Company, subscribers for the Placing Shares.

The Placing is conditional, inter alia, upon:

-- the passing of the Resolutions without amendment at the Extraordinary General Meeting;

-- the Acquisition Agreement having become unconditional in all respects save for the condition relating to Admission;

-- the Placing Agreement not having been terminated prior to Admission in accordance with its terms; and

-- Admission becoming effective by not later than 8.00 a.m. on 7 June 2011 (or such later time and date as the Company and Investec may agree, not being later than 4.30 p.m. on 10 June 2011).

Use of proceeds

The net proceeds of the Placing of approximately GBP15.0 million will be used as follows:

(i) approximately GBP10.0 million will be used to satisfy the aggregate consideration payable pursuant to the Acquisition Agreement; and

(ii) approximately GBP5.0 million will be used to reduce the Group's indebtedness and provide additional working capital in order to present the Group with a more flexible capital structure to enable the Group to pursue its "Project 50/13" growth strategy.

Extraordinary General Meeting

The Placing is subject to a number of conditions, including the passing of the Resolutions at the Extraordinary General Meeting. A notice convening the Extraordinary General Meeting to be held at the Aviation Room, Radisson SAS Hotel, Dublin Airport, Dublin, Ireland, at 1.00 p.m. on 6 June 2011, is being sent to Shareholders shortly.

Whether or not Shareholders intend to be present at the Extraordinary General Meeting, Forms of Proxy are being sent to Shareholders with the notice of meeting. Shareholders are requested to complete and return the Form of Proxy, in accordance with the instructions printed thereon, as soon as possible and in any event so that it may be received by the Company's UK transfer agent, Capita Registrars, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, not later than 1.00 p.m. on 4 June 2011. Completion and return of the Form of Proxy will not preclude Shareholders from attending and voting in person at the Extraordinary General Meeting should they wish to do so.

Shareholders may submit their proxies electronically using the Investor Code provided on the Form of Proxy. If Shareholders hold their Ordinary Shares in CREST, they may appoint a proxy by completing and transmitting a CREST Proxy Instruction to RA10 so that it is received no later than 1.00 p.m. on 4 June 2011.

Expected timetable of principal events

 
                                                              2011 
 Expected latest time and date for receipt          1.00 p.m. on 4 
  of Forms of Proxy and receipt of electronic                 June 
  proxy appointments via the CREST system 
 Extraordinary General Meeting                      1.00 p.m. on 6 
                                                              June 
 Completion of the Acquisition                              7 June 
 Admission and commencement of dealings             8.00 a.m. on 7 
  in Placing Shares on the London Stock                       June 
  Exchange and Placing Shares credited to 
  CREST stock accounts (uncertificated holders 
  only) 
 Expected date of despatch of definitive          By no later than 
  share certificates for Placing Shares                    21 June 
  (to certificated Shareholders only) 
 

Definitions

The following definitions apply throughout this announcement:

 
 "Acquisition"               the acquisition of 75 per cent. of 
                              the share capital of IFO 
 "Acquisition Agreement"     the share sale agreement entered into 
                              between Tarsus and Mr Selahattin Durak 
                              relating to the Acquisition 
 "Admission"                 the admission of the Placing Shares 
                              to the Official List becoming effective 
                              in accordance with the Listing Rules 
                              and the admission of such shares to 
                              trading on the London Stock Exchange's 
                              main market for listed securities 
                              becoming effective in accordance with 
                              the Admission and Disclosure Standards 
 "Admission and Disclosure   the Admission and Disclosure Standards 
  Standards"                  of the London Stock Exchange containing, 
                              among other things, the admission 
                              requirements to be observed by companies 
                              seeking admission to trading on the 
                              London Stock Exchange's main market 
                              for listed securities 
 "Board"                     the board of directors of the Company 
 "certificated" or "in       where a share or other security is 
  certificated form"          not in uncertified form 
 "Closing Price"             the closing middle market price of 
                              an Ordinary Share as derived from 
                              the daily Official List on any particular 
                              date 
 "Company" or "Tarsus"       Tarsus Group plc 
 "CREST"                     the relevant system, as defined in 
                              the CREST Regulations, for paperless 
                              settlement of share transfers and 
                              the holding of shares in uncertificated 
                              form (in respect of which Euroclear 
                              UK is the operator as defined in the 
                              CREST Regulations) 
 "Daily Official List"       The daily official list published 
                              by the London Stock Exchange 
 "Directors"                 the directors of the Company 
 "Enlarged Ordinary          the issued ordinary share capital 
  Share Capital"              of the Company immediately following 
                              completion of the Placing 
 "Extraordinary General      the extraordinary general meeting 
  Meeting"                    of Tarsus to be held on 6 June 2011 
                              at 1.00 p.m., or any adjournment thereof 
 "Form of Proxy"             form of proxy for use by Shareholders 
                              in relation to the Extraordinary General 
                              Meeting 
 "FSA"                       the Financial Services Authority of 
                              the UK in its capacity as the competent 
                              authority for the purposes of Part 
                              VI of FSMA and in the exercise of 
                              its functions in respect of Admission 
                              to the Official List otherwise than 
                              in accordance with Part VI of FSMA 
 "FSMA"                      the Financial Services and Markets 
                              Act 2000, as amended from time to 
                              time 
 "Group" or "Tarsus          the Company and each of its subsidiaries 
  Group"                      and subsidiary undertakings from time 
                              to time 
 "IFO"                       IFO Istanbul Fuar Hizmetleri A.S., 
                              a joint stock company organised and 
                              existing under the laws of Turkey, 
                              having its registered office at Kore 
                              ehitleri Cad. No: 34 Kat: 4, Zincirlikuyu, 
                              34394 i li, Istanbul, Turkey, registered 
                              with Istanbul Trade Registry under 
                              registration number 279087 
 "Investec"                  Investec Bank plc 
 "London Stock Exchange"     London Stock Exchange plc 
 "Official List"             the Official List of the UK Listing 
                              Authority 
 "Ordinary Shares" or        ordinary shares of 5p each in the 
  "Shares"                    capital of the Company (including 
                              where the context requires, Placing 
                              Shares) 
 "Placees"                   the persons with whom a conditional 
                              placing of Placing Shares has been 
                              made pursuant to the Placing 
 "Placing"                   the conditional placing of the Placing 
                              Shares with the Placees at the Placing 
                              Price 
 "Placing Agreement"         the placing agreement between the 
                              Company and Investec dated 19 May 
                              2011 relating, inter alia, to the 
                              Placing 
 "Placing Price"             141.0 pence per Placing Share 
 "Placing Shares"            the new Ordinary Shares to be issued 
                              by the Company pursuant to the Placing 
 "Prospectus"                the document dated 19 May 2011 comprising 
                              a circular and a prospectus relating 
                              to the Company for the purpose of 
                              the Placing (together with any supplements 
                              or amendments thereto) 
 "Resolutions"               the ordinary resolutions and the special 
                              resolution to be proposed at the Extraordinary 
                              General Meeting (each a "Resolution") 
 "Shareholders"              holders of Ordinary Shares 
 "sterling" or "pound"       the lawful currency of the UK 
  or "GBP" or "pence" 
 "UK Listing Authority"      the Financial Services Authority in 
                              its capacity as the competent authority 
                              for the purposes of Part VI of the 
                              Financial Services and Markets Act 
                              2000 and in the exercise of its functions 
                              in respect of the Admission to the 
                              Official List otherwise than in accordance 
                              with Part VI of Financial Services 
                              and Markets Act 2000 
 "United Kingdom" or         the United Kingdom of Great Britain 
  "UK"                        and Northern Ireland 
 "United States" or          the United States of America, its 
  "US"                        territories and possessions, any state 
                              of the United States of America and 
                              the District of Columbia 
 

The pound sterling/Turkish Lira rate as published by the Bank of England was 2.5 (rounded down to the next decimal point) as at 18 May 2011 (being the last practicable date before the date of this announcement). Unless otherwise stated, this rate has been applied to references in this announcement where amounts are expressed in Turkish Lira and a pound sterling equivalent.

This information is provided by RNS

The company news service from the London Stock Exchange

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