Recommended Cash Offer
04/09/2023 07:00
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RNS Number : 2041L Ergomed plc 04 September 2023
This announcement contains inside information
Not for release, publication or distribution, in whole or in part, in or into
any jurisdiction where to do so would constitute a violation of the relevant
laws of such jurisdiction
4 September 2023
RECOMMENDED CASH ACQUISITION
of
ERGOMED PLC
by
EDEN ACQUISITIONCO LIMITED
A NEWLY INCORPORATED COMPANY CONTROLLED AND OWNED BY FUNDS ADVISED BY PERMIRA
ADVISERS LLP
TO BE IMPLEMENTED BY MEANS OF A SCHEME OF ARRANGEMENT
UNDER PART 26 OF THE COMPANIES ACT 2006
Summary
· The boards of directors of Eden AcquisitionCo Limited
("Bidco") and Ergomed plc ("Ergomed") are pleased to announce that they have
reached agreement on the terms of a recommended cash acquisition pursuant to
which Bidco, a newly incorporated company controlled and indirectly wholly
owned by the Permira funds advised by Permira Advisers LLP ("Permira") (the
"Permira Funds"), will acquire the entire issued and to be issued ordinary
share capital of Ergomed (the "Acquisition").
· Under the terms of the Acquisition, each Scheme
Shareholder will be entitled to receive 1,350 pence in cash for each Ergomed
Share (the "Cash Offer"). The Acquisition values Ergomed's entire issued and
to be issued ordinary share capital at approximately £703.1 million and
represents a premium of approximately:
· 32.4 per cent. to the three-month volume weighted average
price per Ergomed Share as at the close of business on 1 September 2023, the
last Business Day before this announcement;
· 32.7 per cent. to the six-month volume weighted average price
per Ergomed Share as at the close of business on 1 September 2023, the last
Business Day before this announcement; and
· 28.3 per cent. to Ergomed's share price of 1,052 pence at the
close of business on 1 September 2023, the last Business Day before this
announcement.
The Acquisition value also provides an implied Ergomed enterprise value
multiple of approximately 24.0x its Adjusted EBITDA of £28.4 million (on an
IFRS 16 basis) for the year ended 31 December 2022, and an implied Ergomed
enterprise value multiple of approximately 21.0x its forecast Adjusted EBITDA
of £32.4 million (on an IFRS 16 basis) for the year ending 31 December 2023,
which the directors of Ergomed believe is highly attractive and at the high
end compared to relevant public precedent transactions.
· As an alternative to the Cash Offer, eligible Ergomed
Shareholders may elect for the Partial Securities Alternative (as defined in
paragraph 15 of this announcement), pursuant to which they will receive 451
pence in cash plus unlisted securities, which will ultimately be issued
pursuant to the mechanism described in paragraph 16 of this announcement
below, in the capital of Eden Topco Limited ("Topco") ("Topco Units"). Ergomed
Shareholders will only be able to elect for the Partial Securities Alternative
in relation to their entire holding of Ergomed Shares and not part only.
Paragraph 15 below contains the terms and conditions of the Partial
Securities Alternative.
· If, on or after the date of this announcement and prior
to the Scheme becoming effective, any dividend, distribution or other return
of capital is declared, made or paid by Ergomed, the Cash Offer (and, as the
case may be, the consideration due under the Partial Securities Alternative)
shall be reduced accordingly. In such circumstances, Ergomed Shareholders
would be entitled to retain any such dividend, distribution or other return of
capital declared, made or paid.
Background to and reasons for the Acquisition
· Permira believes Ergomed is a differentiated platform in
the outsourced pharma services sector with a strong track record in the
Pharmacovigilance ("PV") and Contract Research Organisation ("CRO") spaces.
· Ergomed operates in structurally growing markets,
benefitting from tailwinds of increasing complexity, regulatory requirements
and outsourcing rates. Permira believes that Ergomed has built a strong PV
business with an excellent reputation for medical and scientific expertise, as
well as a specialised CRO business, which is well-positioned to compete in
attractive therapeutic areas against mid-sized and large CROs.
· Permira recognises the strong progress that the
management team have made in recent years, including the strengthening of both
CRO and PV capabilities through acquisitions. However, Permira believes
Ergomed is better able to achieve its long-term growth potential as a private
company than as a public company. Permira is well positioned to support
Ergomed's next phase of growth by investing into the commercial expansion and
technological transformation of the business as well as providing, where
needed, additional capital to undertake transformational M&A.
· Permira has a strong track record in the Healthcare
sector deploying capital and expertise into growth-orientated businesses and
supporting their management teams in achieving their strategic ambitions.
Permira has accumulated deep industry-specific knowledge and a strong network
in the Healthcare space, particularly within the pharma and pharma services
sector, allowing it to support driving the next phase of growth for Ergomed.
Recommendation
· The directors of Ergomed, who have been so advised by
Jefferies and Numis as to the financial terms of the Cash Offer, consider the
terms of the Cash Offer to be fair and reasonable. In providing its advice to
the directors of Ergomed, Jefferies and Numis have taken into account the
commercial assessments of the directors of Ergomed. Jefferies and Numis are
providing independent financial advice to the directors of Ergomed for the
purposes of Rule 3 of the Code.
· Accordingly, the directors of Ergomed unanimously
recommend that Ergomed Shareholders vote in favour of the Scheme at the Court
Meeting and the resolutions to be proposed at the General Meeting (and, if the
Acquisition is subsequently structured as a Takeover Offer, to accept any
Takeover Offer made by Bidco) as Miroslav Reljanović (the "Founder") has
irrevocably undertaken to do in respect of his own Ergomed Shares
(representing approximately 18.0 per cent. of the issued ordinary share
capital of Ergomed). The other directors of Ergomed do not hold Ergomed
Shares, however have irrevocably undertaken to accept any proposals made by
Bidco in accordance with Rule 15 of the Code that have been agreed between
Bidco and Ergomed in respect of any options granted to them under the Ergomed
Share Schemes.
· In considering the terms of the Partial Securities
Alternative, Jefferies, Numis and the directors of Ergomed have considered the
key disadvantages and advantages of electing for the Partial Securities
Alternative outlined below:
· Disadvantages of electing for the Partial Securities
Alternative:
o The Topco Units will be:
· unlisted and will not be admitted to trading on any stock exchange
and will therefore be illiquid. Any assessment of the value of the Topco Units
should therefore take into account an individual shareholder's assessment of
an appropriate liquidity discount;
· subject to a five-year lock-up restriction, during which they can
only be transferred in very limited circumstances, and thereafter will be
subject to a right of first refusal on the part of Eden SPV, an entity
controlled and indirectly wholly owned by the Permira Funds; and
· of uncertain value and there can be no assurance that they will be
capable of being sold in the future;
o Upon the Effective Date, the Topco Group will be controlled by the Permira
Funds (through Eden SPV) and holders of the Topco Units, which do not carry
any general voting rights at general meetings of Topco and will have consent
rights only in respect of a very limited number of reserved matters, will
therefore have no influence over decisions made by Topco in relation to its
investment in Ergomed or in any other business;
o The percentage ownership of Topco attributable to Ergomed Shareholders who
elect for the Partial Securities Alternative, but do not subsequently provide
the cash funds required to accept their entitlements pursuant to any further
issue of securities by Topco in the period following the Effective Date, would
be significantly reduced;
o Eligible Ergomed Shareholders will only be able to elect for the Partial
Securities Alternative in relation to their entire holding of Ergomed Shares
and not part only; and
o Ergomed Shareholders will have no certainty as to the amount of Topco
Units they would receive because:
· the maximum number of Topco Units available to Ergomed Shareholders
under the Partial Securities Alternative will be limited to the equivalent of
20.0 per cent. of the Topco Offer Shares; and
· to the extent that elections for the Partial Securities Alternative
cannot be satisfied in full, the number of Topco Units to be issued in respect
of each Ergomed Share will be rounded down on a pro rata basis, and the
balance of the consideration for each Ergomed Share will be paid in cash in
accordance with the terms of the Cash Offer.
· Advantages of electing for the Partial Securities
Alternative:
o The Partial Securities Alternative allows Ergomed Shareholders to invest
directly in the recapitalised Ergomed Group, providing continued economic
exposure to a private equity owned enterprise without incurring ongoing
management fees;
o The Partial Securities Alternative allows Ergomed Shareholders to
participate in future value creation and may ultimately deliver greater value
than the Cash Offer (although this cannot be guaranteed); and
o From completion of the Acquisition, the Topco Units will rank economically
pari passu with the investment (via Eden SPV) in Topco by the Permira Funds,
and will carry pro rata entitlement to dividends, distributions and returns of
capital.
· Jefferies and Numis are unable to advise the directors of
Ergomed as to whether or not the financial terms of the Partial Securities
Alternative are fair and reasonable. This is because of the significant and
variable impact of the disadvantages and advantages of the Partial Securities
Alternative for individual Ergomed Shareholders including, in terms of the
advantages, in particular, the ability to participate in the future value
creation of the Ergomed Group, and in terms of the disadvantages, in
particular, the terms of the Topco Units including the fact that they are
illiquid and subject to a five-year lock-up period, the level of uncertainty
in their future value, and the potential dilution that would result if an
Ergomed Shareholder did not fund their pre-emptive entitlement pursuant to any
further issue of securities by Topco in the period following the Effective
Date.
· Accordingly, the directors of Ergomed are unable to form
an opinion as to whether or not the terms of the Partial Securities
Alternative are fair and reasonable and are not making any recommendation to
Ergomed Shareholders as to whether or not they should elect for the Partial
Securities Alternative.
· Ergomed Shareholders are encouraged to take into account
the key advantages and disadvantages outlined in paragraph 4 in relation to
the Partial Securities Alternative, as well as their particular circumstances,
when deciding whether to elect for the Partial Securities Alternative. Ergomed
Shareholders should also ascertain whether acquiring or holding Topco Units is
affected by the laws of the relevant jurisdiction in which they reside and
consider whether Topco Units are a suitable investment in light of their own
personal circumstances. Accordingly, Ergomed Shareholders are strongly
recommended to seek their own independent financial, tax and legal advice in
light of their own particular circumstances and investment objectives before
deciding whether to elect for the Partial Securities Alternative. Any decision
to elect for the Partial Securities Alternative should be based on independent
financial, tax and legal advice and full consideration of this announcement
and the Scheme Document (when published).
Background to and reasons for the recommendation
· Whilst the directors of Ergomed have full confidence that
Ergomed is well positioned for future continued success and that its long-term
prospects are strong as an independent listed entity, they strongly believe
that the recommended offer fairly reflects the strength of the Ergomed
business today and its future prospects and provides an opportunity for
Ergomed Shareholders to realise their investment in Ergomed, in cash, at an
attractive price and a very favourable acquisition multiple. Furthermore, the
directors of Ergomed believe that the opportunity presented for value creation
through investing in its technology and its commercial infrastructure would be
best captured in a private company environment.
Shareholder support
· Bidco has received an irrevocable undertaking from the
Founder to vote in favour of the Scheme at the Court Meeting and the
resolutions to be proposed at the General Meeting, and to elect to receive the
Partial Securities Alternative, in respect of the 9,129,297 Ergomed Shares
owned by him, being his entire holding of Ergomed Shares and approximately
18.0 per cent. of the existing issued ordinary share capital of Ergomed on 1
September 2023 (being the last Business Day prior to the date of this
announcement). The other directors of Ergomed do not hold Ergomed Shares,
however have irrevocably undertaken to accept any proposal made by Bidco in
accordance with Rule 15 of the Code that has been agreed between Bidco and
Ergomed in respect of any options granted to them under the Ergomed Share
Schemes.
· In addition, Bidco has received a non-binding letter of
intent to vote in favour of the Scheme at the Court Meeting and the
resolutions to be proposed at the General Meeting from Amati Global Investors
Limited in respect of 1,114,609 Ergomed Shares representing approximately 2.2
per cent. of the existing issued ordinary share capital of Ergomed on 1
September 2023 (being the last Business Day prior to the date of this
announcement).
· In total, therefore, Bidco has received irrevocable
undertakings and a non-binding letter of intent to vote in favour of the
Scheme at the Court Meeting and the resolutions to be proposed at the General
Meeting in respect of 10,243,906 Ergomed Shares representing approximately
20.2 per cent. of Ergomed's issued ordinary share capital as at the close of
business on 1 September 2023 (being the last Business Day prior to the date of
this announcement).
· Further details of these irrevocable undertakings and the
letter of intent (including the circumstances in which they may lapse) are set
out in Appendix 3 to this announcement.
Timetable and Conditions
· It is intended that the Acquisition will be implemented
by means of a Court-sanctioned scheme of arrangement under Part 26 of the
Companies Act (the "Scheme"). It is expected that the Scheme Document,
containing further information about the Acquisition and notices of the Court
Meeting and General Meeting, together with the Forms of Proxy, will be sent to
Ergomed Shareholders and (for information only) participants in the Ergomed
Share Schemes as soon as practicable and that the Scheme will be effective
during Q1 2024, subject to the satisfaction or (where applicable) waiver of
all relevant conditions, including the Conditions and certain further terms
set out in Appendix 1 to this announcement.
· Bidco reserves the right to implement the Acquisition by
way of a Takeover Offer, subject to the Panel's consent and the terms of the
Co-operation Agreement.
· Commenting on the Acquisition, Silvia Oteri, Partner and
Head of Healthcare at Permira said:
"We are delighted to be announcing this recommended cash acquisition of
Ergomed, a high quality, medic-led and fast growing pharma services platform.
We look forward to partnering with the Ergomed management team in accelerating
Ergomed's growth and fulfilling its vision of becoming the leading
pharmacovigilance and rare disease clinical development partner to pharma and
biotech clients to safely commercialise complex and often life-saving
therapies for patients. Miro and his team have built a very strong foundation
and as we look to the next phase of Ergomed's growth, we will continue to
support commercial expansion, new capabilities and technological innovation,
via investments into the business as well as transformational M&A."
· Commenting on the Acquisition, John Dawson, Senior
Independent Director of Ergomed said:
"The Ergomed Board is pleased to have had a proven track record of
consistently delivering on its growth strategy through organic growth,
geographical expansion and an effective acquisition strategy.
"While this strategy is anticipated to generate substantial long-term value
for shareholders, we also note that the next phase of growth will require
investment into the commercial expansion and technological transformation of
the business as well as additional capital to undertake transformational
M&A.
"The offer from the Permira Funds, which follows multiple rounds of
negotiations and extensive discussions on valuation, represents a highly
attractive valuation and offers shareholders the certainty of cash today. The
Acquisition also fairly reflects the exceptional quality of the Ergomed
business, its people and its future prospects. Under the Permira Funds'
private ownership, Ergomed will be able to pursue its organic growth strategy,
while benefiting from the expertise and capital to accelerate its acquisitive
growth plan. Accordingly, following careful consideration, the Board intends
to recommend unanimously that Ergomed Shareholders vote in favour of the
Acquisition."
Commenting on the Acquisition, Miroslav Reljanović, Executive Chairman of
Ergomed said:
"Since IPO, Ergomed has grown significantly to become a global, geographically
diversified player in the CRO and PV sectors. This journey has delivered
significant value for shareholders through consistent growth in revenue,
EBITDA and free cash flow.
"We believe the Acquisition by the Permira Funds now represents an excellent
opportunity for Ergomed shareholders to realise value at a highly attractive
valuation and at the same time allow Ergomed to most effectively deliver
against its ambitious growth strategy.
"Private ownership by funds advised by Permira, a highly-experienced
healthcare investor with a track record of building successful UK-based,
global businesses, will allow us to build on the foundations we have created.
It also brings with it opportunities to access their operational expertise,
global network and capital. As a result, we believe the Acquisition will
significantly increase our ability to invest in our commercial infrastructure,
technology transformation and to execute transformational M&A, in both the
CRO and PV businesses. We are therefore unanimously recommending it to our
shareholders."
This summary should be read in conjunction with, and is subject to, the full
text of the following announcement (including its Appendices). The Acquisition
will be subject to the Conditions and certain further terms set out in
Appendix 1 and to the full terms and conditions to be set out in the Scheme
Document. Appendix 2 contains the sources and bases of certain information
contained in this summary and the following announcement. Appendix 3
contains details of the irrevocable undertakings and the letter of intent
received by Bidco in relation to the Acquisition. Appendix 4 contains details
of Topco, the Topco Units and eligibility to subscribe for the Topco Units.
Appendix 5 contains details of the FY23 Ergomed Profit Forecast. Appendix 6
contains the definitions of certain terms used in this summary and the
following announcement.
This announcement is being made on behalf of Ergomed by Miroslav Reljanović,
Executive Chairman.
Enquiries
Rothschild & Co (financial adviser to Bidco and Permira) +44 (0) 20 7280 5000
Julian Hudson
Aashis Mehta
Andrew Davison
Headland Consultancy Limited (PR adviser to Bidco and Permira) +44 (0) 20 3805 4822
Lucy Legh
Rob Walker
Charlie Twigg
Ergomed +44 (0) 1483 402 975
Miroslav Reljanović (Executive Chairman)
Jonathan Curtain (Chief Financial Officer)
Keith Byrne (Senior Vice President, Capital Markets and Strategy)
Jefferies (Joint financial adviser to Ergomed) +44 (0) 20 7029 8000
Michael Gerardi
Matthew Miller
Paul Bundred
James Umbers
Numis (Joint financial adviser, Nominated adviser and Joint Broker to Ergomed) +44 (0) 20 7260 1000
Freddie Barnfield
Stuart Ord
Alexander Kladov
Euan Brown
Peel Hunt (Joint Broker to Ergomed) +44 (0) 20 7418 8900
James Steel
John Welch
Dr Christopher Golden
Consilium Strategic Communications (PR adviser to Ergomed) +44 (0) 20 3709 5700
Chris Gardner
Matthew Neal
Freshfields Bruckhaus Deringer LLP is acting as legal adviser to Bidco and
Permira in connection with the Acquisition. Covington & Burling LLP is
acting as legal adviser to Ergomed in connection with the Acquisition.
Further information
This announcement is not intended to and does not constitute, or form part of,
an offer, invitation or the solicitation of an offer to purchase, otherwise
acquire, subscribe for, sell or otherwise dispose of any securities, or the
solicitation of any vote or approval in any jurisdiction, pursuant to the
Acquisition or otherwise, nor shall there be any sale, issuance or transfer of
securities of Ergomed in any jurisdiction in contravention of applicable law.
The Acquisition will be made solely by means of the Scheme Document (or, if
the Acquisition is implemented by way of a Takeover Offer, any document by
which the Takeover Offer is made), which will contain the full terms and
conditions of the Acquisition including details of how to vote in respect of
the Acquisition. Any vote in respect of the Scheme or other response in
relation to the Acquisition should be made only on the basis on the
information contained in the Scheme Document.
Please be aware that addresses, electronic addresses and certain other
information provided by Ergomed Shareholders, persons with information rights
and other relevant persons for the receipt of communications from Ergomed may
be provided to Bidco during the Offer Period as required under Section 4 of
Appendix 4 of the Code to comply with Rule 2.11(c).
N.M. Rothschild & Sons Limited ("Rothschild & Co"), which is
authorised and regulated by the Financial Conduct Authority in the United
Kingdom, is acting exclusively for Bidco and Permira and for no‑one else in
connection with the Acquisition and will not regard any other person as its
client in relation to the Acquisition and will not be responsible to anyone
other than Bidco and Permira for providing the protections afforded to clients
of Rothschild & Co, nor for providing advice in relation to any matter
referred to in this announcement.
Jefferies International Limited ("Jefferies"), which is authorised and
regulated by the Financial Conduct Authority in the United Kingdom, is acting
exclusively for Ergomed and no one else in connection with the matters set out
in this announcement and will not regard any other person as its client in
relation to the matters in this announcement and will not be responsible to
anyone other than Ergomed for providing the protections afforded to clients of
Jefferies nor for providing advice in relation to any matter referred to in
this announcement or any transaction or arrangement referred to herein.
Neither Jefferies nor any of its affiliates 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 Jefferies in connection with this announcement, any statement
contained herein, any transaction or arrangement referred to herein, or
otherwise.
Numis Securities Limited ("Numis") which is authorised and regulated by the
Financial Conduct Authority in the United Kingdom, is acting exclusively for
Ergomed and no one else in connection with the matters set out in this
announcement and will not regard any other person as its client in relation to
the matters in this announcement and will not be responsible to anyone other
than Ergomed for providing the protections afforded to clients of Numis nor
for providing advice in relation to any matter referred to in this
announcement or any transaction or arrangement referred to herein. Numis is
not responsible for the contents of this announcement. Neither Numis nor any
of its affiliates 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 Numis in connection
with this announcement, any statement contained herein, any transaction or
arrangement referred to herein, or otherwise.
Peel Hunt LLP ("Peel Hunt") which is authorised and regulated by the Financial
Conduct Authority in the United Kingdom, is acting exclusively for Ergomed and
no one else in connection with the matters set out in this announcement and
will not regard any other person as its client in relation to the matters in
this announcement and will not be responsible to anyone other than Ergomed for
providing the protections afforded to clients of Peel Hunt nor for providing
advice in relation to any matter referred to in this announcement or any
transaction or arrangement referred to herein. Peel Hunt is not responsible
for the contents of this announcement. Neither Peel Hunt nor any of its
affiliates 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 Peel Hunt in connection with
this announcement, any statement contained herein, any transaction or
arrangement referred to herein, or otherwise.
Overseas jurisdictions
The release, publication or distribution of this announcement in or into
jurisdictions other than the UK or the United States may be restricted by law
and therefore any persons who are subject to the law of any jurisdiction other
than the UK or the United States should inform themselves about, and observe,
any applicable legal or regulatory requirements. In particular the ability of
persons who are not resident in the United Kingdom, to vote their Ergomed
Shares with respect to the Scheme at the Court Meeting, or to appoint another
person as proxy to vote at the Court Meeting on their behalf, may be affected
by the laws of the relevant jurisdictions in which they are located. Any
failure to comply with the applicable restrictions may constitute a violation
of the securities laws of any such jurisdiction. To the fullest extent
permitted by applicable law, the companies and persons involved in the
Acquisition disclaim any responsibility or liability for the violation of such
restrictions by any person. This announcement has been prepared for the
purposes of complying with English law and the 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 of jurisdictions
outside of England.
Copies of this announcement and formal documentation relating to the
Acquisition will not be and must not be, mailed or otherwise forwarded,
distributed or sent in, into or from any Restricted Jurisdiction or any
jurisdiction where to do so would violate the laws of that jurisdiction and
persons receiving such documents (including custodians, nominees and trustees)
must not mail or otherwise forward, distribute or send them in or into or from
any Restricted Jurisdiction. Doing so may render invalid any related purported
vote in respect of the Acquisition. If the Acquisition is implemented by way
of Takeover Offer (unless otherwise permitted by applicable law or
regulation), the Takeover Offer may not be made, directly or indirectly, in or
into or by use of the mails or any other means or instrumentality (including,
without limitation, facsimile, email or other electronic transmission, telex
or telephone) of interstate or foreign commerce of, or any facility of a
national, state or other securities exchange of any Restricted Jurisdiction
and the Takeover Offer will not be capable of acceptance by any such use,
means, instrumentality or facilities or from within any Restricted
Jurisdiction.
Further details in relation to Overseas Shareholders will be contained in the
Scheme Document.
Additional information for US investors
The Acquisition is being made to acquire the securities of an English company
by means of a scheme of arrangement provided for under English law. A
transaction effected by means of a scheme of arrangement is not subject to the
tender offer rules under the US Exchange Act. Accordingly, the Scheme will be
subject to disclosure requirements and practices applicable in the UK to
schemes of arrangement, which are different from the disclosure requirements
of the US tender offer rules. The financial information included in this
announcement and the Scheme documentation has been or will have been prepared
in accordance with UK-adopted International Financial Reporting Standards and
thus may not be comparable to financial information of US companies or
companies whose financial statements are prepared in accordance with generally
accepted accounting principles in the US. If Bidco exercises its right to
implement the acquisition of the Ergomed Shares by way of a Takeover Offer,
such offer will be made in compliance with applicable US laws and regulations.
The receipt of cash pursuant to the Acquisition by a US holder as
consideration for the transfer of its Scheme Shares pursuant to the Scheme
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 Ergomed Shareholder is urged to consult his
independent professional adviser immediately regarding the tax consequences of
the Acquisition applicable to them.
The Bidco loan notes and the Topco Units issued under the Partial Securities
Alternative will not be registered under the US Securities Act of 1933 (the
"Securities Act"). Bidco expects to issue the Bidco loan notes and Topco
expects to issue the Topco Units in reliance upon the exemption from the
registration requirements of the Securities Act provided by Section 3(a)(10)
thereof. ("Section 3(a)(10)"). Section 3(a)(10) exempts securities issued in
specified exchange transactions from the registration requirement under the
Securities Act where, among other things, the fairness of the terms and
conditions of the issuance and exchange of such securities have been approved
by a court or governmental authority expressly authorised by law to grant such
approval, after a hearing upon the fairness of the terms and conditions of the
exchange at which all persons to whom the Bidco loan notes or Topco Units are
proposed to be issued have the right to appear; and receive adequate and
timely notice thereof.
The Bidco loan notes and the Topco Units that may be issued pursuant to the
Acquisition have not been and will not be registered under the US Securities
Act or under the relevant securities laws of any state or territory or other
jurisdiction of the United States and will not be listed on any stock
exchange. Neither the US Securities and Exchange Commission nor any US state
securities commission has approved or disapproved of the Partial Securities
Alternative or determined if the Scheme Document is accurate or complete. Any
representation to the contrary is a criminal offence.
It may be difficult for US holders to enforce their rights and claims arising
out of the US federal securities laws, since Bidco and Ergomed are located in
countries other than the US, and some or all of their officers and directors
may be residents of countries other than the US. US holders may not be able to
sue a non-US company or its officers or directors in a non-US court for
violations of US securities laws. Further, it may be difficult to compel a
non-US company and its affiliates to subject themselves to a US court's
judgement.
In the event that the Acquisition is implemented by way of a Takeover Offer,
in accordance with normal UK practice and pursuant to Rule 14e-5(b) of the US
Exchange Act, Bidco or its nominees, or its brokers (acting as agents), may
from time to time make certain purchases of, or arrangements to purchase,
Ergomed Shares outside the United States, other than pursuant to the Takeover
Offer, before or during the period in which the Takeover Offer remains open
for acceptance. These purchases may occur either in the open market at
prevailing prices or in private transactions at negotiated prices. Any
information about such purchases will be disclosed as required in the UK, will
be reported to a Regulatory Information Service and will be available on the
London Stock Exchange website, www.londonstockexchange.com.
Forward looking statements
This announcement (including information incorporated by reference in this
announcement), oral statements made regarding the Acquisition, and other
information published by Bidco and Ergomed contain statements which are, or
may be deemed to be, "forward-looking statements". Forward-looking statements
are prospective in nature and are not based on historical facts, but rather on
current expectations and projections of the management of Bidco and Ergomed
about future events, and are therefore subject to risks and uncertainties
which could cause actual results to differ materially from the future results
expressed or implied by the forward-looking statements. The forward-looking
statements contained in this announcement include statements relating to the
expected effects of the Acquisition on Bidco and Ergomed, the expected timing
and scope of the Acquisition and other statements other than historical facts.
Often, but not always, forward-looking statements can be identified by the use
of forward-looking words such as "plans", "expects" or "does not expect", "is
expected", "is subject to", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates" or "does not anticipate", or "believes", or
variations of such words and phrases or statements that certain actions,
events or results "may", "could", "should", "would", "might" or "will" be
taken, occur or be achieved. Although Bidco and Ergomed believe that the
expectations reflected in such forward-looking statements are reasonable,
Bidco and Ergomed can give no assurance that such expectations will prove to
be correct. By their nature, forward-looking statements involve risk and
uncertainty 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 and developments to differ materially from those expressed or
implied by such forward-looking statements. These factors include the
satisfaction of the Conditions, as well as additional factors, such as: the
general economic climate; competition; interest rate levels; loss of key
personnel; the availability of financing on acceptable terms; and changes in
the legal or regulatory environment. Other unknown or unpredictable factors
could cause actual results to differ materially from those in the
forward-looking statements. Such forward-looking statements should therefore
be construed in the light of such factors. Neither Bidco, Permira nor Ergomed,
nor any of their respective associates or directors, officers or advisers,
provides any representation, assurance or guarantee that the occurrence of the
events expressed or implied in any forward-looking statements in this
announcement will actually occur. You are cautioned not to place undue
reliance on these forward-looking statements. Other than in accordance with
their legal or regulatory obligations, neither Bidco nor Ergomed is under any
obligation, and Bidco and Ergomed expressly disclaim any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
No profit forecasts, estimates or qualified benefits statements
The FY23 Ergomed Profit Forecast is a profit forecast for the purpose of Rule
28 of the Code. The FY23 Ergomed Profit Forecast, the assumptions and basis of
preparation on which the FY23 Ergomed Profit Forecast is based and the
directors' of Ergomed confirmation, as required by Rule 28.1 of the Code, are
set out in Appendix 5 of this announcement.
Other than the FY23 Ergomed Profit Forecast, no statement in this
announcement, or incorporated by reference in this announcement, is intended
as a profit forecast, profit estimate or quantified benefits statement for any
period and no statement in this announcement should be interpreted to mean
that earnings or earnings per share for Ergomed for the current or future
financial years would necessarily match or exceed the historical published
earnings or earnings per share for Ergomed.
Dealing disclosure requirements
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 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.
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 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, (https://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.
Publication on website and hard copies
A copy of this announcement and the documents required to be published by Rule
26 of the Code will be made available, subject to certain restrictions
relating to persons resident in Restricted Jurisdictions, on Bidco's website
at permira.com/news-and-insights/news/permira-offer-for-ergomed and Ergomed's
website at www.ergomedplc.com. For the avoidance of doubt, the contents of
those websites are not incorporated into and do not form part of this
announcement.
Bidco shareholders and Ergomed Shareholders may request a hard copy of this
announcement by contacting Share Registrars Limited during business hours on
+44 (0) 1252 821390 or by submitting a request in writing to Share Registrars
Limited at 3 The Millennium Centre, Crosby Way, Farnham, Surrey, GU9 7XX. If
you have received this announcement in electronic form, copies of this
announcement and any document or information incorporated by reference into
this document will not be provided unless such a request is made.
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
Bidco reserves the right to elect, with the consent of the Panel, and subject
to the terms of the Co-operation Agreement, to implement the Acquisition by
way of a Takeover Offer as an alternative to the Scheme. If the Acquisition
is effected by way of a Takeover Offer, and such offer becomes or is declared
unconditional in all respects and sufficient acceptances are received, Bidco
intends to exercise its rights to apply the provisions of Chapter 3 of Part 28
of the Companies Act so as to acquire compulsorily the remaining Ergomed
Shares in respect of which the Takeover Offer has not been accepted.
Investors should be aware that Bidco may purchase Ergomed Shares otherwise
than under any Takeover Offer or the Scheme, including pursuant to privately
negotiated purchases.
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 appropriate authorised
independent financial adviser.
This announcement contains inside information
Not for release, publication or distribution, in whole or in part, in or into
any jurisdiction where to do so would constitute a violation of the relevant
laws of such jurisdiction
4 September 2023
RECOMMENDED CASH ACQUISITION
of
ERGOMED PLC
by
EDEN ACQUISITIONCO LIMITED
A NEWLY INCORPORATED COMPANY CONTROLLED AND OWNED BY FUNDS ADVISED BY PERMIRA
ADVISERS LLP
TO BE IMPLEMENTED BY MEANS OF A SCHEME OF ARRANGEMENT
UNDER PART 26 OF THE COMPANIES ACT 2006
1. Introduction
The boards of directors of Eden AcquisitionCo Limited ("Bidco") and Ergomed
plc ("Ergomed") are pleased to announce that they have reached agreement on
the terms of a recommended cash acquisition pursuant to which Bidco, a newly
incorporated company controlled and indirectly wholly owned by the Permira
funds advised by Permira Advisers LLP ("Permira") (the "Permira Funds"), will
acquire the entire issued and to be issued ordinary share capital of Ergomed
(the "Acquisition"). It is intended that the Acquisition will be implemented
by way of a Court-sanctioned scheme of arrangement under Part 26 of the
Companies Act.
2. The Acquisition
Under the terms of the Acquisition, which will be subject to the Conditions
and further terms set out in Appendix 1 to this announcement and to be set
out in the Scheme Document, Scheme Shareholders at the Scheme Record Time will
be entitled to receive:
for each Scheme Share 1,350 pence in
cash (the "Cash Offer")
The Acquisition values Ergomed's entire issued and to be issued share capital
at approximately £703.1 million and represents a premium of approximately:
· 32.4 per cent. to the three-month volume weighted average
price per Ergomed Share as at the close of business on 1 September 2023, the
last Business Day before this announcement;
· 32.7 per cent. to the six-month volume weighted average price
per Ergomed Share as at the close of business on 1 September 2023, the last
Business Day before this announcement; and
· 28.3 per cent. to Ergomed's share price of 1,052 pence at the
close of business on 1 September 2023, the last Business Day before this
announcement.
The Acquisition value also provides an implied Ergomed enterprise value
multiple of approximately 24.0x its Adjusted EBITDA of £28.4 million (on an
IFRS 16 basis) for the year ended 31 December 2022, and an implied Ergomed
enterprise value multiple of approximately 21.0x its forecast Adjusted EBITDA
of £32.4 million (on an IFRS 16 basis) for the year ending 31 December 2023,
which the directors of Ergomed believe is highly attractive and at the high
end compared to relevant public precedent transactions.
As an alternative to the Cash Offer, eligible Ergomed Shareholders may elect
to receive for each Ergomed Share, and subject to the terms and conditions of
the Partial Securities Alternative (detailed in paragraph 15 below):
· 1.0 Topco Unit (each Topco Unit comprising 1 Topco B Ordinary
Share and 8.667 Topco B Preference Shares) plus 451 pence in cash (the
"Partial Securities Alternative")
Eligible Ergomed Shareholders will only be able to elect for the Partial
Securities Alternative in relation to their entire holding of Ergomed Shares
and not part only.
The Topco Units will be independently valued and an estimate of the value of
the Topco Units will be included in the Scheme Document. Further information
about the Topco Units is set out in paragraph 16 and Appendix 4 and will
also be included in the Scheme Document.
If, on or after the date of this announcement and prior to the Scheme becoming
effective, any dividend and/or other distribution and/or other return of
capital is declared, made or paid or becomes payable in respect of the Ergomed
Shares, Bidco reserves the right to reduce the cash consideration payable
under the Cash Offer (or, as the case may be, the consideration due under the
Partial Securities Alternative) under the terms of the Acquisition at such
date by an amount up to the amount of such dividend and/or distribution and/or
return of capital. In such circumstances, Ergomed Shareholders would be
entitled to retain any such dividend, distribution or other return of capital
declared, made or paid.
3. Background to and reasons for the Acquisition
Permira believes Ergomed is a differentiated platform in the outsourced pharma
services sector with a strong track record in the Pharmacovigilance ("PV") and
Contract Research Organisation ("CRO") spaces.
Ergomed operates in structurally growing markets, benefitting from tailwinds
of increasing complexity, regulatory requirements and outsourcing rates.
Permira believes that Ergomed has built a strong PV business with an excellent
reputation in medical and scientific expertise as well as a specialised CRO
business, which is well-positioned to compete in attractive therapeutic areas
against mid-sized and large CROs.
Permira recognises the strong progress that the management team have made in
recent years, including the strengthening of both CRO and PV capabilities
through acquisitions. However, Permira believes Ergomed is better able to
achieve its long-term growth potential as a private company than as a public
company. Permira is well positioned to support Ergomed's next phase of growth
by investing into the commercial expansion and technological transformation of
the business as well as providing, where needed, additional capital to
undertake transformational M&A.
Permira has a strong track record in the Healthcare sector deploying capital
and expertise into growth-orientated businesses and supporting their
management teams in achieving their strategic ambitions. Permira has
accumulated deep industry-specific knowledge and a strong network in the
Healthcare space, particularly within the pharma and pharma services sector,
allowing it to support driving the next phase of growth for Ergomed.
4. Recommendation
The directors of Ergomed, who have been so advised by Jefferies and Numis as
to the financial terms of the Cash Offer, consider the terms of the Cash Offer
to be fair and reasonable. In providing its advice to the directors of
Ergomed, Jefferies and Numis have taken into account the commercial
assessments of the directors of Ergomed. Jefferies and Numis are providing
independent financial advice to the directors of Ergomed for the purposes of
Rule 3 of the Code.
Accordingly, the directors of Ergomed unanimously recommend that Ergomed
Shareholders vote in favour of the Scheme at the Court Meeting and the
resolutions to be proposed at the General Meeting (and, if the Acquisition is
subsequently structured as a Takeover Offer, to accept any Takeover Offer made
by Bidco) as Miroslav Reljanović (the "Founder") has irrevocably undertaken
to do in respect of his own Ergomed Shares (representing approximately 18.0
per cent. of the issued ordinary share capital of Ergomed). The other
directors of Ergomed do not hold Ergomed Shares, however have irrevocably
undertaken to accept any proposal made by Bidco in accordance with Rule 15 of
the Code that has been agreed between Bidco and Ergomed in respect of any
options granted to them under the Ergomed Share Schemes.
In considering the terms of the Partial Securities Alternative, Jefferies,
Numis and the directors of Ergomed have considered the key disadvantages and
advantages of electing for the Partial Securities Alternative outlined below:
Disadvantages of electing for the Partial Securities Alternative:
o The Topco Units will be:
· unlisted and will not be admitted to trading on any stock exchange
and will therefore be illiquid. Any assessment of the value of the Topco Units
should therefore take into account an individual shareholder's assessment of
an appropriate liquidity discount;
· subject to the Lock-up Period, during which they can only be
transferred in very limited circumstances, and thereafter will be subject to a
right of first refusal on the part of Eden SPV, an entity controlled and
indirectly wholly owned by the Permira Funds; and
· of uncertain value and there can be no assurance that they will be
capable of being sold in the future;
o On the Effective Date, the Topco Group will be controlled by the Permira
Funds (through Eden SPV) and holders of the Topco Units, which do not carry
any general voting rights at general meetings of Topco and will have consent
rights only in respect of a very limited number of reserved matters, will
therefore have no influence over decisions made by Topco in relation to its
investment in Ergomed or in any other business;
o The percentage ownership of Topco attributable to Ergomed Shareholders who
elect for the Partial Securities Alternative, but do not subsequently provide
the cash funds required to accept their entitlements pursuant to any further
issue of securities by Topco in the period following the Effective Date, would
be significantly reduced;
o Ergomed Shareholders will only be able to elect for the Partial Securities
Alternative in relation to their entire holding of Ergomed Shares and not part
only; and
o Ergomed Shareholders will have no certainty as to the amount of Topco
Units they would receive because:
· the maximum number of Topco Units available to Ergomed Shareholders
under the Partial Securities Alternative will be limited to the equivalent of
20.0 per cent. of the Topco Offer Shares; and
· to the extent that elections for the Partial Securities Alternative
cannot be satisfied in full, the number of Topco Units to be issued in respect
of each Ergomed Share will be rounded down on a pro rata basis, and the
balance of the consideration for each Ergomed Share will be paid in cash in
accordance with the terms of the Cash Offer.
Advantages of electing for the Partial Securities Alternative:
o The Partial Securities Alternative allows Ergomed Shareholders to invest
directly in the recapitalised Ergomed Group, providing continued economic
exposure to a private equity owned enterprise without incurring ongoing
management fees;
o The Partial Securities Alternative allows Ergomed Shareholders to
participate in future value creation and may ultimately deliver greater value
than the Cash Offer (although this cannot be guaranteed); and
o From completion of the Acquisition, the Topco Units will rank economically
pari passu with the investment (via Eden SPV) in Topco by the Permira Funds
and will carry pro rata entitlement to dividends, distributions and returns of
capital.
Jefferies and Numis are unable to advise the directors of Ergomed as to
whether or not the financial terms of the Partial Securities Alternative are
fair and reasonable. This is because of the significant and variable impact of
the disadvantages and advantages of the Partial Securities Alternative for
individual Ergomed Shareholders including, in terms of the advantages in
particular, the ability to participate in the future value creation of the
Ergomed Group, and in terms of the disadvantages, in particular, the terms of
the Topco Units including the fact that they are illiquid and subject to the
Lock-up Period, the level of uncertainty in their future value, and the
potential dilution that would result if an Ergomed Shareholder did not fund
their pre-emptive entitlement pursuant to any further issue of securities by
Topco in the period following the Effective Date.
Accordingly, the directors of Ergomed are unable to form an opinion as to
whether or not the terms of the Partial Securities Alternative are fair and
reasonable and are not making any recommendation to Ergomed Shareholders as to
whether or not they should elect for the Partial Securities Alternative. The
intended elections of the directors of Ergomed in respect of their own
beneficial holdings of Ergomed Shares (if any) will be set out in the Scheme
Document.
Ergomed Shareholders are encouraged to take into account the key advantages
and disadvantages outlined in this paragraph 4 in relation to the Partial
Securities Alternative, as well as their particular circumstances, when
deciding whether to elect for the Partial Securities Alternative. Ergomed
Shareholders should also ascertain whether acquiring or holding Topco Units is
affected by the laws of the relevant jurisdiction in which they reside and
consider whether Topco Units are a suitable investment in light of their own
personal circumstances. Accordingly, Ergomed Shareholders are strongly
recommended to seek their own independent financial, tax and legal advice in
light of their own particular circumstances and investment objectives before
deciding whether to elect for the Partial Securities Alternative. Any decision
to elect for the Partial Securities Alternative should be based on independent
financial, tax and legal advice and full consideration of this announcement
and the Scheme Document (when published).
Each of Jefferies and Numis has given and not withdrawn its consent to the
inclusion in this announcement of reference to its advice to the directors of
Ergomed in the form and context in which they appear.
5. Background to and reasons for the recommendation
Ergomed has recently enjoyed the 25(th) anniversary since its inception with a
proud and proven track record of consistently delivering on its growth
strategy through organic growth, geographical expansion and an effective
acquisition strategy.
The directors of Ergomed believe that in order to maintain its strong market
positions and high growth levels, Ergomed will benefit from continuing to
expand its capabilities and geographic presence to compete with larger CROs
for the larger global trials, the sponsors of whom expect their providers to
have such capabilities. The directors of Ergomed acknowledge that to achieve
the desired capabilities to compete with global CROs, Ergomed will need to
invest materially in its commercial infrastructure and commercial workforce.
These capabilities can clearly be accelerated through acquisitions and as
Ergomed has grown in scale, the size and complexity of acquisition
opportunities that Ergomed has sought to execute has increased commensurately.
In recent years, the directors of Ergomed have become increasingly of the
opinion that Ergomed being a business that is publicly listed in the United
Kingdom is acting as a structural impediment to successfully executing
acquisition opportunities. This has been evidenced through Ergomed failing to
acquire a number of transformative targets despite being in a competitive
position from a valuation perspective. The directors of Ergomed believe that
this dynamic is due to, amongst other things:
o as a publicly listed business in the United Kingdom, Ergomed maintains a
conservative leverage structure. A disadvantage of this approach is that it
results in Ergomed being unable to meaningfully increase leverage to
facilitate larger acquisition opportunities;
o given Ergomed's conservative balance sheet structure, larger acquisition
opportunities will typically require a proportion of the proceeds to be funded
through raising new equity. Ergomed has found that the process for raising
new equity in the United Kingdom is viewed by vendors as creating significant
execution risk. Ergomed has, as a result, been viewed by such vendors as a
sub-optimal counterparty in a number of acquisition processes for significant
strategic and transformational targets where it would have required a
significant equity raise to partially fund the consideration; and
o as a publicly listed business in the United Kingdom, there are many
attractive acquisition opportunities where the vendor would be reluctant to
accept Ergomed shares as part, or in full, as consideration.
The directors of Ergomed explored potential solutions to address this issue,
which were aligned with remaining listed on AIM, including discussions with a
number of private equity parties regarding a potential minority investment
through a private investment in public equity ("PIPE") structure. Having
assessed these options and following engagement with a number of potential
counterparties, the directors of Ergomed concluded that it would be very
challenging to successfully execute a PIPE for a business listed in the United
Kingdom given, amongst other things, the strong preference from private equity
parties to secure a control position on their investments and the dilutive
impact of any potential equity raise upon existing Ergomed Shareholders.
During these PIPE discussions, from 11 July 2023, Permira approached the
directors of Ergomed with a number of proposals to acquire the entire issued
and to be issued ordinary share capital of Ergomed.
Bidco's Cash Offer of 1,350 pence per Ergomed Share follows multiple rounds of
negotiations and extensive discussions on valuation, resulting in a
significant increase in value compared to the initial proposal.
In assessing the proposals from Permira, the directors of Ergomed undertook a
detailed assessment of the standalone, fundamental value of Ergomed, as well
as how that value might translate into the Ergomed Share price over time.
Within that detailed assessment, the directors of Ergomed also took into
account the implied valuation multiple being proposed and how that compared to
recent transactions in the sector.
Whilst the directors of Ergomed have full confidence in Ergomed being well
positioned for future continued success and that its long-term prospects are
strong as an independent listed entity, they strongly believe that the
recommended offer fairly reflects the strength of the Ergomed business today
and its future prospects and provides an opportunity for Ergomed Shareholders
to realise their investment in Ergomed, in cash, at an attractive price and a
very favourable acquisition multiple. Furthermore, the directors of Ergomed
believe that the opportunity presented for value creation through investing in
its technology and its commercial infrastructure would be best captured in
private company environment.
The directors of Ergomed note that, in particular, the Acquisition represents:
o a significant premium of 32.4 per cent. and 28.3 per cent. respectively to
the three-month volume weighted average price per Ergomed Share and Ergomed's
share price as at the close of business on 1 September 2023, the last Business
Day before this announcement; and
o an implied Ergomed enterprise value multiple of approximately 24.0x its
Adjusted EBITDA of £28.4 million (on an IFRS 16 basis) for the year ended 31
December 2022, and an implied Ergomed enterprise value multiple of
approximately 21.0x its forecast Adjusted EBITDA of £32.4 million (on an IFRS
16 basis) for the year ending 31 December 2023, which the directors of Ergomed
believe is highly attractive and at the high end compared to relevant public
precedent transactions.
In addition to the financial terms of the Acquisition, in its evaluation of
Permira as a suitable owner of Ergomed from the perspective of all
stakeholders, the directors of Ergomed have noted Permira's track record of
partnering with businesses in the pharmaceutical and broader healthcare
sectors. The directors of Ergomed have also considered Permira's other stated
intentions for the business, management, employees, pension schemes and other
stakeholders of Ergomed. In particular, the Board is strongly encouraged by
Permira's confirmation that it attaches great importance to the skills and
experience of the existing management team and employees of Ergomed and that,
other than potential minor changes pursuant to Ergomed's delisting (as
described further in section 17 below), Permira does not intend for the
Acquisition to have any material impact on the continued employment of
Ergomed's employees and management or the balance of skills and functions of
Ergomed's employees and management, nor does it intend for the Acquisition to
have any material impact on management's existing strategy regarding the same.
The directors of Ergomed are confident that Permira is well positioned to
support Ergomed's strategy to become a global leading specialised CRO.
Accordingly, following careful consideration of the above factors, the
directors of Ergomed intend to unanimously recommend the Acquisition to
Ergomed Shareholders.
6. Irrevocable undertakings and letter of intent
Directors of Ergomed
Bidco has received an irrevocable undertaking from the Founder to vote in
favour of the Scheme at the Court Meeting and the resolutions to be proposed
at the General Meeting (or, if the Acquisition is subsequently structured as a
Takeover Offer, to accept any Takeover Offer made by Bidco) in respect of the
entirety of Ergomed Shares that he (and his connected persons) beneficially
holds which amount in aggregate to 9,129,297 Ergomed Shares, representing, in
aggregate, approximately 18.0 per cent. of the existing issued ordinary
share capital as at close of business on 1 September 2023 (being the last
Business Day prior to the date of this announcement).
The undertaking from the Founder, will cease to be binding only if:
· Bidco announces that it does not intend to proceed with the
Acquisition;
· the Takeover Offer or Scheme lapses or is withdrawn;
· on the Long-Stop Date unless, on such date, Bidco is bound to
make or has made an Offer that remains open for acceptance in accordance with
the Code; or
· any competing offer for the entire issued and to be issued
share capital of Ergomed is declared wholly unconditional or, if proceeding by
way of scheme of arrangement, becomes effective.
The irrevocable undertaking received from the Founder includes an undertaking
to elect to receive the Partial Securities Alternative in respect of 9,129,297
Ergomed Shares owned by him, representing his entire holding of Ergomed Shares
and approximately 18.0 per cent. of Ergomed's existing issued ordinary share
capital on 1 September 2023 (being the last Business Day prior to the date of
this announcement). The intended elections of the other directors of Ergomed
in respect of their own beneficial holdings of Ergomed Shares (if any) will be
set out in the Scheme Document.
The other directors of Ergomed do not hold Ergomed Shares, however have
irrevocably undertaken to accept any proposals made by Bidco in accordance
with Rule 15 of the Code that has been agreed between Bidco and Ergomed in
respect of any options granted to them under the Ergomed Share Schemes.
Ergomed Shareholders
Bidco has received a non-binding letter of intent to vote in favour of the
Scheme at the Court Meeting and the resolutions to be proposed at the General
Meeting from Amati Global Investors Limited in respect of 1,114,609 Ergomed
Shares representing approximately 2.2 per cent. of Ergomed's issued ordinary
share capital.
In total, therefore, Bidco has received irrevocable undertakings and a
non-binding letter of intent to vote in favour of the Scheme at the Court
Meeting and the resolutions to be proposed at the General Meeting in respect
of 10,243,906 Ergomed Shares representing approximately 20.2 per cent. of
Ergomed's issued ordinary share capital as at the close of business on 1
September 2023 (being the last Business Day prior to the date of this
announcement).
Further details of these irrevocable undertakings and the letter of intent are
set out in Appendix 3 to this announcement.
7. Information relating to Bidco
Bidco is a newly incorporated company formed in the UK at the direction of the
Permira Funds, for the purposes of the Acquisition. The registered address of
Bidco is C/O Alter Domus (Uk) Limited 10(th) Floor, 30 St Mary Axe, London,
United Kingdom, EC3A 8BF. Permira reserves the right to alter the legal and/or
beneficial ownership of Bidco after the date of this announcement, save that
the ultimate beneficial owner of Bidco between the date of this announcement
and the Effective Date will remain as the Permira Funds.
Bidco has not traded since incorporation, nor has it entered into any
obligations, other than in connection with the Acquisition and the financing
of the Acquisition.
The current directors of Bidco are Peter Michel, Simon Roggentin, Paul
Armstrong, Silvia Oteri, Matthew Molton and Timothy Trott. Further details in
relation to Bidco will be contained in the Scheme Document.
8. Information relating to Permira
Permira is a global investment firm that backs successful businesses with
growth ambitions. Founded in 1985, the firm advises funds with total committed
capital of approximately €77bn and makes long-term majority and minority
investments across two core asset classes, private equity and credit. The
Permira private equity funds have made approximately 300 private equity
investments in four key sectors: Technology, Consumer, Healthcare and
Services. Permira employs over 470 people in 15 offices across Europe, the
United States and Asia.
9. Information relating to Ergomed
With 25 years of experience, Ergomed offers custom-made clinical solutions for
every stage of development from proof-of-concept to late-stage programmes.
Ergomed is dedicated to the provision of specialised services to the
pharmaceutical industry and the development of new drugs. With a global
footprint covering over 100 countries, Ergomed has the reach to deliver
solutions for even the toughest clinical development and trial management
challenges. Ergomed has provided clinical development, trial management, and
PV services for over 300 clients, from top 10 pharmaceutical and generics
organisations to small and mid-sized drug development companies.
Ergomed is listed on the AIM Market and has its registered office in
Guildford, UK. In the first half of 2023, Ergomed's revenue was £76.7
million supported by strong order book growth reaching £310 million at the
end of H1 2023.
Ergomed provides specialist services to the pharmaceutical industry spanning
all phases of clinical development, post-approval PV and medical information.
Ergomed's fast-growing services business includes an industry-leading suite of
specialist PV solutions, integrated under the PrimeVigilance brand, a full
range of high-quality clinical research and trial management services under
the Ergomed brand (CRO) and mission-critical regulatory compliance and
consulting services under the ADAMAS brand.
10. Intentions of Bidco
Bidco's strategic plans for Ergomed
Bidco intends to support Ergomed's management team in the pursuit of its
existing strategy following the completion of the Acquisition. Bidco believes
that the successful execution of the key elements of Ergomed's strategy, in
particular the commercial expansion, technological transformation and
investments into further M&A activities, can be underpinned and enhanced
without the pressures of being a listed business, and private ownership can
allow access to additional capital and resources to accelerate the longer term
potential of the business.
Employees and management
Bidco attaches great importance to the skills and experience of Ergomed's
management and employees and is supportive of the management team continuing
in their existing roles. It also intends that Miroslav Reljanović will
continue in his role as an active Chairman of the Ergomed business until the
earlier of (a) the Permira Funds ceasing to hold a majority stake in Ergomed,
and (b) five years from the date of completion of the Acquisition. Bidco
believes that management and employees will benefit from greater opportunities
in a private setting following the Acquisition.
Once Ergomed ceases to be a listed company, some of the listed company-related
functions may be reduced in scope, capable of being merged or reorientated or
become unnecessary to align with Ergomed's new status as a private company.
This may lead to a very limited reduction in the headcount of the Ergomed
Group. Bidco confirms that its intention is for any individuals impacted to be
treated in a manner consistent with Ergomed's high standards, culture and
practices, including, where possible and appropriate offering affected
individuals alternative roles within the Ergomed Group.
Other than as described above, Bidco does not intend for the Acquisition to
have any material impact on the continued employment of Ergomed's employees
and management or the balance of skills and functions of Ergomed's employees
and management, nor does it intend to for the Acquisition to have any material
impact on management's strategy regarding the same.
It is expected that, upon completion of the Acquisition, each of the
non-executive directors of Ergomed will resign from their office as a director
of Ergomed.
Existing employment rights and pensions
Bidco confirms that, following completion of the Acquisition, the existing
contractual and statutory employment rights, including pension rights, of all
Ergomed current management and employees will be fully safeguarded in
accordance with applicable law. Bidco does not intend to make any material
change in the conditions of employment of the management team and employees of
the Ergomed Group, unless otherwise agreed with the relevant employees.
Bidco does not intend to make any changes to the agreed employer contributions
into Ergomed's existing defined contribution pension plans, the accrual of
benefits for existing members or the admission of new members into such
pension plans following completion of the Acquisition.
Management incentive arrangements
Bidco has not entered into any form of incentivisation arrangements with
members of Ergomed's management nor has it had discussions about the terms of
any such incentivisation. At an appropriate future date following completion
of the Acquisition, Bidco intends to discuss and agree the provision of an
alternative future incentive structure for members of the Ergomed management
team.
Headquarters, locations, fixed assets and research and development
Bidco does not intend to make any changes to Ergomed's fixed assets or asset
base. Bidco does not intend to carry out any material restructurings or
changes in the location or functions of Ergomed's headquarters or with regard
to Ergomed's operations and places of business, other than in respect of the
listed company-related functions as described above, and as a consequence of
supporting management in continuing its strategy (including of acquiring
businesses). Ergomed does not have a material research and development
function and accordingly Bidco has no plans in this regard.
11. Trading facilities
The Ergomed Shares are currently admitted to trading on AIM and on the Open
Market of Frankfurt Stock Exchange (Quotation Board). Prior to the Effective
Date, as noted in paragraph 17 below, it is intended that an application
will be made to the London Stock Exchange to cancel the admission to trading
of Ergomed Shares on AIM, such cancellation expected to take effect on or
shortly after the Effective Date. Shortly after the cancellation of the
admission to trading on AIM the Ergomed Shares will also cease being tradable
on the Open Market of Frankfurt Stock Exchange (Quotation Board).
It is intended that Ergomed be re-registered as a private limited company on,
or as soon as practicable following, the Effective Date.
12. Financing
The cash consideration payable by Bidco under the terms of the Acquisition
will be funded from (i) equity to be invested by the Permira Funds; and (ii)
debt to be provided under the Interim Facility Agreement.
Rothschild & Co, financial adviser to Bidco, confirms that it is satisfied
that resources are available to Bidco to satisfy in full the cash
consideration payable under the terms of the Acquisition.
13. Ergomed Share Schemes
Participants in the Ergomed Share Schemes will be contacted regarding the
effect of the Acquisition on their rights and appropriate proposals will be
made to such participants in due course. Details of these proposals will be
set out in the Scheme Document and in separate letters to be sent to
participants in the Ergomed Share Schemes.
14. Offer-related arrangements
Confidentiality Agreement
Permira and Ergomed have entered into the Confidentiality Agreement pursuant
to which each of Permira and Ergomed has undertaken, amongst other things, to:
(a) keep confidential information relating to a potential business
relationship between Permira and Ergomed and not to disclose it to third
parties (other than certain permitted parties) unless required by law or
regulation; and (b) use the confidential information for the sole purpose of
evaluating, negotiating, advising on or implementing the potential business
relationship between Permira and Ergomed. These confidentiality obligations
remain in force until three years after the date of the Confidentiality
Agreement.
The Confidentiality Agreement contains standstill provisions which, subject to
certain exceptions, restrict Permira from acquiring, or offering to acquire,
interests in certain securities of Ergomed until 8 August 2024. The
Confidentiality Agreement also contains restrictions on Permira from
communicating with Ergomed's shareholders and clients without the consent of
the directors of Ergomed.
Co-operation Agreement
Bidco and Ergomed entered into the Co-operation Agreement dated 4 September
2023 pursuant to which Bidco agreed to use its reasonable endeavours to secure
the regulatory clearances and authorisations necessary to satisfy the
Conditions, including by accepting the imposition of, or offering, certain
reasonable undertakings or orders by or to the relevant authorities.
Bidco and Ergomed have agreed to certain undertakings to co-operate and
provide each other with information, assistance and access in relation to the
filings, submissions and notifications to be made in relation to such
regulatory clearances and authorisations. Bidco and Ergomed have also agreed
to provide each other with reasonable information, assistance and access for
the preparation of the key shareholder documentation.
The Co-operation Agreement will terminate in certain circumstances, including:
if the Scheme is withdrawn or lapses, if prior to the Long-Stop Date any
Condition becomes incapable of satisfaction, if the directors of Ergomed
withdraw their recommendation of the Acquisition, a competing proposal (as
defined in the Cooperation Agreement) is recommended by the directors of
Ergomed or completes, becomes effective or is declared or becomes
unconditional in all respects, or if the Scheme does not become effective in
accordance with its terms by the Long-Stop Date or otherwise as agreed between
Bidco and Ergomed.
The Co-operation Agreement records Bidco's and Ergomed's intention to
implement the Acquisition by way of the Scheme, subject to the ability of
Bidco to proceed by way of a Takeover Offer in accordance with and subject to
the terms of the Co-operation Agreement.
The Co-operation Agreement also contains provisions that will apply in respect
of the Ergomed Share Schemes and certain other employee incentive
arrangements.
15. Partial Securities Alternative
Under the Partial Securities Alternative, eligible Ergomed Shareholders may
elect, in respect of all (but not some only) of their Ergomed Shares, to
receive, in lieu of the Cash Offer to which they are otherwise entitled:
for each Ergomed Share: 1.0 Topco Unit (comprising 1 Topco B Ordinary Share
and 8.667 Topco B Preference Shares) plus 451 pence in cash
Any fractional entitlements of an Ergomed Shareholder to Topco B Ordinary
Shares and Topco B Preference Shares under the Partial Securities Alternative
will be rounded down to the nearest whole number of Topco B Ordinary Shares
and Topco B Preference Shares per Ergomed Shareholder. Fractional entitlements
to Topco B Ordinary Shares and Topco B Preference Shares will not be allotted
or issued to such Ergomed Shareholder but will be disregarded.
Accordingly, if an Ergomed Shareholder with 1,000 Ergomed Shares validly
elects to receive the Partial Securities Alternative, it would be entitled to
receive 451,000 pence in cash, 1,000 Topco B Ordinary Shares and 8,667 Topco B
Preference Shares.
The maximum number of Topco Units available to the Ergomed Shareholders under
the Partial Securities Alternative will be limited to the equivalent of 20.0
per cent. of the Topco Offer Shares (as defined in paragraph 16 below) (the
"Partial Securities Alternative Maximum").
If elections are validly received from eligible Ergomed Shareholders in
respect of a number of Ergomed Shares that would require the issue of Topco
Units exceeding the Partial Securities Alternative Maximum, such elections
will be unable to be satisfied in full. In these circumstances the number of
Topco Units to be issued in respect of each Ergomed Share will be rounded down
on a pro rata basis, and the balance of the consideration for each Ergomed
Share will be paid in cash in accordance with the terms of the Cash Offer.
The availability of the Partial Securities Alternative is conditional upon
valid elections being made for such number of Topco Units as represent at
least 10.0 per cent. Of the Topco Offer Shares (as defined in paragraph 16
below), failing which it will lapse. In these circumstances, no Topco Units
will be issued and the consideration payable in respect of each Ergomed Share
will be settled entirely in cash in accordance with the terms of the
Acquisition. However, given the irrevocable undertaking received from the
Founder includes an undertaking to elect to receive the Partial Securities
Alternative in respect of 9,129,297 Ergomed Shares owned by him, representing
his entire holding of Ergomed Shares and approximately 18.0 per cent. of
Ergomed's existing issued ordinary share capital on 1 September 2023 (being
the last Business Day prior to the date of this announcement), the Partial
Securities Alternative is not anticipated to lapse for this reason.
The Partial Securities Alternative is not being offered, sold or delivered,
directly or indirectly, in or into any Restricted Jurisdiction and individual
acceptances of the Partial Securities Alternative will only be valid if all
regulatory approvals required by an Ergomed Shareholder to acquire the Topco
Units have been obtained.
In addition, eligible Ergomed Shareholders who elect for the Partial Share
Alternative will be required to provide certain "Know Your Client" information
as requested by Bidco and Permira.
The issue of any Topco Units pursuant to the Partial Securities Alternative
will be in accordance with the mechanism described in paragraph 16 below
and subject to the Conditions and further terms set out in Appendix 1 to this
announcement and to be set out in the Scheme Document. Further details of the
Topco Group and the rights of the Topco Units are set out in paragraph 16
and in Appendix 4 to this announcement.
For the purposes of Rule 24.11 of the Code, Rothschild & Co, as financial
adviser to Bidco, will provide an estimate of the value of a Topco Unit,
together with the assumptions, qualifications and caveats forming the basis of
its estimate of value, in a letter to be included in the Scheme Document.
Ergomed Shareholders who do not validly elect for the Partial Securities
Alternative will automatically receive the full amount of the Cash Offer for
their entire holding of Ergomed Shares.
16. Structure of the Acquisition
Topco Share Capital as a result of the Acquisition
On or around completion of the Acquisition, Topco will issue around 59,681,078
Topco Ordinary Shares and 517,310,515 Topco Preference Shares (the "Topco
Offer Shares"). If the Partial Securities Alternative (including any Topco A
Ordinary Shares or Topco B Ordinary Shares already in issue) were taken up in
full by eligible Ergomed Shareholders, and assuming the amount of Ergomed
Shares issued pursuant to the Ergomed Share Schemes prior to the Effective
Date is consistent with the calculation set out in Appendix 2 to this
announcement, Topco would issue around:
(i) 47,744,862 Topco A Ordinary Shares and 413,859,332 Topco A
Preference Shares to Eden SPV to fund: the cash consideration; costs and
expenses payable in respect of the Acquisition; and additional capital
provided to support the ordinary course operations and near-term growth
requirements of Ergomed following completion of the Acquisition; and
(ii) 11,936,216 Topco B Ordinary Shares and 103,451,183 Topco B Preference
Shares to those Ergomed Shareholders who validly elect to receive the Partial
Securities Alternative,
and, if the Partial Securities Alternative were accepted in respect of less
than the Partial Securities Alternative Maximum described above, the number of
Topco B Shares would be reduced and the number of Topco A Shares increased
accordingly.
Terms of Issue of Topco Securities
The Topco B Ordinary Shares and Topco B Preference Shares to be issued to
eligible Ergomed Shareholders who elect for the Partial Securities Alternative
will be issued credited as fully paid and will rank economically pari passu
with the Topco A Ordinary Shares and Topco A Preference Shares respectively
being issued to Eden SPV pursuant to the Acquisition as described above,
including the right to receive and retain dividends and other distributions
declared, made or paid by reference to a record date falling on or after the
date of this announcement.
Risk factors and other investment considerations
Eligible Ergomed Shareholders who elect for the Partial Securities Alternative
will, pursuant to a power of attorney to be included in the Form of Election
and/or the Scheme, deliver a fully executed deed of adherence pursuant to
which they will be bound by the Topco Shareholders' Agreement. A summary of
the key rights of the Topco Units are set out in Appendix 4.
In addition, the attention of eligible Ergomed Shareholders who may be
considering electing for the Partial Securities Alternative is drawn to
certain risk factors and other investment considerations relevant to such an
election. These will be set out in full in the Scheme Document and include,
inter alia, the following:
· Upon the Effective Date, the Topco Group will be controlled by
the Permira Funds (through Eden SPV) and holders of the Topco Units (which do
not carry any general voting rights at general meetings of Topco or on any
written resolutions proposed by Topco and will have consent rights only in
respect of a very limited number of reserved matters) will therefore have no
influence over decisions made by Topco in relation to its investment in
Ergomed or in any other business.
· The Topco Units are unquoted and there is no current expectation
that they will be listed or admitted to trading on any exchange or market for
the trading of securities, and will therefore be illiquid.
· The Topco Units do not carry general attendance or voting rights
at any general meeting of Topco nor the right to receive and vote on written
resolutions proposed by Topco.
· The Topco Units will have very limited transfer rights. They will
not be transferable during the Lock-up Period (save in very limited
circumstances such as in accordance with customary drag-along or tag-along
provisions or otherwise with the prior consent of Eden SPV). Following the
Lock-up Period, a holder of Topco Units shall be entitled to transfer its
Topco Units (provided that any such transfer is for all (but not part) of the
Topco Units held by such Topco B Shareholder and any of its associates to whom
Topco Units have been transferred in the limited permitted circumstances, but
shall not include any Topco Units held by any of its associates to the extent
not held as a result of any such transfer), subject to a right of first
refusal on the part of Eden SPV and to certain other restrictions in respect
of the identity of the proposed transferee.
· The value of the Topco Units will be uncertain and there can be
no assurance that any such securities will be capable of being sold in the
future or that they will be capable of being sold at the value to be estimated
by Rothschild & Co in the Scheme Document.
· Payments in respect of Topco Units will not be guaranteed or
secured and, for so long as the Topco Group has any secured debt outstanding,
it is not anticipated that Topco will declare or pay any dividends on any of
the Topco Units.
· Further issues of securities by the Topco Group may occur. Such
further issues will generally be subject to pre-emption rights, provided that
Eden SPV shall have the right for any capital raise made on an urgent basis to
be made solely to Eden SPV and for the Topco B Shareholders to then have
customary pro rata catch up rights.
· In relation to any such further issues of securities, if holders
of Topco Securities wish to avoid their percentage interest in Topco being
reduced by any such issue, they will need to invest further cash sums in the
Topco Group. In particular, Topco B Shareholders who do not elect to exercise
their pre-emption rights or catch up rights by investing the necessary cash
sums in respect of any further issues of securities by the Topco Group will
suffer significant dilution in their percentage ownership.
· The right of holders of Topco Units to participate in future
issues of securities by the Topco Group will also be subject to other
important exceptions. For example, holders of Topco Units will not be entitled
to participate in any issues of securities to actual or potential employees,
directors, officers or consultants of the Topco Group (whether of the same or
different classes to the Topco Units).
· If Bidco introduces one or more management incentive plans for
actual or potential employees, directors, officers and consultants of the
Topco Group after the Effective Date that provide participants with an
interest in securities in the Topco Group, such issue(s) could potentially
significantly dilute the Topco Units. In addition, the Topco Group may not
receive material cash sums on the issue of any such securities and the returns
on any such securities may potentially be structured to increase their
proportionate interest in the value of the Topco Group as it increases in
value (whether pursuant to a ratchet mechanism or otherwise).
· Similarly, holders of Topco Units will not be entitled to
participate in issues of securities by the Topco Group in certain other cases,
including in consideration for, or in connection with, its acquisition of
other assets, companies or all or part of any other businesses or
undertakings.
· The precise numbers of securities that may be issued by the Topco
Group from time to time cannot be ascertained at the date of this announcement
and will depend on a variety of factors including those described above.
Further details on the Topco Group and the principal rights of the Topco Units
are set out in Appendix 4 and will be summarised in the Scheme Document.
Structure and mechanism
It is intended that the Acquisition will be implemented by way of a
Court-sanctioned scheme of arrangement between Ergomed and the Scheme
Shareholders, under Part 26 of the Companies Act. The procedure involves,
among other things, an application by Ergomed to the Court to sanction the
Scheme.
The purpose of the Scheme is to provide for Bidco to become the owner of the
entire issued and to be issued share capital of Ergomed. This is to be
achieved:
(i) under the Cash Offer by the transfer of the Scheme
Shares to Bidco, in consideration for which the Scheme Shareholders shall
receive the cash consideration due under the Cash Offer on the basis set out
in paragraph 2 of this announcement; and
(ii) in respect of those Scheme Shares in respect of which
a Partial Securities Alternative election is made, by the receipt of Topco
Units and cash in exchange for such Scheme Shares of the relevant eligible
Scheme Shareholder pursuant to the mechanism set out in this paragraph,
in each case to be effected pursuant to the Scheme.
Eligible Ergomed Shareholders that elect for the Partial Securities
Alternative shall receive their Topco Units pursuant to a mechanism in the
Scheme whereby on or shortly following the Effective Date they will receive
loan notes to be issued by Bidco which will then be exchanged, directly or
indirectly, for the relevant number of Topco Units that eligible Ergomed
Shareholders are entitled to in accordance with the Partial Securities
Alternative.
Conditions to the Acquisition
The Scheme is subject to the Conditions and certain further terms referred to
in Appendix 1 to this announcement and to be set out in the Scheme Document
when issued. In particular, the Scheme will only become effective if, among
other things, the following events occur on or before the Long-Stop Date:
· a resolution to approve the Scheme is passed by a majority in
number representing 75 per cent. in value of the Scheme Shareholders present
and voting (and entitled to vote) at the Court Meeting, either in person or by
proxy;
· the Special Resolution necessary to implement the Scheme is
passed by the requisite majority of Ergomed Shareholders at the General
Meeting;
· the Scheme is sanctioned (with or without modification, on
terms agreed by Bidco and Ergomed); and
· an office copy of the Scheme Court Order is delivered to the
Registrar of Companies.
Bidco may only invoke a Condition so as to cause the Acquisition not to
proceed, lapse or to be withdrawn with the consent of the Panel. Certain
Conditions are not subject to this requirement. Further details are set out in
Parts A and B of Appendix 1.
Upon the Effective Date: (i) the Scheme will be binding on all Scheme
Shareholders, irrespective of whether or not they attended or voted at the
Court Meeting or the General Meeting (and if they attended and voted, whether
or not they voted in favour); and (ii) share certificates in respect of
Ergomed Shares will cease to be valid and entitlements to Ergomed Shares held
within the CREST system will be cancelled.
If the Scheme does not become effective on or before the Long-Stop Date, it
will lapse and the Acquisition will not proceed (unless Bidco and Ergomed
otherwise agree and the Panel otherwise consents).
The Scheme Document will include full details of the Scheme, together with
notices of the Court Meeting and the General Meeting. The Scheme Document will
also contain the expected timetable for the Acquisition and will specify the
necessary actions to be taken by Ergomed Shareholders. The Scheme Document
will be posted to Ergomed Shareholders and, for information only, to persons
with information rights and to holders of options granted under the Ergomed
Share Schemes, as soon as practicable. Subject, amongst other things, to the
satisfaction or waiver of the Conditions, it is expected that the Scheme will
become effective during Q1 2024.
17. Delisting and re-registration
It is intended that dealings in Ergomed Shares will be suspended at 5.00 p.m.
London time on the Business Day prior to the Effective Date. It is further
intended that an application will be made to the London Stock Exchange for the
cancellation of admission to trading of the Ergomed Shares on AIM, with effect
as of or shortly following the Effective Date. Since the listing of the
Ergomed Shares on AIM is a condition for the trading arrangements in respect
of the Ergomed Shares on the Open Market (Quotation Board) of Frankfurt Stock
Exchange it is expected that shortly after the cancellation of the admission
to trading on AIM the Ergomed Shares will also cease being tradable on the
Open Market (Quotation Board) of Frankfurt Stock Exchange.
On the Effective Date, share certificates in respect of Ergomed Shares shall
cease to be valid and entitlements to Ergomed Shares held within the CREST
system shall be cancelled.
It is also intended that, following the Scheme becoming effective, Ergomed
will be re-registered as a private company under the relevant provisions of
the Companies Act.
18. Dividends
If any dividend and/or other distribution and/or other return of capital is
proposed, announced, authorised, declared, made, paid or becomes payable by
Ergomed in respect of Ergomed Shares on or after the date of this announcement
and before the Scheme becomes effective, Bidco reserves the right to reduce
the Cash Offer (and, as the case may be, the consideration due under the
Partial Securities Alternative) by an amount equal to the aggregate amount of
such dividend and/or other distribution and/or other return of capital, as
applicable, in which case the relevant eligible Ergomed Shareholders will be
entitled to receive and retain such dividend and/or distribution.
If any such dividend, other distribution or other return of capital is paid or
made by Ergomed after the date of this announcement and Bidco exercises its
rights described above, any reference in this announcement to the Cash Offer
(or consideration due under the Partial Securities Alternative) payable under
the Scheme shall be deemed to be a reference to the consideration as so
reduced. Any exercise by Bidco of its rights referred to in this paragraph
shall be the subject of an announcement and, for the avoidance of doubt, shall
not be regarded as constituting any revision or variation of the terms of the
Scheme.
19. Disclosure of interests in Ergomed relevant securities
Except for the irrevocable undertakings referred to in paragraph 6 above,
as at close of business on 1 September 2023 (being the last Business Day prior
to the date of this announcement), neither Bidco, nor any of the directors of
Bidco or any member of the Bidco Group, nor, so far as the directors of Bidco
are aware, any person acting in concert with Bidco for the purposes of the
Acquisition had any interest in, right to subscribe for, or had borrowed or
lent any Ergomed Shares or securities convertible or exchangeable into Ergomed
Shares, nor did any such person have any short position (whether conditional
or absolute and whether in the money or otherwise), including any short
position under a derivative, any agreement to sell or any delivery obligation
or right to require another person to take delivery, or any dealing
arrangement of the kind referred to in Note 11 of the definition of acting in
concert in the Code, in relation to Ergomed Shares or in relation to any
securities convertible or exchangeable into Ergomed Shares.
In the interests of secrecy prior to this announcement, Bidco has not made any
enquiries in respect of the matters referred to in this paragraph of certain
parties who may be deemed by the Panel to be acting in concert with Bidco for
the purposes of the Scheme. Enquiries of such parties will be made as soon as
practicable following the date of this announcement and any disclosure in
respect of such parties will be included in the Scheme Document.
20. Overseas shareholders
The availability of the Acquisition (including the Partial Securities
Alternative) and the distribution of this announcement to Ergomed Shareholders
who are not resident in the United Kingdom or the United States may be
affected by the laws of the relevant jurisdiction. Such persons should inform
themselves of, and observe, any applicable legal or regulatory requirements of
their jurisdiction. Ergomed Shareholders who are in any doubt regarding such
matters should consult an appropriate independent professional adviser in the
relevant jurisdiction without delay.
This announcement does not constitute an offer for sale for any securities or
an offer or an invitation to purchase any securities. Ergomed Shareholders are
advised to read carefully the Scheme Document and related Forms of Proxy once
these have been dispatched.
21. Ergomed issued share capital
In accordance with Rule 2.9 of the Code, Ergomed confirms that it has
50,811,805 Ergomed Shares in issue. The International Securities
Identification Number for Ergomed Shares is GB00BN7ZCY67.
In accordance with Rule 2.9 of the Code, Bidco confirms that it has one
ordinary share of £0.01 in issue. Bidco's ordinary share of £0.01 in issue
is unlisted and therefore does not have an International Securities
Identification Number.
22. Documents published on a website
Copies of the following documents will, by no later than 12 noon (London time)
on 5 September 2023, be published on Ergomed's website at www.ergomedplc.com
and Bidco's website at
permira.com/news-and-insights/news/permira-offer-for-ergomed until the end of
the Offer Period:
· the irrevocable undertakings and the letter of intent referred to
in paragraph 6 above and summarised in Appendix 3 to this announcement;
· the debt financing arrangements referred to in paragraph 12;
· the Confidentiality Agreement;
· the Co-operation Agreement;
· consent letters from each of Jefferies, Numis and Rothschild
& Co; and
· this announcement.
23. General
Bidco reserves the right to elect in accordance with the Co-operation
Agreement to implement the Acquisition by way of a Takeover Offer for the
entire issued and to be issued share capital of Ergomed as an alternative to
the Scheme. In such an event, the Takeover Offer will be implemented on the
same terms (subject to appropriate amendments), so far as applicable, as those
which would apply to the Scheme.
If the Acquisition is effected by way of a Takeover Offer and such Takeover
Offer becomes or is declared unconditional in all respects and sufficient
acceptances are received, Bidco intends to: (i) make a request to the London
Stock Exchange to cancel trading in Ergomed Shares on AIM and to the Frankfurt
Stock Exchange to cancel the admission to trading of Ergomed Shares on the
Open Market (Quotation Board); and (ii) exercise its rights to apply the
provisions of Chapter 3 of Part 28 of the Companies Act to acquire
compulsorily the remaining Ergomed Shares in respect of which the Takeover
Offer has not been accepted.
The Scheme will be governed by English law and will be subject to the
jurisdiction of the courts of England and Wales. The Scheme will be subject to
the applicable requirements of the Code, the Panel, the London Stock Exchange
(including the AIM Rules) and the FCA.
Rothschild & Co (as financial adviser to Bidco and Permira) and Jefferies
and Numis (as financial advisers to Ergomed) have each given and not withdrawn
their consent to the publication of this announcement with the inclusion
herein of the references to their names in the form and context in which they
appear.
The bases and sources of certain financial information contained in this
announcement are set out in Appendix 2. Details of the FY23 Ergomed Profit
Forecast are set out in Appendix 5. Certain terms used in this announcement
are defined in Appendix 6.
This announcement is being made on behalf of Ergomed by Miroslav Reljanović,
Executive Chairman.
Enquiries
Rothschild & Co (financial adviser to Bidco and Permira) +44 (0) 20 7280 5000
Julian Hudson
Aashis Mehta
Andrew Davison
Headland Consultancy Limited (PR adviser to Bidco and Permira) +44 (0) 20 3805 4822
Lucy Legh
Rob Walker
Charlie Twigg
Ergomed +44 (0) 1483 402 975
Miroslav Reljanović (Executive Chairman)
Jonathan Curtain (Chief Financial Officer)
Keith Byrne (Senior Vice President, Capital Markets and Strategy)
Jefferies (Joint financial adviser to Ergomed) +44 (0) 20 7029 8000
Michael Gerardi
Matthew Miller
Paul Bundred
James Umbers
Numis (Joint financial adviser, Nominated adviser and Broker to Ergomed) +44 (0) 20 7260 1000
Freddie Barnfield
Stuart Ord
Alexander Kladov
Euan Brown
Peel Hunt (Joint Broker to Ergomed) +44 (0) 20 7418 8900
James Steel
John Welch
Dr Christopher Golden
Consilium Strategic Communications (PR adviser to Ergomed) +44 (0) 20 3709 5700
Chris Gardner
Matthew Neal
Freshfields Bruckhaus Deringer LLP is acting as legal adviser to Bidco and
Permira in connection with the Acquisition. Covington & Burling LLP is
acting as legal adviser to Ergomed in connection with the Acquisition.
Further information
This announcement is not intended to and does not constitute, or form part of,
an offer, invitation or the solicitation of an offer to purchase, otherwise
acquire, subscribe for, sell or otherwise dispose of any securities, or the
solicitation of any vote or approval in any jurisdiction, pursuant to the
Acquisition or otherwise, nor shall there be any sale, issuance or transfer of
securities of Ergomed in any jurisdiction in contravention of applicable law.
The Acquisition will be made solely by means of the Scheme Document (or, if
the Acquisition is implemented by way of a Takeover Offer, any document by
which the Takeover Offer is made), which will contain the full terms and
conditions of the Acquisition including details of how to vote in respect of
the Acquisition. Any vote in respect of the Scheme or other response in
relation to the Acquisition should be made only on the basis on the
information contained in the Scheme Document.
Please be aware that addresses, electronic addresses and certain other
information provided by Ergomed Shareholders, persons with information rights
and other relevant persons for the receipt of communications from Ergomed may
be provided to Bidco during the Offer Period as required under Section 4 of
Appendix 4 of the Code to comply with Rule 2.11(c).
N.M. Rothschild & Sons Limited ("Rothschild & Co"), which is
authorised and regulated by the Financial Conduct Authority in the United
Kingdom, is acting exclusively for Bidco and Permira and for no‑one else in
connection with the Acquisition and will not regard any other person as its
client in relation to the Acquisition and will not be responsible to anyone
other than Bidco and Permira for providing the protections afforded to clients
of Rothschild & Co, nor for providing advice in relation to any matter
referred to in this announcement.
Jefferies International Limited ("Jefferies"), which is authorised and
regulated by the Financial Conduct Authority in the United Kingdom, is acting
exclusively for Ergomed and no one else in connection with the matters set out
in this announcement and will not regard any other person as its client in
relation to the matters in this announcement and will not be responsible to
anyone other than Ergomed for providing the protections afforded to clients of
Jefferies nor for providing advice in relation to any matter referred to in
this announcement or any transaction or arrangement referred to herein.
Neither Jefferies nor any of its affiliates 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 Jefferies in connection with this announcement, any statement
contained herein, any transaction or arrangement referred to herein, or
otherwise.
Numis Securities Limited ("Numis") which is authorised and regulated by the
Financial Conduct Authority in the United Kingdom, is acting exclusively for
Ergomed and no one else in connection with the matters set out in this
announcement and will not regard any other person as its client in relation to
the matters in this announcement and will not be responsible to anyone other
than Ergomed for providing the protections afforded to clients of Numis nor
for providing advice in relation to any matter referred to in this
announcement or any transaction or arrangement referred to herein. Numis is
not responsible for the contents of this announcement. Neither Numis nor any
of its affiliates 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 Numis in connection
with this announcement, any statement contained herein, any transaction or
arrangement referred to herein, or otherwise.
Peel Hunt LLP ("Peel Hunt") which is authorised and regulated by the Financial
Conduct Authority in the United Kingdom, is acting exclusively for Ergomed and
no one else in connection with the matters set out in this announcement and
will not regard any other person as its client in relation to the matters in
this announcement and will not be responsible to anyone other than Ergomed for
providing the protections afforded to clients of Peel Hunt nor for providing
advice in relation to any matter referred to in this announcement or any
transaction or arrangement referred to herein. Peel Hunt is not responsible
for the contents of this announcement. Neither Peel Hunt nor any of its
affiliates 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 Peel Hunt in connection with
this announcement, any statement contained herein, any transaction or
arrangement referred to herein, or otherwise.
Overseas jurisdictions
The release, publication or distribution of this announcement in or into
jurisdictions other than the UK and the United States may be restricted by law
and therefore any persons who are subject to the law of any jurisdiction other
than the UK and the United States should inform themselves about, and observe,
any applicable legal or regulatory requirements. In particular the ability of
persons who are not resident in the United Kingdom, to vote their Ergomed
Shares with respect to the Scheme at the Court Meeting, or to appoint another
person as proxy to vote at the Court Meeting on their behalf, may be affected
by the laws of the relevant jurisdictions in which they are located. Any
failure to comply with the applicable restrictions may constitute a violation
of the securities laws of any such jurisdiction. To the fullest extent
permitted by applicable law, the companies and persons involved in the
Acquisition disclaim any responsibility or liability for the violation of such
restrictions by any person. This announcement has been prepared for the
purposes of complying with English law and the 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 of jurisdictions
outside of England.
Copies of this announcement and formal documentation relating to the
Acquisition will not be and must not be, mailed or otherwise forwarded,
distributed or sent in, into or from any Restricted Jurisdiction or any
jurisdiction where to do so would violate the laws of that jurisdiction and
persons receiving such documents (including custodians, nominees and trustees)
must not mail or otherwise forward, distribute or send them in or into or from
any Restricted Jurisdiction. Doing so may render invalid any related purported
vote in respect of the Acquisition. If the Acquisition is implemented by way
of Takeover Offer (unless otherwise permitted by applicable law or
regulation), the Takeover Offer may not be made, directly or indirectly, in or
into or by use of the mails or any other means or instrumentality (including,
without limitation, facsimile, email or other electronic transmission, telex
or telephone) of interstate or foreign commerce of, or any facility of a
national, state or other securities exchange of any Restricted Jurisdiction
and the Takeover Offer will not be capable of acceptance by any such use,
means, instrumentality or facilities or from within any Restricted
Jurisdiction.
Further details in relation to Overseas Shareholders will be contained in the
Scheme Document.
Additional information for US investors
The Acquisition is being made to acquire the securities of an English company
by means of a scheme of arrangement provided for under English law. A
transaction effected by means of a scheme of arrangement is not subject to the
tender offer rules under the US Exchange Act. Accordingly, the Scheme will be
subject to disclosure requirements and practices applicable in the UK to
schemes of arrangement, which are different from the disclosure requirements
of the US tender offer rules. The financial information included in this
announcement and the Scheme documentation has been or will have been prepared
in accordance with UK-adopted International Financial Reporting Standards and
thus may not be comparable to financial information of US companies or
companies whose financial statements are prepared in accordance with generally
accepted accounting principles in the US. If Bidco exercises its right to
implement the acquisition of the Ergomed Shares by way of a Takeover Offer,
such offer will be made in compliance with applicable US laws and regulations.
The receipt of cash pursuant to the Acquisition by a US holder as
consideration for the transfer of its Scheme Shares pursuant to the Scheme
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 Ergomed Shareholder is urged to consult his
independent professional adviser immediately regarding the tax consequences of
the Acquisition applicable to them.
The Bidco loan notes and the Topco Units issued under the Partial Securities
Alternative will not be registered under the US Securities Act of 1933 (the
"Securities Act"). Bidco expects to issue the Bidco loan notes and Topco
expects to issue the Topco Units in reliance upon the exemption from the
registration requirements of the Securities Act provided by Section 3(a)(10)
thereof. ("Section 3(a)(10)"). Section 3(a)(10) exempts securities issued in
specified exchange transactions from the registration requirement under the
Securities Act where, among other things, the fairness of the terms and
conditions of the issuance and exchange of such securities have been approved
by a court or governmental authority expressly authorised by law to grant such
approval, after a hearing upon the fairness of the terms and conditions of the
exchange at which all persons to whom the Bidco loan notes or Topco Units are
proposed to be issued have the right to appear; and receive adequate and
timely notice thereof.
The Bidco loan notes and the Topco Units that may be issued pursuant to the
Acquisition have not been and will not be registered under the US Securities
Act or under the relevant securities laws of any state or territory or other
jurisdiction of the United States and will not be listed on any stock
exchange. Neither the US Securities and Exchange Commission nor any US state
securities commission has approved or disapproved of the Partial Securities
Alternative or determined if the Scheme Document is accurate or complete. Any
representation to the contrary is a criminal offence.
It may be difficult for US holders to enforce their rights and claims arising
out of the US federal securities laws, since Bidco and Ergomed are located in
countries other than the US, and some or all of their officers and directors
may be residents of countries other than the US. US holders may not be able to
sue a non-US company or its officers or directors in a non-US court for
violations of US securities laws. Further, it may be difficult to compel a
non-US company and its affiliates to subject themselves to a US court's
judgement.
In the event that the Acquisition is implemented by way of a Takeover Offer,
in accordance with normal UK practice and pursuant to Rule 14e-5(b) of the US
Exchange Act, Bidco or its nominees, or its brokers (acting as agents), may
from time to time make certain purchases of, or arrangements to purchase,
Ergomed Shares outside the United States, other than pursuant to the Takeover
Offer, before or during the period in which the Takeover Offer remains open
for acceptance. These purchases may occur either in the open market at
prevailing prices or in private transactions at negotiated prices. Any
information about such purchases will be disclosed as required in the UK, will
be reported to a Regulatory Information Service and will be available on the
London Stock Exchange website, www.londonstockexchange.com.
Forward looking statements
This announcement (including information incorporated by reference in this
announcement), oral statements made regarding the Acquisition, and other
information published by Bidco and Ergomed contain statements which are, or
may be deemed to be, "forward-looking statements". Forward-looking statements
are prospective in nature and are not based on historical facts, but rather on
current expectations and projections of the management of Bidco and Ergomed
about future events, and are therefore subject to risks and uncertainties
which could cause actual results to differ materially from the future results
expressed or implied by the forward-looking statements. The forward-looking
statements contained in this announcement include statements relating to the
expected effects of the Acquisition on Bidco and Ergomed, the expected timing
and scope of the Acquisition and other statements other than historical facts.
Often, but not always, forward-looking statements can be identified by the use
of forward-looking words such as "plans", "expects" or "does not expect", "is
expected", "is subject to", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates" or "does not anticipate", or "believes", or
variations of such words and phrases or statements that certain actions,
events or results "may", "could", "should", "would", "might" or "will" be
taken, occur or be achieved. Although Bidco and Ergomed believe that the
expectations reflected in such forward-looking statements are reasonable,
Bidco and Ergomed can give no assurance that such expectations will prove to
be correct. By their nature, forward-looking statements involve risk and
uncertainty 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 and developments to differ materially from those expressed or
implied by such forward-looking statements. These factors include the
satisfaction of the Conditions, as well as additional factors, such as: the
general economic climate; competition; interest rate levels; loss of key
personnel; the availability of financing on acceptable terms; and changes in
the legal or regulatory environment. Other unknown or unpredictable factors
could cause actual results to differ materially from those in the
forward-looking statements. Such forward-looking statements should therefore
be construed in the light of such factors. Neither Bidco nor Ergomed, nor any
of their respective associates or directors, officers or advisers, provides
any representation, assurance or guarantee that the occurrence of the events
expressed or implied in any forward-looking statements in this announcement
will actually occur. You are cautioned not to place undue reliance on these
forward-looking statements. Other than in accordance with their legal or
regulatory obligations, neither Bidco nor Ergomed is under any obligation, and
Bidco and Ergomed expressly disclaim any intention or obligation, to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise.
No profit forecasts, estimates or qualified benefits statements
The FY23 Ergomed Profit Forecast is a profit forecast for the purpose of Rule
28 of the Code. The FY23 Ergomed Profit Forecast, the assumptions and basis of
preparation on which the FY23 Ergomed Profit Forecast is based and the
directors' of Ergomed confirmation, as required by Rule 28.1 of the Code, are
set out in Appendix 5 of this announcement.
Other than the FY23 Ergomed Profit Forecast, no statement in this
announcement, or incorporated by reference in this announcement, is intended
as a profit forecast, profit estimate or quantified benefits statement for any
period and no statement in this announcement should be interpreted to mean
that earnings or earnings per share for Ergomed for the current or future
financial years would necessarily match or exceed the historical published
earnings or earnings per share for Ergomed.
Dealing disclosure requirements
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 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 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 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, (https://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.
Publication on website and hard copies
A copy of this announcement and the documents required to be published by Rule
26 of the Code will be made available, subject to certain restrictions
relating to persons resident in Restricted Jurisdictions, on Bidco's website
at permira.com/news-and-insights/news/permira-offer-for-ergomed and Ergomed's
website at www.ergomedplc.com. For the avoidance of doubt, the contents of
those websites are not incorporated into and do not form part of this
announcement.
Bidco shareholders and Ergomed Shareholders may request a hard copy of this
announcement by contacting Share Registrars Limited during business hours on
+44 (0) 1252 821390 or by submitting a request in writing to Share Registrars
Limited at 3 The Millennium Centre, Crosby Way, Farnham, Surrey, GU9 7XX. If
you have received this announcement in electronic form, copies of this
announcement and any document or information incorporated by reference into
this document will not be provided unless such a request is made.
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
Bidco reserves the right to elect, with the consent of the Panel, and subject
to the terms of the Co-operation Agreement, to implement the Acquisition by
way of a Takeover Offer as an alternative to the Scheme. If the Acquisition
is effected by way of a Takeover Offer, and such offer becomes or is declared
unconditional in all respects and sufficient acceptances are received, Bidco
intends to exercise its rights to apply the provisions of Chapter 3 of Part 28
of the Companies Act so as to acquire compulsorily the remaining Ergomed
Shares in respect of which the Takeover Offer has not been accepted.
Investors should be aware that Bidco may purchase Ergomed Shares otherwise
than under any Takeover Offer or the Scheme, including pursuant to privately
negotiated purchases.
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 appropriate authorised
independent financial adviser.
Appendix 1
Conditions and Certain Further Terms of the Scheme and the Acquisition
A. Conditions to the Scheme and Acquisition
Long-Stop Date
1. The Acquisition will be conditional upon the Scheme
becoming unconditional and becoming effective, subject to the provisions of
the Code, by no later than the Long-Stop Date.
Scheme approval
2. The Scheme will be conditional upon:
(a) (i) its approval by a majority in number representing
not less than 75 per cent. in value of the Scheme Shareholders (or each of the
relevant classes thereof, if applicable) present and voting and entitled to
vote, either in person or by proxy, at the Court Meeting (or at any separate
class meeting, if applicable), or at any adjournment thereof; and (ii) the
Court Meeting (and any separate class meeting, if applicable) and any
adjournment thereof being held on or before the 22(nd) day after the expected
date of the Court Meeting to be set out in the Scheme Document in due course
(or such later date (if any) as Bidco and Ergomed may agree, with the consent
of the Panel and/or approval of the Court, if such consent and/or approval is
required);
(b) (i) all resolutions necessary to approve and implement
the Scheme as set out in the notice of the General Meeting (including, without
limitation, the Special Resolution) being duly passed by the requisite
majority or majorities at the General Meeting or at any adjournment thereof;
and (ii) the General Meeting and any adjournment thereof being held on or
before the 22(nd) day after the expected date of the General Meeting to be set
out in the Scheme Document in due course (or such later date (if any) as Bidco
and Ergomed may agree, with the consent of the Panel and/or approval of the
Court, if such consent and/or approval is required); and
(c) (i) the sanction of the Scheme by the Court without
modification or with modification on terms acceptable to Bidco and Ergomed and
the delivery of a copy of the Scheme Court Order to the Registrar of
Companies; and (ii) the Scheme Court Hearing being held on or before the
22(nd) day after the expected date of the Scheme Court Hearing to be set out
in the Scheme Document in due course (or such later date (if any) as Bidco and
Ergomed may agree, with the consent of the Panel and/or approval of the Court,
if such consent and/or approval is required).
In addition, Bidco and Ergomed have agreed that the Acquisition will be
conditional upon the following Conditions and, accordingly, the necessary
actions to make the Scheme effective will not be taken unless such conditions
(as amended, if appropriate) have been satisfied or, where relevant, waived:
Official authorisations and regulatory clearances
Romania
3. Either:
(a) the Romanian Competition Council or the CSDFI having
stated that no clearance is required for the Acquisition under the Romanian
FDI Act; or
(b) the Romanian Competition Council having
unconditionally authorised the Acquisition, following an endorsement issued by
the CSDFI and, as the case may be, the CSAT, in accordance with the Romanian
FDI Act; or
(c) the Romanian Government having conditionally
authorised the Acquisition on terms satisfactory to Bidco, following an
endorsement issued by the CSFDI and, as the case may be, the CSAT, in
accordance with the Romanian FDI Act;
Italy
4. The Italian Golden Power Authority having either:
(a) stated that the Acquisition does not fall within the
scope of application of the Italian Golden Power Regulations;
(b) stated that the Acquisition falls within the scope of
the Italian Golden Power Regulations, but there are no grounds for the
exercise of special powers;
(c) stated that the Acquisition is likely to fall within
the scope of Italian Golden Power Regulations and, following submission of a
formal filing by Bidco or its affiliate(s), having unconditionally authorised
the Acquisition or conditionally authorised the Acquisition on terms
satisfactory to Bidco;
(d) following the submission of a formal filing by Bidco
or its affiliate(s), not issued a decision with respect to the Acquisition
within the time limit set out in the Italian Golden Power Regulations; or
(e) issued no decision with respect to the Acquisition in
the context of a pre-filing process and, following Bidco or its affiliate(s)
having subsequently submitted a formal notification according to the Italian
Golden Power Regulations, one of the outcomes listed in Conditions 4(a)
to 4(d) having occurred;
Serbia
5. The Serbian Competition Commission, having either:
(a) confirmed that the Acquisition is not subject to the
Serbian Competition Commission's approval;
(b) unconditionally approved the Acquisition;
(c) conditionally approved the Acquisition on terms
satisfactory to Bidco; or
(d) not issued a decision with respect to the Acquisition
within the statutory review period under Serbian Competition Law (Zakon o
zaštiti konkurencije);
US
6. Any applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
rules and regulations made thereunder relating to the Acquisition shall have
expired or been terminated;
General Third Party official authorisations and regulatory clearances
7. All notifications to and filings with, Third
Parties which are necessary or are reasonably considered appropriate by Bidco
having been made, all appropriate waiting and other time periods (including
any extensions of such waiting and other time periods) under any applicable
legislation or regulation of any relevant jurisdiction having expired, lapsed
or been terminated (as appropriate) and all statutory or regulatory
obligations in any relevant jurisdiction having been complied with in each
case in connection with the Scheme or Acquisition or the acquisition or
proposed acquisition of any shares or other securities in, or control or
management of, Ergomed or any other member of the Wider Ergomed Group by any
member of the Wider Bidco Group or the carrying on by any member of the Wider
Ergomed Group of its business;
8. No Third Party having intervened (as defined below)
and there not continuing to be outstanding any statute, regulation or order of
any Third Party in each case which would or would reasonably be expected to:
(a) make the Scheme or the Acquisition or, in each case,
its implementation or the acquisition or proposed acquisition by Bidco or any
member of the Wider Bidco Group of any shares or other securities in, or
control or management of, Ergomed or any member of the Wider Ergomed Group
void, illegal or unenforceable in any jurisdiction, or otherwise directly or
indirectly restrain, prevent, prohibit, restrict or delay the same or impose
additional conditions or obligations with respect to the Scheme or the
Acquisition or such acquisition, or otherwise impede, challenge or interfere
with the Scheme or Acquisition or such acquisition, or require amendment to
the terms of the Scheme or Acquisition or the acquisition or proposed
acquisition of any Ergomed Shares or the acquisition of control or management
of Ergomed or the Wider Ergomed Group by Bidco or any member of the Bidco
Group;
(b) limit or delay, or impose any limitations on, the
ability of any member of the Wider Bidco Group or any member of the Wider
Ergomed Group to acquire or to hold or to exercise effectively, directly or
indirectly, all or any rights of ownership in respect of shares or other
securities in, or to exercise voting or management control over, any member of
the Wider Ergomed Group or any member of the Wider Bidco Group;
(c) require, prevent or delay the divestiture or alter the
terms envisaged for any proposed divestiture by any member of the Wider Bidco
Group of any shares or other securities in any member of the Ergomed Group;
(d) require, prevent or delay the divestiture or alter the
terms envisaged for any proposed divestiture by any member of the Wider Bidco
Group or by any member of the Wider Ergomed Group of all or any portion of
their respective businesses, assets or properties or limit the ability of any
of them to conduct any of their respective businesses or to own or control any
of their respective assets or properties or any part thereof;
(e) except pursuant to sections 974 to 991 of the
Companies Act, require any member of the Wider Bidco Group or of the Wider
Ergomed Group to acquire, or to offer to acquire, any shares or other
securities (or the equivalent) in any member of either group owned by any
third party;
(f) limit the ability of any member of the Wider Bidco
Group or of the Wider Ergomed Group to conduct or integrate or co‑ordinate
its business, or any part of it, with the businesses or any part of the
businesses of any other member of the Wider Bidco Group or of the Wider
Ergomed Group;
(g) result in any member of the Wider Ergomed Group or the
Wider Bidco Group ceasing to be able to carry on business under any name under
which it presently does so; or
(h) otherwise adversely affect any or all of the business,
assets, profits, financial or trading position or prospects of any member of
the Wider Ergomed Group or of the Wider Bidco Group,
and all applicable waiting and other time periods during which any Third Party
could intervene under the laws of any relevant jurisdiction having expired,
lapsed or been terminated;
9. All Authorisations (as defined below) which are
necessary or are reasonably considered necessary or appropriate by Bidco in
any relevant jurisdiction for or in respect of the Scheme or Acquisition or
the acquisition or proposed acquisition of any shares or other securities in,
or control or management of, Ergomed or any other member of the Wider Ergomed
Group by any member of the Wider Bidco Group or the carrying on by any member
of the Wider Ergomed Group of its business having been obtained, in terms and
in a form reasonably satisfactory to Bidco, from all appropriate Third Parties
or from any persons or bodies with whom any member of the Wider Ergomed Group
has entered into contractual arrangements and all such Authorisations
remaining in full force and effect and there being no notice or intimation of
any intention to revoke, suspend, restrict, modify or not to renew any of the
same;
Certain matters arising as a result of any arrangement, agreement etc.
10. Except as Disclosed, there being no provision of any
arrangement, agreement, licence, permit, franchise or other instrument to
which any member of the Wider Ergomed Group is a party, or by or to which any
such member or any of its assets is or are or may be bound, entitled or
subject or any circumstance, which, in each case as a consequence of the
Scheme or Acquisition or the acquisition or proposed acquisition of any shares
or other securities in, or control of, Ergomed or any other member of the
Wider Ergomed Group by any member of the Wider Bidco Group or otherwise, would
or may reasonably result in:
(a) any monies borrowed by or any other indebtedness or
liabilities (actual or contingent) of, or any grant available to, any member
of the Wider Ergomed Group being or becoming repayable or capable of being
declared repayable immediately or prior to its stated maturity date or
repayment date or the ability of any member of the Wider Ergomed Group to
borrow monies or incur any indebtedness being withdrawn or inhibited or
becoming capable of being withdrawn or inhibited;
(b) the creation or enforcement of any mortgage, charge or
other security interest over the whole or any part of the business, property,
assets or interests of any member of the Wider Ergomed Group or any such
mortgage, charge or other security interest (wherever created, arising or
having arisen) becoming enforceable;
(c) any such arrangement, agreement, licence, permit,
franchise or instrument, or the rights, liabilities, obligations or interests
of any member of the Wider Ergomed Group thereunder, being, or becoming
capable of being, terminated or adversely modified or affected or any adverse
action being taken or any obligation or liability arising thereunder;
(d) any asset or interest of any member of the Wider
Ergomed Group being or falling to be disposed of or charged or ceasing to be
available to any member of the Wider Ergomed Group or any right arising under
which any such asset or interest could be required to be disposed of or could
cease to be available to any member of the Wider Ergomed Group;
(e) any member of the Wider Ergomed Group ceasing to be
able to carry on business under any name under which it presently does so;
(f) the creation of liabilities (actual or contingent)
by any member of the Wider Ergomed Group;
(g) the rights, liabilities, obligations or interests of
any member of the Wider Ergomed Group under any such arrangement, agreement,
licence, permit, franchise or other instrument or the interests or business of
any such member in or with any other person, firm, company or body (or any
arrangement or arrangements relating to any such interests or business) being
terminated or adversely modified or affected; or
(h) the financial or trading position or the prospects or
the value of any member of the Wider Ergomed Group being prejudiced or
adversely affected,
and no event having occurred which, under any provision of any such
arrangement, agreement, licence, permit or other instrument, would or may
reasonably result in any of the events or circumstances which are referred to
in paragraphs (a) to (h) of this Condition 10;
11. Since 31 December 2022 and except as Disclosed no member
of the Wider Ergomed Group having:
(a) issued or agreed to issue, or authorised the issue of,
additional shares of any class, or securities convertible into or exchangeable
for, or rights, warrants or options to subscribe for or acquire, any such
shares or convertible securities or transferred or sold any shares out of
treasury, other than as between Ergomed and wholly‑owned subsidiaries of
Ergomed other than any shares issued or shares transferred from treasury upon
the exercise of any options granted under any of the Ergomed Share Schemes;
(b) purchased or redeemed or repaid any of its own shares
or other securities or reduced or made any other change to any part of its
share capital;
(c) recommended, declared, paid or made any dividend or
other distribution whether payable in cash or otherwise or made any bonus
issue (other than to Ergomed or a wholly‑owned subsidiary of Ergomed);
(d) made or authorised any change in its loan capital;
(e) merged with, demerged or acquired any body corporate,
partnership or business or acquired or disposed of or transferred, mortgaged,
charged or created any security interest over any assets or any right, title
or interest in any assets (including shares in any undertaking and trade
investments) or authorised the same;
(f) issued or authorised the issue of, or made any
change in or to, any debentures or incurred or increased any indebtedness or
liability (actual or contingent);
(g) entered into, varied, or authorised any agreement,
transaction, arrangement or commitment (whether in respect of capital
expenditure or otherwise) which:
(i) is of a long term, onerous or unusual nature or
magnitude or which could involve an obligation of such nature or magnitude; or
(ii) could restrict the business of any member of the
Wider Ergomed Group; or
(iii) is other than in the ordinary course of business;
(h) entered into, implemented, effected or authorised any
merger, demerger, reconstruction, amalgamation, scheme, commitment or other
transaction or arrangement in respect of itself or another member of the Wider
Ergomed Group;
(i) entered into or varied the terms of, any contract,
agreement or arrangement with any of the directors or senior executives of any
member of the Wider Ergomed Group;
(j) taken any corporate action or had any legal
proceedings instituted or threatened against it or petition presented or order
made for its winding‑up (voluntarily or otherwise), dissolution or
reorganisation or for the appointment of a receiver, administrator,
administrative receiver, trustee or similar officer of all or any part of its
assets and revenues or any analogous proceedings in any jurisdiction or
appointed any analogous person in any jurisdiction;
(k) been unable, or admitted in writing that it is unable,
to pay its debts or having stopped or suspended (or threatened to stop or
suspend) payment of its debts generally or ceased or threatened to cease
carrying on all or a substantial part of its business;
(l) waived or compromised any claim;
(m) made any alteration to its memorandum or articles of
association;
(n) made or agreed or consented to:
(i) any change:
(A) to the terms of the trust deeds constituting the pension
scheme(s) established for its directors, employees or their dependants; or
(B) the contributions payable to any such scheme(s) or to
the benefits which accrue or to the pensions which are payable thereunder; or
(C) the basis on which qualification for, or accrual or
entitlement to such benefits or pensions are calculated or determined; or
(D) the basis upon which the liabilities (including
pensions) or such pension schemes are funded, valued or made; or
(ii) any change to the trustees including the appointment
of a trust corporation;
(o) proposed, agreed to provide or modified the terms of
any share option scheme, incentive scheme or other benefit relating to the
employment or termination of employment of any person employed by the Wider
Ergomed Group; or
(p) entered into any agreement, commitment or arrangement
or passed any resolution or made any offer (which remains open for acceptance)
or proposed or announced any intention with respect to any of the
transactions, matters or events referred to in this Condition 11;
No adverse change, litigation or regulatory enquiry
12. Since 31 December 2022 and except as Disclosed:
(a) there having been no adverse change or deterioration
in the business, assets, financial or trading positions or profit or prospects
of any member of the Wider Ergomed Group which is material in the context of
the Wider Ergomed Group taken as a whole;
(b) no contingent or other liability of any member of the
Wider Ergomed Group having arisen or become apparent or increased which is
reasonably likely to adversely affect the business, assets, financial or
trading position, profits, prospects or operational performance of any member
of the Wider Ergomed Group to an extent which is material to the Wider Ergomed
Group taken as a whole;
(c) no litigation, arbitration proceedings, prosecution or
other legal proceedings to which any member of the Wider Ergomed Group is or
may become a party (whether as plaintiff, defendant or otherwise) having been
threatened, announced, implemented or instituted by or against or remaining
outstanding against or in respect of any member of the Wider Ergomed Group, in
each case which may reasonably be expected to have a material adverse effect
in the context of the Wider Ergomed Group taken as a whole;
(d) (other than as a result of the Acquisition) no enquiry
or investigation by, or complaint or reference to, any Third Party having been
threatened, announced, implemented, instituted by or against or remaining
outstanding against or in respect of any member of the Wider Ergomed Group, in
each case which may reasonably be expected to have a material adverse effect
in the context of the Wider Ergomed Group taken as a whole;
(e) other than with the consent of Bidco, no action having
been taken or proposed by any member of the Wider Ergomed Group, or having
been approved by Ergomed Shareholders or consented to by the Panel, which
falls or would fall within or under Rule 21.1 of the Code; and
(f) no member of the Wider Ergomed Group having
conducted its business in breach of any applicable laws and regulations which
in any case is material in the context of the Wider Ergomed Group taken as a
whole;
No discovery of certain matters
13. Bidco not having discovered other than Disclosed:
(a) that any financial or business or other information
concerning the Wider Ergomed Group disclosed at any time by or on behalf of
any member of the Wider Ergomed Group, whether publicly, to any member of the
Wider Bidco Group or otherwise, is misleading or contains any
misrepresentation of fact or omits to state a fact necessary to make any
information contained therein not misleading and which was not subsequently
corrected before 4 September 2023 by disclosure either publicly or otherwise
to Bidco, and which is, in any case, material in the context of the Wider
Ergomed Group taken as a whole or in the context of the Acquisition;
(b) that any member of the Wider Ergomed Group is subject
to any liability (actual or contingent) which is not disclosed in Ergomed's
annual report and accounts for the financial year ended 31 December 2022 and
which is material in the context of the Wider Ergomed Group taken as a whole;
or
(c) any information which affects the import of any
information disclosed at any time prior to the date of this announcement by or
on behalf of any member of the Wider Ergomed Group and which is material in
the context of the Wider Ergomed Group taken as a whole;
14. Bidco not having discovered other than Disclosed:
(a) that any past or present member of the Wider Ergomed
Group has not complied with all applicable legislation, regulations or other
requirements of any jurisdiction or any Authorisations or notices or other
requirements of any Third Party relating to the use, treatment, storage,
carriage, disposal, discharge, spillage, release, leak or emission of any
waste or hazardous substance or any substance likely to impair the environment
(including property) or harm human or animal health or otherwise relating to
environmental matters or the health and safety of humans, which non-compliance
would be likely to give rise to any liability including any penalty for
non-compliance (whether actual or contingent) on the part of any member of the
Wider Ergomed Group and which is material in the context of the Wider Ergomed
Group taken as a whole;
(b) that there has been a disposal, discharge, spillage,
accumulation, release, leak, emission or the migration, production, supply,
treatment, storage, transport or use of any waste or hazardous substance or
any substance likely to impair the environment (including any property) or
harm human or animal health which (whether or not giving rise to
non-compliance with any law or regulation), would be likely to give rise to
any liability (whether actual or contingent) on the part of any member of the
Wider Ergomed Group and which is material in the context of the Wider Ergomed
Group taken as a whole; or
(c) that there is or is likely to be any obligation or
liability (whether actual or contingent) or requirement to make good,
remediate, repair, reinstate or clean up any property, asset or any controlled
waters currently or previously owned, occupied, operated or made use of or
controlled by any past or present member of the Wider Ergomed Group (or on its
behalf), or in which any such member may have or previously have had or be
deemed to have had an interest, under any environmental legislation, common
law, regulation, notice, circular, Authorisation or order of any Third Party
in any jurisdiction or to contribute to the cost thereof or associated
therewith or indemnify any person in relation thereto and which is material in
the context of the Wider Ergomed Group taken as a whole.
Anti-corruption, sanctions and criminal property
15. Bidco not having discovered other than Disclosed that:
(a) (i) any past or present member, director, officer or
employee of the Wider Ergomed Group is or has at any time engaged in any
activity, practice or conduct which would constitute an offence under the
Bribery Act 2010, the US Foreign Corrupt Practices Act of 1977 or any other
anti‑corruption legislation applicable to the Wider Ergomed Group or (ii)
any person that performs or has performed services for or on behalf of the
Wider Ergomed Group is or has at any time engaged in any activity, practice or
conduct in connection with the performance of such services which would
constitute an offence under the Bribery Act 2010, the US Foreign Corrupt
Practices Act of 1977 or any other applicable anti-corruption legislation; or
(b) any asset of any member of the Wider Ergomed Group
constitutes criminal property as defined by section 340(3) of the Proceeds of
Crime Act 2002 (but disregarding paragraph (b) of that definition) or proceeds
of crime under any other applicable law, rule, or regulation concerning money
laundering or proceeds of crime or any member of the Wider Ergomed Group is
found to have engaged in activities constituting money laundering under any
applicable law, rule, or regulation concerning money laundering; or
(c) any past or present member, director, officer or
employee of the Wider Ergomed Group, or any other person for whom any such
person may be liable or responsible, has engaged in any business with, made
any investments in, made any funds or assets available to or received any
funds or assets from: (i) any government, entity or individual in respect of
which US or European Union persons, or persons operating in those territories,
are prohibited from engaging in activities or doing business, or from
receiving or making available funds or economic resources, by US or European
Union laws or regulations, including the economic sanctions administered by
the United States Office of Foreign Assets Control, or HM Treasury &
Customs; or (ii) any government, entity or individual targeted by any of the
economic sanctions of the United Nations, the United States, the European
Union or any of its member states; or
(d) a member of the Wider Ergomed Group has engaged in any
transaction which would cause Bidco to be in breach of any law or regulation
upon completion of the Acquisition, including the economic sanctions of the
United States Office of Foreign Assets Control, or HM Treasury & Customs,
or any government, entity or individual targeted by any of the economic
sanctions of the United Nations, the United States, the European Union or any
of its member states.
For the purpose of these Conditions:
(i) "Third Party" means any central bank, government,
government department or governmental, quasi‑governmental, supranational,
statutory, regulatory, environmental or investigative body, authority
(including any national or supranational anti‑trust or merger control
authority), court, trade agency, association, institution or professional or
environmental body or any other person or body whatsoever in any relevant
jurisdiction, including, for the avoidance of doubt, the Panel;
(ii) a Third Party shall be regarded as having
"intervened" if it has decided to take, institute, implement or threaten any
action, proceeding, suit, investigation, enquiry or reference or made,
proposed or enacted any statute, regulation, decision or order or taken any
measures or other steps or required any action to be taken or information to
be provided or otherwise having done anything and "intervene" shall be
construed accordingly; and
(iii) "Authorisations" means authorisations, orders, grants,
recognitions, determinations, certificates, confirmations, consents, licences,
clearances, provisions and approvals, in each case, of a Third Party.
B. Waiver and invocation of the Conditions
1. Subject to the requirements of the Panel, Bidco
reserves the right in its sole discretion to waive all or any of the
Conditions set out in Part A of this Appendix 1 except Conditions 1, 2(a)(i),
2(b)(i) and 2(c)(i) which cannot be waived. The deadlines in any of Conditions
2(a)(ii), 2(b)(ii) and 2(c)(ii) may be extended to such later date as may be
agreed in writing by Bidco and Ergomed (with the consent of the Panel and/or
approval of the Court, if such consent and/or approval is required). If any of
Conditions 2(a)(ii), 2(b)(ii) or 2(c)(ii) is not satisfied by the deadline
specified in the relevant Condition, Bidco shall make an announcement by 8.00
a.m. on the Business Day following such deadline confirming whether it has
invoked the relevant Condition, waived the relevant deadline or agreed with
Ergomed to extend the relevant deadline.
2. Bidco shall be under no obligation to waive (if
capable of waiver), to determine to be or remain satisfied or to treat as
fulfilled any of Conditions 3 to 15 in Part A of this Appendix 1 by a
date earlier than the Long-Stop Date, notwithstanding that the other
Conditions may at such earlier date have been waived or fulfilled and that
there are, at such earlier date, no circumstances indicating that any
Condition may not be capable of fulfilment.
3. Subject to paragraph 4 below, under Rule 13.5(a)
of the Code, Bidco may only invoke a Condition so as to cause the Acquisition
not to proceed, to lapse or to be withdrawn with the consent of the Panel. The
Panel will normally only give its consent if the circumstances which give rise
to the right to the invoke the Condition are of material significance to Bidco
in the context of the Acquisition. This will be judged by reference to the
facts of each case at the time that the relevant circumstances arise.
4. The Conditions set out in paragraphs 1 and 2 of
Part A of this Appendix 1 (and any Takeover Offer acceptance condition adopted
on the basis specified in Part C of this Appendix 1) will not be subject to
Rule 13.5(a) of the Code.
5. Any Condition that is subject to Rule 13.5(a) of
the Code may be waived by Bidco.
6. The Scheme will not become effective unless the
Conditions have been fulfilled or (to the extent capable of waiver) waived or,
where appropriate, have been determined by Bidco to be or remain satisfied by
no later than the Long-Stop Date.
7. If the Panel requires Bidco to make an offer or
offers for any Ergomed Shares under the provisions of Rule 9 of the Code,
Bidco may make such alterations to the Conditions as are necessary to comply
with the provisions of that Rule.
8. Each of the Conditions shall be regarded as a
separate Condition and shall not be limited by reference to any other
Condition.
C. Implementation by way of Takeover Offer
Bidco reserves the right to elect to implement the Acquisition by way of a
Takeover Offer, subject to the Panel's consent and (where relevant) to the
terms of the Co-operation Agreement. In such event, such Takeover Offer will
be implemented on the same terms and conditions, so far as applicable, as
those which would apply to the Scheme subject to appropriate amendments to
reflect the change in method of effecting the Acquisition, including (without
limitation and subject to the consent of the Panel) an acceptance condition
that is set at 75 per cent. (or such other percentage (being more than 50 per
cent.) as Bidco may decide (subject to the Panel's consent)) (i) in nominal
value of the shares to which such Takeover Offer relates; and (ii) of the
voting rights attaching to those shares.
D. Certain further terms of the Acquisition
1. Ergomed Shares will be acquired by Bidco fully paid
and free from all liens, equitable interests, charges, encumbrances, rights of
pre-emption and other third party rights of any nature whatsoever and together
with all rights attaching to them as at the date of this announcement or
subsequently attaching or accruing to them, including the right to receive and
retain, in full, all dividends and other distributions (if any) declared,
made, paid or payable, or any other return of capital made, on or after the
date of this announcement.
2. If, on or after the date of this announcement and
prior to the Scheme becoming effective, any dividend and/or other distribution
and/or other return of capital is declared, made or paid or becomes payable in
respect of the Ergomed Shares, Bidco reserves the right (without prejudice to
any right of Bidco to invoke Condition 11(c) in Part A of this Appendix
1), to reduce the Cash Offer (and, as the case may be, the consideration due
under the Partial Securities Alternative) payable under the terms of the
Acquisition for the Ergomed Shares by an amount up to the amount of such
dividend and/or distribution and/or return of capital, in which case any
reference in this announcement or in the Scheme Document to the consideration
payable under the terms of the Acquisition will be deemed to be a reference to
the consideration as so reduced. To the extent that any such dividend and/or
distribution and/or other return of capital is declared, made or paid or is
payable and it is: (i) transferred pursuant to the Acquisition on a basis
which entitles Bidco to receive the dividend or distribution and to retain it;
or (ii) cancelled, the consideration payable under the terms of the
Acquisition will not be subject to change in accordance with this paragraph.
Any exercise by Bidco of its rights referred to in this paragraph shall be the
subject of an announcement and, for the avoidance of doubt, shall not be
regarded as constituting any revision or variation of the Acquisition.
3. The Acquisition and, where relevant, the Partial
Securities Alternative will be subject, inter alia, to the Conditions and
certain further terms which are set out in this Appendix 1 and those terms
which will be set out in the Scheme Document and such further terms as may be
required to comply with the AIM Rules and the provisions of the Code.
4. The availability of the Acquisition to persons not
resident in the United Kingdom may be affected by the laws of the relevant
jurisdiction. Any persons who are subject to the laws of any jurisdiction
other than the United Kingdom should inform themselves about and observe any
applicable requirements. Further information in relation to Overseas
Shareholders will be contained in the Scheme Document.
5. This announcement and any rights or liabilities
arising hereunder, the Acquisition, the Scheme, the Partial Securities
Alternative (and any elections thereunder) and any proxies will be governed by
English law and be subject to the jurisdiction of the courts of England and
Wales. The Scheme will be subject to the applicable requirements of the Code,
the Panel, the London Stock Exchange (including the AIM Rules) and the FCA.
Appendix 2
Bases and Sources
1. The value attributed to the existing issued and to
be issued ordinary share capital of Ergomed is based upon the 50,811,805
Ergomed Shares in issue on 1 September 2023 (being the last Business Day prior
to the date of this announcement) and the 1,273,261 Ergomed Shares which are
the subject of options granted under the Ergomed Share Schemes.
2. Unless otherwise stated, the financial information
on Ergomed is extracted (without material adjustment) from Ergomed's Annual
Report and Accounts for the year ended 31 December 2022 and from the
announcement of Ergomed's H1 2023 Trading Update for the six months ended 30
June 2023.
3. The implied enterprise value of £680.0 million is
calculated by reference to:
· a fully diluted equity value of £703.1 million based on the
issued and to be issued share capital of Ergomed as set out above; less
· the Ergomed cash position of £26.0 million disclosed in the
"Ergomed H1 2023 Trading Update"; plus
· the Ergomed current and non-current lease liabilities of
£2.9 million disclosed in the FY22 Annual Report;
4. Unless otherwise stated in this announcement all
prices for Ergomed Shares have been derived from Bloomberg and represent
Closing Prices on the relevant date(s)
5. Volume-weighted average prices have been derived
from Bloomberg and have been rounded to the nearest one decimal place.
6. The implied enterprise value multiple of 21.0x its
2023 Adjusted EBITDA (on an IFRS 16 basis) in this announcement is calculated
based on:
· an enterprise value of £680.0 million, comprising:
o a fully diluted equity value of £703.1 million based on the issued and to
be issued share capital of Ergomed as set out above; less
o the Ergomed cash position of £26.0 million disclosed in the "Ergomed H1
2023 Trading Update"; plus
o the Ergomed current and non-current lease liabilities of £2.9 million
disclosed in the FY22 Annual Report;
· the FY23 Ergomed Profit Forecast of £32.4 million for 2023 Adjusted
EBITDA (on an IFRS 16 basis).
7. FY23 Ergomed Profit Forecast of £32.4 million for
2023 Adjusted EBITDA (on an IFRS 16 basis) is based on the following data
sourced from the analyst notes published before market close on 24 July 2023
(being the latest date prior to the "H1 2023 Trading Update" announcement):
Date Adjusted FY23 EBITDA (£m)
Berenberg 4 April 2023 32.0
Davy 21 March 2023 32.8
Investec 4 April 2023 32.4
Liberum 4 April 2023 32.3
Shore Capital 22 June 2023 32.3
Stifel 22 June 2023 32.5
Average 32.4
As per Rule 28.7(a)(ii) of the Code, estimates from Numis (£31.9m as at 22
June 2023) and Peel Hunt (£32.2m as at 21 March 2023) have been excluded from
the consensus as they are connected advisers to Ergomed. No other analyst
estimates have been excluded from consensus.
As per Rule 28.7 (c)(i) of the Code, the lowest Adjusted FY23 EBITDA forecast
was £32.0m (Berenberg) and the highest Adjusted FY23 EBITDA forecast was
£32.8m (Davy). The arithmetic mean of all analysts' forecasts ("consensus
forecast" or "market expectations") was £32.4m.
8. The implied enterprise value multiple of 24.0x its
2022 Adjusted EBITDA (on an IFRS 16 basis) in this announcement is calculated
based on:
· an enterprise value of £680.0 million, comprising:
o a fully diluted equity value of £703.1 million based on the issued and to
be issued share capital of Ergomed as set out above; less
o the Ergomed cash position of £26.0 million disclosed in the "Ergomed H1
2023 Trading Update"; plus
o the Ergomed current and non-current lease liabilities of £2.9 million
disclosed in the FY22 Annual Report;
· the FY22 Ergomed EBITDA of £28.4 million for 2022 Adjusted EBITDA
(on an IFRS 16 basis).
9. The comment that "an implied Ergomed enterprise
value multiple of approximately 24.0x its Adjusted EBITDA of £28.4 million
(on an IFRS 16 basis) for the year ended 31 December 2022, and an implied
Ergomed enterprise value multiple of approximately 21.0x its forecast Adjusted
EBITDA of £32.4 million (on an IFRS 16 basis) for the year ending 31 December
2023, which the directors of Ergomed believe is highly attractive and at the
high end compared to relevant public precedent transactions" is made with
reference to the following UK-listed pharma services and recent global CRO
transactions:
· Acquisition of Instem plc by Ichor Management Limited (Announced 30
August 2023)
· Acquisition of Clinigen Group plc by Triley Bidco Limited (Announced
8 December 2021)
· Acquisition of Vectura Group plc by PMI Global Services Inc.
(Announced 9 July 2021)
· Acquisition of UDG Healthcare by Nenelite Limited (Announced 12 May
2021)
· Acquisition of Cello Health plc by Pharma Value Demonstration Bidco
Limited (Announced 1 July 2020)
· Acquisition of Huntsworth plc by CD&R Artemis UK Bidco Limited
(Announced 3 March 2020)
· Acquisition of Consort Medical plc by Recipharm Holdings Limited
(Announced 18 November 2019)
· Acquisition of Syneos Health, Inc. by a consortium of private
investment firm affiliates composed of Elliott Investment Management, Patient
Square Capital, and Veritas Capital (Announced 10 May 2023)
· Acquisition of PPD, Inc. by Thermo Fisher Scientific Inc. (Announced
15 April 2021)
· Acquisition of PRA Health Sciences, Inc. by ICON plc (Announced 21
February 2021)
· Acquisition of PAREXEL International Corporation by Pamplona
Capital Management, LLP (Announced 20 June 2017)
Appendix 3
Details of Irrevocable Undertakings and Letters of Intent
Directors
The Founder has given an irrevocable undertaking to vote in favour of the
Scheme at the Court Meeting and the resolutions to be proposed at the General
Meeting in relation to the 9,129,297 Ergomed Shares, being his entire holding
of Ergomed Shares and approximately 18.0 per cent. of Ergomed's existing
issued ordinary share capital on 1 September 2023 (being the last Business Day
prior to the date of this announcement). The undertaking from the Founder will
cease to be binding only if:
· Bidco announces that it does not intend to proceed with the
Acquisition;
· the Takeover Offer or Scheme lapses or is withdrawn;
· is the Long-Stop Date unless, on such date, Bidco is bound
to make or has made an Offer that remains open for acceptance in accordance
with the Code; or
· any competing offer for the entire issued and to be issued
share capital of Ergomed is declared wholly unconditional or, if proceeding by
way of scheme of arrangement, becomes effective.
The other directors of Ergomed do not hold Ergomed Shares, however have
irrevocably undertaken to accept any proposals made by Bidco in accordance
with Rule 15 of the Code that have been agreed between Bidco and Ergomed in
respect of any options granted to them under the Ergomed Share Schemes.
Shareholders
Amati Global Investors Limited has delivered a non-binding letter of intent to
vote in favour of the Scheme at the Court Meeting and the resolutions to be
proposed at the General Meeting in relation to 1,114,609 Ergomed Shares
representing approximately 2.2 per cent. of the existing issued ordinary share
capital of Ergomed on 1 September 2023 (being the last Business Day prior to
the date of this announcement).
Appendix 4
Details on Topco and the Topco Units
1. Information on Topco and the intermediate holding
companies
Topco is a newly incorporated company controlled and indirectly wholly owned
by the Permira Funds, and was formed for the purpose of implementing the
Acquisition. Each of Bidco, Ergomed Midco 1 and Ergomed Midco 2 (together the
"Intermediate Holding Companies") is a direct or indirect wholly owned
subsidiary company of Topco. None of Topco, or any of the Intermediate Holding
Companies have traded since the date of their incorporation nor entered into
any obligations, other than in connection with the Acquisition.
Topco is directly wholly owned by Eden SPV. Topco is a private limited company
incorporated on 4 August 2023 under the laws of England and Wales. The share
capital of Topco currently comprises one ordinary share of £0.01 but will be
reorganised on or prior to the Effective Date so that it comprises Topco A
Ordinary Shares, Topco B Ordinary Shares, Topco A Preference Shares and Topco
B Preference Shares.
Ergomed Midco 1 is wholly owned by Topco. Ergomed Midco 1 is a private limited
company, was incorporated on 4 August 2023 under the laws of England and
Wales. The share capital of Ergomed Midco 1 currently comprises one ordinary
share of £0.01.
Ergomed Midco 2 is wholly owned by Ergomed Midco 1. Ergomed Midco 2 is a
private limited company incorporated on 4 August 2023 under the laws of
England and Wales. The share capital of Ergomed Midco 2 currently comprises
one ordinary share of £0.01.
Bidco is wholly owned by Ergomed Midco 2. Bidco is a private limited company
incorporated on 4 August 2023 under the laws of England and Wales. The share
capital of Bidco currently comprises one ordinary share of £0.01 each.
Set out below is a summary of the proposed Topco share capital structure and
the provisions of the Topco Shareholders' Agreement and the Topco Articles
governing the terms on which eligible Ergomed Shareholders who elect for the
Partial Securities Alternative will hold securities in Topco pursuant to the
mechanism described in paragraph 16 of the announcement above. Further
details will be included in the Scheme Document.
2. Information on Topco share capital
On or around completion of the Acquisition, Topco will issue around 59,681,078
Topco Ordinary Shares (on the basis of the maximum issue of Ergomed Shares
pursuant to the Ergomed Share Schemes described in Appendix 2). If the Partial
Securities Alternative (including any Topco A Ordinary Shares or Topco B
Ordinary Shares already in issue) were taken up in full by eligible Ergomed
Shareholders, and assuming the amount of Ergomed Shares issued pursuant to the
Ergomed Share Schemes prior to the Effective Date is consistent with the
calculation set out in Appendix 2 to this announcement, Topco would issue
around:
(i) 47,744,862 Topco A Ordinary Shares and 413,859,332
Topco A Preference Shares to Eden SPV to fund: the cash consideration; costs
and expenses payable in respect of the Acquisition; and additional capital
provided to support the ordinary course operations and near-term growth
requirements of Ergomed following completion of the Acquisition; and
(ii) 11,936,216 Topco B Ordinary Shares and 103,451,183
Topco B Preference Shares to those Ergomed Shareholders who validly elect to
receive the Partial Securities Alternative,
and, if the Partial Securities Alternative were accepted in respect of less
than the maximum entitlement to the Partial Securities Alternative described
above, the number of Topco B Shares would be reduced and the number of Topco A
Shares increased accordingly.
The Topco Ordinary Shares will be issued with a nominal value of £0.01 per
share and at a premium of £0.31 per share. The Topco Preference Shares will
be issued with a nominal value of £1 and for nil premium.
3. Terms of Issue of Topco Securities
The Topco B Ordinary Shares and Topco B Preference Shares to be issued to
eligible Ergomed Shareholders who elect for the Partial Securities Alternative
will be issued credited as fully paid and will rank economically pari passu
with the Topco A Ordinary Shares and Topco A Preference Shares respectively
being issued to Eden SPV pursuant to the Acquisition as described above,
including the right to receive and retain dividends and other distributions
declared, made or paid by reference to a record date falling on or after the
date of this announcement.
4. Economic rights
The economic rights described below are subject to the risks also described
below and in paragraph 15 of this announcement (for example, that (i)
holders of Topco Units may be diluted over time, potentially significantly,
should holders of Topco Units not elect to participate in further issues of
additional shares, loan notes or other securities of the Topco Group; (ii)
holders of Topco Units are not always entitled to participate in such issues
and (iii) such additional securities may have different rights to the Topco
Units).
Subject to the above, at the date of this announcement, any return of proceeds
to security holders of Topco, whether on an Exit (as described below in
paragraph 11 of this Appendix 4) or otherwise, including the right to receive
and retain dividends and all other distributions and returns of capital made
or paid, shall be distributed as follows:
Preference Shares
Firstly, such proceeds will be distributed pro-rata to each holder of Topco A
Preference Shares and Topco B Preference Shares in accordance with the terms
and conditions regulating such securities.
The Topco A Preference Shares and the Topco B Preference Shares shall rank
equally as regards any distributions, dividends, buyback, any other capital
redemption or other returns of income or capital made by Topco.
In addition, the Topco A Preference Shares and the Topco B Preference Shares
shall entitle the holders thereof to a fixed cumulative preferential dividend
at an annual rate of 12.5 per cent. of their issue price (the "Preferred
Return"). Any Preferred Return will be compounded annually and paid out of
available proceeds for distribution on an Exit or on redemption.
Ordinary Shares
Subject to the rights of the Topco A Preference Shares and the Topco B
Preference Shares and any other issues of securities by the Topco Group from
time to time, any surplus proceeds available shall then be distributed to each
holder of Topco A Ordinary Shares and Topco B Ordinary Shares, pro rata to
their shareholdings. The Topco A Ordinary Shares and the Topco B Ordinary
Shares shall rank equally as regards any distributions, dividends, buy-back,
any other capital redemption or other returns of income or capital made by
Topco.
5. Voting rights
Every holder of one or more Topco A Ordinary Shares on the date on which
either a written resolution is circulated or a general meeting is held and who
is present at such meeting shall, subject to the Topco Articles, have one vote
for each Topco A Ordinary Share.
The Topco B Ordinary Shares, Topco A Preference Shares and the Topco B
Preference Shares will not entitle the holders thereof to (i) any votes; (ii)
receive a copy of any written resolution; or (iii) receive notice of any
general meetings.
The following matters shall require the prior consent of a majority of Topco B
Shareholders:
(i) any raising of new equity capital or issue of new shareholder
instruments (including shareholder loans) by any member of the Topco Group
which is not conducted in line with the pre-emption, catch-up or other
procedures and customary exceptions specified in the Topco Shareholders'
Agreement;
(ii) any return of capital, redemption or buy-back of shareholder
instruments or recapitalization of or by any member of the Topco Group
otherwise than on a pro rata basis as between the relevant holders of Topco
Securities;
(iii) any dividends or distributions made or undertaken otherwise than on a
pro rata basis as between holders of Topco Securities; and
(iv) the entering into, variation or termination of any related party contract
with Permira and its respective associates (other than portfolio companies)
and other than on commercial arm's length terms,
Save, in the case of paragraphs (i) to (iii) above, between wholly owned
members of the Topco Group, provided it does not disproportionately affect any
class of Topco shareholder.
Eden SPV may amend the rights of the Topco Securities (notwithstanding any
class rights) without the consent of the Topco B Shareholders (provided that
reasonable notice setting out the amendments shall be sent to the Topco B
Shareholders), save that no amendment shall be made which would be materially
and/or disproportionately adverse to economic, tax or legal position of the
Topco B Shareholders as compared to Eden SPV without the consent of Topco B
Shareholders. Any amendments made without the consent of the Topco B
Shareholders shall be for bona fide purposes and shall not be used to
frustrate, terminate or reduce the rights of the Topco B Shareholders.
6. Transfers of Topco Units
Topco B Shares will not be transferable during an initial five year lock up
period (the "Lock-up Period") without the prior written consent of Eden SPV
except pursuant to the drag and tag rights described below, a reorganisation
approved by Eden SPV or in respect of customary permitted transfers to
associates.
No changes in direct or indirect interests or economic entitlements in Topco B
Shares shall be permitted which circumvent the restrictions on transfer during
the Lock-up Period and, without prejudice to damages claims, economic and
board appointment rights shall be suspended during any such breach.
Following the Lock-up Period, a Topco B Shareholder shall be entitled to
transfer its Topco B Shares (provided that any such transfer is for all (but
not part) of the Topco Units held by such Topco B Shareholder and any of its
associates to whom Topco Units have been transferred in the limited permitted
circumstances, but shall not include any Topco Units held by any of its
associates to the extent not held as a result of any such transfer), subject
to a right of first refusal on the part of Eden SPV (other than on associate
transfers) and to certain other restrictions in respect of the identity of the
proposed transferee. In particular, any proposed transferee of Topco B Shares
after the Lock-up Period shall:
(i) adhere to the Topco Shareholders' Agreement;
(ii) complete any applicable anti-money laundering, anti-bribery and
corruption, anti-sanctions and "know your client" checks reasonably required
by Permira or its associates, Eden SPV, the Topco Group or the Ergomed Group
(to be undertaken promptly) and/or any antitrust or regulatory change in
control approvals required by any regulator (which the Topco Group and Ergomed
shall provide reasonable information and assistance in obtaining, if
required); and
(iii) not be permitted if considered by the board of Topco (acting
reasonably and without delay) to be a competitor of the Ergomed Group, or a
person whose investment is likely to result in reputational harm to Permira or
its associates, Eden SPV, the Topco Group or the Ergomed Group.
Customary stapling provisions shall apply in respect of any transfers of Topco
Securities such that Topco Ordinary Shares and Topco Preference Shares must be
transferred together in fixed ratios.
7. Additional Topco Securities Issues
Further issues of securities by the Topco Group are expected to be
implemented.
If Topco proposes to issue new Topco Securities, each holder of Topco Shares
shall be entitled to participate pro rata in such issuance, exercisable on at
least 15 business days' written notice, excluding issues of Topco Securities
or transfer of Topco Securities from treasury:
(a) by one wholly owned member of the Topco Group to
another wholly owned member of the Topco Group, provided that no holder of
Topco Securities is disproportionately adversely affected compared with other
holders of Topco Securities;
(b) to Eden SPV and/or its associates to finance the
Acquisition;
(c) to the Topco B Shareholders pursuant to the Scheme
and/or the mechanism described in paragraph 16 above;
(d) to actual or potential employees, directors or
consultants (whether directly or indirectly) which shall dilute Eden SPV's
Topco Securities and the Topco B Shareholders' Topco Securities pro rata;
(e) other than to Eden SPV or its associates, for non-cash
consideration on the acquisition of, or merger with, all or part of another
business, undertaking, company or assets, which shall dilute Eden SPV's Topco
Securities and the Topco B Shareholders' Topco Securities pro rata;
(f) other than to Eden SPV or its associates, in
connection with the debt financing arrangements of the Topco Group, which
shall dilute Eden SPV's Topco Securities and the Topco B Shareholders' Topco
Securities pro rata;
(g) in connection with an IPO or a pre-IPO reorganisation;
or
(h) in respect of which Eden SPV and a majority of the
Topco B Shareholders give their prior written consent to pre-emption rights
not applying.
If any Topco B Shareholder notifies Topco that it does not wish to participate
in an issuance, Topco shall first be required to conduct an independent
valuation of the Topco Shares, and will issue such new Topco Securities at a
price which is not lower than the price reflected in such valuation.
In the case of an issue of further Topco Securities to Eden SPV (or its
affiliates), the recipient will receive Topco A Shares and the Topco B
Shareholders entitled to participate in such issue will receive further Topco
B Shares. Topco A Shares and Topco B Shares shall be issued pro rata in the
proportions which exist immediately before the new issue of securities if each
shareholder exercises their pre-emption rights in full.
8. Terms of Partial Securities Alternative in the
event of a switch
In the event that Bidco elects, with the consent of the Panel and subject to
the Co-operation Agreement, to switch to a Takeover Offer, and less than one
hundred per cent. of the Ergomed Shares are acquired by Bidco on or around the
date of such Takeover Offer becoming wholly unconditional, the total number of
Topco Offer Shares to be issued to both Eden SPV and Ergomed Shareholders who
elect for the Partial Securities Alternative will be reduced (and in the same
proportions as between Topco A Shares and Topco B Shares such that the maximum
number of Topco Units available to Ergomed Shareholders under the Partial
Securities Alternative will remain equal to the equivalent of 20.0 per cent.
of the total Topco Offer Shares in issue at such time).
In that event, if elections for the Partial Securities Alternative are unable
to be satisfied in full as a result, the number of Topco Units available for
each Ergomed Share will be reduced on a pro rata proportional basis and the
balance of the consideration for each Ergomed Share will be paid in cash in
accordance with the terms of the Cash Offer.
If (i) further Ergomed Shares are acquired for cash by or on behalf of Bidco
after the Takeover Offer becomes wholly unconditional (under the compulsory
acquisition procedure or otherwise), and (ii) the Topco A Shares to be issued
to fund those acquisitions were not included in the calculation of the above
20.0 per cent. entitlement of Ergomed Shareholders who elect for the Partial
Securities Alternative, any additional Topco Ordinary Shares and Topco
Preference Shares which are issued in order to fund those acquisitions, will
be issued in the same proportions as between each class of Topco A Shares and
Topco B Shares as existed following the initial issue of Topco Offer Shares to
electing Ergomed Shareholders. Holders of Topco B Ordinary Shares and Topco B
Preference Shares shall be entitled to customary pre-emption rights or
catch-up rights in relation to any such additional issue of Topco Ordinary
Shares and Topco Preference Shares in order to maintain their percentage
shareholdings in Topco.
9. Governance; Topco Board Representation
Any Topco B Shareholder (together with its associates) holding at least 12.0
per cent. of the Topco Ordinary Shares at any time shall have the right to
appoint a director (subject to the identity of the proposed director being
acceptable to the Topco Board (acting reasonably and in good faith)), it being
agreed that consent being withheld in respect of all actual or potential
competitors of the Ergomed Group shall not be unreasonable) to attend, speak
and vote at meetings of the Topco Board (and the boards of any other Topco
Group or Ergomed Group company on which the Permira Funds have board
representation) and there shall be a minimum of four Topco Board meetings per
annum.
10. Information rights
The director appointed in accordance with the "Governance; Topco Board
Representation" section above shall receive all notices of board meetings and
shall be provided with (subject to customary confidentiality undertakings and
restrictions around the sharing of such information) all relevant papers,
documents and reports provided to the members of the board, and papers,
material provided to, minutes of, and resolutions approved by such board and
any committee of such board.
11. Exit Arrangements
Any future share sale, asset sale, IPO, winding-up or other form of liquidity
event relating to the Topco Group (an "Exit") shall occur at the absolute
discretion of the Permira Funds (through Eden SPV).
All holders of Topco Units are required to co-operate and take such actions in
respect of any proposed Exit as are reasonably requested by the Topco Group,
Eden SPV or the Permira Funds. This shall include without limitation: any
reorganisation, restructuring or other corporate (or similar) action required
to facilitate such Exit; providing warranties as to the title to the Topco
Units held by such holder and its capacity to sell such Topco Units; and, in
the case of an IPO, entering into customary "lockup" undertakings.
12. Drag-Along and Tag-Along
Eden SPV shall have a drag right on the same economic terms on any transfers
of direct or indirect interests in Topco Securities by the Permira Funds to a
bona fide purchaser which is not connected with the Permira Funds if,
following such transfer, the purchaser would thereafter directly or indirectly
hold a majority of the Topco Securities.
Topco B Shareholders shall have a "pro rata" tag right on the same economic
terms on any transfer of direct or indirect shareholdings in Topco Securities
by the Permira Funds (other than in respect of certain excluded instances
including, but not limited to, customary permitted transfers to affiliates,
any current or prospective director, officer, employee or consultant of the
Topco Group, reorganisation, IPO, where a drag right has been exercised,
and/or any "silent syndication" to limited partners and/or co-investors). A
full tag right will apply on a transfer by Eden SPV of a majority of the Topco
Securities (save that this right will be subject to certain excluded instances
specified above).
13. Governing Law and Jurisdiction
The Topco Shareholders' Agreement and any non-contractual obligations arising
out of or in connection with it shall be governed by English law. The courts
of England have exclusive jurisdiction to settle any dispute which may arise
out of or in connection with the Topco Shareholders' Agreement and accordingly
any proceedings arising out of or in connection with the Topco Shareholders'
Agreement shall be brought in such courts.
14. "Know your client" requirements
Eligible Ergomed Shareholders who elect for the Partial Share Alternative will
be required to provide, and procure that their affiliates and other related
persons provide, to Bidco and Permira before completion of the Acquisition
such materials and information with respect to themselves (and, to the extent
applicable, their directors, shareholders, affiliates and other relevant
parties) as requested by Bidco and Permira in order to satisfy Bidco, Permira
and their affiliates' "Know Your Client" checks (including pursuant
to obligations under the UK Money Laundering, Terrorist Financing and
Transfer of Funds (Information on the Payer) Regulations 2017 and the Joint
Money Laundering Steering Group Guidance Notes (or analogous
equivalent) and/or the Luxembourg law of 12 November 2004 on the fight
against money laundering and terrorist financing (as amended)). Further
details regarding the information to be provided, and the manner in which it
should be provided, will be set out in the Scheme Document.
Appendix 5
FY23 Ergomed Profit Forecast
On 25 July 2023 in its "H1 2023 Trading Update" announcement, Ergomed updated
the market in relation to revenue and adjusted EBITDA for the 12 months ending
31 December 2023 with reference to the market expectations immediately prior
to that announcement:
"Revenue and adjusted EBITDA for the full year 2023 are anticipated to be in
line with market expectations, demonstrating the Company's resilience and
ability to maintain its strong financial performance despite the continued
challenging macro-economic environment"
Immediately prior to the announcement on 25 July 2023 the consensus Adjusted
EBITDA for the 12 months ending 31 December 2023 (compiled from analyst notes
published before market close on 24 July 2023, being the latest date prior to
the "H1 2023 Trading Update" announcement) was £32.4m on an IFRS 16 basis. No
subsequent references were made by Ergomed as to its expectations for FY23
EBITDA.
Application of Rule 28 to the Ergomed Profit Forecast
The statement from Ergomed in bold above sets an expectation for Adjusted
EBITDA for the 12 months ending 31 December 2023 of £32.4m on an IFRS 16
basis (the "FY23 Ergomed Profit Forecast") and for the purposes of Rule
28.1(c) of the Code constitutes a profit forecast.
Directors confirmation
The directors of Ergomed confirm that, as at the date of this announcement,
the FY23 Ergomed Profit Forecast remains valid and that it has been properly
compiled on the basis of the assumptions stated below and that the basis of
accounting used is consistent with Ergomed's accounting policies which are in
accordance with IFRS and those that Ergomed applied in preparing its financial
statements for the year ended 31 December 2022.
Further information on the basis of preparation of the FY23 Ergomed Profit
Forecast, including the principal assumptions on which it is based, is set out
below.
Basis of preparation and principal assumptions
The directors' of Ergomed assessment of Ergomed's FY23 financial performance
in comparison to the consensus forecast is based upon internal Ergomed
forecasts.
In confirming the FY23 Ergomed Profit Forecast, the directors of Ergomed have
made the following assumptions in respect of the forecast period ending 31
December 2023:
Factors outside the influence or control of the directors of Ergomed:
1. no material change in the political, economic and/or market environment
that would materially affect Ergomed;
2. there will be no material changes in market conditions over the period
to 31 December 2023 in relation to either customer demand or competitive
environment;
3. no significant one-off events or litigation that would have a material
impact on the operating results or financial position of Ergomed;
4. there will be no material adverse change to Ergomed's commercial
relationships;
5. no adverse changes to inflation, interest or tax rates in Ergomed's
principal markets compared with Ergomed's budgeted estimates;
6. no material changes of the value of pound sterling above the average
foreign exchange rates that have applied during the period from 25 July 2023
to the last Business Day before this announcement;
7. no material adverse events which will have a significant impact on the
operating results or financial position of Ergomed;
8. no material adverse outcome from any ongoing or future disputes with
any customer, competitor, regulator or tax authority; and
9. no material change in legislation, taxation, regulatory requirements,
applicable standards or the position of any regulatory bodies impacting the
Ergomed Group's operations or accounting policies.
Factors within the influence or control of the directors of Ergomed:
1. no additional significant acquisitions, disposals, developments,
partnership or joint venture agreements being entered into by Ergomed which
would have a materially dilutive effect on Ergomed's earnings;
2. no material change in the dividend or capital policies of Ergomed;
3. no material changes to the senior leadership team of Ergomed;
4. no material change in Ergomed's strategy; and
5. Ergomed's accounting policies will be consistently applied in the
period ending 31 December 2023.
Appendix 6
Definitions
The following definitions apply throughout this announcement unless the
context requires otherwise.
"£", "Sterling", "pence" or "p" the lawful currency of the UK
"Acquisition" the direct or indirect acquisition of the entire issued and to be issued share
capital of Ergomed by Bidco to be implemented by way of the Scheme or (should
Bidco so elect, subject to the consent of the Panel) by way of the Takeover
Offer
"AIM" or "AIM Market" the AIM Market of the London Stock Exchange
"AIM Rules" the AIM Rules for Companies published by the London Stock Exchange, as amended
from time to time;
"Authorisations" has the meaning given in paragraph 15 of Part A of Appendix 1
"Bidco" Eden AcquisitionCo Limited, a newly incorporated private limited company
incorporated under the laws of England and Wales with registered number
15049830, controlled and indirectly wholly owned by the Permira Funds
"Bidco Group" Bidco and its subsidiary undertakings
"Business Day" means a day (other than a Saturday or Sunday or a public holiday) on which
banks are open for business in London
"Cash Offer" has the meaning given in section 2
"Closing Price" the closing middle market quotations of a share derived from information
published by the London Stock Exchange
"Code" the City Code on Takeovers and Mergers
"Companies Act" the Companies Act 2006, as amended from time to time
"Conditions" the conditions to the implementation of the Acquisition (including the Scheme)
as set out in Appendix 1 to this announcement and to be set out in the
Scheme Document
"Confidentiality Agreement" the confidentiality dated 28 February 2023 between Permira and Ergomed as
amended and restated on 8 August 2023, entered into in connection with the
Acquisition and further details of which are set out in section 14 of this
announcement.
"Co-operation Agreement" the agreement dated 4 September 2023 between Ergomed and Bidco and relating,
among other things, to the implementation of the Acquisition
"Court" the High Court of Justice of England and Wales
"Court Meeting" the meeting(s) of the Scheme Shareholders to be convened by order of the Court
pursuant to section 896 of the Companies Act, notice of which will be set out
in the Scheme Document, for the purpose of approving the Scheme, including any
adjournment thereof
"CREST" the relevant system (as defined in the Uncertificated Securities Regulations
2001 (SI 2001/3755)) in respect of which Euroclear UK & International
Limited is the Operator (as defined in such Regulations) in accordance with
which securities may be held and transferred in uncertificated form
"CRO" Contract Research Organisation
"CSAT" the Romanian Supreme Council of National Defence
"CSFDI" the Romanian Commission for Screening of Foreign Direct Investments
"Dealing Disclosure" an announcement pursuant to Rule 8 of the Code containing details of dealings
in interests in relevant securities of a party to an offer
"Disclosed" information which has been fairly disclosed by or on behalf of Ergomed: (i) in
the annual report and accounts of the Ergomed Group for the 12 month period to
31 December 2022; (ii) in the half yearly trading update of the Ergomed Group
for the six month period to 30 June 2023 dated 25 July 2023; (iii) in this
announcement; (iv) in any other public announcement by, or on behalf of,
Ergomed to a Regulatory Information Service prior to the date of this
announcement; (v) in writing or orally in meetings and calls by Ergomed
management, in each case prior to the date of this announcement by or on
behalf of Ergomed to Bidco (or its respective officers, employees, agents or
advisers in their capacity as such); or (vi) in the virtual data room operated
by or on behalf of Ergomed in respect of the Acquisition
"Ergomed" Ergomed plc
"Ergomed Group" Ergomed and its subsidiary undertakings
"Ergomed Midco 1" Eden Holdco 1 Limited, a private limited company incorporated under the laws
of England and Wales with registered number 15049585
"Ergomed Midco 2" Eden Holdco 3 Limited, a private limited company incorporated under the laws
of England and Wales with registered number 15049698
"Ergomed Shareholders" the registered holders of Ergomed Shares from time to time
"Ergomed Shares" ordinary shares of one pence each in the capital of Ergomed
"Ergomed Share Schemes" Ergomed Long Term Incentive Plan and Ergomed Unapproved Executive Share Option
Scheme 2007
"Effective Date" the date upon which the Scheme becomes effective in accordance with its terms
"Eden SPV" Eightplatform V Limited, a private limited company incorporated under the laws
of England and Wales with registered number 14628877
"Excluded Shares" (i) any Ergomed Shares beneficially owned by Bidco or any other member of the
Bidco Group; (ii) any Ergomed Shares held in treasury by Ergomed and (iii) any
other Ergomed Shares which Bidco and Ergomed agree will not be subject to the
Scheme
"Exit" has the meaning given in paragraph 11 of Appendix 4
"Form of Election" the form of election to be sent to Scheme Shareholders by or on behalf of
Ergomed pursuant to which a Scheme Shareholder (other than certain Overseas
Shareholders) may make an election under the Partial Securities Alternative
"Forms of Proxy" the form of proxy in connection with each of the Court Meeting and the General
Meeting, which shall accompany the Scheme Document
"Founder" Miroslav Reljanović
"FCA" the Financial Conduct Authority of the United Kingdom, acting in its capacity
as the competent authority for the purposes of FSMA
"FSMA" the Financial Services and Markets Act 2000
"FY23 Ergomed Profit Forecast" the profit forecast included within Ergomed's trading update announcement
released on 25 July 2023 in respect of the year to 31 December 2023, as
detailed further in Appendix 5
"General Meeting" the general meeting of Ergomed to be convened in connection with the Scheme,
notice of which will be set out in the Scheme Document, including any
adjournment thereof
"Interim Facility Agreement" the interim facility agreement between (amongst others) Bidco, the original
interim lenders named therein, Kroll Agency Services Limited as interim
facility agent and Kroll Trustee Services Limited as interim security agent
dated on or about the date of this announcement
"Intermediate Holding Companies" has the meaning given in paragraph 1 of Appendix 4
"IPO" initial public offering
"Italian Golden Power Authority" the Presidency of the Italian Council of Ministries (Presidenza del Consiglio
dei Ministri) or any other office, department, or branch of the Italian
government competent, with authority to issue decisions pursuant to the
Italian Golden Power Regulations
"Italian Golden Power Regulations" collectively, Law Decree No. 21 of 15 March 2012 as subsequently amended and
restated from time to time, including by, but not limited to, Law Decree of 8
April 2020 No. 23, Law Decree of 21 March 2022 No. 21, and Decree of the
President of the Council of Ministries of 1 August 2022 No. 133 and any rules,
decrees, orders and regulations promulgated thereunder and/or applicable to
Ergomed in connection thereto
"Jefferies" Jefferies International Limited
"Lock-up Period" has the meaning given in paragraph 6 of Appendix 4
"London Stock Exchange" London Stock Exchange plc
"Long-Stop Date" 4 June 2024, or such later date as may be agreed in writing by Bidco and
Ergomed (either with the Panel's consent if required or at the direction of
the Panel under Note 3 on Section 3 of Appendix 7 to the Code) and as the
Court may approve (if such approval is required)
"Numis" Numis Securities Limited
"Offer Period" the offer period (as defined by the Code) relating to Ergomed;
"Opening Position Disclosure" has the same meaning as in Rule 8 of the Code
"Overseas Shareholders" Ergomed Shareholders who are resident in, ordinarily resident in, or citizens
of, jurisdictions outside the United Kingdom or the United States
"Panel" the UK Panel on Takeovers and Mergers
"Partial Securities Alternative" has the meaning given in section 2
"Partial Securities Alternative Maximum" has the meaning given in section 15
"Permira" Permira Advisers LLP
"Permira Funds" the Permira funds advised by Permira
"PIPE private investment in public equity
"Preferred Return" has the meaning given in paragraph 4 of Appendix 4
"PV" Pharmacovigilance
"Registrar of Companies" the Registrar of Companies in England and Wales
"Regulatory Information Service" any information service authorised from time to time by the FCA for the
purpose of disseminating regulatory announcements
"Restricted Jurisdiction" any jurisdiction where local laws or regulations may result in a significant
risk of civil, regulatory or criminal exposure if information concerning the
Acquisition is sent or made available to Ergomed Shareholders in that
jurisdiction
"Romanian FDI Act" Romanian Government Emergency Ordinance no. 46/2022 regarding the
implementation measures of Regulation (EU) 2019/452 of the European Parliament
and of the Council of 19 March 2019 establishing a framework for the screening
of foreign direct investments into the Union and for amending and
supplementing competition law no. 21/1996
"Rothschild & Co" N.M. Rothschild & Sons Limited
"Scheme" the scheme of arrangement proposed to be made under Part 26 of the Companies
Act between Ergomed and the Scheme Shareholders, with or subject to any
modification, addition or condition approved or imposed by the Court and
agreed to by Ergomed and Bidco
"Scheme Court Hearing" the hearing of the Court to sanction the Scheme
"Scheme Court Order" the order of the Court sanctioning the Scheme under Part 26 of the Companies
Act
"Scheme Document" the document to be sent to (among others) Ergomed Shareholders containing and
setting out, among other things, the full terms and conditions of the Scheme
and containing the notices convening the Court Meeting and General Meeting
"Scheme Record Time" the time and date specified in the Scheme Document, expected to be 6.00 p.m.
London time on the Business Day immediately prior to the Effective Date
"Scheme Shareholders" holders of Scheme Shares
"Scheme Shares" Ergomed Shares:
(a) in issue as at the date of the Scheme Document;
(b) (if any) issued after the date of the Scheme Document and
prior to the Scheme Voting Record Time; and
(c) (if any) issued on or after the Scheme Voting Record Time
and before the Scheme Record Time, either on terms that the original or any
subsequent holders thereof shall be bound by the Scheme or in respect of which
the holders thereof shall have agreed in writing to be bound by the Scheme,
but in each case other than the Excluded Shares
"Scheme Voting Record Time" the time and date specified in the Scheme Document by reference to which
entitlement to vote on the Scheme will be determined
"Section 3(a)(10)" Section 3(a)(1) of the Securities Act
"Securities Act" the US Securities Act of 1933
"Serbian Competition Commission" the Commission for Protection of Competition of the Republic of Serbia
"Special Resolution" the special resolution to be proposed by Ergomed at the General Meeting in
connection with, among other things, the approval of the Scheme and the
alteration of Ergomed's articles of association and such other matters as may
be necessary to implement the Scheme and the delisting of the Ergomed Shares
"Substantial Interest" a direct or indirect interest in 20 per cent. or more of the voting equity
capital of an undertaking
"Takeover Offer" if (subject to the consent of the Panel) Bidco elects to effect the
Acquisition by way of a takeover offer (as defined in Chapter 3 of Part 29 of
the Companies Act), the offer to be made by or on behalf of Bidco to acquire
the issued and to be issued ordinary share capital of Ergomed on the terms and
subject to the conditions to be set out in the related offer document
"Third Party" has the meaning given in Part A of Appendix 1
"Topco" Eden Topco Limited, a private limited company incorporated under the laws of
England and Wales with registered number 15049295
"Topco A Ordinary Shares" the A ordinary shares in the capital of Topco
"Topco A Preference Shares" the A preference shares in the capital of Topco
"Topco A Shares" the Topco A Ordinary Shares and the Topco A Preference Shares
"Topco Board" means the board of directors of Topco
"Topco B Ordinary Shares" the B ordinary shares in the capital of Topco
"Topco B Preference Shares" the B preference shares in the capital of Topco
"Topco B Shareholders" any holder of Topco B Ordinary Shares and/or the Topco B Preference Shares
"Topco B Shares" the Topco B Ordinary Shares and the Topco B Preference Shares
"Topco Group" Topco and its direct and indirect subsidiaries including, following completion
of the Acquisition, the Ergomed Group
"Topco Offer Shares" has the meaning given in section 16
"Topco Ordinary Shares" the Topco A Ordinary Shares and the Topco B Ordinary Shares
"Topco Preference Shares" the Topco A Preference Shares and the Topco B Preference Shares
"Topco Securities" the Topco A Shares and the Topco B Shares
"Topco Shareholders' Agreement" the shareholders' agreement to be entered into by the Topco B Shareholders,
from time to time, and the Intermediate Holding Companies
"Topco Units" that number of the Topco B Ordinary Shares and the Topco B Preference Shares
available under the Partial Securities Alternative
"UK" or "United Kingdom" the United Kingdom of Great Britain and Northern Ireland
"United States of America", "United States" or "US" the United States of America, its territories and possessions, any state of
the United States and the District of Columbia
"US Exchange Act" the United States Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder
"Wider Bidco Group" Bidco and the subsidiaries and subsidiary undertakings of Bidco and associated
undertakings (including any joint venture, partnership, firm or company in
which any member of the Bidco Group is interested or any undertaking in which
Bidco and such undertakings (aggregating their interests) have a Substantial
Interest)
"Wider Ergomed Group" Ergomed and the subsidiaries and subsidiary undertakings of Ergomed and
associated undertakings (including any joint venture, partnership, firm or
company in which any member of the Ergomed Group is interested or any
undertaking in which Ergomed and such undertakings (aggregating their
interests) have a Substantial Interest)
For the purposes of this announcement, "subsidiary", "subsidiary undertaking",
"undertaking", "associated undertaking" have the meanings given by the
Companies Act.
References to an enactment include references to that enactment as amended,
replaced, consolidated or re-enacted by or under any other enactment before or
after the date of this announcement. All references to time in this
announcement are to London time unless otherwise stated.
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