REG - Smoove PLC PEXA Group Limited - Recommended Cash Acquisition of Smoove plc
04/10/2023 16:45
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20231004:nRSD7205Oa&default-theme=true
RNS Number : 7205O Smoove PLC 04 October 2023
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE
A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE MARKET
ABUSE REGULATION NO 596/2014 (INCORPORATED INTO UK LAW BY VIRTUE OF THE
EUROPEAN UNION (WITHDRAWAL) ACT 2018 AS AMENDED BY VIRTUE OF THE MARKET ABUSE
(AMENDMENT) (EU EXIT) REGULATIONS 2019). UPON THE PUBLICATION OF THIS
ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INSIDE INFORMATION IS
NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
FOR IMMEDIATE RELEASE
4 October 2023
RECOMMENDED CASH ACQUISITION
of
SMOOVE PLC
by
DIGCOM UK HOLDINGS LIMITED
(an indirect subsidiary undertaking of PEXA Group Limited)
to be effected by means of a Scheme of Arrangement under Part 26 of the
Companies Act 2006
Summary and highlights
· The boards of directors of Digcom UK Holdings Limited ("Digcom"),
an indirect subsidiary undertaking of PEXA Group Limited ("PEXA"), and Smoove
plc ("Smoove"), are pleased to announce that they have reached agreement on
the terms of a recommended cash acquisition by Digcom of the entire issued and
to be issued share capital of Smoove (the "Acquisition").
· Under the terms of the Acquisition, Smoove Shareholders will be
entitled to receive
· 54 pence for each Smoove Share (the "Consideration")
· The Consideration of 54 pence per Smoove Share values the entire
issued and to be issued share capital of Smoove at approximately £30.8
million on a fully diluted basis and represents a premium of approximately:
→ 69.3 per cent. to the Closing Price of 31.9 pence per Smoove Share on
21 April 2023 (being the last Business Day before the commencement of the
Offer Period);
→ 74.1 per cent. to the volume-weighted average Closing Price of 31.0
pence per Smoove Share for the one-month period ended 21 April 2023 (being the
last Business Day before the commencement of the Offer Period); and
→ 43.9 per cent. to the volume-weighted average Closing Price of 37.5
pence per Smoove Share for the three-month period ended 21 April 2023 (being
the last Business Day before the commencement of the Offer Period).
· If, on or after the date of this announcement and before the
Effective Date, any dividend, distribution or other return of capital or value
is announced, declared, made or paid by Smoove or becomes payable by Smoove in
respect of the Smoove Shares, Digcom reserves the right to reduce the
Consideration payable for the Smoove Shares pursuant to the Acquisition by an
amount up to the amount of such dividend and/or distribution and/or other
return of capital or value. In such circumstances, Smoove Shareholders would
be entitled to receive and retain any such dividend and/or other distribution
and/or return of capital or value.
Acquisition Overview
· The Acquisition comprises an all-cash acquisition of Smoove by
Digcom, which the Smoove Directors intend to recommend unanimously to Smoove
Shareholders.
· The PEXA Board believes that the Acquisition represents an
attractive opportunity for the PEXA Group to advance its stated strategy of
enhancing and leveraging its property exchange know-how to deliver growth in
different markets, including in other Torrens title jurisdictions starting
with the UK.
· Both Smoove and PEXA share the common goal of simplifying and
enhancing the home moving process through digitalisation, significantly
reducing transaction times, whilst simultaneously removing the pain points
across the process.
· The PEXA Board believes there is a significant opportunity for
Smoove's existing customers to benefit from PEXA's digital property
settlements platform and wider service offering, leveraging PEXA's experience
as the market leader in Australia. Smoove has a long-standing relationship
with Lloyds Banking Group and a connection with over 75 conveyancer firms on
its eConveyancer platform and circa 2,100 conveyancing firms via lender
panels.
· The PEXA Board believes that by integrating Smoove into PEXA, the
Combined Group will be able to build scale and depth in the UK market
accelerating the path to enhancing the home moving process. Smoove provides
access to re-mortgage flows equivalent to 7 per cent.(1) of the UK market and
sales and purchase flows across the Smoove platform which are equivalent to 3
per cent.(1) of the UK's sales and purchase market which are intermediated by
the Smoove platform.
· The PEXA Group's commitment to developing new revenue streams
through international expansion and investments in new digital business and
partnerships, supported by a strong balance sheet and cash generative business
model, will help to build a unique, strong, and attractive business. Smoove
will provide reach into the 'cash back market segment' not currently served by
Optima Legal and indirect access to sale and purchase conveyancing firms.
___
(1) Calculated based on Smoove's sale and purchase and remortgage completion
volumes for the financial year ended 31 March 2023, Bank of England sale and
purchase transactions (Bank of England data set LPMB4B3) and Bank of England
remortage transactions (Bank of England data set LPMVTVX)
Recommendation
· Smoove's Directors, who have been so advised by Cavendish as to
the financial terms of the Acquisition, unanimously consider the terms of the
Acquisition to be fair and reasonable. In providing their advice to the Smoove
Directors, Cavendish has taken into account the commercial assessments of the
Smoove Directors. Cavendish is providing independent financial advice to the
Smoove Directors for the purposes of Rule 3 of the Takeover Code.
· Accordingly, the Smoove Directors intend to recommend unanimously
that Smoove Shareholders vote in favour of the Scheme at the Court Meeting and
the Resolution(s) to be proposed at the General Meeting (or in the event that
the Acquisition is implemented by way of a Takeover Offer, to accept or
procure the acceptance of such Takeover Offer) as the Smoove Directors who are
beneficially interested in Smoove Shares (who, for the avoidance of doubt, do
not include Smoove Directors whose interests in Smoove Shares comprise only
unexercised options under the Smoove Share Plans, nor Oliver Scott who has an
indirect beneficial interest in Smoove Shares as well as being a partner of
Kestrel Partners LLP, an entity interested in Smoove Shares) have irrevocably
undertaken to do in respect of their entire beneficial holdings of 85,000
Smoove Shares representing, in aggregate, approximately 0.15 per cent. of
Smoove's total issued share capital as at the close of business on the Last
Practicable Date.
Irrevocable undertakings and letter of intent
· In addition to the irrevocable undertakings received from the
Smoove Directors, Digcom has also received irrevocable undertakings from
Kestrel Partners LLP (a partner of which, Oliver Scott, is a Non-Executive
Director of Smoove), Harwood Capital Management Limited and Herald Investment
Management Limited to vote in favour (or procure the voting in favour, as
applicable) of the Scheme at the Court Meeting and the Resolution(s) to be
proposed at the General Meeting (or in the event that the Acquisition is
implemented by way of a Takeover Offer, to accept or procure the acceptance of
such Takeover Offer) in respect of, in aggregate, 26,560,625 Smoove Shares,
representing approximately 46.58 per cent. of Smoove's total issued share
capital as at the close of business on the Last Practicable Date.
· In addition, Digcom has received a non-binding letter of intent
from Schroders Investment Management Limited to procure the voting in favour
of the Scheme at the Court Meeting and the Resolution(s) to be proposed at the
General Meeting (or in the event that the Acquisition is implemented by way of
a Takeover Offer, to procure the acceptance of such Takeover Offer) in respect
of 5,365,237 Smoove Shares, representing approximately 9.41 per cent. of
Smoove's total issued share capital as at the close of business on the Last
Practicable Date.
· Further details of these irrevocable undertakings and letter of
intent, together with the irrevocable undertakings received from the Smoove
Directors, are set out in Appendix 3 to this announcement.
· Accordingly, Digcom has received irrevocable undertakings and a
letter of intent to vote, or procure the voting, in favour of the Scheme at
the Court Meeting and the Resolution(s) to be proposed at the General Meeting
(or in the event that the Acquisition is implemented by way of a Takeover
Offer, to accept or procure the acceptance of such Takeover Offer) in respect
of a total of 32,010,862 Smoove Shares, representing, in aggregate,
approximately 56.14 per cent. of the total issued share capital of Smoove as
at the close of business on the Last Practicable Date.
Information on the PEXA Group and Digcom
The PEXA Group
· PEXA is the operator of the leading digital property settlements
platform in Australia, employing approximately 1,000 people and listed on the
ASX with a market capitalisation of A$ 2.016 billion on the Last Practicable
Date.
· Having started in 2010 as a joint initiative of various state
governments and the largest banks in Australia to phase out the use of
inefficient paper-based property settlements, the PEXA Group today offers the
world's first digital platform for managing the lodgement and settlement of
property transactions.
· "PEXA Exchange" operates primarily as an Electronic Lodgement
Network Operator ("ELNO") facilitating the electronic lodgement and settlement
of property transactions through an integrated, cloud-based platform
connecting key property market stakeholders.
· PEXA Exchange's facilitation of secure, reliable and efficient
digital settlements has established the platform as a critical and trusted
component of the Australian property market, providing confidence and
stability for all participants in a property transaction.
· Through its PEXA Digital Growth business, PEXA offers
property-related insight and analytics solutions to its customers and
stakeholders which aim to reduce transaction costs in the property chain and
enhance the experience of developing, buying and selling, financing, settling,
owning, and servicing property. PEXA Digital Growth also identifies and
invests in opportunities across the property ecosystem to complement and
enhance its core insights and analytics offering.
· For the year ended 30 June 2023, PEXA Group generated business
revenue of A$283.4m and an operating EBITDA of A$98.7m. Additional information
on PEXA Group's latest financial results can be found at
https://investors.pexa.com.au/investor-centre/?page=results-centre.
Digcom
· Having created the leading digital property settlements platform
in Australia, PEXA established Digcom in 2020 to enable it to enter the UK
market and implement its strategy to transform the UK property market.
· In seeking to extend its digital property settlements platform
knowledge in new geographies, the PEXA Group launched its initial remortgage
offering in the UK in September 2022 following the successful testing of the
PEXA settlement payment solution with the Bank of England. Shortly after the
UK launch, Digcom acquired Optima Legal, a high-volume remortgage conveyancing
firm that provides legal services in the UK remortgage market.
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 Digcom reserves the right to effect the Acquisition by way of a
Takeover Offer, subject to the consent of the Panel and the terms of the
Co-operation Agreement).
· The Acquisition will be put to Smoove Shareholders at the Court
Meeting and the General Meeting. The Court Meeting and the General Meeting are
required to enable Smoove Shareholders to consider and, if thought fit, to
vote in favour of the Scheme and the Resolution(s) to implement the Scheme. In
order to become Effective, the Scheme must be approved by a majority in number
of Scheme Shareholders present and voting (and entitled to vote) at the Court
Meeting, whether in person or by proxy, representing 75 per cent. or more in
value of the Scheme Shares held by those Scheme Shareholders (or the relevant
class or classes thereof). In addition, in order for the Scheme to become
Effective, at the General Meeting, the Resolution(s) must be passed by Smoove
Shareholders representing at least 75 per cent. of the votes validly cast on
the Resolution(s). The General Meeting will be held immediately after the
Court Meeting.
· The Acquisition will be subject to the other Conditions and terms
set out in Appendix 1 of this announcement, including the receipt of
regulatory approvals, and to the full terms and conditions of the Acquisition
which will be set out in the Scheme Document.
· The Scheme Document containing further information about the
Acquisition and the notices of the Meetings, together with the accompanying
Forms of Proxy, are expected to be published within 28 days of the date of
this announcement (unless the Panel agrees otherwise). An expected timetable
of principal events will be included in the Scheme Document.
· The Acquisition is expected to become Effective in Q4 2023,
subject to the satisfaction (or, where applicable, waiver) of the Conditions
and further terms set out in Appendix 1.
Commenting on today's announcement, Glenn King, PEXA Group CEO and Managing
Director said:
"The acquisition is aligned with PEXA Group's strategy of enhancing and
leveraging our property exchange know-how to deliver growth from different
markets, including in other Torrens title jurisdictions, starting with the UK.
Since entering the UK market, the PEXA Group has launched its first
re-mortgage product, successfully brought two lenders onto the PEXA platform
and acquired and progressed integration of specialist re-mortgage conveyancer,
Optima Legal.
The acquisition and integration of Smoove into the PEXA UK business will
further help us address the many detriments suffered by consumers due to the
UK's fragmented, inefficient conveyancing processes. The acquisition will
allow us to build additional scale and depth in the UK market, enabling the
PEXA product suite to reach more customers, whilst streamlining and improving
the UK property transaction experience."
Commenting on the Acquisition, Martin Rowland, the Chairman of Smoove, said:
"Both Smoove and PEXA share a common objective, to simplify and improve the
home moving experience for consumers. The acquisition of Smoove by Digcom
accelerates execution of the plans for both Smoove and PEXA. Whist the Board
of Smoove continues to believe in Smoove's strategy and prospects as an
independent company, they believe that the combination may provide Smoove with
additional scale and help accelerate its plans to materially change the home
moving experience.
The offer from PEXA allows shareholders to receive all cash consideration at a
69.3 per cent. premium to the Closing Price of 31.9 pence per Smoove Share on
21 April 2023 (being the last Business Day before the commencement of the
Offer Period) which the Smoove Board believes to represent an attractive price
for the business."
This summary should be read in conjunction with, and is subject to, the full
text of this announcement and the Appendices. The Acquisition will be subject
to the Conditions and other terms set out in Appendix 1 and to the full terms
and conditions which will be set out in the Scheme Document. Appendix 2
contains the bases of calculation and sources of certain information contained
in this announcement. Details of irrevocable undertakings and the letter of
intent received by Digcom in connection with the Acquisition are set out in
Appendix 3. Certain terms used in this announcement are defined in Appendix 4.
The person responsible for making this announcement on behalf of Smoove is
Martin Rowland, Chairman.
Enquiries:
PEXA Group Limited
Numis Securities Limited (Financial adviser to PEXA) Tel: +44 20 7260 1000
Simon Willis, Stuart Ord, William Wickham
Cato & Clive (Media and PR adviser to PEXA) Tel: +61 411 888 425
Clive Mathieson
MHP Group (Media and PR adviser to PEXA) Tel: +44 20 3128 8100
Dan Pike; Chanice Smith; Issie Rees-Davies
Smoove plc Via Walbrook PR
Jesper With-Fogstrup, CEO
Michael Cress, CFO
Cavendish Securities plc (Rule 3 Adviser to Smoove) Tel: +44 (0)20 7220 0500
Adrian Hadden, George Lawson, Hamish Waller
Panmure Gordon (UK) Limited (NOMAD and Broker to Smoove) Tel: +44 (0)20 7886 2500
Dominic Morley
Amrit Mahbubani
Walbrook PR Limited (PR to Smoove) smoove@walbrookpr.com or
Tom Cooper, Nick Rome Tel: 020 7933 8780
Addleshaw Goddard LLP is acting as legal adviser to PEXA and Digcom in
connection with the Acquisition.
Shoosmiths LLP is acting as legal adviser to Smoove in connection with the
Acquisition.
Further information
This announcement is for information purposes only and is not intended to, and
does not constitute, or form any part of any 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 Smoove in any
jurisdiction in contravention of applicable law. The Acquisition will be made
and implemented solely pursuant to the terms of the Scheme Document (or if the
Acquisition is implemented by way of a Takeover Offer, the Offer Document),
which will contain the full terms and conditions of the Acquisition, including
details of how to vote in respect of the Acquisition. Any vote in respect of,
or other response 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 a Takeover Offer, the Offer Document).
Smoove and Digcom will prepare the Scheme Document (or if the Acquisition is
implemented by way of a Takeover Offer, the Offer Document) to be distributed
to Smoove Shareholders. Smoove and Digcom urge Smoove Shareholders to read the
Scheme Document (or if the Acquisition is implemented by way of a Takeover
Offer, the Offer Document) when it becomes available because it will contain
important information relating to the Acquisition.
This announcement does not constitute a prospectus, prospectus equivalent
document or an exempted document.
The statements contained in this announcement are made as at the date of this
announcement, unless some other time is specified in relation to them, and
publication of this announcement shall not give rise to any implication that
there has been no change in the facts set forth in this announcement since
such date.
Disclaimers
Numis Securities Limited ("Numis"), which is authorised and regulated in the
United Kingdom by the Financial Conduct Authority, is acting as financial
adviser to Digcom and PEXA, and no one else, in connection with the matters
set out in this announcement, and will not be responsible to anyone other than
the Boards of Digcom and PEXA for providing the protections afforded to
clients of Numis nor for providing advice in relation to the contents of this
announcement or any other matter or arrangement referred to herein. Neither
Numis nor any of its affiliates owes or accepts any duty, liability or
responsibility whatsoever (whether direct or indirect, whether in contract, in
tort, under statute or otherwise) to any person who is not a client of Numis
in connection with this announcement, any matter, arrangement or statement
contained or referred to herein or otherwise.
Cavendish Securities plc ("Cavendish") is acting for Smoove and no one else in
connection with the matters set out in this announcement and will not be
responsible to anyone other than Smoove for providing the protections afforded
to clients of Cavendish for providing advice in relation to the possible
offer, the contents of this announcement or any other matters referred to in
this announcement.
Overseas jurisdictions
This announcement has been prepared in accordance with, and for the purposes
of complying with, English law, the Takeover Code, the Market Abuse Regulation
and the AIM Rules, and information disclosed may not be the same as that which
would have been disclosed if this announcement had been prepared in accordance
with the laws of jurisdictions outside of England.
The release, publication or distribution of this announcement in, into or from
jurisdictions other than the United Kingdom may be restricted by law and
therefore any persons who are subject to the laws of any jurisdiction other
than the United Kingdom should inform themselves about and observe any
applicable requirements.
The availability of the Acquisition to Smoove Shareholders who are not
resident in and citizens of the United Kingdom may be affected by the laws of
the relevant jurisdictions in which they are located or of which they are
citizen. Persons who are not resident in the United Kingdom 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 United Kingdom to vote their Smoove Shares with respect to the
Scheme at the Meetings, or to execute and deliver Forms of Proxy (or other
proxy instructions) appointing another to vote at the Meetings 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.
Unless otherwise determined by Digcom or required by the Takeover Code, and
permitted by applicable law and regulation, the Acquisition will not be made
available, in whole or in part, directly or indirectly, in, into or from a
Restricted Jurisdiction where to do so would constitute a violation of the
relevant laws or regulations of such jurisdiction and no person may vote in
favour of the Acquisition 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 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 a Takeover Offer (unless otherwise permitted by applicable law and
regulation), the Takeover 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 Takeover Offer may not be capable of acceptance by any such use,
means, instrumentality or facilities.
The Acquisition will be subject to English law and the jurisdiction of the
Court, and the applicable requirements of the Takeover Code, the Panel, the
London Stock Exchange (including pursuant to the AIM Rules) and the Registrar
of Companies.
Notice to US investors in Smoove
The Acquisition relates to the shares of an English company with a quotation
on AIM and is being made by means of a scheme of arrangement provided for
under English company law. A transaction effected by means of a scheme of
arrangement is not subject to the tender offer rules or the proxy solicitation
rules under the US Securities Exchange Act of 1934. Accordingly, the
Acquisition is subject to the disclosure requirements and practices applicable
in the United Kingdom to schemes of arrangement which differ from the
disclosure requirements of United States tender offer and proxy solicitation
rules. Neither the United States Securities and Exchange Commission, nor any
securities commission of any state of the United States, has approved or
disapproved any offer, or passed comment upon the adequacy or completeness of
any of the information contained in this announcement. Any representation to
the contrary may be a criminal offence.
If, in the future, Digcom exercises the right, with the consent of the Panel
(where necessary), to implement the Acquisition by way of a Takeover Offer and
determines to extend the offer into the United States, the Acquisition will be
made in compliance with applicable United States laws and regulations,
including Section 14(e) of the US Securities Exchange Act 1934 and Regulation
14E thereunder.
Financial information included in this announcement and the Scheme Document
(or, if the Acquisition is implemented by way of a Takeover Offer, the Offer
Document) has been or will have been prepared in accordance with accounting
standards applicable in the United Kingdom or Australia (as applicable) that
may not be comparable to financial information of US companies or companies
whose financial statements are prepared in accordance with generally accepted
accounting principles in the United States.
The receipt of cash pursuant to the Acquisition by a US holder of Smoove
Shares as consideration for the transfer of its Scheme Shares pursuant to the
Scheme may be a taxable transaction for US federal income tax purposes and
under applicable US state and local, as well as foreign and other, tax laws.
Each Smoove Shareholder is therefore urged to consult with independent legal,
tax and financial advisers in connection with making a decision regarding the
Acquisition.
It may be difficult for US holders of Smoove Shares to enforce their rights
and any claim arising out of the US federal laws in connection with the
Acquisition, since Digcom and Smoove are located in, and organised under the
laws of, a non-US jurisdiction, and some or all of their officers and
directors may be residents of a non-US jurisdiction. US holders of Smoove
Shares may not be able to sue a non-US company or its officers or directors in
a non-US court for violations of the US securities laws. Further, it may be
difficult to compel a non-US company and its affiliates to subject themselves
to a US court's jurisdiction or judgement.
In accordance with normal UK practice and pursuant to Rule 14e-5(b) of the US
Securities Exchange Act of 1934, Digcom, certain affiliated companies and
their nominees or brokers (acting as agents), may from time to time make
certain purchases of, or arrangements to purchase, Smoove Shares outside of
the US, other than pursuant to the Acquisition, until the date on which the
Acquisition and/or Scheme becomes Effective, lapses or is otherwise withdrawn.
Also, in accordance with Rule 14e-5(b) of the US Securities Exchange Act of
1934, each of Numis and Cavendish will continue to act as an exempt principal
trader in Smoove Shares on the London Stock Exchange. If such purchases or
arrangements to purchase were to be made, they would occur either in the open
market at prevailing prices or in private transactions at negotiated prices
and comply with applicable law, including the US Securities Exchange Act of
1934. Any information about such purchases will be disclosed as required in
the UK, will be reported to the Regulatory News Service of the London Stock
Exchange and will be available on the London Stock Exchange website at
www.londonstockexchange.com.
Cautionary Note Regarding Forward-Looking Statements
This announcement (including information incorporated by reference into this
announcement), statements made regarding the Acquisition, and other
information to be published by Digcom, PEXA and/or Smoove, contain statements
which are, or may be deemed to be, "forward-looking statements".
Forward-looking statements are prospective in nature and not based on
historical facts, but rather are based on current expectations and projections
of the management of Digcom, PEXA and/or Smoove 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 with respect to the financial condition, results of operations and
business of Smoove and certain plans and objectives of Digcom and PEXA with
respect thereto and other statements other than historical facts. Often, but
not always, forward-looking statements can be identified by the fact that they
do not relate only to historical or current facts and may use words such as
"anticipate", "target", "expect", "estimate", "forecast", "intend", "plan",
"budget", "scheduled", "goal", "believe", "hope", "aims", "continue", "will",
"may", "should", "would", "could", or other words of similar meaning. These
statements are based on assumptions and assessments made by Smoove and/or
Digcom and/or PEXA in light of their experience and their perception of
historical trends, current conditions, future developments and other factors
they believe appropriate. By their nature, forward-looking statements involve
known and unknown risk and uncertainty and other factors which may cause
actual results, performance or developments to differ materially from those
expressed in or implied by such, because they relate to events and depend on
circumstances that will occur in the future. Although Digcom and/or PEXA
and/or Smoove believe that the expectations reflected in such forward-looking
statements are reasonable, no assurance can be given that such expectations
will prove to have been correct and you are therefore cautioned not to place
reliance on these forward-looking statements which speak only as at the date
of this announcement. Neither Digcom nor PEXA nor Smoove assumes any
obligation to update or correct the information contained in this announcement
(whether as a result of new information, future events or otherwise), except
as required by applicable law.
There are a number of factors which could cause actual results and
developments to differ materially from those expressed or implied in
forward-looking statements. The factors that could cause actual results to
differ materially from those described in the forward-looking statements
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; 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 dispositions; changes in general
and economic business conditions; changes in the behaviour of other market
participants; the anticipated benefits of the Acquisition not being realised
as a result of changes in general economic and market conditions in the
countries in which Digcom, PEXA and Smoove operate; weak, volatile or illiquid
capital and/or credit markets; changes in the degree of competition in the
geographic and business areas in which Digcom, PEXA and Smoove 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 Digcom nor PEXA nor Smoove, 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 their announcement will actually occur. Given
the risks and uncertainties, you are cautioned not to place any reliance on
these forward-looking statements.
Other than in accordance with their legal or regulatory obligations, neither
Digcom nor PEXA nor Smoove is under any obligation, and Digcom, PEXA and
Smoove expressly disclaim any intention or obligation, to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
Dealing and Opening Position Disclosure Requirements
Under Rule 8.3(a) of the Takeover Code, any person who is interested in one
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 10(th)
business day following the commencement of the Offer Period and, if
appropriate, by no later than 3.30 p.m. (London time) on the 10(th) business
day following the announcement in which any securities exchange offeror is
first identified. Relevant persons who deal in the relevant securities of the
offeree company or of a securities exchange offeror prior to the deadline for
making an Opening Position Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Takeover Code, any person who is, or becomes,
interested in one 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
www.thetakeoverpanel.org.uk, including details of the number of relevant
securities in issue, when the Offer Period commenced and when any offeror was
first identified. You should contact the Panel's Market Surveillance Unit on
+44 (0)20 7638 0129 if you are in any doubt as to whether you are required to
make an Opening Position Disclosure or a Dealing Disclosure.
Publication on website
In accordance with Rule 26.1 of the Takeover Code a copy of this announcement
and the documents required to be published under Rule 26 of the Takeover Code,
will be made available free of charge, subject to certain restrictions
relating to persons resident in Restricted Jurisdictions, on PEXA's website at
https://investors.pexa.com.au/investor-centre and Smoove's website at
www.hellosmoove.com/investorrelations by no later than 12 noon (London time)
on the first business day following the date of this announcement. For the
avoidance of doubt, neither the contents of these websites nor the contents of
any websites accessible from any hyperlinks are incorporated into or form part
of this announcement.
Neither the contents of PEXA's website, nor those of Smoove's website, nor
those of any other website accessible from hyperlinks on either PEXA's or
Smoove's websites, are incorporated into or form part of this announcement.
No profit forecasts, profit estimates or quantified benefits statements
No statement in this announcement is intended as a profit forecast, profit
estimate or quantified benefits statement for any period and no statement in
this announcement should be interpreted to mean that earnings or earnings per
share for Smoove for the current or future financial years would necessarily
match or exceed the historical published earnings or earnings per share for
Smoove.
Requesting hard copy documents
In accordance with Rule 30.3 of the Takeover Code, Smoove Shareholders,
persons with information rights and participants in the Smoove Share Plans may
request a hard copy of this announcement by contacting Smoove's registrars,
Equiniti, by: (i) submitting a request in writing to Equiniti, Aspect House,
Spencer Road, Lancing, West Sussex BN99 6DA, United Kingdom; or (ii) calling
+44 (0)371 384 2050. Calls are charged at the standard geographical rate and
will vary by provider. Calls outside the United Kingdom will be charged at the
applicable international rate. Phone lines are open between 8.30 a.m. and 5.30
p.m. (London time), Monday to Friday (excluding public holidays in England and
Wales). Please note that Equiniti cannot provide any financial, legal or tax
advice and calls may be recorded and monitored for security and training
purposes.
For persons who receive a copy of this announcement in electronic form or via
a website notification, a hard copy of this announcement will not be sent
unless so requested. Such persons may also request that all future documents,
announcements and information to be sent to them in relation to the
Acquisition should be in hard copy form.
Electronic communications
Please be aware that addresses, electronic addresses and certain other
information provided by Smoove Shareholders, persons with information rights
and other relevant persons for the receipt of communications from Smoove may
be provided to Digcom and/or PEXA during the Offer Period as required under
Section 4 of Appendix 4 to the Takeover Code to comply with Rule 2.11(c) of
the Takeover Code.
Rounding
Certain figures included in this announcement have been subjected to rounding
adjustments. Accordingly, figures shown for the same category presented in
different tables may vary slightly and figures shown as totals in certain
tables may not be an arithmetic aggregation of figures that precede them.
General
Digcom reserves the right to elect, with the consent of the Panel (where
necessary), and subject to the terms and conditions of the Co-operation
Agreement, to implement the Acquisition by way of a Takeover Offer for the
entire issued and to be issued share capital of Smoove not already held by
Digcom as an alternative to the Scheme. In such an event, a Takeover Offer
will be implemented on substantially the same terms, so far as applicable, as
those which would apply to the Scheme.
If the Acquisition is effected by way of Takeover Offer, and such Takeover
Offer becomes or is declared unconditional and sufficient acceptances are
received, Digcom 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 Smoove Shares in respect of which the Takeover Offer has not been
accepted.
If you are in any doubt about the contents of this announcement or the action
you should take, you are recommended to seek your own independent financial
advice immediately from your stockbroker, bank manager, solicitor or
independent financial adviser duly authorised under 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.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE
A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE MARKET
ABUSE REGULATION NO 596/2014 (INCORPORATED INTO UK LAW BY VIRTUE OF THE
EUROPEAN UNION (WITHDRAWAL) ACT 2018 AS AMENDED BY VIRTUE OF THE MARKET ABUSE
(AMENDMENT) (EU EXIT) REGULATIONS 2019). UPON THE PUBLICATION OF THIS
ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INSIDE INFORMATION IS
NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
FOR IMMEDIATE RELEASE
4 October 2023
RECOMMENDED CASH ACQUISITION
of
SMOOVE PLC
by
DIGCOM UK HOLDINGS LIMITED
(an indirect subsidiary undertaking of PEXA Group Limited)
to be effected by means of a Scheme of Arrangement under Part 26 of the
Companies Act 2006
1. Introduction
The boards of directors of Digcom UK Holdings Limited ("Digcom"), an indirect
subsidiary undertaking of PEXA Group Limited ("PEXA"), and Smoove plc
("Smoove"), are pleased to announce that they have reached agreement on the
terms of a recommended cash acquisition by Digcom of the entire issued and to
be issued share capital of Smoove (the "Acquisition").
2. The Acquisition
It is intended that the Acquisition will be implemented by way of a
Court-sanctioned scheme of arrangement under Part 26 of the Companies Act. The
purpose of the Scheme is to enable Digcom to acquire the whole of the issued
and to be issued share capital of Smoove.
Under the terms of the Acquisition, which will be subject to the Conditions
and other terms set out in this announcement and to the full terms and
conditions which will be set out in the Scheme Document, Smoove Shareholders
will be entitled to receive:
54 pence for each Smoove Share (the
"Consideration")
The Consideration of 54 pence per Smoove Share values the entire issued and to
be issued share capital of Smoove at approximately £30.8 million on a fully
diluted basis and represents a premium of approximately:
→ 69.3 per cent. to the Closing Price of 31.9 pence per Smoove Share on
21 April 2023 (being the last Business Day before the commencement of the
Offer Period);
→ 74.1 per cent. to the volume-weighted average Closing Price of 31.0
pence per Smoove Share for the one-month period ended 21 April 2023 (being the
last Business Day before the commencement of the Offer Period); and
→ 43.9 per cent. to the volume-weighted average Closing Price of 37.5
pence per Smoove Share for the three-month period ended 21 April 2023 (being
the last Business Day before the commencement of the Offer Period).
If, on or after the date of this announcement and before the Effective Date,
any dividend, distribution or other return of capital or value is announced,
declared, made or paid by Smoove or becomes payable by Smoove in respect of
the Smoove Shares, Digcom reserves the right to reduce the Consideration
payable pursuant to the Acquisition by an amount up to the amount of such
dividend and/or distribution and/or other return of capital or value. In such
circumstances, Smoove Shareholders would be entitled to receive and retain any
such dividend and/or other distribution and/or return of capital or value.
In the event that the Acquisition is to be implemented by way of a Takeover
Offer, Smoove Shares will be acquired pursuant to the Takeover Offer fully
paid and free from all liens, charges, equitable interests, encumbrances and
rights of pre-emption and any other interests of any nature whatsoever and
together with all rights attaching thereto including the right to receive and
retain all dividends and distributions declared, made or paid by reference to
a record date after the Effective Date.
3. Background to and reasons for the Acquisition
The PEXA Group's strategy is to enhance and leverage its property exchange
know-how to deliver growth from different markets, including in other Torrens
title jurisdictions starting with the UK.
Since entering the UK market at the end of 2020, the PEXA Group, via Digital
Completion UK Limited, has launched its first re-mortgage product, brought two
lenders onto the platform, and acquired a specialist re-mortgage conveyancer,
Optima Legal. The Acquisition will provide PEXA with a growing conveyancer
presence via Amity Law and Smoove Complete. The PEXA Group's aim in executing
this strategy is to help solve the many detriments consumers and property
stakeholders suffer due to the UK's fragmented, inefficient conveyancing
processes. The Acquisition will allow PEXA to leverage Smoove's experience to
obtain expert input into development of PEXA's sale and purchase platform and
potential PEXA product enhancements.
Both Smoove and PEXA share a common goal of simplifying and enhancing the home
moving process through digitalisation, significantly reducing transaction
times, whilst simultaneously removing the pain points across the process. The
PEXA Board believes there is an opportunity for Smoove's existing customers to
benefit from PEXA's digital property settlements platform and wider service
offering, leveraging PEXA's experience as the market leader in Australia.
Smoove has a long-standing relationship with Lloyds Banking Group and a
connection with over 75 conveyancer firms on its eConveyancer platform and
circa 2,100 conveyancing firms via lender panels.
The PEXA Board strongly believes that by integrating Smoove into Digcom, the
Combined Group will be able to address the challenges of building scale and
depth in the UK market, accelerating the path to enhancing the home moving
process. Smoove provides access to re-mortgage flows equivalent to 7 per
cent.(2) of the UK market and sales and purchase flows across the Smoove
platform which are equivalent to 3 per cent.(2) of the UK's sales and purchase
market which are intermediated by the Smoove platform.
PEXA's existing business, commitment to developing new revenue streams through
international expansion and investments in new digital business and
partnerships, supported by a strong balance sheet and cash generative business
model, will help to build a unique, strong and attractive business. Smoove
will provide reach into the 'cash back market segment' not currently served by
Optima Legal and indirect access to sale and purchase conveyancing firms. The
Acquisition also presents an opportunity to cross-sell the PEXA platform to
panel firms of Smoove (which provides access to volumes both on and outside of
the Smoove platform).
The Consideration represents:
· an Enterprise Value of £20.8 million;
· an implied Enterprise Value / FY23 revenue multiple of 1.0x; and
· an implied Enterprise Value / FY23 gross profit multiple of 2.7x.
4. Recommendation
Smoove's Directors, who have been so advised by Cavendish as to the financial
terms of the Acquisition, unanimously consider the terms of the Acquisition to
be fair and reasonable. In providing their advice to the Smoove Directors,
Cavendish has taken into account the commercial assessments of the Smoove
Directors. Cavendish is providing independent financial advice to the Smoove
Directors for the purposes of Rule 3 of the Takeover Code.
Accordingly, the Smoove Directors intend to recommend unanimously that Smoove
Shareholders vote in favour of the Scheme at the Court Meeting and the
Resolution(s) to be proposed at the General Meeting (or in the event that the
Acquisition is implemented by way of a Takeover Offer, to accept or procure
the acceptance of such Takeover Offer) as the Smoove Directors who are
beneficially interested in Smoove Shares (who, for the avoidance of doubt, do
not include Smoove Directors whose interests in Smoove Shares comprise only
unexercised options under the Smoove Share Plans, nor Oliver Scott who has an
indirect beneficial interest in Smoove Shares as well as being a partner of
Kestrel Partners LLP, an entity interested in Smoove Shares) have irrevocably
undertaken to do in respect of their entire beneficial holdings of 85,000
Smoove Shares, representing, in aggregate, approximately 0.15 per cent. of
Smoove's total issued share capital as at the close of business on the Last
Practicable Date.
___
(2) Calculated based on Smoove's sale and purchase and remortgage completion
volumes for the financial year ended 31 March 2023, Bank of England sale and
purchase transactions (Bank of England data set LPMB4B3) and Bank of England
remortage transactions (Bank of England data set LPMVTVX)
5. Smoove Directors' interests in Smoove Shares and bonus arrangements
Each of Martin Rowland and Jesper With-Fogstrup, who are the only Smoove
Directors who are beneficially interested in Smoove Shares (not including, for
the avoidance of doubt, those Smoove Directors whose interests in Smoove
Shares comprise only unexercised options under the Smoove Share Plans, nor
Oliver Scott who has an indirect beneficial interest in Smoove shares as well
as being a partner of Kestrel Partners LLP, an entity interested in Smoove
Shares), have given to Digcom irrevocable undertakings to vote in favour (or
procure the voting in favour, as applicable) of the Scheme at the Court
Meeting and the Resolution(s) to be proposed at the General Meeting (or in the
event that the Acquisition is implemented by way of a Takeover Offer, to
accept or procure the acceptance of such Takeover Offer), in respect of their
entire beneficial holdings of, in aggregate, 85,000 Smoove Shares,
representing in aggregate approximately 0.15 per cent. of Smoove's total
issued share capital as at the close of business on the Last Practicable Date.
In addition, Martin Rowland has been granted options over 750,000 Smoove
Shares under the Smoove Share Plans, Jesper With-Fogstrup has been granted
options and JOA awards over 2,175,000 Smoove Shares under the Smoove Share
Plans and Michael Cress has been granted options over 750,000 Smoove Shares
under the Smoove Share Plans. Save for the options over 750,000 Smoove Shares
granted to Martin Rowland which will be exercisable as a result of the
Acquisition, it is not expected any of these options or awards will be
exercised or vest as part of the Acquisition as they are either underwater
(i.e. the exercise price is in excess of the Consideration), or they are
subject to performance share price triggers which are in excess of the
Consideration and so will not be met. It is therefore expected that those
options (other than the options granted over 750,000 Smoove Shares to Martin
Rowland) and awards will lapse in accordance with the applicable Smoove Share
Plan rules.
Oliver Scott, a Non-Executive Director of Smoove, is a partner of Kestrel
Partners LLP which is interested in 15,711,095 Smoove Shares. Kestrel Partners
LLP has given an irrevocable undertaking as detailed in paragraph 7 below.
Jesper With-Fogstrup and Michael Cress, along with two other members of senior
management, are entitled to receive transaction bonuses in the event of a cash
offer resulting in the acquisition of Smoove by a third party. The
entitlements of the relevant Smoove Directors are:
· Jesper With-Fogstrup - £150,000; and
· Michael Cress - £75,000.
The bonus arrangements will be subject to usual tax and National Insurance
deduction.
6. Background to and reasons for the recommendation
Smoove has sought to make moving house in the UK a simpler, more transparent
and automated process for the benefit of both consumers and the professionals
who work in the sector. To that end, Smoove has developed service offerings,
such as eConveyancer, a two-sided digital comparison marketplace connecting
consumers to conveyancing lawyers. eConveyancer allows the consumer, primarily
through introducers such as mortgage brokers, lenders, or estate agents, to
compare the cost, service, and location of conveyancing lawyers. Smoove has
developed further products and services to provide solutions covering more of
the end-to-end home moving experience.
In the last 18 months, the home moving sector has been impacted by challenging
macroeconomic conditions. These factors include sudden and persistently high
inflation which has, in turn, led to a rapid, and at times unpredictable,
increase in interest rates from historic lows. As a result, sale and
purchase transaction volumes in the market have fallen sharply over the past
year and house prices have been unstable and begun falling also in real
terms. These events have combined to erode the confidence of market
participants including home movers, mortgage brokers, lenders, and estate
agents. Meanwhile, and not unrelated, the environment for trading in the
shares in Smoove has, in recent times, been impacted by poor sentiment around
not only AIM, but particularly smaller pre-profit companies, with limited
trading liquidity on the stock market.
Smoove's current trading has been in line with the Smoove Board's expectations
despite difficult market conditions and the Smoove Directors continue to
believe that Smoove's present strategy is capable of delivering long-term
growth in revenue and profits. However, they also believe that PEXA's scale
will help to accelerate the execution of Smoove's strategy. Access to PEXA's
digital property settlements platform is also expected to benefit Smoove's
offering to customers. The terms of the Acquisition provide Smoove
Shareholders with an immediate, certain and attractive cash value for their
investment. The Smoove Directors believe the Acquisition appropriately
recognises the growth potential of Smoove as a standalone business.
In considering its recommendation of the Acquisition to Smoove Shareholders,
the Smoove Directors have given due consideration to Digcom's intentions
regarding Smoove's employees and other stakeholders as set out in paragraph 10
of this announcement.
When considering the Acquisition, the Smoove Directors have taken into account
the substantial premium of the Consideration to the Closing Price of Smoove
Shares on 21 April 2023 (being the last Business Day before the commencement
of the Offer Period). The Consideration of 54 pence in cash per Smoove Share
represents a premium of approximately:
→ 69.3 per cent. to the Closing Price of 31.9 pence per Smoove Share on
21 April 2023 (being the last Business Day before the commencement of the
Offer Period);
→ 74.1 per cent. to the volume-weighted average Closing Price of 31.0
pence per Smoove Share for the one-month period ended 21 April 2023 (being the
last Business Day before the commencement of the Offer Period); and
→ 43.9 per cent. to the volume-weighted average Closing Price of 37.5
pence per Smoove Share for the three-month period ended 21 April 2023 (being
the last Business Day before the commencement of the Offer Period).
The Acquisition provides the certainty of a realisable value to all Smoove
Shareholders and allows them to realise their investment in Smoove Shares for
cash without incurring broking fees.
As further described below and at Appendix 3 to this announcement, Digcom has
received irrevocable undertakings and a non-binding letter of intent in
respect of 32,010,862 Smoove Shares representing, in aggregate, approximately
56.14 per cent. of Smoove's total issued capital as at the close of business
on the Last Practicable Date.
The Smoove Directors consider the terms of the Acquisition to be fair and
reasonable. Accordingly, following careful consideration of both the financial
terms of the Acquisition and PEXA's intentions regarding the conduct of the
Smoove business under PEXA's ownership, the Smoove Directors intend to
recommend unanimously the Acquisition to Smoove Shareholders. In reaching its
intention to recommend unanimously the Acquisition, the Smoove Board, in
addition to the financial terms of the Acquisition, took account of the
interests of all of its key stakeholders, including customers, employees and
shareholders.
7. Irrevocable undertakings and letter of intent
In addition to the irrevocable undertakings from the Smoove Directors
described in paragraph 5 above, Digcom has also received irrevocable
undertakings from each of Kestrel Partners LLP (a partner of which, Oliver
Scott, is a Non-Executive Director of Smoove), Harwood Capital Management
Limited and Herald Investment Management Limited to vote in favour (or procure
the voting in favour, as applicable) of the Scheme at the Court Meeting and
the Resolution(s) to be proposed at the General Meeting (or in the event that
the Acquisition is implemented by way of a Takeover Offer, to accept or
procure the acceptance of such Takeover Offer) in respect of, in aggregate,
26,560,625 Smoove Shares, representing approximately 46.58 per cent. of
Smoove's total issued share capital as at the close of business on the Last
Practicable Date.
In addition, Digcom has received a non-binding letter of intent from Schroders
Investment Management Limited to procure the voting in favour of the Scheme at
the Court Meeting and the Resolution(s) to be proposed at the General Meeting
(or in the event that the Acquisition is implemented by way of a Takeover
Offer, to procure the acceptance of such Takeover Offer) in respect of
5,365,237 Smoove Shares, representing approximately 9.41 per cent. of Smoove's
total issued share capital as at the close of business on the Last Practicable
Date.
Further details of these irrevocable undertakings and letter of intent are set
out in Appendix 3 to this announcement.
Accordingly, Digcom has received irrevocable undertakings and a letter of
intent to vote, or procure the voting, in favour of the Scheme at the Court
Meeting and the Resolution(s) to be proposed at the General Meeting (or in the
event that the Acquisition is implemented by way of a Takeover Offer, to
accept or procure the acceptance of such Takeover Offer) in respect of a total
of 32,010,862 Smoove Shares representing, in aggregate, approximately 56.14
per cent. of Smoove's total issued share capital of Smoove as at the close of
business on the Last Practicable Date.
8. Information relating to Smoove
Smoove provides online digital platforms for everyone involved in the buying,
selling, and refinancing of property in the UK. Smoove is investing in new
technology to generate more value from its partner relationships, develop new
revenue streams, and build products that improve the experience of
consumers.
· eConveyancer is a platform that brings together conveyancers and
introducers such as mortgage brokers and lenders to offer a conveyancing
comparison service to consumers. The eConveyancer offering includes
value-added tools such as DigitalMove, an onboarding and messaging service
that helps all participants in the conveyancing process to communicate and
collaborate. In the most recent financial year, eConveyancer generated
69,662 conveyancing instructions and 53,224 conveyancing completions.
eConveyancer and its related services account for the vast majority of
Smoove's revenue.
· Smoove Complete is a platform for self-employed Consultant
Conveyancing Lawyers ("CCLs"). In exchange for a share of the conveyancing fee
income, Smoove provides CCLs with a suite of services including onboarding and
post-completion services, as well as support infrastructure including
technology, regulatory oversight and professional indemnity insurance. The
business is an area of strategic focus, but because it only recently began
trading in late October 2022, it made a minimal contribution to Smoove group
revenues in the most recent financial year. Smoove Complete trades within ALL,
a conveyancing law firm acquired by Smoove in October 2021.
· Legal Eye provides risk management and compliance services to
solicitors and licensed conveyancers. Legal Eye accounted for approximately 4
per cent. of group revenue in the most recent financial year.
· Smoove Start launched in August 2022 after a well-received
limited product pilot. The software provides a service to estate agents
encompassing ID verification, anti-money laundering, and upfront information.
In response to challenging market conditions the product was pivoted to focus
on a conveyancing-led offering to emphasise the fee earning potential to
estate agents from referral of cases into eConveyancer. Given its limited
trading history, Smoove Start made a minimal contribution to Smoove group
revenues in the most recent financial year.
Smoove's business was founded in 2003 and was admitted to AIM in July 2014.
Current trading
To date, Smoove has continued to trade in line with the Smoove Board's
expectations during the first half of the current financial year. This period
has been characterised by continued growth in the remortgage segment and
year-on-year volume declines in the transactional segment. The latter trend
reflects deteriorating conditions in the housing market as increased costs in
mortgage finance since the start of the current financial year have led to
lower market transaction volumes and falling real house prices. The cash
balance at 30 September 2023 was £9.2 million. The reduced rate of cash burn
has benefitted from the impact of previously announced cost reduction
initiatives.
9. Information on the PEXA Group and Digcom
The PEXA Group
· PEXA is the operator of the leading digital property settlements
platform in Australia, employing approximately 1,000 people and listed on the
ASX with a market cap of A$ 2.016 billion on the Last Practicable Date.
· Having started in 2010 as a joint initiative of various state
governments and the largest banks in Australia to phase out the use of
inefficient paper-based property settlements, the PEXA Group today offers the
world's first digital platform for managing the lodgement and settlement of
property transactions.
· "PEXA Exchange" operates primarily as an ELNO facilitating the
electronic lodgement and settlement of property transactions through an
integrated, cloud-based platform connecting key property market stakeholders.
· PEXA Exchange's facilitation of secure, reliable and efficient
digital settlements has established the platform as a critical and trusted
component of the Australian property market, providing confidence and
stability for all participants in a property transaction.
· Through its PEXA Digital Growth business, PEXA offers
property-related insight and analytics solutions to its customers and
stakeholders which aim to reduce transaction costs in the property chain and
enhance the experience of developing, buying and selling, financing, settling,
owning, and servicing property. PEXA Digital Growth also identifies and
invests in opportunities across the property ecosystem to complement and
enhance its core insights and analytics offering.
· For the year ended 30 June 2023, PEXA Group generated business
revenue of A$283.4 million and an operating EBITDA of A$98.7 million.
Additional information on PEXA Group's latest financial results can be found
at https://investors.pexa.com.au/investor-centre/?page=results-centre
(https://investors.pexa.com.au/investor-centre/?page=results-centre) .
· The Acquisition will be funded through cash currently held by
PEXA, which has been drawn down by PEXA under its existing facility and a
newly established facility (which can be used for general commercial
requirements and has a limit of $40 million AUD).
Digcom
· Having created the leading digital property settlements platform
in Australia, Digcom was established in 2020 to enable PEXA to enter the UK
market and implement its strategy to transform the UK property market.
· In seeking to extend its digital property settlements platform
knowledge in new geographies, the PEXA Group launched its remortgage offering
in the UK in September 2022 following the successful testing of the PEXA
settlement payment solution with the Bank of England. Shortly after the UK
launch, Digcom acquired Optima Legal, a high-volume remortgage conveyancing
firm that provides legal services in the UK remortgage market.
10. PEXA's intentions for the Smoove business
PEXA and Digcom's strategic plans for the Combined Group
Following Completion, PEXA intends to integrate Smoove into PEXA's existing UK
business to further advance the offering of its digital settlements platform
to lenders, conveyancers and consumers in the UK.
PEXA has been granted access to Smoove management and information to carry out
due diligence. However, due to transaction constraints, PEXA has not yet had
access to sufficiently detailed information to formulate a complete
post-Acquisition strategy for the integration of Smoove into PEXA's UK
business. To assist with this process, PEXA intends to carry out a review of
Smoove's and PEXA's UK business. The review is expected to take at least six
months following Completion of the Acquisition. The review will examine the
current operating and organisational structures of both businesses and provide
the basis for the development of an integration programme designed to minimise
any disruption to customers, suppliers, employees and consumers whilst
delivering the expected opportunities and benefits of the Acquisition.
Brand
In the longer term, Digcom intends that the Smoove business will operate under
the umbrella PEXA brand but, following Completion, will undertake a review of
individual product brands (including eConveyancer, DigitalMove, Smoove
Complete, Smoove Start and Legal Eye) to ensure that their offerings are
distinguishable under the PEXA brand.
Employees, management and directors
Digcom attaches great importance to the skills and experience of Smoove's
management and employees and recognises their important contribution to the
success that has been achieved by Smoove.
Digcom confirms that, following completion of the Acquisition, the existing
contractual and statutory employment rights of Smoove employees will be fully
safeguarded in accordance with applicable law. Following Completion, Digcom
will seek to align the employment contracts and benefits of Smoove employees
with those of the PEXA Group so that employees benefit from matters that are
of cultural importance to the PEXA Group.
Whilst Digcom's review will seek to design an optimal strategy for integrating
Smoove into PEXA's existing UK business, given the complementary nature of
both businesses Digcom does not expect the outcome of its review to result in
any material change to Smoove's employee skills mix and headcount. To the
extent that the outcome of Digcom's review unlocks synergies and opportunities
for costs savings Digcom will endeavour to minimise their impact on employees.
It is expected that the Non-Executive Directors of Smoove will resign from the
Smoove Board on Completion.
Pensions
Digcom intends to maintain the rate of contributions made to the Smoove
Group's pension schemes following Completion. The Smoove Group operates
defined contribution pension arrangements for its management and employees and
has no exposure under any form of defined benefit (final salary) pension
scheme.
Management incentives
PEXA has not entered into, and has not had discussion on proposals to enter
into, any form of incentive arrangements with any of the existing members of
Smoove's management. PEXA expects to put in place appropriate incentive
arrangements for Smoove's management following Completion.
Locations of business, fixed assets and research and development
Following Completion, it is intended that Smoove will continue to operate from
its head office in Thame, Oxfordshire. Digcom will review the Smoove Group's
leasing arrangements in the ordinary course to ensure they continue to meet
the Smoove Group's operating needs moving forward. Smoove does not have any
material fixed assets and the PEXA Board does not intend to redeploy any of
Smoove's fixed assets following Completion.
Smoove has no dedicated research and development function.
Trading facilities
Smoove Shares are currently traded on AIM. As set out in paragraph 17 below,
it is intended that a request will be made to the London Stock Exchange to
cancel trading in Smoove Shares on AIM, subject to the Acquisition becoming
Effective, such cancellation to take effect from or shortly after the
Effective Date. At the same time, it is intended that Smoove will be
re-registered as a private limited company. As stated in paragraph 17 below,
dealings in Smoove Shares will be suspended prior to the Effective Date and,
thereafter, there will be no trading facilities in relation to Smoove Shares.
As a result of the cancellation of trading in Smoove Shares on AIM, the
Combined Group expects to achieve savings from Smoove no longer having to
comply with its ongoing public company reporting obligations.
No "post-offer undertakings"
No statements in this paragraph 10 are "post-offer undertakings" for the
purposes of Rule 19.5 of the Takeover Code.
11. Share Schemes
Participants in the Smoove Share Plans will be contacted regarding the effect
of the Acquisition on their rights under the Smoove Share Plans and provided
with further details concerning the proposals which will be made to them in
due course. Details of the proposals will be set out in the Scheme Document
(or, as the case may be, the Offer Document) and in separate letters to be
sent to participants in the Smoove Share Plans.
12. Financing of the Acquisition
The Consideration payable to Smoove Shareholders pursuant to the Acquisition
will be financed using existing cash resources of the PEXA Group.
Numis, in its capacity as financial adviser to PEXA and Digcom, is satisfied
that sufficient resources are available to Digcom to satisfy in full the
Consideration payable by Digcom to Smoove Shareholders pursuant to the
Acquisition.
Further information on the financing of the Acquisition will be set out in the
Scheme Document.
13. Offer-related Arrangements
Confidentiality Agreement
On 9 August 2023, PEXA and Smoove entered into the Confidentiality Agreement
in connection with the Acquisition, pursuant to which, amongst other things,
the parties gave certain undertakings to: (i) subject to certain exceptions,
keep information relating to the Acquisition and each other party 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 12 months from the date
of the agreement and Completion.
Co-operation Agreement
On 4 October 2023, Digcom and Smoove entered into the Co-operation Agreement
in relation to the Acquisition. Pursuant to the Co-operation Agreement: (i)
Digcom and Smoove have agreed to co-operate to assist with the satisfaction of
certain regulatory conditions, subject to certain customary carve-outs; (ii)
the parties have agreed to implement certain arrangements with respect to the
Smoove Share Plans and other employee-related matters; and (iii) the parties
have agreed to certain provisions if the Acquisition should switch to a
Takeover Offer. In addition, Digcom has agreed to provide Smoove with certain
information for the purposes of the Scheme Document and to otherwise assist
with the preparation of the Scheme Document.
The Co-operation Agreement shall terminate, amongst other things: (i) where:
(a) such termination is agreed between Digcom and Smoove; (b) the Scheme is
not approved by the requisite majority of the Scheme Shareholders at the Court
Meeting or the Resolutions are not passed by the requisite majority at the
General Meeting; (c) the Scheme is not sanctioned by the Court; (ii) upon
written notice of either party where: (a) prior to the Long Stop Date, a
competing offer becomes effective or is declared unconditional; (b) the Smoove
Directors withdraw their recommendation of the Acquisition or if the Smoove
Directors recommend a competing proposal; or (iii) upon written notice by
Digcom on Smoove: (a) prior to the Long Stop Date, a Condition which is either
not capable of being waived or, where capable of being waived Digcom has
confirmed that it will not waive said Condition, becomes incapable of
satisfaction by the Long Stop Date in circumstances where invocation of the
relevant Condition is permitted by the Panel.
14. Scheme process
It is intended that the Acquisition will be effected by a Court-sanctioned
scheme of arrangement between Smoove and the Scheme Shareholders under Part 26
of the Companies Act. Digcom reserves the right, however, to effect the
Acquisition by way of Takeover Offer, subject to the consent of the Panel and
the terms of the Co-operation Agreement.
The purpose of the Scheme is to provide for Digcom to become the owner of the
whole of the issued and to be issued share capital of Smoove. Under the
Scheme, the Acquisition is to be achieved by the transfer of the Scheme Shares
held by Scheme Shareholders to Digcom in consideration for which Scheme
Shareholders will receive the Consideration on the basis set out in paragraph
2 of this announcement. The process involves, amongst other things, an
application by Smoove to the Court to sanction the Scheme.
The Acquisition will be subject to the Conditions and further terms and
conditions referred to in Appendix 1 to this announcement and to be set out in
the Scheme Document. Subject, amongst other things, to the satisfaction (or,
where applicable, waiver) of the Conditions, the Scheme will only become
Effective if, amongst other things, the following events occur on or before
the Long Stop Date (or such later date as Digcom and Smoove may, with the
consent of the Panel, agree and, if required, the Court may approve):
· a resolution to approve the Scheme is passed by a majority in
number of the Scheme Shareholders present and voting (and entitled to vote) at
the Court Meeting, either in person or by proxy, representing 75 per cent. or
more in value of each class of the Scheme Shares held by those Scheme
Shareholders;
· the Resolution(s) is (or are, as applicable) passed by the
requisite majority of Smoove Shareholders at the General Meeting;
· certain regulatory approvals as described in Appendix 1
(including approvals from the CLC (being a regulator of ALL, a subsidiary of
Smoove)) are obtained (or waived, as applicable);
· following the Meetings, the Scheme is sanctioned by the Court
(with or without modification, and, if with modification, on terms agreed by
Digcom and Smoove); and
· following such sanction, an office copy of the Court Order is
delivered to the Registrar of Companies.
Upon the Scheme becoming Effective, it will be binding on all Smoove
Shareholders, irrespective of whether or not they attended or voted at the
Meetings (and if they attended and voted, whether or not they voted in favour)
and the Consideration will be despatched by Digcom to Scheme Shareholders no
later than 14 days after the Effective Date. In addition, share certificates
in respect of the Smoove Shares will cease to be valid and entitlements to
Smoove Shares held within the CREST system will be cancelled.
Any Smoove Shares issued before the Scheme Record Time will be subject to the
terms of the Scheme. The Resolution(s) to be proposed at the General Meeting
will, amongst other matters, provide that the articles of association of
Smoove be amended to incorporate provisions requiring any Smoove Shares issued
after the Scheme Record Time (other than to Digcom and/or its nominees) to be
automatically transferred to Digcom on the same terms as the Acquisition
(other than terms as to timings and formalities). These provisions of the
Articles (as amended) will avoid any person (other than Digcom and/or its
nominees) holding Smoove Shares after the Effective Date.
The Scheme Document will include full details of the Scheme, together with
notices of the Court Meeting and the General Meeting and the expected
timetable for the implementation of the Scheme, and will specify the action to
be taken by Scheme Shareholders. The Scheme Document, together with
accompanying Forms of Proxy, are expected to be published and sent to Smoove
Shareholders within 28 days of the date of this announcement (unless the Panel
agrees otherwise). The Acquisition will lapse if the Scheme does not become
Effective by the Long Stop Date (or such later date as Digcom and Smoove may
agree, with the consent of the Panel and as the Court may approve, if such
approval is required).
Subject to, amongst other things, the satisfaction (or, where applicable,
waiver) of the Conditions, it is expected that the Acquisition will become
Effective in Q4 2023.
The Scheme will be governed by English law. The Scheme will be subject to the
applicable requirements of the Takeover Code, the Panel, the London Stock
Exchange (including pursuant to the AIM Rules) and the Registrar of Companies.
15. Dividends
If, on or after the date of this announcement and before the Effective Date,
any dividend, distribution or other return of capital or value is announced,
declared, made or paid by Smoove or becomes payable by Smoove in respect of
the Smoove Shares, Digcom reserves the right to reduce the Consideration
payable pursuant to the Acquisition for the Smoove Shares by an amount up to
the amount of such dividend and/or distribution and/or other return of capital
or value. In such circumstances, Smoove Shareholders would be entitled to
receive and retain any such dividend and/or other distribution and/or return
of capital or value.
16. Disclosure of interests
Except for the interests in Smoove Shares referred to in paragraph 5 above and
the irrevocable commitments referred to in paragraph 7 above, as at the date
of this announcement neither PEXA nor Digcom, nor any of their respective
directors, nor, so far as PEXA and Digcom are aware, any person acting in
concert (within the meaning of the Takeover Code) with Digcom:
· has any interest in, or right to subscribe for, any relevant
securities of Smoove; nor
· has any short position in respect of any relevant securities of
Smoove, including any short position under a derivative, any agreement to
sell, any delivery obligation or right to require another person to purchase
or take delivery of relevant securities of Smoove; nor
· has borrowed or lent any relevant securities of Smoove or entered
into any financial collateral arrangements relating to relevant securities of
Smoove; nor
· is party to any dealing arrangement of the kind referred to in
Note 11 of the definition of acting in concert in the Takeover Code in
relation to relevant securities of Smoove.
An "interest in" securities for these purposes arises, in summary, when a
person has long economic exposure, whether absolute or conditional, to changes
in the price of securities (and a person who only has a short position in
securities is not treated as interested in those securities). In particular, a
person will be treated as having an 'interest' by virtue of the ownership,
voting rights or control of securities, or by virtue of any agreement to
purchase, option in respect of, or derivative referenced to securities.
17. Cancellation of admission to trading on AIM and re-registration of
Smoove
Prior to the Scheme becoming Effective, it is intended that an application
will be made to the London Stock Exchange to, subject to the Acquisition
becoming Effective, cancel trading in Smoove Shares on AIM, with effect from
or shortly after the Effective Date.
The last day of dealings in, and registration of transfers of, Smoove Shares
on the London Stock Exchange is expected to be the Business Day immediately
prior to the Effective Date and no transfers will be registered after 6.00
p.m. (London time) on that date.
On the Effective Date, Smoove will become a wholly-owned subsidiary of Digcom
and share certificates in respect of Smoove Shares will cease to be valid and
should be destroyed. In addition, entitlements held within CREST to the Smoove
Shares will be cancelled on the Effective Date.
Upon the Scheme becoming Effective, Digcom will acquire the Smoove Shares
fully paid and free from all liens, charges, equitable interests, encumbrances
and rights of pre-emption and any other interests of any nature whatsoever and
together with all rights attaching thereto including the right to receive and
retain all dividends and distributions declared, made or paid by reference to
a record date after the Effective Date.
It is also intended that, subject to and with effect from the Scheme becoming
Effective, Smoove will be re-registered as a private limited company.
18. Consents
Numis and Cavendish 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 content in which they appear.
19. Documents available for inspection
Copies of this announcement and the following documents will, by no later than
12 noon on the business day following the date of this announcement, be
published on PEXA's website at https://investors.pexa.com.au/investor-centre
and Smoove's website at www.hellosmoove.com/investorrelations until the end of
the Offer Period:
· this announcement;
· the irrevocable undertakings and letter of intent referred to in
paragraph 7 above and further described in Appendix 3 to this announcement;
· the Confidentiality Agreement;
· the Co-operation Agreement; and
· the consent letters referred to in paragraph 18 above.
The contents of PEXA's website and Smoove's website are not incorporated into
and do not form part of this announcement.
20. General
Digcom reserves the right to elect, with the consent of the Panel (where
necessary) and subject to the terms and conditions of the Co-operation
Agreement, to implement the Acquisition by way of a Takeover Offer for the
entire issued and to be issued share capital of Smoove not already held by
Digcom as an alternative to the Scheme. In such an event a Takeover Offer will
be implemented on substantially the same terms, so far as applicable, as those
which would apply to the Scheme.
If the Acquisition is effected by way of a Takeover Offer and such Takeover
Offer becomes or is declared unconditional and sufficient acceptances are
received, Digcom intends to: (i) request that the London Stock Exchange
cancels trading in Smoove Shares on AIM; and (ii) exercise its rights (to the
extent such rights are available) to apply the provisions of Chapter 3 of Part
28 of the Companies Act to acquire compulsorily the remaining Smoove Shares in
respect of which the Takeover Offer has not been accepted.
The Acquisition will be subject to the Conditions and other terms set out in
Appendix 1 and to the full terms and conditions which will be set out in the
Scheme Document. The formal Scheme Document containing further information
about the Acquisition and notices of the Meetings, together with the
accompanying Forms of Proxy, are expected to be published and sent to Smoove
Shareholders within 28 days of the date of this announcement (unless the Panel
agrees otherwise).
Appendix 2 contains the bases of calculation and sources of certain
information contained in this announcement. Details of the irrevocable
undertakings and letter of intent received by Digcom in connection with the
Acquisition are set out in Appendix 3 to this announcement. Certain terms used
in this announcement are defined in Appendix 4.
Enquiries:
PEXA Group Limited
Numis Securities Limited (Financial adviser to PEXA) Tel: +44 20 7260 1000
Simon Willis, Stuart Ord, William Wickham
Cato & Clive (Media and PR adviser to PEXA) Tel: +61 411 888 425
Clive Mathieson
MHP (Media and PR adviser to PEXA) Tel: +44 20 3128 8100
Dan Pike; Chanice Smith; Issie Rees-Davies
Smoove plc Via Walbrook PR
Jesper With-Fogstrup, CEO
Michael Cress, CFO
Cavendish Securities plc (Rule 3 Adviser to Smoove) Tel: +44 (0)20 7220 0500
Adrian Hadden, George Lawson, Hamish Waller
Panmure Gordon (UK) Limited (NOMAD and Broker to Smoove) Tel: +44 (0)20 7886 2500
Dominic Morley
Amrit Mahbubani
Walbrook PR Limited (PR to Smoove) smoove@walbrookpr.com or
Tom Cooper, Nick Rome Tel: 020 7933 8780
Addleshaw Goddard LLP is acting as legal adviser to PEXA and Digcom in
connection with the Acquisition.
Shoosmiths LLP is acting as legal adviser to Smoove in connection with the
Acquisition.
Further information
This announcement is for information purposes only and is not intended to, and
does not constitute, or form part of any 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 Smoove in any jurisdiction in
contravention of applicable law. The Acquisition will be made and implemented
solely pursuant to the terms of the Scheme Document (or if the Acquisition is
implemented by way of a Takeover Offer, the Offer Document), which will
contain the full terms and conditions of the Acquisition, including details of
how to vote in respect of the Acquisition. Any vote in respect of, or other
response 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 a Takeover Offer, the Offer Document).
Smoove and Digcom will prepare the Scheme Document (or if the Acquisition is
implemented by way of a Takeover Offer, the Offer Document) to be distributed
to Smoove Shareholders. Smoove and Digcom urge Smoove Shareholders to read the
Scheme Document (or if the Acquisition is implemented by way of a Takeover
Offer, the Offer Document) when it becomes available because it will contain
important information relating to the Acquisition.
This announcement does not constitute a prospectus, prospectus equivalent
document or an exempted document.
The statements contained in this announcement are made as at the date of this
announcement, unless some other time is specified in relation to them, and
publication of this announcement shall not give rise to any implication that
there has been no change in the facts set forth in this announcement since
such date.
Disclaimers
Numis Securities Limited ("Numis"), which is authorised and regulated in the
United Kingdom by the Financial Conduct Authority, is acting as financial
adviser to Digcom and PEXA, and no one else, in connection with the matters
set out in this announcement, and will not be responsible to anyone other than
the Boards of Digcom and PEXA for providing the protections afforded to
clients of Numis nor for providing advice in relation to the contents of this
announcement or any other matter or arrangement referred to herein. Neither
Numis nor any of its affiliates owes or accepts any duty, liability or
responsibility whatsoever (whether direct or indirect, whether in contract, in
tort, under statute or otherwise) to any person who is not a client of Numis
in connection with this announcement, any matter, arrangement or statement
contained or referred to herein or otherwise.
Cavendish Securities plc ("Cavendish") is acting for Smoove and no one else in
connection with the matters set out in this announcement and will not be
responsible to anyone other than Smoove for providing the protections afforded
to clients of Cavendish for providing advice in relation to the possible
offer, the contents of this announcement or any other matters referred to in
this announcement.
Overseas jurisdictions
This announcement has been prepared in accordance with, and for the purposes
of complying with, English law, the Takeover Code and the AIM Rules, and
information disclosed may not be the same as that which would have been
disclosed if this announcement had been prepared in accordance with the laws
of jurisdictions outside of England.
The release, publication or distribution of this announcement in, into or from
jurisdictions other than the United Kingdom may be restricted by law and
therefore any persons who are subject to the laws of any jurisdiction other
than the United Kingdom should inform themselves about and observe any
applicable requirements.
The availability of the Acquisition to Smoove Shareholders who are not
resident in and citizens of the United Kingdom may be affected by the laws of
the relevant jurisdictions in which they are located or of which they are
citizen. Persons who are not resident in the United Kingdom 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 United Kingdom to vote their Smoove Shares with respect to the
Scheme at the Meetings, or to execute and deliver Forms of Proxy (or other
proxy instructions) appointing another to vote at the Meetings 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.
Unless otherwise determined by Digcom or required by the Takeover Code, and
permitted by applicable law and regulation, the Acquisition will not be made
available, in whole or in part, directly or indirectly, in, into or from a
Restricted Jurisdiction where to do so would constitute a violation of the
relevant laws or regulations of such jurisdiction and no person may vote in
favour of the Acquisition 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 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 a Takeover Offer (unless otherwise permitted by applicable law and
regulation), the Takeover 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 Takeover Offer may not be capable of acceptance by any such use,
means, instrumentality or facilities.
The Acquisition will be subject to English law and the jurisdiction of the
Court, and the applicable requirements of the Takeover Code, the Panel, the
London Stock Exchange (including pursuant to the AIM Rules) and the Registrar
of Companies.
Notice to US investors in Smoove
The Acquisition relates to the shares of an English company with a quotation
on AIM and is being made by means of a scheme of arrangement provided for
under English company law. A transaction effected by means of a scheme of
arrangement is not subject to the tender offer rules or the proxy solicitation
rules under the US Securities Exchange Act of 1934. Accordingly, the
Acquisition is subject to the disclosure requirements and practices applicable
in the United Kingdom to schemes of arrangement which differ from the
disclosure requirements of United States tender offer and proxy solicitation
rules. Neither the United States Securities and Exchange Commission, nor any
securities commission of any state of the United States, has approved or
disapproved any offer, or passed comment upon the adequacy or completeness of
any of the information contained in this announcement. Any representation to
the contrary may be a criminal offence.
If, in the future, Digcom exercises the right, with the consent of the Panel
(where necessary), to implement the Acquisition by way of a Takeover Offer and
determines to extend the offer into the United States, the Acquisition will be
made in compliance with applicable United States laws and regulations,
including Section 14(e) of the US Securities Exchange Act 1934 and Regulation
14E thereunder.
Financial information included in this announcement and the Scheme Document
(or, if the Acquisition is implemented by way of a Takeover Offer, the Offer
Document) has been or will have been prepared in accordance with accounting
standards applicable in the United Kingdom or Australia (as applicable) that
may not be comparable to financial information of US companies or companies
whose financial statements are prepared in accordance with generally accepted
accounting principles in the United States.
The receipt of cash pursuant to the Acquisition by a US holder of Smoove
Shares as consideration for the transfer of its Scheme Shares pursuant to the
Scheme may be a taxable transaction for US federal income tax purposes and
under applicable US state and local, as well as foreign and other, tax laws.
Each Smoove Shareholder is therefore urged to consult with independent legal,
tax and financial advisers in connection with making a decision regarding the
Acquisition.
It may be difficult for US holders of Smoove Shares to enforce their rights
and any claim arising out of the US federal laws in connection with the
Acquisition, since Digcom and Smoove are located in, and organised under the
laws of, a non-US jurisdiction, and some or all of their officers and
directors may be residents of a non-US jurisdiction. US holders of Smoove
Shares may not be able to sue a non-US company or its officers or directors in
a non-US court for violations of the US securities laws. Further, it may be
difficult to compel a non-US company and its affiliates to subject themselves
to a US court's jurisdiction or judgement.
In accordance with normal UK practice and pursuant to Rule 14e-5(b) of the US
Securities Exchange Act of 1934, Digcom, certain affiliated companies and
their nominees or brokers (acting as agents), may from time to time make
certain purchases of, or arrangements to purchase, Smoove Shares outside of
the US, other than pursuant to the Acquisition, until the date on which the
Acquisition and/or Scheme becomes Effective, lapses or is otherwise withdrawn.
Also, in accordance with Rule 14e-5(b) of the US Securities Exchange Act of
1934, each of Numis and Cavendish will continue to act as an exempt principal
trader in Smoove Shares on the London Stock Exchange. If such purchases or
arrangements to purchase were to be made they would occur either in the open
market at prevailing prices or in private transactions at negotiated prices
and comply with applicable law, including the US Securities Exchange Act of
1934. Any information about such purchases will be disclosed as required in
the UK, will be reported to the Regulatory News Service of the London Stock
Exchange and will be available on the London Stock Exchange website at
www.londonstockexchange.com (http://www.londonstockexchange.com) .
Cautionary Note Regarding Forward-Looking Statements
This announcement (including information incorporated by reference into this
announcement), statements made regarding the Acquisition, and other
information to be published by Digcom, PEXA and/or Smoove, contain statements
which are, or may be deemed to be, "forward-looking statements".
Forward-looking statements are prospective in nature and not based on
historical facts, but rather are based on current expectations and projections
of the management of Digcom, PEXA and/or Smoove 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 with respect to the financial condition, results of operations and
business of Smoove and certain plans and objectives of Digcom and PEXA with
respect thereto and other statements other than historical facts. Often, but
not always, forward-looking statements can be identified by the fact that they
do not relate only to historical or current facts and may use words such as
"anticipate", "target", "expect", "estimate", "forecast", "intend", "plan",
"budget", "scheduled", "goal", "believe", "hope", "aims", "continue", "will",
"may", "should", "would", "could", or other words of similar meaning. These
statements are based on assumptions and assessments made by Smoove and/or
Digcom and/or PEXA in light of their experience and their perception of
historical trends, current conditions, future developments and other factors
they believe appropriate. By their nature, forward-looking statements involve
known and unknown risk and uncertainty and other factors which may cause
actual results, performance or developments to differ materially from those
expressed in or implied by such, because they relate to events and depend on
circumstances that will occur in the future. Although Digcom and/or PEXA
and/or Smoove believe that the expectations reflected in such forward-looking
statements are reasonable, no assurance can be given that such expectations
will prove to have been correct and you are therefore cautioned not to place
reliance on these forward-looking statements which speak only as at the date
of this announcement. Neither Digcom nor PEXA nor Smoove assumes any
obligation to update or correct the information contained in this announcement
(whether as a result of new information, future events or otherwise), except
as required by applicable law.
There are a number of factors which could cause actual results and
developments to differ materially from those expressed or implied in
forward-looking statements. The factors that could cause actual results to
differ materially from those described in the forward-looking statements
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; 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 dispositions; changes in general
and economic business conditions; changes in the behaviour of other market
participants; the anticipated benefits of the Acquisition not being realised
as a result of changes in general economic and market conditions in the
countries in which Digcom, PEXA and Smoove operate; weak, volatile or illiquid
capital and/or credit markets; changes in the degree of competition in the
geographic and business areas in which Digcom, PEXA and Smoove 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 Digcom nor PEXA nor Smoove, 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 their announcement will actually occur. Given
the risks and uncertainties, you are cautioned not to place any reliance on
these forward-looking statements.
Other than in accordance with their legal or regulatory obligations, neither
Digcom nor PEXA nor Smoove is under any obligation, and Digcom, PEXA and
Smoove expressly disclaim any intention or obligation, to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
Dealing and Opening Position Disclosure Requirements
Under Rule 8.3(a) of the Takeover Code, any person who is interested in one
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 10(th)
business day following the commencement of the Offer Period and, if
appropriate, by no later than 3.30 p.m. (London time) on the 10(th) business
day following the announcement in which any securities exchange offeror is
first identified. Relevant persons who deal in the relevant securities of the
offeree company or of a securities exchange offeror prior to the deadline for
making an Opening Position Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Takeover Code, any person who is, or becomes,
interested in one 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
www.thetakeoverpanel.org.uk, including details of the number of relevant
securities in issue, when the Offer Period commenced and when any offeror was
first identified. You should contact the Panel's Market Surveillance Unit on
+44 (0)20 7638 0129 if you are in any doubt as to whether you are required to
make an Opening Position Disclosure or a Dealing Disclosure.
Publication on website
In accordance with Rule 26.1 of the Takeover Code a copy of this announcement
and the documents required to be published under Rule 26 of the Takeover Code,
will be made available free of charge, subject to certain restrictions
relating to persons resident in Restricted Jurisdictions, on PEXA's website at
https://investors.pexa.com.au/investor-centre and Smoove's website at
www.hellosmoove.com/investorrelations
(http://www.hellosmoove.com/investorrelations) by no later than 12 noon
(London time) on the first business day following the date of this
announcement. For the avoidance of doubt, neither the contents of these
websites nor the contents of any websites accessible from any hyperlinks are
incorporated into or form part of this announcement.
Neither the contents of PEXA's website, nor those of Smoove's website, nor
those of any other website accessible from hyperlinks on either PEXA's or
Smoove's websites, are incorporated into or form part of this announcement.
No profit forecasts, profit estimates or quantified benefits statements
No statement in this announcement is intended as a profit forecast, profit
estimate or quantified benefits statement for any period and no statement in
this announcement should be interpreted to mean that earnings or earnings per
share for Smoove for the current or future financial years would necessarily
match or exceed the historical published earnings or earnings per share for
Smoove.
Requesting hard copy documents
In accordance with Rule 30.3 of the Takeover Code, Smoove Shareholders,
persons with information rights and participants in the Smoove Share Plans may
request a hard copy of this announcement by contacting Smoove's registrars,
Equiniti, by: (i) submitting a request in writing to Equiniti, Aspect House,
Spencer Road, Lancing, West Sussex BN99 6DA, United Kingdom; or (ii) calling
+44 (0)371 384 2050. Calls are charged at the standard geographical rate and
will vary by provider. Calls outside the United Kingdom will be charged at the
applicable international rate. Phone lines are open between 8.30 a.m. and 5.30
p.m. (London time), Monday to Friday (excluding public holidays in England and
Wales). Please note that Equiniti cannot provide any financial, legal or tax
advice and calls may be recorded and monitored for security and training
purposes.
For persons who receive a copy of this announcement in electronic form or via
a website notification, a hard copy of this announcement will not be sent
unless so requested. Such persons may also request that all future documents,
announcements and information to be sent to them in relation to the
Acquisition should be in hard copy form.
Electronic communications
Please be aware that addresses, electronic addresses and certain other
information provided by Smoove Shareholders, persons with information rights
and other relevant persons for the receipt of communications from Smoove may
be provided to Digcom and/or PEXA during the Offer Period as required under
Section 4 of Appendix 4 to the Takeover Code to comply with Rule 2.11I of the
Takeover Code.
Rounding
Certain figures included in this announcement have been subjected to rounding
adjustments. Accordingly, figures shown for the same category presented in
different tables may vary slightly and figures shown as totals in certain
tables may not be an arithmetic aggregation of figures that precede them.
General
Digcom reserves the right to elect, with the consent of the Panel (where
necessary), and subject to the terms and conditions of the Co-operation
Agreement, to implement the Acquisition by way of a Takeover Offer for the
entire issued and to be issued share capital of Smoove not already held by
Digcom as an alternative to the Scheme. In such an event a Takeover Offer will
be implemented on substantially the same terms, so far as applicable, as those
which would apply to the Scheme.
If the Acquisition is effected by way of Takeover Offer, and such Takeover
Offer becomes or is declared unconditional and sufficient acceptances are
received, Digcom 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 Smoove Shares in respect of which the Takeover Offer has not been
accepted.
If you are in any doubt about the contents of this announcement or the action
you should take, you are recommended to seek your own independent financial
advice immediately from your stockbroker, bank manager, solicitor or
independent financial adviser duly authorised under 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.
APPENDIX 1
CONDITIONS TO AND CERTAIN FURTHER TERMS OF THE ACQUISITION
PART A: CONDITIONS TO THE SCHEME AND THE 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. (London time) on the Long Stop Date.
Scheme approval condition
2. The Scheme will be conditional upon:
(A) (i) its approval by a majority in number representing not less than 75 per cent. in value of the Scheme Shareholders who are on the register of members of Smoove (or the relevant class or classes thereof, if applicable) at the Voting Record Time, present and voting (and entitled to vote), whether 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; and (ii) such Court Meeting and any such separate class meeting being held on or before the 22(nd) day after the expected date of the Court Meeting to be set out in the Scheme Document in due course (or such later date, if any, as Digcom and Smoove may agree and (if required) the Court may allow);
(B) (i) the Resolution(s) necessary to approve and implement the Scheme being duly passed by the requisite majority or majorities at the General Meeting or at any adjournment of that meeting; and (ii) such General Meeting being held on or before the 22(nd) day after the expected date of the General Meeting to be set out in the Scheme Document in due course (or such later date, if any, as Digcom and Smoove may agree and (if required) the Court may allow); and
(C) (i) the sanction of the Scheme by the Court with or without modification (but subject to any such modification being acceptable to Digcom and Smoove) and the delivery of the Court Order to the Registrar of Companies; and (ii) the Court Hearing being held on or before the 22(nd) day after the expected date of the Court Hearing to be set out in the Scheme Document in due course (or such later date, if any, as Digcom and Smoove may agree and (if required) the court may allow).
General conditions
3. In addition, subject to as stated in Part B of this Appendix 1 and to the requirements of the Panel, Digcom and Smoove have agreed that the Acquisition will be conditional upon the following Conditions and, accordingly, the necessary actions to make the Scheme Effective will not be taken unless the following Conditions (as amended if appropriate) have been satisfied, or, where relevant, waived (subject in respect of Conditions 3(A) and 3(B) to Digcom only being required to accept an outcome consistent with its commitment to use reasonable endeavours to satisfy the Conditions as set out in Clause 3 of the Co-operation Agreement):
Regulatory
(A) CLC Approvals
(i) in respect of each person who will, as a result of the Acquisition, acquire a restricted interest (as defined in Schedule 13, Paragraph 2(1) of the LSA) in ALL (the "CLC Regulated Firm"), and who is required to notify the CLC of such acquisition under Schedule 13, Paragraph 21(2) of the LSA, the CLC:
(a) providing its unconditional approval (by virtue of Schedule 13, Paragraph 27 of the LSA) of the acquisition of the relevant interest in the CLC Regulated Firm; or
(b) making a conditional approval of the acquisition of such notifiable interest (as defined in Schedule 13, Paragraph 21(4)(b) of the LSA) by virtue of Schedule 13, Paragraph 28 of the LSA, with such conditions being on terms satisfactory to Digcom (acting reasonably);
(ii) in respect of each natural person who will, as a result of the Acquisition, be deemed to be a beneficial owner (as defined in the MLRs) of the CLC Regulated Firm, the CLC:
(a) providing its unconditional approval of the deemed beneficial ownership (as applicable); or
(b) making a conditional approval of the deemed beneficial ownership (as applicable), with such conditions being on terms satisfactory to Digcom (acting reasonably); and
(iii) in respect of each other approval from the CLC (in relation to the CLC Regulated Firm or any other person or otherwise) as a result of the Acquisition as the CLC shall require (each, an "Additional CLC Approval Matter"), the CLC:
(a) providing its unconditional approval in respect of each Additional CLC Approval Matter; or
(b) making a conditional approval in respect of the Additional CLC Approval Matter, with such conditions being on terms satisfactory to Digcom (acting reasonably); and
(iv) the CLC not having cancelled or materially varied, and not having notified (or intimated that it intends to notify) any proposal to cancel or materially vary, any permission or approval or authorisation in respect of the CLC Regulated Firm including, without limitation, in respect of any approval or authorisation granted in accordance with paragraphs (A)(i) or (A)(ii) or (A)(iii) above;
Antitrust approvals and clearances
(B) one of the following has occurred:
(i) the CMA having indicated in a response to a briefing paper that it has no further questions at that stage in relation to the Acquisition; and as at the date on which all other Conditions are satisfied or waived, the CMA has not: (1) requested submission of a merger notice; or (2) otherwise given notice to either party that it is commencing an investigation under the merger control provisions of the Enterprise Act 2002; or
(ii) where the CMA has commenced an investigation following the submission of a merger notice or a briefing paper, the CMA:
(a) in accordance with section 33(1) of the Enterprise Act 2002, announcing that it has decided not to refer the Acquisition to the chair of the CMA for the constitution of a group under Schedule 4 to the Enterprise and Regulatory Reform Act 2013 (a Referral); or
(b) in accordance with section 73(2) of the Enterprise Act 2002, formally accepting undertakings in lieu of a Referral offered by Digcom, or a modified version of them;
General Third Party clearances
(C) other than in respect of any briefing paper, notification and/ or filing required in connection with the Conditions set out in paragraphs 3(A) and 3(B) above (to which only Conditions 3(A) and 3(B) above shall apply, as applicable), the waiver (or non-exercise within any applicable time limits) by any relevant government or governmental, quasi-governmental, supranational, statutory, regulatory, environmental or investigative body, court, trade agency, association, institution, any entity owned or controlled by any relevant government or state, or any other body or person whatsoever in any jurisdiction (each a "Third Party") of any termination right, right of pre-emption, first refusal or similar right (which is material in the context of the Wider Smoove Group taken as a whole) arising as a result of or in connection with the Scheme or the Acquisition;
(D) other than in respect of any briefing paper, notification and/ or filing required in connection with the Conditions set out in paragraphs 3(A) and 3(B) above (to which only Conditions 3(A) and 3(B) above shall apply, as applicable), all notifications, necessary filings or applications having been made in connection with the Acquisition and all statutory or regulatory obligations in any jurisdiction which are necessary or reasonably considered necessary by Digcom having been complied with in connection with the Acquisition or the acquisition by any member of the Wider PEXA Group of any shares or other securities in, or control of, Smoove and all authorisations, orders, recognitions, grants, determinations, confirmations, consents, licences, clearances, permissions, exemptions and approvals reasonably deemed necessary or appropriate by Digcom or any member of the Wider PEXA Group for or in respect of the Acquisition including without limitation, its implementation or the proposed direct or indirect acquisition of any shares or other securities in, or control of, Smoove or any member of the Wider Smoove Group by any member of the Wider PEXA Group having been obtained in terms and in a form reasonably satisfactory to Digcom from all appropriate Third Parties or persons with whom any member of the Wider Smoove Group has entered into contractual arrangements in each case where the direct consequence of the absence of such notification, filing or application would have a material adverse effect on the Wider Smoove Group or the Wider PEXA Group in each case taken as a whole or in the context of the Acquisition, and all such authorisations, orders, grants, recognitions, determinations, confirmations, consents, licences, clearances, permissions, exemptions and approvals necessary or appropriate to carry on the business of any member of the Wider Smoove Group which is material in the context of the Wider PEXA Group or the Wider Smoove Group as a whole or in the context of the Acquisition remaining in full force and effect and all filings necessary for such purpose having been made and there being no notice or intimation of any intention to revoke or not to renew any of the same at the time at which the Acquisition becomes otherwise unconditional and all necessary statutory or regulatory obligations in any jurisdiction having been complied with;
(E) other than in respect of any briefing paper, notification and/ or filing required in connection with the Conditions set out in paragraphs 3(A) and 3(B) above (to which only Conditions 3(A) and 3(B) above shall apply, as applicable), no Third Party having given notice of a decision to take, institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference (and, in each case, not having withdrawn the same), or having required any action to be taken, or otherwise having done anything, or having enacted, made or proposed any statute, regulation, decision or order or change to published practice, and there not continuing to be outstanding any statue, regulation, decision or order or having taken any other action or step which would or might reasonably be expected to:
(i) require, prevent or delay the divestiture, or alter the terms envisaged for any proposed divestiture, by any member of the Wider PEXA Group or any member of the Wider Smoove Group of all or any portion of their respective businesses, assets or property or impose any limitation on the ability of any of them to conduct their respective businesses (or any of them) or to own any of their respective assets or properties or any part thereof which, in any such case, is material in the context of the Wider PEXA Group or the Wider Smoove Group in either case taken as a whole or in the context of the Acquisition;
(ii) require, prevent or materially delay the divestiture by any member of the Wider PEXA Group of any shares or other securities in Smoove;
(iii) impose any limitation on, or result in a delay in, the ability of any member of the Wider PEXA Group directly or indirectly to acquire or to hold or to exercise effectively any rights of ownership in respect of shares or loans or securities convertible into shares or any other securities (or the equivalent) in any member of the Wider Smoove Group or the Wider PEXA Group or to exercise voting or management control over any such member which, in any such case, is material in the context of the Wider PEXA Group or the Wider Smoove Group in either case taken as a whole;
(iv) otherwise adversely affect the business, assets, profits or prospects of any member of the Wider PEXA Group or of any member of the Wider Smoove Group to an extent which is material in the context of the Wider PEXA Group or the Wider Smoove Group in either case taken as a whole;
(v) make the Scheme or Acquisition or, in each case, its implementation or the acquisition or proposed acquisition by Digcom or any member of the Wider PEXA Group of any shares or other securities in, or control of, Smoove void, illegal, and/or unenforceable under the laws of any jurisdiction, or otherwise, directly or indirectly, restrain, restrict, prohibit, materially delay or challenge or otherwise interfere with the same, or impose additional conditions or obligations with respect thereto;
(vi) require any member of the Wider PEXA Group or the Wider Smoove Group to offer to acquire any shares or other securities (or the equivalent) or interest in any member of the Wider Smoove Group or the Wider PEXA Group owned by any third party;
(vii) impose any limitation on the ability of any member of the Wider Smoove Group to co-ordinate its business, or any part of it, with the businesses of any other members which is adverse to and material in the context of the Wider Smoove Group taken as a whole or in the context of the Acquisition; or
(viii) result in any member of the Wider Smoove Group ceasing to be able to carry on business under any name under which it presently does so,
and all applicable waiting and other time periods (including any extensions thereof) during which any such Third Party could institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference or any other step under the laws of any jurisdiction in respect of the Scheme or the Acquisition, or the acquisition or proposed acquisition of any Smoove Shares having expired, lapsed or been terminated;
Certain matters arising as a result of any arrangement, agreement etc.
(F) save as Disclosed, there being no provision of any agreement, arrangement, licence, permit or other instrument to which any member of the Wider Smoove Group is a party or by or to which any such member or any of its assets may be bound, entitled or subject, or any circumstance which in consequence of the Acquisition, or the acquisition or proposed acquisition by a member of the Wider PEXA Group of any shares or other securities (or equivalent) in Smoove or because of a change in the control or management of Smoove or otherwise, could or might reasonably result in (to an extent which is material and adverse in the context of the Wider Smoove Group or Wider PEXA Group, in either case, taken as a whole or in the context of the Acquisition):
(i) any moneys borrowed by or any other indebtedness or liabilities (actual or contingent) of, or grant available to, any such member, being or becoming repayable or capable of being declared repayable immediately or earlier than their or its stated maturity date or repayment date or the ability of any such member to borrow moneys or incur any indebtedness being withdrawn or inhibited or being capable of becoming or being withdrawn or inhibited;
(ii) any such agreement, arrangement, licence, permit or instrument or the rights, liabilities, obligations or interests of any such member thereunder being terminated or adversely modified or affected or any obligation or liability arising or any action being taken or arising thereunder;
(iii) any assets or interests of any such member being or failing to be disposed of or charged or ceasing to be available to any such member 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 such member otherwise than in the ordinary course of business;
(iv) the creation or enforcement of any mortgage, charge or other security interest over the whole or any part of the business, property, assets or interests of any such member;
(v) the rights, liabilities, obligations or interests of any such member in, or the business of any such member with, any person, firm, company or body (or any arrangement or arrangements relating to any such interest or business) being terminated, adversely modified or affected or any obligation or liability arising or any adverse action being taken thereunder;
(vi) the value of any such member or its financial or trading position or prospects being prejudiced or adversely affected;
(vii) any such member ceasing to be able to carry on business under any name under which it presently does so; or
(viii) the creation or acceleration of any liability, actual or contingent, by any such member, other than trade creditors or other liabilities incurred in the ordinary course of business or in connection with the Acquisition,
and, save as Disclosed, no event having occurred which, under any provision of any agreement, arrangement, licence, permit or other instrument to which any member of the Wider Smoove Group is a party or by or to which any such member or any of its assets may be bound, entitled or subject, would or might reasonably be expected to result in any of the events or circumstances as are referred to in sub-paragraphs (i) to (viii) (inclusive) of this paragraph 3(F), in each case to the extent material in the context of the Wider Smoove Group taken as a whole or in the context of the Acquisition;
Certain events occurring since 31 March 2023
(G) save as Disclosed, no member of the Wider Smoove Group, since 31 March 2023, having:
(i) save as between Smoove and wholly-owned subsidiaries of Smoove or for Smoove Shares issued under or pursuant to the exercise of options and vesting of awards granted under the Smoove Share Plans, issued, or agreed to issue, authorised or proposed or announced its intention to authorise or propose the issue of additional shares of any class;
(ii) save as between Smoove and wholly-owned subsidiaries of Smoove or for the grant of options and awards and other rights granted under the Smoove Share Plans, issued or agreed to issue, authorised or proposed the issue of securities convertible into shares of any class or rights, warrants or options to subscribe for, or acquire, any such shares or convertible securities;
(iii) other than to another member of the Smoove Group, prior to the Acquisition becoming Effective, recommended, declared, paid or made or proposed to recommend, declare, pay or make any bonus, dividend or other distribution whether payable in cash or otherwise;
(iv) save for intra-Smoove Group transactions, merged or demerged with any body corporate or acquired or disposed of or transferred, mortgaged or charged or created any security interest over any assets or any right, title or interest in any asset (including shares and trade investments) or authorised or proposed or announced any intention to propose any merger, demerger, acquisition or disposal, transfer, mortgage, charge or security interest, in each case other than in the ordinary course of business;
(v) save for intra-Smoove Group transactions, made or authorised or proposed or announced an intention to propose any change in its loan capital;
(vi) issued, authorised or proposed the issue of, or made any changes in or to, any debentures or (save for intra-Smoove Group transactions), save in the ordinary course of business, incurred or increased any indebtedness or become subject to any contingent liability;
(vii) purchased, redeemed or repaid or announced any proposal to purchase, redeem or repay any of its own shares or other securities or reduced or, save in respect to the matters mentioned in sub-paragraphs (i) or (ii) of this paragraph 3(G), made any other change to any part of its share capital;
(viii) save for intra-Smoove Group transactions, implemented, or authorised, proposed or announced its intention to implement, any reconstruction, amalgamation, scheme, commitment or other transaction or arrangement otherwise than in the ordinary course of business;
(ix) entered into or varied or authorised, proposed or announced its intention to enter into or vary any contract, transaction, arrangement or commitment (whether in respect of capital expenditure or otherwise) which:
(a) is of a long term, onerous or unusual nature or magnitude or which involves or could involve an obligation of such nature or magnitude (save in the ordinary course of business); or
(b) would or could reasonably be expected to be restrictive on the businesses of any member of the Wider Smoove Group or the Wider PEXA Group (other than to a nature and extent which is normal in the context of the business concerned),
and, in either case, is material in the context of the Wider Smoove Group taken as a whole or in the context of the Acquisition;
(x) (other than in respect of a member which is dormant and was solvent at the relevant time) taken any corporate action or steps or had any legal proceedings started or threatened against it in relation to the suspension of payments, a moratorium of any indebtedness, or petition presented or order made for its winding-up, dissolution or reorganisation or for the appointment of a receiver, administrative receiver, administrator, manager, trustee or similar officer of all or any part of its assets or revenues or any analogous proceedings in any jurisdiction or had any such person appointed in each case to the extent material in the context of the Wider Smoove Group taken as a whole or in the context of the Acquisition;
(xi) waived or compromised any claim otherwise than in the ordinary course of business which is material in the context of the Wider Smoove Group taken as a whole;
(xii) made any material alteration to its memorandum or Articles or other incorporation documents;
(xiii) 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;
(xiv) entered into any contract, commitment, arrangement or agreement 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 any intention to, or proposed to, effect any of the transactions, matters or events referred to in this paragraph 3(G);
(xv) made or agreed or consented to any change to:
(a) the terms of the trust deeds constituting the pension scheme(s) established by any member of the Wider Smoove Group for its directors, employees or their dependents;
(b) the contributions payable to any such scheme(s) or to the benefits which accrue or to the pensions which are payable thereunder;
(c) the basis on which qualification for, or accrual or entitlement to, such benefits or pensions are calculated or determined; or
(d) the basis upon which the liabilities (including pensions) of such pension schemes are funded, valued or made,
in each case, to the extent material in the context of the Wider Smoove Group taken as a whole or in the context of the Acquisition;
(xvi) save as agreed by the Panel (if required) and Digcom, proposed, agreed to provide or modified the terms of any of the Smoove Share Plans or other benefit constituting a material change relating to the employment or termination of employment of a material category of persons employed by the Wider Smoove Group or which constitutes a material change to the terms or conditions of employment of any senior employee of the Wider Smoove Group, or entered into or changed the terms of or made any offer (which remains open for acceptance) to enter into or change the terms of any contract with any director or senior executive employed by the Wider Smoove Group;
(xvii) taken (or agreed or proposed to take) any action which requires, or would require, the consent of the Panel or the approval of Smoove Shareholders in general meeting in accordance with, or as contemplated by, Rule 21.1 of the Takeover Code;
No adverse change, litigation or regulatory enquiry
(H) save as Disclosed, since 31 March 2023:
(i) no adverse change or deterioration having occurred in the business, assets, financial or trading position or profits, operational performance or prospects of any member of the Wider Smoove Group which, in any such case, is material in the context of the Wider Smoove Group taken as a whole or in the context of the Acquisition;
(ii) no litigation, arbitration proceedings, prosecution or other legal proceedings to which any member of the Wider Smoove 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 or other investigative body against or in respect of any member of the Wider Smoove Group having been instituted announced, implemented or threatened by or against or remaining outstanding in respect of any member of the Wider Smoove Group which in any such case has or would reasonably be expected to materially adversely affect any member of the Wider Smoove Group taken as a whole or in the context of the Acquisition;
(iii) no contingent or other liability of any member of the Wider Smoove Group having arisen or become apparent to Digcom which has or would reasonably be likely to materially adversely affect any member of the Wider Smoove Group or in the context of the Acquisition;
(iv) no member of the Wider Smoove Group having conducted it business in breach of any applicable laws and regulations which is material in the context of the Wider Smoove Group taken as a whole or in the context of the Acquisition;
(v) no steps having been taken which are reasonably likely to result in the withdrawal, cancellation, termination or modification of any licence or permit held by any member of the Wider Smoove 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, a material adverse effect on the Wider Smoove Group taken as a whole or in the context of the Acquisition;
No discovery of certain matters
(I) save as Disclosed, Digcom not having discovered:
(i) that any financial, business or other information concerning the Wider Smoove Group as contained in the information publicly disclosed at any time by or on behalf of any member of the Wider Smoove Group is misleading, contains a misrepresentation of fact or omits to state a fact necessary to make that information not misleading, and which was not subsequently corrected before the date of this announcement by public disclosure, in each case, to the extent material in the context of the Wider Smoove Group taken as a whole or in the context of the Acquisition;
(ii) that any member of the Wider Smoove Group or partnership, company or other entity in which any member of the Wider Smoove Group has a significant economic interest and which is not a subsidiary undertaking of Smoove is subject to any liability (contingent or otherwise), other than in the ordinary course of business and, in each case, to the extent material in the context of the Wider Smoove Group taken as a whole or in the context of the Acquisition; or
(iii) any information which affects the import of any information Disclosed and which is material in the context of the Wider Smoove Group taken as a whole or in the context of the Acquisition;
(J) save as Disclosed, Digcom not having discovered that, in relation to any release, emission, accumulation, discharge, disposal or other similar circumstance which has impaired or is likely to impair the environment (including property) or harmed or is likely to harm the health of humans, animals or other living organisms or eco‑systems, any past or present member of the Wider Smoove Group, in a manner or to an extent which is material in the context of the Wider Smoove Group, (i) has committed any violation of any applicable laws, statutes, regulations, consents, licences, permissions, authorisations, notices or other requirements of any Third Party giving rise to a liability; and/or (ii) has incurred any liability (whether actual or contingent) to any Third Party; and/or (iii) is likely to incur any liability (whether actual or contingent), or is 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 Smoove Group taken as a whole or in the context of the Acquisition;
Anti-corruption, economic sanctions, criminal property and money laundering
(K) save as Disclosed, Digcom not having discovered that:
(i) any:
(a) past or present member, director, officer or employee of the Wider Smoove Group, in connection with their position in the Wider Smoove 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 or anti-bribery law, rule or regulation or any other applicable law, rule, or regulation concerning improper payments or kickbacks; or
(b) person that performs or has performed services for or on behalf of the Wider Smoove 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 or anti-bribery law, rule or regulation or any other applicable law, rule, or regulation concerning improper payments or kickbacks;
(ii) any asset of any member of the Wider Smoove Group constitutes criminal property as defined by section 340(3) of the Proceeds of Crime Act 2002 (but disregarding paragraph (b) of that definition) or proceeds of crime under any other applicable law, rule, or regulation concerning money laundering or proceeds of crime or any member of the Wider Smoove Group is found to have engaged in activities constituting money laundering under any applicable law, rule, or regulation concerning money laundering;
(iii) any past or present member, director, officer or employee of the Wider Smoove Group, or any other person for whom any such person may be liable or responsible, is or has engaged in any conduct which would violate applicable economic sanctions or dealt 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, UK 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, UK or European Union laws or regulations, including the economic sanctions administered by the United States Office of Foreign Assets Control, or HM Revenue and Customs; or
(b) any government, entity or individual targeted by any of the economic sanctions of the United Nations, the United Kingdom, the European Union or any of their respective member states;
(iv) any past or present member, director, officer or employee of the Wider Smoove Group, or any other person for whom any such person may be liable or responsible:
(a) has engaged in conduct which would violate any relevant anti-terrorism laws, rules, or regulations, including but not limited to the U.S. Anti-Terrorism Act;
(b) has engaged in conduct which would violate any relevant anti-boycott law, rule, or regulation or any applicable export controls, including but not limited to the Export Administration Regulations administered and enforced by the U.S. Department of Commerce or the International Traffic in Arms Regulations administered and enforced by the U.S. Department of State;
(c) has engaged in conduct which would violate any relevant laws, rules, or regulations concerning human rights, including but not limited to any law, rule, or regulation concerning false imprisonment, torture or other cruel and unusual punishment, or child labour; or
(d) is debarred or otherwise rendered ineligible to bid for or to perform contracts for or with any government, governmental instrumentality, or international organization or found to have violated any applicable law, rule, or regulation concerning government contracting or public procurement; or
(v) any member of the Wider Smoove Group is or has been engaged in any transaction which would cause Digcom or any member of the Wider PEXA Group to be in breach of any law or regulation upon its offer for Smoove, including but not limited to the economic sanctions of the United States Office of Foreign Assets Control, or HM Revenue and Customs, or any other relevant government authority.
PART B: FURTHER TERMS OF THE ACQUISITION
1. Subject to the requirements of the Panel and the Takeover Code, Digcom reserves the right in its sole discretion to waive:
(A) the deadline set out in paragraph 1 of Part A of this Appendix 1, and any of the deadlines set out in paragraph 2 of Part A of this Appendix 1 for the timing of the Court Meeting, the General Meeting and the Court Hearing. If any such deadline is not met, Digcom shall make an announcement by 8.00 am on the Business Day following such deadline confirming whether it has invoked or waived the relevant Condition or agreed with Smoove to extend the deadline in relation to the relevant Condition; and
(B) in whole or in part, all or any of the Conditions set out in paragraphs 3(A) to 3(K) (inclusive) of Part A of this Appendix 1.
2. Digcom 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 set out in paragraphs 3(A) to 3(K) (inclusive) of Part A of this Appendix 1 that it is entitled (with the consent of the Panel and subject to the requirements of the Takeover Code) to invoke, by a date earlier than the latest date specified above for the fulfilment or waiver thereof, notwithstanding that the other Condition may at such earlier date have been waived or fulfilled and that there are at such earlier date no circumstances indicating that any such Conditions may not be capable of fulfilment.
3. Under Rule 13.5(a) of the Takeover Code, Digcom may not invoke a Condition so as to cause the Acquisition not to proceed, to lapse or to be withdrawn unless the circumstances which give rise to the right to invoke the Condition are of material significance to Digcom in the context of the Acquisition. Conditions 2(A)(i), 2(B)(i) and 2(C)(i) of Part A of this Appendix 1, and, if applicable, any acceptance condition if the Acquisition is implemented by means of a Takeover Offer, are not subject to Rule 13.5(a) of the Takeover Code. Digcom may only invoke a Condition that is subject to Rule 13.5(a) with the consent of the Panel and any Condition that is subject to Rule 13.5(a) may be waived by Digcom.
4. If Digcom is required by the Panel to make an offer for Smoove Shares under the provisions of Rule 9 of the Takeover Code, Digcom may make such alterations to any of the above Conditions and the terms of the Acquisition as are necessary to comply with the provisions of Rule 9.
5. Digcom reserves the right to elect to implement the Acquisition by way of a Takeover Offer as an alternative to the Scheme (subject to the Panel's consent (where necessary) and the terms of the Co-operation Agreement). In such an event, the Acquisition will be implemented on the same terms and conditions (subject to appropriate amendments including (without limitation) the inclusion of an acceptance condition set at 90 per cent. of the Smoove Shares (or such other percentage as Digcom and Smoove may, subject to the rules of the Takeover Code and the terms of the Co-operation Agreement and with the consent of the Panel, decide, being in any case more than 50 per cent. of the Smoove Shares), or any amendments required by, or deemed appropriate by, Digcom under applicable law or any amendments necessary to reflect the Takeover Offer) as those that would apply to the Scheme. Further, if sufficient acceptances of such Takeover Offer are received and/or sufficient Smoove Shares are otherwise acquired, it is the intention of Digcom to apply the provisions of the Companies Act to acquire compulsorily any outstanding Smoove Shares to which such Takeover Offer relates.
6. Each of the Conditions shall be regarded as a separate Condition and shall not be limited by reference to any other Condition.
7. Smoove Shares which will be acquired pursuant to 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 whatsoever 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 or any other return of capital or value (whether by reduction of share capital or share premium account or otherwise) made on or after the Effective Date.
8. If on or after the date of this announcement and before the Effective Date any dividend, distribution or other return of capital or value is announced, declared, made or paid by Smoove or becomes payable by Smoove in respect of the Smoove Shares, Digcom reserves the right (without prejudice to any right of Digcom, with the consent of the Panel, to invoke the Condition set out in paragraph 3(G)(iii) of Part A to this Appendix 1) to reduce the Consideration payable under the terms of the Acquisition for the Smoove Shares by an amount up to the amount of such dividend and/or distribution and/or other return of capital or value. In such circumstances, Smoove Shareholders would be entitled to receive and retain any such dividend and/or other distribution and/or return of capital or value. Any exercise by Digcom of its rights referred to in this paragraph 8 shall be the subject of an announcement and, for the avoidance of doubt, shall not be regarded as constituting any revision or variation of the Acquisition.
9. The Acquisition will be governed by the laws of England and Wales and be subject to the jurisdiction of the English Courts and 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. The Scheme will be subject to the applicable requirements of the Takeover Code, the Panel, the London Stock Exchange (including pursuant to the AIM Rules) and the Registrar of Companies.
10. The Acquisition will not be made, directly or indirectly, in or into, or by use of the mails of, or by any means or instrumentality (including, without limitation, facsimile transmission, telex, telephone, internet or e-mail) of interstate or foreign commerce of, or of any facility of, any Restricted Jurisdiction.
11. The availability of the Acquisition to persons not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions. Any persons who are subject to the laws of any jurisdiction other than the United Kingdom should inform themselves about and observe any applicable requirements.
APPENDIX 2
BASES AND SOURCES
In this announcement, unless otherwise stated or the context otherwise
requires, the following bases and sources have been used.
1. As at the Last Practicable Date, Smoove had in issue
57,016,550 Smoove Shares, which includes 1,632,314 Smoove Shares (as at the
Last Practicable Date) held by the trustee of the Smoove Employee Benefit
Trust that can be used to satisfy the exercise of options and vesting of
awards granted under the Smoove Share Plans.
2. The fully diluted share capital of Smoove (being 57,060,216
Smoove Shares) is calculated on the basis of:
· the number of Smoove Shares referred to in paragraph 1 above; and
· 43,666 Smoove Shares which may be issued on or after the date of
this announcement on the exercise of options granted under the Smoove Share
Plans.
3. A value of approximately £30.8 million for the entire
issued and to be issued share capital of Smoove is based on:
· the Consideration of 54 pence per Smoove Share; and
· Smoove's assumed fully diluted issued ordinary share capital of
57,060,216 Smoove Shares, as set out in paragraph 2 above.
4. The premium calculations to the price per Smoove Share used
in this announcement have been calculated based on the Consideration of 54
pence per Smoove Share, and by reference to:
· the Closing Price on 21 April 2023 (being the last Business Day
before the commencement of the Offer Period) of 31.9 pence per Smoove Share,
derived from Bloomberg;
· the one-month volume weighted average Closing Price of 31.0 pence
per Smoove Share as at 21 April 2023 (being the last Business Day before the
commencement of the Offer Period), derived from Bloomberg; and
· the three-month volume weighted average Closing Price of 37.5
pence per Smoove Share as at 21 April 2023 (being the last Business Day before
the commencement of the Offer Period), derived from Bloomberg.
5. The Enterprise Value of £20.8 million is calculated on the
basis of:
· a fully diluted equity value of £30.8 million as calculated in
accordance with paragraph 3 above;
· Smoove's net cash position of £9.2 million as at 30 September
2023; and
· £0.8 million received from the proceeds of exercised options.
6. The implied Enterprise Value / FY23 revenue multiple of
1.0x is calculated on the basis of:
· an Enterprise Value of £20.8 million calculated in accordance
with paragraph 5 above; and
· Smoove revenue of £20.6 million for its financial year ended 31
March 2023.
7. The implied Enterprise Value / FY23 gross profit multiple
of 2.7x is calculated on the basis of:
· an Enterprise Value of £20.8 million calculated in accordance
with paragraph 5 above; and
· Smoove gross profit of £7.8 million for its financial year ended
31 March 2023.
8. Unless otherwise stated, the financial information of
Smoove is extracted (without material adjustment) from the annual report and
audited consolidated accounts of Smoove for the 12 months ended 31 March 2023.
9. Certain figures included in this announcement have been
subject to rounding adjustments.
APPENDIX 3
DETAILS OF IRREVOCABLE UNDERTAKINGS AND LETTER OF INTENT
Irrevocable Undertakings
From Smoove Directors as shareholders
The following Smoove Directors have each given an irrevocable undertaking to
vote (or procure the voting, as applicable) in favour of the Scheme at the
Court Meeting and the Resolution(s) at the General Meeting, or to accept, or
procure the acceptance of, the Takeover Offer (if the Acquisition is
implemented as a Takeover Offer), in respect of their beneficial holdings of
Smoove Shares:
Name Number of Smoove Shares in respect of which undertaking is given Percentage of Smoove's issued share capital at the Last Practicable Date (%)
Jesper With-Fogstrup 25,000 0.04
Martin Rowland 60,000 0.11
Total 85,000 0.15
The irrevocable undertakings from the Smoove Directors listed above will cease
to be binding, inter alia:
· if the Scheme Document or Offer Document (as the case may be) has
not been posted within 28 days of the issue of the announcement (or within
such longer period as Digcom and Smoove, with the consent of the Panel
determines), provided that if the Acquisition was initially being implemented
by way of a Scheme, and Digcom elects to exercise its right to implement the
Acquisition by way of a Takeover Offer or vice versa, such time period shall
be extended to refer to within 28 days of the issue of the press announcement
announcing the change in structure (or such other date for the posting of the
Offer Document or Scheme Document (as applicable) as the Panel may require);
· on the date on which the Acquisition (whether implemented by way
of a Scheme or a Takeover Offer) is withdrawn or lapses in accordance with its
terms, provided that this shall not apply where the Acquisition is withdrawn
or lapses as a result of Digcom exercising its right, in accordance with the
Takeover Code, to implement the Acquisition by way of a Takeover Offer rather
than by way of a Scheme or vice versa;
· if the Scheme or the Takeover Offer (as applicable) has not
become Effective, or become or been declared unconditional (as the case may
be), on or before the Long Stop Date, provided that this shall not apply where
the Scheme or Takeover Offer failing to become effective, or to become or have
been declared unconditional (as applicable), is as a result of Digcom
exercising its right, in accordance with the Takeover Code, to implement the
Acquisition by way of a Takeover Offer rather than by way of a Scheme or vice
versa; or
· if Digcom announces that it does not intend to proceed with the
Acquisition and no new, revised or replacement Scheme or Takeover Offer is
announced by Digcom in accordance with Rule 2.7 of the Takeover Code at the
same time.
From other Smoove Shareholders
In addition to the Smoove Directors, the following Smoove Shareholders have
each given an irrevocable undertaking to vote (or procure the voting, as
applicable) in favour of the Scheme at the Court Meeting and the Resolution(s)
at the General Meeting, or to accept, or procure the acceptance of, the
Takeover Offer if the Acquisition is implemented as a Takeover Offer, in
respect of their interests in Smoove Shares:
Name Number of Smoove Shares in respect of which undertaking is given Percentage of Smoove's issued share capital at the Last Practicable Date (%)
Kestrel Partners LLP 15,711,095 27.56
Harwood Capital Management Limited 7,296,970 12.80
Herald Investment Management Limited 3,552,560 6.23
Total 26,560,625 46.58
*Kestrel Partners LLP, whose partner Oliver Scott is a Non-Executive Director
of Smoove, is amongst the Smoove Shareholders that have given irrevocable
undertakings to Digcom.
The irrevocable undertakings from the Smoove Shareholders listed above will
cease to be binding, inter alia:
· if the Scheme Document or Offer Document (as the case may be) has
not been posted within 28 days of the issue of the announcement (or within
such longer period as Digcom and Smoove, with the consent of the Panel
determine), provided that if the Acquisition was initially being implemented
by way of a Scheme, and Digcom elects with the consent of the Panel (where
necessary) and subject to the terms and conditions of the Co-operation
Agreement to exercise its right to implement the Acquisition by way of a
Takeover Offer or vice versa, such time period shall be extended to refer to
within 28 days of the issue of the press announcement announcing the change in
structure (or such other date for the posting of the Offer Document or Scheme
Document (as applicable) as the Panel may require);
· on the date on which the Acquisition (whether implemented by way
of a Scheme or a Takeover Offer) is withdrawn or lapses in accordance with its
terms, provided that this shall not apply where the Acquisition is withdrawn
or lapses as a result of Digcom exercising its right with the consent of the
Panel (where necessary) and subject to the terms and conditions of the
Co-operation Agreement to implement the Acquisition by way of a Takeover Offer
rather than by way of a Scheme or vice versa;
· if the Scheme or the Takeover Offer (as applicable) has not
become Effective, or become or been declared unconditional (as the case may
be), on or before the Long Stop Date, provided that this shall not apply where
the Scheme or Takeover Offer failing to become effective, or to become or have
been declared unconditional (as applicable), is as a result of Digcom
exercising its right with the consent of the Panel (where necessary) and
subject to the terms and conditions of the Co-operation Agreement to implement
the Acquisition by way of a Takeover Offer rather than by way of a Scheme or
vice versa;
· if Digcom announces that it does not intend to proceed with the
Acquisition and no new, revised or replacement Scheme or Takeover Offer is
announced by Digcom in accordance with Rule 2.7 of the Takeover Code at the
same time; or
· in the case of Herald Investment Management Limited only, if a
third party announces a firm intention to make an offer for the entire issued
and to be issued share capital of Smoove at a price per Smoove Share which is
at least 10 per cent. greater than the Consideration.
Letter of intent
Schroders Investment Management Limited has given to Digcom a non-binding
letter of intent to procure the voting in favour of the Scheme at the Court
Meeting and the Resolution(s) to be proposed at the General Meeting (or in the
event that the Acquisition is implemented by way of a Takeover Offer, to
procure the acceptance of such Takeover Offer) in respect of 5,365,237 Smoove
Shares, representing approximately 9.4 per cent. of Smoove's total issued
share capital as at the close of business on the Last Practicable Date.
APPENDIX 4
DEFINITIONS
"Acquisition" the acquisition of the entire issued and to be issued share capital of Smoove
by Digcom to be implemented by way of the Scheme or, should Digcom so elect
(with the consent of the Panel and subject to the terms of the Co-operation
Agreement) by way of the Takeover Offer, and, where the context admits, any
subsequent revision, variation, extension or renewal thereof
"AIM" the market of that name operated by the London Stock Exchange
"AIM Rules" the Rules and Guidance notes for companies listed on AIM issued by the London
Stock Exchange from time to time
"ALL" Amity Law Limited, a private limited company incorporated in England and Wales
with registered number 5490029 and whose registered office is at The
Loweswater Suite, Second Floor Paragon House, Paragon Business Park, Chorley
New Road, Horwich, Bolton, Lancashire BL6 6HG
"ASX" Australian Securities Exchange
"Articles" the articles of association of Smoove from time to time
"Business Day" a day (other than a Saturday, Sunday, public or bank holiday) on which banks
are generally open for business in London, England
"Cavendish" Cavendish Securities plc
"CLC" The Council for Licensed Conveyancers
"Closing Price" the closing middle market quotation for a Smoove Share on the day to which
such price relates, derived from the AIM appendix to the Daily Official List
of the London Stock Exchange
"CMA" the Competition and Markets Authority of the United Kingdom
"Combined Group" PEXA Group, including the Smoove Group, following the Acquisition becoming
Effective
"Companies Act" the Companies Act 2006, as amended from time to time
"Completion" completion of the Acquisition
"Conditions" the conditions to which the Acquisition is subject, as set out in Appendix 1
to this announcement and to be set out in the Scheme Document
"Confidentiality Agreement" the confidentiality agreement entered into between PEXA and Smoove in relation
to the Acquisition dated 9 August 2023, a summary of which is set out in
paragraph 13 of this announcement
"Consideration" the cash consideration of 54 pence per Smoove Share
"Co-operation Agreement" the co-operation agreement entered into between Digcom and Smoove dated 4
October 2023, a summary of which is set out in paragraph 13 of this
announcement
"Court" the High Court of Justice in England and Wales
"Court Hearing" the hearing of the Court to sanction the Scheme under section 899 of the
Companies Act
"Court Meeting" the meeting of Scheme Shareholders convened by order of the Court pursuant to
section 899 of the Companies Act for the purpose of considering and, if
thought fit, approving the Scheme (with or without amendment) and any
adjournment thereof
"Court Order" the order of the Court sanctioning the Scheme under section 899 of the
Companies Act
"CREST" the relevant system (as defined in the Uncertificated Securities Regulations
2001 (SI 2001/3755) in respect of which Euroclear UK & Ireland Limited is
the Operator (as defined in the Regulations))
"Dealing Disclosure" an announcement pursuant to Rule 8 of the Takeover Code containing details of
dealings in interests in relevant securities of a party to an offer
"Digcom" Digcom UK Holdings Limited, a private limited company incorporated in England
and Wales with registered number 12829486 and whose registered office is at 85
Great Portland Street, First Floor, London W1W 7LT
"Disclosed" (a) disclosed by, or on behalf of, Smoove in Smoove's annual report and financial statements for the year ended 31 March 2023;
(b) fairly disclosed prior to the date of this announcement by, or on behalf
of, Smoove to Digcom or PEXA (or any of their respective officers, employees,
agents or advisers in their capacity as such), including (without limitation)
via the virtual data room operated on behalf of Smoove in respect of the
Acquisition or via email;
(c) as otherwise publicly announced by Smoove prior to the date of this
announcement (by delivery of an announcement to a Regulatory Information
Service); or
(d) disclosed in this announcement
"Effective" either:
(a) if the Acquisition is implemented by way of Scheme, the Scheme having
become effective pursuant to its terms; or
(b) if the Acquisition is implemented by way of Takeover Offer, the Takeover
Offer having been declared or having become unconditional in accordance with
the requirements of the Takeover Code
"Effective Date" the date on which the Acquisition becomes Effective in accordance with its
terms
"ELNO" Electronic Lodgement Network Operator
"Enterprise Value" the enterprise value of the Acquisition of Smoove calculated in accordance
with paragraph 5 of Appendix 2
"Excluded Shares" any Smoove Shares:
(a) registered in the name of, or beneficially owned by:
(i) PEXA or any member of the PEXA Group;
(ii) any nominee of any of the foregoing; or
(b) held by Smoove in treasury as at the Scheme Record Time
"FCA" the Financial Conduct Authority
"Forms of Proxy" the forms of proxy for use in connection with each of the Court Meeting and
the General Meeting, which shall accompany the Scheme Document
"FSMA" the Financial Markets and Services Act 2000, as amended from time to time
"General Meeting" the general meeting of Smoove Shareholders to be convened to consider and, if
thought fit, approve the Resolution(s) (with or without amendment) including
any adjournment, postponement or reconvening thereof
"group undertaking" has the meaning given in section 1161 of the Companies Act
"JOA" joint ownership agreement entered into in January 2023
"Last Practicable Date" 3 October 2023
"London Stock Exchange" London Stock Exchange plc
"Long Stop Date" 30 April 2024, or such later date as may be agreed between Digcom and Smoove
(with the Panel's consent and as the Court may approve, if such approval is
required)
"LSA" Legal Services Act 2007 (as amended from time to time)
"Market Abuse Regulation" Regulation (EU) No 596/2014, as it forms part of domestic law of the United
Kingdom by virtue of the European Union (Withdrawal) Act 2018, as amended from
time to time
"Meetings" the Court Meeting and the General Meeting
"MLRs" The Money Laundering, Terrorist Financing and Transfer of Funds (Information
on the Payer) Regulations 2017 (as amended from time to time)
"Numis" Numis Securities Limited
"Offer Document" should the Acquisition be implemented by means of the Takeover Offer, the
document to be sent to Smoove Shareholders which will contain, amongst other
things alia, the terms and conditions of the Takeover Offer
"Offer Period" the offer period (as defined in the Takeover Code) relating to Smoove which
commenced on 24 April 2023
"Opening Position Disclosure" has the meaning given in Rule 8 of the Takeover Code
"Optima Legal" Optima Legal Services Limited, a private limited company incorporated in
England and Wales with registered number 05781608 and whose registered office
is at Hepworth House, Claypit Lane, Leeds LS2 8AE
"Overseas Shareholders" Scheme Shareholders who are resident in, ordinarily resident in, or citizens
of, jurisdictions outside the United Kingdom
"Panel" the Panel on Takeovers and Mergers
"PEXA" PEXA Group Limited an Australian public company limited by shares with company
number 629193764 whose registered office is Docklands, Victoria 3008 Australia
"PEXA Board" the board of directors of PEXA
"PEXA Group" PEXA and its group undertakings from time to time
"Registrar of Companies" the registrar of companies in England and Wales
"Resolution(s)" the resolution(s) to be proposed at the General Meeting necessary to implement
the Scheme, including, amongst other things, to make certain amendments to the
Articles and to approve the re-registration of Smoove as a private limited
company in accordance with the Companies Act
"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 Smoove Shareholders in that
jurisdiction
"Scheme" the proposed scheme of arrangement under Part 26 of the Companies Act between
Smoove and Smoove Shareholders to implement the Acquisition
"Scheme Document" the document to be dispatched to Smoove Shareholders and other persons with
information rights setting out, amongst other things, the details of the
Acquisition, the full terms and conditions of the Scheme and containing
notices convening the Meetings
"Scheme Record Time" the time and date specified as such in the Scheme Document, expected to be
6.00 p.m. (London time) on the Business Day immediately after the date of the
Court Hearing, or such later time as Digcom and Smoove may agree
"Scheme Shareholder" a holder of Scheme Shares
"Scheme Shares" all Smoove Shares:
(a) in issue at the date of the Scheme Document;
(b) (if any) issued after the date of the Scheme Document and prior to the
Voting Record Time; and
(c) (if any) issued at or after the Voting Record Time and prior to the
Scheme Record Time in respect of which the original or any subsequent holder
thereof is bound by the Scheme, or shall by such time have agreed in writing
to be bound by the Scheme,
but excluding any Excluded Shares
"Smoove" Smoove plc, a public limited company incorporated in England and Wales with
registered number 07466574 and whose registered office is at Masters Court,
Church Road, Thame, Oxfordshire OX9 3FA
"Smoove Board" the board of directors of Smoove
"Smoove Directors" the directors of Smoove as at the date of this announcement
"Smoove Group" Smoove and its group undertakings from time to time
"Smoove Shareholders" the holders of Smoove Shares
"Smoove Shares" the ordinary shares of 0.4 pence each in the capital of Smoove
"Smoove Share Plans" the ULS Technology plc Enterprise Management Incentive and Non-Tax Advantaged
Share Option Plan 2014, the Smoove Share Option Scheme 2023, the joint
ownership agreement entered into in January 2023 and the ULS Technology PLC
Share Incentive Plan dated 15 September 2020
"subsidiary" has the meaning given in section 1159 of the Companies Act
"subsidiary undertaking" has the meaning given in section 1162 of the Companies Act
"Takeover Code" the City Code on Takeovers and Mergers
"Takeover Offer" 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 Digcom to acquire the entire issued and to be issued share capital
of Smoove and, where the context admits, any subsequent revision, variation,
extension or renewal of such offer
"Torrens title jurisdiction" a jurisdiction that uses a centralised land register that represents an
authoritative register of real property interests
"UK" or "United Kingdom" the United Kingdom of Great Britain and Northern Ireland
"US" or "United States" the United States of America, its territories and possessions, any state of
the United States of America and the District of Columbia
"Voting Record Time" 6.30 p.m. (London time) on the day two days prior to the Court Meeting or any
adjournment thereof (as the case may be)
"Wider PEXA Group" PEXA and its subsidiary undertakings, associated undertakings and any other
undertaking in which PEXA and/or such undertakings (aggregating their
interests) have a significant interest
"Wider Smoove Group" Smoove and its subsidiary undertakings, associated undertakings and any other
undertaking in which Smoove and/or such undertakings (aggregating their
interests) have a significant interest
For the purpose of this announcement "subsidiary undertaking" and
"undertaking" have the meanings given by the Companies 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 Companies Act).
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END SOANKQBKPBDDBKKRecent news on PEXA
See all newsREG - PEXA Group Limited - Rule 19.6(c) confirmation of post-offer intentions
AnnouncementREG - Takeover Panel - Disclosure Table
AnnouncementREG - Takeover Panel - Disclosure Table
AnnouncementREG - Takeover Panel - Disclosure Table
AnnouncementREG - Takeover Panel - Disclosure Table
Announcement