REG - Melrose Industries GKN PLC - Firm Offer for GKN plc <Origin Href="QuoteRef">GKN.L</Origin> <Origin Href="QuoteRef">MRON.L</Origin> - Part 3
17/01/2018 08:05
- Part 3: For the preceding part double click ID:nRSQ0978Cb
enquiry
(p) save as Disclosed, since 31 December 2016:
(i) no adverse change or deterioration having occurred in the
business, assets, financial or trading position or profits or prospects or
operational performance of any member of the Wider GKN Group which, in any
such case, is material in the context of the Wider GKN Group taken as a whole
and no circumstances have arisen which would or might reasonably be expected
to result in such adverse change;
(ii) no litigation, arbitration proceedings, prosecution or other legal
proceedings to which any member of the Wider GKN Group is or may become a
party (whether as a plaintiff, defendant or otherwise) and no enquiry, review
or investigation by, or complaint or reference to, any Third Party against or
in respect of any member of the Wider GKN Group having been instituted
announced or threatened by or against or remaining outstanding in respect of
any member of the Wider GKN Group which in any such case has had or might
reasonably be expected to have an adverse effect on the Wider GKN Group taken
as a whole;
(iii) no contingent or other liability having arisen or become apparent
to Melrose or increased which has had or might reasonably be expected to have
an adverse effect the Wider GKN Group taken as a whole; and
(iv) no steps having been taken which are likely to result in the
withdrawal, cancellation, termination or modification of any licence held by
any member of the Wider GKN Group which is necessary for the proper carrying
on of its business and the withdrawal, cancellation, termination or
modification of which has had, or would reasonably be expected to have, an
adverse effect on the Wider GKN Group taken as a whole;
No discovery of certain matters
(q) save as Disclosed, Melrose not having discovered:
(i) that any financial, business or other information concerning the
Wider GKN Group as contained in the information publicly disclosed at any time
by or on behalf of any member of the Wider GKN Group is materially misleading,
contains a material misrepresentation of fact or omits to state a fact
necessary to make that information not misleading, in each case, to the extent
which is material in the context of the Wider GKN Group taken as a whole;
(ii) that any member of the Wider GKN Group or partnership, company or
other entity in which any member of the Wider GKN Group has a significant
economic interest and which is not a subsidiary undertaking of GKN, is subject
to any liability (contingent or otherwise) which is not disclosed in the
Annual Report and Accounts of GKN for the financial year ended 31 December
2016, in each case, to the extent which is material in the context of the
Wider GKN Group taken as a whole; or
(iii) any information which affects the import of any information
disclosed at any time by or on behalf of any member of the Wider GKN Group and
which is material in the context of the Wider GKN Group taken as a whole;
(r) save as Disclosed, Melrose not having discovered that:
(i) any past or present member of the Wider GKN Group has failed to
comply with any and/or all applicable legislation or regulation, of any
jurisdiction with regard to the use, treatment, storage, carriage, disposal,
spillage, release, discharge, leak or emission of any waste or hazardous
substance or any substance likely to impair the environment or harm human
health or animal health or otherwise relating to environmental matters or the
health and safety of humans, or that there has otherwise been any such use,
treatment, storage, carriage, disposal, spillage, release, discharge, leak or
emission (whether or not the same constituted a non-compliance by any person
with any such legislation or regulations, and wherever the same may have taken
place) any of which storage, carriage, disposal, spillage, release, discharge,
leak or emission would be likely to give rise to any liability (actual or
contingent) on the part of any member of the Wider GKN Group and which is
material in the context of the Wider GKN Group taken as a whole;
(ii) there is, or is likely to be, for other reason whatsoever, any
liability (actual or contingent) of any past or present member of the Wider
GKN Group to make good, remediate repair, reinstate or clean up any property
or any controlled waters now or previously owned, occupied, operated or made
use of or controlled by any such past or present member of the Wider GKN Group
(or on its behalf) or by any person for which a member of the Wider GKN Group
is or has been responsible, or in which any such member may have or previously
have had or be deemed to have had an interest, under any environmental
legislation, regulation, notice, circular or order of any Third Party and
which is material in the context of the Wider GKN Group taken as a whole or
the Acquisition;
(iii) circumstances exist (whether as a result of the making of the
Offer or the Acquisition or otherwise) which would be reasonably likely to
lead to any Third Party instituting, or whereby any member of the Wider
Melrose Group or any present or past member of the Wider GKN Group would be
likely to be required to institute, an environmental audit or take any other
steps which would in any such case be reasonably likely to result in any
liability (whether actual or contingent) to improve, modify existing or
install new plant, machinery or equipment or carry out changes in the
processes currently carried out or make good, remediate, repair, re-instate or
clean up any land or other asset currently or previously owned, occupied or
made use of by any past or present member of the Wider GKN Group (or on its
behalf) or by any person for which a member of the Wider GKN Group is or has
been responsible, or in which any such member may have or previously have had
or be deemed to have had an interest which is material in the context of the
Wider GKN Group taken as a whole or the Acquisition; or
(iv) circumstances exist whereby a person or class of persons would be
likely to have any claim or claims in respect of any product or process of
manufacture or materials used therein currently or previously manufactured,
sold or carried out by any past or present member of the Wider GKN Group which
claim or claims would be likely, materially and adversely, to affect any
member of the Wider GKN Group and which is material in the context of the
Wider GKN Group taken as a whole or the Acquisition; and
Anti-corruption, sanctions and criminal property
(s) save as Disclosed, Melrose not having discovered that:
(i) (a) any past or present member, director, officer or employee of
the Wider GKN Group is or has at any time engaged in any activity, practice or
conduct which would constitute an offence under the Bribery Act 2010, the US
Foreign Corrupt Practices Act of 1977 or any other applicable anti-corruption
legislation and regulation or (b) any person that performs or has performed
services for or on behalf of the Wider GKN Group is or has at any time engaged
in any activity, practice or conduct in connection with the performance of
such services which would constitute an offence under the Bribery Act 2010,
the US Foreign Corrupt Practices Act of 1977 or any other applicable
anti-corruption legislation and regulation; or
(ii) any asset of any member of the Wider GKN Group constitutes
criminal property as defined by section 340(3) of the Proceeds of Crime Act
2002 (but disregarding paragraph (b) of that definition); or
(iii) any past or present member, director, officer or employee of the
Wider GKN Group, or any other person for whom any such person may be liable or
responsible, has engaged in any business with, made any investments in, made
any funds or assets available to or received any funds or assets from: (a) any
government, entity or individual in respect of which US or European Union
persons, or persons operating in those territories, are prohibited from
engaging in activities or doing business, or from receiving or making
available funds or economic resources, by US or European Union laws or
regulations, including the economic sanctions administered by the United
States Office of Foreign Assets Control, or HMRC; or (b) 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
(iv) any member of the Wider GKN Group is or has been engaged in any
transaction which would cause Melrose to be in breach of any law or regulation
upon its acquisition of GKN, including the economic sanctions of the United
States Office of Foreign Assets Control, or HMRC, or any government, entity or
individual targeted by any of the economic sanctions of the United Nations,
the United States, the European Union or any of its member states.
For the purposes of these Conditions the "Wider GKN Group" means GKN and its
subsidiary undertakings, associated undertakings and any other undertaking in
which GKN and/or such undertakings (aggregating their interests) have a
significant interest and the "Wider Melrose Group" means Melrose and its
subsidiary undertakings, associated undertakings and any other undertaking in
which Melrose and/or such undertakings (aggregating their interests) have a
significant interest and for these purposes "subsidiary undertaking" and
"undertaking" have the meanings given by the Act, "associated undertaking" has
the meaning given by paragraph 19 of Schedule 6 to the Large and Medium-sized
Companies and Groups (Accounts and Reports) Regulations 2008, other than
paragraph 19(1)(b) of Schedule 6 to those regulations which shall be excluded
for this purpose, and "significant interest" means a direct or indirect
interest in 20 per cent. or more of the total voting rights conferred by the
equity share capital (as defined in section 548 of the Act).
Part B
Waiver and Invocation of the Conditions
Melrose reserves the right to waive, in whole or in part, all or any of the
Conditions set out in Part A of Appendix 1 above, except for Conditions(a)
(Acceptance Condition), (b) (Melrose Shareholder approval), or (c) (Admission
to listing) which cannot be waived. The Acquisition will be subject to the
satisfaction (or waiver, if permitted) of the Conditions set out in this
Appendix 1, and to certain further terms set out in Appendix 1, and to the
full terms and conditions which will be set out in the Offer Document, the
Melrose Prospectus and the Form of Acceptance.
The Acquisition shall lapse unless all of the Conditions have been fulfilled
or, where permitted, waived or, where appropriate, have been determined by
Melrose to be or remain satisfied, by midnight (London time) on the 21st day
after the later of (i) the first closing date of the Offer; and (ii) the date
on which Condition(a) (Acceptance Condition), is fulfilled (or, in each case,
such later date as Melrose may determine, with the consent of the Panel).
Melrose shall be under no obligation to waive (if capable of waiver), to
determine to be or remain satisfied or to treat as satisfied any of
Conditions(b) to (s) (inclusive) that are capable of waiver by a date earlier
than the latest date specified above for the fulfilment of the relevant
Condition, notwithstanding that the other Conditions to 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 such Condition(s) may not be
capable of fulfilment.
If Melrose is required by the Panel to make an offer for GKN Shares under the
provisions of Rule 9 of the City Code, Melrose may make such alterations to
the Conditions as are necessary to comply with the provisions of that Rule.
Part C
Implementation by way of Scheme
Melrose reserves the right, with the consent of the Panel (where necessary),
to elect to implement the Acquisition by way of the Scheme.
If the Acquisition is implemented by way of the Scheme, such Scheme will be
implemented on the same terms, subject to appropriate amendments to reflect
the change in method of effecting the Acquisition, including (without
limitation and subject to the consent of the Panel):
(a) its approval by a majority in number representing not less than
three-fourths in value of the relevant GKN Shareholders (or the relevant class
or classes thereof, if applicable) present and voting, either in person or by
proxy, at the Court Meeting and at any separate class meeting which may be
required by the Court or at any adjournment of any such meeting 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 Melrose may
agree and the Court may allow);
(b) all resolutions necessary to approve and implement the Scheme being
duly passed by the requisite majority or majorities at a GKN General Meeting
or at any adjournment of that meeting on or before the 22nd day after the
expected date of the GKN General Meeting as set out in the Scheme Document in
due course (or such later date, if any, as Melrose may agree and the Court may
allow); and
(c) the sanction of the Scheme by the Court with or without
modification (but subject to any such modification being acceptable to
Melrose) on or before the 22nd day after the expected date of the Court
hearing to sanction the Scheme as set out in the Scheme Document in due course
(or such later date, if any, as Melrose may agree and the Court may allow) and
the delivery of a copy of the Scheme Order within seven Business Days
thereafter to the Registrar of Companies in England and Wales.
In addition, if the Acquisition is implemented by way of the Scheme, the
Scheme will be conditional upon the Conditions set out above and, accordingly,
the necessary actions to make the Scheme effective will not be taken unless
the Conditions set out above have either been waived (if permitted) or
fulfilled.
Part D
Certain further terms of the Acquisition
Melrose reserves the right to direct that a portion of the GKN Shares to be
transferred pursuant to acceptances of the Offer be transferred directly to a
wholly owned subsidiary of Melrose.
The availability of the Acquisition to persons not resident in the United
Kingdom may be affected by the laws of the relevant jurisdictions. Persons who
are not resident in the United Kingdom should inform themselves about and
observe any applicable requirements.
The Acquisition will be governed by and construed in accordance with English
law and be subject to the jurisdiction of the courts of England and Wales, to
the Conditions and terms set out in this Announcement and in due course in the
Offer Document, the Melrose Prospectus and the Form of Acceptance. The
Acquisition will comply with the applicable rules and regulations of the FCA,
the London Stock Exchange and the City Code.
Each of the Conditions shall respectively be regarded as a separate Condition,
and shall not be limited by reference to any other Condition.
If the Acquisition lapses for any reason, the Acquisition will cease to be
capable of further acceptance, and Melrose and accepting GKN Shareholders will
cease to be bound by acceptances of the Acquisition delivered on or before the
time when the Acquisition lapses.
Fractions of New Melrose Shares will not be allotted to GKN Shareholders but
will be aggregated and sold in the market. The net proceeds of such sale will
then be paid in cash to the relevant GKN Shareholder in accordance with their
fractional entitlements. Individual entitlements, however, of less than £5.00
will not be paid but will be donated to charity.
The New Melrose Shares, which will be issued in connection with the
Acquisition, have not been and will not be registered under any of the
relevant securities laws of Canada, Japan, Australia, South Africa or the
United States or any jurisdiction other than the UK and no regulatory
clearance in respect of the New Melrose Shares has been, or will be, applied
for in any jurisdiction other than the United Kingdom. The New Melrose Shares
may not be offered, sold or delivered, directly or indirectly, in Canada,
Japan, Australia, South Africa or the United States or any other Restricted
Jurisdictions except pursuant to exemptions from applicable requirements of
any such jurisdiction.
GKN Shares which will be acquired under the Acquisition will be acquired fully
paid and free from all liens, equities, charges, encumbrances, options, rights
of pre-emption and any other third party rights and interests of any nature
and together with all rights now or hereafter attaching or accruing to them,
including voting rights and the right to receive and retain in full all
dividends and other distributions (if any) declared, made or paid on or after
the Effective Date.
If, after the date of this Announcement, any dividend and/or other
distribution and/or other return of capital is announced, declared or paid in
respect of the GKN Shares, Melrose reserves the right to reduce the offer
consideration by an amount up to the amount of such dividend and/or
distribution and/or return of capital so announced, declared or paid, in which
case any reference in this Announcement or the Offer Document to the offer
consideration for the GKN Shares will be deemed to be a reference to the offer
consideration as so reduced. For the avoidance of doubt, any payments made in
cash or by way of the delivery of shares on the vesting of awards calculated
by reference to dividends accrued in respect of those underlying vested shares
are not to be construed as a dividend, distribution or return of capital for
these purposes.
The Acquisition will lapse if:
(a) in so far as the Acquisition or any matter arising from or relating
to the Acquisition constitutes a concentration with a Community dimension
within the scope of the Regulation, the European Commission either initiates
proceedings under Article 6(1)(c) of the Regulation or makes a referral to a
competent authority in the United Kingdom under Article 9(1) of the Regulation
and there is then a CMA Phase 2 Reference; or
(b) in so far as the Acquisition or any matter arising from the
Acquisition does not constitute a concentration with a Community dimension
within the scope of the Regulation, the Acquisition or any matter arising from
or relating to the Acquisition becomes subject to a CMA Phase 2 Reference,
in each case, before the later of 1:00 p.m. on the first closing date of the
Acquisition or the date when the Acquisition becomes or is declared
unconditional as to acceptances.
Appendix 2
SOURCES OF INFORMATION AND BASES OF CALCULATION
(1) In this Announcement:
(a) the number of issued GKN Shares is based on 1,726,103,630 shares in
issue as announced by GKN on 12 January 2018 adjusted for 1,987,000 options as
at 31 December 2016;
(b) the premiums calculations to the price per GKN Share used in this
Announcement have been calculated by reference to the Closing Price on 11
January 2018 (being the last Business Day before the commencement of the Offer
Period) of 332.7 pence and to the Closing Price on 5 January 2018 (being the
last Business Day before the approach made by Melrose to the GKN Board in
connection with the Acquisition) of 326.3 pence in respect of a GKN Share;
(c) the total Melrose net shareholder value increase of £4.9 billion is
calculated based on total money invested of £3.64 billion and total money
returned to investors of £4.35 billion in addition to the market
capitalisation of £4.22 billion as at 5 January 2018, the last business day
prior to the approach made by Melrose to GKN's board in connection with the
Acquisition;
(d) GKN's top-end group trading margin target based on the published
target range of 8% - 10% first stated in its Annual Report for the financial
year ended 31 December 2007 and repeated up until its Interim Results for the
period ended 30 June 2017;
(e) GKN's divisional target ranges of 11% - 13% for Aerospace, 8 - 10%
for Driveline and 9 - 11% for Powder Metallurgy first stated in its 2011
full-year results presentation and repeated up until 2015 first half results
presentation;
(f) GKN consensus comprises all analyst notes available to Melrose
since 13 October 2017 (date of GKN's trading statement) and includes
divisional and group level estimates from the following analysts: Barclays (16
October 2017), Berenberg (16 October 2017), Deutsche Bank (16 October 2017), J
P Morgan Cazenove (group level only, 16 October 2017), UBS (16 October 2017),
Peel Hunt (17 October 2017), Citi (18 October 2017), Liberum (23 October
2017), Jefferies (9 November 2017) and Bank of America Merrill Lynch (16
November 2017). Estimates from the following analysts have been excluded from
the consensus as they adjust estimated trading profit for the impairment
charge in the Aerospace business: Bank of America Merrill Lynch (17 November
2017), Deutsche Bank (17 November 2017), J P Morgan Cazenove (6 December
2017), Investec (18 December 2017) and UBS (10 January 2018). Estimates from
Investec (6 November 2017) have been excluded from the consensus as it is a
connected adviser to Melrose.
The minimum Aerospace trading profit margin full-year 2017 estimate per the
consensus is 8.2%, the maximum Aerospace trading profit margin full-year 2017
estimate is 9.0% and the arithmetic average is 8.5%. In accordance with Rule
28.8(c) of the Code, the consensus estimates are not shown with the agreement
or the approval of GKN;
(g) information relating to GKN's sales and employees by region,
percentages of group revenue by division and segment operating profit
percentages have been taken from its Annual Report for the financial year
ended 31 December 2016;
(h) information describing the businesses of each of Melrose's
divisions has been taken from its Annual Report for the financial year ended
31 December 2016; and
(i) unless otherwise stated:
(i) historical financial information relating to Melrose has been
extracted or derived (without material adjustment) from the audited financial
statements of Melrose contained in Melrose's Annual Report and Accounts for
the financial year ended 31 December 2016 or from Melrose's management
accounts; and
(ii) historical financial information relating to GKN has been extracted
or derived (without material adjustment) from the audited financial statements
of GKN contained in GKN's Annual Report and Accounts for the financial year
ended 31 December 2016.
Certain figures included in this Announcement have been subject to rounding
adjustments.
(2) The Melrose Board having reviewed and analysed the potential
benefits of the Acquisition, based on their previous experience of improving
performance of industrial companies, expects to re-energise and re-purpose
GKN's operations to enable them to exceed GKN's own top-end group trading
margin target of 10 per cent., under Melrose management.
The Melrose Board expects to deliver this improvement over the typical Melrose
ownership timeframe of three to five years (which is flexible).
The Melrose Board believes that it would be possible to achieve this level of
performance given the following:
(a) Melrose has a proven track record of improving the performance of
companies it has owned with underlying margins increasing by 30% to 70% from
their original level under Melrose ownership;
(b) GKN's trading profit margins historically have under-performed its
targets;
(i) the Melrose Board believes it will be able to deliver performance
that GKN originally had set out in its strategy as outlined in its full-year
2012 results presentation, and target divisional trading margins as per its
2011 annual report;
(ii) in particular, trading profit margin in the Driveline division
only marginally exceeded the 8% lower-end target margin in 2014 (8.1%) and
2015 (8.2%) and was below this in all other years since 2011; and
(iii) in addition, the profitability of the Aerospace division has
deteriorated over the last three years, to below the lower end of the target
margin range of 11% - 13% (full-year 2015: 10.9%, full-year 2016: 9.9%,
full-year 2017 consensus: 8.5%);
(c) there is a gap in performance of GKN vs. its potential as
demonstrated by relevant peer performance which Melrose would seek to narrow.
This gap can be illustrated as follows:
(i) Aerospace: full-year 2016 divisional trading profit margin for GKN
was 9.9% and consensus full-year 2017 is 8.5% before adjustments for the
inventory write off between £80 million and £130 million. This compares to the
full-year 2016 average operating margin of a set of close peers (MTU Aero
Engines and Spirit AeroSystems) of approximately 13%;
(ii) Driveline: the divisional trading profit margin in 2016 was 7.7%
(before restatement for the inclusion of Off-Highway Powertrain). However, if
removing £435 million revenue of the China JV (as per the 2016 GKN Annual
Report) and the corresponding trading profit of £76.5 million from the 2016
full-year management revenues of £4,216 million and £323 million trading
profit, the rest of the Driveline business would have achieved management
revenues of £3,781 million and trading profit of £246.5 million, which implies
trading profit margin of approximately 6.5%. This compares to the full-year
2016 average operating margin of a peer set (American Axle & Manufacturing,
BorgWarner, Dana (Light Vehicle Division) and Nexteer Automotive) of
approximately 10%;
(d) limited disclosure in GKN's public accounts shows that costs
outside of materials have increased as a percentage of sales from 43% in 2012
to 49% in 2016, which suggests accumulated operating inefficiencies over the
recent years; and
(e) GKN's annual report discloses that the full-year 2016 corporate and
unallocated costs were £21 million, which Melrose intends to review and
assess.
Melrose is not able to provide an estimate of any non-recurring integration
costs that may be necessary to achieve its expected improvement of GKN's
performance. It is anticipated that any integration costs will be incurred
over the course of the Melrose ownership period.
Aside from the integration costs, no material dis-synergies are expected in
connection with the Acquisition. The Melrose existing businesses do not
overlap with GKN.
Given that Melrose does not have access to GKN's internal information, the
Board of Melrose have not been able to prepare any detailed integration plan
besides the high level action points that have already been stated in this
Announcement.
This statement of trading profit margin improvement relates to future actions
and circumstances which by their nature involve risks, uncertainties and
contingencies. As a consequence, the expected performance referred to may not
be achieved, may be achieved later or sooner than estimated, or those achieved
could be materially different from those estimated. In making this statement,
Melrose took into account historical group trading profit margins as achieved
by GKN.
This statement is not intended as a profit forecast or a Quantified Financial
Benefit Statement for the purposes of Rule 28 of the Code and should not be
interpreted as such.
Appendix 3
DEFINITIONS
"Act" means the Companies Act 2006, as amended from time to time;
"Acquisition" means the acquisition of the entire issued and to be issued share capital of GKN by Melrose, to be implemented by way of the Offer as described in this Announcement and to be set out in the Offer Document (or by way of the Scheme, under certain
circumstances described in this Announcement);
"Admission" means admission of the New Melrose Shares to the Official List with a premium listing and to trading on the main market for listed securities of the London Stock Exchange;
"Announcement" means this announcement made pursuant to Rule 2.7 of the City Code;
"Authorisations" for the purpose of the relevant Conditions, means authorisations, orders, grants, recognitions, determinations, confirmations, consents, licences, clearances, permissions, exemptions and approvals;
"AWV" means the German Foreign Trade Ordinance;
"Business Day" means a day, other than a public holiday, Saturday or Sunday, when banks are open in London for general banking business;
"BMWi" means the German Federal Ministry of Economics and Energy;
"CFIUS" means the Committee on Foreign Investment in the United States;
"City Code" means the City Code on Takeovers and Mergers as issued from time to time by or on behalf of the Panel;
"Closing Price" means the closing middle market quotation of a share derived from the daily official list of the London Stock Exchange;
"Conditions" means the conditions to the implementation of the Acquisition set out in Part A of Appendix 1 to this Announcement and to be set out in the Offer Document;
"Court" means the High Court of Justice in England and Wales;
"Court Meeting" means, should the Acquisition be implemented by way of the Scheme, the meeting of the GKN Shareholders to be convened by order of the Court pursuant to section 896 of the Act for the purpose of considering and, if thought fit, approving the Scheme (with or
without amendment) and any adjournment, postponement or reconvention thereof;
"Dealing Disclosure" means an announcement pursuant to Rule 8 of the Code containing details of dealings in interests in relevant securities of a party to an offer;
"Defence Conditions" has the meaning given to it in Section 16 of this Announcement;
"Disclosed" means the information fairly disclosed by, or on behalf of GKN: (i) in the Annual Report and Accounts of the GKN Group for the financial year ended 31 December 2016; or (ii) in any other public announcement made by GKN in accordance with the Market Abuse
Regulations, the Listing Rules and the Disclosure Guidance and Transparency Rules prior to this Announcement;
"Disclosure Guidance and Transparency Rules" means the rules and regulations made by the FCA under Part VI of the Financial Services and Markets Act 2000 (as amended from time to time), referred to in section 73A(2) of the same and contained in the FCA's publication of the same name (as amended from
time to time);
"DSS" the Defense Security Service, a branch of the United States Department of Defense;
"DDTC" means the US State Department Directorate of Defense Trade Controls;
"EBITDA" means earnings before interest, tax, depreciation and amortisation;
"Effective Date" means the date on which: a) the Offer becomes or is declared unconditional in all respects; orb) if Melrose elects to implement the Acquisition by way of a Scheme, the date on which the Scheme becomes effective in accordance with its terms;
"Eligible GKN Shareholders" means GKN Shareholders, other than Restricted GKN Shareholders;
"Enlarged Group" means the enlarged group following completion of the Acquisition, comprising the Melrose Group and the GKN Group;
"EU" or "European Union" means an economic and political union of 28 member states which are located primarily in Europe;
"EUMR" means the EU Merger Regulation (No 139/2004);
"FCA" means the UK Financial Conduct Authority;
"Form of Acceptance" means the form of acceptance to accept the Offer;
"GKN" means GKN plc, incorporated in England and Wales with registered number 04191106;
"GKN Board" means the GKN Directors collectively;
"GKN Directors" means the directors of GKN as at the date of this Announcement or, where the context so requires, the directors of GKN from time to time;
"GKN General Meeting" means, should the Acquisition be implemented by way of the Scheme, the general meeting of GKN Shareholders (and any adjournment thereof) to be convened for the purpose of considering and, if thought fit, approving the shareholder resolutions necessary to
enable GKN to implement the Acquisition;
"GKN Group" means GKN and its subsidiaries and subsidiary undertakings from time to time and a "member of the GKN Group" shall be construed accordingly;
"GKN Share Schemes" means the employee share schemes of GKN as described in its latest annual report and accounts;
"GKN Shareholders" means the holders of GKN Shares;
"GKN Shares" means the shares of 10 pence each in the capital of GKN and includes:(a) the existing unconditionally allotted or issued and fully paid (or credited as fully paid) ordinary shares of 10 each in the capital of GKN;(b) any further ordinary shares of 10
each in the capital of GKN which are unconditionally allotted or issued and fully paid (or credited as fully paid) before the date on which the Offer closes (or such earlier date or dates as Melrose may, subject to the City Code, determine); and(c) any
GKN Shares held as treasury shares that cease to be held as treasury shares before the date on which the Offer closes (or such earlier date or dates as Melrose may, subject to the City Code, determine)but excludes any shares held as treasury shares on such
date as Melrose may determine before the Offer closes (which may be a different date(s) to the date referred to in ((b) and (c)), and "GKN Share" means any one of them;
"HMRC" means H M Revenue & Customs;
"Investec" means Investec Bank plc;
"ITAR" the US International Traffic in Arms Regulations (22 Code of Federal Regulations 120-130);
"Listing Rules" means the rules and regulations made by the UK Listing Authority under Part VI of the Financial Services and Markets Act 2000, as amended, and contained in the UK Listing Authority's publication of the same name (as amended from time to time);
"London Stock Exchange" means London Stock Exchange plc;
"Market Abuse Regulations" means the Market Abuse Regulation (2014/596/EU);
"Melrose" means Melrose Industries PLC, incorporated in England and Wales with registered number 9800044;
"Melrose Board" means the Melrose Directors collectively;
"Melrose Circular" means the circular to be sent by Melrose to Melrose Shareholders summarising the background to and the reasons for the Acquisition, which will include a notice convening the Melrose General Meeting;
"Melrose Directors" means the directors of Melrose as at the date of this Announcement or, where the context so requires, the directors of Melrose from time to time;
"Melrose General Meeting" means a meeting of Melrose Shareholders (and any adjournment thereof) at which the Melrose Shareholder Resolutions will be considered, and, if thought fit, approved;
"Melrose Group" means Melrose and its subsidiaries and subsidiary undertakings from time to time and "member of the Melrose Group" shall be construed accordingly;
"Melrose Prospectus" means the prospectus or equivalent document to be published by Melrose at the same time as the Offer Document and accompanying Form of Acceptance in respect of the New Melrose Shares to be issued to GKN Shareholders in connection with the Acquisition and
for the purpose of admission of the New Melrose Shares to the Official List with a premium listing and to trading on the main market for listed securities of the London Stock Exchange (including any supplementary prospectus);
"Melrose Shareholder Resolutions" means the shareholder resolutions of Melrose recommended by the Melrose Board as necessary to implement the Acquisition, including to approve, effect and implement the Acquisition and to grant authority to the Melrose Directors to allot the New Melrose
Shares and any amendment(s) thereof;
"Melrose Shareholders" means holders of Melrose Shares;
"Melrose Shares" means the shares of 48/7 pence each in the capital of Melrose from time to time;
"Mix and Match Facility" means the facility under which Eligible GKN Shareholders will be entitled to elect to vary the proportions in which they receive New Melrose Shares and in which they receive cash in respect of their holdings of Eligible GKN Shares to the extent that other
such GKN Shareholders make offsetting elections;
"New Melrose Shares" means the new Melrose Shares proposed to be issued to Eligible GKN Shareholders pursuant to the terms of the Acquisition;
"Offer" means the Offer as described in this Announcement and to be made by Melrose by way of a takeover offer as defined in Chapter 3 of Part 28 of the Act to acquire the entire issued and to be issued share capital of GKN on the terms and subject to the
conditions to be set out in the Offer Document, the Melrose Prospectus and the Form of Acceptance (and, where the context admits, any subsequent revision, variation, extension or renewal of such offer, including any revision, variation, extension or
renewal of such offer including any election or alternative available in connection with it);
"Offer Document" means the document to be dispatched to GKN Shareholders, containing (among other things) the terms and conditions of the Offer;
"Offer Period" means the period commencing on 12 January 2018 and ending on: (i) the earlier of the date on which the Offer has become or has been declared unconditional as to acceptances and/or the date on which the Offer lapses or is withdrawn (or such other date as
the Panel may decide) other than where such lapsing or withdrawal is a result of Melrose electing to implement the Acquisition by way of a Scheme; or (ii) if applicable, the earlier of the date on which the Scheme becomes effective and/or the date on which
the Scheme lapses or is withdrawn (or such other date as the Panel and/or the Court may decide);
"Official List" means the official list maintained by the UK Listing Authority;
"Opening Position Disclosure" means an announcement pursuant to Rule 8 of the City Code containing details of interests or short position in, or rights to subscribe for, any relevant securities of a party to an offer;
"Panel" means the Panel on Takeovers and Mergers;
"PRA" means the Prudential Regulation Authority;
"Restricted GKN Shareholders" means those GKN Shareholders who are located in a Restricted Jurisdiction;
"Restricted Jurisdiction" means 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 GKN Shareholders in that jurisdiction, including the
United States and any state or jurisdiction in the United States;
"Rothschild" means N M Rothschild & Sons Limited;
"Scheme" means, should the Acquisition be implemented by way of a scheme of arrangement under Part 26 of the Act, such scheme of arrangement between GKN and the GKN Shareholders to implement the Acquisition with or subject to any modification, addition or condition
approved or imposed by the Court;
"Scheme Document" means, should the Acquisition be implemented by way of the Scheme, the document to be despatched to GKN Shareholders, including the particulars required by section 897 of the Act, including any supplementary scheme document;
"Scheme Order" means, should the Acquisition be implemented by means of the Scheme, the order of the Court sanctioning the Scheme under section 899 of the Act;
"SEC" means the US Securities and Exchange Commission;
"UK" or "United Kingdom" means the United Kingdom of Great Britain and Northern Ireland;
"UK Listing Authority" or "UKLA" means the FCA acting in its capacity as the authority for listing in the UK;
"US" or "United States" means the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia;
"US Exchange Act" means the US Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder;
"US Securities Act" means the US Securities Act of 1933, as amended and the rules and regulations promulgated thereunder;
"Wider GKN Group" has the meaning given to it in Appendix 1 to this Announcement; and
"Wider Melrose Group" has the meaning given to it in Appendix 1 to this Announcement.
All times referred to are London time, unless otherwise stated.
All references to "GBP", "pence", "sterling" or "£" are to the lawful currency
of the United Kingdom.
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 re-enacted from time to time and all
statutory instruments, regulations and orders from time to time made
thereunder or deriving validity therefrom.
All references to "relevant securities" are to that term as it is defined in
the City Code.
All references to "subsidiary", "subsidiary undertaking", "undertaking" and
"associated undertaking" have the respective meanings given to them in the
Act.
This information is provided by RNS
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