REG - Cobham Limited - Statement re Rule 19.5(g) of the Takeover Code

IACAnnouncement

03/04/2024 12:00

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RNS Number : 1610J  Cobham Limited  03 April 2024

FOR IMMEDIATE RELEASE

3 April 2024

AI Convoy Topco & Cy S.C.A. ("Topco")

AI Convoy Bidco Limited ("Bidco")

Cobham Limited (formerly Cobham plc) ("Cobham")

(together, the "PoU Givers")

Rule 19.5(g) update regarding post-offer undertakings announced on 20 December
2019

The PoU Givers refer to the post-offer undertakings announced on 20 December
2019 pursuant to Rule 19.5 of the City Code on Takeovers and Mergers (the
"Code") (the "PoUs") in connection with Bidco's acquisition of the entire
issued and to be issued ordinary share capital of Cobham (the "Acquisition"),
which, as previously announced, completed on 17 January 2020. The substantive
provisions of the PoUs are set out in the schedule to this announcement, and
capitalised terms which are used but not defined in this announcement have the
meanings given to them in such schedule.

Further to the PoUs and the Acquisition, the PoU Givers announce, in
accordance with Rule 19.5(g) of the Code, that:

·      on 2 April 2024, the Cobham Group sold its Aerospace
Communications business, comprised of the entire issued share capital of
Cobham Aerospace SAS (and its subsidiaries Cobham Aerospace Holding S.à r.l.,
Cobham Aerospace ApS, Comant Industries Inc., Omnipless Manufacturing (Pty)
Limited, TEAM SA, Cobham Aerospace Communications Dourdan SA, Cobham Aerospace
Communications Singapore Pte. Ltd., Satori Air Services Inc. and Satori Air
Communications Limited), and in each case their respective undertakings,
businesses and activities (together, "Aerospace Communications") to Thales SA
and its subsidiaries (together, the "Buyer") (the "Aerospace Communications
Sale");

·      as the Buyer is not an Affiliate of Advent and the sale and
purchase agreement relating to the Aerospace Communications Sale does not
include any provisions which would result in Advent and/or any of its
Affiliates retaining Control of Aerospace Communications following completion
of the Aerospace Communications Sale, the Aerospace Communications Sale has
resulted in Aerospace Communications ceasing to be Controlled by Advent and/or
any of its Affiliates;

·      prior to and in connection with the Aerospace Communications
Sale, in accordance with Rule 19.5(f) of the Code, the PoU Givers consulted
the Panel and obtained the Panel's consent to rely on the qualification and
condition included in the PoUs that:

Any obligation on Topco, Bidco or Cobham in respect of Communications &
Connectivity, UK Communications & Connectivity, Mission Systems UK,
Aviation Services UK, the UK Cobham Group, the Cobham Group or any
undertaking, business or activity thereof shall, subject to consulting the
Panel in advance and obtaining the Panel's consent to rely on such
qualification and condition pursuant to Rule 19.5(f) of the Code, subsist only
for so long as Advent and/or any of its Affiliates retains Control of any such
undertaking, business or activity, and references to "Communications &
Connectivity", "UK Communications & Connectivity", "Mission Systems UK",
"Aviation Services UK", the "Cobham Group" and the "UK Cobham Group" shall be
only to those undertakings, businesses and activities of the Cobham Group or
UK Cobham Group (as applicable) over which Advent and/or any of its Affiliates
retains Control from time to time.

·      as a result of the foregoing, on completion of the Aerospace
Communications Sale, Aerospace Communications ceased to form part of each of
the Cobham Group and Communications & Connectivity for purposes of the
PoUs.

Enquiries:

  Greg Bagwell, Director of Cobham Limited   +44 (0) 7786 547851

 

SCHEDULE

Post-Offer Undertakings

Each of Topco, Bidco and Cobham makes the following post-offer undertakings
pursuant to Rule 19.5 of the Code, subject to the qualifications and
conditions set out below (each of the post-offer undertakings in paragraphs
1(a), 1(b), 1(c), 2(a), 2(b), 2(c), 2(d), 3 and 4 being a "Post-Offer
Undertaking" and, together, the "Post-Offer Undertakings"):

1.       Each of Topco and Bidco undertakes to procure, and Cobham
undertakes, that throughout the Undertaking Period:

(a)   Communications & Connectivity will maintain a headquarters in the
United Kingdom, by occupying a designated area in one or more buildings in the
United Kingdom, one of which buildings is publicly designated as a
headquarters for Communications & Connectivity;

(b)   Aviation Services UK will maintain a headquarters in the United
Kingdom, by occupying a designated area in one or more buildings in the United
Kingdom, one of which buildings is publicly designated as a headquarters for
Aviation Services UK; and

(c)   Mission Systems UK will maintain a headquarters in the United Kingdom,
by occupying a designated area in one or more buildings in the United Kingdom,
one of which buildings is publicly designated as a headquarters for Mission
Systems UK.

2.       Each of Topco and Bidco undertakes to procure, and Cobham
undertakes, that:

(a)   the aggregate amount of Research and Development Spend of the UK
Cobham Group in respect of the period from 1 January 2020 to 31 December 2024
(the "Expenditure Period") will be at least 4.4% of the aggregate amount of
Sales of UK Communications & Connectivity and Mission Systems UK (being
the UK businesses of the Cobham Group that undertake research and development
as at the date of this announcement) for the Expenditure Period 1  (#_ftn1) ;

(b)   the aggregate amount of Research and Development Spend of the UK
Cobham Group in respect of the period from 1 January 2020 to 31 December 2022
(the "Interim Expenditure Period") will be at least 90% of 4.4% of the
aggregate amount of Sales of UK Communications & Connectivity and Mission
Systems UK for the Interim Expenditure Period;

(c)   without prejudice to the Post-Offer Undertakings in paragraphs 2(a)
and 2(b), in the event that the aggregate amount of Research and Development
Spend of the UK Cobham Group in respect of:

(i)     the Expenditure Period is not at least 4.4% of the aggregate
amount of Sales of UK Communications & Connectivity and Mission Systems UK
for the Expenditure Period, an amount equal to any shortfall shall be spent by
the UK Cobham Group as Research and Development Spend in the period from 1
January 2025 to 30 June 2025, and (without prejudice to that obligation) in
the event of a failure to do so, and as a continuing obligation, that the
remaining balance of any such shortfall is spent by the UK Cobham Group as
Research and Development Spend forthwith after 30 June 2025; and

(ii)    the Interim Expenditure Period is not at least 90% of 4.4% of the
aggregate amount of Sales of UK Communications & Connectivity and Mission
Systems UK for the Interim Expenditure Period, an amount equal to any
shortfall shall be spent by the UK Cobham Group as Research and Development
Spend in the period from 1 January 2023 to 30 June 2023, and (without
prejudice to that obligation) in the event of a failure to do so, and as a
continuing obligation, that the remaining balance of any such shortfall is
spent by the UK Cobham Group as Research and Development Spend forthwith after
30 June 2023; and

(d)   throughout the Expenditure Period and thereafter for so long as the
Post-Offer Undertaking in paragraph 2(c) applies, financial records of UK
Communications & Connectivity, Mission Systems UK and the UK Cobham Group
shall be maintained containing and recording all items necessary to assess
progress towards compliance, compliance and the likelihood of future
compliance with the Post-Offer Undertakings in paragraphs 2(a), 2(b) and 2(c).

3.       Each of Topco and Bidco undertakes to procure, and Cobham
undertakes, that throughout the Undertaking Period the "Cobham" name will
continue to be included in the registered names of those members of the UK
Cobham Group which include "Cobham" in their registered names as at the
Effective Date.

4.       Topco undertakes that throughout the period for which the
relevant Post-Offer Undertakings apply, it will not permit any transfer,
transaction or arrangement as a result of which it would cease to Control any
undertaking or business of the Cobham Group to which any of the Post-Offer
Undertakings in paragraphs 1(a), 1(b), 1(c), 2(a), 2(b), 2(c), 2(d) and/or 3
relate in circumstances where that undertaking or business would, immediately
following such cessation of Control by Topco, continue to be under the Control
of Advent and/or any of its Affiliates.

Qualifications and Conditions

Subject to consulting the Panel in advance and obtaining the Panel's consent
to rely on such qualifications or conditions pursuant to Rule 19.5(f) of the
Code, each of the Post-Offer Undertakings will no longer apply where the Panel
determines that Topco, Bidco or Cobham (as the case may be) is unable to
comply with the relevant Post-Offer Undertaking as a result of an event, act
or circumstance which none of the following could control: Topco, Bidco,
Cobham, any subsidiary undertakings of Topco, Bidco or Cobham from time to
time, or Advent.

Any obligation on Topco, Bidco or Cobham in respect of Communications &
Connectivity, UK Communications & Connectivity, Mission Systems UK,
Aviation Services UK, the UK Cobham Group, the Cobham Group or any
undertaking, business or activity thereof shall, subject to consulting the
Panel in advance and obtaining the Panel's consent to rely on such
qualification and condition pursuant to Rule 19.5(f) of the Code, subsist only
for so long as Advent and/or any of its Affiliates retains Control of any such
undertaking, business or activity, and references to "Communications &
Connectivity", "UK Communications & Connectivity", "Mission Systems UK",
"Aviation Services UK", the "Cobham Group" and the "UK Cobham Group" shall be
only to those undertakings, businesses and activities of the Cobham Group or
UK Cobham Group (as applicable) over which Advent and/or any of its Affiliates
retains Control from time to time.

Definitions

The following definitions apply for the purposes of the Post-Offer
Undertakings:

·           "Advent" means Advent International Corporation, a
Delaware corporation;

·           "Affiliate" means, in respect of any person:

(a)   any person that directly, or indirectly through one or more
intermediaries, Controls or is Controlled by or is under common Control with
that person from time to time;

(b)   any funds and/or vehicles managed and/or advised by that person or any
person falling within (a) above;

(c)   any funds and/or vehicles managed and/or advised by the person (the
"Manager") that manages or advises that person; and

(d)   any funds and/or vehicles managed and/or advised by the Manager's
Affiliates within the meaning of (a) above;

·           "Aviation Services UK" means the Cobham Group's
Aviation Services business in the United Kingdom from time to time, comprising
currently of businesses of FB Heliservices Limited (a company incorporated in
England and Wales with registered number 04137146), FR Aviation Limited (a
company incorporated in England and Wales with registered number 00845310), FR
Aviation Services Limited (a company incorporated in England and Wales with
registered number 01861144), FB Leasing Limited (a company incorporated in
England and Wales with registered number 04509877) and Cobham Leasing Limited
(a company incorporated in England and Wales with registered number 02941915);

·           "Bidco" means AI Convoy Bidco Limited, a company
incorporated in England and Wales with registered number 12110752;

·           "Cobham" means Cobham plc, a company incorporated in
England and Wales with registered number 30470;

·           "Cobham Group" means:

(a)   Cobham and its direct and indirect subsidiary undertakings from time
to time; and

(b)   each of Cobham and its direct and indirect subsidiary undertakings and
each of their businesses as at the Effective Date,

in each case which, from time to time, are Controlled by Advent and/or any of
its Affiliates;

·           "Code" means the City Code on Takeovers and Mergers
issued from time to time by the Panel;

·           "Communications & Connectivity" means the Cobham
Group's Communications & Connectivity business from time to time,
comprising currently of businesses of the Aerospace Communications, Aerospace
Connectivity, Wireless, Electrical and Electronic Equipment, and Satcom
Maritime & Land business units;

·           "Control" means with respect to a person or business:

(a)   direct or indirect ownership of or control over more than 50% of the
voting and/or equity securities (or the economic participation therein) of
such person or business;

(b)   the direct or indirect right to appoint, or cause the appointment of,
more than 50% of the members of the board of directors (or similar governing
body) of such person or business; or

(c)   the direct or indirect right to manage, or direct the management of, on
a discretionary basis, the business, affairs and/or assets of such person or
business,

and:

(i)    a general partner of a limited partnership is deemed to Control that
limited partnership and all undertakings under the Control of that limited
partnership;

(ii)    a manager of a fund is deemed to Control that fund and all
undertakings under the Control of that fund; and

(iii)   any person which is a subsidiary undertaking of another person shall
be deemed to be Controlled by that second person;

·           "Effective Date" means the date on which the Scheme
becomes effective in accordance with its terms;

·           "Expenditure Period" has the meaning set out in the
Post-Offer Undertaking in paragraph 2(a);

·           "IFRS" means International Financial Reporting
Standards as adopted by the European Union;

·           "Interim Expenditure Period" has the meaning set out in
the Post-Offer Undertaking in paragraph 2(b);

·           "Mission Systems UK" means:

(a)   Cobham Mission Systems Wimborne Limited, a company incorporated in
England and Wales with registered number 293529 ("Mission Systems Wimborne");
and

(b)   any other undertaking(s) to which all or part of the business of
Mission Systems Wimborne has been transferred after the Effective Date,

in each case which, from time to time, are Controlled by Advent and/or any of
its Affiliates;

·           "Panel" means the Panel on Takeovers and Mergers, or
any successor to it;

·           "person" includes an individual, corporation,
partnership, undertaking and any unincorporated body of persons;

·           "procure" includes taking, continuing to take and
preserving the ability to take steps to secure a relevant outcome (provided
that this shall not be construed as restricting Advent or its Affiliates'
freedom to cease to Control any undertaking, business or activity of UK
Communications & Connectivity, Mission Systems UK, Aviation Services UK,
Communications & Connectivity, the UK Cobham Group or the Cobham Group,
but without prejudice to the Post-Offer Undertaking in paragraph 4);

·           "Research and Development Spend" means "Private
Venture" or "PV" investment as defined in Cobham's group accounting manual as
at 31 December 2018, as recognised in accordance with Cobham's accounting
policies and accounting practices in force as at 31 December 2018, applied on
a consistent basis, regardless of whether or not it is expensed to the income
statement or capitalised;

·           "Sales" means the aggregate standalone revenues of the
relevant undertakings, as recognised in accordance with IFRS and as determined
in accordance with Cobham's accounting policies and accounting practices in
force as at 31 December 2018 applied on a consistent basis;

·           "subsidiary undertaking" and "undertaking" shall have
the meaning given to such terms in the Companies Act 2006;

·           "Supervisor" means RSM Corporate Finance LLP, a limited
liability partnership incorporated in England and Wales with registered number
OC325347;

·           "Topco" means AI Convoy Topco & Cy S.C.A., a
société en commandite par actions incorporated and existing under the laws
of the Grand Duchy of Luxembourg, having its registered office at 2-4 Rue
Beck, L-1222 Luxembourg, Grand Duchy of Luxembourg and registered with the
Luxembourg Trade and Companies Register under number B236607;

·           "UK Cobham Group" means those members of the Cobham
Group which are incorporated in the United Kingdom from time to time;

·           "UK Communications & Connectivity" means:

(a)   Chelton Limited, a company incorporated in England and Wales with
registered number 896823 ("Chelton");

(b)   Axell Wireless Limited, a company incorporated in England and Wales
with registered number 4042808 ("Axell Wireless"); and

(c)   any other undertaking(s) to which all or part of the business of
Chelton and/or Axell Wireless has been transferred after the Effective Date,

in each case which, from time to time, are Controlled by Advent and/or any of
its Affiliates;

·           "Undertaking Period" means the period from the
Effective Date until the fifth anniversary of the Effective Date;  and

·           "United Kingdom" or "UK" means the United Kingdom of
Great Britain and Northern Ireland.

 

 1  (#_ftnref1)    Note (1): The aggregate amount of Sales of UK
Communications & Connectivity and Mission Systems UK for the financial
year ended 31 December 2018 was £204.9 million.

     Note (2): Note that the Post-Offer Undertakings contain no
restriction on the disposal of businesses or undertakings out of UK
Communications & Connectivity or Mission Systems UK or on the
re-domiciliation of businesses or undertakings.  The extent of the businesses
and undertakings that are included within UK Communications & Connectivity
and Mission Systems UK may therefore be reduced during the period of the
Post-Offer Undertakings.

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