Recommended Cash Offer

SCS

24/10/2023 07:00

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RNS Number : 0395R  Poltronesofa S.p.A.  24 October 2023

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

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

 

For immediate release

 

24 October 2023

 

RECOMMENDED CASH OFFER

 

for

 

ScS Group plc

 

by

 

Cerezzola Limited

 

a wholly-owned subsidiary of

 

Poltronesofà S.p.A.

 

(to be implemented by way of a scheme of arrangement under Part 26 of the
Companies Act 2006)

 

 

Summary

 

·    The boards of Poltronesofà S.p.A. ("Poltronesofà") and ScS Group
plc ("ScS") are pleased to announce that they have reached agreement on the
terms of a recommended cash offer by Cerezzola Limited ("BidCo"), a
wholly-owned subsidiary of Poltronesofà, for the entire issued and to be
issued share capital of ScS (the "Acquisition"). It is intended that the
Acquisition be implemented by way of a Court-sanctioned scheme of arrangement
under Part 26 of the Companies Act.

 

·    Under the terms of the Acquisition, ScS Shareholders will be entitled
to receive:

280 pence for each ScS Share (the "Transaction Value").

·    The Transaction Value comprises for each ScS Share at the relevant
record date:

270 pence in cash (the "Cash Consideration")

and

a final dividend of 10 pence for the year ended 29 July 2023 which is not
conditional on the Acquisition becoming effective (the "Permitted Dividend").

 

In its audited financial results for the year ended 29 July 2023, which ScS
expects to announce on 25 October 2023, the ScS Directors intend to declare
the Permitted Dividend of 10 pence per ScS Share. ScS Shareholders on the
register of members of ScS at the relevant record date will be entitled to
receive the Permitted Dividend regardless of whether the Acquisition becomes
effective and without any reduction in the Cash Consideration if the
Acquisition becomes effective. The Permitted Dividend, if approved by ScS
Shareholders at ScS's 2023 Annual General Meeting, will be paid on 15 December
2023 to ScS Shareholders on the register of members of ScS on 17 November
2023.

 

·    The Transaction Value values ScS's entire issued and to be issued
share capital at approximately £99,387,946 on a fully diluted basis.

 

·    The Transaction Value represents a premium of approximately:

·     66 per cent. to the Closing Price per ScS Share of 169 pence on 23
October 2023 (being the last practicable date prior to the date of this
Announcement); and

·     67 per cent. to the volume weighted average Closing Price per ScS
Share of 168 pence for the three months ended on 23 October 2023 (being the
last practicable date prior to the date of this Announcement).

 

·    The Poltronesofà Board believes there is a compelling strategic and
financial rationale for undertaking the Acquisition because:

 

·    as the next step in its successful pan-European expansion,
Poltronesofà has decided to continue its geographic growth and plans to enter
the United Kingdom sofa market; and

 

·    having followed the UK market and its key players for a significant
amount of time, Poltronesofà believes that ScS and Poltronesofà share many
common values and principles. Poltronesofà admires ScS's significant presence
in the United Kingdom sofa and furniture market, as well as its strong brand
position, and recognises that ScS is a strong business with a widespread and
established base of 100 well-located and spacious showrooms in the United
Kingdom. Moreover, ScS benefits from, a well-invested and growing digital
e-commerce platform, industry-leading operational excellence, and resilient
financial performance.

 

·    The ScS Directors, who have been so advised by Shore Capital as to
the financial terms of the Acquisition, consider the terms of the Acquisition
to be fair and reasonable. In providing its advice to the ScS Directors, Shore
Capital has taken into account the commercial assessments of the ScS
Directors.

 

·    Accordingly, the ScS Directors intend to recommend unanimously that
ScS Shareholders vote in favour of the Scheme at the Court Meeting and the
resolutions relating to the Acquisition at the ScS General Meeting, as the ScS
Directors have irrevocably undertaken to do in respect of their entire
beneficial holdings of 272,653 ScS Shares representing, in aggregate,
approximately 0.8 per cent. of the issued share capital of ScS as at 23
October 2023 (being the last practicable date prior to this Announcement).

 

·    Established in Reggio Emilia in 1995, Poltronesofà has become the
leading sofa retailer in Italy and one of the leading sofa retailers in
Europe. It designs and sells sofas and armchairs, as well as sofa beds and
decorative accessories and retails them through its 167 stores in Italy, 106
stores in France and 27 further stores across Europe (15 in Belgium, nine in
Switzerland, two in Cyprus and one in Malta).

 

·    Poltronesofà is widely recognised for its focus on a high-quality
customer experience while offering Italian-manufactured products at affordable
prices. Its fabric sofas are produced in the Forli and Faenza district, whilst
leather sofas are produced in the Puglia and Basilicata district.
Poltronesofà's customers appreciate the extensive optionality for
customisation, with the wide range of models and versions being customisable
through Poltronesofà's extensive range of upholsteries. This customer-centric
offering is made available at a very convenient price range and also comes
with a full team of well-trained and experienced professionals at the
customer's service who are available at any moment to assist throughout the
purchase process.

 

·    BidCo is a newly-incorporated English private limited company and a
wholly-owned direct subsidiary of Poltronesofà. BidCo has been formed at the
direction of Poltronesofà for the purposes of implementing the Acquisition.
BidCo has not traded since its date of incorporation, nor has it entered into
any obligations other than in connection with the Acquisition.

 

·    ScS is one of the UK's largest retailers of sofas, flooring and
furniture. It trades as two separate brands -- the core ScS brand and the
newly acquired Snug brand. The ScS brand seeks to offer value and choice
through a wide range of sofas, flooring and furniture products. The product
range is designed to appeal to a broad customer base with a mid-market priced
offering and is currently traded from 100 stores. The brand specialises
primarily in fabric and leather sofas and chairs, selling a range of branded
products which are sold under registered trademarks that are not owned by ScS
(which include La-Z-Boy, Ideal Home and G Plan) and a range of branded
products which are sold under registered trademarks owned by ScS (such as
Endurance, Inspire and SiSi Italia). The flooring business includes carpets,
rugs, wood, laminate and luxury vinyl tiling. Snug is an innovative
digital-first sofa and sofa-bed business specialising in modular and
re-configurable sofas, with quick delivery and great quality and customer
service.

 

·    Commenting on the Acquisition, Mr. Renzo Ricci, Chief Executive
Officer of Poltronesofà, said:

 

"As the next step of Poltronesofà's pan-European expansion, the Acquisition
represents the best opportunity for Poltronesofà to enter the United Kingdom
market of upholstery products. Poltronesofà believes it is strategically very
well placed to support ScS in the next stage of its development, and by
building on the combined industry knowledge and experience and providing the
necessary capital to accelerate ScS's ambitions, the Acquisition will help ScS
realise its full growth potential."

 

·    Commenting on the Acquisition, Alan Smith, Non-Executive Chair of
ScS, said:

 

"This cash offer, which the ScS Board unanimously recommends, comes at an
attractive valuation. It recognises the quality of the ScS Group's operations,
its cash resources, and the progress accomplished under Steve Carson's
leadership via his refreshed strategy. Poltronesofà, based in Italy, is a
pan-European sofa retailer that has been successfully pursuing international
expansion and ScS, with UK operations, is the next juncture of that strategy.
The ScS Board believes Poltronesofà will bring significant benefits to ScS
through its broad industry expertise in addition to providing the necessary
capital that would accelerate our current strategy, albeit in a private rather
than public sphere. The Acquisition will enable ScS to continue as part of a
broader, pan-European entity in pursuit of its strategy and position it for
long-term success in the UK."

 

·    Save for the Permitted Dividend, if any dividend or other
distribution or return of capital is authorised, declared, made or paid in
respect of ScS Shares on or after the date of this Announcement, Poltronesofà
reserves the right to reduce the offer consideration by the aggregate amount
of such dividend or other distribution or return of capital.

 

·    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 (or,
if Poltronesofà so elects, an Offer). The Acquisition is conditional on,
among other things: (i) the approval of ScS Shareholders at the Court Meeting
and the passing of the resolutions by ScS Shareholders at the ScS General
Meeting; (ii) the sanction of the Scheme by the Court; and (iii) regulatory
approval from the FCA.

 

·    The Acquisition is expected to become Effective in the first quarter
of 2024, subject to the satisfaction (or, where applicable, waiver) of the
Conditions set out in Appendix I to this Announcement. An expected timetable
of principal events will be included in the Scheme Document.

 

·    Further details of the Acquisition will be contained in the Scheme
Document which is intended to be published along with notices of the Court
Meeting and General Meeting and the Forms of Proxy within 28 days of the date
of this Announcement, unless ScS and Poltronesofà otherwise agree, and the
Panel consents, to a later date. Subject to certain restrictions relating to
persons resident in Restricted Jurisdictions, the Scheme Document will also be
made available on Poltronesofà's website at www.poltronesofa-offer.com and
ScS's website at www.scsplc.co.uk/investors.

 

This summary should be read in conjunction with, and is subject to, the full
text of this Announcement (including its Appendices).

 

The Acquisition is subject to the Conditions and further terms that are set
out in Appendix I, and to the full terms and conditions which will be set out
in the Scheme Document. Appendix II contains the bases and sources of certain
information used in this Announcement. Appendix III contains details of the
irrevocable undertakings received in relation to the Acquisition that are
referred to in this Announcement. Appendix IV contains definitions of terms
used in this Announcement.

 

 

 

Enquiries:

 

 Poltronesofà                                                   +39 0543 757011
 Renzo Ricci, Chief Executive Officer
 Nicola Sautto, Chief Financial Officer
 Goldman Sachs (Financial adviser to Poltronesofà)              +44 (0)207 774 1000
 Chris Emmerson
 Giuseppe Pipitone
 ScS Group plc                                                  +44 (0)20 7466 5000
 Steve Carson, Chief Executive Officer
 Mark Fleetwood, Chief Financial Officer
 Chris Muir, Executive Director
 Shore Capital (Financial adviser and Broker to ScS)            +44 (0)20 7408 4050
 Patrick Castle
 James Thomas
 Iain Sexton
 Ben Canning
 Buchanan Communications Limited (Financial PR adviser to ScS)  +44 (0)20 7466 5000
 Richard Oldworth                                               scs@buchanan.uk.com
 Toto Berger
 Verity Parker
 Image Building S.r.l. (Financial PR adviser to Poltronesofà)   +39 0289011300
 Giuliana Paoletti                                              poltronesofa@imagebuilding.it
 Rafaella Casula
 Giusy Fusco

 

 

Skadden, Arps, Slate, Meagher & Flom (UK) LLP is acting as legal adviser
to Poltronesofà in connection with the Acquisition. Ward Hadaway LLP is
acting as legal adviser to ScS in connection with the Acquisition.

 

Disclaimers

 

Goldman Sachs, which is authorised and regulated in the United Kingdom by the
Financial Conduct Authority is acting as financial adviser to Poltronesofà
and no one else in connection with the Acquisition referred to in this
Announcement and will not be responsible to anyone other than Poltronesofà
for providing the protections afforded to clients of Goldman Sachs or for
providing advice in relation to this approach, the contents of this
Announcement or any other matter referred to herein.

 

Shore Capital, which is authorised and regulated in the United Kingdom by the
Financial Conduct Authority is acting as financial adviser to ScS and no one
else in connection with the Acquisition referred to in this Announcement and
will not be responsible to anyone other than ScS for providing the protections
afforded to clients of Shore Capital or for providing advice in relation to
this approach, the contents of this Announcement or any other matter referred
to herein.

 

Further information

 

This Announcement is for information purposes only and is not intended to and
does not constitute, or form any part of, an offer, invitation or the
solicitation of an offer to purchase or subscribe, 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.

 

The Acquisition will be subject to English law and to the applicable
requirements of the Code, the Panel, the Listing Rules, the London Stock
Exchange and the FCA.

 

The Acquisition will be made solely by way of the Scheme Document, which will
contain the full terms and conditions of the Acquisition, including details of
how to vote in respect of the Scheme. Any voting decision or response in
relation to the Acquisition should be made solely on the basis of the Scheme
Document. ScS Shareholders are advised to read the formal documentation in
relation to the Acquisition carefully once it has been published. Each ScS
Shareholder is urged to consult his or her independent professional adviser
regarding the tax consequences of the Acquisition.

 

This Announcement does not constitute a prospectus or a prospectus equivalent
document.

 

If you are in any doubt about the contents of this Announcement or the action
you should take, you are recommended to seek your own independent financial
advice immediately from your stockbroker, bank manager, solicitor, accountant
or from an independent financial adviser duly authorised under the Financial
Services and Markets Act 2000 (as amended).

 

This Announcement has been prepared for the purpose of complying with English
law and the Code and the information disclosed may not be the same as that
which would have been disclosed if this Announcement had been prepared in
accordance with the laws of jurisdictions outside England.

 

Overseas shareholders

 

The release, publication or distribution of this Announcement in 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 (including Restricted Jurisdictions) should inform themselves about,
and observe, any applicable legal or regulatory requirements. In particular,
the ability of persons who are not resident in the United Kingdom or who are
subject to the laws of another jurisdiction to vote their ScS Shares in
respect of the Scheme at the Court Meeting, or to execute and deliver Forms of
Proxy appointing another to vote at the Court Meeting on their behalf, may be
affected by the laws of the relevant jurisdictions in which they are located
or to which they are subject. Any failure to comply with applicable legal or
regulatory requirements of any jurisdiction may constitute a violation of
securities laws in that jurisdiction. To the fullest extent permitted by law,
the companies and persons involved in the Acquisition disclaim any
responsibility or liability for the violation of such restrictions by any
person. This Announcement has been prepared for the purpose of complying with
English law and the Code and the information disclosed may not be the same as
that which would have been disclosed if this Announcement had been prepared in
accordance with the laws of jurisdictions outside England.

 

The Acquisition will not be made, directly or indirectly, in or into or by use
of the mails or any other means or instrumentality (including, without
limitation, telephonic or electronic) of interstate or foreign commerce of, or
any facility of a national, state or other securities exchange of, a
Restricted Jurisdiction, and the Acquisition will not be capable of acceptance
by any such use, means, instrumentality or facility or from within a
Restricted 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 or any jurisdiction where to do so
would constitute a violation of the laws of such jurisdiction and persons
receiving such documents (including custodians, nominees and trustees) must
not mail or otherwise forward, distribute or send them in or into or from any
Restricted Jurisdiction. Doing so may render invalid any related purported
vote in respect of acceptance of the Acquisition.

 

If the Acquisition is implemented by way of an Offer (unless otherwise
permitted by applicable law and regulation), the Offer may not be made,
directly or indirectly, in or into or by use of the mails or any other means
or instrumentality (including, without limitation, facsimile, e-mail or other
electronic transmission, telex or telephone) of interstate or foreign commerce
of, or any facility of a national, state or other securities exchange of any
Restricted Jurisdiction and the Offer will not be capable of acceptance by any
such use, means, instrumentality or facilities or from within any Restricted
Jurisdiction.

 

Further details in relation to ScS Shareholders in overseas jurisdictions will
be contained in the Scheme Document.

 

Additional information for US investors in ScS

 

The Acquisition relates to the shares of an English company and is being made
by way of a scheme of arrangement provided for under Part 26 of the Companies
Act. The Acquisition, where implemented by way of a scheme of arrangement, is
not subject to the tender offer rules or the proxy solicitation rules under
the US Exchange Act. Accordingly, the Acquisition and the Scheme will be
subject to the disclosure requirements and practices applicable to a scheme of
arrangement involving a target company incorporated in the UK and listed on
the London Stock Exchange, which differ from the disclosure requirements of US
tender offer and proxy solicitation rules. If, in the future, Poltronesofà
exercises its right to implement the Acquisition by way of an Offer and
determines to extend the Offer into the United States, the Acquisition will be
made in compliance with applicable US laws and regulations.

 

Forward-Looking Statements

 

This Announcement contains certain forward-looking statements with respect to
the financial condition, results of operations and business of ScS and certain
plans and objectives of Poltronesofà and ScS.

 

These forward-looking statements can be identified by the fact that they do
not relate only to historical or current facts. These statements are based on
assumptions and assessments made by ScS, BidCo and Poltronesofà in light of
their experience and their perception of historical trends, current
conditions, future developments and other factors they believe appropriate,
and therefore are subject to risks and uncertainties which could cause actual
results to differ materially from those expressed or implied by those
forward-looking statements.

 

Forward-looking statements often use words such as "anticipate", "target",
"expect", "estimate", "intend", "plan", "goal", "believe", "hope", "aim",
"will", "continue", "may", "would", "could", "should" or other words of
similar meaning or the negative thereof. Forward-looking statements include
statements relating to the following: (i) future capital expenditures,
expenses, revenues, economic performance, synergies, financial conditions,
market growth, dividend policy, losses and future prospects; (ii) business and
management strategies and the expansion and growth of the operations of the
Poltronesofà Group or the ScS Group; and (iii) the effects of government
regulation on the business of the Poltronesofà Group or the ScS Group. There
are many factors which could cause actual results to differ materially from
those expressed or implied in forward-looking statements. Among such factors
are changes in the global, political, economic, business, competitive or
market landscape and regulatory forces, future exchange and interest rates,
changes in tax rates and future business combinations or disposals.

 

These forward-looking statements are based on numerous assumptions regarding
the present and future business strategies of such persons and the environment
in which each will operate in the future. By their nature, these
forward-looking statements involve known and unknown risks and uncertainties
because they relate to events and depend on circumstances that will occur in
the future. The factors described in the context of such forward-looking
statements in this Announcement may cause the actual results, performance or
achievements of any such person, or industry results and developments, to be
materially different from any results, performance or achievements expressed
or implied by such forward-looking statements. No assurance can be given that
such expectations will prove to have been correct and persons reading this
Announcement are therefore cautioned not to place undue reliance on these
forward-looking statements which speak only as at the date of this
Announcement. All subsequent oral or written forward-looking statements
attributable to Poltronesofà, BidCo or ScS or any persons acting on their
behalf are expressly qualified in their entirety by the cautionary statement
above. Neither Poltronesofà, BidCo nor ScS undertakes any obligation to
update publicly or revise forward-looking statements, whether as a result of
new information, future events or otherwise, except to the extent legally
required.

 

No profit forecasts, estimates or quantified financial benefits statements

 

No statement in this Announcement is intended as a profit forecast or estimate
for any period or a quantified financial benefits statement and no statement
in this Announcement should be interpreted to mean that earnings or earnings
per ordinary share, for Poltronesofà or ScS respectively, for the current or
future financial years would necessarily match or exceed the historical
published earnings or earnings per ordinary share for Poltronesofà or ScS,
respectively.

 

Right to switch to an Offer

 

Poltronesofà reserves the right to elect to implement the Acquisition by way
of an Offer as an alternative to the Scheme. In such an event, the Offer will
be implemented on the same terms (subject to appropriate amendments), so far
as applicable, as those which would apply to the Scheme and subject to the
amendment referred to in Part C of Appendix I to this Announcement.

 

Publication on website

 

A copy of this Announcement and the documents required to be published
pursuant to Rule 26.1 and Rule 26.2 of the Code will be made available
(subject to certain restrictions relating to persons resident in Restricted
Jurisdictions), free of charge, at www.poltronesofa-offer.com and at
www.scsplc.co.uk/investors and by no later than 12 noon on the Business Day
following the date of this Announcement.

 

Neither the contents of these websites nor the content of any other website
accessible from hyperlinks on such websites is incorporated into, or forms
part of, this Announcement.

 

Hard copy documents

 

In accordance with Rule 30.3 of the Code, ScS Shareholders, persons with
information rights and participants in the ScS Share Schemes may request a
hard copy of this Announcement by contacting ScS's registrars, Equiniti
Limited, on +44 (0)371 384 2050 or by submitting a request in writing to
Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA,
United Kingdom. The Shareholder Helpline is open from 8.30 a.m. to 5.30 p.m.
(London time) Monday to Friday (except English and Welsh public holidays).
Calls are charged at the standard geographical rate and will vary by provider.
Calls from outside the United Kingdom will be charged at the applicable
international rate.

 

Please note the Shareholder Helpline cannot provide advice on the merits of
the Acquisition or the Scheme nor give any financial, investment, legal or tax
advice.

 

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 be sent to them in relation to the Acquisition
in hard copy form.

 

UK Market Abuse Regulation

 

This Announcement contains inside information for the purposes of Article 7 of
UK MAR. Market soundings (as defined in UK MAR) were taken in respect of a
potential offer with the result that certain persons became aware of inside
information (as defined in UK MAR) as permitted by UK MAR. This inside
information is set out in this Announcement. Therefore, those persons that
received inside information in a market sounding are no longer in possession
of such inside information relating to ScS and its securities.

 

Information relating to ScS Shareholders

 

Addresses, electronic addresses and certain other information provided by ScS
Shareholders, persons with information rights and other relevant persons for
the receipt of communications from ScS may be provided to Poltronesofà and
BidCo during the Offer Period as required under Section 4 of Appendix 4 of the
Code to comply with Rule 2.11(c) of the 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 the figures that precede them.

 

Rule 2.9 disclosure

 

In accordance with Rule 2.9 of the Code, ScS confirms that, as at the close of
business on 23 October 2023, being the last practicable date prior to this
Announcement, it had in issue 33,954,674 ordinary shares of £0.001 each. The
International Securities Identification Number (ISIN) for ScS Shares is
GB00BRF0TJ56.

 

Disclosure requirements of the Code

 

Under Rule 8.3(a) of the Code, any person who is interested in 1 per cent. or
more of any class of relevant securities of an offeree company or of any
securities exchange offeror (being any offeror other than an offeror in
respect of which it has been announced that its offer is, or is likely to be,
solely in cash) must make an Opening Position Disclosure following the
commencement of the Offer Period and, if later, following the announcement in
which any securities exchange offeror is first identified.

 

An Opening Position Disclosure must contain details of the person's interests
and short positions in, and rights to subscribe for, any relevant securities
of each of (i) the offeree company and (ii) any securities exchange
offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a)
applies must be made by no later than 3.30 p.m. (London time) on the 10th
Business Day (as defined in the Code) following the commencement of the Offer
Period and, if appropriate, by no later than 3.30 p.m. (London time) on the
10th Business Day (as defined in the Code) following the announcement in which
any securities exchange offeror is first identified. Relevant persons who deal
in the relevant securities of the offeree company or of a securities exchange
offeror prior to the deadline for making an Opening Position Disclosure must
instead make a Dealing Disclosure.

 

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1
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(s), save to the extent that
these details have previously been disclosed under Rule 8. A Dealing
Disclosure by a person to whom Rule 8.3(b) applies must be made by no later
than 3.30 p.m. (London time) on the Business Day (as defined in the Code)
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. If you are in any doubt as to whether you are required to
make an Opening Position Disclosure or a Dealing Disclosure, you should
contact the Panel's Market Surveillance Unit on +44(0)20 7638 0129.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

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

 

For immediate release

 

24 October 2023

 

RECOMMENDED CASH OFFER

 

for

 

ScS Group plc

 

by

 

Cerezzola Limited

 

a wholly-owned subsidiary of

 

Poltronesofà S.p.A

 

(to be implemented by way of a scheme of arrangement under Part 26 of the
Companies Act 2006)

 

 

1.       Introduction

 

The boards of Poltronesofà and ScS are pleased to announce that they have
reached agreement on the terms of a recommended cash offer by Cerezzola
Limited ("BidCo"), a wholly-owned subsidiary of Poltronesofà, for the entire
issued and to be issued share capital of ScS. It is intended that the
Acquisition be implemented by way of a Court-sanctioned scheme of arrangement
under Part 26 of the Companies Act.

 

2.       The Acquisition

 

·    Under the terms of the Acquisition, ScS Shareholders will be entitled
to receive:

280 pence for each ScS Share (the "Transaction Value").

·    The Transaction Value comprises for each ScS Share at the relevant
record date:

270 pence in cash (the "Cash Consideration")

and

a final dividend of 10 pence for the year ended 29 July 2023 which is not
conditional on the Acquisition becoming effective (the "Permitted Dividend").

 

In its audited financial results for the year ended 29 July 2023, which ScS
expects to announce on 25 October 2023, the ScS Directors intend to declare
the Permitted Dividend of 10 pence per ScS Share. ScS Shareholders on the
register of members of ScS at the relevant record date will be entitled to
receive the Permitted Dividend regardless of whether the Acquisition becomes
effective and without any reduction in the Cash Consideration if the
Acquisition becomes effective. The Permitted Dividend, if approved by ScS
Shareholders at ScS's 2023 Annual General Meeting, will be paid on 15 December
2023 to ScS Shareholders on the register of members of ScS on 17 November
2023.

 

·    The Transaction Value values ScS's entire issued and to be issued
share capital at approximately £99,387,946 on a fully diluted basis.

 

The Transaction Value represents a premium of approximately:

·    66 per cent. to the Closing Price per ScS Share of 169 pence on 23
October 2023 (being the last practicable date prior to the date of this
Announcement); and

·    67 per cent. to the volume weighted average Closing Price per ScS
Share of 168 pence for the three months ended on 23 October 2023 (being the
last practicable date prior to the date of this Announcement).

 

The ScS Shares will be acquired by BidCo (or its nominee) with full title
guarantee, fully paid and free from all liens, equitable interests, charges,
encumbrances, rights of pre-emption and any other third party rights or
interests whatsoever and together with all rights existing at the date of this
Announcement or thereafter attaching thereto, including (without limitation)
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
(whether by way of reduction of share capital or share premium account or
otherwise) made on or after the date of this Announcement and prior to the
Effective Date in respect of the ScS Shares.

 

Save for the Permitted Dividend, if any dividend or other distribution or
return of capital in respect of the ScS Shares is announced, declared, payable
or paid in respect of the ScS Shares on or after the date of this Announcement
and prior to the Effective Date, Poltronesofà reserves the right to reduce
the consideration payable for each ScS Share by the amount of all or part of
any such dividend or other distribution or return of capital.

 

3.       Background to and reasons for the Acquisition

As the next step in its successful pan-European expansion, Poltronesofà has
decided to continue its geographic growth and plans to enter the United
Kingdom sofa market.

Having followed the UK market and its key players for a significant amount of
time, Poltronesofà believes that ScS and Poltronesofà share many common
values and principles. Poltronesofà admires ScS's significant presence in the
United Kingdom sofa and furniture market, as well as its strong brand
position, and recognises that ScS is a strong business with a widespread and
established base of 100 well-located and spacious showrooms in the United
Kingdom. Moreover, ScS benefits from, a well-invested and growing digital
e-commerce platform, industry-leading operational excellence, and resilient
financial performance.

Poltronesofà acknowledges that the success of upholstery products requires a
good understanding of the United Kingdom's customer needs and preferences, as
well as local tastes and habits. Given this admiration, Poltronesofà wishes
to enter the United Kingdom market through acquiring ScS and combining it with
Poltronesofà.

Poltronesofà believes it is strategically well placed to support ScS in the
next stage of its development. By building on the combined industry knowledge
and experience, and providing the necessary capital to accelerate ScS's
ambitions, Poltronesofà intends to help realise ScS's full growth potential.

 

4.       Recommendation

 

The ScS directors, who have been so advised by Shore Capital as to the
financial terms of the Acquisition, consider the terms of the Acquisition to
be fair and reasonable. In providing its advice to the ScS Directors, Shore
Capital has taken into account the commercial assessments of the ScS
Directors.

 

Accordingly, the ScS Directors intend to recommend unanimously that ScS
Shareholders vote in favour of the Scheme at the Court Meeting and the
resolutions relating to the Acquisition at the ScS General Meeting, as they
have irrevocably committed to do in respect of their entire beneficial
holdings of 272,653 ScS Shares, representing approximately 0.8 per cent. of
ScS's issued share capital as at 23 October 2023, being the last practicable
date prior to this Announcement.

 

5.       Background to and reasons for the recommendation

 

ScS background and developments since IPO

 

ScS was admitted to the premium listing segment of the Official List and to
trading on the London Stock Exchange's Main Market for listed securities in
January 2015 (the "IPO" or the "Admission"). The rationale for the IPO was,
among other things, to enable, the owner at the time to partially monetise its
holding while also developing a liquid market for its retained ScS Shares
going forward. A key part of the investment case for IPO investors was the
high dividend yield on offer, with ScS targeting 8.0 per cent. dividend yield
for the year ended 25 July 2015 at a time when interest rates were
significantly lower than today. The ScS Board believed that a high dividend
yield was achievable on IPO due to the cash generative and negative working
capital model of ScS combined with an attractive or low IPO valuation.

 

Since the IPO, the ScS Board believes that ScS has generally performed well
despite numerous macroeconomic challenges including Brexit and Covid-19 and
currently the high inflationary and higher interest rate environment. However,
the ScS Board believes that this performance has generally not been reflected
in the ScS share price and ScS has struggled to improve the low market
valuation from IPO despite developing a well-regarded track record as a listed
company with investors and growing cash resources.

 

On 6 January 2021, Steve Carson joined the ScS Board as Chief Executive
Officer. Since that date, under Steve's leadership, ScS has implemented a
refreshed strategy with the aim of driving future growth alongside a revised
purpose for the ScS Group of 'helping create the home you love'. The ScS Board
believes that significant progress has been made against this refreshed
strategy including, among other things: developing a new format store design
and commencing rollout of it across the estate; the acquisition of Snug to
expand the ScS Group's offering and increase market share; and refreshing and
launching new branding and advertising. As a result, ScS has continued to gain
market share helping to cement its position as the UK's second largest
upholstered furniture retailer.

 

Rationale for recommendation

 

In the short term, the ScS Board remains cognisant of the challenging economic
environment facing ScS's customers, which the ScS Board expects to continue
throughout 2024. However, the ScS Board is confident that the ScS Group's
strategy and strong balance sheet will enable it to continue to trade
resiliently and grow market share. The ScS Board further believes that this
will place ScS in a strong position for when the economic environment
improves.

 

Nevertheless, based on ScS's history since the IPO, the ScS Board is not
confident that this anticipated progress will necessarily be recognised in
appropriate share price appreciation. In the ScS Board's view, this is due to
a number of factors including; the lumpiness and sometimes unpredictability of
big ticket retail which is unattractive to some public market investors; the
IPO positioning of ScS as an income stock when small cap companies are
typically growth focused companies and noting the current significantly higher
interest rate environment; the poor track record of some comparable retailers;
and the failure of investors to properly value ScS's cash resources.

 

The ScS Directors believe that the ScS Shares generally have low levels of
liquidity which makes it difficult for ScS Shareholders with larger holdings
to realise their investment and acts as a barrier to certain investors who
require a significant holding to become a ScS Shareholder.

 

Against this backdrop, in considering the terms of the Acquisition, the ScS
Directors have taken into account a number of specific factors, including:

 

·    that the terms of the Acquisition (including the Permitted Dividend)
represent an attractive premium in cash for ScS shareholders of approximately:

 

o  66 per cent. to the Closing Price per ScS Share of 169 pence on 23 October
2023 (being the last practicable date prior to the date of this Announcement);
and

o  67 per cent. to the volume weighted average Closing Price per ScS Share of
168 pence for the three months ended on 23 October 2023 (being the last
practicable date prior to the date of this Announcement).

·    that Poltronesofà will bring strategic benefits to ScS, by
leveraging its significant, pan-European industry expertise and providing the
capital necessary to accelerate ScS's strategy from what would be possible as
a public company. In this regard, the ScS Board welcomes the statement by
Poltronesofà that it is highly supportive of ScS management's vision for the
business and the long-term ambitions of being the UK's best value-for-money
home retailer;

·    that Poltronesofà recognises the high quality of the employees and
the strength of the management team at ScS and their importance to the success
of ScS following the Acquisition. In addition, that Poltronesofà does not
intend that there will be any material headcount reductions as a result of the
Acquisition; and

·    the Acquisition allows ScS Shareholders to realise their full
investment in ScS for cash in the near-term at an attractive valuation, which
recognises the quality of ScS's underlying business, cash resources and
prospects under its refreshed strategy.

 

6.       Irrevocable undertakings

 

BidCo has received irrevocable undertakings to vote in favour of the Scheme at
the Court Meeting and the resolutions relating to the Acquisition at the ScS
General Meeting from certain of the ScS Directors, in respect of their entire
beneficial holdings, amounting to 272,653 ScS Shares, in aggregate,
representing approximately 0.8 per cent. of the issued share capital of ScS as
at 23 October 2023, being the last practicable date prior to this
Announcement.

 

Further details of these irrevocable undertakings are set out in Appendix III.

 

7.       Information on Poltronesofà

 

Established in Reggio Emilia in 1995, Poltronesofà has become the leading
sofa retailer in Italy and one of the leading sofa retailers in Europe. It
designs and sells sofas and armchairs, as well as sofa beds and decorative
accessories and retails them through its 167 stores in Italy, 106 stores in
France and 27 further stores across Europe (15 in Belgium, nine in
Switzerland, two in Cyprus and one in Malta).

 

Poltronesofà is widely recognised for its focus on high-quality customer
experience while offering Italian-manufactured products at affordable prices.
Its fabric sofas are produced in the Forli and Faenza district, whilst leather
sofas are produced in the Puglia and Basilicata district. Poltronesofà's
customers appreciate the extensive optionality for customisation, with the
wide range of models and versions being customisable through Poltronesofà's
extensive range of upholsteries. This customer-centric offering is made
available at a very convenient price range and also comes with a full team of
well-trained and experienced professionals at the customer's service who are
available at any moment to assist throughout the purchase process.

 

Poltronesofà has in recent years engaged in a successful pan-European
expansion. From its beginnings in Italy in 1995, Poltronesofà has grown to
currently have over 30% share of the Italian sofa market. Poltronesofà
entered the French market in 2011. In the 12 years since it first entered this
market, Poltronesofà has grown its market share to currently have over 10% of
the French market, despite having a store footprint that only services
approximately 60% of the French population. Poltronesofà intends to continue
to expand its presence in France in the coming years. Poltronesofà has also
successfully entered other markets in Europe, namely Belgium, Switzerland,
Cyprus and Malta.

 

In expanding into new geographies, Poltronesofà's expansion strategy has
proven to be highly efficient, with industry-leading timelines for
establishing a strong store presence in new regions and taking national market
share despite limited initial brand awareness.

 

The majority of Poltronesofà's share capital is ultimately owned by its
founder, Mr. Renzo Ricci, who also serves as Poltronesofà's Chief Executive
Officer.

 

BidCo

 

BidCo is a newly-incorporated English private limited company and a
wholly-owned direct subsidiary of Poltronesofà. BidCo has been formed at the
direction of Poltronesofà for the purposes of implementing the Acquisition.
BidCo has not traded since its date of incorporation, nor has it entered into
any obligations other than in connection with the Acquisition.

 

8.       Information on ScS

 

ScS is one of the UK's largest retailers of sofas, flooring and furniture. It
trades as two separate brands - the core ScS brand and the newly acquired Snug
brand. The ScS brand seeks to offer value and choice through a wide range of
sofas, flooring and furniture products. The product range is designed to
appeal to a broad customer base with a mid-market priced offering and is
currently traded from 100 stores. The brand specialises primarily in fabric
and leather sofas and chairs, selling a range of branded products which are
sold under registered trademarks that are not owned by ScS (which include
La-Z-Boy, Ideal Home and G Plan) and a range of branded products which are
sold under registered trademarks owned by ScS (such as Endurance, Inspire and
SiSi Italia). The flooring business includes carpets, rugs, wood, laminate and
luxury vinyl tiling. Snug is an innovative digital-first sofa and sofa-bed
business specialising in modular and re-configurable sofas, with quick
delivery and great quality and customer service, currently operating from 26
retail locations throughout the country, having three standalone stores, 16
concessions in ScS stores and seven third party concessions.

 

The Group's business commenced trading in Sunderland in 1894 as a family-owned
general home furnishings store, under the name "Suite Centre Sunderland". By
the 1980s, the business operated from eight stores in the North-East of
England under the ScS name, specialising in selling upholstered furniture.
Following a management buyout in 1993, the business began to expand outside of
the North-East of England, and focused on establishing ScS as a major UK
upholstered furniture retailer operating from larger and more modern stores in
out-of-town retail park locations.

 

The store expansion programme saw the store estate grow, and by 2007 it had
increased to 95 stores nationwide, under the guidance of ScS's then Chief
Executive Officer, David Knight, who was appointed in 2002.

 

In 2012, following the addition of flooring products to its offering, ScS was
re-branded 'Sofa Carpet Specialist' and a number of operational initiatives
were also undertaken, including upgrades to business processes, management
information and information technology systems.

 

These improvements led to ScS being listed on the London Stock Exchange in
2015, following a successful IPO.

 

On 10 January 2023, the ScS Group expanded with the acquisition of Snug, a
predominately online modular sofa retailer.

 

ScS currently has a total of 100 stores across the country from as far north
as Aberdeen, all the way down to Plymouth. Although predominantly online, Snug
currently operates from 26 retail locations throughout the country, having
three standalone stores, 16 concessions in ScS stores and seven third party
concessions.

 

The ScS Group employs over 1,800 people across the UK.

 

The ScS Group continues to ensure that the needs of its customers remain at
the core of everything it does, just as the "Suite Centre Sunderland" aimed to
do over a hundred years ago.

 

Under the leadership of Steve Carson, who was appointed as Chief Executive
Officer in January 2021, the ScS Group prides itself on giving its customers
an excellent shopping experience allowing them to shop easily in-store, online
or by telephone, with experienced sofa and flooring professionals on hand to
provide expert knowledge and advice.

 

9.       Financing

 

BidCo intends to finance the cash consideration payable to ScS Shareholders
pursuant to the Acquisition from existing cash on Poltronesofà's balance
sheet.

 

Goldman Sachs, as financial adviser to Poltronesofà, is satisfied that
sufficient resources are available to BidCo to enable it to satisfy in full
the cash consideration payable to ScS Shareholders under the terms of the
Acquisition.

 

Further information on the financing of the Acquisition will be set out in the
Scheme Document.

 

10.     Management, employees, pensions, research and development,
locations

 

Poltronesofà's strategic plans for ScS

 

Poltronesofà intends to support ScS by leveraging its significant,
pan-European industry expertise and providing the capital necessary to
accelerate ScS's strategy. Poltronesofà is highly supportive of ScS
management's vision for the business and the long-term ambitions of being the
UK's best value-for-money home retailer.

 

Prior to this Announcement, consistent with market practice, Poltronesofà has
been granted access to ScS's senior management for the purposes of
confirmatory due diligence. However, because of the constraints of a public
offer process, Poltronesofà has not yet had access to sufficiently detailed
information to formulate detailed plans or intentions regarding the impact of
the Acquisition on ScS.

 

Poltronesofà recognises and values the strategic, operational and product
positioning and setup of ScS, as well as the expertise of its management team
and employees. Poltronesofà therefore intends to work closely with ScS's
senior management to undertake a strategic review of ScS in order to determine
how its short and long-term objectives can best be delivered or exceeded. The
strategic review will include:

 

·    an assessment of the short and long-term objectives, strategy and
potential of ScS's business;

·    review of the opportunities and impact that the Acquisition will have
on the operations of ScS;

·    investigating the potential opportunities for ScS to benefit from the
enhanced access to capital that the Acquisition will provide; and

·    considering how best to position ScS's business to compete more
strongly, which would include evaluating the best corporate organisational
setup for the Enlarged Group going forwards.

 

Poltronesofà expects to complete the strategic review within approximately
six months from the Effective Date.

 

Employees, management, existing rights and pensions

 

ScS has a strong team of talented and committed employees who have worked hard
to position ScS as a leading UK home retailer poised for further growth.
Poltronesofà recognises the high quality of the employees and the strength of
the management team at ScS and their importance to the success of ScS
following the Acquisition. Poltronesofà intends to work with ScS's management
team to review ScS's business and operations and consider any operational best
practices that could be implemented within the Enlarged Group following
completion of the Acquisition.

 

Until the review referenced above is completed, Poltronesofà cannot be
certain what, if any, repercussions there will be on employment of the
management and employees of ScS. Poltronesofà does not intend that there will
be any material headcount reductions or material change in the balance of
skills and functions of the ScS employees and management as a result of the
Acquisition, except that following the Effective Date there may be reductions
in respect of certain overlapping corporate and support functions.

 

In connection with the strategic review, Poltronesofà will work with the ScS
management team to streamline the Enlarged Group with the aim of maintaining
operational momentum and retaining and motivating the best talent across the
Enlarged Group.

 

In addition, the strategic review and any headcount reduction would be subject
to applicable informing and consulting requirements and conducted in
accordance with applicable law.

 

It is expected that, on the Effective Date, each non-executive ScS Director
will resign with immediate effect.

 

ScS operates a defined contribution pension scheme. Following completion of
the Acquisition, the Enlarged Group does not intend to make any changes with
regard to the agreed employer contributions into ScS's existing pension scheme
or the accrual of benefits to existing members or the admission of new members
to such pension schemes.

 

Management incentivisation arrangements

 

Proposals regarding incentivisation arrangements for management and employees
of ScS will be considered following the Effective Date. Poltronesofà has not
entered into incentivisation or other arrangements with ScS's management and
has not yet had discussions about the form these might take. There are no such
proposed incentivisation arrangement for management at this time and no
discussions have yet taken place.

 

Headquarters, locations, research and development and fixed assets

 

Poltronesofà does not intend to make material changes to places of business,
or headquarters of ScS or to redeploy the fixed assets of ScS. As set out
above, these areas will all form part of the strategic review to establish an
optimal approach for the future of ScS.

 

As far as Poltronesofà is aware, ScS does not have a research and development
function and Poltronesofà has no plans in this regard.

 

Trading facilities

 

ScS is currently listed on the Official List. If Poltronesofà reaches the
requisite acceptance thresholds referred to in Section 13 (Structure of the
Acquisition), applications will be made to the London Stock Exchange for the
cancellation of the trading of the ScS Shares on the Main Market, and to the
FCA to request cancellation of the listing of the ScS Shares on the Official
List and Poltronesofà will re-register ScS as a private company.

 

No statements in this Section 10 (Management, employees, pensions, research
and development, locations) constitute "post-offer undertakings" for the
purposes of Rule 19.5 of the Code.

 

11.     ScS Share Schemes

 

Details of any proposals to participants in the ScS Share Schemes will be set
out in the Scheme Document and in separate letters to be sent to the
participants in the ScS Share Schemes.

 

12.     Acquisition-related arrangements

 

Confidentiality Agreement

 

Poltronesofà and ScS have entered into a Confidentiality Agreement, pursuant
to which Poltronesofà has undertaken to keep confidential information
relating to the ScS Group and not to disclose it to third parties (with
certain exceptions) unless required by law or regulation or to the extent ScS
consents in writing prior to the disclosure. The Confidentiality Agreement
also includes customary standstill and surrender obligations.

 

The confidentiality obligations will remain in force notwithstanding any
decision by Poltronesofà or ScS not to proceed with the Acquisition and shall
terminate 24 months after the termination of discussions between Poltronesofà
and ScS.

 

Co-operation Agreement

 

Poltronesofà, BidCo and ScS entered into the Co-operation Agreement on 23
October 2023, pursuant to which BidCo and ScS have, among other things, each
agreed that BidCo and ScS will: (i) co-operate in relation to obtaining the
satisfaction of Conditions set out in paragraph 3(a) of Appendix I by the Long
Stop Date; (ii) co-operate in relation to the provision of certain information
for the purposes of the Scheme Document and for BidCo to otherwise assist ScS
with the preparation of the Scheme Document; and (iii) co-operate in
implementing certain employee-related matters in relation to the ScS Share
Schemes.

 

The Co-operation Agreement will terminate in certain circumstances, including
if: (i) the Offer (if applicable) is withdrawn or lapses in accordance with
its terms or with the consent of the Panel; (ii) the ScS Directors withdraw
their recommendation of the Acquisition; or (iii) the Scheme does not become
Effective in accordance with its terms by the Long Stop Date.

 

13.     Structure of the Acquisition

 

Scheme

 

It is intended that the Acquisition will be implemented by way of a
Court-sanctioned scheme of arrangement between ScS and the ScS Shareholders
under Part 26 of the Companies Act (although Poltronesofà reserves the right
to implement the Acquisition by means of an 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 BidCo to become the ultimate owner
of the entire issued and to be issued share capital of ScS. Pursuant to the
Scheme, the ScS Shares will be transferred to BidCo in consideration for which
the ScS Shareholders who are on ScS's register of members at the Scheme Record
Time will receive the cash consideration on the basis set out in Section 2
(The Acquisition) of this Announcement.

 

Approval by Court Meeting and General Meeting

 

To become Effective, the Scheme requires, among other things:

 

(a)        satisfaction (or, where applicable, waiver) of the
Conditions including the receipt of relevant regulatory approval from the FCA
in respect of the Acquisition;

 

(b)       approval by a majority in number of the ScS Shareholders who
are present and vote, either in person or by proxy, at the Court Meeting (and
at any separate class meeting which may be required by the Court) and who
represent not less than 75 per cent. in value of the ScS Shares (or the
relevant class or classes thereof) voted by those ScS Shareholders;

 

(c)        approval of not less than 75 per cent. of the votes cast,
either in person or by proxy, of the resolutions required to approve and
implement the Scheme at the ScS General Meeting; and

 

(d)       sanction of the Scheme by the Court and, following such
sanction, the delivery of a copy of the Court Order to the Registrar of
Companies.

 

Application to Court to sanction the Scheme

 

Once the approvals of the ScS Shareholders have been obtained at the Court
Meeting and the General Meeting, and the other Conditions have been satisfied
or (where applicable) waived, the Scheme must be sanctioned by the Court at
the Court Hearing.

 

The Scheme will become effective in accordance with its terms on delivery of a
copy of the Court Order to the Registrar of Companies. Upon the Scheme
becoming Effective, it will be binding on all ScS Shareholders, irrespective
of whether or not they attended or voted at the Court Meeting or General
Meeting, or whether they voted in favour of or against the Scheme.

 

Full details of the Scheme to be set out in the Scheme Document

 

The Scheme Document will contain further information about the Acquisition and
the notices of the Court Meeting and ScS General Meeting, together with the
associated Forms of Proxy. Further details of the Scheme will be set out in
the Scheme Document, including the expected timetable and the action to be
taken by ScS Shareholders.

 

The Scheme will be governed by English law. The Scheme will be subject to the
applicable requirements of the Code, the Panel, the London Stock Exchange, the
FCA and the Listing Rules.

 

It is expected that the Scheme Document will be published and sent to ScS
Shareholders and, for information only, to participants in the ScS Share
Schemes within 28 days of this Announcement, unless Poltronesofà and ScS
otherwise agree, and the Panel consents, to a later date.

 

At this stage, subject to the approval and availability of the Court (which is
subject to change), and subject to the satisfaction (or, where applicable,
waiver) of the Conditions, Poltronesofà expects the Acquisition will become
Effective in the first quarter of 2024.

 

Subject to certain restrictions relating to persons resident in Restricted
Jurisdictions, the Scheme Document will also be made available on
Poltronesofà's website at www.poltronesofa-offer.com and ScS's website at
www.scsplc.co.uk/investors.

 

Conditions to the Acquisition

 

The Acquisition will be subject to the Conditions and further terms set out in
full in Appendix I to this Announcement and to be set out in the Scheme
Document.

 

Among others, the Conditions include a regulatory approval in England and
Wales.

 

The Conditions set out in paragraphs 1 and 2 of Appendix I to this
Announcement provide that the Scheme will lapse, and the Acquisition shall not
proceed (unless the Panel otherwise consents) if:

 

(a)        the Scheme does not become Effective by 11.59 p.m. on the
Long Stop Date;

 

(b)        the Court Meeting is not held on or before the 22nd day
after the expected date of the Court Meeting to be set out in the Scheme
Document in due course (or such later date as may be agreed between
Poltronesofà and ScS and the Court may allow);

 

(c)        the ScS General Meeting is not held on or before the 22nd
day after the expected date of the ScS General Meeting to be set out in the
Scheme Document in due course (or such later date as may be agreed between
Poltronesofà and ScS and the Court may allow); or

 

(d)        the Scheme is not sanctioned on or before the 22nd day after
the expected date of the Court Hearing to be set out in the Scheme Document in
due course (or such later date as may be agreed between Poltronesofà and ScS
and the Court may allow) and a copy of the Court Order is not delivered to the
Registrar of Companies,

 

and such deadlines are not waived by BidCo or otherwise extended by agreement
between BidCo, ScS, the Panel and the Court.

 

Right to switch to an Offer

 

BidCo reserves the right to elect to implement the Acquisition by way of an
Offer for the entire issued and to be issued share capital of ScS as an
alternative to the Scheme. In such an event, the Offer will be implemented on
the same terms (subject to appropriate amendments), so far as applicable, as
those which would apply to the Scheme and subject to the amendment referred to
in Part C of Appendix I to this Announcement.

 

14.     De-listing, cancellation of trading and re-registration

 

Prior to the Scheme becoming Effective, a request will be made by ScS to the
London Stock Exchange to cancel the admission to trading in ScS Shares on its
Main Market for listed securities to take effect on, or shortly after, the
Effective Date and the FCA will be requested to cancel the listing of the ScS
Shares from the Official List on, or shortly after, the Effective Date.

 

On the Effective Date, share certificates in respect of ScS Shares will cease
to be valid (and should be destroyed) and entitlements to ScS Shares held
within the CREST system will be cancelled.

 

As soon as practicable after the Effective Date and after the cancellation of
the admission to trading in ScS Shares on the London Stock Exchange's Main
Market for listed securities and the cancellation of the listing of the ScS
Shares on the Official List, it is intended that ScS will be re-registered as
a private limited company under the relevant provisions of the Companies Act.

 

15.     Disclosure of interests in ScS

 

As at the close of business on 23 October 2023 (being the last practicable
date prior to this Announcement), save for: (i) the disclosures in this
Section 15; and (ii) the Irrevocable Undertakings referred to in Section 6,
none of BidCo or any of its directors or, so far as BidCo is aware, any person
acting, or deemed to be acting, in concert with BidCo had:

·   any interest in, or right to subscribe for, relevant securities of ScS;

·   any short position in (whether conditional or absolute and whether in
the money or otherwise), including any short position under a derivative, any
agreement to sell or any delivery obligation or right to require another
person to purchase or take delivery of, relevant securities of ScS;

·   procured an irrevocable commitment to accept the terms of the
Acquisition in respect of relevant securities of ScS; or

·   borrowed or lent any ScS Shares.

Furthermore, no dealing arrangement (of the kind referred to in Note 11 of the
definition of "acting in concert" in the Code) exists between BidCo or ScS or
any person acting in concert with BidCo or ScS in relation to ScS Shares.

 

16.     Rule 2.9 disclosure

 

In accordance with Rule 2.9 of the Code, ScS confirms that, as at the close of
business on 23 October 2023, being the last Business Day before this
Announcement, it had 33,954,674 ordinary shares of £0.001 each in issue
admitted to trading on the Main Market of the London Stock Exchange. The
International Securities Identification Number (ISIN) for ScS Shares is
GB00BRF0TJ56.

 

19.     General

 

The Acquisition will be subject to the Conditions and other terms set out in
Appendix I and to be set out in the Scheme Document.

 

Goldman Sachs and Shore Capital have each given and not withdrawn their
consent to the publication of this Announcement with the inclusion of their
names in the form and context in which they appear.

 

21.       Documents available on a website

 

Subject to certain restrictions relating to persons in Restricted
Jurisdictions, copies of the following documents will, by no later than 12
noon on the Business Day following the date of this Announcement, be made
available on Poltronesofà's website at www.poltronesofa-offer.com and ScS's
website at www.scsplc.co.uk/investors (as applicable) until the end of the
Offer Period:

 

(a)     this Announcement;

 

(b)     the Confidentiality Agreement;

 

(c)     the Co-operation Agreement;

 

(d)     the Irrevocable Undertakings; and

 

(e)     consent letters from Goldman Sachs and Shore Capital.

 

Neither the contents of Poltronesofà's website or the contents of ScS's
website, nor the content of any other website accessible from hyperlinks on
either such website, is incorporated into or forms part of, this Announcement.

 

 

Disclaimers

 

Goldman Sachs, which is authorised and regulated in the United Kingdom by the
Financial Conduct Authority is acting as financial adviser to Poltronesofà
and no one else in connection with the Acquisition referred to in this
Announcement and will not be responsible to anyone other than Poltronesofà
for providing the protections afforded to clients of Goldman Sachs or for
providing advice in relation to this approach, the contents of this
Announcement or any other matter referred to herein.

 

Shore Capital, which is authorised and regulated in the United Kingdom by the
Financial Conduct Authority is acting as financial adviser to ScS and no one
else in connection with the Acquisition referred to in this Announcement and
will not be responsible to anyone other than ScS for providing the protections
afforded to clients of Shore Capital or for providing advice in relation to
this approach, the contents of this Announcement or any other matter referred
to herein.

 

Further information

 

This Announcement is for information purposes only and is not intended to and
does not constitute, or form any part of, an offer, invitation or the
solicitation of an offer to purchase or subscribe, 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.

 

The Acquisition will be subject to English law and to the applicable
requirements of the Code, the Panel, the Listing Rules, the London Stock
Exchange and the FCA.

 

The Acquisition will be made solely by the Scheme Document, which will contain
the full terms and conditions of the Acquisition, including details of how to
vote in respect of the Scheme. Any voting decision or response in relation to
the Acquisition should be made solely on the basis of the Scheme Document. ScS
Shareholders are advised to read the formal documentation in relation to the
Acquisition carefully once it has been published. Each ScS Shareholder is
urged to consult his or her independent professional adviser regarding the tax
consequences of the Acquisition.

 

This Announcement does not constitute a prospectus or a prospectus equivalent
document.

 

If you are in any doubt about the contents of this Announcement or the action
you should take, you are recommended to seek your own independent financial
advice immediately from your stockbroker, bank manager, solicitor, accountant
or from an independent financial adviser duly authorised under the Financial
Services and Markets Act 2000 (as amended).

 

This Announcement has been prepared for the purpose of complying with English
law and the Code and the information disclosed may not be the same as that
which would have been disclosed if this Announcement had been prepared in
accordance with the laws of jurisdictions outside England.

 

Overseas shareholders

 

The release, publication or distribution of this Announcement in 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 (including Restricted Jurisdictions) should inform themselves about,
and observe, any applicable legal or regulatory requirements. In particular,
the ability of persons who are not resident in the United Kingdom or who are
subject to the laws of another jurisdiction to vote their ScS Shares in
respect of the Scheme at the Court Meeting, or to execute and deliver Forms of
Proxy appointing another to vote at the Court Meeting on their behalf, may be
affected by the laws of the relevant jurisdictions in which they are located
or to which they are subject. Any failure to comply with applicable legal or
regulatory requirements of any jurisdiction may constitute a violation of
securities laws in that jurisdiction. To the fullest extent permitted by law,
the companies and persons involved in the Acquisition disclaim any
responsibility or liability for the violation of such restrictions by any
person. This Announcement has been prepared for the purpose of complying with
English law and the Code and the information disclosed may not be the same as
that which would have been disclosed if this Announcement had been prepared in
accordance with the laws of jurisdictions outside England.

 

The Acquisition will not be made, directly or indirectly, in or into or by use
of the mails or any other means or instrumentality (including, without
limitation, telephonic or electronic) of interstate or foreign commerce of, or
any facility of a national, state or other securities exchange of, a
Restricted Jurisdiction, and the Acquisition will not be capable of acceptance
by any such use, means, instrumentality or facility or from within a
Restricted 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 or any jurisdiction where to do so
would constitute a violation of the laws of such jurisdiction and persons
receiving such documents (including custodians, nominees and trustees) must
not mail or otherwise forward, distribute or send them in or into or from any
Restricted Jurisdiction. Doing so may render invalid any related purported
vote in respect of acceptance of the Acquisition.

 

If the Acquisition is implemented by way of an Offer (unless otherwise
permitted by applicable law and regulation), the Offer may not be made,
directly or indirectly, in or into or by use of the mails or any other means
or instrumentality (including, without limitation, facsimile, e-mail or other
electronic transmission, telex or telephone) of interstate or foreign commerce
of, or any facility of a national, state or other securities exchange of any
Restricted Jurisdiction and the Offer will not be capable of acceptance by any
such use, means, instrumentality or facilities or from within any Restricted
Jurisdiction.

 

Further details in relation to ScS Shareholders in overseas jurisdictions will
be contained in the Scheme Document.

 

Additional information for US investors in ScS

 

The Acquisition relates to the shares of an English company and is being made
by way of a scheme of arrangement provided for under Part 26 of the Companies
Act. The Acquisition, implemented by way of a scheme of arrangement, is not
subject to the tender offer rules or the proxy solicitation rules under the US
Exchange Act. Accordingly, the Acquisition and the Scheme will be subject to
the disclosure requirements and practices applicable to a scheme of
arrangement involving a target company incorporated in the UK and listed on
the London Stock Exchange, which differ from the disclosure requirements of US
tender offer and proxy solicitation rules. If, in the future, BidCo exercises
its right to implement the Acquisition by way of an Offer and determines to
extend the Offer into the United States, the Acquisition will be made in
compliance with applicable US laws and regulations.

 

Forward-Looking Statements

 

This Announcement contains certain forward-looking statements with respect to
the financial condition, results of operations and business of ScS and certain
plans and objectives of Poltronesofà and ScS.

 

These forward-looking statements can be identified by the fact that they do
not relate only to historical or current facts. These statements are based on
assumptions and assessments made by ScS, BidCo and Poltronesofà in light of
their experience and their perception of historical trends, current
conditions, future developments and other factors they believe appropriate,
and therefore are subject to risks and uncertainties which could cause actual
results to differ materially from those expressed or implied by those
forward-looking statements.

 

Forward-looking statements often use words such as "anticipate", "target",
"expect", "estimate", "intend", "plan", "goal", "believe", "hope", "aim",
"will", "continue", "may", "would", "could", "should" or other words of
similar meaning or the negative thereof. Forward-looking statements include
statements relating to the following: (i) future capital expenditures,
expenses, revenues, economic performance, synergies, financial conditions,
market growth, dividend policy, losses and future prospects; (ii) business and
management strategies and the expansion and growth of the operations of the
Poltronesofà Group or the ScS Group; and (iii) the effects of government
regulation on the business of the Poltronesofà Group or the ScS Group. There
are many factors which could cause actual results to differ materially from
those expressed or implied in forward-looking statements. Among such factors
are changes in the global, political, economic, business, competitive or
market landscape and regulatory forces, future exchange and interest rates,
changes in tax rates and future business combinations or disposals.

 

These forward-looking statements are based on numerous assumptions regarding
the present and future business strategies of such persons and the environment
in which each will operate in the future. By their nature, these
forward-looking statements involve known and unknown risks and uncertainties
because they relate to events and depend on circumstances that will occur in
the future. The factors described in the context of such forward-looking
statements in this Announcement may cause the actual results, performance or
achievements of any such person, or industry results and developments, to be
materially different from any results, performance or achievements expressed
or implied by such forward-looking statements. No assurance can be given that
such expectations will prove to have been correct and persons reading this
Announcement are therefore cautioned not to place undue reliance on these
forward-looking statements which speak only as at the date of this
Announcement. All subsequent oral or written forward-looking statements
attributable to Poltronesofà, BidCo or ScS or any persons acting on their
behalf are expressly qualified in their entirety by the cautionary statement
above. Neither Poltronesofà, BidCo nor ScS undertakes any obligation to
update publicly or revise forward-looking statements, whether as a result of
new information, future events or otherwise, except to the extent legally
required.

 

No profit forecasts, estimates or quantified financial benefits statements

 

No statement in this Announcement is intended as a profit forecast or estimate
for any period or a quantified financial benefits statement and no statement
in this Announcement should be interpreted to mean that earnings or earnings
per ordinary share, for Poltronesofà or ScS, respectively for the current or
future financial years would necessarily match or exceed the historical
published earnings or earnings per ordinary share for Poltronesofà or ScS,
respectively.

 

Right to switch to an Offer

 

BidCo reserves the right to elect to implement the Acquisition by way of an
Offer for the entire issued and to be issued share capital of ScS as an
alternative to the Scheme. In such an event, the Offer will be implemented on
the same terms (subject to appropriate amendments), so far as applicable, as
those which would apply to the Scheme and subject to the amendment referred to
in Part C of Appendix I to this Announcement.

 

Publication on website

 

A copy of this Announcement and the documents required to be published
pursuant to Rule 26.1 and Rule 26.2 of the Code will be made available
(subject to certain restrictions relating to persons resident in Restricted
Jurisdictions), free of charge, at www.poltronesofa-offer.com and at
www.scsplc.co.uk/investors and by no later than 12 noon on the Business Day
following the date of this Announcement.

 

Neither the contents of these websites nor the content of any other website
accessible from hyperlinks on such websites is incorporated into, or forms
part of, this Announcement.

 

Hard copy documents

 

In accordance with Rule 30.3 of the Code, ScS Shareholders, persons with
information rights and participants in the ScS Share Schemes may request a
hard copy of this Announcement by contacting ScS's registrars, Equiniti
Limited, on +44 (0)371 384 2050 or by submitting a request in writing to
Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA,
United Kingdom. The Shareholder Helpline is open from 8.30 a.m. to 5.30 p.m.
(London time) Monday to Friday (except English and Welsh public holidays).
Calls are charged at the standard geographical rate and will vary by provider.
Calls from outside the United Kingdom will be charged at the applicable
international rate.

 

Please note the Shareholder Helpline cannot provide advice on the merits of
the Acquisition or the Scheme nor give any financial, investment, legal or tax
advice.

 

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 be sent to them in relation to the Acquisition
in hard copy form.

 

UK Market Abuse Regulation

 

This Announcement contains inside information for the purposes of Article 7 of
UK MAR. Market soundings (as defined in UK MAR) were taken in respect of a
potential offer with the result that certain persons became aware of inside
information (as defined in UK MAR) as permitted by UK MAR. This inside
information is set out in this Announcement. Therefore, those persons that
received inside information in a market sounding are no longer in possession
of such inside information relating to ScS and its securities.

 

Information relating to ScS Shareholders

 

Addresses, electronic addresses and certain other information provided by ScS
Shareholders, persons with information rights and other relevant persons for
the receipt of communications from ScS may be provided to Poltronesofà and
BidCo during the Offer Period as required under Section 4 of Appendix 4 of the
Code to comply with Rule 2.11(c) of the 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 the figures that precede them.

 

Rule 2.9 disclosure

 

In accordance with Rule 2.9 of the Code, ScS confirms that, as at the close of
business on 23 October 2023, being the last practicable date prior to this
Announcement, it had in issue 33,954,674 ordinary shares of 0.001 each. The
International Securities Identification Number (ISIN) for ScS Shares is
GB00BRF0TJ56.

 

Disclosure requirements of the Code

 

Under Rule 8.3(a) of the Code, any person who is interested in 1 per cent. or
more of any class of relevant securities of an offeree company or of any
securities exchange offeror (being any offeror other than an offeror in
respect of which it has been announced that its offer is, or is likely to be,
solely in cash) must make an Opening Position Disclosure following the
commencement of the Offer Period and, if later, following the announcement in
which any securities exchange offeror is first identified.

 

An Opening Position Disclosure must contain details of the person's interests
and short positions in, and rights to subscribe for, any relevant securities
of each of (i) the offeree company and (ii) any securities exchange
offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a)
applies must be made by no later than 3.30 p.m. (London time) on the 10th
Business Day (as defined in the Code) following the commencement of the Offer
Period and, if appropriate, by no later than 3.30 p.m. (London time) on the
10th Business Day (as defined in the Code) following the announcement in which
any securities exchange offeror is first identified. Relevant persons who deal
in the relevant securities of the offeree company or of a securities exchange
offeror prior to the deadline for making an Opening Position Disclosure must
instead make a Dealing Disclosure.

 

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1
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(s), save to the extent that
these details have previously been disclosed under Rule 8. A Dealing
Disclosure by a person to whom Rule 8.3(b) applies must be made by no later
than 3.30 p.m. (London time) on the Business Day (as defined in the Code)
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. If you are in any doubt as to whether you are required to
make an Opening Position Disclosure or a Dealing Disclosure, you should
contact the Panel's Market Surveillance Unit on +44(0)20 7638 0129.

APPENDIX I

 

CONDITIONS AND FURTHER TERMS OF THE ACQUISITION

 

Part A

 

Conditions to the Acquisition

1.         The Acquisition will be conditional upon the Scheme
becoming unconditional and Effective, subject to the Code, by no later than
11.59 p.m. on the Long Stop Date.

 

Scheme approval

 

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 ScS Shareholders (or the relevant
class or classes thereof, if applicable) in each case present, entitled to
vote and voting, either in person or by proxy, at the Court Meeting and at any
separate class meeting which may be required by the Court or at any
adjournment of any such meeting; and

 

(ii)     the Court Meeting and any separate class meeting which may be
required by the Court or any adjournment of any such meeting being held on or
before the 22nd day after the expected date of the Court Meeting to be set out
in the Scheme Document in due course (or such later date, if any, as
Poltronesofà and ScS may agree and the Court may allow);

 

(b)     (i)      all resolutions 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)     the ScS General Meeting or any adjournment of that meeting being
held on or before the 22nd day after the expected date of the ScS General
Meeting to be set out in the Scheme Document in due course (or such later
date, if any, as Poltronesofà and ScS may agree and 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
Poltronesofà and ScS)) and the delivery of a copy of the Court Order to the
Registrar of Companies; and

 

          (ii)     the Court Hearing being held on or before the
22nd 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 Poltronesofà
and ScS may agree and the Court may allow).

 

Other Conditions

 

3.         The Acquisition will also 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 capable of waiver, waived:

Competition law and regulatory approvals

            each of BidCo and any other person who is to acquire
control over ScS for the purposes of Part XIII of FSMA at completion of the
Acquisition having given notice to the FCA under section 178 of FSMA, and the
FCA:

(i)         having given notice in writing of its unconditional
approval of the acquisition of control by each such person in accordance with
section 189(4)(a) of FSMA; or

(ii)        having given notice in writing that it approves the
acquisition of control by each such person subject to conditions in accordance
with section 189(7) of FSMA, where those conditions are reasonably
satisfactory to Poltronesofà; or

(iii)       being treated as having approved the acquisition of control
by each such person in accordance with section 189(6) of FSMA.

General third party clearances

            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 ScS Group or the Wider Poltronesofà Group taken as a whole)
arising as a result of or in connection with the Acquisition including,
without limitation, its implementation and financing or the proposed direct or
indirect acquisition of any shares or other securities in, or control of, ScS
by BidCo or any member of the Poltronesofà Group;

            no Third Party having given notice of a decision to
take, institute, implement or threaten any action, proceeding, suit,
investigation, enquiry or reference, or enacted, made or proposed any statute,
regulation, decision or order, or having taken any other steps which would or
might reasonably be expected to:

(i)         require, prevent or materially delay the divestiture, or
materially alter the terms envisaged for any proposed divestiture by any
member of the Wider Poltronesofà Group or any member of the Wider ScS 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 would be
material in the context of the Wider Poltronesofà Group or Wider ScS Group
taken as a whole;

(ii)        require, prevent or materially delay, or materially alter
the terms envisaged for, any proposed divestiture by any member of the Wider
Poltronesofà Group of any shares or other securities in ScS;

(iii)       impose any material limitation on, or result in a delay in,
the ability of any member of the Wider ScS Group directly or indirectly to
acquire or to hold or to exercise effectively, directly or indirectly, all or
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 ScS Group or the Wider Poltronesofà Group or to exercise
management control over any such member, in each case, to an extent which is
material in the context of the Wider ScS Group or the Wider Poltronesofà
Group;

(iv)       otherwise adversely affect the business, assets, profits or
prospects of any member of the Wider ScS Group or of any member of the Wider
Poltronesofà Group to an extent which is material in the context of the Wider
Poltronesofà Group or the Wider ScS Group, in either case taken as a whole;

(v)        make the Acquisition or its implementation or the
acquisition or proposed acquisition by Poltronesofà or any member of the
Wider ScS Group of any shares or other securities in, or control of ScS void,
illegal, or unenforceable under the laws of any relevant jurisdiction, or
otherwise, directly or indirectly, materially restrain, restrict, prohibit,
delay or otherwise interfere with the same, or impose material additional
conditions or obligations with respect thereto, or otherwise challenge or
interfere therewith;

(vi)       require (save as envisaged by the Acquisition) any member of
the Wider Poltronesofà Group or the Wider ScS Group to offer to acquire any
shares or other securities (or the equivalent) or interest in any member of
the Wider Poltronesofà Group or the Wider ScS Group owned by any third party
where such acquisition would be material in the context of the Wider ScS Group
taken as a whole or, as the case may be, the Wider Poltronesofà Group taken
as a whole;

(vii)      impose any limitation on the ability of any member of the
Wider Poltronesofà Group to integrate or co-ordinate its business, or any
part of it, with the businesses or any part of the businesses of any other
member of the Wider ScS Group which is adverse to and material in the context
of the Wider ScS Group or the Wider Poltronesofà Group, in each case taken as
a whole in the context of the Acquisition; or

(viii)     result in any member of the Wider ScS 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 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 Acquisition or the acquisition or proposed
acquisition of any ScS Shares having expired, lapsed or been terminated;

            in addition to the competition law and regulatory
approvals referred to in Condition 3(a) to 3(c) above, all necessary filings
or applications having been made in connection with the Acquisition and all
necessary statutory or regulatory obligations in any jurisdiction having been
complied with in connection with the Acquisition or the acquisition by any
member of the Wider Poltronesofà Group of any shares or other securities in,
or control of, ScS and all authorisations, orders, recognitions, grants,
consents, licences, confirmations, clearances, permissions and approvals or
the proposed acquisition of any shares or other securities in, or control of,
ScS by any member of the Wider Poltronesofà Group having been obtained in
terms and in a form reasonably satisfactory to Poltronesofà from all
appropriate Third Parties or persons with whom any member of the Wider ScS
Group has entered into contractual arrangements and all such authorisations,
orders, recognitions, grants, consents, licences, confirmations, clearances,
permissions and approvals together with all authorisations orders,
recognitions, grants, licences, confirmations, clearances, permissions and
approvals necessary or appropriate to carry on the business of any member of
the Wider ScS Group, in each case which is material in the context of the
Wider Poltronesofà Group or the Wider ScS Group as a whole, remaining in full
force and effect and all material filings necessary for such purpose have 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;

Certain matters arising as a result of any arrangement, agreement etc.

            except as Disclosed, there being no provision of any
agreement, arrangement, licence, permit or other instrument to which any
member of the Wider ScS Group is a party or by or to which any such member or
any of its assets are or may be bound, entitled or subject, which, in each
case as a consequence of the Acquisition or the proposed acquisition of any
shares or other securities in ScS or because of a change in the control or
management of ScS or otherwise, would or would reasonably be expected to
result in (in each case to an extent which is material in the context of the
Wider ScS Group as a whole, or in the context of the Acquisition):

(i)         any monies 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 monies 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 affected or any onerous
obligation or liability arising or any action being taken or arising
thereunder;

(iii)       any assets or interests of any such member being or falling
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
other 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 or
assets 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 or
body (or any arrangement or arrangements relating to any such interest or
business) being terminated, adversely modified or affected;

(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;

(viii)     the creation 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

(ix)       any liability of any such member to make any severance,
termination, bonus or other payment to any of its directors or other officers,

and no event having occurred which, under any provision of any agreement,
arrangement, licence, permit or other instrument to which any member of the
Wider ScS 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 (ix) of this Condition 3(e), in each case which is or
would be material in the context of the Wider ScS Group taken as a whole;

 

No material transactions, claims or changes in the conduct of the business of
the ScS Group

 

            except as Disclosed, no member of the Wider ScS Group
having, since 30 July 2022:

(i)         save as between ScS and wholly-owned subsidiaries of ScS
or for ScS Shares issued pursuant to the exercise of options or vesting of
awards granted under the ScS Share Schemes, issued, authorised or proposed the
issue of additional shares of any class;

(ii)        save as between ScS and wholly-owned subsidiaries of ScS or
for the grant of options and awards under the ScS Share Schemes, 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)       save for the Permitted Dividend(s), other than to another
member of the ScS Group, 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-ScS 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-ScS Group transactions, made or authorised or
proposed or announced an intention to propose any material change in its loan
capital;

(vi)       issued, authorised or proposed the issue of any debentures or
(save for intra-ScS Group transactions), save in the ordinary course of
business, incurred or increased any indebtedness or become subject to any
liability (actual or contingent);

(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-paragraph (i) above, made
any other change to any part of its share capital;

(viii)     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
or entered into or changed the terms of any contract with any director or
senior executive;

(ix)       entered into or varied or authorised, proposed or announced
its intention to enter into or vary any contract, transaction or commitment
(whether in respect of capital expenditure or otherwise) which is of a long
term, onerous or unusual nature or magnitude or which is or could be
restrictive on the businesses of any member of the Wider ScS Group or the
Wider Poltronesofà Group or which involves an obligation of such a nature or
magnitude or which is other than in the ordinary course of business and which,
in any such case, is material in the context of the Wider ScS Group or the
Wider Poltronesofà Group taken as a whole;

(x)        (other than in respect of a member of the Wider ScS Group
which is dormant and was solvent at the relevant time) taken any corporate
action or had any legal proceedings started or threatened against it for its
winding-up, dissolution or reorganisation or for the appointment of a
receiver, administrative receiver, administrator, trustee or similar officer
of all or any of its assets or revenues or any analogous proceedings in any
jurisdiction or had any such person appointed;

(xi)       waived or compromised any claim otherwise than in the
ordinary course of business and which is material in the context of the Wider
ScS Group taken as a whole;

(xii)      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 to propose to, effect any of the
transactions, matters or events referred to in this Condition 3(f) and which
is material in the context of the Wider ScS Group taken as a whole;

(xiii)     having made or agreed or consented to any significant change
to:

 

(A)    the terms of the trust deeds constituting the pension scheme(s)
established by any member of the Wider ScS 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 which
is material in the context of the Wider ScS Group taken as a whole;

 

(xiv)     proposed, agreed to provide or modified the terms of any share
option scheme, incentive scheme or other benefit relating to the employment or
termination of employment of any person employed by the Wider ScS Group and in
each case which is material in the context of the Wider ScS Group taken as a
whole; or

(xv)      having taken (or agreed or proposed to take) any action which
requires, or would require, the consent of the Panel or the approval of ScS
Shareholders in a general meeting in accordance with, or as contemplated by,
Rule 21.1 of the Code;

 

No adverse change, litigation or regulatory enquiry

 

            except as Disclosed, since 30 July 2022:

(i)         no adverse change or deterioration having occurred in the
business, assets, financial or trading position or profits or prospects of any
member of the Wider ScS Group which is material in the context of the Wider
ScS Group taken as a whole;

(ii)        no litigation, arbitration proceedings, prosecution or
other legal or regulatory proceedings to which any member of the Wider ScS
Group is or may become a party (whether as a plaintiff, defendant or
otherwise) and no investigation by any ScS Party against or in respect of any
member of the Wider ScS Group having been instituted, announced or threatened
by or against or remaining outstanding in respect of any member of the Wider
ScS Group which is material in the context of the Wider ScS Group taken as a
whole;

(iii)       no contingent or other liability having arisen or become
apparent to Poltronesofà which would be likely to adversely affect any member
of the Wider ScS Group, taken as a whole;

(iv)       no steps having been taken which are likely to result in the
withdrawal, cancellation, termination or modification of any licence held by
any member of the Wider ScS Group which is necessary for the proper carrying
on of its business; and

(v)        no member of the Wider ScS Group having conducted its
business in breach of any applicable laws and regulations which in any case is
material in the context of the Wider ScS Group taken as a whole;

 

No discovery of certain matters

            except as Disclosed, Poltronesofà not having
discovered:

(i)         that any financial, business or other information
concerning the Wider ScS Group as contained in the information publicly
disclosed at any time by or on behalf of any member of the Wider ScS Group is
misleading, contains a material misrepresentation of fact or omits to state a
fact necessary to make that information not misleading; or

(ii)        that any member of the Wider ScS Group is subject to any
liability (actual or contingent) which is not disclosed in the annual report
and accounts of ScS for the financial year ended 30 July 2022,

 

in each case, to the extent which is material in the context of the Wider ScS
Group taken as a whole;

            except as Disclosed, Poltronesofà not having
discovered that:

(i)         any past or present member of the Wider ScS Group has
failed to comply in any material respect with any or all applicable
legislation or regulations, of any jurisdiction with regard to the use,
storage, carriage, disposal, spillage, release, discharge, leak or emission of
any waste or hazardous substance or any substance likely to impair materially
the environment (including property) or harm human health or animal health or
otherwise relating to environmental matters or the health and safety of
humans, or that there has otherwise been any such storage, carriage, disposal,
spillage, release, discharge, leak or emission (whether or not the same
constituted a non-compliance by any person with any such legislation or
regulations, and wherever the same may have taken place) any of which storage,
carriage, disposal, spillage, release, discharge, leak or emission would be
likely to give rise to any material liability (actual or contingent) on the
part of any member of the Wider ScS Group; or

(ii)        there is, or is likely to be, for that or any other reason
whatsoever, any material liability (actual or contingent) of any past or
present member of the Wider ScS Group to make good, repair, reinstate or clean
up any property now or previously owned, occupied, operated or made use of or
controlled by any such past or present member of the Wider ScS Group, under
any environmental legislation, regulation, notice, circular or order of any
government, governmental, quasi-governmental, state or local government,
supranational, statutory or other regulatory body, agency, court, association
or any other person or body in any jurisdiction; or

 

Anti-corruption, sanctions and criminal property

 

            save as Disclosed, Poltronesofà not having discovered
that:

(i)         any past or present member, director, officer or employee
of the Wider ScS Group is or has at any time engaged in any activity, practice
or conduct which would constitute an offence under the Bribery Act 2010, the
US Foreign Corrupt Practices Act of 1977 or any other applicable
anti-corruption legislation or any person that performs or has performed
services for or on behalf of the Wider ScS Group is or has at any time engaged
in any activity, practice or conduct in connection with the performance of
such services which would constitute an offence under the Bribery Act 2010,
the US Foreign Corrupt Practices Act of 1977 or any other applicable
anti-corruption legislation; or

(ii)        any asset of any member of the Wider ScS Group constitutes
criminal property as defined by section 340(3) of the Proceeds of Crime Act
2002 (but disregarding paragraph (b) of that definition); or

(iii)       any past or present member, director, officer or employee of
the ScS Group, or any other person for whom any such person may be liable or
responsible, has engaged in any business with, made any investments in, made
any funds or assets available to or received any funds or assets from: (a) any
government, entity or individual in respect of which US, 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 US Office of
Foreign Assets Control, or HM Treasury in the UK; or (b) any government,
entity or individual targeted by any of the economic sanctions of the United
Nations, the US, the UK, the European Union or any of its member states; or

(iv)       no member of the ScS Group being engaged in any transaction
which would cause Poltronesofà to be in breach of any law or regulation upon
its acquisition of ScS, including the economic sanctions of the US Office of
Foreign Assets Control, or HM Treasury & Customs in the UK, or any
government, entity or individual targeted by any of the economic sanctions of
the United Nations, the US, the UK, the European Union or any of its member
states,

in each case, to the extent which is material in the context of the Wider ScS
Group taken as a whole.

 

 

Part B

 

Waiver and Invocation of the Conditions

 

1.         Subject to the requirements of the Panel in accordance with
the Code, BidCo reserves the right to waive, in whole or in part, all or any
of the Conditions in Part A above, except for Conditions 2(a)(i), 2(b)(i) and
2(c)(i) (Scheme Approval), which cannot be waived.

2.         The Acquisition will be subject to the satisfaction (or
waiver, if permitted) of the Conditions in Part A above, and to certain
further terms set out in Part D below, and to the full terms and conditions
which will be set out in the Scheme Document.

3.         Conditions 2(a)(i), 2(b)(i) and 3(a)-3(d) (inclusive) must
be fulfilled, determined by Poltronesofà to be or to remain satisfied or (if
capable of waiver) waived, by no later than 11.59 p.m. on the date immediately
preceding the date of the Court Hearing, failing which the Acquisition will
lapse. BidCo shall be under no obligation to waive or treat as satisfied any
of Condition 3(a)-3(d) by a date earlier than the latest date specified above
for the fulfilment or waiver thereof, notwithstanding that the other
Conditions to the Acquisition may at such earlier date have been waived or
fulfilled and that there are at such earlier date no circumstances indicating
that any of such Conditions may not be capable of fulfilment.

4.         Under Rule 13.5 of the Code, BidCo may not invoke a
Condition so as to cause the Acquisition not to proceed, to lapse or be
withdrawn, unless the circumstances which give rise to the right to invoke the
Condition are of material significance to BidCo in the context of the
Acquisition. Conditions 1 and 2 of Part A (and, if applicable, any acceptance
condition adopted on the basis specified in paragraph 2 of Part C below in
relation to any Offer) are not subject to this provision of the Code. Any
Condition which is subject to Rule 13.5(a) of the Code may be waived by
Poltronesofà.

 

Part C

 

Implementation by way of an Offer

 

1.       BidCo reserves the right to elect to implement the Acquisition
by way of an Offer as an alternative to the Scheme with the consent of the
Panel and subject to the terms of the Co-operation Agreement.

 

2.       In such event, such Offer will be implemented on the same terms
and conditions, so far as applicable, as those which would apply to the Scheme
subject to appropriate amendments to reflect the change in method of effecting
the Offer, including (without limitation) the inclusion of an acceptance
condition set at 90 per cent. of the ScS Shares to which the Offer relates or
such lesser percentage as BidCo, with the consent of the Panel, decides, being
in any case more than 50 per cent. of the ScS Shares to which the Offer
relates.

 

 

Part D

 

Certain further terms of the Acquisition

 

1.       The Acquisition will lapse if the Scheme does not become
effective by 11.59 p.m. on the Long Stop Date.

 

2.       The availability of the Acquisition to persons not resident in
the UK may be affected by the laws of the relevant jurisdictions. Persons who
are not resident in the UK should inform themselves about, and observe, any
applicable requirements. ScS Shareholders who are in any doubt about such
matters should consult an appropriate independent professional adviser in the
relevant jurisdiction without delay and observe any applicable requirements.

 

3.       This Acquisition will be governed by English law and be subject
to the jurisdiction of the English courts and to the Conditions set out in the
Scheme Document. The Acquisition will comply with the applicable rules and
regulations of the FCA, the London Stock Exchange and the Code.

 

4.       Each of the Conditions shall be regarded as a separate
Condition and shall not be limited by reference to any other Condition.

 

5.       The ScS Shares will be acquired by BidCo with full title
guarantee, fully paid and free from all liens, equitable interests, charges,
encumbrances, rights of pre-emption and any other third party rights or
interests whatsoever and together with all rights existing at the date of this
Announcement or thereafter attaching thereto, including (without limitation)
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
(whether by way of reduction of share capital or share premium account or
otherwise) made on or after the Effective Date in respect of the ScS Shares.

 

6.       Save for the Permitted Dividends, if any dividend or other
distribution is announced, declared, made or paid in respect of the ScS Shares
on or after the date of this Announcement and prior to the Effective Date,
BidCo reserves the right to reduce the consideration payable in respect of
each ScS Share by the amount of all or part of any such dividend or other
distribution.

 

7.       If BidCo is required by the Panel to make an offer for ScS
pursuant to Rule 9 of the Code, Poltronesofà may make such alterations to any
of the above Conditions and terms of the Acquisition as are necessary to
comply with the provisions of the Code.

APPENDIX II

 

SOURCES OF INFORMATION AND BASES OF CALCULATION

 

In this Announcement:

 

(i)         the value of the Acquisition is based on ScS's fully
diluted issued ordinary share capital of 35,495,695 ScS Shares, calculated as:

            33,954,674 ScS Shares in issue (net of shares in
treasury) on 23 October 2023 (being the latest practicable date prior to this
Announcement); plus

            1,541,021 ScS Shares that may be issued on the expected
vesting of awards and exercise of options granted under the ScS Share Schemes
being the expected number of ScS Shares which could be issued on or after the
date of this Announcement on the vesting of awards or exercise of options
under the ScS Share Schemes;

(ii)        as at 23 October 2023 (being the latest practicable date
prior to this Announcement), ScS had 33,954,674 ScS Shares in issue; and

 

(iii)       unless otherwise stated, all prices for ScS Shares are the
Closing Price derived from Factset for the relevant date.

 

 

 

 

APPENDIX III

 

IRREVOCABLE UNDERTAKINGS

 

Directors' Irrevocable Undertakings

 

BidCo has received irrevocable undertakings from certain of the ScS Directors
to vote in favour of the Scheme at the Court Meeting and the resolutions
relating to the Acquisition at the General Meeting in respect of their
beneficial holdings of ScS Shares representing in aggregate approximately 0.8
per cent. of the existing issued ordinary share capital of ScS as at 23
October 2023 (being the last practicable date prior to this Announcement).

 

 Name of ScS Director  Number of ScS Shares  % of ScS issued share capital
 Alan Smith            18,096                0.1
 Steve Carson          75,000                0.2
 Chris Muir            179,557               0.5
 TOTAL                 272,653               0.8

These irrevocable undertakings given by certain of the ScS Directors will
continue to be binding in the event that a higher competing offer is made for
ScS.

 

The irrevocable undertakings given by certain of the ScS Directors will cease
to be binding if:

 

·    this Announcement has not been released by midday (London time) on 24
October 2023 (or such later date as ScS and Bidco may agree);

·    the Scheme Document has not been published within 28 days of the date
of this Announcement (or such longer period as the Panel may agree);

·    BidCo announces, with the consent of the Panel and prior to
publication of the Scheme Document, that it does not intend to proceed with
the Acquisition and no new, revised or replacement Scheme is announced by
BidCo in accordance with Rule 2.7 of the Code at the same time;

·    the Scheme lapses or is withdrawn in accordance with its terms and no
new, revised or replacement Scheme is announced by BidCo in accordance with
Rule 2.7 of the Code at the same time; or

·    the Scheme has not become effective by 11.59 p.m. (London time) on
the Long Stop Date.

 

APPENDIX IV

 

DEFINITIONS

 

The following definitions apply throughout this Announcement, unless the
context otherwise requires:

 

 

 Acquisition                     the proposed recommended cash acquisition by BidCo of the entire issued and to
                                 be issued share capital of ScS, to be implemented by way of the Scheme as
                                 described in this Announcement
 Announcement                    this announcement made pursuant to Rule 2.7 of the Code
 BidCo                           Cerezzola Limited, a private limited company incorporated in England and Wales
                                 with registered number 15175709
 Business Day                    a day (other than a Saturday, Sunday, public or bank holiday) on which banks
                                 are generally open for business in London
 Closing Price                   the closing middle market quotation of a share derived from the Daily Official
                                 List of the London Stock Exchange
 Code                            the City Code on Takeovers and Mergers
 Companies Act                   the Companies Act 2006
 Conditions                      the conditions to the Acquisition set out in Part A of Appendix I and to be
                                 set out in the Scheme Document
 Confidentiality Agreement       the confidentiality agreement between Poltronesofà and ScS dated 10 September
                                 2023, as described in Section 12 of this Announcement
 Co-operation Agreement          the co-operation agreement between Poltronesofà, BidCo and ScS dated 23
                                 October 2023, as described in Section 12 of this Announcement
 Court                           the High Court of Justice in England and Wales
 Court Hearing                   the hearing of the Court at which ScS will seek the Court Order
 Court Meeting                   the meeting or meetings of ScS Shareholders to be convened by the Court
                                 pursuant to Part 26 of the Companies Act for the purpose of considering and,
                                 if thought fit, approving the Scheme (with or without amendment approved or
                                 imposed by the Court and agreed to by BidCo and ScS) including any
                                 adjournment, postponement or reconvention of any such meeting, notice of which
                                 shall be contained in the Scheme Document
 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)
 Disclosed                       the information which has been fairly disclosed: (i) in writing prior to the
                                 date of this Announcement by or on behalf of ScS to the Poltronesofà Group;
                                 (ii) in ScS's published annual or half year report and accounts for the
                                 relevant financial period or periods referred to in the relevant Condition and
                                 published prior to the date of this Announcement; (iii) in a public
                                 announcement by ScS prior to the date of this Announcement by way of any
                                 Regulatory Information Service; or (iv) in this Announcement
 Effective                       means: (i) if the Acquisition is implemented by way of the Scheme, the Scheme
                                 having become effective in accordance with its terms; or (ii) if the
                                 Acquisition is implemented by way of an Offer, the Offer having been declared
                                 or become wholly unconditional in accordance with the requirements of the Code
 Effective Date                  the date on which the Acquisition becomes Effective
 Enlarged Group                  the Poltronesofà Group as enlarged by the ScS Group following completion of
                                 the Acquisition
 FCA                             the UK Financial Conduct Authority
 Forms of Proxy                  the forms of proxy in connection with each of the Court Meeting and the
                                 General Meeting, which shall accompany the Scheme Document
 FSMA                            the Financial Services and Markets Act 2000
 Goldman Sachs                   Goldman Sachs International, financial adviser to Poltronesofà
 Irrevocable Undertakings        the irrevocable undertakings given by certain of the ScS Directors to vote in
                                 favour of the Scheme at the Court Meeting and the resolutions relating to the
                                 Acquisition at the ScS General Meeting, as detailed in Section 6 of this
                                 Announcement
 Listing Rules                   the listing rules made by the FCA under section 73A of FSMA
 London Stock Exchange           London Stock Exchange plc
 Long Stop Date                  30 September 2024 or such later date as Poltronesofà and ScS may agree
 Meetings                        the Court Meeting and the General Meeting
 Offer                           if the Acquisition is implemented by way of a takeover offer (as that term is
                                 defined in section 974 of the Companies Act), the offer to be made by or on
                                 behalf of BidCo, or an associated undertaking thereof, to acquire the entire
                                 issued and to be issued ordinary share capital of ScS including, where the
                                 context admits, any subsequent revision, variation, extension or renewal of
                                 such offer
 Offer Period                    the period commencing on the date of this Announcement and ending on:

                                 (a)      the earlier of the date on which the Scheme becomes Effective or
                                 lapses or is withdrawn (or such other date as the Panel may decide); or

                                 (b)     the earlier of the date on which the Offer has become of has been
                                 declared unconditional as to acceptances or lapses or is withdrawn (or such
                                 other date as the Panel may decide),

                                 in each case other than where such lapsing or withdrawal is a result of
                                 Poltronesofà exercising its right to implement the Acquisition by way of an
                                 Scheme
 Official List                   the official list maintained by the FCA pursuant to Part 6 of FSMA
 Opening Position Disclosure     an announcement containing details of interests or short positions in, or
                                 rights to subscribe for, any relevant securities of a party to an offer if the
                                 person concerned has such a position, as defined in Rule 8 of the Code
 Panel                           the UK Panel on Takeovers and Mergers
 Permitted Dividend              the final dividend in respect of the year ended 29 July 2023, of 10 pence per
                                 ScS Share
 Poltronesofà                    Poltronesofà S.p.A., a company incorporated in the Italian Republic with its
                                 registered office at Via Lunda n. 16, Crespellano 40053, Valsamoggia, Bologna,
                                 Italy
 Poltronesofà Board              the board of directors of Poltronesofà
 Poltronesofà Directors          the directors of Poltronesofà at the date of this Announcement or, where the
                                 context so requires, the directors of Poltronesofà from time to time
 Poltronesofà Group              Poltronesofà and its subsidiary undertakings and associated undertakings
 Registrar of Companies          the Registrar of Companies in England and Wales
 Regulatory Information Service  a primary information provider (as defined in the FCA's Handbook of Rules and
                                 Guidance)
 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 ScS Shareholders in that jurisdiction
 Scheme                          the proposed scheme of arrangement under Part 26 of the Companies Act between
                                 ScS and ScS Shareholders to implement the Acquisition to be set out in the
                                 Scheme Document, with or subject to any modification, addition or condition
                                 approved or imposed by the Court and agreed to by Poltronesofà and ScS
 Scheme Document                 the document to be dispatched to ScS Shareholders including the particulars
                                 required by section 897 of the Companies Act
 Scheme Record Time              the time and date to be specified as such in the Scheme Document, expected to
                                 be 6.00 p.m. on the Business Day immediately preceding the Effective Date, or
                                 such other time as Poltronesofà and ScS may agree
 ScS                             ScS Group plc, a public limited company incorporated in England and Wales with
                                 registered number 03263435.
 ScS Board                       the board of directors of ScS
 ScS Directors                   the directors of ScS as at the date of this Announcement or, where the context
                                 so requires, the directors of ScS from time to time
 ScS General Meeting             the general meeting of ScS Shareholders (including any adjournment thereof) to
                                 be convened for the purpose of considering and, if thought fit, approving the
                                 shareholder resolutions necessary to enable ScS to implement the Acquisition,
                                 notice of which shall be contained in the Scheme Document
 ScS Group                       ScS and its subsidiary undertakings and associated undertakings
 ScS Share Schemes               the ScS Long Term Incentive Plan; the CSOP sub-plan appended to the Long Term
                                 Incentive Plan and the ScS Share Incentive Plan
 ScS Shareholders                the holders of ScS Shares from time to time
 ScS Shares                      the ordinary shares of £0.001 each in the capital of ScS
 significant interest            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)
 Shore Capital                   Shore Capital and Corporate Limited and/or Shore Capital Stockbrokers Limited
                                 as the context admits, together being financial adviser and broker to ScS
 UK or United Kingdom            the United Kingdom of Great Britain and Northern Ireland
 UK MAR                          Regulation (EU) No 596/2014 of the European Parliament and the Council of 16
                                 April 2014 (as it forms part of domestic law in the United Kingdom by virtue
                                 of the European Union (Withdrawal) Act 2018)
 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
 Wider Poltronesofà Group        Poltronesofà and its subsidiary undertakings, associated undertakings and any
                                 other undertaking in which Poltronesofà or such undertakings (aggregating
                                 their interests) have a significant interest (in each case, from time to time)
                                 but excluding the Wider ScS Group
 Wider ScS Group                 ScS and its subsidiary undertakings, associated undertakings and any other
                                 undertaking in which ScS or such undertakings (aggregating their interests)
                                 have a significant interest (in each case, from time to time) but excluding
                                 the Wider Poltronesofà Group

 

All references to GBP, pence, Sterling, Pounds, Pounds Sterling, p or £ are
to the lawful currency of the United Kingdom. All references to USD, $, US$,
US dollars, United States dollars and cents are to the lawful currency of the
United States of America.

 

All references to statutory provision or law or to any order or regulation
shall be construed as a reference to that provision, law, order or regulation
as extended, modified, amended, replaced or re-enacted from time to time and
all statutory instruments, regulations and orders from time to time made
thereunder or deriving validity therefrom.

 

All the times referred to in this Announcement are London times unless
otherwise stated.

 

References to the singular include the plural and vice versa.

 

All references to "subsidiary", "subsidiary undertaking", "undertaking" and
"associated undertaking" have the respective meanings given to them in the
Companies Act.

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