REG - ZQ Capital Limited Allergy Therapeutics - Statement Regarding Possible Mandatory Cash Offer

Allergy TherapeuticsAnnouncement

06/04/2023 14:15

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RNS Number : 6709V  ZQ Capital Limited  06 April 2023

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION (IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY) IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE
A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.

THIS IS AN ANNOUNCEMENT FALLING UNDER RULE 2.4 OF THE CITY CODE ON TAKEOVERS
AND MERGERS (THE "CODE") AND DOES NOT CONSTITUTE AN ANNOUNCEMENT OF A FIRM
INTENTION TO MAKE AN OFFER UNDER RULE 2.7 OF THE CODE. THERE CAN BE NO
CERTAINTY THAT ANY OFFER WILL BE MADE.

 

6 April 2023

 

FOR IMMEDIATE RELEASE

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

STATEMENT REGARDING POSSIBLE MANDATORY CASH OFFER

for

ALLERGY THERAPEUTICS PLC

("ALLERGY THERAPEUTICS" or the "Company")

by

SKYGEM ACQUISITION LIMITED ("SKYGEM")

which is an indirect wholly-owned subsidiary of funds managed by

ZQ Capital Management Limited (collectively, "ZQ")

1.         Introduction

Further to the announcement by Allergy Therapeutics on 6 April 2023, Skygem
announces that it has entered into an equity commitment agreement (the "Equity
Commitment Agreement"), pursuant to which Skygem and Southern Fox Investments
Limited ("Southern Fox") (another shareholder of Allergy Therapeutics) have
each agreed to conditionally subscribe for new ordinary shares of 0.1 pence
each in the capital of the Company ("Allergy Therapeutics Shares") (the "New
Shares") at an issue price of 1 pence per New Share (the "Issue Price") to
raise gross proceeds of £40.75 million (the "Equity Financing").

The Equity Financing will be comprised of a conditional subscription for New
Shares by each of Skygem and Southern Fox, and an open offer expected to be
made to all Qualifying Shareholders (which will exclude Allergy Therapeutics'
three largest shareholders Skygem, Southern Fox and Abbott Laboratories, as
well as any shareholders in a restricted jurisdiction), and which will be
underwritten by Skygem by way of a conditional subscription for any New Shares
not taken up by Qualifying Shareholders under the open offer (the "Open
Offer").

Skygem, and persons acting in concert with it, currently holds 173,740,037
Allergy Therapeutics Shares (representing approximately 25.58 per cent. of the
existing issued ordinary share capital of Allergy Therapeutics). Should the
Equity Financing complete, Skygem, and persons acting in concert with it,
would, in aggregate, hold Allergy Therapeutics Shares representing at least 30
per cent. of Allergy Therapeutics' enlarged issued ordinary share capital.

The Code applies to Allergy Therapeutics. Under Rule 9 of the Code, any person
who acquires an interest in shares which, taken together with shares in which
that person or any person acting in concert with that person is interested,
carry 30 per cent. or more of the voting rights of a company, which is subject
to the Code, is normally required to make an offer to all the remaining
shareholders to acquire their shares.

Similarly, when any person, together with persons acting in concert with that
person, is interested in shares which in the aggregate carry not less than 30
per cent. of the voting rights of such a company but does not hold shares
carrying more than 50 per cent. of the voting rights of the company, an offer
will normally be required if such person or any person acting in concert with
that person acquires a further interest in shares which increases the
percentage of shares carrying voting rights in which that person is
interested.

If the conditions of the Equity Financing, in accordance with the terms of the
Equity Commitment Agreement (the "Equity Conditions"), are satisfied (or
waived , if capable of waiver) and the Equity Financing completes, Skygem will
be required, under Rule 9 of the Takeover Code, to make a mandatory cash offer
for the Allergy Therapeutics Shares not already held by Skygem (or any persons
acting in concert with it), at a price of 1 pence per Allergy Therapeutics
Share (such price also being the Issue Price) (the "Possible Mandatory
Offer"). Southern Fox and Skygem are not acting in concert with each other in
connection with the Possible Mandatory Offer.

For the avoidance of doubt, this does not constitute an announcement of a firm
intention to make an offer under Rule 2.7 of the Code. A firm offer
announcement will be made immediately if and when the Equity Conditions are
satisfied (or waived, if capable of waiver) and the Equity Financing,
including the Open Offer, has completed. There can accordingly be no certainty
that the Possible Mandatory Offer will be made.

The Equity Conditions are more fully described in paragraph 6 below, "Equity
Conditions", and the Financing Announcement. The timing for the satisfaction
of certain of these conditions is currently highly uncertain, and it is
possible that the FDI Clearance Conditions necessary for the Equity Financing
to proceed may not be received for several months or at all. The Panel has
confirmed with the agreement of Allergy Therapeutics, that in the
circumstances the 28 day deadline referred to in Rule 2.6(a) of the Code will
not apply to Skygem or ZQ.

2.         Background to and reasons for the Equity Financing and Possible Mandatory Offer
On 4 October 2022, Allergy Therapeutics announced a pause in production at its Freeman facility, part of its Worthing manufacturing site located in the UK. This followed an internal review of Allergy Therapeutics' current operating processes to improve the robustness of its quality systems and build capacity across its manufacturing facilities. As a result of the manufacturing pause occurring during a period of peak production prior to the start of the pollen season, Allergy Therapeutics' revenue for the year ending 30 June 2023 is expected to be significantly below previous market expectations and there is a need for significant additional near-term funding for Allergy Therapeutics.
Following a thorough internal review of the Allergy Therapeutics business by Allergy Therapeutics' management, and careful consideration of the potential funding options and other strategic alternatives that are available to the Allergy Therapeutics Board, the Allergy Therapeutics Board believes that Allergy Therapeutics' portfolio of products and clinical pipeline remains highly valuable and that, accordingly, it is in the best interests of Allergy Therapeutics and its shareholders to continue to fund the ongoing operations of the business. Skygem is fully supportive of the Allergy Therapeutics Board's conclusion and is willing to fund the Company's short term cash needs through a loan facility, pending Skygem obtaining relevant clearances from foreign direct investment authorities necessary for it to be able to subscribe for additional Allergy Therapeutics Shares through the Equity Financing.
Allergy Therapeutics announced today that it had secured a debt financing package of £40.75 million from Skygem and Southern Fox (the "Loan Facility") alongside the Equity Financing (the "Financing Announcement") (the Loan Facility and the Equity Financing together being the "Financing"). The Equity Financing is conditional upon the Equity Conditions. Should the Equity Conditions be satisfied (or waived, if capable of waiver), the proceeds of the Equity Financing will be used principally to repay the principal amounts outstanding and any accrued interest under the Loan Facility. Given the difficulty Allergy Therapeutics currently finds itself in, the Financing is the only realistic source of significant near-term funding that the Allergy Therapeutics Board has been able to identify through this process. For full details of the Financing please refer to the Financing Announcement.
The Loan Facility and the subsequent Equity Financing will provide Allergy Therapeutics with on-going working capital into H2 2023. The Financing also provides immediate financing certainty which Allergy Therapeutics expects to allow the Allergy Therapeutics Board to apply the going concern principle in finalising and publishing Allergy Therapeutics' annual report and audited accounts for the year ended 30 June 2022, as well as the unaudited interim accounts for the six-month period ended 31 December 2022, by 30 June 2023, which will facilitate restoration of trading in Allergy Therapeutics Shares on AIM.
Skygem has been a shareholder in Allergy Therapeutics since 2019, having made regular acquisitions of Allergy Therapeutics Shares and supporting Allergy Therapeutics' fundraising in October 2022, such that Skygem now is interested in shares representing approximately 25.58 percent of Allergy Therapeutics' issued voting rights. Throughout its tenure as a shareholder, Skygem has, and still holds the belief that Allergy Therapeutics has the potential to become one of the most prominent allergy immunotherapy companies globally, and accordingly, has sought to be supportive towards management in the strategic ambitions of Allergy Therapeutics, including advancing Allergy Therapeutics' products into the US market.
In addition, Skygem acknowledges the fact that any risk to adequate funding being secured over the medium term will likely present extreme challenges to the viability and future prospects of Allergy Therapeutics' business and may result in a material loss of shareholder value. Consequently, Skygem has agreed to participate in the Financing to provide the necessary capital Allergy Therapeutics needs to endure this period of financial difficulty and to continue Allergy Therapeutics' clinical trials programme (in particular, the pivotal G306 Trial). A pause, or a negative outcome, in these trials would have both direct and indirect adverse impacts on the Company and its future commercial prospects.
Subject to satisfaction (or waiver, if capable of being waived) of the Equity Conditions, completion of the Equity Financing would result in Skygem and any parties acting in concert with it being interested in Allergy Therapeutics shares Allergy Therapeutics carrying 30 per cent. or more of the total voting rights of Allergy Therapeutics. Consequently, Skygem would then be required to make a mandatory offer for Allergy Therapeutics at a price of 1 pence per share.
3.         Irrevocable undertaking

Skygem has received from Southern Fox an irrevocable undertaking not to accept
the Possible Mandatory Offer which would be extended to Southern Fox should it
be made, in respect of the 149,871,529 Allergy Therapeutics Shares it
currently owns, plus any shares subscribed for pursuant to the Equity
Financing. In any event, following the Equity Financing, Southern Fox will be
interested in shares in Allergy Therapeutics not exceeding 27.5 percent of the
enlarged share capital of Allergy Therapeutics (excluding treasury shares) as
at the Last Practicable Date.

The irrevocable undertaking will lapse (i) if the Possible Mandatory Offer is
made at a price per share greater than the Issue Price and/or (ii) on the
earlier of (x) the date falling nine (9) months following the date hereof and
(y) the date of G306 Trial Failure (as such term is defined in the Equity
Commitment Agreement) or such other date as SAL and Southern Fox may agree in
writing.

4.         Information about Skygem

Skygem is a private company limited by shares incorporated in England and
Wales and was established for the purposes of ZQ acquiring an interest in
Allergy Therapeutics Shares. It is not a trading company and since
incorporation has not engaged in any activities save for transactions relating
to a Possible Mandatory Offer or Allergy Therapeutics Shares. Skygem is an
indirect wholly-owned subsidiary of funds managed by ZQ.

5.         Information about ZQ
ZQ is a fast-growing private equity investment firm in Asia. Since its inception in 2016, ZQ has sourced, executed and exited over US$500 million of investments with a strong track record of more than 30 per cent. IRR for its investors to date. With seven investment professionals based in Hong Kong, Shanghai and Singapore, ZQ focusses on long-term investment and partnering with mature global businesses with promising growth potential and capable of delivering steady cashflow in less volatile markets, such as healthcare and consumer products.
ZQ's founder, Mr. Zheqing (Simon) Shen, has over a decade of professional experience in investment banking and private equity investment. Prior to founding ZQ, he was Managing Director and Head of China Financial Institutions Group at Barclays. Mr Shen's previous experience also includes working as an investment banker for Goldman Sachs in both its New York and Hong Kong offices, having advised many corporations globally in connection with their capital markets and M&A activities. Mr. Shen has extensive knowledge of capital markets and wide connections with entrepreneurs and corporations in Asia and serves as a director on the boards of several public companies in the US, Europe and Asia.
ZQ's team of investment professionals have decades of combined investment and deal-making experience in Europe, the US and Asia, across a range of sectors including healthcare, consumer, TMT and environmental-related services.
6.         Intentions of Skygem
Intentions for the future business of Allergy Therapeutics
Skygem intends to continue to support Allergy Therapeutics' existing business plan and foresee no significant changes to it. In addition, Skygem intends to continue to be financially supportive such that Allergy Therapeutics' growth and earning potential is optimized going forward.
Furthermore, Skygem believes its key relationships and capabilities within Asia can unlock additional value for Allergy Therapeutics due to the access it provides to key markets for Allergy Therapeutics' products.

Intentions for headquarters, locations, fixed assets and research and
development

 

Skygem does not intend to make any changes to Allergy Therapeutics' business (including its research and development function) or broader strategic plans, or locations and places of business (including its headquarters and headquarters functions) and does not intend to redeploy any of Allergy Therapeutics' fixed assets.

Intentions for management and employees

 

Skygem attaches great importance to the skills and experience of the employees
and management team of Allergy Therapeutics and its subsidiaries and
consequently Skygem does not intend to cause Allergy Therapeutics or its
subsidiaries to effect any material change with regard to: (i) the continued
employment of its employees and managers and (ii) the conditions of employment
or balance of skills and functions of the management of Allergy Therapeutics
or its subsidiaries.

 

Intentions for existing rights and end of service benefits

 

Allergy Therapeutics intends that, following completion of the Possible
Mandatory Offer, the existing contractual and employment rights (including
Allergy Therapeutics' pension schemes) of Allergy Therapeutics' management and
employees will be respected in accordance with applicable law. Skygem does not
intend to make any material changes to the terms and conditions of Allergy
Therapeutics' pension schemes, including the employer contributions, accrual
of benefits for existing members or the rights of admission of new members.

 

Intentions for management incentivisation arrangements

 

Skygem has not entered into, and has not discussed, any form of
incentivisation arrangements with members of Allergy Therapeutics' management.
Skygem intends to put in place incentive arrangements for certain members of
the Allergy Therapeutics management team following completion of the Possible
Mandatory Offer.

 

Intentions for trading facilities

 

Skygem recognises the benefits to Allergy Therapeutics and its shareholders of
a public market listing and supports Allergy Therapeutics' continuing
admission to AIM. Therefore, should the Equity Financing complete, and the
potential subsequent Possible Mandatory Offer become unconditional, Skygem
does not intend to procure that Allergy Therapeutics makes an application to
cancel trading in Allergy Therapeutics Shares on AIM.

 

Post-offer undertakings

No statements in this paragraph 6 are "post-offer undertakings" for the
purposes of Rule 19.5 of the Code.

7.         Equity Conditions

The Equity Conditions are more fully set out in Equity Commitment Agreement
and summarised in this Announcement, and comprise broadly:

 

(a)  the passing by shareholders of (i) an ordinary resolution (which
requires a majority of the votes cast by those entitled to vote) to authorise
the Directors to allot new Ordinary Shares pursuant to the Subscription and
Open Offer and (ii) a special resolution (which requires not less than 75 per
cent. of the votes cast by those entitled to vote) to disapply the statutory
pre-emption rights in connection with the Subscription and the Open Offer ;

 

(b)  receipt by ZQ, on terms reasonably satisfactory to ZQ, of certain
foreign direct investment/national security clearances in Austria, Italy,
Germany and Spain (the "ZQ FDI Clearance Condition");

 

(c)  receipt by Southern Fox, on terms reasonably satisfactory to Southern
Fox, of certain foreign direct investment/national security clearances in
Austria, Italy and Germany (the "SF FDI Clearance Condition" and together with
the ZQ FDI Clearance Condition the "FDI Clearance Conditions");

 

(d)  since the date of the Equity Commitment Agreement and in the opinion of
both Skygem and Southern Fox, no events or facts have occurred or conditions
or circumstances have arisen which are reasonably likely to result in:

 

(i)   a Manufacturing Plant Shutdown (as such term is defined in the Equity
Commitment Agreement); or

 

(ii)   G306 Trial Failure (as such term is defined in the Equity Commitment
Agreement); and

 

(e)  admission of the New Shares to trading on AIM ("Admission"),

 

in each case on or before the earlier of (i) 6 January 2024, being the date
that is nine months from the date of the Financing Announcement or (ii) the
date of failure of the G306 Trial, or such later date Skygem, Southern Fox and
Allergy Therapeutics may agree in writing prior to the earlier of (i) or (ii).

 

The Equity Conditions (save for (d)) cannot be waived by either of ZQ or by
Southern Fox.

 

The timing for the satisfaction of the FDI Clearance Conditions is currently
highly uncertain. FDI submissions will be made shortly after this
announcement. It is possible that clearances may not be received for several
months or at all. If the ZQ FDI Clearance Condition is satisfied, but the SF
FDI Clearance Condition is not satisfied, ZQ shall have the option (but not
the obligation) to assume the obligations of Southern Fox (subject to Southern
Fox's consent) and vice versa, such that if the SF FDI Clearance Condition is
satisfied, but the ZQ FDI Clearance Condition is not satisfied, Southern Fox
shall have the option (but not the obligation) to assume the obligations of ZQ
(subject to ZQ Capital's consent). In any event, given that under the terms of
the Equity Financing Southern Fox's interest in the voting rights of Allergy
Therapeutics is to be restricted to 27.5 per cent. of Allergy Therapeutics'
enlarged share capital, there is no circumstance arising under the Equity
Financing where Southern Fox will have an obligation to make a mandatory offer
for the entire issued and to be issued share capital of Allergy Therapeutics
pursuant to Rule 9.

 

Additionally, pursuant to the terms of the Equity Commitment Agreement, each
of ZQ and Southern Fox may, in its absolute discretion, at any time before
Admission terminate the Equity Commitment Agreement if (a) an Equity Condition
has not been satisfied or (b) the application for Admission has been withdrawn
or rejected.

A firm intention to make a mandatory offer setting out its full terms and conditions will be made immediately following satisfaction of the Equity Conditions and completion of the Equity Financing and an offer document with respect to such mandatory offer will be posted to Allergy Therapeutics Shareholders as soon as practicable thereafter.
8.         Financing of the Possible Mandatory Offer and cash confirmation

The cash consideration payable by Skygem pursuant to the Possible Mandatory
Offer (should it be required to be made) for the entire issued and to be
issued share capital of Allergy Therapeutics it does not already own
(including any New Shares issued pursuant to the Equity Financing) would be
financed by existing cash resources available  to entities under common
control with ZQ which have been transferred to Skygem.

finnCap, the financial adviser to Skygem, confirms that it is satisfied that
sufficient resources are available to Skygem to enable it to satisfy in full
the cash consideration payable to Allergy Therapeutics Shareholders in the
event of full acceptance of the Possible Mandatory Offer.

9.         Rule 9.5 dispensation and Rule 2.4(c)(iii) clarification

ZQ (acting through Skygem) subscribed for 30,000,000 new Allergy Therapeutics
Shares at a price of 20 pence per share on 19 October 2022, as set out in
Allergy Therapeutics' announcement of 29 September 2022 entitled "Subscription
and Debt Financing". This subscription was made prior to any consideration of
the Possible Mandatory Offer and prior to Allergy Therapeutics' voluntary
pause in production and the consequent deterioration in Allergy Therapeutics'
financial position and prospects.

An offer under Rule 9 must be made in cash at the highest price paid by the
person required to make the offer, or any person acting in concert with such
person, for any interest in shares of the company during the 12 months prior
to the announcement of the offer. With the agreement of Allergy Therapeutics,
Skygem has received a dispensation from the Panel Executive in respect of the
minimum price of the Possible Mandatory Offer and pursuant to Note 3 to Rule
9.5, such that it may be made at the price of 1 pence per Allergy Therapeutics
Share in the circumstances set out above.

10.        Publication on website and requesting hard copies of documents

A copy of this Announcement, the Equity Commitment Agreement and any other
documents required to be published by Rule 26 of the Takeover Code shall be
made available subject to certain restrictions relating to persons resident in
Restricted Jurisdictions on ZQ's website at
www.zqcap.com/microsite/agy_announcement.php
(https://protect-us.mimecast.com/s/Cx8ZC5yWAxSZQ6Vj7SOwAQ5?domain=zqcap.com)
by no later than 12 noon (London time) on the business day following the date
of this announcement. For the avoidance of doubt, the contents of the websites
referred to in this announcement are not incorporated into and do not form
part of this announcement.

Pursuant to Rule 30.3 of the Code, a person so entitled may request a copy of
this Announcement and any information incorporated into it by reference to
another source in hard copy form. A person may also request that all future
documents, announcements and information to be sent to that person in relation
to the Possible Offer should be in hard copy form. For persons who receive a
copy of this Announcement in electronic form or via a website notification, a
hard copy of this Announcement will not be sent unless so requested from
Zheqing (Simon) Shen at ZQ (contact details of whom are set out in the above
Enquiries section), or Allergy Therapeutics' registrar, Link Group at 10th
Floor, Central Square, 29 Wellington Street, Leeds, LS1 4DL or by calling Link
Group 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. Lines are open between 9.00 a.m.
and 5.30 p.m. (London time), Monday to Friday (excluding public holidays in
England and Wales). Please note that Link Group cannot provide any financial,
legal or tax advice and calls may be recorded and monitored for security and
training purposes.

11.        Disclosure requirements of the Takeover Code

Under Rule 8.3(a) of the Takeover Code, any person who is interested in 1 per
cent. or more of any class of relevant securities of an offeree company or of
any securities exchange offeror (being any offeror other than an offeror in
respect of which it has been announced that its offer is, or is likely to be,
solely in cash) must make an Opening Position Disclosure following the
commencement of the offer period and, if later, following the announcement in
which any securities exchange offeror is first identified. An Opening Position
Disclosure must contain details of the person's interests and short positions
in, and rights to subscribe for, any relevant securities of each of (i) the
offeree company and (ii) any securities exchange offeror(s). An Opening
Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no
later than 3.30 pm (London time) on the 10(th) Business Day following the
commencement of the offer period and, if appropriate, by no later than 3.30 pm
(London time) on the 10(th) Business Day following the announcement in which
any securities exchange offeror is first identified. Relevant persons who deal
in the relevant securities of the offeree company or of a securities exchange
offeror prior to the deadline for making an Opening Position Disclosure must
instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Takeover Code, any person who is, or becomes,
interested in 1 per cent. or more of any class of relevant securities of the
offeree company or of any securities exchange offeror must make a Dealing
Disclosure if the person deals in any relevant securities of the offeree
company or of any securities exchange offeror. A Dealing Disclosure must
contain details of the dealing concerned and of the person's interests and
short positions in, and rights to subscribe for, any relevant securities of
each of (i) the offeree company and (ii) any securities exchange offeror(s),
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 pm (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 Takeover Panel's website at
www.thetakeoverpanel.org.uk, including details of the number of relevant
securities in issue, when the offer period commenced and when any offeror was
first identified. You should contact the 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.

Enquiries

ZQ Capital Management Limited

Zheqing (Simon) Shen, Managing Partner and Founder
         T. +852 3890 6566

 
         E. contact@zqcap.com

finnCap (Financial Adviser to ZQ Capital Management Limited)

Henrik
Persson
         T. +44 (0) 20 7220 0500

Seamus
Fricker

 

Goodwin Proctor (UK) LLP is providing legal advice to Skygem and ZQ. Covington
& Burling LLP is providing legal advice to Allergy Therapeutics.

Important Notes

finnCap Ltd ("finnCap"), which is authorized and regulated in the United
Kingdom by the Financial Conduct Authority, is acting as financial adviser to
Skygem and ZQ and no one else in connection with the matters described in this
Announcement and will not be responsible to anyone other than Skygem and ZQ
for providing the protections offered to clients of finnCap or for providing
advice in connection with any matter referred to in this Announcement. Neither
finnCap nor any of its affiliates (nor their respective directors, officers,
employees or agents) owes or accepts any duty, liability or responsibility
whatsoever (whether direct or indirect, whether in contract, in tort, under
statute or otherwise) to any person who is not a client of finnCap in
connection with this Announcement, any statement contained herein, the
Possible Mandatory Offer or otherwise. No representation or warranty, express
or implied, is made by finnCap as to the contents of this Announcement.

No offer or solicitation

This Announcement is not intended to and does not constitute, or form part of,
any offer or invitation or the solicitation of any offer to sell or purchase
any securities or the solicitation of any offer to otherwise acquire,
subscribe for, sell or otherwise dispose of any security pursuant to the
Possible Mandatory Offer or otherwise.

Overseas jurisdictions

The availability of the Possible Mandatory Offer and the release and/or
distribution of this Announcement in or into jurisdictions other than the
United Kingdom may be restricted by the laws and regulations of those
jurisdictions and, therefore, persons who are not resident in the United
Kingdom into whose possession this Announcement comes should inform themselves
about and observe any such restrictions. Failure to comply with any such
restrictions may constitute a violation of the securities laws of any such
jurisdiction. Allergy Therapeutics Shareholders who are in any doubt regarding
such matters should consult an appropriate independent financial adviser in
their relevant jurisdiction without delay.

Copies of this Announcement are not being, and must not be, directly or
indirectly, mailed or otherwise forwarded, distributed or sent in, into or
from any Restricted Jurisdiction, and persons receiving this Announcement
(including custodians, nominees and trustees) must not, directly or
indirectly, mail or otherwise distribute or send it in, into or from such
Restricted Jurisdictions as doing so may violate the securities laws of such
jurisdictions and invalidate any purported acceptance of the Possible
Mandatory Offer.

This Announcement has been prepared in compliance with English law and
regulation (including 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 and regulations of jurisdictions
outside England.

This Announcement is not an offer of securities for sale in any jurisdiction
(including any Restricted Jurisdiction).

Notice to US shareholders

The Possible Mandatory Offer relates to the shares of an English company and
is subject to UK procedural and disclosure requirements, which differ from
those of the United States. The Possible Mandatory Offer is extended into the
United States in reliance on the "Tier I" exemption pursuant to Rule 14d-1(c)
under the U.S. Securities Exchange Act of 1934, as amended (the "Exchange
Act"), from the requirements of the Exchange Act and the rules and regulations
promulgated thereunder. Accordingly, the Possible Mandatory Offer will be
subject to procedural and disclosure requirements, including with respect to
withdrawal rights, notices of extensions, announcements of results, settlement
procedures and waivers of conditions, which differ in various respects from
the requirements and customary practices followed in US domestic tender
offers.

Financial information included or referred to herein has been or will be
prepared in accordance with accounting standards applicable in the United
Kingdom and, accordingly, may not be comparable to financial information of US
companies or other companies whose financial statements are prepared in
accordance with US generally accepted accounting principle" ("US GAAP"). US
GAAP differs in certain significant respects from accounting standards
applicable in the United Kingdom. None of the financial information included
or referred to herein has been audited in accordance with auditing standards
generally accepted in the United States or the auditing standards of the
Public Company Accounting Oversight Board (United States).

The Possible Mandatory Offer is being made to US shareholders on the same
terms and conditions as those made to all other Allergy Therapeutics
Shareholders to whom the Possible Mandatory Offer is made. All information
documents disseminated by Skygem regarding the Possible Mandatory Offer will
be disseminated to US Allergy Therapeutics Shareholders on a basis comparable
to the method pursuant to which those documents are provided to all other
Allergy Therapeutics Shareholders.

The receipt of cash pursuant to the Possible Mandatory Offer by a US
shareholder as consideration for the transfer of its Allergy Therapeutics
Shares pursuant to the Possible Mandatory Offer will likely be a taxable
transaction for United States federal income tax purposes and under applicable
United States state and local, as well as foreign and other, tax laws. Each
Allergy Therapeutics Shareholder is urged to consult its independent
professional adviser immediately regarding the tax consequences of acceptance
of the Possible Mandatory Offer.

Neither the Possible Mandatory Offer nor this announcement has been approved
or disapproved by the US Securities and Exchange Commission, any state
securities commission in the United States or any other US regulatory
authority, nor have such authorities passed upon or determined the adequacy or
accuracy of the information contained in this Announcement or the merits of
the Possible Mandatory Offer. Any representation to the contrary is a criminal
offence in the United States.

Forward-looking statements

This Announcement, including any information incorporated by reference in this
Announcement, contains certain forward-looking statements. The forward-looking
statements contained herein include statements about the expected effects of
the Possible Mandatory Offer on Skygem and the Allergy Therapeutics Group,
strategic options, the expected timing and scope of the Possible Mandatory
Offer, and all other statements in this Announcement other than historical
facts. These statements are based on the current expectations and are
naturally subject to uncertainty and changes in circumstances. Forward-looking
statements often use words such as "anticipate", "target", "expect",
"estimate", "intend", "plan", "budget", "schedule", "forecast", "project",
"goal", "believe", "hope", "aims", "continue", "will", "may", "should",
"would", "could", "subject to", or other words of similar meaning. By their
nature, forward-looking statements involve known and unknown risks and
uncertainties, because they relate to events and depend on circumstances that
will occur in the future. There are a number of factors that could cause
actual results, outcomes and developments to differ materially from those
expressed in, or implied by, such forward-looking statements and such
statements are, therefore, qualified in their entirety by the risks and
uncertainties surrounding these future expectations. Many of these risks and
uncertainties relate to factors that are beyond those making the
forward-looking statements ability to control or estimate precisely, such as,
but not limited to, general business and market conditions both globally and
locally, political, economic and regulatory forces, industry trends and
competition, future exchange and interest rates, changes in government and
regulation including in relation to health and safety, the environment, labour
relations and tax rates and future business combinations or dispositions.
Although Skygem believes that the expectations reflected in such
forward-looking statements are reasonable, Skygem cannot give any assurance,
representation or guarantee that such expectations will prove to have been
correct and such forward-looking statements should be construed in light of
such factors and you are, therefore, cautioned not to place reliance on these
forward-looking statements which speak only as at the date of this
Announcement. Skygem assumes no obligation to update or correct the
information contained in this Announcement (whether as a result of new
information, future events or otherwise),except as required by applicable law
or regulation.

No profit forecasts, estimates or quantified financial benefits statements

No statement in this Announcement is intended as a profit forecast, profit
estimate or quantified financial benefits statement for any period and no
statement in this Announcement should be interpreted to mean that earnings or
earnings per share or dividends or dividends per share for Allergy
Therapeutics for the current or future financial years would necessarily match
or exceed the historical published earnings or earnings per share or dividends
or dividends per share for Allergy Therapeutics.

Rule 2.9 Disclosures

In accordance with Rule 2.9 of the Code, as at the date of this announcement,
Allergy Therapeutics' issued share capital comprises 679,104,621 ordinary
shares each of 1 pence each (ISIN:GB00B02LCQ05).

Dividends

If any dividend or other distribution is declared, made or paid in respect of
Allergy Therapeutics Shares on or after the date of this announcement, Skygem
reserves the right to reduce any price paid for any Allergy Therapeutics
shares subject to the Possible Mandatory Offer by the amount of such dividend
or other distribution in which case any reference in this announcement to the
price per Allergy Therapeutics share payable under the Possible Mandatory
Offer will be deemed to be a reference to that price so reduced. In such
circumstances, Allergy Therapeutics Shareholders would be entitled to receive
and retain any such dividend or other distribution.

Purchases outside the Possible Mandatory Offer

Skygem or its nominees or brokers (acting as agents) may purchase Allergy
Therapeutics Shares otherwise than under the Possible Mandatory Offer, such as
in the open market or through privately negotiated purchases. Such purchases
shall comply with the Takeover Code and the rules of the London Stock
Exchange.

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.

General

If you are in any doubt about the contents of this Announcement or the action
you should take, you are recommended to seek your own independent financial
advice immediately from your stockbroker, bank manager, solicitor or
independent financial adviser duly authorised under FSMA if you are resident
in the United Kingdom or, if not, from another appropriately authorised
independent financial adviser.

 

APPENDIX 1

DEFINITIONS

The following definitions apply throughout this Announcement unless the
context requires otherwise:

 AIM                                the market of that name operated by the London Stock Exchange
 Announcement                       this Announcement of which the Appendices form part
 Allergy Therapeutics               Allergy Therapeutics plc, a public limited company incorporated in England and
                                    Wales with company number 05141592
 Allergy Therapeutics Board         the board of Allergy Therapeutics at the date of this Announcement
 Allergy Therapeutics Group         Allergy Therapeutics and its subsidiary undertakings (as defined in the
                                    Companies Act) and, where the context permits, each of them
 Allergy Therapeutics Shares        ordinary shares of 0.1 pence each in the capital of Allergy Therapeutics
 Allergy Therapeutics Shareholders  holders of Allergy Therapeutics Shares
 Business Day                       any day other than (a) a Saturday or Sunday or (b) any day on which banks
                                    located in London, United Kingdom, Cayman Islands and Hong Kong are authorised
                                    or obligated to close
 Code or Takeover Code              the City Code on Takeovers and Mergers
 Companies Act                      the UK Companies Act 2006, as amended from time to time
 Dealing Disclosure                 as defined in the Takeover Code
 Equity Commitment Agreement        the equity commitment agreement entered into on the date of this Announcement
                                    between Allergy Therapeutics, Skygem and Southern Fox
 Equity Conditions                  the conditions to the Equity Financing as set out in the Equity Commitment
                                    Agreement, and Equity Condition means any one of them
 Equity Financing                   the conditional subscription for the New Shares at the Issue Price by Skygem
                                    and Southern Fox pursuant to the Equity Commitment Agreement
 FDI Clearance Conditions           the SF FDI Clearance Condition and the ZQ FDI Clearance Condition
 Financing Announcement             Announcement made by Allergy Therapeutics on the date of this Announcement in
                                    relation to the Loan Facility and Equity Financing
 finnCap                            financial adviser to Skygem and ZQ
 FSMA                               UK Financial Services and Markets Act 2000, as amended
 G306 Trial                         Astrum's pivotal Phase III G306 trial for Grass MATA MPL
 G306 Trial Failure                 if the G306 Trial is terminated or if G306 Trial Success does not occur
 G306 Trial Success                 in respect of the G306 Trial, the first date on which, using the primary
                                    efficacy measure, the investigational medicinal product has:

                                    (a)  achieved an average treatment effect which is at least 25% higher in the
                                    treatment group compared to placebo; or

                                    (b)  achieved a treatment effect that is less than 25% in the treatment group
                                    compared to placebo but (i) following consultation with the relevant
                                    regulatory authority, the results of the G306 Trial are stated by such
                                    regulatory authority to be sufficient to support the submission of a marketing
                                    authorisation application in Germany for the investigational medicinal product
                                    tested in the G306 Study without conducting further phase III clinical trials
                                    (except for the commencement of the planned G308 multiyear paediatric study);
                                    or (ii) a marketing authorisation application is submitted in respect of the
                                    investigational medicinal product tested in the G306 Trial
 hard copy form                     a document, an announcement or any information will be sent in hard copy form
                                    if it is sent in a paper copy or similar form capable of being read
 Issue Price                        1 pence per New Share
 Last Practicable Date              5 April 2023
 Loan Facility                      debt financing facility of £40.75 million made available to the Company by
                                    Skygem and Southern Fox
 London Stock Exchange              London Stock Exchange plc or its successor from time to time
 New Shares                         the Allergy Therapeutics Shares to be issued pursuant to the Equity Financing
 Opening Position Disclosure        as defined in the Takeover Code
 Panel                              the UK Panel on Takeovers and Mergers
 Possible Mandatory Offer           the possible cash offer that will be required to be made by ZQ Capital to all
                                    other shareholders of the Company to acquire the entire issued and to be
                                    issued share capital of the Company pursuant to Rule 9 of the Takeover Code,
                                    if the Equity Conditions are satisfied and the Equity Financing completes
 relevant securities                as defined in the Takeover Code
 Restricted Jurisdiction            any jurisdiction where the release, publication or distribution in whole or in
                                    part, in, into or from or where the extension of the Possible Mandatory Offer
                                    would constitute a violation of the relevant laws of the jurisdiction, in
                                    particular the United States of America, Canada, Japan or Australia
 SF FDI Clearance Condition         has the meaning ascribed in paragraph 7(c) of this Announcement
 Skygem                             Skygem Acquisition Limited, a private limited company incorporated in England
                                    and Wales with company number 11286999
 Southern Fox                       Southern Fox Investments Limited
 UK or United Kingdom               the United Kingdom of Great Britain and Northern Ireland
 US or United States                the United States of America, its territories and possessions, any state of
                                    the United States, the District of Columbia and all other areas subject to its
                                    jurisdiction
 Wider Allergy Therapeutics Group   Allergy Therapeutics and any of its subsidiaries, subsidiary undertakings (as
                                    defined in the Companies Act) and associated undertakings and any other body
                                    corporate, partnership, joint venture or person in which Allergy Therapeutics
                                    and such undertakings (aggregating their interests) have a direct or indirect
                                    interest of 20 per cent. or more of the voting or equity capital or equivalent
 Wider Skygem Group                 Skygem and its subsidiary undertakings (as defined in the Companies Act) and
                                    associated undertakings and any other body corporate, partnership, joint
                                    venture or person in which Skygem and such undertakings (aggregating their
                                    interests) have a direct or indirect interest of 20 per cent. or more of the
                                    voting or equity capital or equivalent
 ZQ                                 means funds managed by ZQ Capital Management Limited
 ZQ FDI Clearance Condition         has the meaning ascribed in paragraph 7(b) of this Announcement

1.         In this Announcement, unless the contrary is otherwise indicated:
1.1        "parent undertaking", "subsidiary", "subsidiary undertaking" and "undertaking" have the respective meanings given by the Companies Act 2006 of the United Kingdom and "associated undertaking" has the meaning given by paragraph 19 of Schedule 6 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (other than paragraph 19(1)(b) of Schedule 6 to those Regulations which shall be excluded for this purpose);
1.2        references to £, pence, penny, and p are to the lawful currency of the United Kingdom;
1.3        all times referred to are London time unless otherwise stated;
1.4        references to the singular include the plural and vice versa and words importing the masculine gender include the feminine or neutral;
1.5        all references to legislation are to English legislation; and
1.6        any reference to a provision of any legislation shall include any amendment, modification, re-enactment or extension.
2.         References in this Announcement to any English legal term shall in respect of any jurisdiction other than England or in respect of any member of the Wider Skygem Group or the Wider Allergy Therapeutics Group which is incorporated or operating in a jurisdiction other than England be deemed to include what most nearly approximates in that jurisdiction to the English legal term.
3.         All references to statutory provision or law or to any order or regulation shall be construed as a reference to that provision, law, order or regulation as extended, modified, replaced or re-enacted from time to time and all statutory instruments, regulations and orders from time to time made thereunder or deriving validity therefrom.

 

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