REG - Diploma PLC - Result of Placing

DiplomaAnnouncement

17/03/2023 07:00

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RNS Number : 3052T  Diploma PLC  17 March 2023

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS
NOT FOR PUBLICATION, RELEASE, DISTRIBUTION OR FORWARDING, DIRECTLY OR
INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA,
CANADA, THE REPUBLIC OF SOUTH AFRICA, JAPAN OR ANY OTHER JURISDICTION IN WHICH
SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL.

FURTHER, THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND IS NOT AN
OFFER OF SECURITIES IN ANY JURISDICTION.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

For immediate release

17 March 2023

DIPLOMA PLC

Result of Placing

 

Diploma PLC ("Diploma" or the "Company"), the international group supplying
specialised technical products and services, announces the successful pricing
of the non-pre-emptive placing of new ordinary shares of 5p each in the
capital of the Company ("Ordinary Shares") following yesterday's announcement
(the "Placing").

 

A total of 9,297,005 new Ordinary Shares (the "Placing Shares") have been
placed with institutional investors by Barclays Bank PLC ("Barclays") and
Numis Securities Limited ("Numis") (together, the "Bookrunners") at a price
of 2,525 pence per Placing Share (the "Placing Price") raising gross
proceeds of approximately £235 million.

 

Concurrently with the Placing, each of the directors of the Company have
subscribed for an aggregate of 3,960 new Ordinary Shares (the "Subscription
Shares"), at the Placing Price, pursuant to subscription letters entered into
with the Company (the "Subscription"). The proceeds of the Subscription will
be approximately £100,000. In addition, retail investors have subscribed in
the separate offer made by the Company via the PrimaryBid platform for a total
of 50,000 new Ordinary Shares (the "Retail Shares") at the Placing Price (the
"Retail Offer") raising gross proceeds of approximately £1 million.

 

Together, the Placing, Subscription and Retail Offer (together, the "Capital
Raise") in aggregate comprised 9,350,965 new Ordinary Shares, and will raise
gross proceeds of approximately £236 million. The Placing Price represents a
discount of approximately 4.2 per cent to the closing share price of 2,636
pence on 16 March 2023. The Placing Shares, the Subscription Shares and the
Retail Offer Shares (together, the "New Ordinary Shares") being issued
together represent approximately 7.5 per cent of the existing issued ordinary
share capital of Diploma prior to the Offer.

 

Applications have been made to the Financial Conduct Authority (the "FCA") and
London Stock Exchange plc (the "LSE") respectively for the admission of the
New Ordinary Shares to the premium listing segment of the Official List of the
FCA and to trading on the main market for listed securities of the LSE
(together, "Admission"). It is expected that Admission will become effective
on or before 8.00 a.m. on 21 March 2023. The Placing, the Subscription and the
Retail Offer are conditional upon, amongst other things, Admission becoming
effective and upon the placing agreement between the Bookrunners and the
Company not being terminated in accordance with its terms.

 

The New Ordinary Shares will, when issued, be credited as fully paid and will
rank pari passu in all respects with each other and with the existing
Ordinary Shares, including, without limitation, the right to receive all
dividends and other distributions declared, made or paid after the date of
issue.

 

Following Admission, the total number of ordinary shares in issue in Diploma
will be 134,030,507. The Company does not hold any shares in treasury, and
therefore the total number of voting rights in Diploma will be 134,030,507
following Admission, and this figure may be used by shareholders as the
denominator for the calculations by which they will determine if they are
required to notify their interest in, or a change to their interest in, the
Company under the FCA's Disclosure Guidance and Transparency Rules.

Board participation in the Subscription

Each of the directors of the Company have agreed to subscribe for the number
of Subscription Shares at the Placing Price opposite their name as set out
below:

 Name            Number of Subscription Shares
 David Lowden    396
 Johnny Thomson  990
 Chris Davies    990
 Anne Thorburn   396
 Dean Finch      396
 Andy Smith      396
 Geraldine Huse  396

 

Smaller related party transaction

Capital Group ("Capital") is a substantial shareholder in the Company for the
purposes of the Listing Rules as a result of having been entitled to exercise,
or to control the exercise of, over 10 per cent. of the votes able to be cast
at general meetings of the Company within the last 12 months. Capital is
therefore considered to be a related party of the Company for the purposes of
the Listing Rules. Capital has agreed to subscribe for 1,806,310 Placing
Shares at the Placing Price for an aggregate consideration of approximately
£46 million. The participation in the Placing by Capital constitutes a
"smaller" related party transaction and falls within Listing Rule 11.1.10R and
this announcement (the "Announcement") is therefore made in accordance with
Listing Rule 11.1.10R(2)(c).

 

This Announcement contains inside information for the purposes of the Market
Abuse Regulation (Regulation (EU) No 596/2014), as it forms part of retained
EU law in the United Kingdom by virtue of the European Union (Withdrawal) Act
2018 ("UK MAR").

The person responsible for releasing this Announcement is John Morrison,
Company Secretary.

Diploma PLC LEI: 2138008OGI7VYG8FGR19

For further information please contact:

 

 Diploma                                                   +44 (0)20 7549 5700
 Johnny Thomson

 Chris Davies

 Kellie McAvoy

 Barclays (Joint Global Coordinator and Joint Bookrunner)  +44 (0)20 7623 2323
 Alisdair Gayne

 Neal West

 Guy Bomford

 Chris Madderson

 Numis (Joint Global Coordinator and Joint Bookrunner)     +44 (0)20 7260 1000
 Mark Lander

 Julian Cater

 George Price

 William Wickham

 Teneo                                                     +44 (0)20 7353 4200
 Martin Robinson

 Olivia Peters

 

Pre-Emption Group Reporting

The Placing is a non-pre-emptive issue of equity securities for cash and
accordingly the Company makes the following post transaction report in
accordance with the most recently published Pre-Emption Group Statement of
Principles (2022).

 Name of issuer        Diploma PLC

 Transaction details   In aggregate, Capital Raise of 9,350,965 New Ordinary Shares (comprising
                       9,297,005 Placing Shares, 3,960 Subscription Shares and 50,000 Retail Shares)
                       represents approximately 7.5% of the Company's issued ordinary share capital.

                       Settlement for the New Ordinary Shares and Admission are expected to take
                       place on or before 8.00 a.m. on 21 March 2023.

 Use of proceeds       The proceeds of the proposed Placing, Subscription and Retail Offer will be
                       used to refinance the consideration paid for the acquisition of Tennessee
                       Industrial Electronics, LLC, a market leading value-add distributor of
                       aftermarket parts and repair services into the fast-growing US industrial
                       automation end market, with a focus on robotics and computer numerical control
                       (CNC) machines, as well as provide the Group with greater flexibility to
                       execute on its strong M&A pipeline to accelerate future organic growth.
 Quantum of proceeds   In aggregate, the Capital Raise raised gross proceeds of approximately £236
                       million and net proceeds of approximately £232 million.

 Discount              The Placing Price of 2,525 pence represents a discount of 4.2 per cent. to the
                       closing share price of 2,636 pence on 16 March 2023.

 Allocations           Soft pre-emption has been adhered to in the allocations process. Management
                       was involved in the allocations process, which has been carried out in
                       compliance with the MiFID II Allocation requirements. Allocations made outside
                       of soft pre-emption were preferentially directed towards existing shareholders
                       in excess of their pro rata, and wall-crossed accounts.

 Consultation          The Joint Bookrunners undertook a pre-launch wall-crossing process, including
                       consultation with major shareholders, to the extent reasonably practicable and
                       permitted by law.

 Retail investors      The Capital Raise included a Retail Offer, for a total of 50,000 Retail
                       Shares, via the PrimaryBid platform.

                       Retail investors, who participated in the Retail Offer, were able to do so at
                       the same Placing Price as all other investors participating in the Placing and
                       Subscription.

                       The Retail Offer was made available to existing shareholders and new investors
                       in the UK. Investors were able to participate through PrimaryBid's platform
                       via its partner network (covering 60+ FCA registered intermediaries) and
                       through PrimaryBid's free-to-use direct channel. Investors had the ability to
                       participate in this transaction through ISAs and SIPPs, as well as General
                       Investment Accounts (GIAs). This combination of participation routes meant
                       that, to the extent practicable on the transaction timetable, eligible UK
                       retail investors (including certificated retail shareholders) had the
                       opportunity to participate in the Capital Raise alongside institutional
                       investors.

                       Allocations in the Retail Offer were preferentially directed towards existing
                       shareholders in keeping with the principle of soft pre-emption.

Important Notices

No action has been taken by the Company, Barclays Bank PLC, acting through its
investment bank ("Barclays") or Numis Securities Limited ("Numis" and,
together with Barclays, the "Bookrunners") or any of their respective
affiliates, or any person acting on its or their behalf that would permit an
offer of the Placing Shares or possession or distribution of this Announcement
or any other offering or publicity material relating to such Placing Shares in
any jurisdiction where action for that purpose is required. Persons into whose
possession this Announcement comes are required by the Company and the
Bookrunners to inform themselves about, and to observe, such restrictions.

No prospectus, offering memorandum, offering document or admission document
has been or will be made available in connection with the matters contained in
this Announcement and no such prospectus is required (in accordance with the
Prospectus Regulation (EU) 2017/1129 (the "EU Prospectus Regulation") or the
UK version of the EU Prospectus Regulation as it forms part of UK law by
virtue of the European Union (Withdrawal) Act 2018 (the "UK Prospectus
Regulation")) to be published. Persons needing advice should consult a
qualified independent legal adviser, business adviser, financial adviser or
tax adviser for legal, financial, business or tax advice.

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT, IS RESTRICTED AND IS
NOT FOR PUBLICATION, RELEASE, FORWARDING OR DISTRIBUTION, DIRECTLY OR
INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES OF AMERICA, ITS
TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES OR THE DISTRICT OF
COLUMBIA (COLLECTIVELY, THE "UNITED STATES"), AUSTRALIA, CANADA, THE REPUBLIC
OF SOUTH AFRICA OR JAPAN OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION,
RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL. FURTHER, THIS ANNOUNCEMENT IS FOR
INFORMATION PURPOSES ONLY AND IS NOT AN OFFER OF SECURITIES IN ANY
JURISDICTION. THIS ANNOUNCEMENT HAS NOT BEEN APPROVED BY THE LONDON STOCK
EXCHANGE PLC, NOR IS IT INTENDED THAT IT WILL BE SO APPROVED.

 

This Announcement or any part of it 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, Canada, Australia, the
Republic of South Africa, Japan or any other jurisdiction in which the same
would be unlawful. No public offering of the Placing Shares is being made in
any such jurisdiction.

The securities referred to herein have not been and will not be registered
under the United States Securities Act of 1933, as amended (the "Securities
Act"), or with any securities regulatory authority of any State or other
jurisdiction of the United States, and may not be offered, sold or transferred
directly or indirectly in or into the United States except pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act and in compliance with the securities laws
of any State or any other jurisdiction of the United States. Accordingly, the
Placing Shares are being offered and sold by the Company only (i) outside the
United States in "offshore transactions" (as such terms are defined in
Regulation S under the Securities Act ("Regulation S")) pursuant to Regulation
S under the Securities Act and otherwise in accordance with applicable laws;
and (ii) in the United States to a limited number of "qualified institutional
buyers" (as defined in Rule 144A under the Securities Act). No public offering
of securities is being made in the United States.

 

This Announcement is for information purposes only and is directed only at:
(i) persons in member states of the European Economic Area (the "EEA") who are
qualified investors within the meaning of Article 2(e) of the Prospectus
Regulation ("Qualified Investors"); or (ii) in the United Kingdom, qualified
investors within the meaning of Article 2(e) of the UK Prospectus Regulation
who are (a) persons who have professional experience in matters relating to
investments who fall within the definition of "investment professionals" in
Article 19(5) of the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2005 (the "Order"); (b) persons who fall within Article
49(2)(a) to (d) of the Order; or (c) otherwise, persons to whom it may
otherwise lawfully be distributed (all such persons together being referred to
as "Relevant Persons"). Any investment or investment activity to which this
Announcement relates is available in member states of the EEA only to
Qualified Investors or the United Kingdom only to Relevant Persons and will be
engaged in only with such persons. This Announcement must not be acted on or
relied on by persons in member states of the EEA who are not Qualified
Investors or the United Kingdom who are not Relevant Persons.

 

In Canada, no prospectus has been filed with any securities commission or
similar regulatory authority in respect of the Placing Shares. No such
securities commission or similar regulatory authority in Canada has reviewed
or in any way passed upon the merits of any proposed offering of the Placing
Shares and any representation to the contrary is an offence; no prospectus has
been lodged with, or registered by, the Australian Securities and Investments
Commission or the Japanese Ministry of Finance; the relevant clearances have
not been, and will not be, obtained for the South Africa Reserve Bank or any
other applicable body in the Republic of South Africa in relation to the
Placing Shares and the Placing Shares have not been, nor will they be,
registered under or offering in compliance with the securities laws of any
state, province or territory of Australia, Canada, the Republic of South
Africa or Japan. Accordingly, the Placing Shares may not (unless an exemption
under the relevant securities laws is applicable) be offered, sold, resold or
delivered, directly or indirectly, in or into Australia, Canada, the Republic
of South Africa, or Japan or any other jurisdiction in which such activities
would be unlawful.

 

In Canada, the Placing Shares may only be offered and sold in the provinces of
Alberta, British Columbia, Ontario and Quebec on a basis exempt from the
prospectus requirements of applicable securities laws. In connection with any
offer or sale made to investors in the Placing that are located in Canada, the
Placee will be required to provide a signed investor letter, confirming its
eligibility to participate in the Placing and containing additional prescribed
disclosure for the purposes of compliance with Canadian securities law
requirements.

 

Certain statements contained in this Announcement constitute "forward-looking
statements" with respect to the financial condition, results of operations and
businesses and plans of the Company and its subsidiaries (the "Group"). Words
such as "believes", "anticipates", "estimates", "expects", "intends", "plans",
"aims", "potential", "will", "would", "could", "considered", "likely",
"estimate" and variations of these words and similar future or conditional
expressions, are intended to identify forward-looking statements but are not
the exclusive means of identifying such statements. These statements and
forecasts involve risk and uncertainty because they relate to events and
depend upon future circumstances that have not occurred. There are a number of
factors that could cause actual results or developments to differ materially
from those expressed or implied by these forward-looking statements and
forecasts. As a result, the Group's actual financial condition, results of
operations and business and plans may differ materially from the plans, goals
and expectations expressed or implied by these forward-looking statements. No
representation or warranty is made as to the achievement or reasonableness of,
and no reliance should be placed on, such forward-looking statements. No
statement in this Announcement is intended to be, nor may it be construed as,
a profit forecast or be relied upon as a guide to future performance. The
forward-looking statements contained in this Announcement speak only as of the
date of this Announcement. The Company, its directors, the Bookrunners, their
respective affiliates and any person acting on its or their behalf each
expressly disclaim any obligation or undertaking to update or revise publicly
any forward-looking statements, whether as a result of new information, future
events or otherwise, unless required to do so by applicable law or regulation,
the Listing Rules, UK MAR, the Disclosure Guidance and Transparency Rules, the
rules of the LSE or the FCA.

 

Barclays Bank PLC is authorised by the Prudential Regulation Authority ("PRA")
and regulated in the United Kingdom by the PRA and the FCA. Numis Securities
Limited is authorised and regulated in the United Kingdom by the FCA. Each of
Barclays and Numis are acting exclusively for the Company and no one else in
connection with the Placing and will not regard any other person (whether or
not a recipient on this Announcement) as its client in relation to the Placing
or any other matter referred to in this Announcement and will not be
responsible to anyone (including any Placees) other than the Company for
providing the protections afforded to its clients or for providing advice to
any other person in relation to the Placing or any other matters referred to
in this Announcement. Neither Barclays nor Numis is acting for the Company
with respect to the Retail Offer or the Subscription.

 

Each of the Bookrunners and their respective affiliates may have engaged in
transactions with, and provided various commercial banking, investment
banking, financial advisory transactions and services in the ordinary course
of their business with the Company and/or its affiliates for which they would
have received customary fees and commissions. Each of the Bookrunners and
their respective affiliates may provide such services to the Company and/or
its affiliates in the future.

 

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 either Bookrunner or by any of its affiliates or any person acting
on its or their behalf 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.

 

This Announcement does not constitute a recommendation concerning any
investor's investment decision with respect to the Placing. Any indication in
this Announcement of the price at which ordinary shares have been bought or
sold in the past cannot be relied upon as a guide to future performance. The
price of shares and any income expected from them may go down as well as up
and investors may not get back the full amount invested upon disposal of the
shares. Past performance is no guide to future performance. The contents of
this Announcement are not to be construed as legal, business, financial or tax
advice. Each investor or prospective investor should consult his, her or its
own legal adviser, business adviser, financial adviser or tax adviser for
legal, financial, business or tax advice.

 

The Placing Shares to be issued or sold pursuant to the Placing will not be
admitted to trading on any stock exchange other than the LSE.

 

Persons (including, without limitation, nominees and trustees) who have a
contractual or other legal obligation to forward a copy of this Announcement
should seek appropriate advice before taking any action.

 

Neither the content of the Company's website (or any other website) nor the
content of any website accessible from hyperlinks on the Company's website (or
any other website) is incorporated into or forms part of this Announcement.

 

This Announcement has been prepared for the purposes of complying with
applicable law and regulation in the United Kingdom 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
any jurisdiction outside the United Kingdom.

 

UK Product Governance Requirements

Solely for the purposes of the product governance requirements of Chapter 3 of
the FCA Handbook Product Intervention and Product Governance Sourcebook (the
"UK Product Governance Rules") and/or any equivalent requirements elsewhere to
the extent determined to be applicable, and disclaiming all and any liability,
whether arising in tort, contract or otherwise, which any 'manufacturer' (for
the purposes of the UK Product Governance Rules and/or any equivalent
requirements elsewhere to the extent determined to be applicable) may
otherwise have with respect thereto, the Placing Shares have been subject to a
product approval process, which has determined that such Placing Shares are:
(a) compatible with an end target market of retail investors and investors who
meet the criteria of professional clients and eligible counterparties, each as
defined in Chapter 3 of the FCA Handbook Conduct of Business Sourcebook
("COBS"); and (b) eligible for distribution through all permitted distribution
channels (the "UK target market assessment"). Notwithstanding the UK target
market assessment, distributors should note that: the price of the Placing
Shares may decline and investors could lose all or part of their investment;
the Placing Shares offer no guaranteed income and no capital protection; and
an investment in the Placing Shares is compatible only with investors who do
not need a guaranteed income or capital protection, who (either alone or in
conjunction with an appropriate financial or other adviser) are capable of
evaluating the merits and risks of such an investment and who have sufficient
resources to be able to bear any losses that may result therefrom. The UK
target market assessment is without prejudice to the requirements of any
contractual, legal or regulatory selling restrictions in relation to the
Placing. Furthermore, it is noted that, notwithstanding the UK target market
assessment, each of Barclays and Numis will only procure investors for the
Placing Shares who meet the criteria of professional clients and eligible
counterparties.

For the avoidance of doubt, the UK target market assessment does not
constitute: (a) an assessment of suitability or appropriateness for the
purposes of COBS 9A and COBS 10A, respectively; or (b) a recommendation to any
investor or group of investors to invest in, or purchase or take any other
action whatsoever with respect to the Placing Shares. Each distributor is
responsible for undertaking its own UK target market assessment in respect of
the Placing Shares and determining appropriate distribution channels.

NOTWITHSTANDING ANYTHING IN THE FOREGOING, NO PUBLIC OFFERING OF THE PLACING
SHARES IS BEING MADE BY ANY PERSON ANYWHERE AND THE COMPANY HAS NOT AUTHORISED
OR CONSENTED TO ANY SUCH OFFERING IN RELATION TO THE PLACING SHARES.

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