REG - Mission Group PLC Brave Bison Grp PLC - RESPONSE TO REVISED POSSIBLE OFFER ANNOUNCEMENT

Brave BisonAnnouncement

06/06/2024 09:15

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RNS Number : 4073R  Mission Group PLC (The)  06 June 2024

FOR IMMEDIATE RELEASE

 

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

THIS ANNOUNCEMENT 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

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

 

6 June 2024

The MISSION Group plc

("MISSION", the "Company" or the "Group")

RESPONSE TO REVISED POSSIBLE OFFER ANNOUNCEMENT BY BRAVE BISON GROUP PLC

MISSION Group plc (AIM: TMG), notes the announcement released on 3 June 2024
by Brave Bison Group plc ("Brave Bison") in accordance with Rule 2.4 of the
City Code on Takeovers and Mergers (the "Code") and confirms, in line with the
announcement it made on 4 June 2024, that on 25 May 2024, it received a
further unsolicited conditional proposal regarding a possible offer by Brave
Bison for the entire issued and to be issued share capital of MISSION.  Such
possible offer comprised an all-share offer at an exchange ratio of 13.9 Brave
Bison shares for each ordinary share in MISSION, a partial cash alternative of
up to 50 per cent. of the potential offer price and the intention to undertake
an underwritten share placing to reduce indebtedness of the proposed combined
group (the "Revised Possible Offer").

The board of MISSION ("Board") understands that the amount of such partial
cash alternative and the quantum of any proposed reduction in indebtedness for
the proposed combined group is not certain and will be determined by Brave
Bison following a period of due diligence.

Based on the terms of the Revised Possible Offer and the closing market prices
of MISSION and Brave Bison shares on 10 May 2024, being the last trading day
prior to Brave Bison's 12 May 2024 announcement of the initial possible offer,
the Revised Possible Offer values each MISSION share at approximately 35
pence(1). Were the Revised Possible Offer to be implemented on its indicative
terms, prior to any proposed equity fundraising, this would result in
MISSION's shareholders holding approximately 50 per cent. of the proposed
combined group.

On 6 June 2024, the Board of MISSION, following consultation with its
financial advisers and a period of engagement with certain of its
shareholders, unanimously rejected the Revised Possible Offer which it
believes to be opportunistic and undervalues the Group and its prospects.
Moreover, it is dilutive to MISSION's shareholders as it does not reflect the
relevant contributions of each party to the proposed combined group.

In that regard, the Board of MISSION would like to bring shareholders'
attention to the following points:

·      The Board continues to believe that the Revised Possible Offer
does not fully reflect the inherent value in MISSION which, has been reflected
in a 62.1 per cent. increase in the MISSION share price to 10 May 2024(3).

·      Moreover, the Board believes that the Revised Possible Offer
undervalues the contribution of MISSION to the proposed combined group. Based
on the respective net revenue, adjusted EBITDA and adjusted pre-tax profit
contributions of MISSION and Brave Bison as set out in their respective
results for their financial years ending 31 December 2023, MISSION would
contribute approximately 81 per cent. of revenues, approximately 71 per cent.
of adjusted EBITDA and approximately 54 per cent. of adjusted pre-tax profits
to the proposed combined group(2). The proposed exchange ratio under the terms
of the Revised Possible Offer and of MISSION's shareholders holding
approximately 50 per cent. of the proposed combined group does not reflect
that contribution.

·      The proposed holding by MISSION shareholders of approximately 50
per cent. of the proposed combined group also only represents the position
before any potential dilution from the proposed equity fundraising outlined by
Brave Bison in its 3 June possible offer announcement.  The Board of MISSION
understands that, while subject to due diligence, the size of this fundraising
is anticipated to be between £10 - 15 million at a price of 2.53 pence per
Brave Bison share. Brave Bison has indicated to MISSION that the proceeds of
the equity fundraising, together with Brave Bison's existing cash
(approximately £7 million at 31 December 2023), would be used to deleverage
the proposed combined group and to satisfy a cash alternative of up to 17.5
pence per MISSION share. Brave Bison's current assumption based on publicly
available information is that a minimum of £4 million and a maximum of £10
million would be required to reduce indebtedness, therefore providing between
£10 million and £16 million for a cash alternative.  The effect of any such
equity fundraising could therefore further dilute MISSION's shareholders'
interest in the proposed combined group below the proposed approximately 50
per cent. holding to the extent that MISSION's shareholders did not or were
not able to participate in such fundraising.

·      Brave Bison has indicated the proposed equity fundraising would
be underwritten by Oliver and Theodore Green and certain Brave Bison
shareholders.

·      Brave Bison's proposed Board composition under the terms of the
Revised Possible Offer also currently envisage only two additional
Non-Executive Directors and no executive directors from MISSION joining the
board of the proposed combined group.  In the Board's view this does not
reflect the significant contribution of MISSION to the proposed combined
group.

·      The Board of MISSION continues to believe the Revised Possible
Offer is not transformational for MISSION and its offering to its clients. The
increased scale and some additional capabilities do not offset the dilutive
impact to MISSION's shareholders of only holding approximately 50 per cent. of
the proposed combined group and potentially less following the proposed equity
fundraising.  The MISSION directors also believe that the Revised Possible
Offer does not provide a step change in scale, nor any new offering or access
to new markets.  In addition, in the meetings between Brave Bison and MISSION
management, the MISSION management does not believe that Brave Bison have set
out a compelling future strategy for the proposed combined group.

·      Notwithstanding the proposed dilution referred to above, Brave
Bison anticipates that MISSION's shareholders would enjoy more value from the
combination based on a re-rating of the proposed combined group.  There is no
certainty of a re-rating. In addition, if Brave Bison's shares are re-rated,
it is likely this will benefit Brave Bison shareholders more than MISSION
shareholders. This is because the current exchange ratio does not reflect the
contribution of the MISSION business to the proposed combined group.
Furthermore, following the proposed placing, MISSION shareholders may not
continue to hold approximately 50 per cent. of the proposed combined group.

·      As previously announced on 17 January 2024, the Board of MISSION
has set out how it expects to realise value for MISSION's shareholders through
its standalone strategy and execution of the Group's Value Restoration Plan,
which is now well underway.

·      The Board continues to work closely with NatWest, the Company's
lender, and was pleased to announce a refinancing arrangement on 28 March
2024, which extended facilities through to 5 April 2026. This provides the
flexibility the Company needs to deliver on its Value Restoration Plan and
reduce its leverage.

·      In addition, the Board of MISSION continues to review the Group's
options to reduce its debt position, including the disposal of certain assets
within its portfolio. MISSION is in active discussions on a number of these
assets. The Board considers that an  disposal of even some of the assets
would have a material impact on deleveraging, based on the estimated
proceeds.  The Board of MISSION remains confident that during the remainder
of the year, it will deliver on its plan to reduce leverage.

·      The announcement by Brave Bison on 3 June 2024 in relation to the
Revised Possible Offer stated that MISSION's net debt was £25.5 million as at
20 October 2023, £25.2 million as at 31 December 2023 and £26.8 million as
at 30 April 2024. The Board of MISSION wishes to advise that the net debt
balance stated by Brave Bison in this announcement in relation to 20 October
2023 excludes acquisition obligations, while the balances at 31 December 2023
and 30 April 2024 include acquisition obligations. The net debt as at 20
October 2023 (including acquisition obligations) was £31.0 million, compared
to £25.2 million at 31 December 2023 and £26.8 million as at 30 April 2024
on the same basis, representing a reduction of £4.2 million. MISSION also
wishes to clarify that the Pathfindr £1 million initial consideration was
received in the financial year ended 31 December 2023.

·      The Board of MISSION notes that Tangent Marketing Services
Limited ("Tangent") is referenced in Brave Bison's annual report as a related
party of Brave Bison as Oliver and Theodore Green are indirect shareholders of
Tangent, and Tangent is co-located with Brave Bison in its London offices. It
is unclear to MISSION whether Tangent operates in a similar market segment to
Brave Bison and/or MISSION, and/or what ongoing time commitments Brave Bison
management have with Tangent.

As previously announced, the Board of MISSION is open to proposals that it
believes would enhance shareholder value and deliver benefits to MISSION's
shareholders. The Board of MISSION does not consider the terms of the Revised
Possible Offer to meet those criteria.

Shareholders are urged to take no further action at this time.

In accordance with Rule 2.6(a) of the Code, Brave Bison must, by no later than
5.00 p.m. (London time) on 9 June 2024, either announce a firm intention to
make an offer for MISSION in accordance with Rule 2.7 of the Code, or announce
that it does not intend to make an offer, in which case the announcement will
be treated as a statement to which Rule 2.8 of the Code applies. The deadline
can be extended with the consent of the Takeover Panel in accordance with Rule
2.6(c) of the Code.

This announcement has been made by MISSION without the agreement or approval
of Brave Bison.

There can be no certainty either that an offer will be made.

The attention of shareholders is drawn to the disclosure requirements of Rule
8 of the Code, which are summarised below.

Footnotes:

1              The valuation of approximately 35.2 pence per
MISSON share for MISSION's shareholders in the proposed combined group, is
based on (i) an exchange ratio of 13.9 Brave Bison shares for each ordinary
share in MISSION, (ii) a Brave Bison closing mid-market share price of 2.525
pence (as at 10 May 2024, being the last trading day prior to Brave Bison's 12
May 2024 announcement of the possible offer), (iii) an issued share capital of
MISSION being 92,238,119 shares and a fully diluted share capital of
92,498,311, and (iv) an issued share capital of Brave Bison being
1,288,147,280 shares.

2          The contribution of MISSION to the proposed combined group
is based on the following information:

 Revenue                      £ million   %
 MISSION (see Note 2(a))      86.3        80.5
 Brave Bison (see Note 2(b))  20.9        19.5
 Pro forma                    107.2       100.0
 Adjusted EBITDA
 MISSION (see Note 2(a))      10.6        71.3
 Brave Bison (see Note 2(b))  4.3         28.7
 Pro forma                    14.9        100.0
 Adjusted profit before tax
 MISSION (see Note 2(a))      4.2         53.6
 Brave Bison (see Note 2(b))  3.6         46.4
 Pro forma                    7.8         100.0

 

 

(a)  for the year ended 31 December 2023, MISSION had reported net revenue of
£86.3 million from continuing operations (turnover of £195.4 million less
cost of sales of £109.1 million), headline EBITDA of £10.6 million (headline
operating profit (continuing operations) of £6.5 million, depreciation of
owned tangible assets of £1.2 million, depreciation expense on right of use
assets of £2.6 million and amortisation of other intangible assets of £0.4
million) and headline pre-tax profits of £4.2 million (continuing
operations).  This financial information relating to the Company has been
extracted or derived (without any adjustment) from the Company's final results
for the year ended 31 December 2023;

(b) for the year ended 31 December 2023, Brave Bison reported net revenue of
£20.9 million (turnover/billings of £35.7 million less cost of sales of
£14.8 million), adjusted EBITDA of £4.3 million and adjusted pre-tax profits
of £3.6 million. This financial information relating to Brave Bison has been
extracted or derived (without any adjustment) from Brave Bison's final results
for the year ended 31 December 2023.;

3          The closing mid-market price for a MISSION share on 23
October 2023 was 14.0       pence, and on 10 May 2024 was 22.7 pence.

4          The statements regarding MISSION's outstanding debts (net
of cash balances) and certain liabilities totalling approximately £25.2
million as at 31 December 2023 and comprised of net debt of £15.4 million,
acquisition obligations of £5.5 million and HMRC Time to Pay agreement of
£4.3 million have been extracted or derived (without any adjustment) from
MISSION's final results for the year ended 31 December 2023.

5          The statements regarding MISSION's outstanding debts (net
of cash balances) and certain liabilities totalling approximately £26.8
million as at 30 April 2024 and comprised of net bank debt of £22.2 million,
acquisition obligations of £4.1 million and HMRC Time to Pay agreement of
£0.5 million have been extracted from MISSION's unaudited internal financial
information.

6          The statements regarding MISSION's outstanding debts (net
of cash balances) and certain liabilities totalling approximately £31.0
million as at 20 October 2023 and comprised of net bank debt of £25.5
million, acquisition obligations of £5.5 million and HMRC Time to Pay
agreement of £Nil have been extracted from MISSION's unaudited internal
financial information.

 

 

ENDS

 

ENQUIRIES:

 David Morgan, Non-Executive Chair

 James Clifton, Chief Executive Officer

 Giles Lee, Chief Financial Officer                                           Via Houston

 The MISSION Group plc

 Simon Bridges / Julie Langley / Andrew Potts / Harry Rees
 Canaccord Genuity Limited (Financial Adviser, Nominated Adviser and Broker)  020 7523 8000

 Kate Hoare / Alexander Clelland / India Spencer
 HOUSTON (Financial PR and Investor Relations)                                0204 529 0549

 

Canaccord Genuity Limited, which is authorised and regulated in the United
Kingdom by the FCA, is acting as financial adviser and corporate broker
exclusively for MISSION and for no one else in connection with the Revised
Possible Offer and will not regard any other person as its client in relation
to the matters referred to in this announcement and will not be responsible to
anyone other than MISSION for providing the protections afforded to clients of
Canaccord Genuity Limited, nor for providing advice in relation to the Revised
Possible Offer or any other matter referred to in this announcement.

The person responsible for arranging the release of this announcement on
behalf of MISSION is James Clifton.

Publication of this announcement

In accordance with Rule 26.1 of the Code, a copy of this announcement will be
available on the Company's website at https://www.themission.co.uk/
(https://www.themission.co.uk/) by no later than 12 noon (London time) on the
business day following the date of this announcement. The content of the
website referred to in this announcement is not incorporated into and does not
form part of this announcement.

Disclosure requirements of the Code

Under Rule 8.3(a) of the Code, any person who is interested in 1% 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 (as defined in the Code) 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 10th business day following
the commencement of the offer period and, if appropriate, by no later than
3.30 pm (London time) on the 10th business day following the announcement in
which any securities exchange offeror is first identified. Relevant persons
who deal in the relevant securities of the offeree company or of a securities
exchange offeror prior to the deadline for making an Opening Position
Disclosure must instead make a Dealing Disclosure (as defined in the Code).

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1%
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 Bidder 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 Bidder 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.

The information contained within this announcement is deemed to constitute
inside information as stipulated under the Market Abuse (Amendment) (EU Exit)
Regulations 2019. Upon the publication of this announcement, this inside
information is now considered to be in the public domain.

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