Keywords Studios PLC BPEA Fund VIII Ld - Recommended Final Cash Offer
03/07/2024 07:00
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RNS Number : 8938U Keywords Studios PLC 03 July 2024
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THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
FOR IMMEDIATE RELEASE
3 July 2024
RECOMMENDED FINAL CASH ACQUISITION 1 (#_ftn1)
of
Keywords Studios Plc ("Keywords Studios")
by
Houting UK Limited ("Bidco")
a newly formed company indirectly wholly-owned by EQT's BPEA Fund VIII
to be effected by means of a scheme of arrangement
under Part 26 of the UK Companies Act 2006
Summary
· The boards of Bidco and Keywords Studios are pleased to announce
that they have reached agreement on the terms of a recommended cash
acquisition of the entire issued and to be issued ordinary share capital of
Keywords Studios by Bidco. The Acquisition is to be effected by means of a
scheme of arrangement under Part 26 of the Companies Act.
· Under the terms of the Acquisition, each Keywords Studios
Shareholder shall be entitled to receive:
for each Keywords Studios Share 2,450 pence in cash ("Acquisition Price")
· The Acquisition Price represents a premium of approximately:
o 66.7 per cent. to the Closing Price of 1,470 pence per Keywords Studios
Share on 17 May 2024 (being the last Business Day before the commencement of
the Offer Period);
o 96.1 per cent. to the volume-weighted average price of 1,249 pence per
Keywords Studios Share for the one-month period ended 17 May 2024 (being the
last Business Day before the commencement of the Offer Period);
o 87.1 per cent. to the volume-weighted average price of 1,309 pence per
Keywords Studios Share for the three-month period ended 17 May 2024 (being the
last Business Day before the commencement of the Offer Period); and
o 77.1 per cent. to the volume-weighted average price of 1,383 pence per
Keywords Studios Share for the six-month period ended 17 May 2024 (being the
last Business Day before the commencement of the Offer Period).
· The Acquisition values the entire issued and to be issued
ordinary share capital of Keywords Studios at approximately £2.1 billion on a
fully diluted basis, and implies an enterprise value of approximately £2.2
billion and a multiple of approximately 15.9 times Keywords Studios' adjusted
EBITDA for the 12-month period ended 31 December 2023 of £139 million.
· The Acquisition Price is final and will not be increased, except
that Bidco reserves the right to increase the Acquisition Price where: (i)
there is an announcement of a possible offer or firm intention to make an
offer for Keywords Studios by any third party; or (ii) the Panel otherwise
provides its consent.
· If any dividend, distribution, or other return of capital or
value is announced, declared, made or paid in respect of Keywords Studios
Shares on or after the date of this Announcement, Bidco will reduce the
Acquisition Price by the amount of such dividend and/or distribution and/or
other return of capital or value. Any such reduction shall be the subject of
an announcement and, for the avoidance of doubt, shall not be regarded as
constituting any revision or variation of the terms of the Scheme or
Acquisition. In such circumstances, the Keywords Studios Shareholders will be
entitled to retain any such dividend, distribution and/or other return of
capital or value.
· The consideration payable to Keywords Studios Shareholders under
the terms of the Acquisition will be financed by a combination of (i) equity
capital to be invested by EQT, CPP Investments, acting through its
wholly-owned subsidiary CPPIB PHI4, and Rosa Investments and (ii) debt
financing.
Keywords Studios recommendation
· The Keywords Studios Directors, who have been so advised by
Deutsche Numis and Robey Warshaw as to the financial terms of the Acquisition,
consider the terms of the Acquisition to be fair and reasonable. In providing
their advice to the Keywords Studios Directors, Deutsche Numis and Robey
Warshaw have taken into account the commercial assessments of the Keywords
Studios Directors.
· Accordingly, the Keywords Studios Directors intend to unanimously
recommend that Keywords Studios Shareholders vote in favour of the Scheme at
the Court Meeting and that Keywords Studios Shareholders vote in favour of the
resolutions to be proposed at the Keywords Studios General Meeting (or in the
event the Acquisition is implemented by way of an Offer, to accept or procure
acceptance of such Offer), as the Keywords Studios Directors who hold
interests in Keywords Studios Shares have irrevocably undertaken to do in
respect of their own legal and/or beneficial holdings which are under their
control being, in aggregate, 51,019 Keywords Studios Shares (representing
approximately 0.06 per cent. of Keywords Studios' issued ordinary share
capital on the Latest Practicable Date). Further details of these
undertakings, including the circumstances in which they cease to be binding,
are set out in Appendix 3 to this Announcement.
· Robey Warshaw is providing independent financial advice to the
Keywords Studios Directors for the purposes of Rule 3 of the Takeover Code.
Letters of intent
· In addition to the irrevocable undertakings from the Keywords
Studios Directors described above, Bidco has received letters of intent from
Franklin Templeton Institutional, LLC ("Franklin Templeton") and Banque Pictet
& Cie SA ("Pictet") to vote in favour of the Scheme at the Court Meeting
and the resolutions to be proposed at the Keywords Studios General Meeting in
respect of 6,055,691 Keywords Studios Shares, representing approximately 7.57
per cent. of Keywords Studios' issued ordinary share capital on the Latest
Practicable Date.
· In total, therefore, Bidco has procured irrevocable undertakings
and letters of intent to vote, or procure votes, in favour of the Scheme at
the Court Meeting and the resolutions to be proposed at the Keywords Studios
General Meeting in respect of 6,106,710 Keywords Studios Shares, representing
approximately 7.64 per cent. of Keywords Studios' issued ordinary share
capital on the Latest Practicable Date.
· Further details of these irrevocable undertakings and letters of
intent, including the circumstances in which they cease to be binding, are set
out in Appendix 3 to this Announcement.
Information on Keywords Studios
· Keywords Studios is a global provider of fully integrated
creative and technology-enabled solutions to the video games and entertainment
industries. Established in 1998, and now with over 70 facilities in 26
countries strategically located in Asia, Australia, the Americas, and Europe,
it provides services across the entire content development life cycle through
its Create, Globalize and Engage divisions to a large blue-chip client base
across the globe.
· Keywords Studios provides services to 24 of the top 25 most
prominent games companies and contributes to over 70 per cent. of the 2023
Game Awards winners. Across the games and entertainment industry, clients
include Activision Blizzard, Bandai Namco, Bethesda, Electronic Arts, Epic
Games, Konami, Microsoft, Netflix, Riot Games, Square Enix, Supercell,
TakeTwo, Tencent and Ubisoft. Recent titles worked on include Starfield,
Baldur's Gate 3, Diablo IV and Hogwarts Legacy.
· Keywords Studios is a public limited company registered in
England and Wales. The Keywords Studios Shares are currently admitted to
trading on AIM, a market operated by the London Stock Exchange.
Information on Bidco, EQT, CPP Investments and Rosa Investments
· Bidco is a newly formed private limited company incorporated in
England and Wales. In due course, Bidco will be indirectly owned by EQT's BPEA
Fund VIII, and equity co-investors CPP Investments, acting through its
wholly-owned subsidiary CPPIB PHI4, and Rosa Investments. As at the Effective
Date, it is intended that Bidco will be owned in the following proportions:
(i) EQT's BPEA Fund VIII will indirectly own 51.0 per cent. and (ii) each of
CPPIB PHI4 and Rosa Investments will indirectly own 24.5 per cent.
· EQT is a global private markets investment organisation focused
on active ownership strategies. With a Nordic heritage and a global mindset,
EQT takes an active approach to transforming companies. It works alongside
management teams to provide capital and expertise, drawing on its global
network. Its funds invest in portfolio companies, leveraging its deep sector
expertise and thirty years of experience to advance innovation and growth. On
average, over the past five years, EQT has seen double digit growth in its
portfolio companies underpinned by sources of value creation including sales
expansion, multiple expansion, margin expansion and debt pay-down.
· EQT was founded in Sweden over thirty years ago with investment
from the Wallenberg family, industrialists who are leading owners of
high-quality international companies with Swedish roots, including Astra
Zeneca, ABB and Ericsson. The Wallenberg family's entrepreneurial mindset and
philosophy of long-term ownership has helped guide EQT's management
philosophy, which is underpinned by a set of strong values and a distinct
corporate culture.
· EQT manages and advises funds and vehicles that invest across the
world with the mission to future-proof companies, generate attractive returns
and make a positive impact with everything EQT does. EQT operates in more than
25 countries across Asia Pacific, Europe and the Americas and has over 1,000
employees, with a total AUM of €242bn* (Fee-generating AUM €132 billion).
· EQT has a long and positive track record investing in the
services and global technology industries. EQT is a leading services investor,
with US$33.7 billion invested to date into 88 services portfolio investments
globally with 33 exits across M&A and IPOs. EQT also has deep expertise
investing in technology globally. Over the years, EQT has invested US$37.0
billion into 116 technology portfolio investments globally with 35 exits
through the public and private markets.
· BPEA Fund VIII is part of EQT Private Capital Asia's flagship
private equity investment strategy, focused on large-cap buyouts. In October
2022, EQT combined with BPEA and in January 2024, BPEA rebranded as EQT and is
known as EQT Private Capital Asia. With US$11.2 billion in capital
commitments, BPEA VIII is one of the largest funds ever raised in
Asia-Pacific. EQT Private Capital Asia's buyout strategy targets control
buyouts of companies in the pan-Asian region or with business links to Asia
and takes a thematic approach to investing, focused on services, technology
and healthcare. Its core markets include India, Japan, Korea, Southeast Asia
and Australia, as well as cross-border investments for which Asia represents a
meaningful driver of returns. Over the past 27 years, EQT Private Capital Asia
has made more than 140 investments, and today, the current portfolio employs
more than 400,000 people globally, with a strong focus on tech-enabled
businesses with global delivery footprints.
· CPP Investments is a global professional investment management
organisation that invests the assets transferred to it by the CPP that are not
currently needed by the CPP to pay current benefits in the best interests of
22 million contributors and beneficiaries. CPP Investments was incorporated in
1997 and made its first investment in March 1999. In order to build a
diversified portfolio, CPP Investments invests in public equities, private
equities, real estate, infrastructure and fixed income instruments.
Headquartered in Toronto, with offices in Hong Kong, London, Luxembourg,
Mumbai, New York City, San Francisco, São Paulo and Sydney, CPP Investments
is governed and managed independently of the CPP and at arm's length from the
government of Canada. As at March 31, 2024, CPP Investments had C$632.3
billion (approximately £370 billion) assets under management, of which C$26.2
billion (approximately £15 billion) is invested in the UK. CPPIB PHI4 is a
wholly-owned subsidiary of CPP Investments, and is the entity through which
CPP Investments will invest in Bidco.
· Rosa Investments is a private limited company incorporated in
Singapore and an indirect wholly-owned subsidiary of Temasek. Rosa Investments
is the entity through which Temasek will invest in Bidco. Temasek is a global
investment company with a net portfolio value of S$382 billion (approximately
£232 billion) as at 31 March 2023. Founded in Singapore in 1974, Temasek
operates on commercial principles and invests thematically in line with long
term structural trends, with the aim of building a resilient and forward
looking portfolio that delivers sustainable returns over the long term.
Temasek has overall corporate credit ratings of Aaa/AAA by rating agencies
Moody's Investors Service and S&P Global Ratings respectively.
Headquartered in Singapore, Temasek has 13 offices in 9 countries around the
world: Beijing, Hanoi, Mumbai, Shanghai, Shenzhen, and Singapore in Asia; and
London, Brussels, Paris, New York, San Francisco, Washington DC, and Mexico
City outside Asia.
Background to and reasons for the Acquisition
· EQT has a long and successful track record investing in the
services and global technology industries, working alongside entrepreneurial
management teams to accelerate growth in global businesses and transform them
into industry leaders. Since the firm's founding thirty years ago, EQT funds
have invested US$33.7 billion in the services sector through investments
across 88 companies, with 33 exits both through public listings and sales,
making EQT a leading services investor in the world. Over the years, EQT funds
have also invested US$37.0 billion in the global technology sector, investing
in 116 businesses, with 35 exits through the public and private markets.
· Bidco believes that, with the right additional investment, there
are significant opportunities for Keywords Studios to increase the pace of its
growth and fulfil its long-term potential evolving into a leading global
full-scale integrated gaming services provider. Keywords Studios is well
placed to succeed in this large, fragmented and growing global gaming services
market as an end-to-end player across the video games value chain. In this
context, Bidco believes growth can be unlocked, at a greater pace, by
expanding into adjacent media and entertainment end-markets and fast-growing
technologies. This would enable Keywords Studios to build on its existing
capabilities and better meet changing customer demands for its services at the
pace they expect.
· Bidco is supportive of Keywords Studios' existing strategy and
management team. Bidco can provide additional capital to Keywords Studios'
value accretive M&A strategy, further expanding its global reach while
drawing on its deep technology domain expertise. EQT will also leverage its
global network to help Keywords Studios expand internationally.
· Bidco believes that Keywords Studios will be better able to
fulfil its long-term growth potential in the private markets. Keywords
Studios' management team will be able to take a longer-term view while
delivering its strategy. The global gaming services sector is characterised by
constant change and innovation, accelerated by the emergence of generative AI.
Operating in the private markets, coupled with additional capital, would
enable Keywords Studios to invest in innovation that is essential for it to
keep up with this pace of change and sustain its status as the global gaming
services market leader.
Background to and reasons for the Recommendation
· Since its admission to AIM in July 2013, Keywords Studios has
become the trusted global solutions provider to the world's leading video
games and entertainment companies, working with them across their full content
development cycle, from concept through to launch and beyond. The Company has
an excellent track-record of evolving the business to meet its clients' needs,
having transformed from a 100 per cent. localisation business at IPO to a
diversified portfolio with services across the video-games life cycle.
· Over the past decade, through both organic growth and
acquisitions, Keywords Studios' revenue has increased from €16.4 million in
2013 to €780.4 million in 2023, and adjusted EBITDA has increased from
€2.7 million in 2013 to €158.3 million in 2023, representing compound
annual growth rates of 47 per cent. and 50 per cent. respectively.
Additionally, adjusted operating profits have improved from €2.5 million in
2013 to €122.0 million in 2023, and adjusted cash conversion in 2023
remained in excess of Keywords Studios' medium term objective of 80 per cent.,
supporting Keywords Studios' organic and inorganic growth ambitions.
· Keywords Studios has continued to grow its platform through
selective, value accretive M&A and has scaled its collection of connected
studios from 5 in 2013 to over 70 studios in 2023 across 26 countries. 2023
represented another successful year with M&A, consummating acquisitions
for total maximum consideration of €225 million, supported by Keywords
Studios' strong balance sheet and cash generation. Keywords Studios is
recognised as an acquirer of choice within the industry, and has a track
record of growing the businesses it has acquired to add significant value for
its shareholders.
· While the Keywords Studios Directors expect the continued
execution of Keywords Studios' strategic objectives to create significant
value, the Keywords Studios Directors are also mindful of the near-term
challenges in the broader video games and entertainment industries that have
impacted recent growth, as well as other longer-term uncertainties, many of
which are beyond Keywords Studios' control. On balance, the Keywords Studios
Directors believe that the long-term potential of the group, as a market
leading compounding growth business in a highly fragmented industry, has not
been entirely reflected in the price and valuation rating of the Group's
shares, which have fluctuated significantly in the past twelve months.
· Bidco's offer of 2,450 pence per Keywords Studios Share followed
numerous previous unsolicited proposals from EQT in recent months and
represents a significant increase from the initial proposal. The Keywords
Studios Directors note that the terms of the Acquisition provide Keywords
Studios Shareholders an opportunity to crystallise the value of their holdings
today at a significant premium to the undisturbed share price as at 17 May
2024.
· In considering the terms of the Acquisition and determining
whether they reflect an appropriate valuation of Keywords Studios and its
future prospects, the Keywords Studios Directors have taken into account a
number of factors, including but not limited to:
· the significant premium of approximately 66.7 per cent. to the
Closing Price of 1,470 pence per Keywords Studios Share on 17 May 2024 (being
the last Business Day before the commencement of the Offer Period);
· the approximately 87.1 per cent. premium to the volume-weighted
average price of 1,309 pence per Keywords Studios Share for the three-month
period and approximately 77.1 per cent. premium to the volume-weighted average
price of 1,383 pence per Keywords Studios Share for the six-month period ended
17 May 2024 (being the last Business Day prior to the commencement of the
Offer Period); and
· the opportunity for Keywords Studios Shareholders to realise the
entirety of their current investment upfront for cash as compared to the
risk-adjusted returns that may be generated for Keywords Studios Shareholders
by executing on Keywords Studios' strategy over the coming years.
· In addition to the financial terms, the Keywords Studios
Directors have also taken into account Bidco's intentions concerning Keywords
Studios' business, management team, employees and other stakeholders of the
Company (as detailed in section 13). The Keywords Studios Directors note the
great importance Bidco attaches to the skill and experience of Keywords
Studios' management and employees who will continue to be key to the success
of Keywords Studios.
· Accordingly, following careful consideration of the above
factors, the Keywords Studios Directors intend unanimously to recommend that
Keywords Studios Shareholders vote in favour of the Scheme at the Court
Meeting and that Keywords Studios Shareholders vote in favour of the
resolutions to be proposed at the Keywords Studios General Meeting (or in the
event the Acquisition is implemented by way of an Offer, to accept or procure
acceptance of such Offer).
Timetable and Conditions
· It is intended that the Acquisition will be implemented by way of
a court-sanctioned scheme of arrangement under Part 26 of the Companies Act
(although Bidco reserves the right to effect the Acquisition by way of an
Offer, subject to the consent of the Panel and the terms of the Cooperation
Agreement).
· The Acquisition is conditional on, among other things, the
approval of the requisite majority of Keywords Studios Shareholders at the
Court Meeting and at the Keywords Studios General Meeting. In order to become
Effective, the Scheme must be approved by a majority in number of Keywords
Studios Shareholders, present and voting at the Court Meeting, whether in
person or by proxy, representing 75 per cent. or more in value of the Scheme
Shares voted. In addition, a special resolution relating to the implementation
of the Scheme must be passed by Keywords Studios Shareholders representing at
least 75 per cent. of votes cast at the Keywords Studios General Meeting. In
addition, the Scheme must be sanctioned by the Court.
· The Conditions to the Acquisition are set out in full in Appendix
1 to this Announcement along with certain other terms; the full terms and
conditions will be provided in the Scheme Document.
· It is expected that the Scheme Document, containing further
information about the Acquisition and notices of the Court Meeting and
Keywords Studios General Meeting, together with the associated forms of proxy,
will be posted to Keywords Studios Shareholders as soon as practicable and in
any event within 28 days of this Announcement (or such later date as Keywords
Studios, Bidco and the Panel agree) and the Meetings are expected to be held
as soon as reasonably practicable thereafter. Subject to certain restrictions
relating to persons resident in Restricted Jurisdictions, the Scheme Document
will also be made available on Keywords Studios' website at
https://www.keywordsstudios.com/en/investors/investors-home/potential-offer
(https://www.keywordsstudios.com/en/investors/investors-home/potential-offer)
.
· The Acquisition is currently expected to complete in the fourth
quarter of 2024, subject to the satisfaction or (where applicable) waiver of
the Conditions. An expected timetable of key events relating to the
Acquisition will be set out in the Scheme Document.
Commenting on the Acquisition, Don Robert, Chairman of the Board of Keywords
Studios, said:
"Since its IPO in 2013, Keywords Studios has delivered exceptional growth both
organically and through a successful M&A strategy, transforming the
business into the only truly global provider of fully integrated creative and
technology-enabled solutions to the video games and entertainment industries.
Today, Keywords Studios is the strategic partner of choice for the largest
industry players across the entire content development life cycle with its
diversified technology enabled platform coupled with outstanding talent
driving broad-based growth.
EQT is a leading global investor with significant experience in technology
services and a proven track record in supporting management teams of
high-growth businesses deliver against their strategies. We believe that
Keywords Studios will benefit from EQT's operational expertise and its deep
industry network and that EQT will provide a good home for our valued
employees as they continue building trusted partnerships with our customers.
Whilst the Board expects the continued execution of Keywords Studios'
strategic objectives and its leadership position to create significant value,
the Board is also mindful of the near-term challenges in the broader video
games and entertainment industries, as well as other longer-term
uncertainties, which have caused volatile returns for Keywords Studios'
shareholders over the past fifteen months. On balance, the Board believes that
this offer represents a good opportunity for Keywords Studios shareholders to
realise value for their investment in cash upfront at a significant premium to
the undisturbed share price. We therefore unanimously recommend the offer to
our shareholders."
Commenting on the Acquisition, Bertrand Bodson, Chief Executive Officer of
Keywords Studios, said:
"I am extremely proud of our passionate world-class teams and the leading
technology-enabled global platform we are building together, which have
enabled us to develop innovative solutions and foster strategic partnerships
with our clients. We have consistently delivered strong financial performance,
creating significant value for our shareholders.
This offer from EQT marks an exciting new chapter on our growth journey, with
a like-minded partner who possesses deep sector expertise and a desire to
accelerate the pace of our growth, both organically and through M&A, to
unlock the many opportunities ahead of us across the entertainment landscape.
I am convinced that together we will be able to strengthen our leadership
position at the heart of the largest entertainment industries in the world and
build a truly unique global integrated games services platform for the benefit
of our people and clients."
Commenting on the Acquisition, Jean Salata, Chairman of EQT Asia, added:
"Keywords Studios is an exciting business in a growing and fragmented video
gaming technology services market. As the industry evolves, continued
investment by Keywords Studios in innovation, higher value added services and
international expansion will be key to sustaining a strong position and
driving further long-term growth. As a private company under EQT's ownership,
Keywords Studios will be well positioned to make the long term investments
required for the transition to next-gen video gaming and for global expansion.
We plan to draw on our experience in the services and technology sectors to
support management and invest further in innovation, talent, and M&A to
accelerate Keywords Studios' current strategy."
This summary should be read in conjunction with, and is subject to, the full
text of this Announcement. The Acquisition shall be subject to the Conditions
and further terms set out in Appendix 1 to this Announcement and to the full
terms and conditions which shall be set out in the Scheme Document; Appendix 2
to this Announcement contains the sources of information and bases of
calculations of certain information contained in this summary and the
Announcement; Appendix 3 contains a summary of the irrevocable undertakings
and letters of intent received in relation to this Acquisition; Appendix 4
contains a summary of proposals in relation to the Keywords Studios Share
Schemes; Appendix 5 contains details of the Keywords Studios Profit Forecast
and Appendix 6 contains definitions of certain expressions used in this
summary and in this Announcement.
Enquiries:
EQT
J.P. Morgan Cazenove (Financial Adviser to Bidco) +44 (0) 20 3493 8000
Dwayne Lysaght / Jonty Edwards / Edward Hatter
FGS Global (PR Adviser to EQT and Bidco) +44 (0) 20 7251 3801
Faeth Birch / Amanda Healy / Sophia Johnston EQT-LON@fgsglobal.com
Keywords Studios Plc via Deutsche Numis / Robey Warshaw
Giles Blackham, Director of Investor Relations
Deutsche Numis (Joint Financial Adviser, NOMAD and Joint Corporate Broker to +44 (0) 20 7260 1000
Keywords Studios)
Stuart Skinner / Alec Pratt / William Baunton / Alexander Kladov
Robey Warshaw LLP (Joint Financial Adviser to Keywords Studios) +44 (0) 20 7317 3900
Simon Robey / Daniel Zumbuehl
MHP Group (PR Adviser to Keywords Studios) +44 (0) 20 3128 8100
Katie Hunt / Eleni Menikou / Charles Hirst keywords@mhpgroup.com (mailto:keywords@mhpgroup.com)
DLA Piper UK LLP is acting as legal adviser to Keywords Studios in connection
with the Acquisition.
Simpson Thacher & Bartlett LLP is acting as legal adviser to EQT and
Bidco. Kirkland & Ellis is acting as finance counsel to EQT and Houting
B.V. Freshfields Bruckhaus Deringer LLP is acting as legal adviser to CPP
Investments.
Allen Overy Shearman Sterling is acting as finance counsel to the Arranger (as
defined in the Facilities Agreement).
Important Notices
J.P. Morgan Securities plc, which conducts its UK investment banking business
as J.P. Morgan Cazenove ("J.P. Morgan Cazenove"), is authorised in the United
Kingdom by the Prudential Regulation Authority ("PRA") and regulated by the
PRA and the FCA. J.P. Morgan Cazenove is acting as financial adviser
exclusively for Bidco and no one else in connection with the Acquisition and
will not regard any other person as its client in relation to the Acquisition
and will not be responsible to anyone other than Bidco for providing the
protections afforded to clients of J.P. Morgan Cazenove or its affiliates, nor
for providing advice in relation to the Acquisition or any other matter or
arrangement referred to herein.
Numis Securities Limited (trading as "Deutsche Numis"), which is authorised
and regulated in the United Kingdom by the Financial Conduct Authority
("FCA"), is acting exclusively for Keywords Studios as joint financial
advisor, NOMAD and joint corporate broker and no one else in connection with
the matters set out in this Announcement and will not regard any other person
as its client in relation to the matters referred to in this Announcement and
will not be responsible to anyone other than Keywords Studios for providing
the protections afforded to clients of Deutsche Numis, nor for providing
advice in relation to any matter referred to herein. Neither Deutsche Numis
nor any of its affiliates (nor any of 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 Deutsche Numis in
connection with this Announcement, any statement contained herein or
otherwise.
Robey Warshaw LLP ("Robey Warshaw"), which is authorised and regulated in the
United Kingdom by the FCA, is acting as financial adviser exclusively for
Keywords Studios and no one else in connection with the matters referred to in
this Announcement and will not regard any other person as its client in
relation to the matters referred to in this Announcement and will not be
responsible to anyone other than Keywords Studios for providing the
protections afforded to clients of Robey Warshaw, nor for providing advice in
relation to the matters referred to in this Announcement.
Further Information
This Announcement is for information purposes only 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 Keywords
Studios in any jurisdiction in contravention of applicable law. The
Acquisition will be implemented solely pursuant to the terms of the Scheme
Document (or, if the Acquisition is implemented by way of an 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 of the information contained in
the Scheme Document (or, if the Acquisition is implemented by way of an Offer,
the offer document).
This Announcement does not constitute a prospectus, prospectus equivalent
document or exempted document.
This Announcement contains inside information in relation to Keywords Studios
for the purposes of Article 7 of the Market Abuse Regulation. The person
responsible for arranging the release of this Announcement on behalf of
Keywords Studios is Gavin White, Company Secretary. Keywords Studios' Legal
Entity Identifier is 2138007VR9ZYCWS7VE12.
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, accountant
or independent financial adviser duly authorised under the Financial Services
and Markets Act 2000 (as amended) if you are resident in the United Kingdom
or, if not, from another appropriately authorised independent financial
adviser.
Overseas Shareholders
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 of, and observe, any applicable legal or regulatory
requirements. Any failure to comply with such requirements 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 in accordance
with and for the purpose of complying with English law, the Takeover Code, the
Market Abuse Regulation, the AIM Rules for Companies and the Disclosure
Guidance and Transparency Rules and information disclosed may not be the same
as that which would have been prepared in accordance with the laws of
jurisdictions outside England.
The availability of the Acquisition to Keywords Studios Shareholders who are
not resident in and citizens of the UK may be affected by the laws of the
relevant jurisdictions in which they are located or of which they are
citizens. Persons who are not resident in the UK should inform themselves of,
and observe, any applicable legal or regulatory requirements of their
jurisdictions. In particular, the ability of persons who are not resident in
the UK to vote their Keywords Studios 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. Further
details in relation to Overseas Shareholders will be contained in the Scheme
Document (or, if the Acquisition is implemented by way of an Offer, the offer
document).
Unless otherwise determined by Bidco or required by the Takeover Code, and
permitted by applicable law and regulation, the Acquisition will not be made
available, directly or indirectly, in, into or from a Restricted Jurisdiction
where to do so would violate the laws in that jurisdiction and no person may
vote in favour of the Scheme by any such use, means, instrumentality or from
within a Restricted Jurisdiction or any other jurisdiction if to do so would
constitute a violation of the laws of that jurisdiction. Copies of this
Announcement and any formal documentation relating to the Acquisition are not
being, and must not be, directly or indirectly, mailed or otherwise forwarded,
distributed or sent in or into or from any Restricted Jurisdiction and persons
receiving such documents (including, without limitation, agents, custodians,
nominees and trustees) must not mail or otherwise forward, distribute or send
it 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 an Offer (unless otherwise permitted by applicable
law and regulation), the Offer may not be made directly or indirectly, in or
into, or by the use of mails or any means or instrumentality (including, but
not limited to, facsimile, e-mail 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 the Offer may not be capable of acceptance by any such use, means,
instrumentality or facilities.
Further details in relation to Overseas Shareholders will be included in the
Scheme Document (or, if the Acquisition is implemented by way of an Offer, the
offer document).
Notice to U.S. Keywords Studios Shareholders
The Acquisition relates to the shares of an English company and is being made
by means of a scheme of arrangement provided for under the laws of England and
Wales. A transaction effected by means of a scheme of arrangement is not
subject to the tender offer or proxy solicitation rules under the U.S.
Securities Exchange Act of 1934 ("U.S. Exchange Act"). Accordingly, the
Acquisition is subject to the disclosure requirements and practices applicable
in the UK to schemes of arrangement which differ from the disclosure
requirements of the U.S. tender offer and proxy solicitation rules.
The financial information included in this Announcement has been prepared in
accordance with accounting standards applicable in the United Kingdom and thus
may not be comparable to financial information of U.S. companies or companies
whose financial statements are prepared in accordance with generally accepted
accounting principles in the United States.
The Acquisition may, in certain circumstances, instead be carried out by way
of an Offer under the laws of England and Wales. If, in the future, Bidco
exercises its right, with the consent of the Panel (if required), to implement
the Acquisition by way of an Offer, such Offer will be made in compliance with
the applicable U.S. laws and regulations, including any applicable exemptions
under the U.S. Exchange Act. Such a takeover would be made in the United
States by Bidco and no one else.
In the event that the Acquisition is implemented by way of an Offer, in
accordance with normal UK practice and pursuant to Rule 14e-5(b) of the U.S.
Exchange Act, Bidco, certain affiliated companies or their nominees, or their
brokers (acting as agents), may from time to time make certain purchases of,
or arrangements to purchase, Keywords Studios Shares outside of the U.S.,
other than pursuant to the Acquisition, until the date on which the
Acquisition becomes Effective, lapses or is otherwise withdrawn. 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 United Kingdom, will be
reported to a Regulatory Information Service and will be available on the
London Stock Exchange website, www.londonstockexchange.com
(http://www.londonstockexchange.com) . Also, in accordance with Rule 14e-5(b)
of the U.S. Exchange Act, Deutsche Numis and J.P. Morgan Cazenove will
continue to act as exempt principal traders in Keywords Studios Shares on the
London Stock Exchange.
It may be difficult for U.S. holders of Keywords Studios Shares to enforce
their rights and any claim arising out of the U.S. federal laws, since Bidco
and Keywords Studios are organized under the laws of a non-U.S. jurisdiction,
some or all of their respective officers and directors may be residents of a
non-U.S. jurisdiction and most of their respective assets are located outside
of the United States. U.S. holders of Keywords Studios Shares may not be able
to sue a non-U.S. company or its officers or directors in a non-U.S. court for
violations of the U.S. securities laws. Further, it may be difficult to compel
a non-U.S. company and its affiliates to subject themselves to a U.S. court's
judgement.
U.S. Keywords Studios Shareholders also should be aware that the transaction
contemplated herein may have tax consequences in the U.S. and, that such
consequences, if any, are not described herein. U.S. Keywords Studios
Shareholders are urged to consult with legal, tax and financial advisers in
connection with making a decision regarding this transaction.
Forward Looking Statements
This Announcement (including information incorporated by reference in this
Announcement), oral statements made regarding the Acquisition, and other
information published by Bidco and Keywords Studios contain statements which
are, or may be deemed to be, "forward-looking statements". Forward-looking
statements are prospective in nature and are not based on historical facts,
but rather on current expectations and projections of the management of Bidco
and Keywords Studios about future events, and are therefore subject to risks
and uncertainties which could cause actual results to differ materially from
the future results expressed or implied by the forward-looking statements.
The forward-looking statements contained in this Announcement include
statements relating to the expected effects of the Acquisition on Bidco and
Keywords Studios (including their future prospects, developments and
strategies), 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
"prepares", "plans", "expects" or "does not expect", "is expected", "is
subject to", "budget", "projects", "synergy", "strategy", "scheduled", "goal",
"estimates", "forecasts", "cost-saving", "intends", "anticipates" or "does not
anticipate", or "believes", or variations of such words and phrases or
statements that certain actions, events or results "may", "could", "should",
"would", "might" or "will" be taken, occur or be achieved. Forward looking
statements may include statements relating to the following: (i) future
capital expenditures, expenses, revenues, earnings, synergies, economic
performance, indebtedness, financial condition, dividend policy, losses and
future prospects; (ii) business and management strategies and the expansion
and growth of Bidco's, Keywords Studios', any member of the Bidco Group's or
any member of the Keywords Studios Group's operations and potential synergies
resulting from the Acquisition; and (iii) the effects of global economic
conditions and governmental regulation on Bidco's, Keywords Studios', any
member of the Bidco Group's or any member of the Keywords Studios Group's
business.
Although Bidco and Keywords Studios believe that the expectations reflected in
such forward-looking statements are reasonable, Bidco and Keywords Studios can
give no assurance that such expectations will prove to be correct. By their
nature, forward-looking statements involve risk and uncertainty because they
relate to events and depend on circumstances that will occur in the future.
There are a number of factors that could cause actual results and developments
to differ materially from those expressed or implied by such forward-looking
statements.
These factors include, but are not limited to: the ability to complete the
Acquisition; the ability to obtain requisite regulatory and shareholder
approvals and the satisfaction of other Conditions on the proposed terms and
schedule; changes in the global political, economic, business and competitive
environments and in market and regulatory forces; changes in future exchange
and interest rates; changes in tax rates; future business combinations or
disposals; changes in general economic and business conditions; changes in the
behaviour of other market participants; changes in the anticipated benefits
from the Acquisition not being realised as a result of changes in general
economic and market conditions in the countries in which Bidco Group and
Keywords Studios Group operate, weak, volatile or illiquid capital and/or
credit markets, changes in tax rates, interest rate and currency value
fluctuations, the degree of competition in the geographic and business areas
in which Bidco Group and Keywords Studios Group operate and changes in laws or
in supervisory expectations or requirements. Other unknown or unpredictable
factors could cause actual results to differ materially from those expected,
estimated or projected in the forward-looking statements. If any one or more
of these risks or uncertainties materialises or if any one or more of the
assumptions proves incorrect, actual results may differ materially from those
expected, estimated or projected. Such forward-looking statements should
therefore be construed in the light of such factors. Neither Bidco nor
Keywords Studios, nor any of their respective associates or directors,
officers or advisers, provides any representation, assurance or guarantee that
the occurrence of the events expressed or implied in any forward-looking
statements in this Announcement will actually occur. You are cautioned not to
place any reliance on these forward-looking statements.
Specifically, statements of estimated cost savings and synergies related to
future actions and circumstances, by their nature, involve risks,
uncertainties and contingencies. As a result, the cost savings and synergies
referred to may not be achieved, may be achieved later or sooner than
estimated, or those achieved could be materially different from those
estimated. Due to the scale of the Keywords Studios Group, there may be
additional changes to the Keywords Studios Group's operations. As a result,
and given the fact that the changes relate to the future, the resulting cost
synergies may be materially greater or less than those estimated.
Other than in accordance with their legal or regulatory obligations, neither
Bidco nor Keywords Studios is under any obligation, and Bidco and Keywords
Studios expressly disclaim any intention or obligation, to update or revise
any forward-looking statements, whether as a result of new information, future
events or otherwise.
No Profit Forecasts or Profit Estimates or Quantified Financial Benefit
Statements
The Keywords Studios Profit Forecast is a profit forecast for the purposes of
Rule 28 of the Takeover Code. As required by Rule 28.1 of the Takeover Code,
the assumptions on which the Keywords Studios Profit Forecast is stated are
set out in Appendix 5 of this announcement.
Other than the Keywords Studios Profit Forecast, no statement in this
Announcement is intended as a profit forecast, profit estimate or quantified
financial benefits statement for any period and no statement in this
Announcement should be interpreted to mean that earnings or earnings per share
for Keywords Studios for the current or future financial years would
necessarily match or exceed the historical published earnings or earnings per
share for Keywords Studios.
Disclosure Requirements of the Takeover Code
Under Rule 8.3(a) of the Takeover Code, any person who is interested in 1 per
cent. 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 p.m. (London time) on the 10th Business Day following the
commencement of the Offer Period and, if appropriate, by no later than 3.30
p.m. (London time) on the 10th Business Day following the announcement in
which any securities exchange offeror is first identified. Relevant persons
who deal in the relevant securities of the offeree company or of a securities
exchange offeror prior to the deadline for making an Opening Position
Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Takeover Code, any person who is, or becomes,
interested in 1 per cent. 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, 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 p.m. (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 Panel's website at
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. If you are in any doubt as to whether you are
required to make an Opening Position Disclosure or a Dealing Disclosure, you
should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129.
Electronic Communications
Please be aware that addresses, electronic addresses and certain information
provided by Keywords Studios Shareholders, persons with information rights and
other relevant persons for the receipt of communications from Keywords Studios
may be provided to Bidco during the Offer Period as required under Section 4
of Appendix 4 of the Takeover Code to comply with Rule 2.11(c) of the Takeover
Code.
Publication on Website and Availability of Hard Copies
A copy of this Announcement and the documents required to be published by Rule
26 of the Takeover Code shall be made available subject to certain
restrictions relating to persons resident in Restricted Jurisdictions on
Keywords Studios' website at
https://www.keywordsstudios.com/en/investors/investors-home/potential-offer
(https://www.keywordsstudios.com/en/investors/investors-home/potential-offer)
by no later than 12 noon (London time) on the Business Day following the date
of this Announcement. For the avoidance of doubt, the contents of the websites
referred to in this Announcement are not incorporated into and do not form
part of this Announcement.
In accordance with Rule 30.3 of the Takeover Code, Keywords Studios
Shareholders, persons with information rights and participants in the Keywords
Studios Share Plans may request a hard copy of this Announcement by contacting
Gavin White, Company Secretary, during business hours on +44 (0) 7881 330263
or by submitting a request in writing to Keywords Studios Plc, 4th Floor, 110
High Holborn, London, WC1V 6JS. In accordance with Rule 30.3 of the Takeover
Code, a person so entitled may also request that all future documents,
announcements and information in relation to the Acquisition should be sent to
them in hard copy form. If you have received this Announcement in electronic
form or via a website notification, hard copies of this Announcement and any
document or information incorporated by reference into this document will not
be provided unless such a request is made.
Rounding
Certain figures included in this Announcement have been subjected to rounding
adjustments. Accordingly, figures shown for the same category presented in
different tables may vary slightly and figures shown as totals in certain
tables may not be an arithmetic aggregation of the figures that precede them.
Rule 2.9 Disclosure
In accordance with Rule 2.9 of the Takeover Code, Keywords Studios confirms
that as at the date of this Announcement, it has in issue 79,963,864 Keywords
Studios Shares admitted to trading on AIM under ISIN code GB00BBQ38507.
Keywords Studios does not hold any ordinary shares in treasury.
Disclaimer
The information contained herein does not constitute an offer to sell, nor a
solicitation of an offer to buy, any security, and may not be used or relied
upon in connection with any offer or solicitation. Any offer or solicitation
in respect of EQT and EQT funds will be made only through a confidential
private placement memorandum and related documents which will be furnished to
qualified investors on a confidential basis in accordance with applicable laws
and regulations. The information contained herein is not for publication or
distribution to persons in the U.S. Any securities referred to herein have not
been and will not be registered under the U.S. Securities Act of 1933, as
amended, and may not be offered or sold without registration thereunder or
pursuant to an available exemption therefrom. Any offering of securities to be
made in the U.S. would have to be made by means of an offering document that
would be obtainable from the issuer or its agents and would contain detailed
information about the issuer of the securities and its management, as well as
financial information. The securities may not be offered or sold in the U.S.
absent registration or an exemption from registration.
The Acquisition will be subject to English law, the jurisdiction of the Court,
and the applicable requirements of the Takeover Code, the Panel, the London
Stock Exchange, the FCA, the AIM Rules for Companies and the Registrar of
Companies.
General
Bidco reserves the right to elect, with the consent of the Panel (where
necessary) and subject to the terms of the Cooperation Agreement, to implement
the Acquisition by way of an Offer as an alternative to the Scheme. In such an
event, an Offer will be implemented on substantially 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 terms of the
Cooperation Agreement) an acceptance condition set at 75 per cent. of Keywords
Studios Shares (or such lesser percentage as may be determined by Bidco in
accordance with the terms of the Cooperation Agreement). If the Acquisition is
effected by way of an Offer, and such an Offer becomes or is declared
unconditional in all respects and sufficient acceptances are received, Bidco
intends to exercise its rights to apply the provisions of Chapter 3 of Part 28
of the Companies Act so as to acquire compulsorily the remaining Keywords
Studios Shares in respect of which the Offer has not been accepted.
Investors should be aware that Bidco may purchase Keywords Studios Shares
otherwise than under any Offer or the Scheme, including pursuant to privately
negotiated purchases.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR
FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE
RELEVANT LAWS OF SUCH JURISDICTION. 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 AND OTHER PROFESSIONAL ADVICE IMMEDIATELY
FROM YOUR STOCKBROKER, BANK MANAGER, SOLICITOR, ACCOUNTANT OR OTHER
INDEPENDENT FINANCIAL ADVISER DULY AUTHORISED UNDER FSMA IF YOU ARE RESIDENT
IN THE UNITED KINGDOM OR, IF NOT, FROM ANOTHER APPROPRIATELY AUTHORISED
INDEPENDENT FINANCIAL ADVISER.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
FOR IMMEDIATE RELEASE
3 July 2024
RECOMMENDED FINAL CASH ACQUISITION
of
Keywords Studios Plc ("Keywords Studios")
by
Houting UK Limited ("Bidco")
a newly formed company indirectly wholly-owned by EQT's BPEA Fund VIII
to be effected by means of a scheme of arrangement
under Part 26 of the UK Companies Act 2006
1 Introduction
The boards of Bidco and Keywords Studios are pleased to announce that they
have reached agreement on the terms of a recommended cash acquisition of the
entire issued and to be issued ordinary share capital of Keywords Studios by
Bidco. The Acquisition is to be effected by means of a scheme of arrangement
under Part 26 of the Companies Act.
2 The Acquisition
Under the terms of the Acquisition, which shall be subject to the Conditions
and further terms set out in Appendix 1 to this Announcement and to be set out
in the Scheme Document, Keywords Studios Shareholders who are on the register
of members of Keywords Studios at the Scheme Record Time shall be entitled to
receive:
for each Keywords Studios
Share 2,450
pence in cash
The Acquisition Price per Keywords Studios Share represents a premium of
approximately:
· 66.7 per cent. to the Closing Price of 1,470 pence per Keywords
Studios Share on 17 May 2024 (being the last Business Day before the
commencement of the Offer Period);
· 96.1 per cent. to the volume-weighted average price of 1,249
pence per Keywords Studios Share for the one-month period ended 17 May 2024
(being the last Business Day before the commencement of the Offer Period);
· 87.1 per cent. to the volume-weighted average price of 1,309
pence per Keywords Studios Share for the three-month period ended 17 May 2024
(being the last Business Day before the commencement of the Offer Period); and
· 77.1 per cent. to the volume-weighted average price of 1,383
pence per Keywords Studios Share for the six-month period ended 17 May 2024
(being the last Business Day before the commencement of the Offer Period).
The Acquisition values the entire issued and to be issued ordinary share
capital of Keywords Studios at approximately £2.1 billion on a fully diluted
basis, and implies an enterprise value of approximately £2.2 billion and a
multiple of approximately 15.9 times Keywords Studios' adjusted EBITDA for the
12-month period ended 31 December 2023 of £139 million.
The Acquisition Price is final and will not be increased, except that Bidco
reserves the right to increase the Acquisition Price where: (i) there is an
announcement of a possible offer or firm intention to make an offer for
Keywords Studios by any third party; or (ii) the Panel otherwise provides its
consent.
If any dividend, distribution, or other return of capital or value is
announced, declared, made or paid in respect of Keywords Studios Shares on or
after the date of this Announcement, Bidco will reduce the Acquisition Price
by the amount of such dividend, distribution, or other return of capital or
value. Any such reduction shall be the subject of an announcement and, for the
avoidance of doubt, shall not be regarded as constituting any revision or
variation of the terms of the Scheme or Acquisition. In such circumstances,
the Keywords Studios Shareholders will be entitled to retain any such
dividend, distribution and/or other return of capital or value.
The consideration payable to Keywords Studios Shareholders under the terms of
the Acquisition will be financed by a combination of (i) equity capital to be
invested by EQT, CPP Investments, acting through its wholly-owned subsidiary
CPPIB PHI4, and Rosa Investments and (ii) debt financing.
The Scheme Document, containing further information about the Acquisition and
notices of the Court Meeting and the Keywords Studios General Meeting,
together with the forms of proxy, is expected to be published within 28 days
of the date of this Announcement unless otherwise agreed by the Panel, Bidco
and Keywords Studios.
3 Background to and reasons for the Acquisition
EQT has a long and successful track record investing in the services and
global technology industries, working alongside entrepreneurial management
teams to accelerate growth in global businesses and transform them into
industry leaders. Since the firm's founding thirty years ago, EQT funds have
invested US$33.7 billion in the services sector through investments across 88
companies, with 33 exits both through public listings and sales, making EQT a
leading services investor in the world. Over the years, EQT funds have also
invested US$37.0 billion in the global technology sector, investing in 116
businesses, with 35 exits through the public and private markets.
Bidco believes that, with the right additional investment, there are
significant opportunities for Keywords Studios to increase the pace of its
growth and fulfil its long-term potential - evolving into a leading global
full-scale integrated gaming services provider. Keywords Studios is well
placed to succeed in this large, fragmented and growing global gaming services
market as an end-to-end player across the video games value chain. In this
context, Bidco believes growth can be unlocked, at a greater pace, by
expanding into adjacent media and entertainment end-markets and fast-growing
technologies. This would enable Keywords Studios to build on its existing
capabilities and better meet changing customer demands for its services at the
pace they expect.
Bidco is supportive of Keywords Studios' existing strategy and management
team. Bidco can provide additional capital to Keywords Studios' value
accretive M&A strategy, further expanding its global reach while drawing
on its deep technology domain expertise. EQT will also leverage its global
network to help Keywords Studios expand internationally.
Bidco believes that Keywords Studios will be better able to fulfil its
long-term growth potential in the private markets. Keywords Studios'
management team will be able to take a longer-term view while delivering its
strategy. The global gaming services sector is characterised by constant
change and innovation, accelerated by the emergence of generative AI.
Operating in the private markets, coupled with additional capital, would
enable Keywords Studios to invest in innovation that is essential for it to
keep up with this pace of change and sustain its status as the global gaming
services market leader.
4 Keywords Studios Recommendation
The Keywords Studios Directors, who have been so advised by Deutsche Numis and
Robey Warshaw as to the financial terms of the Acquisition, consider the terms
of the Acquisition to be fair and reasonable. In providing their advice to the
Keywords Studios Directors, Deutsche Numis and Robey Warshaw have taken into
account the commercial assessments of the Keywords Studios Directors.
Accordingly, the Keywords Studios Directors intend to unanimously recommend
that Keywords Studios Shareholders vote in favour of the Scheme at the Court
Meeting and that Keywords Studios Shareholders vote in favour of the
resolutions to be proposed at the Keywords Studios General Meeting (or in the
event the Acquisition is implemented by way of an Offer, to accept or procure
acceptance of such Offer), as the Keywords Studios Directors who hold
interests in Keywords Studios Shares have irrevocably undertaken to do in
respect of their own legal and/or beneficial holdings which are under their
control being, in aggregate, 51,019 Keywords Studios Shares (representing
approximately 0.06 per cent. of Keywords Studios' issued ordinary share
capital on the Latest Practicable Date). Further details of these
undertakings, including the circumstances in which they cease to be binding,
are set out in Appendix 3 to this Announcement.
Robey Warshaw is providing independent financial advice to the Keywords
Studios Directors for the purposes of Rule 3 of the Takeover Code.
5 Background to and reasons for the recommendation
Since its admission to AIM in July 2013, Keywords Studios has become the
trusted global solutions provider to the world's leading video games and
entertainment companies, working with them across their full content
development cycle, from concept through to launch and beyond. The Company has
an excellent track-record of evolving the business to meet its clients' needs,
having transformed from a 100 per cent. localisation business at IPO to a
diversified portfolio with services across the video-games life cycle.
Over the past decade, through both organic growth and acquisitions, Keywords
Studios' revenue has increased from €16.4 million in 2013 to €780.4
million in 2023, and adjusted EBITDA has increased from €2.7 million in 2013
to €158.3 million in 2023, representing compound annual growth rates of 47
per cent. and 50 per cent. respectively. Additionally, adjusted operating
profits have improved from €2.5 million in 2013 to €122.0 million in 2023,
and adjusted cash conversion in 2023 remained in excess of Keywords Studios'
medium term objective of 80 per cent., supporting Keywords Studios' organic
and inorganic growth ambitions.
Keywords Studios has continued to grow its platform through selective, value
accretive M&A and has scaled its collection of connected studios from 5 in
2013 to over 70 studios in 2023 across 26 countries. 2023 represented another
successful year with M&A, consummating acquisitions for total maximum
consideration of €225 million, supported by Keywords Studios' strong balance
sheet and cash generation. Keywords Studios is recognised as an acquirer of
choice within the industry, and has a track record of growing the businesses
it has acquired to add significant value for its shareholders.
While the Keywords Studios Directors expect the continued execution of
Keywords Studios' strategic objectives to create significant value, the
Keywords Studios Directors are also mindful of the near-term challenges in the
broader video games and entertainment industries that have impacted recent
growth, as well as other longer-term uncertainties, many of which are beyond
Keywords Studios' control. On balance, the Keywords Studios Directors believe
that the long-term potential of the group, as a market leading compounding
growth business in a highly fragmented industry, has not been entirely
reflected in the price and valuation rating of the Group's shares, which have
fluctuated significantly in the past twelve months.
Bidco's offer of 2,450 pence per Keywords Studios Share followed numerous
previous unsolicited proposals from EQT in recent months and represents a
significant increase from the initial proposal. The Keywords Studios Directors
note that the terms of the Acquisition provide Keywords Studios Shareholders
an opportunity to crystallise the value of their holdings today at a
significant premium to the undisturbed share price as at 17 May 2024.
In considering the terms of the Acquisition and determining whether they
reflect an appropriate valuation of Keywords Studios and its future prospects,
the Keywords Studios Directors have taken into account a number of factors,
including but not limited to:
· the significant premium of approximately 66.7 per cent. to the
Closing Price of 1,470 pence per Keywords Studios Share on 17 May 2024 (being
the last Business Day before the commencement of the Offer Period);
· the approximately 87.1 per cent. premium to the volume-weighted
average price of 1,309 pence per Keywords Studios Share for the three-month
period and approximately 77.1 per cent. premium to the volume-weighted average
price of 1,383 pence per Keywords Studios Share for the six-month period ended
17 May 2024 (being the last Business Day prior to the commencement of the
Offer Period); and
· the opportunity for Keywords Studios Shareholders to realise the
entirety of their current investment upfront for cash as compared to the
risk-adjusted returns that may be generated for Keywords Studios Shareholders
by executing on Keywords Studios' strategy over the coming years.
In addition to the financial terms, the Keywords Studios Directors have also
taken into account the Bidco's intentions concerning Keywords Studios'
business, management team, employees and other stakeholders of the Company (as
detailed in section 13). The Keywords Studios Directors note the great
importance Bidco attaches to the skill and experience of Keywords Studios'
management and employees who will continue to be key to the success of
Keywords Studios.
Accordingly, following careful consideration of the above factors, the
Keywords Studios Directors intend unanimously to recommend that Keywords
Studios Shareholders vote in favour of the Scheme at the Court Meeting and
that Keywords Studios Shareholders vote in favour of the resolutions to be
proposed at the Keywords Studios General Meeting (or in the event the
Acquisition is implemented by way of an Offer, to accept or procure acceptance
of such Offer).
6 Irrevocable undertakings and letters of intent
As described above, Bidco has received irrevocable undertakings from the
Keywords Studios Directors to vote in favour of the Scheme at the Court
Meeting and the resolutions to be proposed at the Keywords Studios General
Meeting in respect of those Keywords Studios Shares that they legally and/or
beneficially hold which are under their control, in aggregate, representing
approximately 0.06 per cent. of Keywords Studios' issued ordinary share
capital on the Latest Practicable Date.
In addition to the irrevocable undertakings from the Keywords Studios
Directors described above, Bidco has received letters of intent from Franklin
Templeton and Pictet to vote in favour of the Scheme at the Court Meeting and
the resolutions to be proposed at the Keywords Studios General Meeting in
respect of 6,055,691 Keywords Studios Shares, representing approximately 7.57
per cent. of Keywords Studios' issued ordinary share capital on the Latest
Practicable Date.
In total, therefore, Bidco has procured irrevocable undertakings and letters
of intent to vote, or procure votes, in favour of the Scheme at the Court
Meeting and the resolutions to be proposed at the Keywords Studios General
Meeting in respect of 6,106,710 Keywords Studios Shares, in aggregate,
representing approximately 7.64 per cent. of Keywords Studios' issued ordinary
share capital on the Latest Practicable Date.
Further details of the irrevocable undertakings and letters of intent
described above, including the circumstances in which they cease to be
binding, are set out in Appendix 3.
7 Information on Bidco, EQT, CPP Investments and Rosa Investments
Bidco is a newly formed private limited company incorporated in England and
Wales. In due course, Bidco will be indirectly owned by EQT's BPEA Fund VIII,
and equity co-investors CPP Investments, acting through its wholly-owned
subsidiary CPPIB PHI4, and Rosa Investments. As at the Effective Date, it is
intended that Bidco will be owned in the following proportions: (i) EQT's BPEA
Fund VIII will indirectly own 51.0 per cent. and (ii) each of CPPIB PHI4 and
Rosa Investments will indirectly own 24.5 per cent.
EQT is a global private markets investment organisation focused on active
ownership strategies. With a Nordic heritage and a global mindset, EQT takes
an active approach to transforming companies. It works alongside management
teams to provide capital and expertise, drawing on its global network. Its
funds invest in portfolio companies, leveraging its deep sector expertise and
thirty years of experience to advance innovation and growth. On average, over
the past five years, EQT has seen double digit growth in its portfolio
companies underpinned by sources of value creation including sales expansion,
multiple expansion, margin expansion and debt pay-down.
EQT was founded in Sweden over thirty years ago with investment from the
Wallenberg family, industrialists who are leading owners of high-quality
international companies with Swedish roots, including Astra Zeneca, ABB and
Ericsson. The Wallenberg family's entrepreneurial mindset and philosophy of
long-term ownership has helped guide EQT's management philosophy, which is
underpinned by a set of strong values and a distinct corporate culture.
EQT manages and advises funds and vehicles that invest across the world with
the mission to future-proof companies, generate attractive returns and make a
positive impact with everything EQT does. EQT operates in more than 25
countries across Asia Pacific, Europe and the Americas and has over 1,000
employees, with a total AUM of €242bn* (Fee-generating AUM €132 billion).
EQT has a long and positive track record investing in the services and global
technology industries. EQT is a leading services investor, with US$33.7
billion invested to date into 88 services portfolio investments globally with
33 exits across M&A and IPOs. EQT also has deep expertise investing in
technology globally. Over the years, EQT has invested US$37.0 billion into 116
technology portfolio investments globally with 35 exits through the public and
private markets.
BPEA Fund VIII is part of EQT Private Capital Asia's flagship private equity
investment strategy, focused on large-cap buyouts. In October 2022, EQT
combined with BPEA and in January 2024, BPEA rebranded as EQT and is known as
EQT Private Capital Asia. With US$11.2 billion in capital commitments, BPEA
VIII is one of the largest funds ever raised in Asia-Pacific. EQT Private
Capital Asia's buyout strategy targets control buyouts of companies in the
pan-Asian region or with business links to Asia and takes a thematic approach
to investing, focused on services, technology and healthcare. Its core markets
include India, Japan, Korea, Southeast Asia and Australia, as well as
cross-border investments for which Asia represents a meaningful driver of
returns. Over the past 27 years, EQT Private Capital Asia has made more than
140 investments, and today, the current portfolio employs more than 400,000
people globally, with a strong focus on tech-enabled businesses with global
delivery footprints.
CPP Investments is a global professional investment management organisation
that invests the assets transferred to it by the CPP that are not currently
needed by the CPP to pay current benefits in the best interests of 22 million
contributors and beneficiaries. CPP Investments was incorporated in 1997 and
made its first investment in March 1999. In order to build a diversified
portfolio, CPP Investments invests in public equities, private equities, real
estate, infrastructure and fixed income instruments. Headquartered in Toronto,
with offices in Hong Kong, London, Luxembourg, Mumbai, New York City, San
Francisco, São Paulo and Sydney, CPP Investments is governed and managed
independently of the CPP and at arm's length from the government of Canada. As
at March 31, 2024, CPP Investments had C$632.3 billion (approximately £370
billion) assets under management, of which C$26.2 billion (approximately £15
billion) is invested in the UK. CPPIB PHI4 is a wholly-owned subsidiary of CPP
Investments, and is the entity through which CPP Investments will invest in
Bidco.
Rosa Investments is a private limited company incorporated in Singapore and an
indirect wholly-owned subsidiary of Temasek. Rosa Investments is the entity
through which Temasek will invest in Bidco. Temasek is a global investment
company with a net portfolio value of S$382 billion (approximately £232
billion) as at 31 March 2023. Founded in Singapore in 1974, Temasek operates
on commercial principles and invests thematically in line with long term
structural trends, with the aim of building a resilient and forward looking
portfolio that delivers sustainable returns over the long term. Temasek has
overall corporate credit ratings of Aaa/AAA by rating agencies Moody's
Investors Service and S&P Global Ratings respectively. Headquartered in
Singapore, Temasek has 13 offices in 9 countries around the world: Beijing,
Hanoi, Mumbai, Shanghai, Shenzhen, and Singapore in Asia; and London,
Brussels, Paris, New York, San Francisco, Washington DC, and Mexico City
outside Asia.
8 Information on Keywords Studios
Keywords Studios is a global provider of fully integrated creative and
technology-enabled solutions to the video games and entertainment industries.
Established in 1998, and now with over 70 facilities in 26 countries
strategically located in Asia, Australia, the Americas, and Europe, it
provides services across the entire content development life cycle through its
Create, Globalize and Engage divisions to a large blue-chip client base across
the globe.
Keywords Studios provides services to 24 of the top 25 most prominent games
companies and contributes to over 70 per cent. of the 2023 Game Awards
winners. Across the games and entertainment industry, clients include
Activision Blizzard, Bandai Namco, Bethesda, Electronic Arts, Epic Games,
Konami, Microsoft, Netflix, Riot Games, Square Enix, Supercell, TakeTwo,
Tencent and Ubisoft. Recent titles worked on include Starfield, Baldur's Gate
3, Diablo IV and Hogwarts Legacy.
Keywords Studios is a public limited company registered in England and Wales.
The Keywords Studios Shares are currently admitted to trading on AIM, a market
operated by the London Stock Exchange.
9 Keywords Studios trading update
As set out in the Keywords Studios Group's full year results, the Board is
confident in delivering strong overall revenue and profit growth in 2024, with
performance expected to be second half weighted as the sector emerges from the
slower content creation trends that are currently dampening industry spend and
therefore Keywords Studios Group growth.
The Keywords Studios Group has had a small number of larger game development
projects being deferred into H2 or cancelled, creating capacity gaps in Create
which were unable to be filled at short notice. This, together with ongoing
softer demand in Globalize and the relatively slow ramp-up in content
production in Hollywood, has meant that first half organic growth is now
expected to be slightly negative during H1. Reported revenue is still expected
to grow by around 7 per cent. in the first half.
The Keywords Studios Group is, however, increasingly seeing positive signs
across the industry with spend from larger clients continuing to grow
strongly, and anticipates a stronger recovery from the US strikes, which
reinforces its confidence in the second half performance. As a result, H2
organic growth is expected to be around 10 per cent, in-line with our
medium-term guidance. The Board continues to be confident in the Keywords
Studios Group's ability to outperform the market and deliver on its
medium-term guidance.
The Keywords Studios Group continues to closely manage costs, taking a broad
range of cost actions, including the restructuring of the go-to-market
approach in Globalize set out at the full year results, and expects full year
margins to be around 15 per cent. Due to the timing of the cost saving
programmes and the reduction of volumes, H1 adjusted operating margins are
expected to be lower, with H2 margins strong, as the impact of the cost
savings programmes and pick-up in volumes flow through.
The Keywords Studios Group continues to actively pursue M&A opportunities
and has a strong pipeline. It has signed a number of letters of intent with
high-quality businesses, and recently completed the acquisition of a small
game development studio in Australia as it continues to build out its offering
there. The Keywords Studios Group is confident in its ability to deploy in
excess of €100m on value accretive M&A this year.
10 Financing of the Acquisition
The cash consideration payable to Keywords Studios Shareholders under the
terms of the Acquisition will be financed by:
i. equity to be invested by investment vehicles managed by affiliates of
EQT, CPP Investments, acting through its wholly-owned subsidiary CPPIB PHI4,
and Rosa Investments and
ii. debt to be provided under the Facilities Agreement.
It is expected that on or following the Effective Date, certain of EQT's
equity commitments will be provided by equity co-investors in investment
vehicles managed by EQT (such co-investors would be passive and not be granted
any governance or control rights over Bidco or any member of the Bidco Group
or Keywords Studios Group).
J.P. Morgan Cazenove, as financial adviser to Bidco, is satisfied that
sufficient resources are available to Bidco to satisfy in full the Acquisition
Price payable to Keywords Studios Shareholders under the terms of the
Acquisition.
Further information on the financing of the Acquisition will be set out in the
Scheme Document.
11 Acquisition-related Arrangements
Confidentiality Agreement
On 2 May 2024, BPEA Fund VIII Limited (an affiliate of EQT) and Keywords
Studios entered into a Confidentiality Agreement in relation to the
Acquisition, pursuant to which, amongst other things, BPEA Fund VIII Limited
has undertaken to: (i) subject to certain exceptions, keep information
relating to Keywords Studios and the Acquisition confidential and not to
disclose it to third parties; and (ii) use such confidential information only
in connection with the Acquisition. These confidentiality obligations will
remain in force until the earlier of (a) completion of the Acquisition and (b)
2 May 2026. The Confidentiality Agreement also contains customary standstill
and non-solicitation undertakings.
Each of Temasek Capital Management and CPP Investments entered into a joinder
agreement to the Confidentiality Agreement, dated 8 May 2024 and 7 May 2024
respectively, in which they agreed to be bound by the Confidentiality
Agreement.
Clean Team and Joint Defence Agreement
Keywords Studios, BPEA Fund VIII Limited and their respective external legal
counsel entered into a Clean Team and Joint Defence Agreement, dated 21 May
2024, which was amended and restated to add Temasek Capital Management and its
external legal counsel as parties on 18 June 2024. The purpose of the
agreement is to ensure that the exchange or disclosure of certain materials
relating to the parties and in relation, in particular, to the regulatory and
antitrust workstreams, only takes place between their respective external
legal counsel 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.
Cooperation Agreement
On 3 July 2024, a Cooperation Agreement was entered into by Keywords Studios
and Bidco, pursuant to which, among other things: (i) Bidco has agreed to take
all required or necessary steps to promptly obtain the clearances and
approvals necessary and/or expedient to satisfy certain regulatory conditions
as soon as reasonably practicable and in any event, in sufficient time to
enable the Effective Date to occur by the Long Stop Date; (ii) Bidco and
Keywords Studios have agreed to certain undertakings to co-operate in relation
to such clearances and approvals; (iii) Bidco has agreed to provide Keywords
Studios with certain information for the purposes of the Scheme Document and
to otherwise assist Keywords Studios with the preparation of the Scheme
Document; (iv) Bidco has agreed to take all such steps as are permissible by
the Takeover Code and applicable law and are within its power that are
necessary to implement the Acquisition in accordance with, and subject to the
Takeover Code and the terms and conditions set out in, the Cooperation
Agreement, this Announcement and the Scheme Document; and (v) Bidco and
Keywords Studios have agreed to certain provisions if the Scheme should switch
to an Offer. The Cooperation Agreement also contains provisions that will
apply in respect of employee-related matters, the Keywords Studios Share Plans
and any other Keywords Studios Shares that may be issued pursuant to existing
contractual agreements.
The Cooperation Agreement can be terminated in a number of customary
circumstances, including (subject to certain exceptions): (i) if Bidco and
Keywords Studios agree in writing to terminate the Cooperation Agreement; (ii)
if the Effective Date has not occurred on or before the Long Stop Date; (iii)
if, prior to the Long Stop Date, any Condition becomes incapable of
satisfaction (in circumstances where the invocation of the relevant Condition
is permitted by the Panel); (iv) at Bidco's election, if the Keywords Studios
Directors withdraw, adversely modify or qualify the recommendation provided in
this Announcement and at such time no third party has announced a firm
intention to make an offer or a revised offer (whether or not subject to the
satisfaction or waiver of any pre-conditions) and no possible offer
announcement under Rule 2.4 of the Takeover Code has been announced in
relation to Keywords Studios in respect of any possible offer by a third
party; or (v) if the Acquisition, with the permission of the Panel, is
withdrawn or lapses in accordance with its terms prior to the Long Stop Date
(other than in certain limited circumstances).
Bid Conduct Agreement
Bidco, Houting TopCo B.V., BPEA Fund VIII Limited, CPPIB PHI4, and Rosa
Investments have entered into the Bid Conduct Agreement, pursuant to which
they have agreed certain principles in accordance with which they intend to
cooperate in respect of the Acquisition.
The terms of the Bid Conduct Agreement include an agreement not to pursue a
competing proposal to the Acquisition with respect to Keywords Studios or take
any action to frustrate the Acquisition or directly or indirectly solicit,
encourage or otherwise facilitate any enquiries or the making of any offer or
proposal by a third party to make a competing proposal to the Acquisition, in
each case for so long as the Bid Conduct Agreement is in force.
The Bid Conduct Agreement will terminate in certain circumstances, including
at such time as the Acquisition is withdrawn or lapses; at such time as a
competing bid in relation to Keywords Studios becomes effective or
unconditional in all respects; or at such time as the parties thereto mutually
agree.
12 Disclosure of interests in Keywords Studios
Except for the irrevocable undertakings referred to in paragraph 6 above and
Appendix 3, as at the close of business on the Latest Practicable Date,
neither Bidco, nor any of its directors, nor, so far as Bidco is aware, any
person treated as acting in concert (within the meaning of the Takeover Code)
with it for the purposes of the Acquisition: (i) had any interest in or right
to subscribe for or had borrowed or lent any Keywords Studios Shares or
securities convertible or exchangeable into Keywords Studios Shares, or (ii)
had any short positions in respect of relevant securities of Keywords Studios
(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 purchase or take
delivery, or (iii) has borrowed or lent any relevant securities of Keywords
Studios (including, for these purposes, any financial collateral arrangements
of the kind referred to in Note 4 on Rule 4.6 of the Takeover Code) save for
any borrowed shares which have been either on-lent or resold, or (iv) is a
party to any dealing arrangement of the kind referred to in Note 11 on the
definition of acting in concert in the Takeover Code.
13 Directors, management, employees, pensions, research and development and locations
Bidco's strategic plans for Keywords Studios
EQT has an extensive history of partnering with management teams to
future-proof businesses and create value for all stakeholders. As set out in
paragraph 3, Bidco believes that Keywords Studios is a leading end-to-end
gaming services provider, well placed to evolve into a leading integrated
provider, with a clear vision led by an experienced and strong management
team.
Bidco believes that the successful execution of Keywords Studios' strategy can
be enhanced. Private ownership can allow access to additional capital and
resources to accelerate the longer-term potential of the Keywords Studios
Group.
Prior to this Announcement, consistent with market practice, Bidco was granted
access to Keywords Studios' senior management for the purposes of confirmatory
due diligence. Whilst this has been sufficient to formulate its intention to
support Keywords Studios' ongoing strategy following completion of the
Acquisition, Bidco will work with Keywords Studios management to evolve the
strategy.
Therefore, following the Acquisition becoming Effective, Bidco intends to work
with Keywords Studios' management to undertake an in-depth review of the
business and operations of the Keywords Studios Group. Bidco expects that this
evaluation will be completed within approximately six months from the
Effective Date. In addition to improving Bidco's understanding of the
business, its evaluation will include:
· evaluating opportunities to deepen relationships with Keywords
Studios' customers and leverage Keywords Studios' strength across the gaming
services value chain; and
· assessing opportunities that will support Keywords Studios'
growth ambitions and overall strategy, particularly in Keywords Studios'
potential for further geographical expansion.
Immediately following completion of the Acquisition, Bidco will focus on
continuing to invest in Keywords Studios' end-to-end capabilities, quality of
service and technological innovation that would enable Keywords Studios to be
at the forefront of the quickly evolving industry.
Employees and management
Bidco attaches great importance to the skill and experience of Keywords
Studios' management and employees and recognises that the employees and
management of Keywords Studios have been and will continue to be key to the
continued success of the Keywords Studios Group.
Once Keywords Studios ceases to be a company whose shares are traded on AIM,
as is customary, a very limited number of traded company-related functions may
be reduced to reflect Keywords Studios' new status as a private company. This
may lead to a very limited reduction in the headcount of the Keywords Studios
Group in respect of employees currently fulfilling such traded company-related
functions. Bidco confirms that its intention is for any individuals impacted
to be treated in a manner consistent with Keywords Studios' high standards,
culture and practices, including, where possible and appropriate offering
affected individuals alternative roles within the Keywords Studios Group.
Other than as described above and as consistent with Keywords Studios
management's current plans, Bidco does not intend to initiate any other
material reductions to the Keywords Studios Group's headcount or changes to
the conditions of employment or the balance of skills and functions of the
employees and management of the Keywords Studios Group.
It is intended that, with effect from the Effective Date and once Keywords
Studios becomes a private company, each of the Non-Executive Directors of
Keywords Studios shall resign from their office.
Existing employment rights and pensions
Bidco confirms that, following the Acquisition becoming Effective, the
existing contractual and statutory employment rights, including pension
rights, of all Keywords Studios management and employees will be fully
safeguarded in accordance with applicable law.
Bidco does not intend to make any changes to the current employer pension
arrangements. In line with statutory requirements in France, Italy and India,
Keywords Studios is required to maintain employee defined benefit termination
payment schemes. Elsewhere, Bidco intends to maintain employee defined
contribution schemes.
Headquarters, locations, fixed assets and research and development
Following the Acquisition becoming Effective, Bidco intends that Keywords
Studios will continue to operate as a standalone business.
Other than as described above, Bidco has no intention to initiate any change
in the locations of Keywords Studios' fixed assets or places of business.
Bidco also has no intention to change the location or functions of Keywords
Studios' headquarters in Dublin, other than in respect of the public
company-related functions as described above. Bidco intends for Keywords
Studios to maintain a level of expenditure on research and development which
is at least consistent with past practice since it believes this function in
particular will be a key driver of innovation and growth.
Trading facilities
Keywords Studios Shares are currently admitted to trading on AIM. As set out
in paragraph 16, subject to the Scheme becoming Effective, an application will
be made to the London Stock Exchange to cancel the admission to trading of
Keywords Studios Shares on AIM and steps will be taken to re-register Keywords
Studios as a private company.
Management incentivisation arrangements
As noted above, Bidco attaches great importance to the skills, experience and
expertise of the existing employees of Keywords Studios. Whilst there have
been limited discussions with Keywords Studios senior management regarding
common market practice in this area, no terms have been agreed. Bidco expects
to put in place certain incentive arrangements for the management of Keywords
Studios following the Effective Date and for the retention of key employees.
No statements in this paragraph 13 constitute "post-offer undertakings" for
the purpose of Rule 19.5 of the Takeover Code.
14 Keywords Studios Share Plans
Participants in the Keywords Studios Share Plans will be contacted regarding
the effect of the Acquisition on their rights under the Keywords Studios Share
Plans and provided with further details concerning the proposals that will be
made to them in due course. A summary of the effect of the Acquisition on and
its impact in relation to, the operation of the Keywords Studios Share Plans,
is set out in Appendix 4. Further details about the proposals will be included
in the Scheme Document (or, where relevant, the offer document) and in
separate letters to be sent to participants in the Keywords Studios Share
Plans.
15 Scheme process
It is intended that the Acquisition will be effected by means of a
Court-sanctioned scheme of arrangement between Keywords Studios and Scheme
Shareholders under Part 26 of the Companies Act.
The Acquisition is subject to the Conditions and certain further terms set out
in Appendix 1 to this Announcement and to the full terms and conditions to be
set out in the Scheme Document, and will only become Effective if, among other
things, the following events occur on or before the Long Stop Date (or such
later date as Bidco and Keywords Studios may, with the consent of the Panel,
agree and, if required, the Court may approve):
(i) the approval of a majority in number of the Scheme Shareholders present and voting (and entitled to vote), either in person or by proxy, at the Court Meeting (or any adjournment thereof), representing not less than 75 per cent. in value of the Scheme Shares held by such Scheme Shareholders;
(ii) the resolution(s) necessary to approve and implement the Scheme as set out in the notice of the Keywords Studios General Meeting (including, without limitation, the special resolution(s) to be specified therein) being passed by the requisite majority or majorities of Keywords Studios Shareholders at the Keywords Studios General Meeting (or any adjournment thereof);
(iii) following the Court Meeting and the Keywords Studios General Meeting and satisfaction and/or waiver (where applicable) of the other Conditions, the Scheme is sanctioned by the Court (with or without modification but subject to any modification being on terms acceptable to Keywords Studios and Bidco); and
(iv) following the sanction of the Scheme by the Court, the delivery of a copy of the Court Order to the Registrar of Companies.
The Conditions in paragraphs 1 and 2 of Appendix 1 to this Announcement
provide that the Scheme will lapse (under the authority of Rule 13.5(b) of the
Takeover Code) if:
· the Court Meeting and the Keywords Studios General Meeting are
not held on or before the 22(nd) day after the expected date of such meetings
as set out in the Scheme Document in due course (or such later date (if any)
as Bidco may specify, with the agreement of Keywords Studios or, in a
competitive situation, with the consent of the Panel, and the approval of the
Court if such approval is required);
· the Sanction Hearing to approve the Scheme is not held on or
before the 22(nd) day after the expected date of the Sanction Hearing as set
out in the Scheme Document (or such later date (if any) as Bidco may specify,
with the agreement of Keywords Studios or, in a competitive situation, with
the consent of the Panel, and the approval of the Court if such approval is
required); or
· the Scheme does not become Effective by 11.59 pm on the Long Stop
Date (or such later date as Bidco and Keywords Studios may, with the consent
of the Panel, agree and (if required) the Court may allow).
The deadlines for the timing of the Court Meeting, the Keywords Studios
General Meeting and the Sanction Hearing as set out above may be waived by
Bidco or amended to such later date as Bidco may specify with the agreement of
Keywords Studios or, in a competitive situation, with the consent of the
Panel, and the approval of the Court if such approval is required.
If any Condition in paragraph 2 of Part A of Appendix 1 to this Announcement
is not capable of being satisfied by the date specified therein, Bidco shall
make an announcement through a Regulatory Information Service as soon as
practicable and, in any event, by not later than 8.00 a.m. on the Business Day
following the date so specified, stating whether Bidco has invoked that
Condition, (where applicable) waived that Condition or, with the agreement of
Keywords Studios, or, in a competitive situation, with the consent of the
Panel, specified a new date by which that Condition must be satisfied.
Once the necessary approvals from Keywords Studios Shareholders have been
obtained and the other Conditions have been satisfied or (where applicable)
waived and the Scheme has been approved by the Court, the Scheme will become
Effective upon delivery of a copy of the Court Order to the Registrar of
Companies. Subject to the satisfaction of the Conditions, the Scheme is
expected to become Effective in the fourth quarter of 2024.
Upon the Scheme becoming Effective: (i) it will be binding on all Keywords
Studios Shareholders, irrespective of whether or not they attended or voted at
the Court Meeting or the Keywords Studios General Meeting (and if they
attended and voted, whether or not they voted in favour); and (ii) share
certificates in respect of Keywords Studios Shares will cease to be valid and
entitlements to Keywords Studios Shares held within the CREST system will be
cancelled. In accordance with the applicable provisions of the Takeover Code,
the consideration for the transfer of the Scheme Shares to Bidco will be
despatched no later than 14 days after the Effective Date.
Any Keywords Studios Shares issued before the Scheme Record Time will be
subject to the terms of the Scheme. The resolution(s) to be proposed at the
Keywords Studios General Meeting will, among other things, provide that the
Articles be amended to incorporate provisions requiring any Keywords Studios
Shares issued after the Scheme Record Time (other than to Bidco and/or its
nominees) to be automatically transferred to Bidco on the same terms as the
Scheme (other than terms as to timings and formalities). The provisions of the
Articles (as amended) will avoid any person (other than Bidco and its
nominees) holding Keywords Studios Shares after the Effective Date.
Further details of the Scheme, including expected times and dates for each of
the Court Meeting, the Keywords Studios General Meeting, and the Sanction
Hearing, together with notices of the Court Meeting and the Keywords Studios
General Meeting, will be set out in the Scheme Document. It is expected that
the Scheme Document and the Forms of Proxy accompanying the Scheme Document
will be published as soon as practicable and in any event within 28 days of
this Announcement (or such later date as Bidco and Keywords Studios may, with
the consent of the Panel, agree and, if required, the Court may approve).
16 Dividends
If any dividend or distribution is announced, declared, made or paid in
respect of Keywords Studios Shares on or after the date of this Announcement,
Bidco will reduce the Acquisition Price by the amount of such dividend or
other distribution. If any such dividend or distribution is paid after the
date of this Announcement and the Acquisition Price is so reduced, Keywords
Studios Shareholders will be entitled to retain any such dividend or other
distribution and any reference in this Announcement to the consideration
payable under the Scheme shall be deemed to be a reference to the
consideration as so reduced.
The Acquisition Price will not be reduced in circumstances where the Keywords
Studios Shares are or will be acquired pursuant to the Scheme on a basis which
entitles Bidco to receive a dividend or other distribution in respect of its
Keywords Studios Shares after the Scheme has become Effective and to retain
such dividend or other distribution.
17 Cancellation of admission to trading on AIM and re-registration
Prior to the Scheme becoming Effective, Keywords Studios will make an
application for the cancellation of trading of the Keywords Studios Shares on
AIM, in each case to take effect from or shortly after the Effective Date.
The last day of dealings in Keywords Studios Shares on AIM is expected to be
the Business Day immediately prior to the Effective Date and no transfers will
be registered after 6.00 p.m. on that date.
On the Effective Date, share certificates in respect of Keywords Studios
Shares shall cease to be valid and entitlements to Keywords Studios Shares
held within the CREST system shall be cancelled.
It is also proposed that, following the Effective Date and after the
cancellation of trading of the Keywords Studios Shares on AIM, Keywords
Studios will be re-registered as a private limited company.
18 Documents available on website
Copies of the following documents shall be made available on Keywords Studios'
website, subject to certain restrictions relating to persons resident in
Restricted Jurisdictions at
https://www.keywordsstudios.com/en/investors/investors-home/potential-offer
(https://www.keywordsstudios.com/en/investors/investors-home/potential-offer)
and in any event no later than noon on the Business Day following this
Announcement, until the end of the Acquisition:
· this Announcement;
· the irrevocable undertakings listed in Appendix 3 to this
Announcement;
· the Confidentiality Agreement and Joinder Agreements;
· the Cooperation Agreement;
· the Clean Team and Joint Defence Agreement;
· the Bid Conduct Agreement;
· the documents relating to the financing of the Acquisition
referred to in paragraph 10 above; and
· the consent letters from each of Deutsche Numis, Robey Warshaw
and J.P. Morgan Cazenove to being named in this Announcement.
Neither the content of the website referred to in this Announcement, nor any
website accessible from hyperlinks, is incorporated into or forms part of this
Announcement.
19 General
Bidco reserves the right to elect, with the consent of the Panel (where
necessary) and subject to the terms of the Cooperation Agreement, to implement
the Acquisition by way of an Offer as an alternative to the Scheme. In such an
event, an Offer will be implemented on substantially 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 terms of the
Cooperation Agreement) an acceptance condition set at 75 per cent. of Keywords
Studios Shares (or such lesser percentage as may be determined by Bidco in
accordance with the terms of the Cooperation Agreement).
The Acquisition will be made subject to the Conditions and further terms set
out in Appendix 1 to this Announcement and to 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 to this Announcement. A summary of
the irrevocable undertakings and letters of intent given in relation to the
Acquisition is contained in Appendix 3 to this Announcement. Appendix 4
contains a summary of proposals in relation to the Keywords Studios Share
Schemes. The details of the Keywords Studios Profit Forecast included in
Appendix 5. Certain terms used in this Announcement are defined in Appendix 6
to this Announcement.
Deutsche Numis, Robey Warshaw and J.P. Morgan Cazenove have each given and not
withdrawn their consent to the publication of this Announcement with the
inclusion herein of the references to their names in the form and context in
which they appear.
Enquiries:
EQT
J.P. Morgan Cazenove (Financial Adviser to Bidco) +44 (0) 20 3493 8000
Dwayne Lysaght / Jonty Edwards / Edward Hatter
FGS Global (PR Adviser to EQT and Bidco) +44 (0) 20 7251 3801
Faeth Birch / Amanda Healy / Sophia Johnston EQT-LON@fgsglobal.com
Keywords Studios Plc via Deutsche Numis / Robey Warshaw
Giles Blackham, Director of Investor Relations
Deutsche Numis (Joint Financial Adviser, NOMAD and Joint Corporate Broker to +44 (0) 20 7260 1000
Keywords Studios)
Stuart Skinner / Alec Pratt / William Baunton / Alexander Kladov
Robey Warshaw LLP (Joint Financial Adviser to Keywords Studios) +44 (0) 20 7317 3900
Simon Robey / Daniel Zumbuehl
MHP Group (PR Adviser to Keywords Studios) +44 (0) 20 3128 8100
Katie Hunt / Eleni Menikou / Charles Hirst keywords@mhpgroup.com (mailto:keywords@mhpgroup.com)
DLA Piper UK LLP is acting as legal adviser to Keywords Studios in connection
with the Acquisition.
Simpson Thacher & Bartlett LLP is acting as legal adviser to EQT and
Bidco. Kirkland & Ellis is acting as finance counsel to EQT and Houting
B.V. Freshfields Bruckhaus Deringer LLP is acting as legal adviser to CPP
Investments.
Allen Overy Shearman Sterling is acting as finance counsel to the Arranger (as
defined in the Facilities Agreement).
Important Notices
J.P. Morgan Securities plc, which conducts its UK investment banking business
as J.P. Morgan Cazenove ("J.P. Morgan Cazenove"), is authorised in the United
Kingdom by the Prudential Regulation Authority ("PRA") and regulated by the
PRA and the FCA. J.P. Morgan Cazenove is acting as financial adviser
exclusively for Bidco and no one else in connection with the Acquisition and
will not regard any other person as its client in relation to the Acquisition
and will not be responsible to anyone other than Bidco for providing the
protections afforded to clients of J.P. Morgan Cazenove or its affiliates, nor
for providing advice in relation to the Acquisition or any other matter or
arrangement referred to herein.
Numis Securities Limited (trading as "Deutsche Numis"), which is authorised
and regulated in the United Kingdom by the Financial Conduct Authority
("FCA"), is acting exclusively for Keywords Studios as joint financial
advisor, NOMAD and joint corporate broker and no one else in connection with
the matters set out in this Announcement and will not regard any other person
as its client in relation to the matters in this Announcement and will not be
responsible to anyone other than Keywords Studios for providing the
protections afforded to clients of Deutsche Numis, nor for providing advice in
relation to any matter referred to herein. Neither Deutsche Numis nor any of
its affiliates (nor any of 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 Deutsche Numis in connection
with this Announcement, any statement contained herein or otherwise.
Robey Warshaw LLP ("Robey Warshaw"), which is authorised and regulated in the
United Kingdom by the FCA, is acting as financial adviser exclusively for
Keywords Studios and no one else in connection with the matters referred to in
this Announcement and will not regard any other person as its client in
relation to the matters referred to in this Announcement and will not be
responsible to anyone other than Keywords Studios for providing the
protections afforded to clients of Robey Warshaw, nor for providing advice in
relation to the matters referred to in this Announcement.
Further Information
This Announcement is for information purposes only 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 Keywords
Studios in any jurisdiction in contravention of applicable law. The
Acquisition will be implemented solely pursuant to the terms of the Scheme
Document (or, if the Acquisition is implemented by way of an 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 of the information contained in
the Scheme Document (or, if the Acquisition is implemented by way of an Offer,
the offer document).
This Announcement does not constitute a prospectus, prospectus equivalent
document or exempted document.
This Announcement contains inside information in relation to Keywords Studios
for the purposes of Article 7 of the Market Abuse Regulation. The person
responsible for arranging the release of this Announcement on behalf of
Keywords Studios is Gavin White, Company Secretary. Keywords Studios' Legal
Entity Identifier is 2138007VR9ZYCWS7VE12.
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, accountant
or independent financial adviser duly authorised under the Financial Services
and Markets Act 2000 (as amended) if you are resident in the United Kingdom
or, if not, from another appropriately authorised independent financial
adviser.
Overseas Shareholders
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 of, and observe, any applicable legal or regulatory
requirements. Any failure to comply with such requirements 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 in accordance
with and for the purpose of complying with English law, the Takeover Code, the
Market Abuse Regulation, the AIM Rules for Companies and the Disclosure
Guidance and Transparency Rules and information disclosed may not be the same
as that which would have been prepared in accordance with the laws of
jurisdictions outside England.
The availability of the Acquisition to Keywords Studios Shareholders who are
not resident in and citizens of the UK may be affected by the laws of the
relevant jurisdictions in which they are located or of which they are
citizens. Persons who are not resident in the UK should inform themselves of,
and observe, any applicable legal or regulatory requirements of their
jurisdictions. In particular, the ability of persons who are not resident in
the UK to vote their Keywords Studios 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. Further
details in relation to Overseas Shareholders will be contained in the Scheme
Document (or, if the Acquisition is implemented by way of an Offer, the offer
document).
Unless otherwise determined by Bidco or required by the Takeover Code, and
permitted by applicable law and regulation, the Acquisition will not be made
available, directly or indirectly, in, into or from a Restricted Jurisdiction
where to do so would violate the laws in that jurisdiction and no person may
vote in favour of the Scheme by any such use, means, instrumentality or from
within a Restricted Jurisdiction or any other jurisdiction if to do so would
constitute a violation of the laws of that jurisdiction. Copies of this
Announcement and any formal documentation relating to the Acquisition are not
being, and must not be, directly or indirectly, mailed or otherwise forwarded,
distributed or sent in or into or from any Restricted Jurisdiction and persons
receiving such documents (including, without limitation, agents, custodians,
nominees and trustees) must not mail or otherwise forward, distribute or send
it 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 an Offer (unless otherwise permitted by applicable
law and regulation), the Offer may not be made directly or indirectly, in or
into, or by the use of mails or any means or instrumentality (including, but
not limited to, facsimile, e-mail 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 the Offer may not be capable of acceptance by any such use, means,
instrumentality or facilities.
Further details in relation to Overseas Shareholders will be included in the
Scheme Document (or, if the Acquisition is implemented by way of an Offer, the
offer document).
Notice to U.S. Keywords Studios Shareholders
The Acquisition relates to the shares of an English company and is being made
by means of a scheme of arrangement provided for under the laws of England and
Wales. A transaction effected by means of a scheme of arrangement is not
subject to the tender offer or proxy solicitation rules under the U.S.
Securities Exchange Act of 1934 ("U.S. Exchange Act"). Accordingly, the
Acquisition is subject to the disclosure requirements and practices applicable
in the UK to schemes of arrangement which differ from the disclosure
requirements of the U.S. tender offer and proxy solicitation rules.
The financial information included in this Announcement has been prepared in
accordance with accounting standards applicable in the United Kingdom and thus
may not be comparable to financial information of U.S. companies or companies
whose financial statements are prepared in accordance with generally accepted
accounting principles in the United States.
The Acquisition may, in certain circumstances, instead be carried out by way
of an Offer under the laws of England and Wales. If, in the future, Bidco
exercises its right, with the consent of the Panel (if required), to implement
the Acquisition by way of an Offer, such Offer will be made in compliance with
the applicable U.S. laws and regulations, including any applicable exemptions
under the U.S. Exchange Act. Such a takeover would be made in the United
States by Bidco and no one else.
In the event that the Acquisition is implemented by way of an Offer, in
accordance with normal UK practice and pursuant to Rule 14e-5(b) of the U.S.
Exchange Act, Bidco, certain affiliated companies or their nominees, or their
brokers (acting as agents), may from time to time make certain purchases of,
or arrangements to purchase, Keywords Studios Shares outside of the U.S.,
other than pursuant to the Acquisition, until the date on which the
Acquisition becomes Effective, lapses or is otherwise withdrawn. 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 United Kingdom, will be
reported to a Regulatory Information Service and will be available on the
London Stock Exchange website, www.londonstockexchange.com
(http://www.londonstockexchange.com) . Also, in accordance with Rule 14e-5(b)
of the U.S. Exchange Act, Deutsche Numis and J.P. Morgan Cazenove will
continue to act as exempt principal traders in Keywords Studios Shares on the
London Stock Exchange.
It may be difficult for U.S. holders of Keywords Studios Shares to enforce
their rights and any claim arising out of the U.S. federal laws, since Bidco
and Keywords Studios are organized under the laws of a non-U.S. jurisdiction,
some or all of their respective officers and directors may be residents of a
non-U.S. jurisdiction and most of their respective assets are located outside
of the United States. U.S. holders of Keywords Studios Shares may not be able
to sue a non-U.S. company or its officers or directors in a non-U.S. court for
violations of the U.S. securities laws. Further, it may be difficult to compel
a non-U.S. company and its affiliates to subject themselves to a U.S. court's
judgement.
U.S. Keywords Studios Shareholders also should be aware that the transaction
contemplated herein may have tax consequences in the U.S. and, that such
consequences, if any, are not described herein. U.S. Keywords Studios
Shareholders are urged to consult with legal, tax and financial advisers in
connection with making a decision regarding this transaction.
Forward Looking Statements
This Announcement (including information incorporated by reference in this
Announcement), oral statements made regarding the Acquisition, and other
information published by Bidco and Keywords Studios contain statements which
are, or may be deemed to be, "forward-looking statements". Forward-looking
statements are prospective in nature and are not based on historical facts,
but rather on current expectations and projections of the management of Bidco
and Keywords Studios about future events, and are therefore subject to risks
and uncertainties which could cause actual results to differ materially from
the future results expressed or implied by the forward-looking statements.
The forward-looking statements contained in this Announcement include
statements relating to the expected effects of the Acquisition on Bidco and
Keywords Studios (including their future prospects, developments and
strategies), 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
"prepares", "plans", "expects" or "does not expect", "is expected", "is
subject to", "budget", "projects", "synergy", "strategy", "scheduled", "goal",
"estimates", "forecasts", "cost-saving", "intends", "anticipates" or "does not
anticipate", or "believes", or variations of such words and phrases or
statements that certain actions, events or results "may", "could", "should",
"would", "might" or "will" be taken, occur or be achieved. Forward looking
statements may include statements relating to the following: (i) future
capital expenditures, expenses, revenues, earnings, synergies, economic
performance, indebtedness, financial condition, dividend policy, losses and
future prospects; (ii) business and management strategies and the expansion
and growth of Bidco's, Keywords Studios', any member of the Bidco Group's or
any member of the Keywords Studios Group's operations and potential synergies
resulting from the Acquisition; and (iii) the effects of global economic
conditions and governmental regulation on Bidco's, Keywords Studios', any
member of the Bidco Group's or any member of the Keywords Studios Group's
business.
Although Bidco and Keywords Studios believe that the expectations reflected in
such forward-looking statements are reasonable, Bidco and Keywords Studios can
give no assurance that such expectations will prove to be correct. By their
nature, forward-looking statements involve risk and uncertainty because they
relate to events and depend on circumstances that will occur in the future.
There are a number of factors that could cause actual results and developments
to differ materially from those expressed or implied by such forward-looking
statements.
These factors include, but are not limited to: the ability to complete the
Acquisition; the ability to obtain requisite regulatory and shareholder
approvals and the satisfaction of other Conditions on the proposed terms and
schedule; changes in the global political, economic, business and competitive
environments and in market and regulatory forces; changes in future exchange
and interest rates; changes in tax rates; future business combinations or
disposals; changes in general economic and business conditions; changes in the
behaviour of other market participants; changes in the anticipated benefits
from the Acquisition not being realised as a result of changes in general
economic and market conditions in the countries in which Bidco Group and
Keywords Studios Group operate, weak, volatile or illiquid capital and/or
credit markets, changes in tax rates, interest rate and currency value
fluctuations, the degree of competition in the geographic and business areas
in which Bidco Group and Keywords Studios Group operate and changes in laws or
in supervisory expectations or requirements. Other unknown or unpredictable
factors could cause actual results to differ materially from those expected,
estimated or projected in the forward-looking statements. If any one or more
of these risks or uncertainties materialises or if any one or more of the
assumptions proves incorrect, actual results may differ materially from those
expected, estimated or projected. Such forward-looking statements should
therefore be construed in the light of such factors. Neither Bidco nor
Keywords Studios, nor any of their respective associates or directors,
officers or advisers, provides any representation, assurance or guarantee that
the occurrence of the events expressed or implied in any forward-looking
statements in this Announcement will actually occur. You are cautioned not to
place any reliance on these forward-looking statements.
Specifically, statements of estimated cost savings and synergies related to
future actions and circumstances, by their nature, involve risks,
uncertainties and contingencies. As a result, the cost savings and synergies
referred to may not be achieved, may be achieved later or sooner than
estimated, or those achieved could be materially different from those
estimated. Due to the scale of the Keywords Studios Group, there may be
additional changes to the Keywords Studios Group's operations. As a result,
and given the fact that the changes relate to the future, the resulting cost
synergies may be materially greater or less than those estimated.
Other than in accordance with their legal or regulatory obligations, neither
Bidco nor Keywords Studios is under any obligation, and Bidco and Keywords
Studios expressly disclaim any intention or obligation, to update or revise
any forward-looking statements, whether as a result of new information, future
events or otherwise.
No Profit Forecasts or Profit Estimates or Quantified Financial Benefit
Statements
The Keywords Studios Profit Forecast is a profit forecast for the purposes of
Rule 28 of the Takeover Code. As required by Rule 28.1 of the Takeover Code,
the assumptions on which the Keywords Studios Profit Forecast is stated are
set out in Appendix 5 of this announcement.
Other than the Keywords Studios Profit Forecast, no statement in this
Announcement is intended as a profit forecast, profit estimate or quantified
financial benefits statement for any period and no statement in this
Announcement should be interpreted to mean that earnings or earnings per share
for Keywords Studios for the current or future financial years would
necessarily match or exceed the historical published earnings or earnings per
share for Keywords Studios.
Disclosure Requirements of the Takeover Code
Under Rule 8.3(a) of the Takeover Code, any person who is interested in 1 per
cent. 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 p.m. (London time) on the 10th Business Day following the
commencement of the Offer Period and, if appropriate, by no later than 3.30
p.m. (London time) on the 10th Business Day following the announcement in
which any securities exchange offeror is first identified. Relevant persons
who deal in the relevant securities of the offeree company or of a securities
exchange offeror prior to the deadline for making an Opening Position
Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Takeover Code, any person who is, or becomes,
interested in 1 per cent. 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, 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 p.m. (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 Panel's website at
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. If you are in any doubt as to whether you are
required to make an Opening Position Disclosure or a Dealing Disclosure, you
should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129.
Electronic Communications
Please be aware that addresses, electronic addresses and certain information
provided by Keywords Studios Shareholders, persons with information rights and
other relevant persons for the receipt of communications from Keywords Studios
may be provided to Bidco during the Offer Period as required under Section 4
of Appendix 4 of the Takeover Code to comply with Rule 2.11(c) of the Takeover
Code.
Publication on Website and Availability of Hard Copies
A copy of this Announcement and the documents required to be published by Rule
26 of the Takeover Code shall be made available subject to certain
restrictions relating to persons resident in Restricted Jurisdictions on
Keywords Studios' website at
https://www.keywordsstudios.com/en/investors/investors-home/potential-offer
(https://www.keywordsstudios.com/en/investors/investors-home/potential-offer)
by no later than 12 noon (London time) on the Business Day following the date
of this Announcement. For the avoidance of doubt, the contents of the websites
referred to in this Announcement are not incorporated into and do not form
part of this Announcement.
In accordance with Rule 30.3 of the Takeover Code, Keywords Studios
Shareholders, persons with information rights and participants in the Keywords
Studios Share Plans may request a hard copy of this Announcement by contacting
Gavin White, Company Secretary during business hours on +44 (0) 7881 330263 or
by submitting a request in writing to Keywords Studios Plc, 4th Floor, 110
High Holborn, London, WC1V 6JS. In accordance with Rule 30.3 of the Takeover
Code, a person so entitled may also request that all future documents,
announcements and information in relation to the Acquisition should be sent to
them in hard copy form. If you have received this Announcement in electronic
form or via a website notification, hard copies of this Announcement and any
document or information incorporated by reference into this document will not
be provided unless such a request is made.
Rounding
Certain figures included in this Announcement have been subjected to rounding
adjustments. Accordingly, figures shown for the same category presented in
different tables may vary slightly and figures shown as totals in certain
tables may not be an arithmetic aggregation of the figures that precede them.
Rule 2.9 Disclosure
In accordance with Rule 2.9 of the Takeover Code, Keywords Studios confirms
that as at the date of this Announcement, it has in issue 79,963,864 Keywords
Studios Shares admitted to trading on AIM under ISIN code GB00BBQ38507.
Keywords Studios does not hold any ordinary shares in treasury.
Disclaimer
The information contained herein does not constitute an offer to sell, nor a
solicitation of an offer to buy, any security, and may not be used or relied
upon in connection with any offer or solicitation. Any offer or solicitation
in respect of EQT and EQT funds will be made only through a confidential
private placement memorandum and related documents which will be furnished to
qualified investors on a confidential basis in accordance with applicable laws
and regulations. The information contained herein is not for publication or
distribution to persons in the U.S. Any securities referred to herein have not
been and will not be registered under the U.S. Securities Act of 1933, as
amended, and may not be offered or sold without registration thereunder or
pursuant to an available exemption therefrom. Any offering of securities to be
made in the U.S. would have to be made by means of an offering document that
would be obtainable from the issuer or its agents and would contain detailed
information about the issuer of the securities and its management, as well as
financial information. The securities may not be offered or sold in the U.S.
absent registration or an exemption from registration.
The Acquisition will be subject to English law, the jurisdiction of the Court,
and the applicable requirements of the Takeover Code, the Panel, the London
Stock Exchange, the FCA, the AIM Rules for Companies and the Registrar of
Companies.
General
Bidco reserves the right to elect, with the consent of the Panel (where
necessary) and subject to the terms of the Cooperation Agreement, to implement
the Acquisition by way of an Offer as an alternative to the Scheme. In such an
event, an Offer will be implemented on substantially 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 terms of the
Cooperation Agreement) an acceptance condition set at 75 per cent. of Keywords
Studios Shares (or such lesser percentage as may be determined by Bidco in
accordance with the terms of the Cooperation Agreement). If the Acquisition is
effected by way of an Offer, and such an Offer becomes or is declared
unconditional in all respects and sufficient acceptances are received, Bidco
intends to exercise its rights to apply the provisions of Chapter 3 of Part 28
of the Companies Act so as to acquire compulsorily the remaining Keywords
Studios Shares in respect of which the Offer has not been accepted.
Investors should be aware that Bidco may purchase Keywords Studios Shares
otherwise than under any Offer or the Scheme, including pursuant to privately
negotiated purchases.
APPENDIX 1
CONDITIONS AND FURTHER TERMS OF THE SCHEME AND THE ACQUISITION
Part A: Conditions to the Scheme and Acquisition
1. The Acquisition will be conditional upon the Scheme
becoming unconditional and becoming Effective, subject to the provisions of
the Takeover Code, by no later than 11.59 p.m. on the Long Stop Date.
Conditions of the Scheme
2. The Scheme will be subject to the following Conditions:
(a) (i) its approval by a majority in number of Scheme
Shareholders representing not less than 75 per cent. in value of Scheme
Shares held by Scheme Shareholders who are on the register of members of
Keywords Studios (or the relevant class or classes thereof, if applicable) at
the Voting Record Time, present and voting, whether in person or by proxy, at
the Court Meeting and at any separate class meeting which may be required (or
any adjournment thereof), and (ii) such Court Meeting (and any separate class
meeting, if applicable) and any adjournment thereof being held on or before
the 22nd 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 may
specify, with the agreement of Keywords Studios or, in a competitive
situation, with the consent of the Panel, and the approval of the Court if
such approval is required);
(b) (i) the resolution(s) being duly passed by the requisite
majority or majorities at the Keywords Studios General Meeting (or any
adjournment thereof); and (ii) such Keywords Studios General Meeting and any
adjournment thereof being held on or before the 22nd day after the expected
date of the Keywords Studios General Meeting to be set out in the Scheme
Document in due course (or such later date (if any) as Bidco may specify, with
the agreement of Keywords Studios or, in a competitive situation, with the
consent of the Panel, and the approval of the Court if such approval is
required);
(c) (i) the sanction of the Scheme by the Court (with or without
modification (but subject to such modification being acceptable to Bidco and
Keywords Studios)); and (ii) the Sanction Hearing being held on or before the
22nd day after the expected date of the Sanction Hearing to be set out in the
Scheme Document in due course (or such later date (if any) as Bidco may
specify, with the agreement of Keywords Studios or, in a competitive
situation, with the consent of the Panel, and the approval of the Court if
such approval is required); and
(d) the delivery of a copy of the Court Order to the Registrar
of Companies.
General Conditions
3. In addition, subject as stated in Part B of this Appendix
1, the Acquisition will be conditional upon the following Conditions and,
accordingly, the Court Order will not be delivered to the Registrar of
Companies unless the following Conditions (as amended if appropriate) have
been satisfied or, where relevant, waived:
Antitrust
United Kingdom
3.1 the CMA:
(a) as at the date on which all other Conditions are satisfied
or waived (with the exception of the Conditions set out in paragraphs 1 and
2(c) and 2(d) of Part A of this Appendix 1), having confirmed to Bidco in
writing that it does not intend to request further information and not having:
(i) commenced a Phase 1 review by indicating that the
statutory review period in which the CMA has to decide whether to make a
reference under section 34ZA of the Enterprise Act 2002 (as amended) has
begun; or
(ii) indicated that it will commence such a review (including,
for the avoidance of doubt, by providing the option of submitting a merger
notice, sending an enquiry letter or engaging in pre-notification
discussions);
(b) where the CMA commences a Phase 1 review, deciding not to
make a reference pursuant to section 33 of the Enterprise Act 2002 (as
amended) to the chair of the CMA for the constitution of a group under
Schedule 4 to the Enterprise and Regulatory Reform Act 2013; or
(c) where the CMA makes a reference to the chair of the CMA for
the constitution of a group under Schedule 4 to the Enterprise and Regulatory
Reform Act 2013, either:
(i) concluding in a report published in accordance with
section 38 of the Enterprise Act 2002 (as amended) that neither the
Acquisition nor any matter arising from or relating to the Acquisition may be
expected to result in a substantial lessening of competition within any market
or markets in the United Kingdom for goods or services; or
(ii) allowing the Acquisition and any matter arising from or
relating to the Acquisition to proceed in accordance with section 41 of the
Enterprise Act 2002 (as amended);
in each case with respect to the Acquisition or any matter arising from or
relating to the Acquisition;
United States of America
3.2 all applicable filings having been made and any applicable
waiting period under the Hart Scott Rodino Antitrust Improvements Act of 1976
(as amended) and the regulations made thereunder (and any extension thereof)
relating to the Acquisition having expired, lapsed or been terminated;
Ireland
3.3 insofar as the Acquisition is subject to a mandatory filing
requirement under Part 3 of the Irish Competition Act 2002 (as amended), the
Irish Competition and Consumer Protection Commission having informed the
parties that the Acquisition may be put into effect (whether conditionally or
unconditionally) and/or the applicable waiting periods under Part 3 of the
Irish Competition Act 2002 (as amended) having expired or having been
terminated;
Finland
3.4 insofar as the Acquisition is subject to a mandatory filing
requirement under the Finnish Competition Act, the Finnish Competition and
Consumer Authority having approved the consummation of the Acquisition
(whether conditionally or unconditionally) and/or the applicable waiting
periods having expired or having been terminated;
Austria
3.5 insofar as the Acquisition is subject to a mandatory filing
requirement under the Austrian Cartel Act, the Austrian Federal Competition
Authority and the Austrian Federal Cartel Prosecutor having waived their right
to file a request for an in-depth assessment at the Cartel Court or not having
filed a request for an in-depth assessment;
Cyprus
3.6 insofar as the Acquisition is subject to a mandatory filing
requirement under the Cyprus Control of Concentrations between Undertakings
Act of 2014, the Cyprus Commission for the Protection of Competition having
approved the consummation of the Acquisition (whether conditionally or
unconditionally) and/or the applicable waiting periods having expired or
having been terminated;
Denmark
3.7 insofar as the Acquisition is subject to a mandatory filing
requirement under the Danish Competition Act, the Danish Competition and
Consumer Authority or Danish Competition Council having approved the
consummation of the Acquisition (whether conditionally or unconditionally)
and/or the applicable waiting periods having expired or having been
terminated;
Turkey
3.8 insofar as the Acquisition is subject to a mandatory filing
requirement under the Law No. 4054 on the Protection of Competition, the
Turkish Competition Board having approved the consummation of the Acquisition
(whether conditionally or unconditionally) and/or the applicable waiting
periods having expired;
Other Third Party Clearances
3.9 other than in relation to the matters referred to in
Conditions 3.1 to 3.8, no central bank, government or governmental,
quasi-governmental, supranational, statutory, regulatory, environmental,
fiscal or investigative body, court, arbitrator, arbitral tribunal agency,
association, organisation, institution, authority (including any national,
supranational, federal, state, municipal, or other governmental authority,
entity, agency, commission, court or instrumentality (or other sub-division
thereof) exercising executive, legislative, judicial, regulatory or
administrative functions), or professional or environmental body, employee
representative body or any other body or person whatsoever in any
jurisdiction, including, for the avoidance of doubt, the Panel (each a "Third
Party") having given notice of a decision to take, institute, initiate,
enforce, implement or threaten any action, proceeding, suit, investigation,
enquiry, injunction or reference, or having required any action to be taken or
otherwise having done anything or having enacted, made or proposed any
statute, regulation, decision, law or order or change to published practice
and there is not continuing to be outstanding any statute, regulation,
decision or order which would or might 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, any member of the Wider Keywords Studios Group by
any member of the Wider Bidco Group void, illegal, unlawful and/or
unenforceable under the laws of any relevant jurisdiction, or otherwise
directly or indirectly prevent, prohibit or restrain, restrict or impede the
implementation of the Acquisition or the acquisition of any shares or other
securities in, or control or management of, any member of the Wider Keywords
Studios Group by any member of the Wider Bidco Group or require an amendment
of the Scheme;
(b) require, prevent or materially delay any proposed
divestiture or alter the terms envisaged for such divestiture by any member of
the Wider Bidco Group or by any member of the Wider Keywords Studios Group of
all or any part of their businesses, assets or property or impose any
limitation on the ability of all or any of them to conduct their businesses
(or any part thereof) or to own, control or manage any of their assets or
properties (or any part thereof) to an extent which is material in the context
of the Wider Bidco Group or Wider Keywords Studios Group (as applicable) taken
as a whole or in the context of the Acquisition;
(c) impose any material limitation on the ability of any member
of the Wider Bidco Group directly or indirectly to acquire or hold or to
exercise effectively all or any rights of ownership in respect of shares or
other securities in Keywords Studios (or any member of the Wider Keywords
Studios Group) or on the ability of any member of the Wider Keywords Studios
Group or any member of the Wider Bidco Group directly or indirectly to hold or
exercise effectively any rights of ownership in respect of shares or other
securities (or the equivalent) in, or to exercise management control over, any
member of the Wider Keywords Studios Group to an extent which is material in
the context of the Wider Keywords Studios Group taken as a whole or in the
context of the Acquisition;
(d) other than pursuant to the implementation of the Scheme or,
if applicable, sections 974 to 991 of the Companies Act, require any member of
the Wider Bidco Group or the Wider Keywords Studios Group to acquire or offer
to acquire any shares, other securities (or the equivalent) or interest in any
member of the Wider Keywords Studios Group or any asset owned by any third
party which is material in the context of the Wider Keywords Studios Group or
the Wider Bidco Group, in either case taken as a whole;
(e) result in any member of the Wider Keywords Studios Group
ceasing to be able to carry on business under any name under which it
presently carries on business to an extent which is material in the context of
the Wider Keywords Studios Group taken as a whole or in the context of the
Acquisition; or
(f) impose any limitation on the ability of any member of the
Wider Bidco Group and/or any member of the Wider Keywords Studios Group to
conduct, integrate or co-ordinate all or any part of their respective
businesses with all or any part of the business of any other member of the
Wider Bidco Group and/or the Wider Keywords Studios Group in a manner which is
adverse and material to the Wider Bidco Group and/or the Wider Keywords
Studios Group, in each case taken as a whole or in the context of the
Acquisition,
and all applicable waiting and other time periods (including any extensions
thereof) during which any such Third Party could decide to take, institute,
implement or threaten any such action, proceeding, suit, investigation,
enquiry or reference or take any other step under the laws of any jurisdiction
in respect of the Acquisition or proposed acquisition of any Keywords Studios
Shares or otherwise intervene having expired, lapsed, or been terminated;
3.10 other than in relation to the matters referred to in Conditions
3.1 to 3.8, all notifications, filings or applications which are deemed by
Bidco to be necessary or reasonably considered to be required in any relevant
jurisdiction having been made in connection with the Acquisition and all
necessary waiting and other time periods (including any extensions thereof)
under any applicable legislation or regulation of any jurisdiction having
expired, lapsed or been terminated (as appropriate) and all statutory and
regulatory obligations in any jurisdiction having been complied with and all
Authorisations which are deemed by Bidco, acting reasonably, to be necessary
or reasonably considered to be required in any jurisdiction for or in respect
of the Acquisition or the proposed acquisition of any shares or other
securities in, or control of, Keywords Studios by any member of the Wider
Bidco Group having been obtained on terms and in a form reasonably
satisfactory to Bidco from all appropriate Third Parties or (without prejudice
to the generality of the foregoing) from any person or bodies with whom any
member of the Wider Keywords Studios Group or the Wider Bidco Group has
entered into contractual arrangements in each case where the direct
consequence of a failure to make such notification or filing or to wait for
the expiry, lapse or termination of any such waiting or other time period or
to comply with such obligation or obtain such Authorisation would be unlawful
in any relevant jurisdiction or have a material adverse effect on the Wider
Keywords Studios Group, any member of the Wider Bidco Group or the ability of
Bidco to implement the Scheme and all such Authorisations remaining in full
force and effect at the time at which the Scheme becomes otherwise
unconditional in all respects and there being no notice or intimation of an
intention to revoke, suspend, restrict, modify or not to renew such
Authorisations;
3.11 no temporary restraining order, preliminary or permanent
injunction, preliminary or permanent enjoinment, or other order having been
issued and being in effect by a court or other Third Party which has the
effect of making the Acquisition or any acquisition or proposed acquisition of
any shares or other securities or control or management of, any member of the
Wider Keywords Studios Group by any member of the Wider Bidco Group, or the
implementation of either of them, void, voidable, illegal and/or unenforceable
under the laws of any relevant jurisdiction, or otherwise directly or
indirectly prohibiting, preventing, restraining, restricting, delaying or
otherwise interfering with the completion or the approval of the Acquisition
or any matter arising from the proposed acquisition of any shares or other
securities in, or control or management of, any member of the Wider Keywords
Studios Group by any member of the Wider Bidco Group;
Confirmation of absence of adverse circumstances
3.12 except as Disclosed, there being no provision of any
arrangement, agreement, licence, permit, franchise, lease or other instrument
to which any member of the Wider Keywords Studios Group is a party or by or to
which any such member or any of its assets is or may be bound, entitled or be
subject or any event or circumstance which, in each case as a consequence of
the Scheme or the Acquisition or the proposed acquisition by any member of
Keywords Studios or any member of the Wider Bidco Group of any shares or other
securities in Keywords Studios or because of a change in the control or
management of any member of the Wider Keywords Studios Group or otherwise,
would or might reasonably be expected to result in, in each case to an extent
which is material in the context of the Wider Keywords Studios Group taken as
a whole or in the context of the Acquisition, including the financing thereof:
(a) any monies borrowed by, or any other indebtedness or
liabilities, actual or contingent of, or any grant available to, any member of
the Wider Keywords Studios Group being or becoming repayable, or capable of
being declared repayable, immediately or prior to its or their stated maturity
date or repayment date, or the ability of any such member to borrow monies or
incur any indebtedness being withdrawn or inhibited or being capable of
becoming or being withdrawn or inhibited;
(b) the rights, liabilities, obligations, interests or business
of any member of the Wider Keywords Studios Group or any member of the Wider
Bidco Group under any such arrangement, agreement, licence, permit, franchise,
lease or instrument or the interests or business of any member of the Wider
Keywords Studios Group or any member of the Wider Bidco Group in or with any
other firm or company or body or person (or any agreement or arrangement
relating to any such business or interests) being or likely to become
terminated or adversely modified or affected or any onerous obligation or
liability arising or any adverse action being taken or arising thereunder;
(c) any member of the Wider Keywords Studios Group ceasing to be
able to carry on business under any name under which it presently carries on
business to an extent which is material in the context of the Keywords Studios
Group taken as a whole or in the context of the Acquisition;
(d) any assets or interests of, or any asset the use of which is
enjoyed by, any member of the Wider Keywords Studios Group being or falling to
be disposed of or charged or ceasing to be available to any member of the
Wider Keywords Studios Group or any right arising under which any such asset
or interest could be required to be disposed of or charged or could cease to
be available to any member of the Wider Keywords Studios Group otherwise than
in the ordinary course of business;
(e) other than in the ordinary course of business, the creation
or enforcement of any mortgage, charge or other security interest over the
whole or any part of the business, property or assets of any member of the
Wider Keywords Studios Group or any such mortgage, charge or other security
interest (whenever created, arising or having arisen) becoming enforceable;
(f) the business, assets, value, financial or trading
position, profits, prospects or operational performance of any member of the
Wider Keywords Studios Group being prejudiced or adversely affected;
(g) the creation or acceleration of any material liability
(actual or contingent) by any member of the Wider Keywords Studios Group other
than trade creditors or other liabilities incurred in the ordinary course of
business; or
(h) any liability of any member of the Wider Keywords Studios
Group to make any severance, termination, bonus or other payment to any of its
directors or other officers other than in the ordinary course of business;
No material transactions, claims or changes in the conduct of the business of
the Keywords Studios Group
3.13 except as Disclosed, no member of the Wider Keywords Studios
Group having since 31 December 2023:
(a) save as between Keywords Studios and its wholly-owned
subsidiaries or between such wholly-owned subsidiaries on the exercise of
options or vesting of awards granted in the ordinary course under the Keywords
Studios Share Plans, issued or agreed to issue or authorised or proposed or
announced its intention to authorise or propose the issue of additional shares
of any class, or securities 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 or agreed to transfer
or sell or authorised or proposed the transfer or sale of Keywords Studios
Shares out of treasury;
(b) recommended, declared, paid or made or agreed to recommend,
declare, pay or make any bonus issue, dividend or other distribution (whether
payable in cash or otherwise) other than: (i) to Keywords Studios or one of
its wholly-owned subsidiaries and (ii) the final dividend (in respect of the
financial year ended 31 December 2023) of 1.76 pence per Keywords Studios
Share payable to Keywords Studios Shareholders on the register of members of
the Company on 24 May 2024 and which was paid on 28 June 2024;
(c) save as between Keywords Studios and its wholly-owned
subsidiaries or between such wholly-owned subsidiaries, merged with (by
statutory merger or otherwise) or demerged from or acquired any body
corporate, partnership or business or acquired or disposed of, or, other than
in the ordinary course of business, transferred, mortgaged or charged or
created any security interest over, any assets or any right, title or interest
in any asset (including shares in any undertaking and trade investments) or
authorised, proposed or announced any intention to do so, in each case to an
extent which is material in the context of the Wider Keywords Studios Group
taken as a whole;
(d) save as between Keywords Studios and its wholly-owned
subsidiaries or between such wholly-owned subsidiaries, made, authorised,
proposed or announced an intention to propose any change in its loan capital
other than in the ordinary course of business and to an extent which is
material in the context of the Wider Keywords Studios Group taken as a whole;
(e) issued, authorised or proposed or announced an intention to
authorise or propose the issue of, or made any change in or to the terms of,
any debentures or (save in the ordinary course of business and save as between
Keywords Studios and its wholly-owned subsidiaries or between such
wholly-owned subsidiaries) incurred or increased any indebtedness or become
subject to any contingent liability to an extent which is material in the
context of the Wider Keywords Studios Group taken as a whole or in the context
of the Acquisition;
(f) entered into, varied, authorised or proposed entry into or
variation of, or announced its intention to enter into or vary, any contract,
transaction, arrangement or commitment (whether in respect of capital
expenditure or otherwise) (otherwise than in the ordinary course of business)
which is of a long-term, unusual or onerous nature, or which involves or could
reasonably be expected to involve an obligation of a nature or magnitude which
is or is likely to be materially restrictive on the business of any member of
the Wider Keywords Studios Group to an extent which is or is reasonably likely
to be material to the Wider Keywords Studios Group taken as a whole;
(g) entered into any licence or other disposal of intellectual
property rights of any member of the Wider Keywords Studios Group which are
material in the context of the Wider Keywords Studios Group and outside the
normal course of business;
(h) entered into, varied, authorised or proposed entry into or
variation of, or announced its intention to enter into or vary the terms of or
made any offer (which remains open for acceptance) to enter into or vary the
terms of, any contract, commitment, arrangement or any service agreement with
any director or senior executive of the Wider Keywords Studios Group save for
salary increases, bonuses or variations of terms in the ordinary course;
(i) proposed, agreed to provide or modified the terms of any
share option scheme, incentive scheme, or other benefit relating to the
employment or termination of employment of any employee of the Wider Keywords
Studios Group which, taken as a whole, are material in the context of the
Wider Keywords Studios Group taken as a whole;
(j) (i) (excluding the trustee of any pension scheme(s)
established by a member of the Wider Keywords Studios Group other than
Keywords Studios itself) made, agreed or consented to or procured any
significant change to: (a) the terms of any existing trust deeds, rules,
policy or other governing documents, or entered into or established any new
trust deeds, rules, policy or other governing documents, constituting any
pension scheme or other retirement or death benefit arrangement established
for the directors, former directors, employees or former employees of any
entity in the Wider Keywords Studios Group or their dependants and established
by a member of the Wider Keywords Studios Group (a "Relevant Pension Plan");
(b) the basis on which benefits accrue, pensions which are payable or the
persons entitled to accrue or be paid benefits, under any Relevant Pension
Plan; (c) the basis on which the liabilities of any Relevant Pension Plan are
funded or valued; or (d) the basis or rate of employer contribution to a
Relevant Pension Plan, in each case to the extent which is material in the
context of the Wider Keywords Studios Group taken as a whole or in the context
of the Acquisition and other than as required in accordance with applicable
law; or (ii) enter into or propose to enter into one or more bulk annuity
contracts in relation to any Relevant Pension Plan; or (iii) carried out any
act: (a) which would or could reasonably be expected to lead to the
commencement of the winding up of any Relevant Pension Plan; (b) which would
or is reasonably likely to create a material debt owed by an employer to any
Relevant Pension Plan; (c) which would or might accelerate any obligation on
any employer to fund or pay additional contributions to any Relevant Pension
Plan; or (d) which would, having regard to the published guidance of the
Pensions Regulator give rise directly or indirectly to a liability in respect
of a Relevant Pension Plan arising out of the operation of sections 38 and 38A
of the Pensions Act 2004 in relation to a Relevant Pension Plan, in each case
to the extent which is material in the context of the Wider Keywords Studios
Group taken as a whole or in the context of the Acquisition and other than as
required in accordance with applicable law;
(k) other than to replace a vacancy on the board of directors of
a corporate trustee, changed the trustee or trustee directors or other
fiduciary or any Relevant Pension Plan;
(l) entered into, implemented or effected, or authorised,
proposed or announced its intention to implement or effect, any joint venture,
asset or profit sharing arrangement, partnership, composition, assignment,
reconstruction, amalgamation, commitment, scheme or other transaction or
arrangement (other than the Scheme) otherwise than in the ordinary course of
business which is material in the context of the Wider Keywords Studios Group
taken as a whole or in the context of the Acquisition;
(m) purchased, redeemed or repaid or announced any proposal to
purchase, redeem or repay any of its own shares or other securities or reduced
or made any other change to any part of its share capital to an extent which
(other than in the case of Keywords Studios) is material in the context of the
Wider Keywords Studios Group taken as a whole;
(n) other than with respect to claims between Keywords Studios
and its wholly-owned subsidiaries (or between such subsidiaries), waived,
compromised or settled any claim or admitted any dispute, claim or
counter-claim whether made or potential and whether by or against any member
of the Wider Keywords Studios Group, otherwise than in the ordinary course of
business, which is material in the context of the Wider Keywords Studios Group
taken as a whole or in the context of the Acquisition;
(o) made any alteration to its articles of association or other
constitutional documents (in each case, other than in connection with the
Scheme) which is material in the context of the Acquisition;
(p) (other than in respect of a member of the Wider Keywords
Studios Group which is dormant and was solvent at the relevant time) taken or
proposed any steps, corporate action or had any legal proceedings instituted
or threatened against it in relation to the suspension of payments, a
moratorium of any indebtedness, its winding-up (voluntary or otherwise),
dissolution, reorganisation or for the appointment of any administrator,
receiver, manager, administrative receiver, trustee or similar officer of all
or any of its assets or revenues or any analogous proceedings in any
jurisdiction or appointed any analogous person in any jurisdiction or had any
such person appointed which is material in the context of the Wider Keywords
Studios Group taken as a whole or in the context of the Acquisition;
(q) been unable, or admitted in writing that it is unable, to
pay its debts or commenced negotiations with one or more of its creditors with
a view to rescheduling or restructuring any of its indebtedness, 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 which is material in the context of the Wider Keywords
Studios Group taken as a whole or in the context of the Acquisition;
(r) entered into any contract, commitment, agreement or
arrangement otherwise than in the ordinary course of business or passed any
resolution or made any offer (which remains open for acceptance) with respect
to or announced an intention to, or to propose to, effect any of the
transactions, matters or events referred to in this Condition;
(s) terminated or varied the terms of any agreement or
arrangement between any member of the Wider Keywords Studios Group and any
other person in a manner which would or might be expected to have a material
adverse effect on the financial position of the Wider Keywords Studios Group
taken as a whole; or
(t) taken (or agreed or proposed to take) any action which
requires, or would require, the consent of the Panel or the approval of
Keywords Studios Shareholders in general meeting in accordance with, or as
contemplated by, Rule 21.1 of the Takeover Code;
No material adverse change
3.14 since 31 December 2023, and except as Disclosed, there having
been:
(a) no adverse change and no circumstance having arisen which
would be expected to result in any adverse change or deterioration in the
business, assets, value, financial or trading position, profits, prospects or
operational performance of any member of the Wider Keywords Studios Group to
an extent which is material to the Wider Keywords Studios Group taken as a
whole or to the financing of the Acquisition;
(b) no litigation, arbitration proceedings, prosecution or other
legal proceedings including, without limitation, with regard to intellectual
property rights used by the Wider Keywords Studios Group having been
threatened, announced or instituted by or against or remaining outstanding
against any member of the Wider Keywords Studios Group or to which any member
of the Wider Keywords Studios Group is or may become a party (whether as
claimant or defendant or otherwise) which, in any such case, might reasonably
be expected to have a material adverse effect on the Wider Keywords Studios
Group taken as a whole, and no enquiry, review, investigation or enforcement
proceedings by, or complaint or reference to, any Third Party against or in
respect of any member of the Wider Keywords Studios Group having been
threatened, announced or instituted by or against, or remaining outstanding in
respect of, any member of the Wider Keywords Studios Group which, in any such
case, might reasonably be expected to have a material adverse effect on the
Wider Keywords Studios Group taken as a whole;
(c) no contingent or other liability having arisen, increased or
become apparent which is reasonably likely to adversely affect the business,
assets, financial or trading position, profits, prospects or operational
performance of any member of the Wider Keywords Studios Group to an extent
which is material to the Wider Keywords Studios Group taken as a whole;
(d) no steps having been taken and no omissions having been made
which are reasonably likely to result in the withdrawal, cancellation,
termination or modification of any licence held by any member of the Wider
Keywords Studios Group, which is necessary for the proper carrying on of its
business and the withdrawal, cancellation, termination or modification of
which is material and reasonably likely to have a material adverse effect on
the Wider Keywords Studios Group taken as a whole; and
(e) no member of the Wider Keywords Studios Group having
conducted its business in material breach of any applicable laws and
regulations which in any case is material in the context of the Wider Keywords
Studios Group taken as a whole;
3.15 since 31 December 2023, except as Disclosed, Bidco not having
discovered:
(a) that any financial, business or other information concerning
the Wider Keywords Studios Group publicly announced or disclosed to any member
of the Wider Bidco Group at any time prior to the date of this Announcement by
or on behalf of any member of the Wider Keywords Studios Group or to any of
their advisers is misleading, contains a misrepresentation of fact or omits to
state a fact necessary to make that information not misleading and which is,
in any case, material in the context of the Wider Keywords Studios Group taken
as a whole or in the context of the Acquisition;
(b) that any member of the Wider Keywords Studios Group is
subject to any liability, contingent or otherwise and which is material in the
context of the Wider Keywords Studios Group taken as a whole; or
(c) any information which affects the import of any information
disclosed to Bidco at any time prior to the date of this Announcement by or on
behalf of any member of the Wider Keywords Studios Group which is material in
the context of the Wider Keywords Studios Group taken as a whole;
Environmental liabilities
3.16 except as Disclosed, Bidco not having discovered that, any past
or present member of the Wider Keywords Studios Group (i) having committed any
violation of any applicable laws, statutes, regulations, Authorisations,
notices or other requirements of any Third Party giving rise to a material
liability; and/or (ii) having incurred any material liability (whether actual
or contingent) to any Third Party; and/or (iii) being likely to incur any
material liability (whether actual or contingent), or being required, to make
good, remediate, repair, re-instate or clean up the environment (including any
property) in each case of (i), (ii) or (iii) which such liability or
requirement would be material to the Wider Keywords Studios Group taken as a
whole;
Intellectual property
3.17 except as Disclosed, no circumstance having arisen or event
having occurred in relation to any intellectual property owned or used by any
member of the Wider Keywords Studios Group which would be reasonably likely to
have a material adverse effect on the Wider Keywords Studios Group taken as a
whole or is otherwise material and adverse in the context of the Acquisition,
including:
(a) any member of the Wider Keywords Studios Group losing its
title to any intellectual property material to its business, or any
intellectual property owned by the Wider Keywords Studios Group and material
to its business being revoked, cancelled or declared invalid; or
(b) any claim being asserted in writing or threatened in writing
by any person challenging the ownership of any member of the Wider Keywords
Studios Group to, or the validity or effectiveness of, any intellectual
property that is material to the business of the Wider Keywords Studios Group;
Anti-corruption and sanctions
3.18 except as Disclosed, Bidco not having discovered that (to an
extent that is material in the context of the Wider Keywords Studios Group
taken as a whole):
(a) any past or present member, director, officer or employee of
the Wider Keywords Studios Group or any person that performs or has performed
services for or on behalf of any such company is or has at any time engaged in
any activity, practice or conduct (or omitted to take any action) in
contravention of the UK Bribery Act 2010, the U.S. Foreign Corrupt Practices
Act of 1977, as amended or any other applicable anti-corruption legislation;
(b) any past or present member, director, officer or employee of
the Wider Keywords Studios Group, or any other person for whom any such person
may be liable or responsible, has engaged in any activity or business with, or
made any investments in, or made any funds or assets available to or received
any funds of assets from (i) any government, entity or individual in respect
of which US or European Union persons, or any persons operating in those
territories, are prohibited from engaging in activities or doing business, or
from receiving or making available funds or economic resources, by US or
European Union laws or regulations, including the economic sanctions
administered by the United States Office of Foreign Assets Control or HM
Treasury & Customs; or (ii) any government, entity or individual targeted
by any of the economic sanctions of the United Nations, the United States, the
European Union or any of its member states; or
(c) a member, director, officer or employee of the Wider
Keywords Studios Group has engaged in a transaction which would cause a member
of the Wider Bidco Group to be in breach of any law or regulation on
completion of the Acquisition, including the economic sanctions administered
by the United States Office of Foreign Assets Control or HM Treasury &
Customs or any government, entity or individual targeted by any of the
economic sanctions of the United Nations, United States or the European Union
or any of its member states; and
No criminal property
3.19 except as Disclosed, Bidco not having discovered that any asset
of any member of the Wider Keywords Studios Group constitutes criminal
property as defined by section 340(3) of the Proceeds of Crime Act 2002 (but
disregarding paragraph (b) of that definition).
Part B: Further terms of the Acquisition
1. Subject to the requirements of the Panel, Bidco reserves
the right in its sole discretion to waive, in whole or in part, all or any of
the Conditions set out in Part A of Appendix 1, except Conditions 1, 2(a)(i),
2(b)(i), 2(c)(i) and 2(d) which cannot be waived. The deadlines in any of
Conditions 2(a)(ii), 2(b)(ii) and 2(c)(ii) may be extended by Bidco to such
later date as may be agreed with Keywords Studios, or, in a competitive
situation, with the consent of the Panel (as applicable) (and/or approval of
the Court, if such approval is required). If any of Conditions 2(a)(ii),
2(b)(ii) or 2(c)(ii) is not satisfied by the relevant 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 deadlines or agreed with Keywords
Studios or, in a competitive situation, obtained the consent of the Panel (and
the approval of the Court, if required), to extend the relevant deadline.
2. Bidco shall be under no obligation to waive (if capable of
waiver), to determine to be or remain satisfied or to treat as fulfilled any
of the Conditions in Part A of Appendix 1 above that are capable of waiver by
a date earlier than the Long Stop Date, notwithstanding that the other
Conditions of the Acquisition may at such earlier date have been waived or
fulfilled and that there are at such earlier date no circumstances indicating
that any of such Conditions may not be capable of fulfilment.
3. Under Rule 13.5(a) of the Takeover Code and subject to
paragraph 4, 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.
4. Condition 1, Conditions 2(a)(i), 2(b)(i), 2(c)(i) and 2(d)
in Part A of Appendix 1 above, and, if applicable, any acceptance condition if
the Acquisition is implemented by means of an Offer, are not subject to Rule
13.5(a) of the Takeover Code.
5. Any Condition that is subject to Rule 13.5(a) of the
Takeover Code may be waived by Bidco.
6. If the Panel requires Bidco to make an offer or offers for
Keywords Studios Shares under the provisions of Rule 9 of the Takeover Code,
Bidco may make such alterations to the Conditions as are necessary to comply
with the provisions of that Rule.
7. Bidco reserves the right to elect, with the consent of the
Panel (where necessary) and subject to the terms of the Cooperation Agreement,
to implement the Acquisition by way of an Offer as an alternative to the
Scheme. In such an event, an Offer will be implemented on substantially 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
terms of the Cooperation Agreement) an acceptance condition set at 75 per
cent. of Keywords Studios Shares (or such lesser percentage as may be
determined by Bidco in accordance with the terms of the Cooperation
Agreement). If the Acquisition is effected by way of an Offer, and such Offer
becomes or is declared unconditional and sufficient acceptances are received
in respect of such Offer, 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 Keywords Studios Shares in respect of which the
Offer has not been accepted.
8. The Acquisition will be subject, inter alia, to the
Conditions and certain further terms which are set out in this Appendix 1 and
to the full 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 AIM
Rules for Companies, the provisions of the Takeover Code and the applicable
requirements of the Panel and the London Stock Exchange.
9. Keywords Studios Shares will be acquired by Bidco fully
paid and free from all liens, charges, encumbrances and other third party
rights of any nature whatsoever and together with all rights attaching to them
as at the Effective Date, including the right to receive and retain all
dividends and other distributions (if any) declared, made or paid after the
Acquisition becomes Effective.
10. If, on or after the date of this Announcement and prior to
the Acquisition becoming Effective, 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 Keywords Studios Shares, Bidco will
reduce the consideration payable under the terms of the Acquisition for the
Keywords Studios Shares by an amount equal to the aggregate amount of such
dividend and/or distribution and/or other return of capital or value, in which
case any reference in this Announcement or in the Scheme Document to the
consideration payable under the terms of the Acquisition will be deemed to be
a reference to the consideration as so reduced. Any such reduction 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 Scheme or the
Acquisition. In such circumstances, Keywords Studios Shareholders would be
entitled to retain any such dividend, distribution and/or return of capital or
value.
11. The availability of the Acquisition to persons not resident
in the United Kingdom may be affected by the laws or regulatory requirements
of the relevant jurisdictions. Persons who are subject to the laws of any
jurisdiction other than the United Kingdom should inform themselves about and
observe any applicable requirements.
12. This announcement and any rights or liabilities arising
hereunder, the Acquisition, the Scheme and any proxies will be governed by
English law and be subject to the jurisdiction of the courts of England and
Wales, to the Conditions set out above and full terms to be set out in the
Scheme Document. The Acquisition will be subject to the applicable
requirements of the Takeover Code, the Panel, the London Stock Exchange, the
FCA, the AIM Rules for Companies and the Registrar of Companies.
13. Each of the Conditions shall be regarded as a separate
Condition and shall not be limited by reference to any other Condition.
APPENDIX 2
SOURCES OF INFORMATION AND BASES OF CALCULATION
1. As at the Latest Practicable Date, there were 79,963,864
Keywords Studios Shares in issue.
2. As at the Latest Practicable Date, a further up to
4,391,777 Keywords Studios Shares are expected to be issued on or after the
date of this Announcement on the exercise of options or vesting of awards
under the Keywords Studios Share Plans.
3. Any references to the issued and to be issued share capital
of Keywords Studios are each based on:
(a) the 79,963,864 Keywords Studios Shares referred to in
paragraph (1) above; and
(b) the 4,391,777 Keywords Studios Shares that may be issued
pursuant to the Keywords Studios Share Plans referred to in paragraph (2)
above.
4. The value attributed to the existing issued and to be
issued ordinary share capital of the Company is based upon a fully diluted
share capital figure of 84,355,641 Keywords Studios Shares as calculated in
paragraph (3) above.
5. The fully diluted equity value is based on the issued and
to be issued share capital of Keywords Studios as set out above.
6. The implied enterprise value for Keywords Studios of
approximately £2.2 billion is based on:
(a) the fully diluted equity value as described in paragraph 5
above; plus
(b) reported net debt of €67.5 million, or £58.5 million
using the €:£ exchange rate of 0.87 as at 31 December 2023, being loans and
borrowings less cash and cash equivalents (exclusive of lease liabilities) for
the financial year ended 31 December 2023 as set out in the 2023 Keywords
Studios Annual Report; plus
(c) reported lease liabilities €47.0 million, or £40.7
million using the €:£ exchange rate of 0.87 as at 31 December 2023, for the
financial year ended 31 December 2023 as set out in the 2023 Keywords Studios
Annual Report; plus
(d) reported deferred and contingent consideration of €55.8
million, or £48.4 million using the 2023 average €:£ exchange rate of 0.87
as at 31 December 2023, for the financial year ended 31 December 2023 as set
out in the 2023 Keywords Studios Annual Report.
7. Keywords Studios' adjusted EBITDA for the financial year
ended 31 December 2023 of £139.0 million is based on:
(a) Keywords Studios' adjusted EBITDA of €158.3 million, or
£139.0 million using the 2023 average €:£ exchange rate of 0.88, for the
financial year ended 31 December 2023 as set out in the 2023 Keywords Studios
Annual Report.
8. Unless stated otherwise, all prices quoted for Keywords
Studios Shares are Closing Prices.
9. Volume weighted average prices are derived from Bloomberg.
10. Exchange rates are defined per Keywords Studios' "Change in
Presentational Currency" announcement released on 28 June 2024.
11. Certain figures included in this Announcement have been
subject to rounding adjustments.
APPENDIX 3
IRREVOCABLE UNDERTAKINGS AND LETTERS OF INTENT
Keywords Studios Directors' Irrevocable Undertakings
The following Keywords Studios Directors have given irrevocable undertakings
in their capacity as shareholders to vote in favour of the Scheme at the Court
Meeting and the resolutions to be proposed at the Keywords Studios General
Meeting (or, if the Acquisition is subsequently structured as an Offer, to
accept any Offer made by Bidco in accordance with the terms of the irrevocable
undertaking) in relation to the following Keywords Studios Shares:
Name of Keywords Studios Director Number of Keywords Studios Shares in respect of which undertaking is given Percentage of Keywords Studios issued ordinary share capital*
Charlotta Ginman-Horrell 1,071 0.00%
Jonathan Hauck 13,145 0.02%
Richard Neil Thompson 3,387 0.00%
Donald Austin Robert 16,259 0.02%
Bertrand Bodson 9,636 0.01%
Marion Jane Sears 3,000 0.00%
Georges Fornay 4,521 0.01%
Robert Kingston** Nil N/A
* based on the number of Keywords Studios Shares in issue on the Latest
Practicable Date.
** Robert Kingston does not currently hold Keywords Studios Shares, however,
he is interested in certain Keywords Studios Shares pursuant to awards granted
to him under the Keywords Studios Share Plans. He has therefore entered into
an irrevocable undertaking on the same terms as the other Keywords Studios
directors in respect of those interests.
These irrevocable undertakings also extend to any Keywords Studios Shares
acquired by the Keywords Studios Directors as a result of the vesting of
awards or the exercise of options under the Keywords Studios Share Plans.
The irrevocable undertakings referred to above cease to be binding on the
earliest of the following occurrences: (i) this Announcement not having been
released by 5.00 p.m. on the date that is one Business Day from the date of
the undertaking (or such later date as Bidco and Keywords Studios may agree);
(ii) Bidco announces, with the consent of the Panel, that it does not intend
to make or proceed with the Acquisition and no new, revised or replacement
offer or scheme is announced at the same time; (iii) the Scheme lapses or is
withdrawn in accordance with its terms and Bidco is prevented from making a
revised offer under the Takeover Code; (iv) the Scheme has not become
Effective by 11.59 p.m. on the Long Stop Date (or such later time and/or date
as may be agreed between Bidco and Keywords Studios, with the approval of the
Court and/or the Panel, if required) (other than in circumstances where Bidco
has, prior to such date, elected to exercise its right to proceed by way of an
Offer and announced the same in accordance with the requirements of Paragraph
8 of Appendix 7 to the Takeover Code, and such Offer has not lapsed or been
withdrawn); or (v) any competing offer for the entire issued, and to be
issued, share capital of Keywords Studios is declared unconditional in all
respects or, if implemented by way of a scheme of arrangement, becomes
effective.
If Bidco exercises the right to switch to an Offer, these irrevocable
undertakings shall continue to be binding in accordance with their terms.
Keywords Studios Shareholders
Letters of intent
The following Keywords Studios Shareholders have given a non-binding letter of
intent to vote in favour of the Scheme at the Court Meeting and the
resolutions to be proposed at the Keywords Studios General Meeting (or, if the
Acquisition is subsequently structured as an Offer, to accept any Offer made
by Bidco):
Name of Keywords Studios Shareholder giving letter of intent Number of Keywords Studios Shares in respect of which a letter of intent is Percentage of Keywords Studios issued ordinary share capital*
given
Franklin Templeton Institutional, LLC 3,565,991 4.46%
Banque Pictet & Cie SA 2,489,700 3.11%
* based on the number of Keywords Studios Shares in issue on the Latest
Practicable Date.
APPENDIX 4
EFFECT OF THE ACQUISITION ON THE KEYWORDS STUDIOS SHARE PLANS
General
The following represents a summary of the effect of the Acquisition on and its
impact in relation to, the operation of the Keywords Studios Share Plans. In
due course, further details about the proposals will be included in the Scheme
Document and in separate letters sent to participants in the Keywords Studios
Share Plans.
The Keywords Studios Long Term Incentive Plan 2013 ("LTIP 2013")
To the extent determined by the Keywords Studios Remuneration Committee, it is
anticipated that outstanding unvested awards will vest in full and become
exercisable by reason of the Acquisition. To the extent not exercised, awards
will lapse at the end of the six-week period immediately following the
Effective Date (unless they lapse earlier under the rules of the LTIP 2013).
The Keywords Studios Long Term Incentive Plan 2022 ("LTIP 2022")
To the extent determined by the Keywords Studios Remuneration Committee, it is
anticipated that outstanding unvested awards granted under the LTIP 2022 for
the financial years ending 31 December 2022 and 31 December 2023 (which as at
1 July 2024 subsisted over an aggregate of 2,072,511 Keywords Studios Shares),
will vest in full and become exercisable by reason of the Acquisition.
For outstanding unvested awards granted under the LTIP 2022 for the financial
year ending 31 December 2024, the number of Keywords Studios Shares that could
vest, shall not result in the aggregate of: (i) the number of Keywords Studios
Shares in issue on the date the Scheme is sanctioned by the Court (excluding
any Keywords Studios Shares that are issued after the date of the Cooperation
Agreement in respect of any M&A); and (ii) the number of Keywords Studios
Shares in respect of which all outstanding (in flight) awards on the date the
Scheme is sanctioned by the Court, from exceeding 84,355,641 Keywords Studios
Shares.
To the extent not exercised, awards will lapse at the end of the one-month
period immediately following the date the Scheme is sanctioned by the Court
(unless they lapse earlier under the rules of the LTIP 2022).
The Keywords Studios Share Option Plan ("SOP")
To the extent determined by the Keywords Studios Remuneration Committee, it is
anticipated that outstanding unvested options which are "in the money" at the
time of the Effective Date, will become exercisable by reason of the
Acquisition and subject to time pro-rating. To the extent not exercised,
options will lapse at the end of the six-week period immediately following the
Effective Date (unless they lapse earlier under the rules of the SOP).
The Keywords Studios Employee Share Purchase Plan ("ESPP")
Participation in the ESPP shall continue until the end of the normal savings
contribution period in accordance with the rules of the ESPP. At the end of
the contribution period, the participant's accrued savings will be returned to
them together with a cash payment equal to the aggregate value of the discount
at which they would have been entitled to purchase Keywords Studios Shares
under their award agreement. No Keywords Studios Shares will be issued in
connection with the ESPP.
APPENDIX 5
Keywords Studios profit forecast
On 28 June 2024 Keywords Studios made the "Updated Possible Offer, and current
trading and outlook" announcement (the "PUSU Extension RNS"), which included
the following guidance in relation to the revenue growth and operating profit
margin for the year ending 31 December 2024 ("Keywords Studios Profit
Forecast"):
"As set out in the Keywords Studios Group's full year results, the Board is
confident in delivering strong overall revenue and profit growth in 2024, with
performance expected to be second half weighted as the sector emerges from the
slower content creation trends that are currently dampening industry spend and
therefore Keywords Studios Group growth."
"This, together with ongoing softer demand in Globalize and the relatively
slow ramp-up in content production in Hollywood, has meant that first half
organic growth is now expected to be slightly negative during H1. Reported
revenue is still expected to grow by around 7% in the first half."
"As a result, H2 organic growth is expected to be around 10%, in-line with our
medium-term guidance."
"The Keywords Studios Group continues to closely manage costs, taking a broad
range of cost actions, including the restructuring of the go-to-market
approach in Globalize set out at the full year results, and expects full year
margins to be around 15%. Due to the timing of the cost saving programmes and
the reduction of volumes, H1 adjusted operating margins are expected to be
lower, with H2 margins strong, as the impact of the cost savings programmes
and pick-up in volumes flow through."
Application of Rule 28 to Keywords Studios Profit Forecast
The statements from the PUSU Extension RNS in bold above contain data from
which a calculation of future profits may be made, thus setting expectations
for the adjusted operating profit and for purposes of Rule 28.1(c) of the
Takeover Code constitutes a profit forecast.
Directors' confirmation
The Keywords Studios Directors confirm that, as at the date of this
announcement, the Keywords Studios Profit Forecast remains valid and that it
has been complied on the basis of the assumptions stated below and that the
basis of accounting used is consistent with Keywords Studios' accounting
policies which are in accordance with IFRS and those that Keywords Studios
applied in preparing its financial statements for the year ended 31 December
2023.
Further information on the basis of preparation of the Keywords Studios Profit
Forecast, including the principal assumptions on which it is based, is set out
below.
Basis of preparation and principal assumptions
The Keywords Studios Profit Forecast is based upon internal Keywords Studios
forecasts.
In confirming the Keywords Studios Profit Forecast, the Keywords Studios
Directors have made the following assumptions in respect of the forecast
period to 31 December 2024:
1. Factors outside the influence of the Keywords Studios
Directors:
(a) no material change in the political, economic and/or market
environment that would materially affect Keywords Studios;
(b) there will be no material changes in market conditions over
the period to 31 December 2024 in relation to either customer demand or
competitive environment;
(c) no significant one-off events or litigation that would have
a material impact on the operating results or financial position of Keywords
Studios;
(d) there will be no material adverse change to Keywords
Studios' commercial relationships;
(e) no adverse changes to inflation, interest or tax rates in
Keywords Studios' principal markets compared with Keywords Studios' budgeted
estimates;
(f) no material changes of the value of pound sterling above
the average foreign exchange rates that have applied during the period from 28
June 2024 to the last Business Day before this announcement;
(g) no material adverse events which will have a significant
impact on the operating results or financial position of Keywords Studios;
(h) no material adverse outcome from any ongoing or future
disputes with any customer, competitor, regulator or tax authority; and
(i) no material change in legislation, taxation, regulatory
requirements, applicable standards or the position of any regulatory bodies
impacting the Keywords Studios Group's operations or accounting policies.
2. Factors within the influence or control of the Keywords
Studios Directors:
(a) no additional significant acquisitions, disposals,
developments, partnership or joint venture agreements being entered into by
Keywords Studios which would have a materially dilutive effect on Keywords
Studios' earnings;
(b) no material change in the dividend or capital policies of
Keywords Studios;
(c) no material changes to the senior leadership team of
Keywords Studios;
(d) no material change in Keywords Studios' strategy; and
(e) Keywords Studios' accounting policies will be consistently
applied in the period ending 31 December 2024.
Appendix 6
DEFINITIONS
The following definitions apply throughout this document unless the context
otherwise requires:
"2023 Keywords Studios Annual Report" the annual report and audited accounts of the Keywords Studios Group for the
year ended 31 December 2023
"Acquisition" the proposed acquisition by Bidco of the entire issued, and to be issued,
ordinary share capital of Keywords Studios, to be implemented by means of the
Scheme, or should Bidco so elect in accordance with the terms of the
Cooperation Agreement and, where required, with the consent of the Panel, by
means of an Offer, and where the context admits, any subsequent revision,
variation, extension or renewal thereof
"Acquisition Price" 2,450 pence in cash per Keywords Studios Share
"AIM" AIM, a market operated by the London Stock Exchange
"AIM Rules for Companies" the rules of AIM as set out in the "AIM Rules for Companies" issued by the
London Stock Exchange from time to time relating to AIM traded securities and
the operation of AIM
"Announcement" this Announcement made pursuant to Rule 2.7 of the Takeover Code, including
its Appendices
"Appendices" the appendices to this Announcement and Appendix has a corresponding meaning
"Articles" the articles of association of Keywords Studios from time to time
"associated undertaking" shall be construed in accordance with paragraph 19 of Schedule 6 to The Large
and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008
(SI 2008/410) but for this purpose ignoring paragraph 19(1)(b) of Schedule 6
to those regulations
"Authorisations" authorisations, orders, grants, recognitions, confirmations, consents,
licences, clearances, certificates, permissions or approvals, in each case of
a Third Party
"Bid Conduct Agreement" the agreement between Bidco, Houting TopCo B.V., BPEA Fund VIII Limited, CPPIB
PHI4 and Rosa Investments relating to bid conduct in connection with the
Acquisition dated 3 July 2024
"Bidco" Houting UK Limited, a private limited company incorporated in England and
Wales
"Bidco Group" Bidco and its subsidiary undertakings and associated undertakings
"BPEA Fund VIII" BPEA Fund VIII Limited and the affiliated entities within EQT Private Capital
Asia's BPEA Fund VIII
"Business Day" a day, not being a public holiday, Saturday or Sunday, on which clearing banks
in London are open for normal business
"certificated" or "certificated form" in relation to a share or other security, a share or other security title to
which is recorded in the relevant register of the share or other security as
being held in certificated form (that is, not in CREST)
"Clean Team and Joint Defence Agreement" the clean team and joint defence agreement between Keywords Studios, BPEA Fund
VIII Limited and their respective external legal counsel dated 21 May 2024, as
amended and restated to include Temasek Capital Management and its external
legal counsel as parties on 18 June 2024
"Closing Price" the closing middle market price of an Keywords Studios Share, as derived from
the Daily Official List on any particular date
"Companies Act" the UK Companies Act 2006, as amended from time to time
"Conditions" the conditions to the implementation of the Acquisition, as set out in
Appendix 1 to this Announcement and to be set out in the Scheme Document
"Confidentiality Agreement" the confidentiality agreement between BPEA Fund VIII Limited and Keywords
Studios dated 2 May 2024
"Cooperation Agreement" the co-operation agreement between Keywords Studios and Bidco dated 3 July
2024
"Court" the High Court of Justice in England and Wales
"Court Meeting" the meeting of Scheme Shareholders to be convened at the direction of the
Court pursuant to Part 26 of the Companies Act at which a resolution will be
proposed to approve the Scheme, including any adjournment, postponement or
reconvening thereof
"Court Order" the order of the Court sanctioning the Scheme under Part 26 of the Companies
Act
"CPP" Canada Pension Plan
"CPPIB PHI4" CPP Investment Board Private Holdings (4) Inc., a wholly-owned subsidiary of
CPP Investments
"CPP Investments" Canada Pension Plan Investment Board
"CREST" the relevant system (as defined in the Regulations) in respect of which
Euroclear is the operator (as defined in the Regulations)
"Daily Official List" the daily official list of the London Stock Exchange
"Dealing Disclosure" an announcement by a party to an offer or a person acting in concert as
required by Rule 8 of the Takeover Code
"Deutsche Numis" Numis Securities Limited
"Disclosed" the information fairly disclosed by or on behalf of Keywords Studios: (i) in
the 2023 Keywords Studios Annual Report; (ii) in this Announcement; (iii) in
any other announcement to a Regulatory Information Service prior to the
publication of this Announcement; (iv) in writing (including via the virtual
data room operated by or on behalf of Keywords Studios in respect of the
Acquisition) or (v) verbally in meetings and calls between Keywords Studios
management and EQT prior to the date of this Announcement to Bidco or Bidco's
officers, employees, agents or advisers (in their capacity as such)
"Disclosure Guidance and Transparency Rules" the Disclosure Guidance and Transparency Rules sourcebook issued by the FCA
"Effective" (i) if the Acquisition is implemented by way of the Scheme, the Scheme having
become effective pursuant to its terms; or (ii) if the Acquisition is
implemented by way of the Offer, the Offer having been declared or having
become unconditional in all respects in accordance with the requirements of
the Takeover Code
"Effective Date" the date on which the Acquisition becomes Effective
"EQT" EQT AB, EQT Services Netherlands B.V., SEP Holdings B.V. and their respective
affiliates
"Euroclear" Euroclear UK & Ireland Limited
"Facilities Agreement" the facilities agreement between (amongst others) Houting B.V. as borrower (an
affiliate of Bidco), Bidco as an original guarantor, the original lender named
therein and JPMorgan Chase Bank, N.A., acting through its Hong Kong Branch as
agent and GLAS Trust Corporation Limited as security agent dated on or about
the date of this Announcement
"FCA" or "Financial Conduct Authority" Financial Conduct Authority of the UK or its successor from time to time
"FCA Handbook" the FCA's Handbook of rules and guidance as amended from time to time
"Houting TopCo B.V." an indirect parent company of Bidco
"Joinder Agreements" the joinder agreements to the Confidentiality Agreement, between each of
Temasek Capital Management and CPP Investments, in favour of Keywords Studios,
dated 8 May 2024 and 7 May 2024 respectively
"J.P. Morgan Cazenove" J.P. Morgan Securities plc, which conducts its UK investment banking business
as J.P. Morgan Cazenove
"Keywords Studios" or "Company" Keywords Studios Plc
"Keywords Studios Directors" or the "Board" the directors of Keywords Studios at the time of this Announcement or, where
the context so requires, the directors of Keywords Studios from time to time
"Keywords Studios General Meeting" the general meeting of Keywords Studios Shareholders to be convened to
consider and if thought fit pass, inter alia, the resolutions in relation to
the Scheme, including any adjournments, postponements or reconvening thereof
"Keywords Studios Group" Keywords Studios Plc and its subsidiary undertakings and where the context
permits, each of them
"Keywords Studios Profit Forecast" the profit forecast included within Keywords Studios' "Updated Possible Offer,
and current trading and outlook" announcement released on 28 June 2024 in
respect of the year ending 31 December 2024, as detailed further in Appendix 5
"Keywords Studios Share(s)" the existing unconditionally allotted or issued and fully paid ordinary shares
of £0.01 each in the capital of Keywords Studios and any further such
ordinary shares which are unconditionally allotted or issued before the Scheme
becomes Effective
"Keywords Studios Share Plans" the Keywords Studios Long Term Incentive Plan 2013, the Keywords Studios Long
Term Incentive Plan 2022, the Keywords Studios Employee Share Purchase Plan
and the Keywords Studios Share Option Plan
"Keywords Studios Shareholder(s)" registered holders of Keywords Studios Shares from time to time
"Latest Practicable Date" 2 July 2024, being the latest practicable date prior to publication of this
Announcement
"London Stock Exchange" the London Stock Exchange plc or its successor
"Long Stop Date" 3 April 2025 or such later date as may be agreed in writing between Bidco and
Keywords Studios with the approval of the Court and the Panel, if required
"Meetings" the Court Meeting and the Keywords Studios General Meeting
"Offer" subject to the consent of the Panel and the terms of the Cooperation
Agreement, should the Acquisition be implemented by way of a takeover offer as
defined in Chapter 3 of Part 28 of the Companies Act, the offer to be made by
or on behalf of Bidco to acquire the entire issued and to be issued share
capital of Keywords Studios and, where the context admits, any subsequent
revision, variation, extension or renewal of such offer
"Offer Period" the Offer Period (as defined by the Takeover Code) relating to Keywords
Studios which commenced on 18 May 2024
"Opening Position Disclosure" an announcement pursuant to Rule 8 of the Takeover Code containing details of
interests or short positions in, or rights to subscribe for, any relevant
securities of a party to the Acquisition
"Overseas Shareholders" holders of Scheme Shares who are resident in, ordinarily resident in, or
citizens of, jurisdictions outside the United Kingdom
"Panel" the UK Panel on Takeovers and Mergers
"PRA" the Prudential Regulation Authority
"Registrar of Companies" the Registrar of Companies in England and Wales
"Regulations" the Uncertificated Securities Regulations 2001 (SI 2001/3755), including as
they form part of the domestic law of the United Kingdom by virtue of the
European Union (Withdrawal) Act 2018
"Regulatory Information Service" a regulatory information service as defined in the FCA Handbook
"relevant securities" as the context requires, Keywords Studios Shares, other Keywords Studios share
capital and any securities convertible into or exchangeable for, and rights to
subscribe for, any of the foregoing
"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 Keywords Studios Shareholders in that
jurisdiction
"Robey Warshaw" Robey Warshaw LLP
"Rosa Investments" Rosa Investments Pte. Ltd., an indirect wholly-owned subsidiary of Temasek
"Sanction Hearing" the Court hearing to sanction the Scheme and any adjournment, postponement or
reconvening thereof
"Scheme" the proposed scheme of arrangement under Part 26 of the Companies Act between
Keywords Studios and the holders of the Scheme Shares, with or subject to any
modification, addition or condition approved or imposed by the Court and
agreed by Keywords Studios and Bidco
"Scheme Document" the document to be sent to Keywords Studios Shareholders and persons with
information rights containing, amongst other things, the Scheme and notices of
the Meetings and information regarding the proxy forms in respect of the
Meetings
"Scheme Record Time" the time and date to be specified in the Scheme Document, expected to be 6.00
p.m. (London time) on the Business Day immediately preceding the Effective
Date (or such other date and/or time as Bidco and Keywords Studios may agree)
"Scheme Shareholders" registered holders of Scheme Shares
"Scheme Shares" all Keywords Studios Shares: (i) in issue at the date of the Scheme Document
and which remain in issue at the Scheme Record Time; (ii) (if any) issued
after the date of the Scheme Document but before the Voting Record Time and
which remain in issue at the Scheme Record Time; and (iii) (if any) issued at
or after the Voting Record Time but at or before the Scheme Record Time on
terms that the holder thereof shall be bound by the Scheme in respect of which
the original or any subsequent holders thereof are, or shall have agreed in
writing to be, bound by the Scheme which remain in issue at the Scheme Record
Time
"Takeover Code" the City Code on Takeovers and Mergers issued by the Panel on Takeovers and
Mergers, as amended from time to time
"Temasek" Temasek Holdings (Private) Limited
"Temasek Capital Management" Temasek Capital Management Pte. Ltd., an indirect wholly-owned subsidiary of
Temasek
"Third Party" has the meaning given in paragraph 3.9 of Part A of Appendix 1
"UK" or "United Kingdom" United Kingdom of Great Britain and Northern Ireland
"uncertificated" or "in uncertificated form" a share or other security title to which is recorded in the relevant register
of the share or security as being held in uncertificated form, in CREST, and
title to which, by virtue of the Regulations may be transferred by means of
CREST
"US" or "United States" United States of America, its territories and possessions, any state of the
United States of America, the District of Columbia, and all other areas
subject to its jurisdiction
"Voting Record Time" the time and date to be specified in the Scheme Document by reference to which
entitlement to vote on the Scheme will be determined
"Wider Bidco Group" Bidco Group, as well as funds, vehicles and/or accounts advised and/or managed
by EQT Private Capital Asia or any of its affiliates, together with their
respective associated undertakings and any other body corporate, partnership,
joint venture or person in which Bidco or any such undertakings (aggregating
their interests) have an interest of more than 30 per cent. of the voting or
equity capital or the equivalent
"Wider Keywords Studios Group" Keywords Studios and associated undertakings and any other body corporate,
partnership, joint venture or person in which Keywords Studios and such
undertakings (aggregating their interests) have an interest of more than 30
per cent. of the voting or equity capital or the equivalent (excluding, for
the avoidance of doubt, Bidco and all of its associated undertakings which are
not members of the Keywords Studios Group)
For the purposes of this Announcement, "subsidiary", "subsidiary undertaking",
"undertaking" and "parent undertaking" have the respective meanings given
thereto by the Companies Act.
All references to "pounds", "pounds Sterling", "Sterling", "GBP", "£",
"pence" and "p" are to the lawful currency of the United Kingdom.
All references to "US dollars", "USD", "US$", "$" and "cents" are to the
lawful currency of the United States.
All references to statutory provision or law or to any order or regulation
shall be construed as a reference to that provision, law, order or regulation
as extended, modified, replaced or reenacted from time to time and all
statutory instruments, regulations and orders from time to time made
thereunder or deriving validity therefrom.
All times referred to are London time unless otherwise stated.
References to the singular include the plural and vice versa.
1 (#_ftnref1) The Acquisition Price is final and
will not be increased, except that Bidco reserves the right to increase the
Acquisition Price where: (i) there is an announcement of a possible offer or
firm intention to make an offer for Keywords Studios by any third party; or
(ii) the Panel otherwise provides its consent.
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