Recommended cash acquisition
16/11/2023 07:00
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RNS Number : 6773T Hotel Chocolat Group PLC 16 November 2023
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THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
FOR IMMEDIATE RELEASE
16 November 2023
RECOMMENDED CASH ACQUISITION
of
HOTEL CHOCOLAT GROUP PLC
by
HIVE BIDCO, INC.
a wholly-owned indirect subsidiary of Mars, Incorporated,
to be implemented by means of a scheme of arrangement under Part 26 of the
Companies Act 2006
Summary
● The boards of directors of Hive Bidco, Inc. ("Bidco") and Hotel Chocolat Group
plc ("Hotel Chocolat") are pleased to announce that they have reached
agreement on the terms of a recommended cash acquisition, pursuant to which
Bidco, a wholly-owned indirect subsidiary of Mars, Incorporated ("Mars"), will
acquire the entire issued and to be issued ordinary share capital of Hotel
Chocolat (the "Acquisition"). 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.
● 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 the full
terms and conditions which will be set out in the Scheme Document, each Hotel
Chocolat Shareholder at the Scheme Record Time will be entitled to receive:
for each Hotel Chocolat Share 375 pence in cash (the "Cash
Offer")
● The Cash Offer values the entire issued and to be issued share capital of
Hotel Chocolat at approximately £534 million on a fully diluted basis.
● The Cash Offer represents a premium of approximately:
● 169.8 per cent. to Hotel Chocolat's share price of 139 pence at the close of
business on 15 November 2023, being the last Business Day prior to the date of
this announcement.
● 194.2 per cent. to the volume-weighted average price of 127 pence per Hotel
Chocolat Share for the 60-day period ended at the close of business on 15
November 2023, being the last Business Day prior to the date of this
announcement.
● 144.3 per cent. to the volume-weighted average price of 154 pence per Hotel
Chocolat Share for the 12 month period ended at the close of business on 15
November 2023, being the last Business Day prior to the date of this
announcement.
● As an alternative to the Cash Offer, eligible Hotel Chocolat Shareholders may
elect to receive one unlisted share of Class B stock of Bidco (a "Rollover
Share") for each Hotel Chocolat Share (the "Partial Share Alternative"), such
Rollover Shares to be issued on the terms and pursuant to the mechanism
described in paragraphs 13 and 14 and Appendix 4 of this announcement.
Eligible Hotel Chocolat Shareholders will be able to elect for the Partial
Share Alternative in relation to some or all of their holdings of Hotel
Chocolat Shares, subject to any such election being in respect of at least the
Minimum Rollover Threshold (as defined in paragraph 2 of this announcement).
In aggregate, the maximum number of Rollover Shares available to be issued to
eligible Hotel Chocolat Shareholders under the Partial Share Alternative will
be limited to the equivalent of 30 per cent. of the Bidco Offer Shares (as
defined in paragraph 14 of this announcement). The key terms and conditions of
the Partial Share Alternative are summarised in paragraph 13 of this
announcement and a more detailed summary of the rights attaching to the
Rollover Shares is set out in Appendix 4 to this announcement. The Rollover
Shares will not be listed nor transferable (subject to certain limited
exceptions). An estimate by Morgan Stanley (as financial adviser to Bidco) of
the value of a Rollover Share, together with the assumptions, qualifications
and caveats forming the basis of its estimate of value, will be set out in a
letter to be included in the Scheme Document.
● If, on or after the date of this announcement and prior to the Effective Date,
any dividend and/or other distribution and/or other return of capital or value
is announced, declared, made or paid or becomes payable in respect of the
Hotel Chocolat Shares, Bidco reserves the right to reduce the consideration
due pursuant to the Cash Offer (and, as the case may be, the consideration due
under the Partial Share 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 or value. In such circumstances, Hotel Chocolat
Shareholders shall be entitled to retain any such dividend, distribution, or
other return of value declared, made or paid.
Background to and reasons for the Acquisition
● Mars has long admired Hotel Chocolat's impressive credentials as a
contemporary, premium brand with a differentiated product offering,
world-class product quality and strong direct-to-consumer capabilities through
its physical store presence and sophisticated digital commerce platform.
● Mars believes that Hotel Chocolat and Mars are culturally aligned, with shared
values of quality, sustainability and purpose among their guiding principles.
Mars' stated purpose is "the world we want tomorrow starts with how we do
business today" and it shares the passion and conviction in Hotel Chocolat's
mission, "to make people and nature happy through reinventing chocolate".
● Mars believes it is well-positioned to support Hotel Chocolat's next growth
phase with its international footprint, global supply chain and extensive
commercial relationships, which could provide the Hotel Chocolat brand with an
enhanced platform for growth in the UK and potentially in new geographies.
● Mars has a strong track record of nurturing entrepreneurial brands, including
KIND, Nature's Bakery and Tru Fru. Mars believes that it can support Hotel
Chocolat's founders and management team, who it holds in high regard, to
generate long-term value for the benefit of all stakeholders, whilst
maintaining Hotel Chocolat's brand and supporting its continued delivery of
high quality, premium products to consumers.
● Mars considers that the Acquisition would further strengthen its commitment to
the UK market (where it has operated since 1932 and today employs c.10k
people), bringing a much-loved brand into its portfolio and deepening its
relationships with consumers. The UK has been an important market for Mars,
and it expects this to be complemented by the acquisition of Hotel Chocolat,
with its distinctive capabilities in product development, luxury gifting and
immersive brand experiences.
● Mars believes that it is ideally positioned to support Hotel Chocolat's
long-term strategic objectives with better access to committed, long-term
capital, and to provide Hotel Chocolat's management team and employees with a
supportive environment within a like-minded, entrepreneurial, purpose-led,
family-owned business.
Recommendation
● The Hotel Chocolat Directors, who have been so advised by Lazard and Liberum
as to the financial terms of the Cash Offer, consider the terms of the Cash
Offer to be fair and reasonable. In providing their financial advice to the
Hotel Chocolat Directors, Lazard and Liberum have each taken into account the
commercial assessments of the Hotel Chocolat Directors. Lazard is providing
independent financial advice to the Hotel Chocolat Directors for the purposes
of Rule 3 of the Code.
● Accordingly, the Hotel Chocolat Directors intend to unanimously recommend
Hotel Chocolat Shareholders to vote in favour of the Scheme at the Court
Meeting and the Resolutions at the General Meeting (or, in the event that the
Acquisition is implemented by way of a Takeover Offer, to accept or procure
acceptance of the Takeover Offer) as they have irrevocably undertaken to do in
respect of their Hotel Chocolat Shares (representing, in aggregate,
approximately 54.2 per cent. of the issued ordinary share capital of Hotel
Chocolat as at 15 November 2023, being the last Business Day prior to this
announcement).
● For the reasons described below, the Hotel Chocolat Directors are not making
any recommendation to holders of Hotel Chocolat Shares in relation to the
Partial Share Alternative. In considering the terms of the Partial Share
Alternative, Lazard, Liberum and the Hotel Chocolat Directors have identified
certain key disadvantages and advantages of electing for the Partial Share
Alternative outlined below:
Disadvantages of electing for the Partial Share Alternative
● The Rollover Shares will be:
● unlisted and will not be admitted to trading on any stock exchange or market
for the trading of securities and will therefore be illiquid. Any assessment
of the value of the Rollover Shares 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 in favour of Mars Snacking Holdings and certain other
restrictions (including, but not limited to, in respect of the identity of the
proposed transferee and requirements in respect of compliance with anti-money
laundering, anti-bribery and corruption and anti-sanctions checks and receipt
of necessary regulatory approvals (if applicable)); and
● of uncertain value and there can be no assurance that they will be capable of
being sold in the future (other than pursuant to the put and call options
described in Appendix 4) or that they will be capable of being sold at the
value to be estimated by Morgan Stanley in the Scheme Document.
● The amount payable by Mars Snacking Holdings to Rollover Shareholders in
respect of any purchase of Rollover Shares on the exercise of any of the put
or call options described in Appendix 4 will depend on the future performance
of the Hotel Chocolat business under the Bidco Group's ownership. This remains
uncertain and could result in the amount received being less than the cash
consideration foregone under the Cash Offer.
● Upon the Effective Date, the Bidco Group will be controlled by Mars Snacking
Holdings. Holders of the Rollover Shares, which will not carry any general
voting rights at general meetings of Bidco nor the right to receive a copy of
or vote on any written resolutions of shareholders of Bidco and will have
consent rights only in respect of a very limited number of reserved matters
(exercisable only by a supermajority of Rollover Shareholders), will therefore
have no influence over decisions made by Bidco in relation to its investment
in Hotel Chocolat or in any other business.
● Individual Rollover Shareholders will have limited control over the date(s) on
and value(s) at which they may be able to realise their investment in the
Bidco Group and, in particular, only Original Rollover Shareholders holding 5
per cent. or more of the Bidco Shares issued at or around the Effective Date
may defer the exercise of their put option rights in any Interim Option
Exercise Period.
● The rights of Rollover Shareholders to participate in future issues of
securities by Bidco will be subject to certain exceptions (including those
described in paragraph 8 of Appendix 4) which may result in them suffering
significant dilution.
● The percentage ownership of Bidco attributable to Hotel Chocolat Shareholders
who elect for the Partial Share Alternative, but do not subsequently provide
the cash funds required to accept their entitlements pursuant to any further
issue of securities by Bidco in the period following the Effective Date, would
be significantly reduced.
● The Hotel Chocolat Shares are currently admitted to trading on AIM and Hotel
Chocolat Shareholders are afforded certain standards and protections,
including in respect of disclosure, as a result. Hotel Chocolat Shareholders
who receive Rollover Shares (being unlisted securities in a private company)
will not be afforded protections commensurate with those that they currently
benefit from as shareholders in Hotel Chocolat, including because Bidco
intends to rely on an exemption from registration under US securities laws and
will therefore not be registering the Rollover Shares with the US Securities
and Exchange Commission. Except for the information to be provided to the
Rollover Shareholder Representative (but not to other Rollover Shareholders)
in connection with the put and call options as described in Appendix 4,
neither the Bidco Organisational Documents nor the Bidco Shareholders'
Agreement will provide holders of Rollover Shares with information rights.
● Payments in respect of Rollover Shares will not be guaranteed or secured and
it is not anticipated that Bidco will declare or pay any distributions on any
of the Rollover Shares prior to the end of the Final Option Exercise Period
described in Appendix 4.
● Hotel Chocolat Shareholders will have no certainty as to the amount of
Rollover Shares they would receive because:
● the maximum number of Rollover Shares available to Hotel Chocolat Shareholders
under the Partial Share Alternative will be limited to the equivalent of 30
per cent. of the Bidco Offer Shares; and
● to the extent that elections for the Partial Share Alternative cannot be
satisfied in full, the number of Rollover Shares to be issued to each eligible
Hotel Chocolat Shareholder who has elected for the Partial Share Alternative
will be reduced on a pro rata basis, and the consideration for each Hotel
Chocolat Share that is not exchanged for Rollover Shares will be paid in cash
in accordance with the terms of the Cash Offer.
Advantages of electing for the
Partial Share Alternative
● The Partial Share Alternative allows eligible Hotel Chocolat Shareholders to
invest directly in Bidco, providing continued economic exposure to Hotel
Chocolat under private ownership.
● The Partial Share Alternative will entitle eligible Hotel Chocolat
Shareholders to sell their Rollover Shares during certain pre-defined option
exercise periods pursuant to the put options summarised in Appendix 4 below,
which may ultimately result in the cash amount received per Hotel Chocolat
Share being more than under the Cash Offer (although this cannot be
guaranteed).
● From completion of the Acquisition, the Rollover Shares will rank economically
pari passu with the investment in Bidco by Mars Snacking Holdings, and will
carry a pro rata entitlement to dividends, distributions and returns of
capital.
● Lazard and Liberum are unable to advise the Hotel Chocolat Directors as to
whether or not the financial terms of the Partial Share Alternative are fair
and reasonable. This is because Lazard and Liberum have not had any
involvement in the development and validation of any financial projections for
Bidco. As a result, Lazard and Liberum are unable to assess any plans Bidco
may have for the development of Hotel Chocolat or the Bidco Group to the
degree necessary to form an assessment of the value of the Partial Share
Alternative. Lazard and Liberum also note the significant and variable impact
that the disadvantages and advantages of the Partial Share Alternative may
have for individual eligible Hotel Chocolat Shareholders. In terms of the
advantages, these include, in particular, the ability to participate in the
potential future value creation of the Hotel Chocolat Group. In terms of the
disadvantages, these include, in particular, the level of uncertainty in their
future value which will depend on the performance of Hotel Chocolat over a
number of years which itself will be impacted by the business plan and
strategy of the business under Bidco's control, as well as the terms of the
Rollover Shares including the fact that they are illiquid and subject to a
five-year lock-up period, the potential dilution that would result if a Hotel
Chocolat Shareholder did not fund their pre-emptive entitlement pursuant to
any further issue of securities by Bidco in the period following the Effective
Date and the fact that the Rollover Shares do not carry voting rights other
than on very limited reserved matters.
● Accordingly, the Hotel Chocolat Directors are unable to form an opinion as to
whether or not the terms of the Partial Share Alternative are fair and
reasonable and are not making any recommendation to eligible Hotel Chocolat
Shareholders as to whether or not they should elect for the Partial Share
Alternative.
● Hotel Chocolat Shareholders are encouraged to take into account the key
advantages and disadvantages outlined above and in paragraph 4 in relation to
the Partial Share Alternative, as well as their particular circumstances, when
deciding whether to elect for the Partial Share Alternative in respect of all
or part of their holding in Hotel Chocolat Shares (subject to any such
election being in respect of at least the Minimum Rollover Threshold). Hotel
Chocolat Shareholders should also ascertain whether acquiring or holding
Rollover Shares is affected by the laws of the relevant jurisdiction in which
they reside and consider whether Rollover Shares are a suitable investment in
light of their own personal circumstances. Accordingly, Hotel Chocolat
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 Share
Alternative. Any decision to elect for the Partial Share Alternative should be
based on any such independent financial, tax and legal advice and full
consideration of the information in this announcement and the Scheme Document
(when published).
Background to and reasons for the recommendation
● Over the last 20 years, Hotel Chocolat has evolved to become one of the UK's
leading premium chocolate brands. Hotel Chocolat is known not only for its
high quality "More Cacao Less Sugar" products, but also for the values of
originality, authenticity and ethical behaviour which are at the core of its
business. Since the Hotel Chocolat business was founded, innovation has
remained at the forefront of what Hotel Chocolat strives for. New products
such as the Velvetiser drinking chocolate system have ensured that the
business continues to resonate with its customers. Hotel Chocolat manufactures
the vast majority of its chocolate products at its UK-based innovation centre
in Cambridgeshire and enjoys a direct relationship with its millions of UK
customers through its growing network of stores, an online channel and
selected resale partners. Areas of international growth for Hotel Chocolat
include the US digital subsidiary business, the cocoa agro-tourism Saint
Lucian subsidiary business and Hotel Chocolat's minority shareholding in the
Japanese brand licence partnership. Since Hotel Chocolat's initial listing on
AIM in 2016, Hotel Chocolat's revenues have grown by 124.5 per cent. to
approximately £205 million in the 53-week period ended 2 July 2023.
● Hotel Chocolat's disappointing financial results for the 53-week period ended
2 July 2023 reflected a year of intensive re-shaping to deal with the
consequences of Hotel Chocolat's previous fast growth. In the first quarter of
the current financial year, Hotel Chocolat's revenue growth has benefited from
opportunities available through opening more stores in the UK and extending
the Hotel Chocolat brand into new product categories. The Hotel Chocolat
Directors believe the Hotel Chocolat brand, with its exciting range of
products, has potential for substantial growth outside the UK in the years
ahead.
● While this growth potential has previously been recognised by the market and
reflected in the Hotel Chocolat share price, over the last year or two it has
become clear to the Hotel Chocolat Directors that achieving this potential
will require substantial investment and time. In particular, the need for, and
cost of, the recent reorganisation of Hotel Chocolat's initial expansion into
the US and Japan illustrates the scale of the challenge to grow the Hotel
Chocolat brand internationally. While the Hotel Chocolat Directors believe
that Hotel Chocolat could realise the full potential of the Hotel Chocolat
brand on a standalone basis in the UK in the medium term, in order to achieve
its overseas growth ambitions in the near to medium term in a way that would
capture the full value for Hotel Chocolat Shareholders would require a level
of investment that is likely to exceed that available from its own resources.
● Whilst Hotel Chocolat is making good progress implementing a three year plan
to re-shape its future business and the Hotel Chocolat Directors consider that
the recent share price does not accurately reflect the underlying value and
potential of Hotel Chocolat, the Hotel Chocolat Directors nevertheless believe
that it is right to recommend Bidco's highly attractive offer for the
following reasons:
● The Cash Offer price at 375 pence per share values the entire issued and to be
issued share capital of Hotel Chocolat at approximately £534 million on a
fully diluted basis and implies an enterprise value of £570 million and a
multiple of approximately 23.7 times Underlying EBITDA for the 53-week period
ended 2 July 2023.
● The Cash Offer provides an opportunity for Hotel Chocolat Shareholders to
achieve a substantial premium to the current Hotel Chocolat Share price, a
premium to the 2021 placing price of 355 pence per Hotel Chocolat Share and is
well above typical public market offer premiums.
● The Cash Offer price represents a premium of approximately:
■ 169.8 per cent. to Hotel Chocolat's share price of 139 pence at the close of
business on 15 November 2023, being the last Business Day prior to the date of
this announcement.
■ 194.2 per cent. to the volume-weighted average price of 127 pence per Hotel
Chocolat Share for the 60-day period ended at the close of business on 15
November 2023, being the last Business Day prior to the date of this
announcement.
■ 144.3 per cent. to the volume-weighted average price of 154 pence per Hotel
Chocolat Share for the 12 month period ended at the close of business on 15
November 2023, being the last Business Day prior to the date of this
announcement.
● The Hotel Chocolat Directors believe the Cash Offer also appropriately
reflects the value of the potential growth of Hotel Chocolat on a standalone
basis over the medium term and provides an opportunity for Hotel Chocolat
Shareholders to realise their investment in Hotel Chocolat, in cash, at a
highly attractive price. The certainty of the Cash Offer should be weighed
against the uncertainty of the value which may be delivered through the
Partial Share Alternative and the risks inherent in executing successfully on
the future strategy of Hotel Chocolat as an independent listed company.
● Notwithstanding the positive management action and encouraging revenue growth
resulting from Hotel Chocolat's recent UK store expansion programme, the Hotel
Chocolat Directors acknowledge that the challenging macro-economic
environment, particularly in the discretionary consumer space, may expose
Hotel Chocolat to an element of risk in achieving its credible but ambitious
business plan targets.
● If Hotel Chocolat continues as a listed company, it is likely to be difficult
in the short to medium term for Hotel Chocolat to raise the significant equity
funding required to expand the business internationally in a way that captures
more of the potential value for shareholders. Expanding into new territories
through an asset and investment light model by way of partners providing
funding is likely to result in much of the benefit of such growth being
realised by the partners rather than Hotel Chocolat.
● With substantially all of Hotel Chocolat's free cash likely to be required for
re-investment into Hotel Chocolat's growth strategy for the foreseeable
future, it is likely to be some time before Hotel Chocolat is in a position to
be able to pay a significant dividend.
● The Hotel Chocolat Directors believe that Mars would be an excellent steward
of the Hotel Chocolat brand. Mars has expressed its excitement about the
long-term prospects of the Hotel Chocolat business and has been clear that it
intends to continue to support Hotel Chocolat's business in the UK and to
explore opportunities to grow the Hotel Chocolat brand outside the UK. Mars
shares similar values to Hotel Chocolat, including in key areas such as
quality and sustainability, and has agreed a cash price for Hotel Chocolat
that the Hotel Chocolat Directors believe recognises Hotel Chocolat's
impressive credentials as a premium chocolate brand and its ethical farming
and environmental practices that are considered to be important by many
consumers in today's market.
● The Hotel Chocolat Directors also believe that Mars is well positioned to
support Hotel Chocolat in its next phase of growth and continue to invest in
the business to improve the sustainable long-term value of the Hotel Chocolat
business. The Hotel Chocolat Directors believe that the Hotel Chocolat brand
would benefit from better access to committed, long-term capital as part of a
like-minded, entrepreneurial, purpose-led, family-owned business. The Hotel
Chocolat Directors welcome Mars' stated intentions for the broader business,
management, employees and business footprint of Hotel Chocolat.
● As a result of all of the above, the Hotel Chocolat Directors believe the
Acquisition will allow Hotel Chocolat to achieve growth faster and more
sustainably than Hotel Chocolat would be able to achieve alone.
● Accordingly, following careful consideration of the above factors, the Hotel
Chocolat Directors intend to unanimously recommend the Cash Offer to Hotel
Chocolat Shareholders.
Shareholder support
● Bidco has received commitments and indications of support for the Acquisition
from Hotel Chocolat Shareholders in respect of 95,753,759 Hotel Chocolat
Shares representing, in aggregate, approximately 69.6 per cent. of the
existing issued ordinary share capital of Hotel Chocolat as at 15 November
2023, being the last Business Day prior to this announcement. These
commitments and indications comprise irrevocable undertakings in respect of
88,875,376 Hotel Chocolat Shares representing, in aggregate, approximately
64.6 per cent. of the existing issued ordinary share capital of Hotel Chocolat
and a non-binding letter of intent in respect of 6,878,383 Hotel Chocolat
Shares representing approximately 5.0 per cent. of the existing issued
ordinary share capital of Hotel Chocolat, in each case as at 15 November 2023,
being the last Business Day prior to this announcement.
● The irrevocable undertakings include irrevocable undertakings from each
Founder, a related trust of each Founder and the other Hotel Chocolat
Directors who are interested in Hotel Chocolat Shares to vote in favour of the
Scheme at the Court Meeting and the Resolutions at the General Meeting (or, in
the event that the Acquisition is implemented by way of a Takeover Offer, to
accept or procure acceptance of the Takeover Offer) in respect of 74,525,727
Hotel Chocolat Shares owned or controlled by them representing, in aggregate,
approximately 54.2 per cent. of the existing issued ordinary share capital of
Hotel Chocolat as at 15 November 2023, being the last Business Day prior to
this announcement. Each Founder and a related trust of one of the Founders
have also undertaken to elect for the Partial Share Alternative in respect of
an aggregate of 42,699,969 Hotel Chocolat Shares as described in paragraph 6
and Appendix 3 of this announcement.
● In addition, these commitments and indications include an irrevocable
undertaking and a non-binding letter of intent from Phoenix Asset Management
Partners Limited ("Phoenix") to vote in favour of the Scheme at the Court
Meeting and the Resolutions at the General Meeting (or, in the event that the
Acquisition is implemented by way of a Takeover Offer, to accept the Takeover
Offer). The Phoenix Irrevocable Undertaking (as defined in paragraph 6) and
the non-binding letter of intent are in respect of, in aggregate, all Hotel
Chocolat Shares under Phoenix's investment management control representing, in
aggregate, approximately 15.4 per cent. of the existing issued ordinary share
capital of Hotel Chocolat as at 15 November 2023, being the last Business Day
prior to this announcement.
● Further details of these irrevocable undertakings (including the circumstances
in which they may lapse) and the non-binding letter of intent are set out in
Appendix 3 to this announcement.
Timetable and conditions
● The Scheme and Acquisition will be subject to the terms and conditions set out
in this announcement and to be set out in full in the Scheme Document,
including amongst other things the satisfaction or (where applicable) waiver
of the Conditions and certain further terms referred to in Appendix 1 to this
announcement. In relation to the Scheme, this includes, among others:
● the approval of the Scheme by a majority in number of, representing not less
than 75 per cent. in value of the Hotel Chocolat Shares voted by, Scheme
Shareholders present and voting and entitled to vote, either in person or by
proxy, at the Court Meeting;
● the approval of the Resolutions by the requisite majority of Hotel Chocolat
Shareholders at the General Meeting; and
● the sanction of the Scheme by the Court.
● 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 and Form of Election, will be sent to Hotel Chocolat
Shareholders and (for information only) participants in the Hotel Chocolat
Share Schemes within 28 days of this announcement (or such later time as Hotel
Chocolat, Bidco and the Panel agree).
● The Scheme is expected to be effective in Q1 2024, subject to the satisfaction
or (where applicable) waiver of all relevant conditions, including the
Conditions. An expected timetable of key events relating to the Acquisition
will be provided in the Scheme Document.
● Commenting on today's announcement, Angus Thirlwell, Chief Executive Officer
of Hotel Chocolat said:
"Hotel Chocolat's brand destiny is to become a leading premium chocolate brand
in major markets through reinventing chocolate for people and nature. In Mars
we have found a true meeting of minds - in strong cultural values, bold
strategy and true long-termism.
Our Gentle Farming programme has got off to a promising start and we truly
believe it can help make cocoa agriculture right for nature and for people.
Joining forces with Mars to achieve an increased positive impact, is a huge
attraction for us.
We know our brand resonates with consumers overseas, but operational supply
chain challenges have held us back. By partnering with Mars, we can grow our
international presence much more quickly using their skills, expertise and
capabilities.
The pillars on which we have built the Hotel Chocolat brand - originality,
authenticity and ethical trading, is precisely what brought Hotel Chocolat and
Mars together and our intention is to strengthen and invest behind these. I'm
excited about the future of the business and in Mars we have found an
excellent long-term steward of the Hotel Chocolat brand and everything we
stand for."
● Commenting on today's announcement, Stephen Alexander, Chair of Hotel Chocolat
said:
"Hotel Chocolat is a brand with strong long-term prospects and today's deal
will allow it to grow further and faster. Joining forces with Mars will
deliver great value through the Cash Offer for Hotel Chocolat shareholders and
the combination will create exciting opportunities for Hotel Chocolat
employees as part of Mars."
● Commenting on today's announcement, Andrew Clarke, Global President of Mars
Snacking, said:
"We have long admired the fantastic business that Angus, Peter and the Hotel
Chocolat team have created. Hotel Chocolat is a differentiated and much-loved
brand, with an impressive product offering and a deep commitment to its values
of originality, authenticity and ethical trading. The Mars and Hotel Chocolat
businesses are highly complementary, and during the course of our discussions
with Hotel Chocolat's leadership it has also become clear that there is a very
strong cultural fit - with purpose at the heart of both organisations, and a
shared passion for quality and sustainability.
Mars has a long and proud history in the UK, and today's announcement further
strengthens our commitment to this important market by bringing an exciting
brand into our portfolio and deepening our relationship with consumers.
Building on the strong foundations that Angus, Peter and their team have
established, we are very excited to support Hotel Chocolat's next phase of
growth.
We are confident that Mars will be an excellent long-term home for Hotel
Chocolat, providing a like-minded, entrepreneurial and purpose-led environment
in which to maximise the potential of the Hotel Chocolat brand which is
already so beloved by consumers."
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 herein and 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. Appendix 4 contains details of Bidco, the Rollover Shares and
eligibility to subscribe for the Rollover Shares. Appendix 5 contains the
definitions of certain terms used in this summary and the following
announcement.
The person responsible for arranging the release of this announcement on
behalf of Hotel Chocolat is Angus Thirlwell, Chief Executive Officer.
Enquiries
Bidco and Mars +1 (312) 794 6200
Fabiano Lima, Global VP of Corporate Affairs, Mars Snacking
Denise Young, Global VP of Corporate Communications, Mars
Morgan Stanley (Financial Adviser to Bidco and Mars) +44 (0)20 7425 8000
Laurence Hopkins
Imran Ansari
Mae Wang
Stuart Wright
Brunswick (Public Relations Adviser to Bidco and Mars) +44 (0)20 7404 5959
Max McGahan
Rosie Oddy
James Baker
Hotel Chocolat +44 (0)1763 257 746
Stephen Alexander, Non-Executive Chairman
Angus Thirlwell, Co-Founder and CEO
Jonathan Akehurst, Chief Financial Officer
Lazard (Lead Financial Adviser to Hotel Chocolat) +44 (0)20 7187 2000
William Lawes
Davin Staats
Fariza Steel
Adam Blin
Liberum (Co-Financial Adviser, Nominated Adviser and Corporate Broker to Hotel +44 (0)20 3100 2000
Chocolat)
Dru Danford
Tim Medak
Ed Thomas
Matt Hogg
Miquela Bezuidenhoudt
Citigate Dewe Rogerson (Financial Communications Adviser to Hotel Chocolat) +44 (0)20 7638 9571
Angharad Couch
Ellen Wilton
Alex Winch
Freshfields Bruckhaus Deringer LLP is acting as legal adviser to Bidco and
Mars in connection with the Acquisition. Herbert Smith Freehills LLP is acting
as legal adviser to Hotel Chocolat in connection with the Acquisition.
Further information
This announcement is for information purposes and 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 Hotel Chocolat 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, the Offer Document), 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 (or, if the Acquisition is
implemented by way of a Takeover Offer, the Offer Document). Hotel Chocolat
and Bidco urge Hotel Chocolat Shareholders to read the Scheme Document when it
becomes available because it will contain important information relating to
the Acquisition.
This announcement is an advertisement and does not constitute a prospectus or
prospectus equivalent.
Please be aware that addresses, electronic addresses and certain other
information provided by Hotel Chocolat Shareholders, persons with information
rights and other relevant persons for the receipt of communications from Hotel
Chocolat 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).
Morgan Stanley, which is authorised by the Prudential Regulation Authority and
regulated in the United Kingdom by the Financial Conduct Authority and the
Prudential Regulation Authority, is acting exclusively as financial adviser to
Bidco and Mars and no one else in connection with the matters contained in
this announcement and Morgan Stanley, its affiliates and their respective
directors, officers, employees and agents will not regard any other person as
their client, nor will they be responsible to anyone other than Bidco and Mars
for providing the protections afforded to clients of Morgan Stanley nor for
providing advice in connection with the matters contained in this announcement
or any other matter referred to herein.
Lazard, which is authorised and regulated by the Financial Conduct Authority
in the United Kingdom, is acting exclusively as financial adviser and Rule 3
adviser to Hotel Chocolat and no one else in connection with the Acquisition
and will not be responsible to anyone other than Hotel Chocolat for providing
the protections afforded to clients of Lazard nor for providing advice in
relation to the Acquisition or any other matters referred to herein. Neither
Lazard 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 Lazard
in connection with this announcement, any statement contained herein or
otherwise.
Liberum, which is authorised and regulated by the Financial Conduct Authority
in the United Kingdom, is acting exclusively for Hotel Chocolat and for no one
else in connection with the subject matter of this announcement and will not
be responsible to anyone other than Hotel Chocolat for providing the
protections afforded to its clients or for providing advice in connection with
the subject matter of this announcement. Neither Liberum nor any of its
affiliates (nor their respective directors, officers, employees or agents)
owes or accepts any duty, liability or responsibility whatsoever (whether
direct or indirect, whether in contract, in tort, under statute or otherwise)
to any person who is not a client of Liberum in connection with the
Acquisition, this announcement, any statement contained herein or otherwise.
No representation or warranty, express or implied, is made by Liberum as to
the contents of this announcement.
Overseas jurisdictions
The release, publication or distribution of this announcement in or into
jurisdictions other than the UK may be restricted by law and therefore any
persons who are subject to the law of any jurisdiction other than the UK
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 Hotel Chocolat 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, the AIM Rules 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.
The availability of the Acquisition (including the Partial Share Alternative)
to Hotel Chocolat Shareholders who are not resident in the United Kingdom may
be affected by the laws of the relevant jurisdictions in which they are
resident. Persons who are not resident in the United Kingdom should inform
themselves of, and observe, any applicable requirements.
Further details in relation to Overseas Shareholders will be contained in the
Scheme Document.
The Acquisition shall be subject to the applicable requirements of the Code,
the Panel, the London Stock Exchange, the FCA and the AIM Rules.
Additional information for US investors
The Acquisition is being made to acquire the shares 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 or the proxy solicitation 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 and proxy solicitation
rules. The financial information included in this announcement and the Scheme
documentation has been or will have been prepared in accordance with
accounting standards applicable in the United Kingdom 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 Hotel Chocolat 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 Hotel Chocolat 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 Hotel Chocolat Shareholder is urged to
consult their independent professional adviser immediately regarding the tax
consequences of the Acquisition applicable to them.
The Rollover Shares issued under the Partial Share Alternative will not be
registered under the US Securities Act of 1933 (the "Securities Act"). Bidco
expects to issue the Rollover Shares 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 Rollover Shares are proposed to be
issued have the right to appear and receive adequate and timely notice
thereof. If Bidco exercises its right to implement the acquisition of the
Hotel Chocolat Shares by way of a Takeover Offer, the Rollover Shares will not
be offered in the United States except pursuant to an exemption from or in a
transaction not subject to registration under the Securities Act.
The Rollover Shares that may be issued pursuant to the Acquisition have not
been and will not be registered under the 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 Share Alternative or determined if the Scheme
Document is accurate or complete. Any representation to the contrary is a
criminal offence.
In accordance with normal UK practice and pursuant to Rule 14e-5(b) of the US
Exchange Act (to the extent applicable), Bidco or its nominees, or its brokers
(acting as agents), may from time to time make certain purchases of, or
arrangements to purchase, Hotel Chocolat Shares outside of the US, other than
pursuant to the Acquisition, until the date on which the Acquisition and/or
Scheme becomes effective, lapses or is otherwise withdrawn. If such purchases
or arrangements to purchase were to be made, they would be made outside of the
US and would be in accordance with applicable law, including the US Exchange
Act and the Code. 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 at www.londonstockexchange.com
(http://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, Mars and Hotel Chocolat 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, Mars and Hotel Chocolat 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, Mars and Hotel Chocolat, 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", "goal", "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, Mars and Hotel Chocolat believe
that the expectations reflected in such forward-looking statements are
reasonable, Bidco, Mars and Hotel Chocolat 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. Among the
factors that could cause actual results to differ materially from those
described in the forward-looking statements are changes in the global,
political, economic, business, competitive, market and regulatory forces,
future exchange and interest rates, changes in tax rates and future business
combinations or dispositions, and any epidemic, pandemic or disease outbreak.
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, Mars nor Hotel Chocolat, nor any of their respective associates or
directors, members, managers, partners, 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 any reliance on these
forward-looking statements. The forward-looking statements speak only at the
date of this announcement. All subsequent oral or written forward-looking
statements attributable to Bidco or any member of the Wider Bidco Group or the
Hotel Chocolat Group, or any of their respective associates, directors,
officers, employees or advisers, are expressly qualified in their entirety by
the cautionary statement above. Other than in accordance with their legal or
regulatory obligations, neither Bidco, Mars or Hotel Chocolat is under any
obligation, and Bidco, Mars and Hotel Chocolat 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.
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 (http://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.
No profit forecasts, estimates or quantified financial benefits statements
No statement 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 Bidco, Mars or Hotel Chocolat, as appropriate, for the current or
future financial years would necessarily match or exceed the historical
published earnings or earnings per share for Bidco, Mars or Hotel Chocolat, as
appropriate.
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 figures that precede them.
General
Bidco reserves the right to elect, with the consent of the Panel and subject
to the terms of the Cooperation 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 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 Hotel Chocolat
Shares in respect of which the Takeover Offer has not been accepted.
Investors should be aware that Bidco may purchase Hotel Chocolat 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.
Rule 2.9 of the Code
For the purposes of Rule 2.9 of the Code, Hotel Chocolat confirms that it has
in issue 137,597,673 ordinary shares of 0.1 pence each. The ISIN for the
shares is GB00BYZC3B04. Hotel Chocolat holds no shares in treasury.
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
https://www.mars.com/news-and-stories/press-releases-statements/recommended-acquisition-of-hotel-chocolat-group-plc
(https://www.mars.com/news-and-stories/press-releases-statements/recommended-acquisition-of-hotel-chocolat-group-plc)
and Hotel Chocolat's website at
https://www.hotelchocolat.com/uk/investor-relations-offer.html
(https://www.hotelchocolat.com/uk/investor-relations-offer.html) by no later
than 12 noon (London time) on the Business Day following publication of this
announcement. For the avoidance of doubt, the contents of any websites
referred to in this announcement are not incorporated into and do not form
part of this announcement.
Hotel Chocolat Shareholders, persons with information rights and participants
in the Hotel Chocolat Share Schemes may request a hard copy of this
announcement by contacting Equiniti during business hours on +44 (0)371 384
2030 or by submitting a request in writing to Equiniti at Aspect House,
Spencer Road, Lancing, West Sussex, BN99 6DA, United Kingdom. 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.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN OR INTO ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
FOR IMMEDIATE RELEASE
16 November 2023
RECOMMENDED CASH ACQUISITION
of
HOTEL CHOCOLAT GROUP PLC
by
HIVE BIDCO, INC.
a wholly-owned indirect subsidiary of Mars, Incorporated,
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 Hive Bidco, Inc. ("Bidco") and Hotel Chocolat Group
plc ("Hotel Chocolat") are pleased to announce that they have reached
agreement on the terms of a recommended cash acquisition, pursuant to which
Bidco, a wholly-owned indirect subsidiary of Mars, Incorporated ("Mars"), will
acquire the entire issued and to be issued ordinary share capital of Hotel
Chocolat (the "Acquisition").
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.
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 the full
terms and conditions which will be set out in the Scheme Document, each Hotel
Chocolat Shareholder at the Scheme Record Time will be entitled to receive:
for each Hotel Chocolat Share 375
pence in cash (the "Cash Offer")
The Cash Offer values the entire issued and to be issued share capital of
Hotel Chocolat at approximately £534 million on a fully diluted basis.
The Cash Offer represents a premium of approximately:
(a) 169.8 per cent. to Hotel Chocolat's share price of 139 pence at the close of
business on 15 November 2023, being the last Business Day prior to the date of
this announcement.
(b) 194.2 per cent. to the volume-weighted average price of 127 pence per Hotel
Chocolat Share for the 60-day period ended at the close of business on 15
November 2023, being the last Business Day prior to the date of this
announcement.
(c) 144.3 per cent. to the volume-weighted average price of 154 pence per Hotel
Chocolat Share for the 12 month period ended at the close of business on 15
November 2023, being the last Business Day prior to the date of this
announcement.
Partial Share Alternative
As an alternative to the Cash Offer, eligible Hotel Chocolat Shareholders may
elect to receive one unlisted share of Class B stock of Bidco (a "Rollover
Share") for each Hotel Chocolat Share (the "Partial Share Alternative"), such
Rollover Shares to be issued on the terms and pursuant to the mechanism
described in paragraphs 13 and 14 and Appendix 4 of this announcement.
Eligible Hotel Chocolat Shareholders will be able to elect for the Partial
Share Alternative in relation to some or all of their holdings of Hotel
Chocolat Shares, subject to any such Hotel Chocolat Shareholder electing for
the Partial Share Alternative in respect of at least 30 per cent. of the Hotel
Chocolat Shares held by them on the "election return date" (further details of
which shall be included in the Scheme Document) (the "Minimum Rollover
Threshold").
In aggregate, the maximum number of Rollover Shares available to be issued to
eligible Hotel Chocolat Shareholders under the Partial Share Alternative will
be limited to the equivalent of 30 per cent. of the Bidco Offer Shares (as
defined in paragraph 14 below).
The Partial Share Alternative is not being offered, sold or delivered,
directly or indirectly, in or into any Restricted Jurisdiction (and so Hotel
Chocolat Shareholders in such jurisdictions will not be eligible to elect for
the Partial Share Alternative) and individual acceptances of the Partial Share
Alternative will only be valid if all regulatory approvals required by a Hotel
Chocolat Shareholder to acquire the Rollover Shares have been obtained.
The Rollover Shares will be independently valued and an estimate of the value
of the Rollover Shares will be included in the Scheme Document. Further
information about the Rollover Shares is set out in paragraphs 13 and 14 and
Appendix 4 and will be included in the Scheme Document.
If, on or after the date of this announcement and prior to the Effective Date,
any dividend and/or other distribution and/or other return of capital or value
is announced, declared, made or paid or becomes payable in respect of the
Hotel Chocolat Shares, Bidco reserves the right to reduce the consideration
due pursuant to the Cash Offer (and, as the case may be, the consideration due
under the Partial Share 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 or value. In such circumstances, Hotel Chocolat
Shareholders shall be entitled to retain any such dividend, distribution, or
other return of value declared, made or paid.
3. Background to and reasons for the Acquisition
Mars has long admired Hotel Chocolat's impressive credentials as a
contemporary, premium brand with a differentiated product offering,
world-class product quality and strong direct-to-consumer capabilities through
its physical store presence and sophisticated digital commerce platform.
Mars believes that Hotel Chocolat and Mars are culturally aligned, with shared
values of quality, sustainability and purpose among their guiding principles.
Mars' stated purpose is "the world we want tomorrow starts with how we do
business today" and it shares the passion and conviction in Hotel Chocolat's
mission, "to make people and nature happy through reinventing chocolate".
Mars believes it is well-positioned to support Hotel Chocolat's next growth
phase with its international footprint, global supply chain and extensive
commercial relationships, which could provide the Hotel Chocolat brand with an
enhanced platform for growth in the UK and potentially in new geographies.
Mars has a strong track record of nurturing entrepreneurial brands, including
KIND, Nature's Bakery and Tru Fru. Mars believes that it can support Hotel
Chocolat's founders and management team, who it holds in high regard, to
generate long-term value for the benefit of all stakeholders, whilst
maintaining Hotel Chocolat's brand and supporting its continued delivery of
high quality, premium products to consumers.
Mars considers that the Acquisition would further strengthen its commitment to
the UK market (where it has operated since 1932 and today employs c.10k
people), bringing a much-loved brand into its portfolio and deepening its
relationships with consumers. The UK has been an important market for Mars,
and it expects this to be complemented by the acquisition of Hotel Chocolat,
with its distinctive capabilities in product development, luxury gifting and
immersive brand experiences.
Mars believes that it is ideally positioned to support Hotel Chocolat's
long-term strategic objectives with better access to committed, long-term
capital, and to provide Hotel Chocolat's management team and employees with a
supportive environment within a like-minded, entrepreneurial, purpose-led,
family-owned business.
4. Recommendation
Acquisition and Cash Offer
The Hotel Chocolat Directors, who have been so advised by Lazard and Liberum
as to the financial terms of the Cash Offer, consider the terms of the Cash
Offer to be fair and reasonable. In providing their financial advice to the
Hotel Chocolat Directors, Lazard and Liberum have each taken into account the
commercial assessments of the Hotel Chocolat Directors. Lazard is providing
independent financial advice to the Hotel Chocolat Directors for the purposes
of Rule 3 of the Code.
Accordingly, the Hotel Chocolat Directors intend to unanimously recommend
Hotel Chocolat Shareholders to vote in favour of the Scheme at the Court
Meeting and the Resolutions at the General Meeting (or, in the event that the
Acquisition is implemented by way of a Takeover Offer, to accept or procure
acceptance of the Takeover Offer) as they have irrevocably undertaken to do in
respect of their Hotel Chocolat Shares (representing, in aggregate,
approximately 54.2 per cent. of the issued ordinary share capital of Hotel
Chocolat as at 15 November 2023, being the last Business Day prior to this
announcement).
Partial Share Alternative
For the reasons described below, the Hotel Chocolat Directors are not making
any recommendation to holders of Hotel Chocolat Shares in relation to the
Partial Share Alternative. In considering the terms of the Partial Share
Alternative, Lazard, Liberum and the Hotel Chocolat Directors have identified
certain key disadvantages and advantages of electing for the Partial Share
Alternative outlined below:
Disadvantages of electing for the Partial Share
Alternative
(a) The Rollover Shares will be:
(i) unlisted and will not be admitted to trading on any stock exchange or market
for the trading of securities and will therefore be illiquid. Any assessment
of the value of the Rollover Shares should therefore take into account an
individual shareholder's assessment of an appropriate liquidity discount;
(ii) 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 in favour of Mars Snacking Holdings and certain other
restrictions (including, but not limited to, in respect of the identity of the
proposed transferee and requirements in respect of compliance with anti-money
laundering, anti-bribery and corruption and anti-sanctions checks and receipt
of necessary regulatory approvals (if applicable)); and
(iii) of uncertain value and there can be no assurance that they will be capable of
being sold in the future (other than pursuant to the put and call options
described in Appendix 4) or that they will be capable of being sold at the
value to be estimated by Morgan Stanley in the Scheme Document.
(b) The amount payable by Mars Snacking Holdings to Rollover Shareholders in
respect of any purchase of Rollover Shares on the exercise of any of the put
or call options described in Appendix 4 will depend on the future performance
of the Hotel Chocolat business under the Bidco Group's ownership. This remains
uncertain and could result in the amount received being less than the cash
consideration foregone under the Cash Offer.
(c) Upon the Effective Date, the Bidco Group will be controlled by Mars Snacking
Holdings. Holders of the Rollover Shares, which will not carry any general
voting rights at general meetings of Bidco nor the right to receive a copy of
or vote on any written resolutions of shareholders of Bidco and will have
consent rights only in respect of a very limited number of reserved matters
(exercisable only by a supermajority of Rollover Shareholders), will therefore
have no influence over decisions made by Bidco in relation to its investment
in Hotel Chocolat or in any other business.
(d) Individual Rollover Shareholders will have limited control over the date(s) on
and value(s) at which they may be able to realise their investment in the
Bidco Group and, in particular, only Original Rollover Shareholders holding 5
per cent. or more of the Bidco Shares issued at or around the Effective Date
may defer the exercise of their put option rights in any Interim Option
Exercise Period.
(e) The rights of Rollover Shareholders to participate in future issues of
securities by Bidco will be subject to certain exceptions (including those
described in paragraph 8 of Appendix 4) which may result in them suffering
significant dilution.
(f) The percentage ownership of Bidco attributable to Hotel Chocolat Shareholders
who elect for the Partial Share Alternative, but do not subsequently provide
the cash funds required to accept their entitlements pursuant to any further
issue of securities by Bidco in the period following the Effective Date, would
be significantly reduced.
(g) The Hotel Chocolat Shares are currently admitted to trading on AIM and Hotel
Chocolat Shareholders are afforded certain standards and protections,
including in respect of disclosure, as a result. Hotel Chocolat Shareholders
who receive Rollover Shares (being unlisted securities in a private company)
will not be afforded protections commensurate with those that they currently
benefit from as shareholders in Hotel Chocolat, including because Bidco
intends to rely on an exemption from registration under US securities laws and
will therefore not be registering the Rollover Shares with the US Securities
and Exchange Commission. Except for the information to be provided to the
Rollover Shareholder Representative (but not to other Rollover Shareholders)
in connection with the put and call options as described in Appendix 4,
neither the Bidco Organisational Documents nor the Bidco Shareholders'
Agreement will provide holders of Rollover Shares with information rights.
(h) Payments in respect of Rollover Shares will not be guaranteed or secured and
it is not anticipated that Bidco will declare or pay any distributions on any
of the Rollover Shares prior to the end of the Final Option Exercise Period
described in Appendix 4.
(i) Hotel Chocolat Shareholders will have no certainty as to the amount of
Rollover Shares they would receive because:
(i) the maximum number of Rollover Shares available to Hotel Chocolat Shareholders
under the Partial Share Alternative will be limited to the equivalent of 30
per cent. of the Bidco Offer Shares; and
(ii) to the extent that elections for the Partial Share Alternative cannot be
satisfied in full, the number of Rollover Shares to be issued to each eligible
Hotel Chocolat Shareholder who has elected for the Partial Share Alternative
will be reduced on a pro rata basis, and the consideration for each Hotel
Chocolat Share that is not exchanged for Rollover Shares will be paid in cash
in accordance with the terms of the Cash Offer.
Advantages of electing for the Partial Share Alternative
(a) The Partial Share Alternative allows eligible Hotel Chocolat Shareholders to
invest directly in Bidco, providing continued economic exposure to Hotel
Chocolat under private ownership.
(b) The Partial Share Alternative will entitle eligible Hotel Chocolat
Shareholders to sell their Rollover Shares during certain pre-defined option
exercise periods pursuant to the put options summarised in Appendix 4 below,
which may ultimately result in the cash amount received per Hotel Chocolat
Share being more than under the Cash Offer (although this cannot be
guaranteed).
(c) From completion of the Acquisition, the Rollover Shares will rank economically
pari passu with the investment in Bidco by Mars Snacking Holdings, and will
carry a pro rata entitlement to dividends, distributions and returns of
capital.
Lazard and Liberum are unable to advise the Hotel Chocolat Directors as to
whether or not the financial terms of the Partial Share Alternative are fair
and reasonable. This is because Lazard and Liberum have not had any
involvement in the development and validation of any financial projections for
Bidco. As a result, Lazard and Liberum are unable to assess any plans Bidco
may have for the development of Hotel Chocolat or the Bidco Group to the
degree necessary to form an assessment of the value of the Partial Share
Alternative. Lazard and Liberum also note the significant and variable impact
that the disadvantages and advantages of the Partial Share Alternative may
have for individual eligible Hotel Chocolat Shareholders. In terms of the
advantages, these include, in particular, the ability to participate in the
potential future value creation of the Hotel Chocolat Group. In terms of the
disadvantages, these include in particular, the level of uncertainty in their
future value which will depend on the performance of Hotel Chocolat over a
number of years which itself will be impacted by the business plan and
strategy of the business under Bidco's control, as well as the terms of the
Rollover Shares including the fact that they are illiquid and subject to a
five-year lock-up period, the potential dilution that would result if a Hotel
Chocolat Shareholder did not fund their pre-emptive entitlement pursuant to
any further issue of securities by Bidco in the period following the Effective
Date and the fact that the Rollover Shares do not carry voting rights other
than on very limited reserved matters.
Accordingly, the Hotel Chocolat Directors are unable to form an opinion as to
whether or not the terms of the Partial Share Alternative are fair and
reasonable and are not making any recommendation to eligible Hotel Chocolat
Shareholders as to whether or not they should elect for the Partial Share
Alternative.
Hotel Chocolat Shareholders are encouraged to take into account the key
advantages and disadvantages outlined above and in paragraph 4 in relation to
the Partial Share Alternative, as well as their particular circumstances, when
deciding whether to elect for the Partial Share Alternative in respect of all
or part of their holding in Hotel Chocolat Shares (subject to any such
election being in respect of at least the Minimum Rollover Threshold). Hotel
Chocolat Shareholders should also ascertain whether acquiring or holding
Rollover Shares is affected by the laws of the relevant jurisdiction in which
they reside and consider whether Rollover Shares are a suitable investment in
light of their own personal circumstances. Accordingly, Hotel Chocolat
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 Share
Alternative. Any decision to elect for the Partial Share Alternative should be
based on any such independent financial, tax and legal advice and full
consideration of the information in this announcement and the Scheme Document
(when published).
Further details of the Partial Share Alternative are set out in paragraphs 13
to 15 (inclusive) and Appendix 4 of this announcement.
5. Background to and reasons for the recommendation
Over the last 20 years, Hotel Chocolat has evolved to become one of the UK's
leading premium chocolate brands. Hotel Chocolat is known not only for its
high quality "More Cacao Less Sugar" products, but also for the values of
originality, authenticity and ethical behaviour which are at the core of its
business. Since the Hotel Chocolat business was founded, innovation has
remained at the forefront of what Hotel Chocolat strives for. New products
such as the Velvetiser drinking chocolate system have ensured that the
business continues to resonate with its customers. Hotel Chocolat manufactures
the vast majority of its chocolate products at its UK-based innovation centre
in Cambridgeshire and enjoys a direct relationship with its millions of UK
customers through its growing network of stores, an online channel and
selected resale partners. Areas of international growth for Hotel Chocolat
include the US digital subsidiary business, the cocoa agro-tourism Saint
Lucian subsidiary business and Hotel Chocolat's minority shareholding in the
Japanese brand licence partnership. Since Hotel Chocolat's initial listing on
AIM in 2016, Hotel Chocolat's revenues have grown by 124.5 per cent. to
approximately £205 million in the 53-week period ended 2 July 2023.
Hotel Chocolat's disappointing financial results for the 53-week period ended
2 July 2023 reflected a year of intensive re-shaping to deal with the
consequences of Hotel Chocolat's previous fast growth. In the first quarter of
the current financial year, Hotel Chocolat's revenue growth has benefited from
opportunities available through opening more stores in the UK and extending
the Hotel Chocolat brand into new product categories. The Hotel Chocolat
Directors believe the Hotel Chocolat brand, with its exciting range of
products, has potential for substantial growth outside the UK in the years
ahead.
While this growth potential has previously been recognised by the market and
reflected in the Hotel Chocolat share price, over the last year or two it has
become clear to the Hotel Chocolat Directors that achieving this potential
will require substantial investment and time. In particular, the need for, and
cost of, the recent reorganisation of Hotel Chocolat's initial expansion into
the US and Japan illustrates the scale of the challenge to grow the Hotel
Chocolat brand internationally. While the Hotel Chocolat Directors believe
that Hotel Chocolat could realise the full potential of the Hotel Chocolat
brand on a standalone basis in the UK in the medium term, in order to achieve
its overseas growth ambitions in the near to medium term in a way that would
capture the full value for Hotel Chocolat Shareholders would require a level
of investment that is likely to exceed that available from its own resources.
Whilst Hotel Chocolat is making good progress implementing a three year plan
to re-shape its future business and the Hotel Chocolat Directors consider that
the recent share price does not accurately reflect the underlying value and
potential of Hotel Chocolat, the Hotel Chocolat Directors nevertheless believe
that it is right to recommend Bidco's highly attractive offer for the
following reasons:
● The Cash Offer price at 375 pence per share values the entire issued and to be
issued share capital of Hotel Chocolat at approximately £534 million on a
fully diluted basis and implies an enterprise value of £570 million and a
multiple of approximately 23.7 times Underlying EBITDA for the 53-week period
ended 2 July 2023.
● The Cash Offer provides an opportunity for Hotel Chocolat Shareholders to
achieve a substantial premium to the current Hotel Chocolat Share price, a
premium to the 2021 placing price of 355 pence per Hotel Chocolat Share and is
well above typical public market offer premiums.
● The Cash Offer price represents a premium of approximately:
■ 169.8 per cent. to Hotel Chocolat's share price of 139 pence at the close of
business on 15 November 2023, being the last Business Day prior to the date of
this announcement.
■ 194.2 per cent. to the volume-weighted average price of 127 pence per Hotel
Chocolat Share for the 60-day period ended at the close of business on 15
November 2023, being the last Business Day prior to the date of this
announcement.
■ 144.3 per cent. to the volume-weighted average price of 154 pence per Hotel
Chocolat Share for the 12 month period ended at the close of business on 15
November 2023, being the last Business Day prior to the date of this
announcement.
● The Hotel Chocolat Directors believe the Cash Offer also appropriately
reflects the value of the potential growth of Hotel Chocolat on a standalone
basis over the medium term and provides an opportunity for Hotel Chocolat
Shareholders to realise their investment in Hotel Chocolat, in cash, at a
highly attractive price. The certainty of the Cash Offer should be weighed
against the uncertainty of the value which may be delivered through the
Partial Share Alternative and the risks inherent in executing successfully on
the future strategy of Hotel Chocolat as an independent listed company.
● Notwithstanding the positive management action and encouraging revenue growth
resulting from Hotel Chocolat's recent UK store expansion programme, the Hotel
Chocolat Directors acknowledge that the challenging macro-economic
environment, particularly in the discretionary consumer space, may expose
Hotel Chocolat to an element of risk in achieving its credible but ambitious
business plan targets.
● If Hotel Chocolat continues as a listed company, it is likely to be difficult
in the short to medium term for Hotel Chocolat to raise the significant equity
funding required to expand the business internationally in a way that captures
more of the potential value for shareholders. Expanding into new territories
through an asset and investment light model by way of partners providing
funding is likely to result in much of the benefit of such growth being
realised by the partners rather than Hotel Chocolat.
● With substantially all of Hotel Chocolat's free cash likely to be required for
re-investment into Hotel Chocolat's growth strategy for the foreseeable
future, it is likely to be some time before Hotel Chocolat is in a position to
be able to pay a significant dividend.
● The Hotel Chocolat Directors believe that Mars would be an excellent steward
of the Hotel Chocolat brand. Mars has expressed its excitement about the
long-term prospects of the Hotel Chocolat business and has been clear that it
intends to continue to support Hotel Chocolat's business in the UK and to
explore opportunities to grow the Hotel Chocolat brand outside the UK. Mars
shares similar values to Hotel Chocolat, including in key areas such as
quality and sustainability, and has agreed a cash price for Hotel Chocolat
that the Hotel Chocolat Directors believe recognises Hotel Chocolat's
impressive credentials as a premium chocolate brand and its ethical farming
and environmental practices that are considered to be important by many
consumers in today's market.
● The Hotel Chocolat Directors also believe that Mars is well positioned to
support Hotel Chocolat in its next phase of growth and continue to invest in
the business to improve the sustainable long-term value of the Hotel Chocolat
business. The Hotel Chocolat Directors believe that the Hotel Chocolat brand
would benefit from better access to committed, long-term capital as part of a
like-minded, entrepreneurial, purpose-led, family-owned business. The Hotel
Chocolat Directors welcome Mars' stated intentions for the broader business,
management, employees and business footprint of Hotel Chocolat.
● As a result of all of the above, the Hotel Chocolat Directors believe the
Acquisition will allow Hotel Chocolat to achieve growth faster and more
sustainably than Hotel Chocolat would be able to achieve alone.
● Accordingly, following careful consideration of the above factors, the Hotel
Chocolat Directors intend to unanimously recommend the Cash Offer to Hotel
Chocolat Shareholders.
6. Irrevocable undertakings and letter of intent
Bidco has received commitments and indications of support for the Acquisition
from Hotel Chocolat Shareholders in respect of 95,753,759 Hotel Chocolat
Shares representing, in aggregate, approximately 69.6 per cent. of the
existing issued ordinary share capital of Hotel Chocolat as at 15 November
2023, being the last Business Day prior to this announcement.
Founders
Bidco has received irrevocable undertakings from each Founder (the "Founder
Irrevocable Undertakings") and from a related trust of each Founder (the
"Family Trusts") (the "Family Trust Irrevocable Undertakings") to vote in
favour of the Scheme at the Court Meeting and the Resolutions at the General
Meeting (or, if the Acquisition is subsequently structured as a Takeover
Offer, to accept, or procure the acceptance of, the Takeover Offer).
The Founder Irrevocable Undertakings are in respect of the entire holdings
owned or controlled by the Founders amounting to 63,911,314 Hotel Chocolat
Shares representing, in aggregate, approximately 46.4 per cent. of the
existing issued ordinary share capital of Hotel Chocolat as at 15 November
2023, being the last Business Day prior to this announcement.
The Family Trust Irrevocable Undertakings are in respect of the entire
holdings owned or controlled by the Family Trusts amounting to 10,600,000
Hotel Chocolat Shares representing, in aggregate, approximately 7.7 per cent.
of the existing issued ordinary share capital of Hotel Chocolat as at 15
November 2023, being the last Business Day prior to this announcement.
Pursuant to the Founder Irrevocable Undertakings and the Family Trust
Irrevocable Undertaking in respect of the Thirlwell Family Trust, the Founders
and the Thirlwell Family Trust have also irrevocably undertaken to elect for
the Partial Share Alternative in respect of:
● Angus Thirlwell: 24,473,247 Hotel Chocolat Shares, representing approximately
17.2 per cent. of the fully diluted ordinary share capital of Hotel Chocolat
and approximately 76.6 per cent. of his existing holding in Hotel Chocolat;
● Peter Harris: 14,233,323 Hotel Chocolat Shares, representing approximately
10.0 per cent. of the fully diluted ordinary share capital of Hotel Chocolat
and approximately 44.5 per cent. of his existing holding in Hotel Chocolat;
● Thirlwell Family Trust: 3,993,399 Hotel Chocolat Shares, representing
approximately 2.8 per cent. of the fully diluted ordinary share capital of
Hotel Chocolat and approximately 75.3 per cent. of the trust's existing
holding in Hotel Chocolat.
The Founder Irrevocable Undertakings also extend to any Hotel Chocolat Shares
acquired by a Founder as a result of the vesting of awards or the exercise of
options under the Hotel Chocolat Share Schemes.
The Founder Irrevocable Undertakings and the Family Trust Irrevocable
Undertakings will remain binding in the event that a higher competing offer is
made for Hotel Chocolat and will cease to be binding only if the Scheme lapses
or is withdrawn.
Other Hotel Chocolat Directors
In addition to the Founder Irrevocable Undertakings, Bidco has received
irrevocable undertakings from all of the other Hotel Chocolat Directors who
are interested in Hotel Chocolat Shares to vote (or procure the voting) in
favour of the Scheme at the Court Meeting and the Resolutions at the General
Meeting (or, in the event that the Acquisition is implemented by way of the
Takeover Offer, to accept, or procure the acceptance of, the Takeover Offer)
in respect of 14,413 Hotel Chocolat Shares, representing, in aggregate,
approximately 0.01 per cent. of the existing issued ordinary share capital as
at 15 November 2023, being the last Business Day prior to this announcement,
and the entire holdings of such directors.
These irrevocable undertakings from the Hotel Chocolat Directors will cease to
be binding only if the Scheme lapses or is withdrawn, and they remain binding
in the event that a higher competing offer for Hotel Chocolat is made.
Other Hotel Chocolat Shareholders
Phoenix has committed and/or indicated its support for the Acquisition in
respect of all Hotel Chocolat Shares under its investment management control
representing, in aggregate, approximately 15.4 per cent. of the existing
issued ordinary share capital of Hotel Chocolat as at 15 November 2023, being
the last Business Day prior to this announcement. This comprises: (i) an
irrevocable undertaking from Phoenix to vote (or procure the voting) in favour
of the Scheme at the Court Meeting and the Resolutions at the General Meeting
(or, in the event that the Acquisition is implemented by way of the Takeover
Offer, to accept, or procure the acceptance of, the Takeover Offer) in respect
of 14,349,649 Hotel Chocolat Shares representing approximately 10.4 per cent.
of the existing issued ordinary share capital of Hotel Chocolat (the "Phoenix
Irrevocable Undertaking"); and (ii) a non-binding letter of intent from
Phoenix to vote (or procure the voting) in favour of the Scheme at the Court
Meeting and the Resolutions at the General Meeting (or, in the event that the
Acquisition is implemented by way of the Takeover Offer, to accept the
Takeover Offer) in respect of 6,878,383 Hotel Chocolat Shares representing
approximately 5.0 per cent. of the existing issued ordinary share capital of
Hotel Chocolat, in each case as at 15 November 2023, being the last Business
Day prior to this announcement.
The Phoenix Irrevocable Undertaking will remain binding in the event that a
higher competing offer for Hotel Chocolat is made and will cease to be binding
only if the Scheme lapses or is withdrawn. Pursuant to the Phoenix Irrevocable
Undertaking, Phoenix has also irrevocably undertaken not to elect for the
Partial Share Alternative in respect of the Hotel Chocolat Shares which are
subject to the Phoenix Irrevocable Undertaking.
Further details of these irrevocable undertakings (including the circumstances
in which they may lapse) and the letter of intent are set out in Appendix 3 to
this announcement.
7. Information relating to Bidco and Mars
Bidco
Bidco is a corporation incorporated under the laws of the State of Delaware in
the United States of America. Bidco is indirectly wholly owned by Mars and was
formed for the purpose of implementing the Acquisition. Bidco has not traded
or entered into any obligations other than in connection with the Acquisition.
Mars
Mars is a leading global manufacturer of chocolate, chewing gum, mints, fruity
confections, and other snacks. It makes products that inspire moments of
everyday happiness for millions, including iconic brands like M&Ms,
Snickers, Orbit, Extra, Kind, and Skittles that are enjoyed in more than 180
countries.
Today, its UK business employs over 1,600 people across four UK sites in
Slough, Plymouth, Maidenhead and London, manufacturing much-loved brands
including Mars, Snickers, Galaxy, and Maltesers.
Globally, its 34,000 Mars Snacking Associates are working hard to improve the
way Mars sources, makes and markets its products, so its consumers can enjoy
them even more. This includes an industry-leading commitment to invest $1
billion to build a new cocoa supply chain model centered on smallholder
farmers. For four decades, Mars has worked in collaboration with others toward
a goal of sustainable cocoa production. Cocoa is an integral ingredient in
Mars' beloved chocolate products, and Mars believes a sustainable cocoa sector
is essential to ensure Mars can continue to provide chocolate for future
generations of chocolate lovers. Protecting children and empowering women and
communities are pivotal to a thriving cocoa supply chain. Mars' Strategic
Approach to Protecting Children in Cocoa Farming Communities sets out how it
identifies, prevents, and mitigates human rights issues. Additionally, Mars
has committed to achieving a deforestation- and conversion-free supply chain
for 100% of the cocoa it sources by 2025 and net zero greenhouse gas emissions
across its full value chain by 2050.
Mars is driven by the belief that the world we want tomorrow starts with how
we do business today. As a global, family-owned business, Mars is
transforming, innovating, and evolving to make a positive impact on the world.
Across its diverse and expanding portfolio of quality snacking, food, and pet
care products and services, Mars employs 140,000+ dedicated Associates. With
more than $47 billion in annual sales, Mars produces some of the world's
best-loved brands including Ben's Original™, CESAR®, Cocoavia®, DOVE®,
EXTRA®, KIND®, M&M's®, SNICKERS®, PEDIGREE®, ROYAL CANIN®, and
WHISKAS®. We are creating A Better World for Pets through our global network
of pet hospitals and diagnostic services - including AniCura, BANFIELD™,
BLUEPEARL™, Linnaeus and VCA™.
8. Information relating to Hotel Chocolat
Hotel Chocolat is a premium British chocolate maker with a strong and
distinctive direct to consumer brand. The business was founded in 1993 by
Angus Thirlwell and Peter Harris, who remain directors of Hotel Chocolat, and
has traded under the Hotel Chocolat brand since 2003. Hotel Chocolat
manufactures premium chocolate and cocoa-related products and sells its
products online, through a network of stores in the UK and abroad, and through
selected wholesale partners. Hotel Chocolat has 131 stores in the UK, as well
as cafés, restaurants, outlets, factory stores, and an eco-hotel on its
working cacao farm in St Lucia. Hotel Chocolat also has 21 stores in Japan,
operated through a brand licencing and supply agreement with a local partner.
Through this integrated model, Hotel Chocolat is involved in each stage of
chocolate, from working with partner farmers, to designing and innovating new
products, to making, distributing and engaging customers through its own
direct channels.
9. Intentions of Mars
As described in paragraph 3 above, Mars believes that Hotel Chocolat would be
better suited to developing its business under private ownership as part of
the Bidco Group, with better access to the committed, long-term capital
required to deliver Hotel Chocolat's growth ambitions and without the costs
and constraints associated with its current public status. Mars is confident
that the Hotel Chocolat Group would benefit from being part of a like-minded,
entrepreneurial, purpose-led, family-owned group of businesses with extensive
international expertise, infrastructure and relationships.
Following the Effective Date, Mars intends to maintain Hotel Chocolat's brand
and to support its continued delivery of high quality, premium products to
consumers through both physical and digital routes to market.
Prior to this announcement and consistent with market practice, Mars has been
granted access to certain Hotel Chocolat information and to Hotel Chocolat's
senior management for the purposes of confirmatory due diligence. However,
because of applicable regulatory controls and the constraints of a public
offer process, Mars has not yet had access to sufficiently detailed
information to formulate detailed plans or intentions regarding the impact of
the Acquisition on the Hotel Chocolat Group.
Following the Effective Date, Mars intends to work with Hotel Chocolat's
management to undertake a detailed evaluation of the Hotel Chocolat Group and
its operations in order to determine how its short and long-term strategic
objectives can best be delivered. Mars expects that this evaluation will be
undertaken within approximately 12 months from the Effective Date.
Whilst the parameters of the evaluation have not yet been finalised, it is
expected to include the following areas:
● evaluating in more detail Hotel Chocolat's existing organisational structure,
strategy, and marketing, supply chain and procurement, development and
delivery capabilities;
● considering how best to position the business and assessing potential
opportunities that may support Hotel Chocolat's growth ambitions (including,
where appropriate, considering opportunities for expansion in new markets in
complementary new geographies); and
● assessing the opportunities to enhance the efficiency of business processes
and structures of the Hotel Chocolat Group.
The outcomes of the review could include investment in people and assets to
grow the business sustainably over the long-term, as well as efficiency in
operations to ensure that Hotel Chocolat is operating in line with industry
best practice and operational and commercial enhancements drawing on Mars'
expertise and capabilities.
Employees and management
Mars attaches great importance and value to the skills, experience and
commitment of the Hotel Chocolat Group's management and employees and
recognises that the management and employees of the Hotel Chocolat Group will
continue to be an important factor in maximising the success and growth of the
business going forward.
Mars expects the Hotel Chocolat Group's management and employees to continue
to contribute to the success of the Hotel Chocolat Group following the
Effective Date and anticipates that they will benefit from greater
opportunities as a result of the Acquisition. As part of this, Mars intends
that Angus Thirlwell will continue as Chief Executive Officer of the Hotel
Chocolat business following the Effective Date. Mars understands that Peter
Harris intends to retire following the Effective Date, but expects that he
will remain with the Hotel Chocolat business for a handover period, in a
consulting role to support his successor.
Except as described below, Mars does not envisage making any material
reduction to Hotel Chocolat's overall headcount or to the balance of skills
and functions of the management and employees of the Hotel Chocolat Group,
including employees engaged in Hotel Chocolat's existing retail stores and
manufacturing, distribution and packing facilities in the UK (other than in
the ordinary course of business).
However, once Hotel Chocolat ceases to be a listed company and becomes part of
the Mars family of companies, a limited number of back-office and listed
company functions may be reduced in scope or become unnecessary. Given that
some of these functions are outsourced or involve very few employees, the
number of employment roles within the Hotel Chocolat Group potentially
affected is likely to be small. Further details of any reductions or changes
will be considered as part of Mars' detailed evaluation described above. To
the extent that Mars proceeds with any such reductions or changes, it intends
to consult with relevant Hotel Chocolat employees and employee representatives
as required by applicable law.
Mars expects that the members of the board of directors of Hotel Chocolat
Group plc will resign from office as directors of Hotel Chocolat Group plc
with effect from the Effective Date.
Existing employment rights and pensions
Mars intends to safeguard the existing contractual and statutory employment
and pensions rights of the management and the employees of the Hotel Chocolat
Group in accordance with applicable law and does not intend to make any
material change to the conditions of employment of the management and
employees of the Hotel Chocolat Group.
Hotel Chocolat does not operate or contribute to any defined benefit pension
schemes in respect of its management and employees. It does, however,
contribute to a defined contribution pension plan. Mars does not intend to
make any material changes to Hotel Chocolat's existing employer pension
contribution arrangements, the accrual of benefits for existing members or the
rights of admission of new members.
Management incentivisation arrangements
Mars intends to put in place incentivisation arrangements for certain members
of the Hotel Chocolat Group's management following the Effective Date and has
confirmed that intention orally to Hotel Chocolat. Mars has not entered into,
and has not held any discussions on the terms, content, scope, or form of its
proposals in relation to any such incentivisation arrangements. Any
discussions with Hotel Chocolat's management about the terms, content, scope
or form of such incentivisation arrangements will not take place until after
the Effective Date.
Headquarters, locations and fixed assets
Mars admires Hotel Chocolat's strong brand appeal and its commitment to the UK
market. As a result, Mars intends to maintain and continue to support Hotel
Chocolat's business in the UK after the Effective Date.
Mars does not intend the Acquisition to result in a material reduction in the
retail or manufacturing footprint of Hotel Chocolat in the United Kingdom or a
redeployment of the fixed assets of Hotel Chocolat. In particular:
● Mars intends to continue to invest in the Hotel Chocolat Group's UK store
footprint (including further store openings) as an important component of its
growth story. Hotel Chocolat regularly evaluates its portfolio of stores
(including plans for further store openings) in the ordinary course and Mars
intends to continue to do the same following the Effective Date in the
ordinary course and as part of the detailed evaluation described above.
● Mars intends to retain Hotel Chocolat's: factory space in Huntingdon, UK;
distribution and packing centres in Northampton, UK and in St Neots, UK;
design space in London, UK; and Rabot Estate (including the Rabot Hotel) in St
Lucia.
● Mars intends to maintain Hotel Chocolat's UK headquarters in Royston, UK. The
global headquarters of Mars' Snacking business (of which Bidco will be part)
are expected to remain in Chicago, Illinois, USA.
Research and development
Mars understands the importance of research and development to Hotel
Chocolat's high-quality product ranges and continued new product development.
Mars therefore intends to maintain the research and development functions of
Hotel Chocolat, subject to reviewing such functions in further detail as part
of the detailed evaluation described above in order to evaluate opportunities
for integrating and enhancing the capabilities of that function within Mars
following the Effective Date.
Sustainability
Mars admires Hotel Chocolat's commitment to sustainability across its business
as highlighted by its existing environmental, carbon and packaging targets and
investment in sustainable farming and supply chain initiatives. Mars considers
Hotel Chocolat's stated focus on sustainability to be an important area of
cultural alignment with Mars' business, and Mars intends to continue to
support the Hotel Chocolat business in pursuing sustainability initiatives
following the Effective Date.
Trading facilities
Hotel Chocolat Shares are currently traded on AIM and, as set out in paragraph
17 of this announcement, it is intended that a request will be made to the
London Stock Exchange to cancel trading in Hotel Chocolat's Shares on AIM,
with effect shortly following the Effective Date. As stated in paragraph 17 of
this announcement, dealings in Hotel Chocolat Shares will be suspended shortly
prior to the Effective Date and thereafter there will be no trading facilities
in relation to Hotel Chocolat Shares from that time.
No statement in this paragraph 9 constitutes a post-offer undertaking for the
purposes of Rule 19.5 of the Code.
10. Financing
The cash consideration payable by Bidco to Hotel Chocolat Shareholders under
the terms of the Acquisition is expected to be financed by existing cash
resources of Mars or its affiliates.
Notwithstanding the above, on 16 November 2023, in order to enable Morgan
Stanley to give the confirmation referred to in Rule 2.7(d) of the Code, Mars
and JPMorgan Chase Bank, N.A. entered into the Acquisition Facility Agreement,
pursuant to which an up to £375,000,000 term facility is available to Mars to
be drawn to finance the cash consideration payable pursuant to the Acquisition
(and to finance fees, costs and expenses in connection with the Acquisition).
To the extent the Acquisition is not funded by existing cash resources of Mars
or its affiliates, the Acquisition Facility Agreement will be drawn down and
Mars has agreed to use the funds received under the Acquisition Facility
Agreement to the extent necessary to fund (directly or indirectly) Bidco with
the cash consideration payable by Bidco to Hotel Chocolat Shareholders under
the terms of the Acquisition.
Morgan Stanley, in its capacity as financial adviser to Bidco and Mars,
confirms that it is satisfied that sufficient resources are available to Bidco
to satisfy in full the cash consideration payable to Hotel Chocolat
Shareholders under the terms of the Acquisition.
Further information on the financing of the Acquisition will be set out in the
Scheme Document.
11. Hotel Chocolat Share Schemes
Participants in the Hotel Chocolat 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.
12. Offer-related arrangements
Confidentiality Agreement
Mars and Hotel Chocolat have entered into a confidentiality agreement dated 16
October 2023 pursuant to which each of Mars and Hotel Chocolat has undertaken,
amongst other things, to: (a) keep confidential information relating to the
Acquisition and the other party 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 only in connection with considering,
evaluating, negotiating, implementing or advising on the potential
Acquisition. These confidentiality obligations remain in force until two years
from the date of the Confidentiality Agreement. The agreement also contains
provisions pursuant to which each party has agreed not to solicit certain
employees of the other party, subject to customary carve-outs, for a period of
12 months.
Cooperation Agreement
Bidco and Hotel Chocolat have entered into a cooperation agreement dated 16
November 2023, pursuant to which, among other things, Bidco and Hotel Chocolat
have each agreed to certain undertakings to co-operate and provide each other
with reasonable information, assistance and access in relation to any filings,
submissions and notifications to be made in relation to regulatory clearances
and authorisations.
The Cooperation Agreement records the parties' intentions to implement the
Acquisition by way of Scheme, subject to the ability of Bidco to implement the
Acquisition by way of a Takeover Offer in certain circumstances set out in the
Cooperation Agreement and with the consent of the Panel.
The Cooperation Agreement will be capable of termination by either party in
certain circumstances, including if the Scheme does not become Effective by
the Long-Stop Date, a competing transaction completes, becomes effective or is
declared or becomes unconditional, any Condition has been invoked by Bidco (in
circumstances where invocation of the relevant Condition is permitted by the
Panel) prior to the Long-Stop Date or if the Acquisition is withdrawn or
lapses in accordance with its terms prior to the Long-Stop Date.
In addition, Bidco may terminate the Cooperation Agreement on written notice
to Hotel Chocolat in certain circumstances, including where the Hotel Chocolat
Directors have publicly withdrawn, adversely qualified, adversely modified or
failed to reaffirm or re-issue (when reasonably requested by Bidco to do so)
their unanimous recommendation that Hotel Chocolat Shareholders vote in favour
of the Scheme or a competing transaction is recommended by the Hotel Chocolat
Directors.
Pursuant to the terms of the Cooperation Agreement, Bidco has undertaken that
it will deliver a notice in writing to Hotel Chocolat on the Business Day
prior to the Scheme Court Hearing confirming either: (i) the satisfaction or
waiver of all Conditions (other than Condition 2(c)); or (ii) if permitted by
the Panel, that it intends to invoke one or more Conditions.
The Cooperation Agreement also contains provisions that will apply in respect
of the Hotel Chocolat Share Schemes and certain other employee incentive
arrangements.
Clean Team Agreement
Mars and Hotel Chocolat have entered into a due diligence clean team agreement
dated 24 October 2023, which sets out how any confidential information that is
commercially sensitive can be disclosed, used or shared for the purposes of
due diligence, integration planning and regulatory analysis and any associated
clearance processes. Such commercially sensitive information must only be made
available to the party receiving information through designated persons
removed from day-to-day commercial or strategic operations and decisions and
external professional advisers. The findings of such designated persons and
external advisers may only be relayed to other employees, officers and
directors of the receiving party in specified circumstances and subject to
certain restrictions.
Confidentiality and Joint Defence Agreement
Mars, Hotel Chocolat and their respective legal advisers have entered into a
Confidentiality and Joint Defence Agreement dated 25 October 2023, the purpose
of which is to ensure that the exchange and/or disclosure of certain materials
relating to the parties only takes place between their respective external
legal advisers and external experts, and does not diminish in any way the
confidentiality of such materials and does not result in a waiver of
privilege, right or immunity that might otherwise be available.
13. Partial Share Alternative
Under the Partial Share Alternative, eligible Hotel Chocolat Shareholders may
elect, in respect of some or all of their Hotel Chocolat Shares (subject to
any such election being in respect of at least the Minimum Rollover
Threshold), to receive, in lieu of the Cash Offer to which they are otherwise
entitled:
for each Hotel Chocolat Share: 1
Rollover Share
In aggregate, the maximum number of Rollover Shares available to be issued to
eligible Hotel Chocolat Shareholders under the Partial Share Alternative will
be limited to the equivalent of 30 per cent. of the Bidco Offer Shares (as
defined in paragraph 14 below) (the "Partial Share Alternative Maximum").
Assuming the Founders and the Thirlwell Family Trust elect for the Partial
Share Alternative in the proportions in which each of them has undertaken to
do pursuant to the Founder Irrevocable Undertakings and the Family Trust
Irrevocable Undertaking for the Thirlwell Family Trust, it is expected that
Partial Share Alternative Maximum will be met.
If elections are validly received from eligible Hotel Chocolat Shareholders in
respect of a number of Hotel Chocolat Shares that would require the issue of
Rollover Shares exceeding the Partial Share Alternative Maximum, such
elections will be unable to be satisfied in full. In these circumstances the
number of Rollover Shares to be issued to each Hotel Chocolat Shareholder who
has validly elected for the Partial Share Alternative will be reduced on a pro
rata basis, and the consideration for each Hotel Chocolat Share that is not
exchanged for Rollover Shares will be paid in cash in accordance with the
terms of the Cash Offer.
Any fractional entitlements to Rollover Shares under the Partial Share
Alternative will be rounded down to the nearest whole number of Rollover
Shares per eligible Hotel Chocolat Shareholder. Fractional entitlements to
Rollover Shares will not be allotted or issued to such Hotel Chocolat
Shareholder but will be disregarded, and the consideration for each applicable
Hotel Chocolat Share will be paid in cash in accordance with the terms of the
Cash Offer.
The availability of the Partial Share Alternative is conditional upon valid
elections being made for such number of Rollover Shares which represents at
least 30 per cent. of the Bidco Offer Shares (as defined in paragraph 14
below), failing which it will lapse. In these circumstances, no Rollover
Shares will be issued and the consideration payable in respect of each Hotel
Chocolat Share will be settled in cash in accordance with the terms of the
Cash Offer. However, given the Founders' and the Thirlwell Family Trust's
undertakings to elect for the Partial Share Alternative in the proportions set
out in the Founder Irrevocable Undertakings and the Family Trust Irrevocable
Undertaking for the Thirlwell Family Trust, the Partial Share Alternative is
not expected to lapse for this reason.
The Partial Share Alternative is not being offered, sold or delivered,
directly or indirectly, in or into any Restricted Jurisdiction and individual
acceptances of the Partial Share Alternative will only be valid if all
regulatory approvals required by a Hotel Chocolat Shareholder to acquire the
Rollover Shares have been obtained.
In addition, Hotel Chocolat Shareholders who wish to elect for the Partial
Share Alternative will be required to provide certain "Know Your Client"
information as requested by Bidco and Mars. Further details of this
eligibility requirement will be set out in the Scheme Document.
The issue of any Rollover Shares pursuant to the Partial Share Alternative
will be in accordance with the mechanism described in paragraph 14 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
regarding Bidco and the rights of the Rollover Shares are set out in
paragraphs 14 and 15 below and in Appendix 4 to this announcement.
For the purposes of Rule 24.11 of the Code, Morgan Stanley, as financial
adviser to Bidco, will provide an estimate of the value of a Rollover Share,
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.
If the Acquisition becomes Effective, Hotel Chocolat Shareholders who do not
validly elect for the Partial Share Alternative will automatically receive
cash consideration due under the Cash Offer for their entire holding of Hotel
Chocolat Shares.
14. Structure of the Partial Share Alternative
Bidco share capital as a result of the Acquisition
The current share capital of Bidco consists of 100 shares of common stock (the
"Initial Bidco Shares"). On or around the Effective Date, Bidco will issue
around 142,333,230 Bidco Shares (the "Bidco Offer Shares") and the Initial
Bidco Shares will be cancelled. If the Partial Share Alternative (including
any Bidco A Shares or Rollover Shares already in issue) were taken up in full
by eligible Hotel Chocolat Shareholders, and assuming the amount of Hotel
Chocolat Shares issued pursuant to the Hotel Chocolat Share Schemes prior to
the Effective Date is consistent with the calculation set out in Appendix 2 to
this announcement, Bidco would issue around:
(a) 99,633,261 Bidco A Shares to Mars Snacking Holdings to fund the cash
consideration and costs and expenses payable in respect of the Acquisition;
and
(b) 42,699,969 Rollover Shares to those eligible Hotel Chocolat Shareholders who
validly elect to receive the Partial Share Alternative.
Terms of Issue of Rollover Shares
The Rollover Shares to be issued to eligible Hotel Chocolat Shareholders who
validly elect for the Partial Share Alternative will be issued credited as
fully paid and will rank economically pari passu with the Bidco A Shares being
issued to Mars Snacking Holdings pursuant to the Acquisition as described
above, including the right to receive and retain dividends and other
distributions declared, made or paid (if any) by reference to a record date
falling on or after the date of this announcement.
15. Risk factors and other investment considerations in respect of
the Partial Share Alternative
Eligible Hotel Chocolat Shareholders who elect for the Partial Share
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 Bidco Shareholders' Agreement. A
summary of the key rights of the Rollover Shares is set out in Appendix 4.
In addition, the attention of eligible Hotel Chocolat Shareholders who may be
considering electing for the Partial Share 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:
(a) upon the Effective Date, the Bidco Group will be controlled by Mars Snacking
Holdings. Holders of the Rollover Shares, which will not carry any general
voting rights at general meetings of Bidco nor any right to receive a copy of
or vote on written resolutions of shareholders of Bidco and will have consent
rights only in respect of a very limited number of reserved matters
(exercisable only by a supermajority of Rollover Shareholders), will therefore
have no influence over decisions made by Bidco in relation to its investment
in Hotel Chocolat or in any other business;
(b) the Rollover Shares are unquoted and will not be listed or admitted to trading
on any exchange or market for the trading of securities, and will therefore be
illiquid;
(c) the Rollover Shares will have very limited transfer rights. They will not be
transferable during the Lock-Up Period (save in very limited circumstances in
relation to certain put and call options, to certain Associates or otherwise
with the prior consent of Mars Snacking Holdings). Following the Lock-Up
Period, a holder of Rollover Shares shall be entitled to transfer its Rollover
Shares (provided that any such transfer is for all (but not only part) of the
Rollover Shares held by such Rollover Shareholder and any of its Associates),
subject to a right of first refusal in favour of Mars Snacking Holdings and to
certain other restrictions including, but not limited to, in respect of the
identity of the proposed transferee;
(d) the value of the Rollover Shares will at all times be uncertain and there can
be no assurance that any such securities will be capable of being sold in the
future (other than pursuant to the put and call options described in Appendix
4) or that they will be capable of being sold at the value to be estimated by
Morgan Stanley in the Scheme Document;
(e) payments in respect of Rollover Shares will not be guaranteed or secured and
it is not anticipated that Bidco will declare or pay any distributions on any
of the Rollover Shares prior to the end of the final call option exercise
period described in Appendix 4;
(f) in relation to any further issues of securities, if holders of Rollover Shares
wish to avoid their percentage interest in Bidco being reduced by any such
issue, they will need to invest further cash sums in the Bidco Group. In
particular, Rollover 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 Bidco Group will suffer
significant dilution in their percentage ownership;
(g) the right of Rollover Shareholders to participate in future issues of
securities by the Bidco Group will also be subject to other important
exceptions. For example:
(i) holders of Rollover Shares will not be entitled to participate in any issues
of securities to actual or potential employees, directors, officers or
consultants of the Bidco Group (whether of the same or different classes to
the Rollover Shares);
(ii) if Bidco introduces one or more management incentive plans for actual or
potential employees, directors, officers and consultants of the Bidco Group
after the Effective Date that provide participants with an interest in
securities in the Bidco Group, such issue(s) could potentially significantly
dilute the Rollover Shares. In addition, the Bidco 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 Bidco Group as it increases in value (whether
pursuant to a ratchet mechanism or otherwise); and
(iii) the holders of Rollover Shares will not be entitled to participate in issues
of securities by the Bidco 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;
(h) the holders of Rollover Shares will enjoy only limited minority protections or
other rights (as summarised in Appendix 4);
(i) holders of Rollover Shares may be required at some point following the Lock-Up
Period to sell their Rollover Shares under the terms of a "drag along"
provision in the Bidco Shareholders' Agreement;
(j) it is possible that Mars Snacking Holdings may dispose of some or all of its
Bidco A Shares during the Lock-Up Period and in such circumstances no "tag
along" rights will apply to Rollover Shareholders;
(k) Mars Snacking Holdings will have a call option over a percentage of Rollover
Shares held by each Rollover Shareholder during the pre-determined Option
Exercise Periods. The call option could be exercised at a value that is less
than holders of Rollover Shares may receive for a sale at another time;
(l) the amount payable by Mars Snacking Holdings to Rollover Shareholders in
respect of any purchase of Rollover Shares on the exercise of any of the put
or call options described in Appendix 4 will depend on the future performance
of the Hotel Chocolat business under the Bidco Group's ownership. This remains
uncertain and could result in the amount received being less than the cash
consideration foregone under the Cash Offer;
(m) individual Rollover Shareholders will have limited control over the date(s) on
and value(s) at which they may be able to realise their investment in the
Bidco Group and, in particular, only Original Rollover Shareholders holding 5
per cent. or more of the Bidco Shares issued at or around the Effective Date
may defer the exercise of their put option rights in any Interim Option
Exercise Period;
(n) individual Rollover Shareholders will not have a right to challenge the Option
Price (as defined in Appendix 4) and any challenge by the Rollover Shareholder
Representative may, if unsuccessful, result in a lower valuation for the put
and call options and/or reduce the cash amount payable in relation to the put
and call options in any relevant Option Exercise Period;
(o) the Hotel Chocolat Shares are currently admitted to trading on AIM and Hotel
Chocolat Shareholders are afforded certain standards and protections,
including in respect of disclosure, as a result. Hotel Chocolat Shareholders
who receive Rollover Shares (being unlisted securities in a private company)
will not be afforded protections commensurate with those that they currently
benefit from as shareholders in Hotel Chocolat, including because Bidco
intends to rely on an exemption from registration under US securities laws and
will therefore not be registering the Rollover Shares with the US Securities
and Exchange Commission. Except for the information to be provided to the
Rollover Shareholder Representative (but not to other Rollover Shareholders)
in connection with the put and call options as described in Appendix 4,
neither the Bidco Organisational Documents nor the Bidco Shareholders'
Agreement will provide holders of Rollover Shares with information rights;
(p) there can be no certainty or guarantee as to the performance of the Bidco
Group or the Hotel Chocolat Group following the Effective Date (including, for
the avoidance of doubt, whether or the extent to which any of the EBITDA
Values or Low-End EBITDA Values relevant to calculation of the put and call
options will be met), and past performance cannot be relied upon as an
indication of future performance or growth; and
(q) Hotel Chocolat Shareholders will have no certainty as to the amount of
Rollover Shares they would receive because:
(i) the maximum number of Rollover Shares available to Hotel Chocolat Shareholders
under the Partial Share Alternative will be limited to the equivalent of 30
per cent. of the Bidco Offer Shares; and
(ii) to the extent that elections for the Partial Share Alternative cannot be
satisfied in full, the number of Rollover Shares to be issued to each eligible
Hotel Chocolat Shareholder who has elected for the Partial Share Alternative
will be reduced on a pro rata basis, and the consideration for each Hotel
Chocolat Share that is not exchanged for Rollover Shares will be paid in cash
in accordance with the terms of the Cash Offer.
Further information relating to Bidco and the Rollover Shares is set out in
Appendix 4 below.
16. Structure of and conditions to the Acquisition
It is intended that the Acquisition will be implemented by way of a
Court-sanctioned scheme of arrangement between Hotel Chocolat and the Scheme
Shareholders, under Part 26 of the Companies Act. The procedure involves,
among other things, an application by Hotel Chocolat 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 Hotel Chocolat. This is to be
achieved by the transfer of Hotel Chocolat Shares to Bidco in consideration
for which Hotel Chocolat Shareholders will receive the cash consideration due
under the Cash Offer and/or (subject to valid election) Rollover Shares on the
terms and conditions set out in paragraph 2 above, in each case to be effected
pursuant to the Scheme. The transfer to Bidco of the Hotel Chocolat Shares is
intended to result in Hotel Chocolat becoming a wholly-owned subsidiary of
Bidco.
Conditions to the Acquisition
The Scheme and Acquisition will be 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
11.59pm (London time) on the Long-Stop Date:
(a) a resolution to approve the Scheme is passed by a majority in number of,
representing 75 per cent. in value of the Hotel Chocolat Shares voted by,
Scheme Shareholders present and voting (and entitled to vote) at the Court
Meeting, either in person or by proxy;
(b) the Resolutions are passed by the requisite majority of Hotel Chocolat
Shareholders at the General Meeting;
(c) the Scheme is sanctioned by the Court (without modification, or with
modification on terms agreed by Bidco and Hotel Chocolat); and
(d) following the sanction by the Court, a copy of the Scheme Court Order is
delivered to the Registrar of Companies.
Additionally, the Scheme will lapse if, amongst other things:
(a) the Court Meeting and/or General Meeting are not held on or before the 22(nd)
day after the expected date of such meetings, which will be set out in the
Scheme Document in due course (or such later date as may be agreed by Bidco
and Hotel Chocolat with the consent of the Panel and, if required, with the
consent of the Court);
(b) the Scheme Court Hearing is not held on or before the 22(nd) day after the
expected date of such hearing, which will be set out in the Scheme Document in
due course (or such later date as may be agreed by Bidco and Hotel Chocolat
with the consent of the Panel and, if required, with the consent of the
Court); or
(c) the Scheme does not become Effective on or before 11.59pm (London time) on the
Long-Stop Date.
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 Scheme becoming Effective: (i) it 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 Hotel
Chocolat Shares will cease to be valid and entitlements to Hotel Chocolat
Shares held within the CREST system will be cancelled.
If the Scheme does not become Effective on or before 11.59pm (London time) on
the Long-Stop Date, it will lapse and the Acquisition will not proceed (unless
Bidco and Hotel Chocolat 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 Hotel Chocolat Shareholders. It is expected
that the Scheme Document, together with the Forms of Proxy and the Form of
Election, will be posted to Hotel Chocolat Shareholders and, for information
only, to persons with information rights and to holders of options and awards
granted under the Hotel Chocolat Share Schemes within 28 days of this
announcement (or such later time as Bidco and Hotel Chocolat and the Panel may
agree). Subject, amongst other things, to the satisfaction or (where
applicable) waiver of the Conditions, it is expected that the Scheme will
become effective by Q1 2024.
17. Delisting and re-registration
It is intended that an application will be made to the London Stock Exchange
for the cancellation of trading of the Hotel Chocolat Shares on AIM, with
effect shortly following the Effective Date.
The last day for dealings in Hotel Chocolat Shares on AIM of the London Stock
Exchange is expected to be the last Business Day immediately prior to the
Effective Date and no transfers shall be registered after 6.00 p.m. (London
time) on that date.
It is also intended that, following the Effective Date, Hotel Chocolat will be
re-registered as a private limited company under the relevant provisions of
the Companies Act.
18. Disclosure of interests in Hotel Chocolat relevant securities
Except for the irrevocable undertakings referred to in paragraph 6 above, as
at close of business on 15 November 2023 (being the last Business Day prior to
the date of this announcement), save as disclosed below, 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 Hotel Chocolat Shares or securities convertible or
exchangeable into Hotel Chocolat 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 Hotel Chocolat
Shares or in relation to any securities convertible or exchangeable into Hotel
Chocolat Shares.
In the interests of secrecy prior to this announcement, it has not been
possible for Bidco to make enquiries in respect of the matters referred to in
this paragraph of all parties who may be deemed or presumed by the Panel to be
acting in concert with Bidco for the purposes of the Acquisition. 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 Opening Position Disclosure.
19. Overseas shareholders
The availability of the Acquisition (including the Partial Share Alternative)
and the distribution of this announcement to Hotel Chocolat Shareholders who
are not resident in the United Kingdom 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. Hotel
Chocolat 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 of any securities or
an offer or an invitation to purchase any securities. Hotel Chocolat
Shareholders are advised to read carefully the Scheme Document and related
Forms of Proxy and Form of Election once these have been dispatched.
20. Documents published on a website
Copies of the following documents will, by no later than 12 noon (London time)
on 17 November 2023, be published on Hotel Chocolat's website at
https://www.hotelchocolat.com/uk/investor-relations-offer.html
(https://www.hotelchocolat.com/uk/investor-relations-offer.html) and Bidco's
website at
https://www.mars.com/news-and-stories/press-releases-statements/recommended-acquisition-of-hotel-chocolat-group-plc
(https://www.mars.com/news-and-stories/press-releases-statements/recommended-acquisition-of-hotel-chocolat-group-plc)
until the end of the offer period:
(a) this announcement;
(b) the irrevocable undertakings referred to in paragraph 6 above and summarised
in Appendix 3 to this announcement;
(c) the documents relating to the financing of the Acquisition referred to in
paragraph 10 above;
(d) the Confidentiality Agreement described in paragraph 12 above;
(e) the Clean Team Agreement described in paragraph 12 above;
(f) the Confidentiality and Joint Defence Agreement described in paragraph 12
above;
(g) the Cooperation Agreement described in paragraph 12 above; and
(h) the consent letters from each of Morgan Stanley, Lazard and Liberum referred
to in paragraph 21 below.
21. General
Bidco reserves the right to elect, with the consent of the Panel and in
accordance with the Cooperation Agreement, to implement the Acquisition by way
of a Takeover Offer for the entire issued and to be issued share capital of
Hotel Chocolat not already held by Bidco 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 subject to appropriate amendments, including
(without limitation) an acceptance condition set at 75 per cent. of the Hotel
Chocolat Shares (or such other lower percentage (being more than 50 per cent.)
as Bidco may, subject to the rules of the Code and the terms of the
Cooperation Agreement and with the consent of the Panel, decide). If the
Acquisition is effected by way of a Takeover Offer and such Takeover Offer
becomes or is declared unconditional and sufficient acceptances are received,
Bidco intends to: (i) make a request to the London Stock Exchange to cancel
trading in Hotel Chocolat Shares on AIM; and (ii) exercise its rights to apply
the provisions of Chapter 3 of Part 28 of the Companies Act to acquire
compulsorily the remaining Hotel Chocolat 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,
the AIM Rules and the FCA.
Each of Morgan Stanley, Lazard and Liberum has given and not withdrawn its
consent to the inclusion in this announcement of references to its name in the
form and context in which it appears.
The Acquisition will be on the terms and subject to the Conditions and certain
further terms set out herein and in Appendix 1 and to the full terms and
conditions which will be set out in the Scheme Document. The bases and sources
of certain financial information contained in this announcement are set out in
Appendix 2. Details of the irrevocable undertakings and the non-binding letter
of intent received by Bidco in connection with the Acquisition are set out in
Appendix 3. Details of Bidco, the Rollover Shares and eligibility to subscribe
for the Rollover Shares are set out in Appendix 4. Certain terms used in this
announcement are defined in Appendix 5.
The Scheme Document, the Forms of Proxy and the Form of Election accompanying
the Scheme Document are expected to be sent to Hotel Chocolat Shareholders
within 28 days of this announcement (or on such later time as Bidco, Hotel
Chocolat and the Panel may agree). A copy of the Scheme Document is also
expected to be sent (for information only) to persons with information rights
and participants in the Hotel Chocolat Share Schemes at the same time as it is
posted to Hotel Chocolat Shareholders.
The person responsible for arranging the release of this announcement on
behalf of Hotel Chocolat is Angus Thirlwell, Chief Executive Officer.
Enquiries
Bidco and Mars +1 (312) 794 6200
Fabiano Lima, Global VP of Corporate Affairs, Mars Snacking
Denise Young, Global VP of Corporate Communications, Mars
Morgan Stanley (Financial Adviser to Bidco and Mars) +44 (0)20 7425 8000
Laurence Hopkins
Imran Ansari
Mae Wang
Stuart Wright
Brunswick (Public Relations Adviser to Bidco and Mars) +44 (0)20 7404 5959
Max McGahan
Rosie Oddy
James Baker
Hotel Chocolat +44 (0)1763 257 746
Stephen Alexander, Non-Executive Chairman
Angus Thirlwell, Co-Founder and CEO
Jonathan Akehurst, Chief Financial Officer
Lazard (Lead Financial Adviser to Hotel Chocolat) +44 (0)20 7187 2000
William Lawes
Davin Staats
Fariza Steel
Adam Blin
Liberum (Co-Financial Adviser, Nominated Adviser and Corporate Broker to Hotel +44 (0)20 3100 2000
Chocolat)
Dru Danford
Tim Medak
Ed Thomas
Matt Hogg
Miquela Bezuidenhoudt
Citigate Dewe Rogerson (Financial Communications Adviser to Hotel Chocolat) +44 (0)20 7638 9571
Angharad Couch
Ellen Wilton
Alex Winch
Freshfields Bruckhaus Deringer LLP is acting as legal adviser to Bidco and
Mars in connection with the Acquisition. Herbert Smith Freehills LLP is acting
as legal adviser to Hotel Chocolat in connection with the Acquisition.
Further information
This announcement is for information purposes and 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 Hotel Chocolat 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, the Offer Document), 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 (or, if the Acquisition is
implemented by way of a Takeover Offer, the Offer Document). Hotel Chocolat
and Bidco urge Hotel Chocolat Shareholders to read the Scheme Document when it
becomes available because it will contain important information relating to
the Acquisition.
This announcement is an advertisement and does not constitute a prospectus or
prospectus equivalent.
Please be aware that addresses, electronic addresses and certain other
information provided by Hotel Chocolat Shareholders, persons with information
rights and other relevant persons for the receipt of communications from Hotel
Chocolat 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).
Morgan Stanley, which is authorised by the Prudential Regulation Authority and
regulated in the United Kingdom by the Financial Conduct Authority and the
Prudential Regulation Authority, is acting exclusively as financial adviser to
Bidco and Mars and no one else in connection with the matters contained in
this announcement and Morgan Stanley, its affiliates and their respective
directors, officers, employees and agents will not regard any other person as
their client, nor will they be responsible to anyone other than Bidco and Mars
for providing the protections afforded to clients of Morgan Stanley nor for
providing advice in connection with the matters contained in this announcement
or any other matter referred to herein.
Lazard, which is authorised and regulated by the Financial Conduct Authority
in the United Kingdom, is acting exclusively as financial adviser and Rule 3
adviser to Hotel Chocolat and no one else in connection with the Acquisition
and will not be responsible to anyone other than Hotel Chocolat for providing
the protections afforded to clients of Lazard nor for providing advice in
relation to the Acquisition or any other matters referred to herein. Neither
Lazard 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 Lazard
in connection with this announcement, any statement contained herein or
otherwise.
Liberum, which is authorised and regulated by the Financial Conduct Authority
in the United Kingdom, is acting exclusively for Hotel Chocolat and for no one
else in connection with the subject matter of this announcement and will not
be responsible to anyone other than Hotel Chocolat for providing the
protections afforded to its clients or for providing advice in connection with
the subject matter of this announcement. Neither Liberum nor any of its
affiliates (nor their respective directors, officers, employees or agents)
owes or accepts any duty, liability or responsibility whatsoever (whether
direct or indirect, whether in contract, in tort, under statute or otherwise)
to any person who is not a client of Liberum in connection with the
Acquisition, this announcement, any statement contained herein or otherwise.
No representation or warranty, express or implied, is made by Liberum as to
the contents of this announcement.
Overseas jurisdictions
The release, publication or distribution of this announcement in or into
jurisdictions other than the UK may be restricted by law and therefore any
persons who are subject to the law of any jurisdiction other than the UK
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 Hotel Chocolat 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, the AIM Rules 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.
The availability of the Acquisition (including the Partial Share Alternative)
to Hotel Chocolat Shareholders who are not resident in the United Kingdom may
be affected by the laws of the relevant jurisdictions in which they are
resident. Persons who are not resident in the United Kingdom should inform
themselves of, and observe, any applicable requirements.
Further details in relation to Overseas Shareholders will be contained in the
Scheme Document.
The Acquisition shall be subject to the applicable requirements of the Code,
the Panel, the London Stock Exchange, the FCA and the AIM Rules.
Additional information for US investors
The Acquisition is being made to acquire the shares 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 or the proxy solicitation 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 and proxy solicitation
rules. The financial information included in this announcement and the Scheme
documentation has been or will have been prepared in accordance with
accounting standards applicable in the United Kingdom 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 Hotel Chocolat 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 Hotel Chocolat 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 Hotel Chocolat Shareholder is urged to
consult their independent professional adviser immediately regarding the tax
consequences of the Acquisition applicable to them.
The Rollover Shares issued under the Partial Share Alternative will not be
registered under the US Securities Act of 1933 (the "Securities Act"). Bidco
expects to issue the Rollover Shares 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 Rollover Shares are proposed to be
issued have the right to appear and receive adequate and timely notice
thereof. If Bidco exercises its right to implement the acquisition of the
Hotel Chocolat Shares by way of a Takeover Offer, the Rollover Shares will not
be offered in the United States except pursuant to an exemption from or in a
transaction not subject to registration under the Securities Act.
The Rollover Shares that may be issued pursuant to the Acquisition have not
been and will not be registered under the 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 Share Alternative or determined if the Scheme
Document is accurate or complete. Any representation to the contrary is a
criminal offence.
In accordance with normal UK practice and pursuant to Rule 14e-5(b) of the US
Exchange Act (to the extent applicable), Bidco or its nominees, or its brokers
(acting as agents), may from time to time make certain purchases of, or
arrangements to purchase, Hotel Chocolat Shares outside of the US, other than
pursuant to the Acquisition, until the date on which the Acquisition and/or
Scheme becomes effective, lapses or is otherwise withdrawn. If such purchases
or arrangements to purchase were to be made, they would be made outside of the
US and would be in accordance with applicable law, including the US Exchange
Act and the Code. 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 at www.londonstockexchange.com
(http://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, Mars and Hotel Chocolat 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, Mars and Hotel Chocolat 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, Mars and Hotel Chocolat, 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", "goal", "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, Mars and Hotel Chocolat believe
that the expectations reflected in such forward-looking statements are
reasonable, Bidco, Mars and Hotel Chocolat 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. Among the
factors that could cause actual results to differ materially from those
described in the forward-looking statements are changes in the global,
political, economic, business, competitive, market and regulatory forces,
future exchange and interest rates, changes in tax rates and future business
combinations or dispositions, and any epidemic, pandemic or disease outbreak.
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, Mars nor Hotel Chocolat, nor any of their respective associates or
directors, members, managers, partners, 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 any reliance on these
forward-looking statements. The forward-looking statements speak only at the
date of this announcement. All subsequent oral or written forward-looking
statements attributable to Bidco or any member of the Wider Bidco Group or the
Hotel Chocolat Group, or any of their respective associates, directors,
officers, employees or advisers, are expressly qualified in their entirety by
the cautionary statement above. Other than in accordance with their legal or
regulatory obligations, neither Bidco, Mars or Hotel Chocolat is under any
obligation, and Bidco, Mars and Hotel Chocolat 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.
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 (http://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.
No profit forecasts, estimates or quantified financial benefits statements
No statement 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 Bidco, Mars or Hotel Chocolat, as appropriate, for the current or
future financial years would necessarily match or exceed the historical
published earnings or earnings per share for Bidco, Mars or Hotel Chocolat, as
appropriate.
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 figures that precede them.
General
Bidco reserves the right to elect, with the consent of the Panel and subject
to the terms of the Cooperation 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 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 Hotel Chocolat
Shares in respect of which the Takeover Offer has not been accepted.
Investors should be aware that Bidco may purchase Hotel Chocolat 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.
Rule 2.9 of the Code
For the purposes of Rule 2.9 of the Code, Hotel Chocolat confirms that it has
in issue 137,597,673 ordinary shares of 0.1 pence each. The ISIN for the
shares is GB00BYZC3B04. Hotel Chocolat holds no shares in treasury.
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
https://www.mars.com/news-and-stories/press-releases-statements/recommended-acquisition-of-hotel-chocolat-group-plc
(https://www.mars.com/news-and-stories/press-releases-statements/recommended-acquisition-of-hotel-chocolat-group-plc)
and Hotel Chocolat's website at
https://www.hotelchocolat.com/uk/investor-relations-offer.html
(https://www.hotelchocolat.com/uk/investor-relations-offer.html) by no later
than 12 noon (London time) on the Business Day following publication of this
announcement. For the avoidance of doubt, the contents of any websites
referred to in this announcement are not incorporated into and do not form
part of this announcement.
Hotel Chocolat Shareholders, persons with information rights and participants
in the Hotel Chocolat Share Schemes may request a hard copy of this
announcement by contacting Equiniti during business hours on +44 (0)371 384
2030 or by submitting a request in writing to Equiniti at Aspect House,
Spencer Road, Lancing, West Sussex, BN99 6DA, United Kingdom. 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.
Appendix 1
Conditions and Certain Further Terms of the Scheme and the Acquisition
Part A Conditions to the Scheme and Acquisition
Long-Stop Date
1. The Acquisition is conditional upon the Scheme becoming unconditional and
becoming effective, subject to the provisions of the Code, by no later than
11.59 p.m. on the Long-Stop Date.
Scheme approval
1. The Scheme will be conditional upon:
(a) (i) its approval by a majority in number of, representing not less than 75 per
cent. in value of the Hotel Chocolat Shares voted by, 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 Hotel Chocolat may agree, with the
consent of the Panel (and that the Court may allow, if required));
(b) (i) all Resolutions 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 Hotel
Chocolat may agree, with the consent of the Panel (and that the Court may
allow, if required)); and
(c) (i) the sanction of the Scheme by the Court without modification or with
modification on terms acceptable to Bidco and Hotel Chocolat 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 Hotel Chocolat may
agree, with the consent of the Panel, (and that the Court may allow, if
required)).
In addition, subject to as stated in Part B of Appendix 1 below and to the
requirements of the Panel, Bidco and Hotel Chocolat 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
General Third Party official authorisations and regulatory clearances
3. 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
Acquisition or, except pursuant to Chapter 3 of Part 28 of the Companies Act,
the acquisition or proposed acquisition of any shares or other securities in,
or control or management of, Hotel Chocolat or any other member of the Wider
Hotel Chocolat Group by any member of the Wider Bidco Group or the carrying on
by any member of the Wider Hotel Chocolat Group of any material aspect of its
business, and all such Authorisations remaining in full force and effect at
the time at which the Acquisition becomes otherwise unconditional and there
being no notice or intimation of an intention to revoke, suspend, restrict,
modify or not to renew such Authorisations;
4. 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 is or is likely to be material in the context of the Wider Bidco
Group or Wider Hotel Chocolat Group or the Acquisition which 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, Hotel
Chocolat or any member of the Wider Hotel Chocolat Group void, illegal or
unenforceable in any jurisdiction, or otherwise directly or indirectly
materially restrain, prevent, prohibit, restrict or delay the same or impose
additional material conditions or obligations with respect to the Scheme or
the Acquisition or such acquisition, or otherwise materially impede, challenge
or interfere with the Scheme or Acquisition or such acquisition, or require
material amendment to the terms of the Scheme or Acquisition or the
acquisition or proposed acquisition of any Hotel Chocolat Shares or the
acquisition of control or management of Hotel Chocolat or the Wider Hotel
Chocolat Group by Bidco or any member of the Bidco Group;
(b) materially limit or delay, or impose any material limitations on, the ability
of any member of the Wider Bidco Group or any member of the Wider Hotel
Chocolat 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 Hotel Chocolat Group or any member of the Wider Bidco Group;
(c) require, prevent or materially delay the divestiture or materially 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 Wider Hotel
Chocolat Group;
(d) require, prevent or materially delay the divestiture or materially alter the
terms envisaged for any proposed divestiture by any member of the Wider Bidco
Group or by any member of the Wider Hotel Chocolat Group of all or any
material portion of their respective businesses, assets or properties or
materially 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 Hotel Chocolat 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) materially adversely limit the ability of any member of the Wider Bidco Group
or of the Wider Hotel Chocolat Group to conduct or integrate or coordinate or
manage 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 Hotel
Chocolat Group;
(g) result in any member of the Wider Hotel Chocolat 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 materially adversely affect any or all of the business, assets,
profits, financial or trading position or prospects of any member of the Wider
Hotel Chocolat 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;
5. all Authorisations which are necessary or are reasonably considered necessary
or appropriate by Bidco in any relevant jurisdiction for or in respect of the
Acquisition or the acquisition or proposed acquisition of any shares or other
securities in, or control or management of, Hotel Chocolat or any other member
of the Wider Hotel Chocolat Group by any member of the Wider Bidco Group or
the carrying on by any member of the Wider Hotel Chocolat 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 Hotel Chocolat Group has entered into
contractual arrangements in each case where the absence of such Authorisation
would have a material adverse effect on the Hotel Chocolat Group taken as a
whole and all such Authorisations remaining in full force and effect and at
the time which the Acquisition becomes otherwise unconditional there being no
notice or intimation of any intention to revoke, suspend, restrict, modify or
not to renew any of such Authorisations;
Certain matters arising as a result of any arrangement, agreement etc.
6. except as Disclosed, there being no provision of any arrangement, agreement,
licence, permit, franchise or other instrument to which any member of the
Wider Hotel Chocolat 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 Acquisition or the
acquisition or proposed acquisition of any shares or other securities in, or
control of, Hotel Chocolat or any other member of the Wider Hotel Chocolat
Group by any member of the Wider Bidco Group or otherwise, would reasonably be
expected to result in (in any case to an extent which is or would be material
and adverse in the context of the Hotel Chocolat Group taken as a whole):
(a) any monies borrowed by or any other indebtedness (actual or contingent) of, or
any grant available to, any member of the Wider Hotel Chocolat 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 Hotel Chocolat 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 Hotel Chocolat 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
Hotel Chocolat 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 Hotel Chocolat Group being or
falling to be disposed of or charged or ceasing to be available to any member
of the Wider Hotel Chocolat 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 Hotel Chocolat Group otherwise than in
the ordinary course of business;
(e) any member of the Wider Hotel Chocolat Group ceasing to be able to carry on
business under any name under which it presently does so;
(f) the creation of material liabilities (actual or contingent) by any member of
the Wider Hotel Chocolat Group other than trade creditors or other liabilities
incurred in the ordinary course of business;
(g) the rights, liabilities, obligations or interests of any member of the Wider
Hotel Chocolat 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 Hotel Chocolat 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 be
reasonably likely to result in any of the events or circumstances which are
referred to in paragraphs (a) to (h) of this Condition 6 in any case to an
extent which is or would be material and adverse in the context of the Hotel
Chocolat Group taken as a whole;
7. since 2 July 2023 and except as Disclosed, no member of the Wider Hotel
Chocolat 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 Hotel Chocolat and wholly-owned subsidiaries of Hotel
Chocolat other than any shares issued or shares transferred from treasury upon
the exercise of any options or vesting of awards granted in the ordinary
course under any of the Hotel Chocolat 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 Hotel
Chocolat or a wholly-owned subsidiary of Hotel Chocolat);
(d) except as between Hotel Chocolat and its wholly-owned subsidiaries or between
such wholly-owned subsidiaries made or authorised any change in its
loan capital;
(e) (other than any acquisition or disposal of assets in the ordinary course of
business or a transaction between Hotel Chocolat and a wholly-owned subsidiary
of Hotel Chocolat or between such wholly-owned subsidiaries) 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 (except in the ordinary course of business or except as between Hotel
Chocolat and its wholly-owned subsidiaries or between such wholly-owned
subsidiaries) incurred or increased any indebtedness or liability (actual or
contingent) which in any case is material in the context of the Hotel Chocolat
Group taken as a whole;
(g) entered into, varied, or authorised any material agreement, transaction,
arrangement or commitment (whether in respect of capital expenditure or
otherwise) which, except in the ordinary course of business:
(i) is of a long term, onerous or unusual nature or magnitude or which is
reasonably likely to involve an obligation of such nature or magnitude; or
(ii) restricts or would reasonably be likely to restrict the business of any member
of the Wider Hotel Chocolat Group,
and which is material in the context of the Hotel Chocolat Group taken as a
whole;
(h) except as pursuant to the Acquisition and except as between Hotel Chocolat and
its wholly-owned subsidiaries or between such wholly-owned subsidiaries
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 Hotel Chocolat
Group otherwise than in the ordinary course of business which in any case is
material in the context of the Hotel Chocolat Group taken as a whole;
(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
Hotel Chocolat Group;
(j) other than in respect of a member of the Wider Hotel Chocolat Group which is
dormant and was solvent at the relevant time, 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 material part of its assets and revenues or any analogous proceedings in
any jurisdiction or appointed any analogous person in any jurisdiction which
in any case is material in the context of the Hotel Chocolat Group taken as a
whole;
(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 in any case with a material adverse effect on
the Hotel Chocolat Group taken as a whole;
(l) waived or compromised any claim, otherwise than in the ordinary course of
business, which is material in the context of the Hotel Chocolat Group taken
as a whole;
(m) other than in connection with the Scheme, made any alteration to its
memorandum or articles of association which is material in the context of the
Acquisition;
(n) except in relation to changes required as a result of changes to legislation,
made or agreed or consented to:
(i) any material 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,
in each case, which has or would reasonably be expected to have an effect that
is material in the context of the Hotel Chocolat Group taken as a whole;
(o) proposed, agreed to provide or modified the terms of any share option scheme
or award, incentive scheme or other benefit relating to the employment or
termination of employment of any person employed by the Wider Hotel Chocolat
Group, other than as set out in the Cooperation Agreement, and which are
material in the context of the Wider Hotel Chocolat Group taken as a whole; 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 7;
No adverse change, litigation or regulatory enquiry
8. since 2 July 2023 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 Hotel Chocolat Group which in any case is material in the context of the
Hotel Chocolat Group taken as a whole;
(b) no contingent or other liability of any member of the Wider Hotel Chocolat
Group having arisen or become apparent or increased which would reasonably be
expected to affect adversely the business, assets, financial or trading
position or profits or prospects of any member of the Wider Hotel Chocolat
Group to an extent which is material in the context of the Hotel Chocolat
Group taken as a whole;
(c) no steps having been taken and no omissions having been made which would
result in the withdrawal, cancellation, termination or modification of any
licence held by any member of the Wider Hotel Chocolat Group which is
necessary for the proper carrying on of its business and the withdrawal,
cancellation, termination or modification of which would have a material
adverse effect on the Wider Hotel Chocolat Group taken as a whole;
(d) no litigation, arbitration proceedings, prosecution or other legal proceedings
to which any member of the Wider Hotel Chocolat 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 Hotel Chocolat Group which in
each case would have a material adverse effect in the context of the Wider
Hotel Chocolat Group taken as a whole;
(e) (other than as a result of or in connection with the Acquisition but without
prejudice to any other Condition) 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 Hotel Chocolat Group which in each case
would have a material and adverse effect in the context of the Wider Hotel
Chocolat Group taken as a whole;
(f) on or after the date of this announcement, other than with the consent of
Bidco, no action having been taken or proposed by any member of the Wider
Hotel Chocolat Group, or having been approved by Hotel Chocolat Shareholders
or consented to by the Panel, which falls or would fall within or under Rule
21.1 of the Code or which otherwise is or would be materially inconsistent
with the implementation by Bidco of the Acquisition on the basis contemplated
as at the date of this announcement; and
(g) no member of the Wider Hotel Chocolat Group having conducted its business in
breach of any applicable laws and regulations which in any case is material in
the context of the Hotel Chocolat Group taken as a whole;
No discovery of certain matters
9. save as Disclosed, Bidco not having discovered:
(a) that any financial or business or other information
concerning the Wider Hotel Chocolat Group disclosed at any time by or on
behalf of any member of the Wider Hotel Chocolat Group, whether publicly, to
any member of the Wider Bidco Group or to any of their advisers or otherwise,
is materially misleading or contains a material 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 the date of this
announcement by disclosure either publicly or otherwise to Bidco or its
professional advisers to an extent which in any case is material in the
context of the Hotel Chocolat Group taken as a whole; or
(b) that any member of the Wider Hotel Chocolat Group is subject
to any liability (actual or contingent) which is not disclosed in Hotel
Chocolat's annual report and accounts for the period ended 2 July 2023 which
has not been Disclosed and which in any case is material in the context of the
Hotel Chocolat Group taken as a whole;
(c) any information which affects the import of any information
disclosed at any time by or on behalf of any member of the Wider Hotel
Chocolat Group to an extent which is material in the context of the Hotel
Chocolat Group taken as a whole;
(d) that any past or present member of the Wider Hotel Chocolat
Group has not complied with any applicable legislation or regulations of any
jurisdiction with regard to the use, treatment, handling, storage, transport,
release, disposal, discharge, spillage, leak or emission of any waste or
hazardous substance or any substance likely to impair the environment or harm
human health, or otherise relating to environmental matters or the health and
safety of any person, or that there has otherwise been any such use,
treatment, handling, storage, transport, release, disposal, discharge,
spillage, leak or emission (whether or not this constituted a non-compliance
by any person with any legislation or regulations and wherever the same may
have taken place) which, in any case, would be likely to give rise to a
liability (whether actual or contingent) or cost on the part of any member of
the Wider Hotel Chocolat Group which in any case is material in the context of
the Hotel Chocolat Group taken as a whole;
(e) that there is, or is likely to be, any material liability,
whether actual or contingent, to make good, repair, reinstate or clean up any
property now or previously owned, occupied or made use of by any past or
present member of the Wider Hotel Chocolat Group or any other property or any
controlled waters under any environmental legislation, regulation, notice,
circular, order or other lawful requirement of any relevant authority or third
party or otherwise which in any case is material in the context of the Hotel
Chocolat Group taken as a whole; or
(f) that circumstances exist whereby a person or class of
persons would be likely to have a claim in respect of any product or process
of manufacture or materials used therein now or previously manufactured, sold
or carried out by any past or present member of the Wider Hotel Chocolat Group
which is or would be material in the context of the Hotel Chocolat Group taken
as a whole;
Anti-corruption, sanctions and criminal property
10. Bidco not having discovered other than as Disclosed that:
(a) (i) any past or present member, director, officer or
employee of the Wider Hotel Chocolat 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 Hotel Chocolat Group or
(ii) any person that performs or has performed services for or on behalf of
the Wider Hotel Chocolat 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;
(b) any asset of any member of the Wider Hotel Chocolat Group
constitutes criminal property as defined by section 340(3) of the Proceeds of
Crime Act 2002 (but disregarding paragraph (b) of that definition);
(c) any past or present member, director, officer or employee of
the Hotel Chocolat 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; 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 Hotel Chocolat Group has engaged in any
transaction which would cause Bidco to be in breach of any law or regulation
upon its acquisition of Hotel Chocolat, including the economic sanctions of
the United States Office of Foreign Assets Control or HM Treasury, 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 or, if applicable, given notice of a decision, 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.
Part B Waiver and invocation of the Conditions
11. 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 2(a)(i), 2(b)(i), 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 Hotel Chocolat (with the consent of the Panel, if required) and with
the approval of the Court, if such approval is required. If any of Conditions
2(a)(ii), 2(b)(ii) or 2(c)(ii) are 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 Hotel Chocolat
to extend the relevant deadline.
12. 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 10 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.
13. Subject to paragraph 14 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 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.
14. The Conditions set out in paragraphs 1 and 2(a)(i), 2(b)(i)
and 2(c)(i) 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.
15. Any Condition that is subject to Rule 13.5(a) of the Code may
be waived by Bidco.
16. 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.
17. If the Panel requires Bidco to make an offer or offers for any
Hotel Chocolat 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.
18. Each of the Conditions shall be regarded as a separate
Condition and shall not be limited by reference to any other Condition.
Part C Implementation by way of Takeover Offer
19. 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 Cooperation Agreement. In such event, subject to
the Cooperation Agreement, 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. of
the Hotel Chocolat Shares (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.
Part D Certain further terms of the Acquisition
20. Hotel Chocolat 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 or value made, on or
after the date of this announcement, other than any dividend or distribution
in respect of which Bidco exercises its rights under the terms of the
Acquisition to reduce the consideration payable in respect of each Hotel
Chocolat Share.
21. If, on or after the date of this announcement and prior to the
Effective Date, any dividend and/or other distribution and/or other return of
capital or value is announced, declared, made or paid or becomes payable in
respect of the Hotel Chocolat Shares, Bidco reserves the right (without
prejudice to any right of Bidco to invoke Condition 7(c) in Part A of this
Appendix 1), to reduce the consideration payable under the Cash Offer (and, as
the case may be, the consideration due under the Partial Share Alternative)
under the terms of the Acquisition for the Hotel Chocolat Shares by an amount
up to the amount of such dividend and/or distribution and/or return of capital
or value. In such circumstances, Hotel Chocolat Shareholders shall be entitled
to retain any such dividend, distribution, or other return of value declared,
made, or paid. Where the consideration payable is so reduced, 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 or value is announced 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.
22. The Acquisition 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 provisions of the Code.
23. The availability of the Acquisition (including the Partial
Share Alternative) 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.
24. Unless otherwise determined by Bidco or required by the Code
and permitted by applicable law and regulations, the Acquisition (including
the Partial Share Alternative) is not being, and will not be, made, directly
or indirectly, in, into or by the use of the mail of, or by any other means or
instrumentality (including, but not limited to, facsimile, email or other
electronic transmission, telex or telephone) of interstate or foreign commerce
of, or of any facility of a national, state or other securities exchange of,
any Restricted Jurisdiction and will not be capable of acceptance by any such
use, means, instrumentality or facility or from within any Restricted
Jurisdiction.
25. This announcement and any rights or liabilities arising
hereunder, the Acquisition, the Scheme, the Partial Share 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, the AIM Rules and the FCA.
Appendix 2
Bases and Sources
1. The value attributed to the fully diluted ordinary share
capital of Hotel Chocolat is based upon the 137,597,673 Hotel Chocolat Shares
in issue on 15 November 2023 (being the last Business Day prior to this
announcement) and an additional 4,735,557 Hotel Chocolat Shares, being the
maximum number of Hotel Chocolat Shares that may be issued on or after the
date of this announcement to satisfy the exercise and vesting of options and
awards outstanding under the Hotel Chocolat Share Schemes as at 15 November
2023 (being the last Business Day prior to this announcement).
2. The 4,735,557 Hotel Chocolat Shares required to satisfy the
exercise and vesting of options and awards outstanding under the Hotel
Chocolat Share Schemes comprise:
(i) 2,966,984 Hotel Chocolat Shares which may be issued on or
after the date of this announcement pursuant to the Hotel Chocolat Long Term
Incentive Plan; plus
(ii) 159,422 Hotel Chocolat Shares which may be issued on or
after the date of this announcement pursuant to the Hotel Chocolat Founder
Shares Plan; plus
(iii) 1,609,151 Hotel Chocolat Shares which may be issued on or
after the date of this announcement pursuant to the Hotel Chocolat Save As You
Earn Plan.
3. The value of approximately £534 million for the entire
issued and to be issued share capital of Hotel Chocolat is based on:
(i) the Cash Offer of 375 pence for each Hotel Chocolat Share;
and
(ii) Hotel Chocolat's fully diluted issued ordinary share
capital of 142,333,230 Hotel Chocolat Shares, as set out in paragraph 1
above.
4. The enterprise value of Hotel Chocolat is calculated by
reference to the valuation of the Cash Offer referenced in paragraph 3 above
plus Hotel Chocolat's reported net debt of £36.8 million (being Hotel
Chocolat's reported gross debt of £48.0 million less Hotel Chocolat's
reported cash and cash equivalents of £11.2 million) less reported equity
investments of £0.1 million, as published by Hotel Chocolat in its annual
report and accounts for the period ended 2 July 2023.
5. Hotel Chocolat's underlying EBITDA (on a post-IFRS 16
basis) for the 53-week period ended 2 July 2023 of £24.1 million has been
extracted from Hotel Chocolat's annual report and accounts for the period
ended 2 July 2023. "Underlying EBITDA" is defined as earnings before net
finance costs, depreciation and amortisation, profit/loss on disposal of
assets, share-based payment charges (and related taxes), share of profit/loss
of joint ventures or associates, tax and exceptional or adjusting items.
6. Unless otherwise stated, the financial information on Hotel
Chocolat is extracted (without material adjustment) from Hotel Chocolat's
annual report and accounts for the period ended 2 July 2023.
7. The market prices of the Hotel Chocolat Shares are the
closing middle market quotations as derived from information published by the
London Stock Exchange.
8. The volume-weighted average prices have been derived from
Bloomberg data.
9. Certain figures included in this announcement have been
subject to rounding adjustments.
Appendix 3
Details of Irrevocable Undertakings and Letter of Intent
Founders and Family Trusts
The Founders and the Family Trusts have given irrevocable undertakings to vote
in favour of the Scheme at the Court Meeting and the Resolutions at the
General Meeting (or, in the event that the Acquisition is implemented by way
of the Takeover Offer, to accept the Takeover Offer) in relation to the
following Hotel Chocolat Shares:
Registered holder Beneficial holder Number of Hotel Chocolat Shares Percentage of issued ordinary share capital of Hotel Chocolat
Angus Thirlwell Angus Thirlwell 31,955,657 23.2
Peter Harris Peter Harris 31,955,657 23.2
Thirlwell Family Trust The children of Angus Thirlwell 5,300,000 3.9
Harris Family Trust The children and grandchildren of Peter Harris 5,300,000 3.9
The Founder Irrevocable Undertakings also extend to any Hotel Chocolat Shares
acquired by such Hotel Chocolat Directors as a result of the vesting of awards
or the exercise of options under the Hotel Chocolat Share Schemes.
The Founders and the Thirlwell Family Trust have also irrevocably undertaken
to elect for the Partial Share Alternative in respect of the following Hotel
Chocolat Shares:
Registered holder Beneficial holder Number of Hotel Chocolat Shares Percentage of issued ordinary share capital of Hotel Chocolat
Angus Thirlwell Angus Thirlwell 24,473,247 17.8
Peter Harris Peter Harris 14,233,323 10.3
Thirlwell Family Trust The children of Angus Thirlwell 3,993,399 2.9
The Founder Irrevocable Undertakings and the Family Trust Irrevocable
Undertakings remain binding in the event that a higher competing offer is made
for Hotel Chocolat and will cease to be binding only if the Scheme lapses or
is withdrawn.
Other Hotel Chocolat Directors
The following other Hotel Chocolat Directors (being all other Hotel Chocolat
Directors who are interested in Hotel Chocolat Shares) have given irrevocable
undertakings to vote (or procure the voting) in favour of the Scheme at the
Court Meeting and the Resolutions at the General Meeting (or in the event that
the Acquisition is implemented by way of a Takeover Offer, to accept, or
procure the acceptance of, the Takeover Offer) in relation to the following
Hotel Chocolat Shares:
Name Number of Hotel Chocolat Shares Percentage of issued ordinary share capital of Hotel Chocolat
Gregory Hodder 8,802 0.01
Sophie Tomkins 5,014 0.00
Jonathan Akehurst 597 0.00
These irrevocable undertakings remain binding in the event that a higher
competing offer is made for Hotel Chocolat and will cease to be binding only
if the Scheme lapses or is withdrawn.
Phoenix Asset Management Partners Limited
Phoenix, an entity exercising investment management control over certain Hotel
Chocolat Shares, has given an irrevocable undertaking to vote (or procure the
voting) in favour of the Scheme at the Court Meeting and the Resolutions at
the General Meeting (or, in the event that the Acquisition is implemented by
way of the Takeover Offer, to accept, or procure the acceptance of, the
Takeover Offer) in relation to the following Hotel Chocolat Shares:
Investment manager Number of Hotel Chocolat Shares Percentage of issued ordinary share capital of Hotel Chocolat
Phoenix Asset Management Partners Limited 14,349,649 10.4
Pursuant to the Phoenix Irrevocable Undertaking, Phoenix has also irrevocably
undertaken not to elect for the Partial Share Alternative in respect of the
Hotel Chocolat Shares which are subject to the Phoenix Irrevocable
Undertaking.
The Phoenix Irrevocable Undertaking remains binding in the event that a higher
competing offer is made for Hotel Chocolat and will cease to be binding only
if the Scheme lapses or is withdrawn.
In addition, Phoenix has delivered a non-binding letter of intent to vote (or
procure the voting) in favour of the Scheme at the Court Meeting and the
Resolutions at the General Meeting (or, in the event that the Acquisition is
implemented by way of the Takeover Offer, to accept the Takeover Offer) in
relation to the following Hotel Chocolat Shares:
Investment manager Number of Hotel Chocolat Shares Percentage of issued ordinary share capital of Hotel Chocolat
Phoenix Asset Management Partners Limited 6,878,383 5.0
In aggregate, the Phoenix Irrevocable Undertaking and the non-binding letter
of intent from Phoenix provide support for the Acquisition in respect of all
Hotel Chocolat Shares over which Phoenix exercises investment management
control.
Appendix 4
Details on Bidco and the Rollover Shares
1. Information on Bidco and the intermediate holding company
Bidco is a corporation incorporated under the laws of the State of Delaware in
the United States of America. Bidco is indirectly wholly owned by Mars and was
formed for the purpose of implementing the Acquisition. Bidco has not traded
or entered into any obligations other than in connection with the Acquisition.
The share capital of Bidco currently comprises 100 Initial Bidco Shares, but
will be reorganised on or around the Effective Date so that it comprises
99,633,261 Bidco A Shares and 42,699,969 Rollover Shares, and the Initial
Bidco Shares will be cancelled.
At the date of this announcement, Bidco is a wholly-owned direct subsidiary of
Mars Snacking Holdings.
Mars Snacking Holdings is a corporation incorporated in Delaware, United
States of America and is a wholly-owned direct subsidiary of Mars.
Set out below is a summary of the proposed share capital structure of Bidco
and the provisions of the Bidco Organisational Documents and the Bidco
Shareholders' Agreement governing the terms on which eligible Hotel Chocolat
Shareholders who validly elect for the Partial Share Alternative will hold
Rollover Shares in Bidco pursuant to the mechanism described in paragraphs 13
and 14 of the announcement above. Further details will be included in the
Scheme Document.
Eligible Hotel Chocolat Shareholders who elect for the Partial Share
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 Bidco Shareholders' Agreement.
2. Information on Bidco shares
On or around the Effective Date, Bidco is expected to issue around 142,333,230
Bidco Shares (on the basis of the maximum issue of Hotel Chocolat Shares
pursuant to the Hotel Chocolat Share Schemes described in Appendix 2), and the
Initial Bidco Shares will be cancelled. If the Partial Share Alternative were
taken up in full by eligible Hotel Chocolat Shareholders, and assuming the
amount of Hotel Chocolat Shares issued pursuant to the Hotel Chocolat Share
Schemes prior to the Effective Date is consistent with the calculation set out
in Appendix 2 to this announcement, Bidco would issue around:
(a) 99,633,261 Bidco A Shares to Mars Snacking Holdings to fund
the cash consideration and costs and expenses payable in respect of the
Acquisition; and
(b) 42,699,969 Rollover Shares to those Hotel Chocolat
Shareholders who validly elect to receive the Partial Share Alternative.
3. Terms of issue of Rollover Shares
The Rollover Shares to be issued to eligible Hotel Chocolat Shareholders who
elect for the Partial Share Alternative will be issued credited as fully paid
and will rank economically pari passu with the Bidco A Shares being issued to
Mars Snacking Holdings 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 Rollover Shares may be diluted over time, potentially significantly, should
holders of Rollover Shares not elect to participate in further issues of
additional shares, loan notes or other securities of the Bidco Group; (ii)
holders of Rollover Shares are not always entitled to participate in such
issues; and (iii) such additional securities may have different rights to the
Rollover Shares).
Subject to the above, at the date of this announcement, any return of proceeds
to shareholders of Bidco, whether on an Exit (as described below in paragraph
12 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 to each holder of Bidco A Shares and Rollover Shares pro
rata to their holdings of Bidco Shares. The Bidco A Shares and the Rollover
Shares shall rank equally as regards any distributions, dividends, buy-back,
any other capital redemption or other returns of income or capital made by
Bidco.
5. Governance and voting rights
Every holder of one or more Bidco A 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 Bidco Organisational Documents
and the Bidco Shareholders' Agreement, have one vote for each Bidco A Share.
The Rollover 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.
Bidco will generally be governed by a board of directors. The following
matters, however, are reserved matters requiring the prior consent of holders
of 75% or more of the Rollover Shares ("Rollover Shareholder Supermajority
Consent"):
(a) any issuances of shares by Bidco which are not in accordance
with the pre-emption, catch-up or other procedures and customary exceptions
specified in the Bidco Organisational Documents and the Bidco Shareholders'
Agreement;
(b) any dividends or distributions by Bidco to holders of
Rollover Shares. Other returns of capital, including by way of buyback or
repurchase of Rollover Shares, will not require Rollover Shareholder
Supermajority Consent, but Mars Snacking Holdings will be required to consider
in good faith any potential material adverse tax consequences of such actions
on Original Rollover Shareholders (as a whole or in general) as compared to
Mars Snacking Holdings prior to taking them;
(c) any amendments to the provisions of the Bidco Organisational
Documents or the Bidco Shareholders' Agreement relating to (i) the content or
scope of matters requiring, or approval thresholds for, Rollover Shareholder
Supermajority Consent described in this paragraph 5, (ii) permitted transfers
of Rollover Shares by Rollover Shareholders as described in paragraph 6 of
this Appendix 4, (iii) the exercise, valuation and deferral of put and call
options described in paragraph 7 of this Appendix 4, (iv) the board
appointment right for Original Rollover Shareholders described in paragraph 10
of this Appendix 4, and (v) drag-along and tag-along rights in relation to the
Rollover Shares described in paragraph 13 of this Appendix 4;
(d) any other amendments to the rights of Rollover Shares which
would be materially and/or disproportionately adverse to the economic, tax or
legal position of the Original Rollover Shareholders (as a whole or in
general) as compared to Mars Snacking Holdings, provided that other amendments
to the rights of Bidco Shares as described below shall be permitted;
(e) the entry into, variation or termination of any related
party contract with Mars Snacking Holdings and/or its affiliates (subject to
(i) customary carve outs, including for actions taken in the ordinary course
of business, and (ii) a de minimis threshold).
Except as described in paragraphs (c) and (d) above, Mars Snacking Holdings
may amend the rights of the Bidco Shares (notwithstanding any class rights)
without the consent of the Rollover Shareholders (including Rollover
Shareholder Supermajority Consent), provided that reasonable notice setting
out the amendments shall be sent to Rollover Shareholders. Any amendments made
without Rollover Shareholder Supermajority Consent shall be for bona fide
purposes.
6. Transfers of Rollover Shares
Rollover Shares will not be transferable during an initial five-year lock up
period (the "Lock-Up Period") without the prior written consent of Mars
Snacking Holdings except pursuant to the put and call options described below
or a reorganisation approved by Mars Snacking Holdings or in respect of
customary permitted transfers by an Original Rollover Shareholder to its
Associates or by its Associates to other Associates of the Original Rollover
Shareholder (subject in each case to such Associates satisfying the
requirements in paragraphs (a) to (c) below). Permitted transfers to
Associates may be in respect of some but not all of the Rollover Shares held
by an Original Rollover Shareholder.
No changes in direct or indirect interests or economic entitlements in
Rollover Shares shall be permitted which circumvent the restrictions on
transfers during the Lock-Up Period and, without prejudice to any claims
available as a matter of law, all rights attaching to such Rollover Shares
shall be suspended during any such breach.
Following the Lock-Up Period, an Original Rollover Shareholder shall be
entitled to transfer its Rollover Shares (provided that any such transfer is
for all (but not part) of the Rollover Shares held by such Rollover
Shareholder and any of its Associates), subject to a right of first refusal in
favour of Mars Snacking Holdings (other than on transfers to an Associate of
such Original Rollover Shareholder) and to certain other restrictions in
respect of the identity of the proposed transferee. In particular, any
proposed transferee of Rollover Shares after the Lock-Up Period shall:
(a) adhere to the Bidco Shareholders' Agreement;
(b) complete any applicable anti-money laundering, anti-bribery
and corruption, anti-sanctions and "Know Your Client" checks reasonably
required by Mars Snacking Holdings or its associates, the Bidco Group or the
Hotel Chocolat Group (to be undertaken promptly) and/or any antitrust or
regulatory change in control approvals required by any regulator (which the
Bidco Group and Hotel Chocolat shall provide reasonable information and
assistance in obtaining, if required); and
(c) not be permitted if considered by the board of Bidco (acting
reasonably and without delay) to be a competitor of the Bidco Group or the
Hotel Chocolat Group, or a person whose investment is likely to result in
reputational harm to Mars or its associates, the Bidco Group or the Hotel
Chocolat Group.
7. Put and Call Options
During certain pre-defined option exercise periods commencing on 31 December
2025, 31 December 2026, 31 December 2027 (each an "Interim Option Exercise
Period") and 31 December 2028 (the "Final Option Exercise Period"), Mars
Snacking Holdings shall have the right to call for the transfer to it of:
(a) in respect of each Interim Option Exercise Period, 20 per
cent. of the Rollover Shares subscribed for by each Original Rollover
Shareholder at or around the Effective Date (plus 100 per cent. of any
additional Rollover Shares held by such Original Rollover Shareholder and its
Associates as a result of exercise of the Option Deferral Right (defined
below) in an earlier Interim Option Exercise Period); and
(b) in respect of the Final Option Exercise Period, all
remaining Rollover Shares held by each Rollover Shareholder,
for cash consideration, calculated pursuant to the valuation mechanic
described below and on and subject to the further terms to be set out in the
Bidco Organisational Documents and the Bidco Shareholders' Agreement.
During each Option Exercise Period, each Original Rollover Shareholder shall
also have a corresponding right to require Mars Snacking Holdings to purchase
the relevant percentage of its and its Associates' Rollover Shares described
above, for cash consideration calculated pursuant to the valuation mechanic
described below.
Anti-circumvention
The valuation mechanic for the put and call options will be subject to
customary anti-circumvention protections which will: (i) oblige Mars Snacking
Holdings to use commercially reasonable endeavours to operate the Bidco
Group's business in the ordinary course; (ii) prohibit Mars Snacking Holdings
from taking (or causing or permitting to be done) any action in bad faith with
the purpose of reducing the price payable to Rollover Shareholders in
connection with the exercise of the put or call options; and (iii) prohibit
any Rollover Shareholder from taking (or permitting to be done) any action in
bad faith with the purpose of increasing the price payable to Rollover
Shareholders in connection with the exercise of the put or call options where
such action is not in the best interests of the Bidco Group's long-term
prospects and success.
Within 60 days of the start of each Option Exercise Period, Mars Snacking
Holdings shall provide the Rollover Shareholder Representative with (A) a copy
of the Bidco Group's annual management accounts (in GBP) for the relevant
Reference Period, (B) written confirmation of the put and call option price
for the relevant Option Exercise Period, as calculated by or on behalf of Mars
Snacking Holdings (the "Option Price"), and (C) details of Mars Snacking
Holdings' calculation of the put and call option price (together the
"Calculation Information"). In the event that the Rollover Shareholder
Representative considers in good faith that the Option Price is materially
lower than it should be based on the Calculation Information, the Rollover
Shareholder Representative shall be entitled to request that Bidco engages an
appropriately qualified independent third party accountant to review the
Calculation Information and provide an independent calculation of the put and
call option price for that Option Exercise Period (the "Independent Valuation
Price"). By requiring an independent valuation as described above, the
Rollover Shareholder Representative shall be deemed to agree as agent on
behalf of all Rollover Shareholders that the Independent Valuation Price shall
apply in respect of that Option Exercise Period and that, if the Independent
Valuation Price is less than 5 per cent. higher than the Option Price, all
reasonable costs payable by Bidco in relation to the independent valuation
shall be deducted from the cash amount payable to Rollover Shareholders in
respect of exercise of that put and call option.
Valuation mechanic for put and call options
The price to be paid per Rollover Share pursuant to the put and call options
shall be calculated at an enterprise value based on an average of the Bidco
Group's revenue and (US GAAP) EBITDA multiple (equally weighted), in each case
adjusted for the performance of the Bidco Group in the 12 month period prior
to commencement of the relevant Option Exercise Period (the "Reference
Period") and net of net debt adjustments. The relevant revenue and (US GAAP)
EBITDA multiple shall be calculated and adjusted for the performance of the
Bidco Group during each Reference Period, as follows:
(c) if EBITDA is at or above the EBITDA Value for the relevant
Reference Period, 3.0x revenue and 20.0x EBITDA (equally weighted);
(d) if EBITDA is at or above the Low-End EBITDA Value but below
the EBITDA Value, between 2.5x and 3.0x revenue and 17.0x and 20.0x EBITDA
(equally weighted), increasing on a linear basis within the stated ranges
based on EBITDA; or
(e) if EBITDA is below the Low-End EBITDA Value, 2.0x revenue
and 14.0x EBITDA (equally weighted),
with the resulting valuation then adjusted for net debt and then divided by
the number of Bidco Shares in issue on the final day of the preceding
Reference Period.
The agreed "EBITDA Value" and "Low-End EBITDA Value" for each Reference Period
will be as follows:
Reference Period EBITDA Value Low-End EBITDA Value
12 months ended £50 million £30 million
31 December 2025
12 months ended £60 million £40 million
31 December 2026
12 months ended £70 million £50 million
31 December 2027
12 months ended £80 million £60 million
31 December 2028
Further details regarding the valuation mechanic for the put and call options
will be included in the Bidco Organisational Documents and the Bidco
Shareholders' Agreement which are expected to be published on or around the
date of publication of the Scheme Document.
Deferral of put / call option exercise
Any Original Rollover Shareholder holding at least 5 per cent. of the Bidco
Shares issued at or around the Effective Date may defer their right to
exercise the put option in any Interim Option Exercise Period until the next
Option Exercise Period (the "Option Deferral Right"). The Option Deferral
Right shall be exercisable by service of written notice (in accordance with
the Bidco Organisational Documents and the Bidco Shareholders' Agreement) to
Mars Snacking Holdings.
If the Option Deferral Right is exercised:
(f) the put option rights of such Original Rollover Shareholder
(together with the equivalent rights of its Associates) in respect of the
relevant Interim Option Exercise Period shall be deferred in full until the
next Option Exercise Period;
(g) Mars Snacking Holdings' right to exercise its call option in
respect of such Original Rollover Shareholder (together with the equivalent
rights of its Associates) in such Interim Option Exercise Period shall also be
deferred in full until the next Option Exercise Period (other than in relation
to Rollover Shares held by such persons as a result of an earlier exercise of
the Option Deferral Right); and
(h) the price payable in respect of exercise of any deferred put
and/or call option in the next Option Exercise Period shall be calculated by
reference to (i) the Bidco Group's performance in the most recent completed
Reference Period prior to exercise of the deferred put or call option (as
applicable), and (ii) the EBITDA Value and Low-End EBITDA Value in respect of
such later Option Exercise Period.
The Option Deferral Right can only be exercised by an Original Rollover
Shareholder once in relation to each Interim Option Exercise Period. Multiple
deferrals by an Original Rollover Shareholder of the put and call options
relating to their and their Associates' Rollover Shares in respect of the same
Interim Option Exercise Period will not be permitted.
8. Additional Bidco Share Issues
Further issues of securities by Bidco may be implemented following the
Effective Date.
If Bidco proposes to issue new Bidco Shares, each holder of Bidco Shares shall
be entitled to participate pro rata in such issuance, exercisable on at least
15 Business Days' written notice, excluding issues of Bidco Shares or
transfers of Bidco Shares from treasury:
(a) to Mars Snacking Holdings and/or its associates to finance
the Acquisition;
(b) to the Original Rollover Shareholders pursuant to the Scheme
and/or the mechanism described in paragraph 14 above;
(c) to actual or potential employees, directors, officers or
consultants (whether directly or indirectly) which shall dilute Mars Snacking
Holdings' Bidco Shares and the Rollover Shareholders' Bidco Shares pro rata;
(d) other than to Mars Snacking Holdings 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 Mars
Snacking Holdings' Bidco Shares and the Rollover Shareholders' Bidco Shares
pro rata;
(e) other than to Mars Snacking Holdings or its associates, in
connection with any debt financing arrangements of the Bidco Group, which
shall dilute Mars Snacking Holdings' Bidco Shares and the Rollover
Shareholders' Bidco Shares pro rata;
(f) in connection with an IPO or a pre-IPO reorganisation; or
(g) in respect of which Mars Snacking Holdings obtains Rollover
Shareholder Supermajority Consent to the disapplication of pre-emption rights.
In the case of an issue of further Bidco Shares to Mars Snacking Holdings (or
its affiliates), such recipient will receive Bidco A Shares and the Rollover
Shareholders entitled to participate in such issue will receive further
Rollover Shares. Bidco A Shares and Rollover Shares shall be issued pro rata
in the proportions which exist immediately before the new issue of securities
if each shareholder in Bidco exercises their pre-emption rights in full.
Unless otherwise agreed between Mars Snacking Holdings and the Rollover
Shareholder Representative, any issues of Bidco Shares following the Effective
Date shall occur at fair market value.
9. Terms of Partial Share Alternative in the event of a switch
In the event that Bidco elects, with the consent of the Panel and subject to
the Cooperation Agreement, to switch to a Takeover Offer, and less than one
hundred per cent. of the Hotel Chocolat Shares are acquired by Bidco on or
around the date of such Takeover Offer becoming unconditional, the total
number of Bidco A Shares to be issued to Mars Snacking Holdings and Rollover
Shares to be issued to Hotel Chocolat Shareholders who elect for the Partial
Share Alternative will be reduced (and in the same proportions as between
Bidco A Shares and Rollover Shares such that the maximum number of Rollover
Shares available to Hotel Chocolat Shareholders under the Partial Share
Alternative will remain equal to the equivalent of 30.0 per cent. of the total
Bidco Offer Shares in issue at such time).
In that event, if elections for the Partial Share Alternative are unable to be
satisfied in full as a result, the number of Rollover Shares to be issued to
each eligible Hotel Chocolat Shareholder who has elected for the Partial Share
Alternative will be reduced on a pro rata basis, and the consideration for
each Hotel Chocolat Share that is not exchanged for Rollover Shares will be
paid in cash in accordance with the terms of the Cash Offer.
If (i) further Hotel Chocolat Shares are acquired for cash by or on behalf of
Bidco after the Takeover Offer becomes unconditional (under the compulsory
acquisition procedure or otherwise), and (ii) the Bidco A Shares to be issued
to fund those acquisitions were not included in the calculation of the above
30.0 per cent. entitlement of Hotel Chocolat Shareholders who elect for the
Partial Share Alternative, any additional Bidco Shares which are issued in
order to fund those acquisitions will be issued in the same proportions as
between each class of Bidco A Shares and Rollover Shares as existed following
the initial issue of Bidco Offer Shares to electing Hotel Chocolat
Shareholders. Holders of Rollover Shares shall be entitled to customary
pre-emption rights or catch-up rights in relation to any such additional issue
of Bidco Shares in order to maintain their percentage interest in Bidco.
10. Governance; Bidco board representation
Any Original Rollover Shareholder holding (in aggregate with any holdings of
its Associates) at least 50 per cent. of the Rollover Shares issued to
Original Rollover Shareholders at or around the Effective Date from time to
time shall have the right to appoint a member to Bidco's board of directors at
any time during the Lock-up Period (subject to the identity of such member
being acceptable to the board of directors of Bidco (acting reasonably and in
good faith)) to attend, speak and vote at meetings of the board of directors
of Bidco. All other members of the Bidco board of directors will be appointed
by Mars Snacking Holdings (or its associates).
Capital expenditure by the Bidco Group in excess of agreed levels (on a per
project / per major investment basis) shall only be permitted with board
supermajority consent (requiring approval of a majority of the Bidco board of
directors, including any member of the Bidco board of directors appointed by
an Original Rollover Shareholder pursuant to this paragraph 10). Further
details will be set out in the Bidco Shareholders' Agreement.
11. Information rights
Any director appointed to Bidco's board of directors in accordance with
paragraph 10 of this Appendix 4 shall receive all notices of board meetings
and shall be provided with (subject to customary confidentiality undertakings,
carve-outs for situations in which the board considers in good faith that such
director has a conflict of interest 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.
Except as provided for in this paragraph 11 and without prejudice to the
information to be provided to the Rollover Shareholder Representative pursuant
to paragraph 7 of this Appendix 4, neither the Bidco Organisational Documents
nor the Bidco Shareholders' Agreement will provide information rights for
Rollover Shareholders.
12. Exit Arrangements
During the Lock-Up Period
During the Lock-Up Period, the following actions and liquidity events shall be
at Mars Snacking Holdings' sole discretion:
(a) any sale, transfer or disposal of or other dealing in Bidco
Shares (other than Rollover Shares);
(b) the giving of any consent for any transfer of Rollover
Shares;
(c) any reorganisation of the Bidco Group (including but not
limited to any winding up or similar process in respect of any member of the
Bidco Group where such process is required by applicable law or such action
would not reasonably be expected to have an adverse effect on the Bidco Group
as a whole or the put and call valuation described in paragraph 7). Rollover
Shareholders shall co-operate and take such actions in respect of any proposed
reorganisation as are reasonably requested by Bidco, Mars Snacking Holdings or
Mars.
Following the Lock-Up Period
Following the Lock-Up Period, any sale of shares, asset sale, IPO, winding-up
or other form of liquidity event relating to the Bidco Group (other than
pursuant to the put options described in paragraph 7 of this Appendix 4) (an
"Exit") shall be at the absolute discretion of Mars Snacking Holdings.
All holders of Rollover Shares are required to co-operate and take such
actions in respect of any proposed Exit as are reasonably requested by Bidco,
Mars Snacking Holdings or Mars. This shall include without limitation: (i)
cooperating in respect of any reorganisation, restructuring or other corporate
(or similar) action required to facilitate such Exit; (ii) providing
warranties as to the title to the Rollover Shares held by such holder and its
capacity to sell such Rollover Shares; and (iii) in the case of an IPO,
entering into customary "lock-up" undertakings.
13. Drag-along and tag-along
Following the Lock-Up Period:
(a) Mars Snacking Holdings shall have a drag right in relation
to all Rollover Shares on the same economic terms on any disposal of direct or
indirect interests in Bidco Shares by Mars Snacking Holdings and/or its
affiliates to a bona fide purchaser which is not connected with Mars Snacking
Holdings if, following such transfer, the purchaser would thereafter directly
or indirectly hold a majority of the Bidco Shares.
(b) Original Rollover Shareholders shall have a "pro rata" tag
right (applicable in relation to Rollover Shares held by such Original
Rollover Shareholder and its Associates) on the same economic terms on any
transfer of Bidco Shares by Mars Snacking Holdings, other than in respect of
certain excluded instances including, but not limited to: (i) customary
permitted transfers to affiliates or any current or prospective director,
officer, employee or consultant of the Bidco Group; (ii) a reorganisation or
IPO of Bidco or the Bidco Group; or (iii) where a drag right has been
exercised. Original Rollover Shareholders shall have a full tag right
(applicable in relation to Rollover Shares held by such Original Rollover
Shareholder and its Associates) on the same economic terms on a transfer by
Mars Snacking Holdings of a majority of the Bidco Shares (save that this right
will be subject to certain excluded instances specified above). The tag rights
described in this paragraph are exercisable by an Original Rollover
Shareholder in respect of all but not only some of the Rollover Shares to
which those tag rights apply.
14. Governing law and jurisdiction
The Bidco Shareholders' Agreement shall be governed by the laws of the State
of Delaware in the United States. The relevant courts of the State of Delaware
have exclusive jurisdiction to settle any dispute which may arise out of or in
connection with the Bidco Shareholders' Agreement and accordingly any
proceedings arising out of or in connection with the Bidco Shareholders'
Agreement shall be brought in such courts.
15. "Know Your Client" and other regulatory requirements
Eligible Hotel Chocolat 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 Mars before the Effective Date
such materials and information with respect to themselves (and, to the extent
applicable, their directors, shareholders, members, affiliates and other
relevant parties) as requested by Bidco, Mars Snacking Holdings or Mars in
order to satisfy any applicable anti-money laundering, anti-bribery and
corruption, anti-sanctions and "Know Your Client" checks reasonably required
by Bidco, Mars Snacking Holdings or Mars or their respective associates and/or
any antitrust or regulatory change in control approvals required by any
regulator.
Appendix 5
Definitions
The following definitions apply throughout this announcement unless the
context requires otherwise.
"£", "Sterling", "pence" or "p" the lawful currency of the UK
"$", "US$", "USD" or "dollars" the lawful currency of the US
"Acquisition" the direct or indirect acquisition of the entire issued and to be issued share
capital of Hotel Chocolat by Bidco to be implemented by way of the Scheme or
(should Bidco so elect, subject to the consent of the Panel and to the terms
of the Cooperation Agreement) by way of the Takeover Offer and, where the
context admits, any subsequent revision, variation, extension or renewal
thereof
"Acquisition Facility Agreement" the term credit agreement dated as of 16 November 2023, among Mars (as
borrower), the lenders party thereto and JPMorgan Chase Bank, N.A. (as
administrative agent);
"AIM" AIM, a market operated by the London Stock Exchange
"AIM Rules" the AIM Rules for Companies, as amended from time to time
"Associate" an associate of an Original Rollover Shareholder (including certain
affiliates, close family members and related family trusts), further details
of which will be set out in the Bidco Shareholders' Agreement
"Bidco" Hive Bidco, Inc.
"Bidco A Shares" the shares of Class A stock of Bidco
"Bidco Group" Bidco and its subsidiary undertakings from time to time
"Bidco Shares" the Bidco A Shares and the Rollover Shares
"Bidco Offer Shares" 99,633,261 Bidco A Shares and 42,699,969 Rollover Shares
"Bidco Organisational Documents" the certificate of incorporation and bylaws of Bidco
"Bidco Shareholders' Agreement" the shareholders' agreement to be entered into by the holders of Rollover
Shares, from time to time, and the holders of Bidco A Shares
"Business Day" a day (other than Saturdays, Sunday and public holidays in the UK or the
United States of America) on which banks are open for business in London and
New York
"Calculation Information" has the meaning given in paragraph 7 of Appendix 4 of this announcement
"Cash Offer" 375 pence per Hotel Chocolat Share
"Clean Team Agreement" the clean team agreement dated 24 October 2023 between Mars and Hotel Chocolat
entered into in connection with the Acquisition and further details of which
are set out in paragraph 12 of this announcement
"Code" the City Code on Takeovers and Mergers, as amended from time to time
"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 agreement dated 16 October 2023 between Mars and Hotel
Chocolat entered into in connection with the Acquisition and further details
of which are set out in paragraph 12 of this announcement
"Confidentiality and Joint Defence Agreement" the confidentiality and joint defence agreement dated 25 October 2023 between
Mars and Hotel Chocolat (amongst others) entered into in connection with the
Acquisition and further details of which are set out in paragraph 12 of this
announcement
"Cooperation Agreement" the agreement dated 16 November 2023 between Bidco and Hotel Chocolat and
relating, among other things, to the implementation of the Acquisition and
further details of which are set out in paragraph 12 of this announcement
"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 considering and, if thought fit,
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
"Dealing Disclosure" has the same meaning as in Rule 8 of the Code
"Disclosed" information which has been fairly disclosed by or on behalf of Hotel Chocolat:
(i) in the annual report and accounts of the Hotel Chocolat Group for the
53-week period to 2 July 2023; (ii) in this announcement; (iii) in any other
public announcement to a Regulatory Information Service by, or on behalf of,
Hotel Chocolat prior to the date of this announcement; and /or (iv) in writing
to Bidco (or its officers, employees, agents or advisers in their capacity as
such) by or on behalf of Hotel Chocolat (including in the virtual data room
operated by or on behalf of Hotel Chocolat in connection with the Acquisition)
in each case prior to the date of this announcement
"EBITDA Value" has the meaning given in paragraph 7 of Appendix 4 of this announcement
"Effective" (i) if the Acquisition is implemented by way of the Scheme, the Scheme having
become effective pursuant to and in accordance with its terms; or (ii) if the
Acquisition is implemented by way of the Takeover Offer, the Takeover Offer
having been declared or having become unconditional in accordance with the
requirements of the Code
"Effective Date" the date upon which the Acquisition becomes Effective
"Excluded Shares" (i) any Hotel Chocolat Shares beneficially owned by Bidco or any other member
of the Bidco Group; and (ii) any other Hotel Chocolat Shares which Bidco and
Hotel Chocolat agree will not be subject to the Scheme
"Exit" has the meaning given in paragraph 12 of Appendix 4
"FCA" the Financial Conduct Authority of the United Kingdom, acting in its capacity
as the competent authority for the purposes of FSMA
"Final Option Exercise Period" has the meaning given in paragraph 7 of Appendix 4 of this announcement
"Form of Election" the form of election to be sent to Scheme Shareholders by or on behalf of
Hotel Chocolat pursuant to which an eligible Scheme Shareholder may elect for
the Partial Share Alternative
"Forms of Proxy" the forms of proxy in connection with each of the Court Meeting and the
General Meeting, which shall accompany the Scheme Document
"Family Trust Irrevocable Undertakings" has the meaning given in paragraph 6 of this announcement
"Family Trusts" has the meaning given in paragraph 6 of this announcement
"Founder Irrevocable Undertaking" has the meaning given in paragraph 6 of this announcement
"Founders" Angus Thirlwell and Peter Harris
"FSMA" the Financial Services and Markets Act 2000
"General Meeting" the general meeting of Hotel Chocolat to be convened in connection with the
Scheme, to consider and, if thought fit, approve the Resolutions, notice of
which will be set out in the Scheme Document, including any adjournment
thereof
"Hotel Chocolat" Hotel Chocolat Group plc
"Hotel Chocolat Directors" the directors of Hotel Chocolat at the time of this announcement or, where the
context so requires, the directors of Hotel Chocolat from time to time
"Hotel Chocolat Group" Hotel Chocolat and its subsidiary undertakings
"Hotel Chocolat Share Schemes" the Hotel Chocolat Long Term Incentive Plan, the Hotel Chocolat Save As You
Earn Plan and the Hotel Chocolat Founder Shares Plan
"Hotel Chocolat Shareholders" the registered holders of Hotel Chocolat Shares from time to time
"Hotel Chocolat Shares" ordinary shares of 0.1 pence each in the capital of Hotel Chocolat
"Independent Valuation Price" has the meaning given in paragraph 7 of Appendix 4 of this announcement
"Initial Bidco Shares" has the meaning given in paragraph 14 of this announcement
"Interim Option Exercise Period" has the meaning given in paragraph 7 of Appendix 4 of this announcement
"IPO" initial public offering
"Lazard" Lazard & Co., Limited
"Liberum" Liberum Capital Limited
"Lock-Up Period" has the meaning given in paragraph 6 of Appendix 4
"London Stock Exchange" London Stock Exchange plc
"Long-Stop Date" 17 May 2024 or such later date (i) as may be agreed in writing by Bidco and
Hotel Chocolat (with the Panel's consent if required) or (ii) at the direction
of the Panel under the Note on Section 3 of Appendix 7 to the Code
"Low-End EBITDA Value" has the meaning given in paragraph 7 of Appendix 4 of this announcement
"Mars" Mars, Incorporated
"Mars Snacking Holdings" Mars Snacking Holdings, Inc., a wholly-owned direct subsidiary of Mars
"Minimum Rollover Threshold" has the meaning given in paragraph 2 of this announcement
"Morgan Stanley" Morgan Stanley & Co. International plc
"Offer Document" should the Acquisition be implemented by way of a Takeover Offer, the offer
document to be sent to (amongst others) Hotel Chocolat Shareholders setting
out, amongst other things, the full terms and conditions of the Takeover Offer
"Opening Position Disclosure" has the same meaning as in Rule 8 of the Code
"Option Deferral Right" has the meaning given in paragraph 7 of Appendix 4 of this announcement
"Option Exercise Periods" the Interim Option Exercise Periods and the Final Option Exercise Period, and
"Option Exercise Period" shall mean any one of them
"Option Price" has the meaning given in paragraph 7 of Appendix 4 of this announcement
"Original Rollover Shareholder" an eligible Hotel Chocolat Shareholder who validly elects for the Partial
Share Alternative and to whom Rollover Shares are issued at or around the
Effective Date
"Overseas Shareholders" Hotel Chocolat Shareholders who are resident in, ordinarily resident in, or
citizens of, jurisdictions outside the United Kingdom
"Panel" the UK Panel on Takeovers and Mergers
"Partial Share Alternative" the alternative to the Cash Offer under which eligible Hotel Chocolat
Shareholders may elect to receive Rollover Shares on and subject to the terms
of this announcement and the terms and conditions to be set out the Scheme
Document (or, if applicable, the Offer Document) in due course, further
details of which are set out at paragraph 2 of this announcement
"Partial Share Alternative Maximum" has the meaning given in paragraph 13 of this announcement
"Phoenix" has the meaning given in paragraph 6 of this announcement
"Phoenix Irrevocable Undertaking" has the meaning given in paragraph 6 of this announcement
"Reference Period" has the meaning given in paragraph 7 of Appendix 4 of this announcement
"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
"Resolutions" the shareholder resolution(s), to be proposed at the General Meeting necessary
to approve, implement and effect the Scheme and the Acquisition, including
(without limitation) a resolution to implement certain amendments to be made
to the articles of association of Hotel Chocolat
"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 Hotel Chocolat Shareholders in that
jurisdiction
"Rollover Shareholder" any holder of Rollover Shares from time to time
"Rollover Shareholder Representative" such person as the Rollover Shareholders appoint from time to time by Rollover
Shareholder Supermajority Consent as their agent for the purposes of certain
actions to be taken under the Bidco Organisational Documents and the Bidco
Shareholders' Agreement and in the event that no such person is appointed by
the Rollover Shareholders, the Original Rollover Shareholder holding the
largest number of Rollover Shares at the relevant time, further details of
which will be set out in the Bidco Organisational Documents and the Bidco
Shareholders' Agreement
"Rollover Shareholder Supermajority Consent" has the meaning given in paragraph 5 of Appendix 4 of this announcement
"Rollover Shares" the shares of Class B stock of Bidco, and "Rollover Share" shall mean any one
of them
"Scheme" the scheme of arrangement proposed to be made under Part 26 of the Companies
Act between Hotel Chocolat and the Scheme Shareholders, with or subject to any
modification, addition or condition approved or imposed by the Court and
agreed to by Hotel Chocolat 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) Hotel Chocolat 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" Hotel Chocolat 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)(10) the Securities Act
"Securities Act" the US Securities Act of 1933
"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 Hotel Chocolat on the
terms and subject to the conditions to be set out in the related offer
document
"UK" or "United Kingdom" the United Kingdom of Great Britain and Northern Ireland
"Underlying EBITDA" has the meaning given in Appendix 2 of this announcement
"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 and any such undertakings (aggregating
their interests) have a Substantial Interest)
"Wider Hotel Chocolat Group" Hotel Chocolat and the subsidiaries and subsidiary undertakings of Hotel
Chocolat and associated undertakings (including any joint venture,
partnership, firm or company in which any member of the Hotel Chocolat Group
or any 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 to them 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.
References to the singular include the plural and vice versa.
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