Ten Entertainment - Recommended cash acquisition
06/12/2023 07:00
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RNS Number : 8509V Ten Entertainment Group PLC 06 December 2023
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FOR IMMEDIATE RELEASE
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
6 December 2023
RECOMMENDED CASH ACQUISITION
of
Ten Entertainment Group plc
by
Neon Buyer Limited
(a newly formed company indirectly owned by
investment funds advised by Trive Capital Partners LP)
to be implemented by means of a scheme of arrangement
under Part 26 of the Companies Act 2006
Summary
· The boards of directors of Neon Buyer Limited ("Bidco") and Ten
Entertainment Group plc ("TEG") are pleased to announce that they have reached
agreement on the terms and conditions of a recommended cash acquisition by
Bidco of the entire issued, and to be issued, ordinary share capital of TEG.
It is intended that the Acquisition will be implemented by way of a
court-sanctioned scheme of arrangement under Part 26 of the 2006 Act.
· Under the terms of the Acquisition, each TEG Shareholder will be
entitled to receive:
for each TEG Share: 412.5 pence in cash
· The Acquisition Price per TEG Share represents a premium of
approximately:
· 46.3 per cent. and 49.7 per cent. to the volume-weighted average
price of 281.9 pence per TEG Share and 275.6 pence per TEG Share for the
six-month and twelve-month period ended 5 December 2023 respectively (being
the last Business Day before the date of this announcement);
· 33.1 per cent. to the Closing Price of 310.0 pence per TEG Share on 5
December 2023 (being the last Business Day before the date of this
announcement);
· 23.3 per cent. to the all-time high price of 334.5 pence per TEG
Share which was achieved in Q1 2020 just before the Covid-19 pandemic; and
· 150.0 per cent. to the IPO price of 165.0 pence per TEG Share on 13
April 2017.
· The Acquisition values TEG's entire issued, and to be issued,
ordinary share capital at approximately £287 million on a fully diluted
basis, and implies a multiple of approximately 7.3 times TEG's Group Adjusted
EBITDA after rental costs for the twelve months ended 2 July 2023.
· Bidco has received irrevocable commitments and non-binding letters of
intent to vote in favour of the resolutions relating to the Scheme and the
Acquisition at the Meetings (or in the event that the Acquisition is
implemented by an Offer, to accept such Offer), in respect of, in aggregate,
27,066,151 TEG Shares (representing approximately 39.51 per cent. of existing
issued ordinary share capital of TEG as at 5 December 2023, being the Business
Day prior to the date of this announcement). Further details are set out in
the 'Irrevocable undertakings and letters of intent' paragraph below.
· If, on or after the date of this announcement and prior to the
Acquisition becoming Effective, any dividend and/or other distribution and/or
other return of capital or value is announced, declared, made or paid or
becomes payable in respect of the TEG Shares, Bidco reserves the right to
reduce the consideration payable under the terms of the Acquisition for the
TEG Shares by an amount up to the aggregate amount of such dividend and/or
distribution and/or other return of capital or value, in which case any
reference in this announcement to the consideration payable under the terms of
the Acquisition will be deemed to be a reference to the consideration as so
reduced. Any exercise by Bidco of its rights referred to in this paragraph
shall be the subject of an announcement and, for the avoidance of doubt, shall
not be regarded as constituting any revision or variation of the terms of the
Scheme or the Acquisition. In such circumstances, TEG Shareholders would be
entitled to retain any such dividend, distribution and/or other return of
capital or value.
Recommendation
· The TEG Directors, who have been so advised by Lazard as to the
financial terms of the Acquisition, unanimously consider the terms of the
Acquisition to be fair and reasonable. In providing its advice to the TEG
Directors, Lazard has taken into account the commercial assessments of the TEG
Directors. Lazard is providing independent financial advice to the TEG
Directors for the purposes of Rule 3 of the Takeover Code.
· Accordingly, the TEG Directors intend to recommend unanimously that
TEG Shareholders vote in favour of the Scheme at the Court Meeting and the
resolutions to be proposed at the General Meeting (or in the event that the
Acquisition is implemented by way of an Offer, to accept or procure the
acceptance of such Offer) as the TEG Directors who hold TEG Shares have
irrevocably undertaken to do in respect of their own beneficial holdings
totalling 500,048 TEG Shares (representing approximately 0.73 per cent. of the
existing issued ordinary share capital of TEG as at 5 December 2023, being the
Business Day prior to the date of this announcement). Further details of these
undertakings, including the circumstances in which they cease to be binding,
are set out in Appendix 3 to this announcement.
Background to and reasons for the Acquisition
· Trive views TEG as a high-quality and leading company in the leisure
and hospitality sector with an experienced management team that has a clear
vision and growth strategy for the future direction of TEG.
· Trive believes TEG has established itself as a highly regarded
operator, offering a high-quality customer experience. Trive holds the TEG
management team in high regard and values their operational expertise and
experience.
· With its philosophy of developing collaborative partnerships with
management teams, long-term investment approach and its expertise in realising
value in the consumer-facing, multi-unit retail sectors, Trive believes it is
well positioned to support TEG's next phase of growth.
· Bidco believes that it can support TEG's strong management team in
accelerating its long-term growth potential, and that it can provide, where
needed, access to additional capital, expertise and resource needed to fulfil
TEG's strategic objective to accelerate the longer-term potential of the
business. This will enable the further investment needed in order to realise
TEG's strategic growth agenda of expanding its footprint of sites and
improving the quality and breadth of services TEG provides its customers.
· Finally, Bidco believes TEG is better positioned to achieve its
growth potential and to create long-term value for the benefit of customers,
employees and other stakeholders as a private company than as a public
company.
Background to and reasons for the recommendation
· The TEG Directors believe that TEG's value-for-money leisure
proposition, high quality customer experience, proven expansion strategy, and
strong capital base provide a foundation for continued sustainable growth.
Since the start of this year, overall operational performance has been in line
with the TEG Directors' expectations. The TEG Directors remain confident in
both TEG's ability to succeed as an independent business and the further
opportunities for growth in the UK.
· Notwithstanding the opportunities to accelerate this growth, the TEG
Directors are conscious of the need to be balanced against the uncertainties
and risks that exist in the short and medium term. TEG is not immune to the
highly unstable national and international political outlook together with a
volatile economic backdrop, all of which have impacted UK economic conditions
and UK consumer confidence as well as having led to significant inflation in
certain input costs.
· In addition, the TEG Directors realise that TEG shares have
consistently traded at a discounted valuation multiple to its core peers in
the public markets. Further, the TEG Directors recognise that the market for
TEG shares is relatively illiquid, making it challenging for TEG Shareholders
to monetise their holdings in the Company should they so wish.
· The TEG Directors also believe that, in light of the opportunities,
risks and historical trading of the TEG share price, the offer from Bidco of
412.5 pence per TEG Share in cash presents an opportunity for TEG shareholders
to accelerate the crystallisation of a certain value from their investment at
an attractive premium, de-risks the return of value and allows full liquidity
of their investment in TEG.
· The Acquisition provides an opportunity for TEG Shareholders to
achieve an attractive premium to the current share price, which has performed
strongly, trading near its 52-week high levels. The Acquisition Price
represents a premium of approximately:
· 46.3 per cent. and 49.7 per cent. to the volume-weighted average
price of 281.9 pence per TEG Share and 275.6 pence per TEG Share for the
six-month and twelve-month period ended 5 December 2023 respectively (being
the last Business Day before the date of this announcement);
· 23.3 per cent. to the all-time high price of 334.5 pence per TEG
Share which was achieved in Q1 2020 just before the Covid-19 pandemic; and
· 150.0 per cent. to the IPO price of 165.0 pence per TEG Share on 13
April 2017.
· The Acquisition values TEG's entire issued and to be issued share
capital at approximately £287 million on a fully diluted basis, and implies a
multiple of approximately 7.3 times TEG's Group Adjusted EBITDA after rental
costs for the twelve months ended 2 July 2023.
· In addition to the financial terms of the Acquisition, in considering
the intention to recommend the Acquisition, the TEG Directors have also given
due consideration to the assurances given by Bidco to its intentions with
respect to the future operation of the business, including Bidco's intentions
to seek to continue growing the business both domestically and
internationally, and the importance placed by Bidco on the existing employees
of TEG.
· The TEG Directors, who have been so advised by Lazard as to the
financial terms of the Acquisition, consider the terms of the Acquisition to
be fair and reasonable. In providing its advice, Lazard has taken into account
the commercial assessments of the TEG Directors. Lazard is providing
independent financial advice to the TEG Directors for the purposes of Rule 3
of the Code.
· Accordingly, the TEG Directors confirm that they intend to recommend
unanimously that the TEG Shareholders vote (or, where applicable, procure the
voting) in favour of the resolutions relating to the Scheme and the
Acquisition at the Meetings (or in the event that the Acquisition is
implemented by an Offer, to accept or procure acceptance of such Offer), as
all TEG Directors who own TEG Shares have irrevocably undertaken to do, or
procure to be done, in respect of their own beneficial holdings totalling
500,048 TEG Shares (representing approximately 0.73 per cent. of the existing
issued ordinary share capital of TEG as at 5 December 2023, being the Business
Day prior to the date of this announcement).
Irrevocable undertakings and letters of intent
· Bidco has received irrevocable commitments and non-binding letters of
intent to vote in favour of the resolutions relating to the Scheme and the
Acquisition at the Meetings (or in the event that the Acquisition is
implemented by an Offer, to accept such Offer), in respect of, in aggregate,
27,066,151 TEG Shares (representing approximately 39.51 per cent. of existing
issued ordinary share capital of TEG as at 5 December 2023, being the Business
Day prior to the date of this announcement).
· These comprise of the following irrevocable undertakings and
non-binding letters of intent:
· Bidco has received irrevocable undertakings from the TEG Directors who
hold TEG Shares to vote (or, where applicable, procure voting) in favour of
the resolutions relating to the Scheme and the Acquisition at the Meetings (or
in the event that the Acquisition is implemented by an Offer, to accept or
procure acceptance of such Offer), in respect of, in aggregate, 500,048 TEG
Shares (representing approximately 0.73 per cent. of the existing issued
ordinary share capital of TEG) as at 5 December 2023, being the Business Day
prior to the date of this announcement. These undertakings will remain binding
in the event that a higher competing offer for TEG is made.
· In addition to the irrevocable undertakings referred to above
received from the TEG Directors, Bidco has received an irrevocable commitment
from the largest shareholder of TEG as at 5 December 2023, being the Business
Day prior to the date of this announcement, Harwood, who has undertaken on
behalf of itself and funds managed or advised by it to: (i) vote in favour of
the resolutions relating to the Scheme and the Acquisition at the Meetings (or
in the event that the Acquisition is implemented by an Offer, to accept or
procure acceptance of such Offer); and (ii) vote against any competing
proposal, in respect of 10,581,000 TEG Shares (representing approximately
15.45 per cent. of the existing issued ordinary share capital of TEG as at 5
December 2023, being the Business Day prior to the date of this announcement).
The undertaking from Harwood will remain binding in the event that a higher
competing offer for TEG is made.
· Slater has delivered a non-binding letter of intent to vote in favour
of the resolutions relating to the Acquisition at the Meetings, or to accept
the Offer if the Acquisition is implemented as an Offer, in respect of
8,427,053 TEG Shares (representing approximately 12.30 per cent. of the
existing issued ordinary share capital of TEG as at 5 December 2023, being the
Business Day prior to the date of this announcement).
· Gresham has also delivered a non-binding letter of intent to vote in
favour of the resolutions relating to the Acquisition at the Meetings, or to
accept the Offer if the Acquisition is implemented as an Offer, in respect of
7,558,050 TEG Shares (representing approximately 11.03 per cent. of the
existing issued ordinary share capital of TEG as at 5 December 2023, being the
Business Day prior to the date of this announcement).
· Further details of these irrevocable undertakings (including the
circumstances in which they cease to be binding) and the letters of intent are
set out in Appendix 3 to this announcement.
Information relating to Bidco and Trive
· Bidco is a private limited company incorporated in England and Wales
on 29 November 2023. Bidco is a newly-formed vehicle, indirectly owned by
investment funds advised by Trive. Bidco was formed for the purposes of the
Acquisition and has not traded since its date of incorporation, nor has it
entered into any obligations other than in connection with the Acquisition.
· Trive is a private equity firm based in Dallas, Texas with over $4
billion in regulatory assets under management. The Trive team is comprised of
seasoned investment professionals who have been involved in over 100
middle-market transactions representing in excess of $6 billion in revenue
across Trive's targeted industry sectors and situations. Trive seeks to
maximise total returns to their investors through a collaborative, hands-on
partnership with management where value creation initiatives are collectively
identified and executed.
Information relating to TEG
· TEG was incorporated in England and Wales on 15 March 2017 as a
public company limited by shares with the name Birchams Newco Plc and with
registered number 10672501. Its ordinary shares were admitted to the Official
List of the London Stock Exchange in 2017 and subsequently transferred to the
Main Market on 13 April 2017.
· TEG provides family entertainment facilities across 52 locations in
the UK. The TEG Group's core bowling proposition is supplemented by a range of
additional entertainment activities to appeal to a wide audience. In
particular, the TEG Group has developed a proposition that is family focused
and offers a broad variety of games, food and drink that complements the
bowling experience. TEG employs over 1,800 people in the UK.
· In 2019, TEG entered into a joint venture with Houdini's Escape Room
Experience Limited ("Houdini's") acquiring 50% of the entire issued share
capital of Houdini's, enabling TEG to offer a range of escape room games
across a number of the Company's locations thereby expanding their
entertainment offering.
· In its latest financial year to 1 January 2023, TEG reported audited
total revenue of £126.7 million (2021: £67.5 million) and a profit after
taxation of £26.6 million (2021: £4.0 million).
· On 20 September 2023, TEG announced its unaudited interim results for
the half year ended 2 July 2023, where it reported total revenue of £65.3
million and a profit after taxation of £12.3 million.
· Further financial and other information on TEG will be set out in the
Scheme Document.
· TEG's issued share capital comprises 68,496,118 ordinary shares
which, based on the Closing Price of a TEG share of 310.0 pence on 5 December
2023 (being the last Business Day prior to the date of this Announcement),
equates to a market capitalisation of approximately £212 million.
Timetable and conditions
· It is intended that the Acquisition will be implemented by way of a
court‑sanctioned scheme of arrangement under Part 26 of the 2006 Act
(although Bidco reserves the right to effect the Acquisition by way of an
Offer, subject to the consent of the Panel and the terms of the Cooperation
Agreement).
· The terms of the Acquisition will be put to TEG Shareholders at the
Court Meeting and the General Meeting. The Court Meeting and the General
Meeting are required to enable TEG Shareholders to consider and, if thought
fit, vote in favour of the Scheme and the Resolutions to implement the
Scheme. In order to become Effective, the Scheme must be approved by a
majority in number of TEG Shareholders, present and voting (and entitled to
vote) at the Court Meeting, whether in person or by proxy, representing 75 per
cent. or more in value of the Scheme Shares voted. In addition, a special
resolution implementing the Scheme must be passed by TEG Shareholders
representing at least 75 per cent. of the votes validly cast at the General
Meeting.
· The Conditions to the Acquisition are set out in full in Appendix 1
to this announcement along with certain other terms; the full terms and
conditions will be provided in the Scheme Document.
· It is expected that the Scheme Document, containing further
information about the Acquisition and notices of the Court Meeting and General
Meeting, together with the associated forms of proxy, will be posted to TEG
Shareholders as soon as practicable and in any event within 28 days of this
announcement (or such later time as TEG, Bidco and the Panel agree) and the
Meetings are expected to be held as soon as reasonably practicable thereafter.
Subject to certain restrictions relating to persons resident in Restricted
Jurisdictions, the Scheme Document will also be made available on TEG's
website at www.tegplc.co.uk.
· The Acquisition is currently expected to complete during the first
quarter of 2024, subject to the satisfaction or (where applicable) waiver of
the Conditions. An expected timetable of key events relating to the
Acquisition will be set out in the Scheme Document.
· Commenting on this announcement, Adam Bellamy, the Chair of TEG,
said:
"TEG is one of the UK's largest listed leisure businesses, with a highly
capable management team and a strong track record of growing sales and profit.
In particular, since reopening after the Covid pandemic, TEG has achieved
record results with Group Adjusted PBT of £26.1m delivered in FY22.
I am confident that the growth strategy we have in place for the business will
continue to deliver for all our stakeholders. However, whilst TEG has
performed well in the public markets in comparison with its peers, the
Acquisition provides all TEG Shareholders with the opportunity and certainty
of an exit which I believe recognises the underlying value in our business.
The price offered by Bidco represents an attractive premium to TEG's
prevailing share price and accordingly the TEG Directors have no hesitation in
recommending the offer to our shareholders."
· Commenting on this announcement, Shravan Thadani, Partner of Trive,
said:
"Trive is delighted to have reached agreement with the TEG Board with respect
to the Acquisition. We have been extremely impressed by the TEG management
team and TEG's ability to deliver a high quality customer experience across
its locations in the UK.
Trive believes that private ownership will enable TEG to achieve its long-term
growth potential through continued investment in organic initiatives and
strategic acquisitions. To that end, and given our experience in the consumer
and multi-unit retail sectors, we are excited to provide the operational
resources, strategic support and capital required to enhance TEG's next phase
of growth."
This summary should be read in conjunction with the following announcement and
the Appendices. The conditions to, and certain further terms of, the
Acquisition are set out in Appendix 1. The bases and sources for certain
financial information contained in this announcement are set out in Appendix
2. Details of irrevocable undertakings and letters of intent received by Bidco
are set out in Appendix 3. Certain definitions and terms used in this
announcement are set out in Appendix 4.
Enquiries
Trive + 1 214 499 9722
Conner Searcy
Shravan Thadani
Cavendish Capital Markets Limited (Sole Financial Adviser to Bidco and Trive) + 44 20 7220 0500
Henrik Persson
Carl Holmes
Seamus Fricker
Fergus Sullivan
George Dollemore
TEG + 44 1234 751 333 investors@tegplc.co.uk
Graham Blackwell (Chief Executive Officer)
Antony Smith (Chief Financial Officer and Company Secretary)
Lazard & Co., Limited (Sole Financial Adviser and Rule 3 Adviser to TEG) +44 20 7187 2000
Vasco Litchfield
Nicholas Page
Andrea Francisco
David Cartwright
Liberum Capital Limited (Sole Corporate Broker to TEG) + 44 20 3100 2222
Andrew Godber
Edward Thomas
Satbir Kler
Instinctif Partners Ltd (Strategic Reputation Adviser to
TEG)
Matthew Smallwood
+44 20 7457 2005
Justine Warren
+44 20 7457 2010
Kirkland & Ellis International LLP is acting as legal adviser to Bidco
and Trive in connection with the Acquisition.
Shoosmiths LLP is acting as legal adviser to TEG in connection with the
Acquisition.
Further information
Cavendish Capital Markets Limited ("Cavendish"), which is authorised and
regulated in the United Kingdom by the FCA, is acting as financial adviser to
Trive and Bidco and no one else in connection with the matters described in
this announcement and will not be responsible to anyone other than Trive and
Bidco for providing the protections offered to clients of Cavendish or for
providing advice in connection with any matter referred to in this
announcement. Neither Cavendish nor any of its affiliates (nor their
respective directors, officers, employees or agents) owes or accepts any duty,
liability or responsibility whatsoever (whether direct or indirect, whether in
contract, in tort, under statute or otherwise) to any person who is not a
client of Cavendish in connection with this announcement, any statement
contained herein, the Offer or otherwise. No representation or warranty,
express or implied, is made by Cavendish as to the contents of this
announcement.
Lazard & Co., Limited ("Lazard"), which is authorised and regulated in the
United Kingdom by the FCA, is acting exclusively as sole financial adviser and
Rule 3 adviser to TEG and no one else in connection with the matters described
in this announcement and will not be responsible to anyone other than TEG for
providing the protections afforded to clients of Lazard nor for providing
advice in relation to the Acquisition or any other matter or arrangement
referred to herein. Neither Lazard nor any of its affiliates (nor their
respective directors, officers, employees or agents) owes or accepts any duty,
liability or responsibility whatsoever (whether direct or indirect, whether in
contract, in tort, under statute or otherwise) to any person who is not a
client of Lazard in connection with this announcement, the Acquisition, any
statement contained herein or otherwise.
Liberum Capital Limited ("Liberum"), which is authorised and regulated by the
FCA in the United Kingdom, is acting exclusively as Sole Broker for TEG and
for no one else in connection with the subject matter of this announcement and
will not be responsible to anyone other than TEG for providing the protections
afforded to its clients or for providing advice in connection with the subject
matter of this announcement. Neither Liberum nor any of its affiliates (nor
their respective directors, officers, employees or agents) owes or accepts any
duty, liability or responsibility whatsoever (whether direct or indirect,
whether in contract, in tort, under statute or otherwise) to any person who is
not a client of Liberum in connection with the Acquisition, this announcement,
any statement contained herein or otherwise. No representation or warranty,
express or implied, is made by Liberum as to the contents of this
announcement.
This announcement is for information purposes only and is not intended to, and
does not, constitute, or form part of, an offer, invitation or the
solicitation of an offer to purchase, otherwise acquire, subscribe for, sell
or otherwise dispose of, any securities or the solicitation of any vote or
approval in any jurisdiction pursuant to the Acquisition or otherwise, nor
shall there be any sale, issuance or transfer of securities of TEG in any
jurisdiction in contravention of applicable law. The Acquisition will be
implemented solely pursuant to the terms of the Scheme Document (or, if the
Acquisition is implemented by way of an Offer, the Offer Document), which will
contain the full terms and conditions of the Acquisition, including details of
how to vote in respect of the Acquisition. Any vote in respect of the Scheme
or other response in relation to the Acquisition should be made only on the
basis of the information contained in the Scheme Document (or, if the
Acquisition is implemented by way of an Offer, the Offer Document).
This announcement does not constitute a prospectus, prospectus equivalent
document or exempted document.
The statements contained in this announcement are made as at the date of this
announcement, unless some other time is specified in relation to them, and
publication of this announcement shall not give rise to any implication that
there has been no change in the facts set forth in this announcement since
such date.
This announcement contains inside information in relation to TEG for the
purposes of Article 7 of the Market Abuse Regulation. The person responsible
for arranging the release of this announcement on behalf of TEG is Antony
Smith. TEG's Legal Entity Identifier is 213800SL9HJUQ5BGPX17.
If you are in any doubt about the contents of this announcement or the action
you should take, you are recommended to seek your own independent financial
advice immediately from your stockbroker, bank manager, solicitor, accountant
or independent financial adviser duly authorised under the Financial Services
and Markets Act 2000 (as amended) if you are resident in the United Kingdom
or, if not, from another appropriately authorised independent financial
adviser.
Overseas shareholders
The release, publication or distribution of this announcement in or into
jurisdictions other than the UK may be restricted by law and therefore any
persons who are subject to the law of any jurisdiction other than the UK
should inform themselves of, and observe, any applicable legal or regulatory
requirements. Any failure to comply with such requirements may constitute a
violation of the securities laws of any such jurisdiction. To the fullest
extent permitted by applicable law, the companies and persons involved in the
Acquisition disclaim any responsibility or liability for the violation of such
restrictions by any person. This announcement has been prepared in accordance
with and for the purpose of complying with English law, the Takeover Code, the
Market Abuse Regulation, the Listing Rules and the Disclosure Guidance and
Transparency Rules and information disclosed may not be the same as that which
would have been prepared in accordance with the laws of jurisdictions outside
England.
The availability of the Acquisition to TEG Shareholders who are not resident
in and citizens of the UK may be affected by the laws of the relevant
jurisdictions in which they are located or of which they are citizens. Persons
who are not resident in the UK should inform themselves of, and observe, any
applicable legal or regulatory requirements of their jurisdictions. In
particular, the ability of persons who are not resident in the UK to vote
their TEG Shares with respect to the Scheme at the Meetings, or to appoint
another person as proxy to vote at the Meetings on their behalf, may be
affected by the laws of the relevant jurisdictions in which they are located.
Any failure to comply with the applicable restrictions may constitute a
violation of the securities laws of any such jurisdiction. To the fullest
extent permitted by applicable law, the companies and persons involved in the
Acquisition disclaim any responsibility or liability for the violation of such
restrictions by any person. Further details in relation to Overseas
Shareholders will be contained in the Scheme Document (or, if the Acquisition
is implemented by way of an Offer, the Offer Document).
Unless otherwise determined by Bidco or required by the Takeover Code, and
permitted by applicable law and regulation, the Acquisition will not be made
available, in whole or in part, directly or indirectly, in, into or from a
Restricted Jurisdiction where to do so would violate the laws in that
jurisdiction and no person may vote in favour of the Acquisition by any such
use, means, instrumentality or from within a Restricted Jurisdiction or any
other jurisdiction if to do so would constitute a violation of the laws of
that jurisdiction. Copies of this announcement and any formal documentation
relating to the Acquisition are not being, and must not be, directly or
indirectly, mailed or otherwise forwarded, distributed or sent in or into or
from any Restricted Jurisdiction and persons receiving such documents
(including, without limitation, agents, custodians, nominees and trustees)
must not mail or otherwise forward, distribute or send it in or into or from
any Restricted Jurisdiction. Doing so may render invalid any related
purported vote in respect of the Acquisition. If the Acquisition is
implemented by way of an Offer (unless otherwise permitted by applicable law
and regulation), the Offer may not be made directly or indirectly, in or into,
or by the use of mails or any means or instrumentality (including, but not
limited to, facsimile, e-mail or other electronic transmission, telex or
telephone) of interstate or foreign commerce of, or of any facility of a
national, state or other securities exchange of any Restricted Jurisdiction
and the Offer may not be capable of acceptance by any such use, means,
instrumentality or facilities.
Further details in relation to Overseas Shareholders will be included in the
Scheme Document (or, if the Acquisition is implemented by way of an Offer, the
Offer Document).
Notice to U.S. TEG Shareholders
The Acquisition relates to the shares of an English company and is being made
by means of a scheme of arrangement provided for under the laws of England and
Wales. A transaction effected by means of a scheme of arrangement is not
subject to the tender offer or proxy solicitation rules under the U.S.
Securities Exchange Act of 1934 (the "U.S. Exchange Act"). Accordingly, the
Acquisition is subject to the disclosure requirements and practices applicable
in the UK to schemes of arrangement which differ from the disclosure
requirements of the U.S. tender offer and proxy solicitation rules. The
financial information included in this announcement has been prepared in
accordance with generally accepted accounting principles of the UK and thus
may not be comparable to financial information of U.S. companies or companies
whose financial statements are prepared in accordance with generally accepted
accounting principles in the United States.
If, in the future, Bidco exercises its right to implement the Acquisition by
way of an Offer, which is to be made into the United States, such Offer will
be made in compliance with the applicable U.S. laws and regulations.
It may be difficult for U.S. holders of TEG Shares to enforce their rights and
any claim arising out of the U.S. federal laws, since Bidco and TEG are
located in a non-U.S. jurisdiction, and some or all of their officers and
directors may be residents of a non-U.S. jurisdiction. U.S. holders of TEG
Shares may not be able to sue a non-U.S. company or its officers or directors
in a non-U.S. court for violations of the U.S. securities laws. Further, it
may be difficult to compel a non-U.S. company and its affiliates to subject
themselves to a U.S. court's judgement.
In accordance with normal UK practice and pursuant to Rule 14e-5(b) of the
U.S. Exchange Act, Trive or their nominees, or their brokers (acting as
agents), may from time to time make certain purchases of, or arrangements to
purchase, TEG Shares outside of the U.S., other than pursuant to the
Acquisition, until the date on which the Acquisition becomes Effective, lapses
or is otherwise withdrawn. Also, in accordance with Rule 14e-5(b) of the
U.S. Exchange Act, Cavendish will continue to act as exempt principal traders
in TEG shares on the London Stock Exchange. These purchases may occur either
in the open market at prevailing prices or in private transactions at
negotiated prices. Any information about such purchases will be disclosed as
required in the United Kingdom, will be reported to a Regulatory Information
Service and will be available on the London Stock Exchange website,
www.londonstockexchange.com.
U.S. TEG Shareholders also should be aware that the transaction contemplated
herein may have tax consequences in the U.S. and, that such consequences, if
any, are not described herein. U.S. TEG Shareholders are urged to consult
with legal, tax and financial advisers in connection with making a decision
regarding this transaction.
Forward looking statements
This announcement (including information incorporated by reference in this
announcement), statements made regarding the Acquisition, and other
information published by Bidco and TEG contain statements which are, or may be
deemed to be, "forward-looking statements". Forward-looking statements are
prospective in nature and are not based on historical facts, but rather on
current expectations and projections of the management of Bidco and TEG about
future events, and are therefore subject to risks and uncertainties which
could cause actual results to differ materially from the future results
expressed or implied by the forward-looking statements.
The forward-looking statements contained in this announcement include
statements relating to the expected effects of the Acquisition on Bidco and
TEG (including their future prospects, developments and strategies), the
expected timing and scope of the Acquisition and other statements other than
historical facts. Often, but not always, forward-looking statements can be
identified by the use of forward-looking words such as "prepares", "plans",
"expects" or "does not expect", "is expected", "is subject to", "budget",
"projects", "synergy", "strategy", "scheduled", "goal", "estimates",
"forecasts", "cost-saving", "intends", "target", "aims", "anticipates",
"continues", or "does not anticipate", or "believes", or variations of such
words and phrases or statements that certain actions, events or results "may",
"could", "should", "would", "might" or "will" be taken, occur or be achieved.
Forward looking statements may include statements relating to the following:
(i) future capital expenditures, expenses, revenues, earnings, synergies,
economic performance, indebtedness, financial condition, dividend policy,
losses and future prospects; (ii) business and management strategies and the
expansion and growth of Bidco's, TEG's, any member of the Bidco Group's or any
member of the TEG Group's operations and potential synergies resulting from
the Acquisition; and (iii) the effects of global economic conditions and
governmental regulation on Bidco's, TEG's, any member of the Bidco Group's or
any member of the TEG Group's business.
Although Bidco and TEG believe that the expectations reflected in such
forward-looking statements are reasonable, Bidco and TEG can give no assurance
that such expectations will prove to be correct. By their nature,
forward-looking statements involve risk and uncertainty because they relate to
events and depend on circumstances that will occur in the future. There are a
number of factors that could cause actual results and developments to differ
materially from those expressed or implied by such forward-looking statements.
These factors include, but are not limited to: the ability to complete the
Acquisition; the ability to obtain requisite shareholder approvals and the
satisfaction of other Conditions on the proposed terms and schedule; changes
in the global political, economic, business and competitive environments and
in market and regulatory forces; changes in future exchange and interest
rates; changes in tax rates; future business combinations or disposals;
changes in general economic and business conditions; changes in the behaviour
of other market participants; changes in the anticipated benefits from the
proposed transaction not being realised as a result of changes in general
economic and market conditions in the countries in which Bidco and TEG
operate, weak, volatile or illiquid capital and/or credit markets, changes in
tax rates, interest rate and currency value fluctuations, the degree of
competition in the geographic and business areas in which Bidco and TEG
operate and changes in laws or in supervisory expectations or requirements.
Other unknown or unpredictable factors could cause actual results to differ
materially from those expected, estimated or projected in the forward-looking
statements. If any one or more of these risks or uncertainties materialises
or if any one or more of the assumptions proves incorrect, actual results may
differ materially from those expected, estimated or projected. Such
forward-looking statements should therefore be construed in the light of such
factors. Neither Bidco nor TEG, nor any of their respective associates or
directors, officers or advisers, provides any representation, assurance or
guarantee that the occurrence of the events expressed or implied in any
forward-looking statements in this announcement will actually occur. You are
cautioned not to place any reliance on these forward-looking statements.
Specifically, statements of estimated cost savings and synergies related to
future actions and circumstances which, by their nature, involve risks,
uncertainties and contingencies. As a result, the cost savings and synergies
referred to may not be achieved, may be achieved later or sooner than
estimated, or those achieved could be materially different from those
estimated. Due to the scale of the TEG Group, there may be additional changes
to the TEG Group's operations. As a result, and given the fact that the
changes relate to the future, the resulting cost synergies may be materially
greater or less than those estimated.
Other than in accordance with their legal or regulatory obligations, neither
Bidco nor TEG is under any obligation, and Bidco and TEG expressly disclaim
any intention or obligation, to update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise.
Dealing and opening position disclosure requirements
Under Rule 8.3(a) of the Takeover Code, any person who is interested in 1% 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) of
the Takeover Code applies must be made by no later than 3.30 pm (London time)
on the 10th business day following the commencement of the offer period and,
if appropriate, by no later than 3.30 pm (London time) on the 10th business
day following the announcement in which any securities exchange offeror is
first identified. Relevant persons who deal in the relevant securities of the
offeree company or of a securities exchange offeror prior to the deadline for
making an Opening Position Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Takeover Code, any person who is, or becomes,
interested in 1% 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 pm (London time) on the business day following the date of the
relevant dealing.
If two or more persons act together pursuant to an agreement or understanding,
whether formal or informal, to acquire or control an interest in relevant
securities of an offeree company or a securities exchange offeror, they will
be deemed to be a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and by
any offeror and Dealing Disclosures must also be made by the offeree company,
by any offeror and by any persons acting in concert with any of them (see
Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant
securities Opening Position Disclosures and Dealing Disclosures must be made
can be found in the Disclosure Table on the Takeover Panel's website at
www.thetakeoverpanel.org.uk, including details of the number of relevant
securities in issue, when the offer period commenced and when any offeror was
first identified. You should contact the Panel's Market Surveillance Unit on
+44 (0)20 7638 0129 if you are in any doubt as to whether you are required to
make an Opening Position Disclosure or a Dealing Disclosure.
Publication on a website
In accordance with Rule 26.1 of the Takeover Code, a copy of this announcement
and the documents required to be published under Rule 26 of the Takeover Code
will be made available, subject to certain restrictions relating to persons
resident in Restricted Jurisdictions, on TEG's website at www.tegplc.co.uk by
no later than 12 noon (London time) on the Business Day following this
announcement. For the avoidance of doubt, neither the content of this
website nor of any website accessible from any hyperlinks are incorporated by
reference or forms part of this announcement.
No profit forecasts, estimates or quantified benefits statements
No statement in this announcement is intended as a profit forecast, profit
estimate or quantified benefits statement for any period and no statement in
this announcement should be interpreted to mean that earnings or earnings per
share for TEG for the current or future financial years would necessarily
match or exceed the historical published earnings or earnings per share for
TEG.
General
Bidco reserves the right to elect to implement the Acquisition by way of an
Offer as an alternative to the Scheme, subject to the Panel's consent and
(while the Cooperation Agreement is continuing) to the terms of the
Cooperation Agreement. In such event, such Offer will be implemented on
substantially the same terms and conditions so far as applicable, as those
which would apply to the Scheme (subject to appropriate amendments, including
(without limitation and for so long as the Cooperation Agreement is continuing
and the Offer arises in accordance with the terms of the Cooperation
Agreement) an acceptance condition set at 90 per cent. of the TEG Shares (or
such other percentage as Bidco may decide after, to the extent necessary,
consultation with the TEG and, to the extent necessary, the Panel, being in
any case more than 50 per cent. of the TEG Shares)).
If the Acquisition is effected by way of an Offer, and such Offer becomes or
is declared unconditional and sufficient acceptances are received in respect
of such Offer, Bidco intends to exercise its rights to apply the provisions of
Chapter 3 of Part 28 of the 2006 Act so as to acquire compulsorily the
remaining TEG Shares in respect of which the Offer has not been accepted.
Investors should be aware that Bidco may purchase TEG Shares otherwise than
under any Offer or the Scheme, including pursuant to privately negotiated
purchases.
Requesting hard copy documents
In accordance with Rule 30.3 of the Takeover Code, TEG Shareholders, persons
with information rights and participants in TEG Share Plan may request a hard
copy of this announcement by contacting TEG's registrars, Computershare
Investor Service plc, during business hours on +44 (0370) 889 4092 or at The
Pavilions, Bridgwater Road, Bristol BS13 8AE.
For persons who receive a copy of this announcement in electronic form or via
a website notification, a hard copy of this announcement will not be sent
unless so requested. Such persons may also request that all future documents,
announcements and information to be sent to you in relation to the Acquisition
should be in hard copy form.
Electronic communications
Please be aware that addresses, electronic addresses and certain other
information provided by TEG Shareholders, persons with information rights and
other relevant persons for the receipt of communications from TEG may be
provided to Bidco during the offer period as required under Section 4 of
Appendix 4 of the Takeover Code to comply with Rule 2.11(c) of the Takeover
Code.
Rounding
Certain figures included in this announcement have been subjected to rounding
adjustments. Accordingly, figures shown for the same category presented in
different tables may vary slightly and figures shown as totals in certain
tables may not be an arithmetic aggregation of figures that precede them.
Rule 2.9 of the Takeover Code
For the purposes of Rule 2.9 of the Takeover Code, TEG confirms that, as at 5
December 2023, it had in issue 68,496,118 ordinary shares of £0.01 each
(excluding shares held in treasury). The ISIN for the ordinary shares is
GB00BF020D33.
Disclaimer
The Acquisition will be subject to English law, the jurisdiction of the Court,
and the applicable requirements of the Takeover Code, the Panel, the London
Stock Exchange, the FCA, the Listing Rules and the Registrar of Companies.
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 THAT JURISDICTION
FOR IMMEDIATE RELEASE
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
6 December 2023
RECOMMENDED CASH ACQUISITION
of
Ten Entertainment Group plc
by
Neon Buyer Limited
(a newly formed company indirectly owned by
investment funds advised by Trive Capital Partners LP)
to be implemented by means of a scheme of arrangement
under Part 26 of the Companies Act 2006
1 Introduction
The boards of directors of Bidco and TEG are pleased to announce that they
have reached agreement on the terms and conditions of a recommended all cash
offer to be made by Bidco for the entire issued, and to be issued, ordinary
share capital of TEG.
It is intended that the Acquisition will be implemented by way of a
court‑sanctioned scheme of arrangement under Part 26 of the 2006 Act
(although Bidco reserves the right to effect the Acquisition by way of an
Offer, subject to the consent of the Panel and the terms of the Cooperation
Agreement). The Conditions to the Acquisition are set out in full in
Appendix 1 to this announcement.
2 The Acquisition
Under the terms of the Acquisition, which will be subject to the Conditions
and further terms set out in Appendix 1 to this announcement and the full
terms and conditions to be set out in the Scheme Document, each TEG
Shareholder will be entitled to receive:
for each TEG Share: 412.5 pence in cash (the "Acquisition Price")
The Acquisition Price per TEG Share represents a premium of approximately:
· 46.3 per cent. and 49.7 per cent. to the volume-weighted average
price of 281.9 pence per TEG Share and 275.6 pence per TEG Share for the
six-month and twelve-month period ended 5 December 2023 (being the last
Business Day before the date of this announcement);
· 33.1 per cent. to the Closing Price of 310.0 pence per TEG Share on 5
December 2023 (being the last Business Day before the date of this
announcement);
· 23.3 per cent. to the all-time high price of 334.5 pence per TEG
Share which was achieved in Q1 2020 just before the Covid-19 pandemic; and
· 150.0 per cent. to the IPO price of 165.0 pence per TEG Share on 13
April 2017.
The Acquisition values TEG's entire issued, and to be issued, ordinary share
capital at approximately £287 million on a fully diluted basis, and implies a
multiple of approximately 7.3 times TEG's Group Adjusted EBITDA after rental
costs for the twelve months ended 2 July 2023.
The TEG Shares will be acquired pursuant to the Acquisition fully paid and
free from all liens, charges, equities, encumbrances, rights of pre‑emption
and any other interests of any nature whatsoever and together with all rights
attaching thereto, including without limitation voting rights and the right to
receive and retain in full all dividends and other distributions (if any)
announced, declared, made or paid with a record date on or after the Effective
Date.
Bidco has received irrevocable commitments and non-binding letters of intent
to vote in favour of the resolutions relating to the Scheme and the
Acquisition at the Meetings (or in the event that the Acquisition is
implemented by an Offer, to accept such Offer), in respect of, in aggregate,
27,066,151 TEG Shares (representing approximately 39.51 per cent. of existing
issued ordinary share capital of TEG as at 5 December 2023, being the Business
Day prior to the date of this announcement). Further details are set out in
paragraph 7 (Irrevocable undertakings and letters of intent) below.
If, on or after the date of this announcement and prior to the Acquisition
becoming Effective, any dividend and/or other distribution and/or other return
of capital or value is announced, declared, made or paid or becomes payable in
respect of the TEG Shares, Bidco reserves the right to reduce the
consideration payable under the terms of the Acquisition for the TEG Shares by
an amount up to the aggregate amount of such dividend and/or distribution
and/or other return of capital or value, in which case any reference in this
announcement to the consideration payable under the terms of the Acquisition
will be deemed to be a reference to the consideration as so reduced. Any
exercise by Bidco of its rights referred to in this paragraph shall be the
subject of an announcement and, for the avoidance of doubt, shall not be
regarded as constituting any revision or variation of the terms of the Scheme
or the Acquisition. In such circumstances, TEG Shareholders would be entitled
to retain any such dividend, distribution and/or other return of capital or
value.
3 Background to and reasons for the Acquisition
Trive views TEG as a high-quality and leading company in the leisure and
hospitality sector with an experienced management team that has a clear vision
and growth strategy for the future direction of TEG.
Trive believes TEG has established itself as a highly regarded operator,
offering a high-quality customer experience. Trive holds the TEG management
team in high regard and values their operational expertise and experience.
With its philosophy of developing collaborative partnerships with management
teams, long-term investment approach and its expertise in realising value in
the consumer-facing, multi-unit retail sector, Trive believes it is well
positioned to support TEG's next phase of growth.
Bidco believes that it can support TEG's strong management team in
accelerating its long-term growth potential, and that it can provide, where
needed, access to additional capital, expertise and resource needed to fulfil
TEG's strategic objective to accelerate the longer-term potential of the
business. This will enable the further investment needed in order to realise
TEG's strategic growth agenda of expanding its footprint of sites and
improving the quality and breadth of services TEG provides its customers.
Finally, Bidco believes TEG is better positioned to achieve its growth
potential and to create long-term value for the benefit of customers,
employees and other stakeholders as a private company than as a public
company.
4 Recommendation
The TEG Directors, who have been so advised by Lazard as to the financial
terms of the Acquisition, unanimously consider the terms of the Acquisition to
be fair and reasonable. In providing its advice to the TEG Directors, Lazard
has taken into account the commercial assessments of the TEG Directors. Lazard
is providing independent financial advice to the TEG Directors for the
purposes of Rule 3 of the Takeover Code.
Accordingly, the TEG Directors intend to recommend unanimously that TEG
Shareholders vote in favour of Scheme at the Court Meeting and the resolutions
to be proposed at the General Meeting (or in the event that the Acquisition is
implemented by way of an Offer, to accept or procure the acceptance of such
Offer) as the TEG Directors who hold TEG Shares have irrevocably undertaken to
do in respect of their own beneficial holdings totalling 500,048 TEG Shares
(representing approximately 0.73 per cent. of the existing issued ordinary
share capital of TEG) as at 5 December 2023, being the Business Day prior to
this announcement. Further details of these undertakings, including the
circumstances in which they cease to be binding, are set out in Appendix 3 to
this announcement.
5 Background to and reasons for the recommendation
The TEG Directors believe that TEG's value-for-money leisure proposition, high
quality customer experience, proven expansion strategy, and strong capital
base provide a foundation for continued sustainable growth. Since the start of
this year, overall operational performance has been in line with the TEG
Directors' expectations. The TEG Directors remain confident in both TEG's
ability to succeed as an independent business and the further opportunities
for growth in the UK.
Notwithstanding the opportunities to accelerate this growth, the TEG Directors
are conscious of the need to be balanced against the uncertainties and risks
that exist in the short and medium term. TEG is not immune to the highly
unstable national and international political outlook together with a volatile
economic backdrop, all of which have impacted UK economic conditions and UK
consumer confidence as well as having led to significant inflation in certain
input costs.
In addition, the TEG Directors realise that TEG shares have consistently
traded at a discounted valuation multiple to its core peers in the public
markets. Further, the TEG Directors recognise that the market for TEG shares
is relatively illiquid, making it challenging for TEG Shareholders to monetise
their holdings in the Company should they so wish.
The TEG Directors also believe that, in light of the opportunities, risks and
historical trading of the TEG share price, the offer from Bidco of 412.5 pence
per TEG Share in cash presents an opportunity for TEG shareholders to
accelerate the crystallisation of a certain value from their investment at an
attractive premium, de-risks the return of value and allows full liquidity of
their investment in TEG.
The Acquisition provides an opportunity for TEG Shareholders to achieve an
attractive premium to the current share price, which has performed strongly,
trading near its 52-week high levels. The Acquisition Price represents a
premium of approximately:
· 46.3 per cent. and 49.7 per cent. to the volume-weighted average
price of 281.9 pence per TEG Share and 275.6 pence per TEG Share for the
six-month and twelve-month period ended 5 December 2023 respectively (being
the last Business Day before the date of this announcement);
· 23.3 per cent. to the all-time high price of 334.5 pence per TEG
Share which was achieved in Q1 2020 just before the Covid-19 pandemic; and
· 150.0 per cent. to the IPO price of 165.0 pence per TEG Share on 13
April 2017.
The Acquisition values TEG's entire issued and to be issued share capital at
approximately £287 million on a fully diluted basis, and implies a multiple
of approximately 7.3 times TEG's Group Adjusted EBITDA after rental costs for
the twelve months ended 2 July 2023.
In addition to the financial terms of the Acquisition, in considering the
intention to recommend the Acquisition, the TEG Directors have also given due
consideration to the assurances given by Bidco to its intentions with respect
to the future operation of the business, including Bidco's intentions to seek
to continue growing the business both domestically and internationally, and
the importance placed by Bidco on the existing employees of TEG.
The TEG Directors, who have been so advised by Lazard as to the financial
terms of the Acquisition, consider the terms of the Acquisition to be fair and
reasonable. In providing its advice, Lazard has taken into account the
commercial assessments of the TEG Directors. Lazard is providing independent
financial advice to the TEG Directors for the purposes of Rule 3 of the Code.
Accordingly, the TEG Directors confirm that they intend to recommend
unanimously that the TEG Shareholders vote (or, where applicable, procure the
voting) in favour of the resolutions relating to the Scheme and the
Acquisition at the Meetings (or in the event that the Acquisition is
implemented by an Offer, to accept or procure acceptance of such Offer), as
all TEG Directors who own TEG Shares have irrevocably undertaken to do, or
procure to be done, in respect of their own beneficial holdings totalling
500,048 TEG Shares (representing approximately 0.73 per cent. of the existing
issued ordinary share capital of TEG as at 5 December 2023, being the Business
Day prior to the date of this announcement).
6 Information relating to Bidco AND Trive
Bidco
Bidco is a private limited company incorporated in England and Wales on 29
November 2023. Bidco is a newly-formed vehicle, indirectly owned by investment
funds advised by Trive. Bidco was formed for the purposes of the Acquisition
and has not traded since its date of incorporation, nor has it entered into
any obligations other than in connection with the Acquisition.
The current directors of Bidco are Shravan Manu Thadani and James Wilbourn
Vise Jr. Further details in relation to Bidco will be contained in the Scheme
Document.
Trive
Trive is a private equity firm based in Dallas, Texas with over $4 billion in
regulatory assets under management. The Trive team is comprised of seasoned
investment professionals who have been involved in over 100 middle-market
transactions representing in excess of $6 billion in revenue across Trive's
targeted industry sectors and situations. Trive seeks to maximise total
returns to their investors through a collaborative, hands-on partnership with
management where value creation initiatives are collectively identified and
executed.
7 Information relating to TEG
TEG was incorporated in England and Wales on 15 March 2017 as a public company
limited by shares with the name Birchams Newco Plc and with registered number
10672501. Its ordinary shares were admitted to the Official List of the London
Stock Exchange in 2017 and subsequently transferred to the Main Market on 13
April 2017.
TEG provides family entertainment facilities across 52 locations in the UK.
The TEG Group's core bowling proposition is supplemented by a range of
additional entertainment activities to appeal to a wide audience. In
particular, the TEG Group has developed a proposition that is family focused
and offers a broad variety of games, food and drink that complements the
bowling experience. TEG employs over 1,800 people in the UK.
In 2019, TEG entered into a joint venture with Houdini's acquiring 50% of the
entire issued share capital of Houdini's, enabling TEG to offer a range of
escape room games across a number of the Company's locations thereby expanding
their entertainment offering.
In its latest financial year to 1 January 2023, TEG reported audited total
revenue of £126.7 million (2021: £67.5 million) and a profit after taxation
of £26.6 million (2021: £4.0 million).
On 20 September 2023, TEG announced its unaudited interim results for the half
year ended 2 July 2023, where it reported total revenue of £65.3 million and
a profit after taxation of £12.3 million.
Further financial and other information on TEG will be set out in the Scheme
Document.
TEG's issued share capital comprises 68,496,118 ordinary shares which, based
on the Closing Price of a TEG share of 310.0 pence on 5 December 2023 (being
the last Business Day prior to the date of this Announcement), equates to a
market capitalisation of approximately £212 million.
8 Irrevocable undertakings and letters of intent
Bidco has received irrevocable undertakings and non-binding letters of intent
to vote in favour of the resolutions relating to the Scheme and Acquisition at
the Meetings (or in the event that the Acquisition is implemented by an Offer,
to accept or such Offer) from all of the TEG Directors who own TEG Shares and
certain other TEG Shareholders, in respect of, in aggregate, 27,066,151 TEG
Shares (representing approximately 39.51 per cent. of the existing issued
ordinary share capital of TEG as at 5 December 2023, being the Business Day
prior to the date of this announcement).
These comprise of the following irrevocable undertakings and non-binding
letters of intent:
· Bidco has received irrevocable undertakings from the TEG Directors
who hold TEG Shares to vote (or, where applicable, procure voting) in favour
of the resolutions relating to the Scheme and Acquisition at the Meetings (or
in the event that the Acquisition is implemented by an Offer, to accept or
procure acceptance of such Offer), in respect of, in aggregate, 500,048 TEG
Shares (representing approximately 0.73 per cent. of the existing issued
ordinary share capital of TEG as at 5 December 2023, being the Business Day
prior to the date of this announcement). These undertakings will remain
binding in the event that a higher competing offer for TEG is made.
· In addition to the irrevocable undertakings referred to above
received from the TEG Directors, Bidco has received an irrevocable commitment
from the largest shareholder of TEG as at 5 December 2023, being the Business
Day prior to the date of this announcement, Harwood, who has undertaken on
behalf of itself and funds managed or advised by it to: (i) vote in favour of
the resolutions relating to the Scheme and the Acquisition at the Meetings (or
in the event that the Acquisition is implemented by an Offer, to accept or
procure acceptance of such Offer); and (ii) vote against any competing
proposal, in respect of 10,581,000 TEG Shares (representing approximately
15.45 per cent. of the existing issued ordinary share capital of TEG) as at 5
December 2023, being the Business Day prior to the date of this announcement.
The undertaking from Harwood will remain binding in the event that a higher
competing offer for TEG is made.
· Slater has delivered a non-binding letter of intent to vote in favour
of the resolutions relating to the Acquisition at the Meetings, or to accept
the Offer if the Acquisition is implemented as an Offer, in respect of
8,427,053 TEG Shares (representing approximately 12.30 per cent. of the
existing issued ordinary share capital of TEG as at 5 December 2023, being the
Business Day prior to the date of this announcement).
· Gresham has also delivered a non-binding letter of intent to vote in
favour of the resolutions relating to the Acquisition at the Meetings, or to
accept the Offer if the Acquisition is implemented as an Offer, in respect of
7,558,050 TEG Shares (representing approximately 11.03 per cent. of the
existing issued ordinary share capital of TEG as at 5 December 2023, being the
Business Day prior to the date of this announcement).
Further details of irrevocable undertakings (including the circumstances in
which they cease to be binding) and the letters of intent are set out in
Appendix 3 to this announcement.
9 Financing of the Acquisition
The cash consideration payable to TEG Shareholders under the terms of the
Acquisition will be financed by: (i) an equity investment indirectly into
Bidco from the Trive Funds; and (ii) debt to be provided by funds managed by
affiliates of Fortress Investment Group LLC pursuant to the Interim Facilities
Agreement.
Cavendish, in its capacity as financial adviser to Bidco, is satisfied that
sufficient resources are available to Bidco to satisfy in full the cash
consideration payable to TEG Shareholders under the terms of the Acquisition.
Further information on the financing of the Acquisition will be set out in the
Scheme Document.
10 Offer‑related arrangements
Confidentiality Agreement
On 8 September 2023, TCG, on behalf of Bidco, and TEG entered into a
Confidentiality Agreement in relation to the Acquisition, pursuant to which,
amongst other things, TCG, on behalf of Bidco has undertaken to: (i) subject
to certain exceptions, keep information relating to TEG and the Acquisition
confidential and not to disclose it to third parties; and (ii) use such
confidential information only in connection with the Acquisition. These
confidentiality obligations will remain in force until the earlier of: (i)
completion of the Acquisition; and (ii) 8 September 2025. The TEG
Confidentiality Agreement also contains undertakings from TCG that for a
period of six months after the date of the TEG Confidentiality Agreement, it
will not: (i) contract with or make any arrangement with any supplier of TEG
and/or the TEG Group, which interferes with the supply of goods or services to
TEG and/or the TEG Group; and (ii) solicit or offer to employ or engage any
employee of the TEG Group involved in discussions relating to the Acquisition
(subject to customary carve-outs).
Cooperation Agreement
Pursuant to the Cooperation Agreement, Bidco and TEG have, amongst other
things, each agreed to cooperate in preparing and implementing appropriate
proposals in relation to the TEG Share Plan. In addition, Bidco has agreed
to certain provisions if the Scheme should switch to an Offer. The
Cooperation Agreement will terminate in certain circumstances, including if
the Acquisition is withdrawn, terminated or lapses, a third party announces a
firm intention to make an offer for TEG which completes, becomes effective or
becomes unconditional, or if prior to the Long Stop Date any Condition has
been invoked by Bidco (with the consent of the Panel), if the TEG Directors
withdraw their recommendation of the Acquisition or if the Scheme does not
become Effective in accordance with its terms by the Long Stop Date or
otherwise as agreed between Bidco and TEG. Pursuant to the terms of the
Cooperation Agreement and the requirements of Paragraph 3(g)(i) of Appendix 7
to the Takeover Code, Bidco undertakes that it will deliver a notice in
writing to TEG on the Business Day prior to the Sanction Hearing confirming
either: (i) the satisfaction or waiver of the Conditions (other than the
Scheme Conditions) and confirming such satisfaction or waiver to the Panel; or
(ii) to the extent permitted by the Panel, that it intends to invoke or treat
as unsatisfied or incapable of satisfaction one or more Conditions.
11 Disclosure of interests in TEG securities
Except for the irrevocable undertakings and letters of intent referred to in
paragraph 7 above and Appendix 3, as at 5 December 2023 (being the last
practicable date prior to the date of this announcement) neither Bidco, nor
any of its directors, nor, so far as Bidco is aware, any person treated as
acting in concert (within the meaning of the Takeover Code) with it for the
purposes of the Acquisition: (i) had any interest in or right to subscribe for
or had borrowed or lent any TEG Shares or securities convertible or
exchangeable into TEG Shares; or (ii) had any short positions in respect of
relevant securities of TEG (whether conditional or absolute and whether in the
money or otherwise), including any short position under a derivative, any
agreement to sell or any delivery obligation or right to require another
person to purchase or take delivery; or (iii) has borrowed or lent any
relevant securities of TEG (including, for these purposes, any financial
collateral arrangements of the kind referred to in Note 4 on Rule 4.6 of the
Takeover Code) save for any borrowed shares which have been either on-lent or
resold; or (iv) is a party to any dealing arrangement of the kind referred to
in Note 11 on the definition of acting in concert in the Takeover Code.
It has not been practicable for Bidco to make enquiries of all of its concert
parties in advance of the release of this announcement. Therefore, if Bidco
becomes aware, following the making of such enquiries, that any of its concert
parties have any additional interests in the relevant securities of TEG, all
relevant details in respect of Bidco's concert parties will be included in
Bidco's Opening Position Disclosure in accordance with Rule 8.1(a) and Note
2(a)(i) on Rule 8 of the Code which must be made on or before 12 noon (London
time) on 20 December 2023.
12 Directors, management, employees, pensions, research and development and locations
Bidco's strategic plans for TEG
As set out in paragraph 3 (Background to and reasons for the Acquisition),
Bidco believes that TEG is a high-quality and leading company in the leisure
and hospitality sector with an experienced management team that has a clear
vision and growth strategy for the future direction of TEG.
However, Bidco believes that in order fully to deliver TEG's strategic growth
agenda through acquisitions and continued refurbishment of existing sites to
improve the quality and breadth of offerings TEG provides its customers, now
is the optimal time for TEG to re-enter private ownership. This will allow for
the additional investment required to achieve such growth and improvements,
which can most effectively be made away from the public markets.
Prior to this Announcement, consistent with market practice, Bidco has been
granted access to TEG's senior management for the purposes of confirmatory due
diligence. However, Bidco has not yet had access to sufficiently detailed
information to formulate specific plans or intentions regarding the impact of
the Acquisition on TEG.
Therefore, following the Acquisition becoming Effective, Bidco intends to work
closely and collaboratively with TEG's management to undertake an in-depth
evaluation of the TEG Group. Bidco expects that this evaluation will be
completed within approximately six months from the Effective Date. The
evaluation will include:
· reviewing existing initiatives regarding refurbishments of existing
centres and identifying new opportunities to keep centres modern with a
best-in-class entertainment experience to continue to drive customer footfall
and dwell time;
· assessing potential acquisitions that could support TEG's growth
ambitions and overall strategy; and
· identifying possible opportunities for geographical expansion both
within and outside of the United Kingdom.
Employees and management
Bidco attaches great importance to the skill and experience of TEG's
management and employees and recognises that the employees and management of
TEG will be key to the continued success of the TEG Group.
Once TEG ceases to be a listed company, Bidco intends that a limited number of
listed company-related functions will be reduced in scope or become
unnecessary. Bidco confirms that its intention is for any individuals impacted
to be treated in a manner consistent with TEG's high standards, culture and
practices.
Other than as part of the reduction in listed company-related functions as
described above, Bidco does not intend to make any other reductions to the TEG
Group's headcount or changes to the conditions of employment or the balance of
skills and functions of the employees and management of the TEG Group.
It is intended that, with effect from the Effective Date, each of the
non-executive members of the TEG Board shall resign from his or her office as
a director of TEG.
Existing employment rights and pensions
Bidco confirms that, following the Acquisition becoming Effective, the
existing contractual and statutory employment rights, including pension
rights, of all TEG management and employees will be fully safeguarded in
accordance with applicable law.
Bidco does not intend to make any changes to the benefits provided by TEG's
defined contribution pension arrangements and intends for the employer to
continue to make contributions in line with current arrangements. No member of
the TEG Group participates in any defined benefit pension scheme.
Management incentive arrangements
Following the Acquisition becoming Effective, Bidco intends to review the
management, governance and incentive structure of TEG. Bidco has not entered
into, and has not had discussions on proposals to enter into, any form of
incentivisation arrangements with members of TEG's management, but may have
discussions and enter into such discussions for certain members of the TEG
management team following the Effective Date.
Headquarters, locations, functions, fixed assets and research and development
Following the Acquisition becoming Effective, Bidco intends that TEG will
continue to operate as a standalone business group.
Bidco has no plans to undertake any material restructurings or change in, the
locations of TEG's fixed assets or places of business. Bidco also has no plans
to change the location or functions of TEG's headquarters in Cranfield, other
than in respect of the listed company-related functions as described above.
TEG does not currently have a research and development function and Bidco has
no plans in this regard.
Trading Facilities
TEG Shares are currently listed on the Official List and admitted to trading
on the London Stock Exchange. As set out in paragraph 15, applications will be
made for the cancellation of the listing of TEG Shares on the Official List
and the cancellation of trading of TEG Shares on the London Stock Exchange,
and steps will be taken to re-register TEG as a private company.
None of the statements in this paragraph 12 are "post-offer undertakings" for
the purposes of Rule 19.5 of the Takeover Code.
13 TEG Share Plan
Participants in the TEG Share Plan will be contacted regarding the effect of
the Acquisition on their options and awards under the TEG Share Plan and an
appropriate proposal will be made to such participants which reflects their
options and awards under the TEG Share Plan in due course. Details of the
impact of the Scheme on each of the TEG Share Plan and the proposals will be
set out in the Scheme Document.
14 Scheme process
The Acquisition will be subject to the Conditions and certain further terms
referred to in Appendix 1 to this announcement and to the full terms and
conditions to be set out in the Scheme Document, and will only become
Effective if, among other things, the following events occur on or before the
Long Stop Date (or such later date as the Bidco and TEG may, with the consent
of the Panel, agree and, if required, the Court may approve):
· a resolution to approve the Scheme is passed by a majority in number
of TEG Shareholders present and voting (and entitled to vote) at the Court
Meeting, either in person or by proxy, representing 75 per cent. or more in
value of each class of the Scheme Shares held by those TEG Shareholders;
· the resolution(s) necessary to implement the Scheme and the
Acquisition is/are passed by the requisite majority of TEG Shareholders at the
General Meeting;
· following the Court Meeting and General Meeting and satisfaction
and/or waiver (where applicable) of the other Conditions, the Scheme is
sanctioned by the Court (without modification, or with modification on terms
agreed by the Bidco and TEG); and
· following such sanction, a copy of the Scheme Court Order is delivered
to the Registrar of Companies.
The Conditions in paragraphs 1 and 2 of Appendix 1 to this announcement
provide that the Scheme will lapse (under the authority of Rule 13.5(b) of the
Takeover Code) if:
· the Court Meeting and the General Meeting are not held by the 22nd
day after the expected date of the Court Meeting and the General Meeting to be
set out in the Scheme Document in due course (or such later date as may be
agreed between Bidco and TEG);
· the Sanction Hearing to approve the Scheme is not held by the 22nd
day after the expected date of the Sanction Hearing to be set out in the
Scheme Document in due course (or such later date as may be agreed between
Bidco and TEG); or
· the Scheme does not become Effective by 11.59 p.m. on the Long Stop
Date (or such later date as Bidco and TEG may, with the consent of the Panel,
agree and (if required) the Court may allow).
If any Condition in paragraph 2 of Part A of Appendix 1 to this announcement
is not capable of being satisfied by the date specified therein, Bidco shall
make an announcement through a Regulatory Information Service as soon as
practicable and, in any event, by not later than 8.00 a.m. on the Business Day
following the date so specified, stating whether Bidco has invoked that
Condition, (where applicable) waived that Condition or, with the agreement of
TEG, specified a new date by which that Condition must be satisfied.
Once the necessary approvals from TEG Shareholders have been obtained and the
other Conditions have been satisfied or (where applicable) waived and the
Scheme has been approved by the Court, the Scheme will become Effective upon
delivery of a copy of the Court Order to the Registrar of Companies. Subject
to the satisfaction of the Conditions, the Scheme is expected to become
Effective during the first quarter of 2024.
Upon the Scheme becoming Effective: (i) it will be binding on all TEG
Shareholders, irrespective of whether or not they attended or voted at the
Court Meeting or the General Meeting (and if they attended and voted, whether
or not they voted in favour); and (ii) share certificates in respect of TEG
Shares will cease to be valid and entitlements to TEG Shares held within the
CREST system will be cancelled. In accordance with the applicable provisions
of the Takeover Code, the consideration for the transfer of the Scheme Shares
to Bidco will be despatched no later than 14 days after the Effective Date.
Any TEG Shares issued before the Scheme Record Time will be subject to the
terms of the Scheme. The resolution(s) to be proposed at the General Meeting
will, amongst other matters, provide that the Articles be amended to
incorporate provisions requiring any TEG Shares issued after the Scheme Record
Time (other than to Bidco and/or their nominees) to be automatically
transferred to Bidco on the same terms as the Acquisition (other than terms as
to timings and formalities). The provisions of the Articles (as amended)
will avoid any person (other than Bidco and their nominees) holding shares in
the capital of TEG after the Effective Date.
Further details of the Scheme, including expected times and dates for each of
the Court Meeting, the General Meeting and the Sanction Hearing, together with
notices of the Court Meeting and the General Meeting, will be set out in the
Scheme Document. It is expected that the Scheme Document and the Forms of
Proxy accompanying the Scheme Document will be published as soon as
practicable and in any event within 28 days of this announcement (or such
later date as the Bidco and TEG may, with the consent of the Panel, agree and,
if required, the Court may approve).
15 Delisting, and cancellation of trading and re‑registration
It is intended that the London Stock Exchange and the FCA will be requested
respectively to cancel trading in TEG Shares on the London Stock Exchange's
Main Market and the listing of the TEG Shares from the Official List on or
shortly after the Effective Date.
It is expected that the last day of dealings in TEG Shares on the Main Market
of the London Stock Exchange is expected to be the Business Day immediately
prior to the Effective Date and no transfers will be registered after 6.00
p.m. (London time) on that date.
On the Effective Date, TEG will become a wholly-owned subsidiary of Bidco and
share certificates in respect of TEG Shares will cease to be valid and should
be destroyed. In addition, entitlements held within CREST to the TEG Shares
will be cancelled on the Effective Date.
Upon the Scheme becoming Effective, Bidco will acquire the TEG Shares fully
paid and free from all liens, charges, equitable interests, encumbrances and
rights of pre-emption and any other interests of any nature whatsoever and
together with all rights attaching thereto including the right to receive and
retain all dividends and distributions declared, made or paid by reference to
a record date after the Effective Date.
It is intended that TEG will be re-registered as a private limited company and
for this to take effect as soon as practicable on or following the Effective
Date.
16 Documents
Copies of the following documents will be available promptly on TEG's website,
subject to certain restrictions relating to persons resident in Restricted
Jurisdictions, at www.tegplc.co.uk and in any event by no later than noon on
the Business Day following this announcement:
· this announcement;
· the Confidentiality Agreement;
· the Cooperation Agreement;
· the irrevocable undertakings and letters of intent referred to in
paragraph 7 above and summarised in Appendix 3 to this announcement;
· the documents entered into for the financing of the Acquisition
referred to in paragraph 9 above; and
· the consents from financial advisers to being named in this
announcement.
Neither the content of the website referred to in this announcement, nor any
website accessible from any hyperlinks, are incorporated into or form part of
this announcement.
17 General
Bidco reserves the right to elect (with the consent of the Panel and subject
to the terms of the Cooperation Agreement) to implement the acquisition of the
TEG Shares by way of an Offer as an alternative to the Scheme. In such event,
the Offer will be implemented on substantially the same terms, so far as
applicable, as those which would apply to the Scheme.
If the Acquisition is effected by way of an Offer, and such an Offer becomes
or is declared unconditional in all respects and sufficient acceptances are
received, Bidco intends to (i) make a request to the FCA to cancel the listing
of the TEG Shares from the Official List; (ii) make a request to the London
Stock Exchange to cancel trading in TEG Shares on its Main Market; and (iii)
exercise its rights to apply the provisions of Chapter 3 of Part 28 of the
2006 Act so as to acquire compulsorily the remaining TEG Shares in respect of
which the Offer has not been accepted.
Investors should be aware that Bidco may purchase TEG Shares otherwise than
under the Scheme or any Offer, including pursuant to privately negotiated
purchases.
The Acquisition will be on the terms and subject to the conditions set out
herein and in Appendix 1, and to be set out in the Scheme Document. The bases
and sources for certain financial information contained in this announcement
are set out in Appendix 2. Details of undertakings and letters of intent
received by Bidco are set out in Appendix 3. Certain definitions and terms
used in this announcement are set out in Appendix 4. The formal Scheme
Document will be sent to shareholders of TEG within 28 days of this
announcement (or on such later date as may be agreed with TEG and the Panel).
Cavendish (as sole financial adviser to Bidco) and Lazard (as sole financial
adviser to TEG) have each given and not withdrawn their consent to the
publication of this announcement with the inclusion herein of the references
to their names in the form and context in which they appear.
This announcement does not constitute an offer or an invitation to purchase or
subscribe for any securities.
Enquiries
Trive + 1 214 499 9722
Conner Searcy
Shravan Thadani
Cavendish Capital Markets Limited (Sole Financial Adviser to Bidco and Trive) + 44 20 7220 0500
Henrik Persson
Carl Holmes
Seamus Fricker
Fergus Sullivan
George Dollemore
TEG + 44 1234 751 333 investors@tegplc.co.uk
Graham Blackwell (Chief Executive Officer)
Antony Smith (Chief Financial Officer and Company Secretary)
Lazard & Co., Limited (Sole Financial Adviser and Rule 3 Adviser to TEG) +44 20 7187 2000
Vasco Litchfield
Nicholas Page
Andrea Francisco
David Cartwright
Liberum Capital Limited (Sole Corporate Broker to TEG) + 44 20 3100 2222
Andrew Godber
Edward Thomas
Satbir Kler
Instinctif Partners Ltd (Strategic Reputation Adviser to
TEG)
Matthew Smallwood
+44 20 7457 2005
Justine Warren
+44 20 7457 2010
Kirkland & Ellis International LLP is acting as legal adviser to Bidco
and Trive in connection with the Acquisition.
Shoosmiths LLP is acting as legal adviser to TEG in connection with the
Acquisition.
Further information
Cavendish Capital Markets Limited ("Cavendish"), which is authorised and
regulated in the United Kingdom by the FCA, is acting as financial adviser to
Trive and Bidco and no one else in connection with the matters described in
this announcement and will not be responsible to anyone other than Trive and
Bidco for providing the protections offered to clients of Cavendish or for
providing advice in connection with any matter referred to in this
announcement. Neither Cavendish nor any of its affiliates (nor their
respective directors, officers, employees or agents) owes or accepts any duty,
liability or responsibility whatsoever (whether direct or indirect, whether in
contract, in tort, under statute or otherwise) to any person who is not a
client of Cavendish in connection with this announcement, any statement
contained herein, the Offer or otherwise. No representation or warranty,
express or implied, is made by Cavendish as to the contents of this
announcement.
Lazard & Co., Limited ("Lazard"), which is authorised and regulated in the
United Kingdom by the FCA, is acting exclusively as sole financial adviser and
Rule 3 adviser to TEG and no one else in connection with the matters described
in this announcement and will not be responsible to anyone other than TEG for
providing the protections afforded to clients of Lazard nor for providing
advice in relation to the Acquisition or any other matter or arrangement
referred to herein. Neither Lazard nor any of its affiliates (nor their
respective directors, officers, employees or agents) owes or accepts any duty,
liability or responsibility whatsoever (whether direct or indirect, whether in
contract, in tort, under statute or otherwise) to any person who is not a
client of Lazard in connection with this announcement, the Acquisition, any
statement contained herein or otherwise.
Liberum Capital Limited ("Liberum"), which is authorised and regulated by the
FCA in the United Kingdom, is acting exclusively as Sole Broker for TEG and
for no one else in connection with the subject matter of this announcement and
will not be responsible to anyone other than TEG for providing the protections
afforded to its clients or for providing advice in connection with the subject
matter of this announcement. Neither Liberum nor any of its affiliates (nor
their respective directors, officers, employees or agents) owes or accepts any
duty, liability or responsibility whatsoever (whether direct or indirect,
whether in contract, in tort, under statute or otherwise) to any person who is
not a client of Liberum in connection with the Acquisition, this announcement,
any statement contained herein or otherwise. No representation or warranty,
express or implied, is made by Liberum as to the contents of this
announcement.
This announcement is for information purposes only and is not intended to, and
does not, constitute, or form part of, an offer, invitation or the
solicitation of an offer to purchase, otherwise acquire, subscribe for, sell
or otherwise dispose of, any securities or the solicitation of any vote or
approval in any jurisdiction pursuant to the Acquisition or otherwise, nor
shall there be any sale, issuance or transfer of securities of TEG in any
jurisdiction in contravention of applicable law. The Acquisition will be
implemented solely pursuant to the terms of the Scheme Document (or, if the
Acquisition is implemented by way of an Offer, the Offer Document), which will
contain the full terms and conditions of the Acquisition, including details of
how to vote in respect of the Acquisition. Any vote in respect of the Scheme
or other response in relation to the Acquisition should be made only on the
basis of the information contained in the Scheme Document (or, if the
Acquisition is implemented by way of an Offer, the Offer Document).
This announcement does not constitute a prospectus, prospectus equivalent
document or exempted document.
The statements contained in this announcement are made as at the date of this
announcement, unless some other time is specified in relation to them, and
publication of this announcement shall not give rise to any implication that
there has been no change in the facts set forth in this announcement since
such date.
This announcement contains inside information in relation to TEG for the
purposes of Article 7 of the Market Abuse Regulation. The person responsible
for arranging the release of this announcement on behalf of TEG is Antony
Smith. TEG's Legal Entity Identifier is 213800SL9HJUQ5BGPX17.
If you are in any doubt about the contents of this announcement or the action
you should take, you are recommended to seek your own independent financial
advice immediately from your stockbroker, bank manager, solicitor, accountant
or independent financial adviser duly authorised under the Financial Services
and Markets Act 2000 (as amended) if you are resident in the United Kingdom
or, if not, from another appropriately authorised independent financial
adviser.
Overseas shareholders
The release, publication or distribution of this announcement in or into
jurisdictions other than the UK may be restricted by law and therefore any
persons who are subject to the law of any jurisdiction other than the UK
should inform themselves of, and observe, any applicable legal or regulatory
requirements. Any failure to comply with such requirements may constitute a
violation of the securities laws of any such jurisdiction. To the fullest
extent permitted by applicable law, the companies and persons involved in the
Acquisition disclaim any responsibility or liability for the violation of such
restrictions by any person. This announcement has been prepared in accordance
with and for the purpose of complying with English law, the Takeover Code, the
Market Abuse Regulation, the Listing Rules and the Disclosure Guidance and
Transparency Rules and information disclosed may not be the same as that which
would have been prepared in accordance with the laws of jurisdictions outside
England.
The availability of the Acquisition to TEG Shareholders who are not resident
in and citizens of the UK may be affected by the laws of the relevant
jurisdictions in which they are located or of which they are citizens. Persons
who are not resident in the UK should inform themselves of, and observe, any
applicable legal or regulatory requirements of their jurisdictions. In
particular, the ability of persons who are not resident in the UK to vote
their TEG Shares with respect to the Scheme at the Meetings, or to appoint
another person as proxy to vote at the Meetings on their behalf, may be
affected by the laws of the relevant jurisdictions in which they are located.
Any failure to comply with the applicable restrictions may constitute a
violation of the securities laws of any such jurisdiction. To the fullest
extent permitted by applicable law, the companies and persons involved in the
Acquisition disclaim any responsibility or liability for the violation of such
restrictions by any person. Further details in relation to Overseas
Shareholders will be contained in the Scheme Document (or, if the Acquisition
is implemented by way of an Offer, the Offer Document).
Unless otherwise determined by Bidco or required by the Takeover Code, and
permitted by applicable law and regulation, the Acquisition will not be made
available, in whole or in part, directly or indirectly, in, into or from a
Restricted Jurisdiction where to do so would violate the laws in that
jurisdiction and no person may vote in favour of the Acquisition by any such
use, means, instrumentality or from within a Restricted Jurisdiction or any
other jurisdiction if to do so would constitute a violation of the laws of
that jurisdiction. Copies of this announcement and any formal documentation
relating to the Acquisition are not being, and must not be, directly or
indirectly, mailed or otherwise forwarded, distributed or sent in or into or
from any Restricted Jurisdiction and persons receiving such documents
(including, without limitation, agents, custodians, nominees and trustees)
must not mail or otherwise forward, distribute or send it in or into or from
any Restricted Jurisdiction. Doing so may render invalid any related
purported vote in respect of the Acquisition. If the Acquisition is
implemented by way of an Offer (unless otherwise permitted by applicable law
and regulation), the Offer may not be made directly or indirectly, in or into,
or by the use of mails or any means or instrumentality (including, but not
limited to, facsimile, e-mail or other electronic transmission, telex or
telephone) of interstate or foreign commerce of, or of any facility of a
national, state or other securities exchange of any Restricted Jurisdiction
and the Offer may not be capable of acceptance by any such use, means,
instrumentality or facilities.
Further details in relation to Overseas Shareholders will be included in the
Scheme Document (or, if the Acquisition is implemented by way of an Offer, the
Offer Document).
Notice to U.S. TEG Shareholders
The Acquisition relates to the shares of an English company and is being made
by means of a scheme of arrangement provided for under the laws of England and
Wales. A transaction effected by means of a scheme of arrangement is not
subject to the tender offer or proxy solicitation rules under the U.S.
Securities Exchange Act of 1934 (the "U.S. Exchange Act"). Accordingly, the
Acquisition is subject to the disclosure requirements and practices applicable
in the UK to schemes of arrangement which differ from the disclosure
requirements of the U.S. tender offer and proxy solicitation rules. The
financial information included in this announcement has been prepared in
accordance with generally accepted accounting principles of the UK and thus
may not be comparable to financial information of U.S. companies or companies
whose financial statements are prepared in accordance with generally accepted
accounting principles in the United States.
If, in the future, Bidco exercises its right to implement the Acquisition by
way of an Offer, which is to be made into the United States, such Offer will
be made in compliance with the applicable U.S. laws and regulations.
It may be difficult for U.S. holders of TEG Shares to enforce their rights and
any claim arising out of the U.S. federal laws, since Bidco and TEG are
located in a non-U.S. jurisdiction, and some or all of their officers and
directors may be residents of a non-U.S. jurisdiction. U.S. holders of TEG
Shares may not be able to sue a non-U.S. company or its officers or directors
in a non-U.S. court for violations of the U.S. securities laws. Further, it
may be difficult to compel a non-U.S. company and its affiliates to subject
themselves to a U.S. court's judgement.
In accordance with normal UK practice and pursuant to Rule 14e-5(b) of the
U.S. Exchange Act, Trive or their nominees, or their brokers (acting as
agents), may from time to time make certain purchases of, or arrangements to
purchase, TEG Shares outside of the U.S., other than pursuant to the
Acquisition, until the date on which the Acquisition becomes Effective, lapses
or is otherwise withdrawn. Also, in accordance with Rule 14e-5(b) of the
U.S. Exchange Act, Cavendish will continue to act as exempt principal traders
in TEG shares on the London Stock Exchange. These purchases may occur either
in the open market at prevailing prices or in private transactions at
negotiated prices. Any information about such purchases will be disclosed as
required in the United Kingdom, will be reported to a Regulatory Information
Service and will be available on the London Stock Exchange website,
www.londonstockexchange.com.
U.S. TEG Shareholders also should be aware that the transaction contemplated
herein may have tax consequences in the U.S. and, that such consequences, if
any, are not described herein. U.S. TEG Shareholders are urged to consult
with legal, tax and financial advisers in connection with making a decision
regarding this transaction.
Forward looking statements
This announcement (including information incorporated by reference in this
announcement), statements made regarding the Acquisition, and other
information published by Bidco and TEG contain statements which are, or may be
deemed to be, "forward-looking statements". Forward-looking statements are
prospective in nature and are not based on historical facts, but rather on
current expectations and projections of the management of Bidco and TEG about
future events, and are therefore subject to risks and uncertainties which
could cause actual results to differ materially from the future results
expressed or implied by the forward-looking statements.
The forward-looking statements contained in this announcement include
statements relating to the expected effects of the Acquisition on Bidco and
TEG (including their future prospects, developments and strategies), the
expected timing and scope of the Acquisition and other statements other than
historical facts. Often, but not always, forward-looking statements can be
identified by the use of forward-looking words such as "prepares", "plans",
"expects" or "does not expect", "is expected", "is subject to", "budget",
"projects", "synergy", "strategy", "scheduled", "goal", "estimates",
"forecasts", "cost-saving", "intends", "target", "aims", "anticipates",
"continues", or "does not anticipate", or "believes", or variations of such
words and phrases or statements that certain actions, events or results "may",
"could", "should", "would", "might" or "will" be taken, occur or be achieved.
Forward looking statements may include statements relating to the following:
(i) future capital expenditures, expenses, revenues, earnings, synergies,
economic performance, indebtedness, financial condition, dividend policy,
losses and future prospects; (ii) business and management strategies and the
expansion and growth of Bidco's, TEG's, any member of the Bidco Group's or any
member of the TEG Group's operations and potential synergies resulting from
the Acquisition; and (iii) the effects of global economic conditions and
governmental regulation on Bidco's, TEG's, any member of the Bidco Group's or
any member of the TEG Group's business.
Although Bidco and TEG believe that the expectations reflected in such
forward-looking statements are reasonable, Bidco and TEG can give no assurance
that such expectations will prove to be correct. By their nature,
forward-looking statements involve risk and uncertainty because they relate to
events and depend on circumstances that will occur in the future. There are a
number of factors that could cause actual results and developments to differ
materially from those expressed or implied by such forward-looking statements.
These factors include, but are not limited to: the ability to complete the
Acquisition; the ability to obtain requisite shareholder approvals and the
satisfaction of other Conditions on the proposed terms and schedule; changes
in the global political, economic, business and competitive environments and
in market and regulatory forces; changes in future exchange and interest
rates; changes in tax rates; future business combinations or disposals;
changes in general economic and business conditions; changes in the behaviour
of other market participants; changes in the anticipated benefits from the
proposed transaction not being realised as a result of changes in general
economic and market conditions in the countries in which Bidco and TEG
operate, weak, volatile or illiquid capital and/or credit markets, changes in
tax rates, interest rate and currency value fluctuations, the degree of
competition in the geographic and business areas in which Bidco and TEG
operate and changes in laws or in supervisory expectations or requirements.
Other unknown or unpredictable factors could cause actual results to differ
materially from those expected, estimated or projected in the forward-looking
statements. If any one or more of these risks or uncertainties materialises
or if any one or more of the assumptions proves incorrect, actual results may
differ materially from those expected, estimated or projected. Such
forward-looking statements should therefore be construed in the light of such
factors. Neither Bidco nor TEG, nor any of their respective associates or
directors, officers or advisers, provides any representation, assurance or
guarantee that the occurrence of the events expressed or implied in any
forward-looking statements in this announcement will actually occur. You are
cautioned not to place any reliance on these forward-looking statements.
Specifically, statements of estimated cost savings and synergies related to
future actions and circumstances which, by their nature, involve risks,
uncertainties and contingencies. As a result, the cost savings and synergies
referred to may not be achieved, may be achieved later or sooner than
estimated, or those achieved could be materially different from those
estimated. Due to the scale of the TEG Group, there may be additional changes
to the TEG Group's operations. As a result, and given the fact that the
changes relate to the future, the resulting cost synergies may be materially
greater or less than those estimated.
Other than in accordance with their legal or regulatory obligations, neither
Bidco nor TEG is under any obligation, and Bidco and TEG expressly disclaim
any intention or obligation, to update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise.
Dealing and opening position disclosure requirements
Under Rule 8.3(a) of the Takeover Code, any person who is interested in 1% 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) of
the Takeover Code applies must be made by no later than 3.30 pm (London time)
on the 10th business day following the commencement of the offer period and,
if appropriate, by no later than 3.30 pm (London time) on the 10th business
day following the announcement in which any securities exchange offeror is
first identified. Relevant persons who deal in the relevant securities of the
offeree company or of a securities exchange offeror prior to the deadline for
making an Opening Position Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Takeover Code, any person who is, or becomes,
interested in 1% 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 pm (London time) on the business day following the date of the
relevant dealing.
If two or more persons act together pursuant to an agreement or understanding,
whether formal or informal, to acquire or control an interest in relevant
securities of an offeree company or a securities exchange offeror, they will
be deemed to be a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and by
any offeror and Dealing Disclosures must also be made by the offeree company,
by any offeror and by any persons acting in concert with any of them (see
Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant
securities Opening Position Disclosures and Dealing Disclosures must be made
can be found in the Disclosure Table on the Takeover Panel's website at
www.thetakeoverpanel.org.uk, including details of the number of relevant
securities in issue, when the offer period commenced and when any offeror was
first identified. You should contact the Panel's Market Surveillance Unit on
+44 (0)20 7638 0129 if you are in any doubt as to whether you are required to
make an Opening Position Disclosure or a Dealing Disclosure.
Publication on a website
In accordance with Rule 26.1 of the Takeover Code, a copy of this announcement
and the documents required to be published under Rule 26 of the Takeover Code
will be made available, subject to certain restrictions relating to persons
resident in Restricted Jurisdictions, on TEG's website at www.tegplc.co.uk by
no later than 12 noon (London time) on the Business Day following this
announcement. For the avoidance of doubt, neither the content of this
website nor of any website accessible from any hyperlinks are incorporated by
reference or forms part of this announcement.
No profit forecasts, estimates or quantified benefits statements
No statement in this announcement is intended as a profit forecast, profit
estimate or quantified benefits statement for any period and no statement in
this announcement should be interpreted to mean that earnings or earnings per
share for TEG for the current or future financial years would necessarily
match or exceed the historical published earnings or earnings per share for
TEG.
General
Bidco reserves the right to elect to implement the Acquisition by way of an
Offer as an alternative to the Scheme, subject to the Panel's consent and
(while the Cooperation Agreement is continuing) to the terms of the
Cooperation Agreement. In such event, such Offer will be implemented on
substantially the same terms and conditions so far as applicable, as those
which would apply to the Scheme (subject to appropriate amendments, including
(without limitation and for so long as the Cooperation Agreement is continuing
and the Offer arises in accordance with the terms of the Cooperation
Agreement) an acceptance condition set at 90 per cent. of the TEG Shares (or
such other percentage as Bidco may decide after, to the extent necessary,
consultation with the TEG and, to the extent necessary, the Panel, being in
any case more than 50 per cent. of the TEG Shares)).
If the Acquisition is effected by way of an Offer, and such Offer becomes or
is declared unconditional and sufficient acceptances are received in respect
of such Offer, Bidco intends to exercise its rights to apply the provisions of
Chapter 3 of Part 28 of the 2006 Act so as to acquire compulsorily the
remaining TEG Shares in respect of which the Offer has not been accepted.
Investors should be aware that Bidco may purchase TEG Shares otherwise than
under any Offer or the Scheme, including pursuant to privately negotiated
purchases.
Requesting hard copy documents
In accordance with Rule 30.3 of the Takeover Code, TEG Shareholders, persons
with information rights and participants in TEG Share Plan may request a hard
copy of this announcement by contacting TEG's registrars, Computershare
Investor Service plc, during business hours on +44 (0370) 889 4092 or at The
Pavilions, Bridgwater Road, Bristol BS13 8AE.
For persons who receive a copy of this announcement in electronic form or via
a website notification, a hard copy of this announcement will not be sent
unless so requested. Such persons may also request that all future documents,
announcements and information to be sent to you in relation to the Acquisition
should be in hard copy form.
Electronic communications
Please be aware that addresses, electronic addresses and certain other
information provided by TEG Shareholders, persons with information rights and
other relevant persons for the receipt of communications from TEG may be
provided to Bidco during the offer period as required under Section 4 of
Appendix 4 of the Takeover Code to comply with Rule 2.11(c) of the Takeover
Code.
Rounding
Certain figures included in this announcement have been subjected to rounding
adjustments. Accordingly, figures shown for the same category presented in
different tables may vary slightly and figures shown as totals in certain
tables may not be an arithmetic aggregation of figures that precede them.
Rule 2.9 of the Takeover Code
For the purposes of Rule 2.9 of the Takeover Code, TEG confirms that, as at 5
December 2023, it had in issue 68,496,118 ordinary shares of £0.01 each
(excluding shares held in treasury). The ISIN for the ordinary shares is
GB00BF020D33.
Disclaimer
The Acquisition will be subject to English law, the jurisdiction of the Court,
and the applicable requirements of the Takeover Code, the Panel, the London
Stock Exchange, the FCA, the Listing Rules and the Registrar of Companies.
Appendix 1
Conditions and Further Terms of the Transaction
Part A
Conditions to the Scheme and Acquisition
1. The Acquisition will be conditional upon the Scheme
becoming unconditional and becoming Effective, subject to the provisions of
the Takeover Code, by no later than 11.59 p.m. on the Long Stop Date.
Conditions of the Scheme
2. The Scheme will be subject to the following Conditions:
2.1 (i) its approval by a majority in number representing not
less than 75 per cent. in value of Scheme Shares held by TEG Shareholders who
are on the register of members of TEG (or the relevant class or classes
thereof, if applicable) at the Voting Record Time, present and voting, whether
in person or by proxy, at the Court Meeting and at any separate class meeting
which may be required by the Court (or any adjournment thereof), and
(ii) such Court Meeting and any separate class 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 as may be agreed
between Bidco and TEG with the consent of the Panel (and that the Court may
approve if required));
2.2 (i) the Resolution(s) being duly passed at the General
Meeting (or any adjournment thereof) and (ii) such General Meeting being held
on or before the 22nd day after the expected date of the General Meeting to be
set out in the Scheme Document in due course (or such later date as may be
agreed between Bidco and TEG with the consent of the Panel (and that the Court
may approve if required));
2.3 (i) the sanction of the Scheme by the Court (with or without
modification (but subject to such modification being acceptable to Bidco and
TEG)); and (ii) the Sanction Hearing being held on or before the 22nd day
after the expected date of the Sanction Hearing to be set out in the Scheme
Document in due course (or such later date as may be agreed between Bidco and
TEG with the consent of the Panel (and that the Court may approve if
required)); and
2.4 the delivery of a copy of the Court Order to the Registrar of
Companies.
General Conditions
3. In addition, subject as stated in Part B of this
Appendix 1, Bidco and TEG have agreed that the Acquisition will be
conditional upon the following Conditions and, accordingly, the necessary
actions to make the Scheme Effective will not be taken unless the following
Conditions (as amended if appropriate) have been satisfied or, where relevant,
waived:
Other Third Party clearances
3.1 no central bank, government or governmental,
quasi‑governmental, supranational, statutory, regulatory, environmental,
administrative, fiscal or investigative body, court, trade agency,
association, institution, environmental body, employee representative body or
any other body or person whatsoever in any jurisdiction (each a "Third Party")
having given notice of a decision to take, institute, implement or threaten
any action, proceeding, suit, investigation, enquiry or reference, or having
required any action to be taken or otherwise having done anything or having
enacted, made or proposed any statute, regulation, decision, order or change
to published practice and there not continuing to be outstanding any statute,
regulation, decision or order which would or might:
3.1.1 make the Acquisition, its implementation or the acquisition or
proposed acquisition of any shares or other securities in, or control or
management of, any member of the Wider TEG Group by any member of the Wider
Bidco Group void, illegal and/or unenforceable under the laws of any relevant
jurisdiction, or otherwise directly or indirectly prevent, prohibit, or
restrain, restrict, impede, challenge, delay or otherwise interfere with the
implementation of, or impose material additional conditions or obligations
with respect to, the Acquisition or the acquisition of any shares or other
securities in, or control or management of, any member of the Wider TEG Group
by any member of the Wider Bidco Group or require an amendment of the Scheme;
3.1.2 require, prevent or materially delay the divestiture or alter
the terms envisaged for such divestiture by any member of the Wider Bidco
Group or by any member of the Wider TEG Group of all or any part of their
businesses, assets or property or impose any limitation on the ability of all
or any of them to conduct their businesses (or any part thereof) or to own,
control or manage any of their assets or properties (or any part thereof) to
an extent which is material in the context of the Wider Bidco Group taken as a
whole or in the context of the Acquisition;
3.1.3 impose any material limitation on, or result in a material
delay in, the ability of any member of the Wider Bidco Group directly or
indirectly to acquire or hold or to exercise effectively all or any rights of
ownership in respect of shares or other securities in TEG (or any member of
the Wider TEG Group) or on the ability of any member of the Wider TEG Group or
any member of the Wider Bidco Group directly or indirectly to hold or exercise
effectively any rights of ownership in respect of shares or other securities
(or the equivalent) in, or to exercise management control over, any member of
the Wider TEG Group to an extent which is material in the context of the Wider
TEG Group taken as a whole or in the context of the Acquisition;
3.1.4 other than pursuant to the implementation of the Scheme or, if
applicable, sections 974 to 991 of the 2006 Act, require any member of the
Wider Bidco Group or the Wider TEG Group to acquire or offer to acquire any
shares, other securities (or the equivalent) or interest in any member of the
Wider TEG Group or any asset owned by any third party which is material in the
context of the Wider TEG Group or the Wider Bidco Group, in either case taken
as a whole;
3.1.5 require, prevent or delay a divestiture by any member of the
Wider Bidco Group of any shares or other securities (or the equivalent) in any
member of the Wider TEG Group;
3.1.6 result in any member of the Wider TEG Group ceasing to be able
to carry on business under any name under which it presently carries on
business to an extent which is material in the context of the Wider TEG Group
taken as a whole or in the context of the Acquisition;
3.1.7 impose any limitation on the ability of any member of the
Wider Bidco Group or any member of the Wider TEG Group to conduct, integrate
or co‑ordinate all or any part of their respective businesses with all or
any part of the business of any other member of the Wider Bidco Group and/or
the Wider TEG Group in a manner which is adverse and material to the Wider
Bidco Group and/or the Wider TEG Group, in either case, taken as a whole or in
the context of the Acquisition; or
3.1.8 except as Disclosed, otherwise affect the business, assets,
value, profits, prospects or operational performance of any member of the
Wider TEG Group or any member of the Wider Bidco Group in each case in a
manner which is adverse to and material in the context of the Wider TEG Group
taken as a whole or of the financing of the Acquisition;
and all applicable waiting and other time periods (including any extensions
thereof) during which any such Third Party could decide to take, institute,
implement or threaten any such action, proceeding, suit, investigation,
enquiry or reference or take any other step under the laws of any jurisdiction
in respect of the Acquisition or proposed acquisition of any TEG Shares or
otherwise intervene having expired, lapsed, or been terminated;
3.2 all notifications, filings or applications which are deemed by
Bidco to be necessary or reasonably considered to be appropriate in any
relevant jurisdiction having been made in connection with the Acquisition and
all necessary waiting and other time periods (including any extensions
thereof) under any applicable legislation or regulation of any jurisdiction
having expired, lapsed or been terminated (as appropriate) and all statutory
and regulatory obligations in any jurisdiction having been complied with and
all Authorisations which are deemed by Bidco to be necessary or reasonably
considered to be appropriate in any jurisdiction for or in respect of the
Acquisition or the proposed acquisition of any shares or other securities in,
or control of, TEG by any member of the Wider Bidco Group having been obtained
on terms and in a form reasonably satisfactory to Bidco from all appropriate
Third Parties or (without prejudice to the generality of the foregoing) from
any person or bodies with whom any member of the Wider TEG Group or the Wider
Bidco Group has entered into contractual arrangements in each case where the
direct consequence of a failure to make such notification or filing or to wait
for the expiry, lapse or termination of any such waiting or other time period
or to comply with such obligation or obtain such Authorisation would be
unlawful in any relevant jurisdiction or have a material adverse effect on the
Wider TEG Group, any member of the Bidco Group or the ability of Bidco to
implement the Scheme and all such Authorisations remaining in full force and
effect at the time at which the Scheme becomes otherwise unconditional in all
respects and there being no notice or intimation of an intention to revoke,
suspend, restrict, modify or not to renew such Authorisations;
3.3 no temporary restraining order, preliminary or permanent
injunction, preliminary or permanent enjoinment, or other order issued and
being in effect by a court or other Third Party which has the effect of making
the Acquisition or any acquisition or proposed acquisition of any shares or
other securities or control or management of, any member of the Wider TEG
Group by any member of the Wider Bidco Group, or the implementation of either
of them, void, voidable, illegal and/or unenforceable under the laws of any
relevant jurisdiction, or otherwise directly or indirectly prohibiting,
preventing, restraining, restricting, delaying or otherwise interfering with
the completion or the approval of the Acquisition or any matter arising from
the proposed acquisition of any shares or other securities in, or control or
management of, any member of the Wider TEG Group by any member of the Wider
Bidco Group;
Confirmation of absence of adverse circumstances
3.4 except as Disclosed, there being no provision of any
arrangement, agreement, licence, permit, franchise, lease or other instrument
to which any member of the Wider TEG Group is a party or by or to which any
such member or any of its assets is or may be bound, entitled or be subject or
any event or circumstance which, as a consequence of the Acquisition or the
proposed acquisition by any member of the Wider Bidco Group of any shares or
other securities in TEG or because of a change in the control or management of
any member of the Wider TEG Group or otherwise, would or might reasonably be
expected to result in, in each case to an extent which is material in the
context of the Wider TEG Group taken as a whole or to the financing of the
Acquisition:
3.4.1 any monies borrowed by, or any other indebtedness, actual or
contingent of, or any grant available to, any member of the Wider TEG Group
being or becoming repayable, or capable of being declared repayable,
immediately or prior to its or their stated maturity date or repayment date,
or the ability of any such member to borrow monies or incur any indebtedness
being withdrawn or inhibited or being capable of becoming or being withdrawn
or inhibited;
3.4.2 the rights, liabilities, obligations, interests or business of
any member of the Wider TEG Group or any member of the Wider Bidco Group under
any such arrangement, agreement, licence, permit, lease or instrument or the
interests or business of any member of the Wider TEG Group or any member of
the Wider Bidco Group in or with any other firm or company or body or person
(or any agreement or arrangement relating to any such business or interests)
being or likely to become terminated or adversely modified or affected or any
onerous obligation or liability arising or any adverse action being taken or
arising thereunder;
3.4.3 any member of the Wider TEG Group ceasing to be able to carry
on business under any name under which it presently carries on business to an
extent which is material in the context of the TEG Group taken as a whole or
in the context of the Acquisition;
3.4.4 any assets or interests of, or any asset the use of which is
enjoyed by, any member of the Wider TEG Group being or falling to be disposed
of or charged or any right arising under which any such asset or interest
could be required to be disposed of or charged or could cease to be available
to any member of the Wider TEG Group otherwise than in the ordinary course of
business;
3.4.5 other than in the ordinary course of business, the creation or
enforcement of any mortgage, charge or other security interest over the whole
or any part of the business, property or assets of any member of the Wider TEG
Group or any such mortgage, charge or other security interest (whenever
created, arising or having arisen), becoming enforceable;
3.4.6 the business, assets, value, financial or trading position,
profits, prospects or operational performance of any member of the Wider TEG
Group being prejudiced or adversely affected;
3.4.7 the creation or acceleration of any material liability (actual
or contingent) by any member of the Wider TEG Group other than trade creditors
or other liabilities incurred in the ordinary course of business; or
3.4.8 any liability of any member of the Wider TEG Group to make any
severance, termination, bonus or other payment to any of its directors or
other officers other than in the ordinary course of business;
No material transactions, claims or changes in the conduct of the business of
the TEG Group
3.5 except as Disclosed, no member of the Wider TEG Group having
since 1 January 2023:
3.5.1 save as between TEG and its wholly‑owned subsidiaries or
between such wholly‑owned subsidiaries and save for the issue or transfer
out of treasury of TEG Shares on the exercise of options or vesting of awards
granted in the ordinary course under the TEG Share Plan, issued or agreed to
issue or authorised or proposed or announced its intention to authorise or
propose the issue of additional shares of any class, or securities or
securities convertible into, or exchangeable for, or rights, warrants or
options to subscribe for or acquire, any such shares or convertible securities
or transferred or sold or agreed to transfer or sell or authorised or proposed
the transfer or sale of TEG Shares out of treasury;
3.5.2 recommended, declared, paid or made or agreed to recommend,
declare, pay or make any bonus issue, dividend or other distribution (whether
payable in cash or otherwise) other than to TEG or one of its wholly‑owned
subsidiaries;
3.5.3 save as between TEG and its wholly‑owned subsidiaries or
between such wholly‑owned subsidiaries, merged with (by statutory merger or
otherwise) or demerged from or acquired any body corporate, partnership or
business or acquired or disposed of, or, other than in the ordinary course of
business, transferred, mortgaged or charged or created any security interest
over, any assets or any right, title or interest in any asset (including
shares and trade investments) or authorised, proposed or announced any
intention to do so, in each case to an extent which is material in the context
of the Wider TEG Group taken as a whole;
3.5.4 save as between TEG and its wholly‑owned subsidiaries or
between such wholly‑owned subsidiaries, made, authorised, proposed or
announced an intention to propose any change in its loan capital other than in
the ordinary course of business and to an extent which is material in the
context of the Wider TEG Group taken as a whole;
3.5.5 issued, authorised or proposed or announced an intention to
authorise or propose the issue of, or made any change in or to the terms of,
any debentures or (save in the ordinary course of business and save as between
TEG and its wholly‑owned subsidiaries or between such wholly‑owned
subsidiaries) incurred or increased any indebtedness or become subject to any
contingent liability to an extent which is material in the context of the
Wider TEG Group taken as a whole or in the context of the Acquisition;
3.5.6 entered into, varied, authorised or proposed entry into or
variation of, or announced its intention to enter into or vary, any contract,
transaction, arrangement or commitment (whether in respect of capital
expenditure or otherwise) (otherwise than in the ordinary course of business)
which is of a long-term, unusual or onerous nature, or which involves or could
reasonably be expected to involve an obligation of a nature or magnitude which
is or is likely to be materially restrictive on the business of any member of
the Wider TEG Group to an extent which is or is reasonably likely to be
material to the Wider TEG Group taken as a whole;
3.5.7 entered into any licence or other disposal of intellectual
property rights of any member of the Wider TEG Group which are material in the
context of the Wider TEG Group and outside the normal course of business;
3.5.8 entered into, varied, authorised or proposed entry into or
variation of, or announced its intention to enter into or vary the terms of or
made any offer (which remains open for acceptance) to enter into or vary the
terms of, any contract, commitment, arrangement or any service agreement with
any director or senior executive of the Wider TEG Group save for salary
increases, bonuses or variations of terms in the ordinary course;
3.5.9 proposed, agreed to provide or modified the terms of any share
option scheme, incentive scheme, or other benefit relating to the employment
or termination of employment of any employee of the Wider TEG Group which,
taken as a whole, are material in the context of the Wider TEG Group taken as
a whole;
3.5.10 (i) (excluding the trustee of any pension scheme(s) established
by a member of the Wider TEG Group other than TEG itself) made, agreed or
consented to or procured any significant change to: (a) the terms of any
existing trust deeds, rules, policy or other governing documents, or entered
into or established any new trust deeds, rules, policy or other governing
documents, constituting any pension scheme or other retirement or death
benefit arrangement established for the directors, former directors, employees
or former employees of any entity in the Wider TEG Group or their dependants
and established by a member of the Wider TEG Group (a "Relevant Pension
Plan"); (b) the basis on which benefits accrue, pensions which are payable or
the persons entitled to accrue or be paid benefits, under any Relevant Pension
Plan; (c) the basis on which the liabilities of any Relevant Pension Plan are
funded or valued; or (d) the basis or rate of employer contribution to a
Relevant Pension Plan, in each case to the extent which is material in the
context of the Wider TEG Group taken as a whole or in the context of the
Acquisition and other than as required in accordance with applicable law; or
(ii) enter into or propose to enter into one or more bulk annuity contracts
in relation to any Relevant Pension Plan; or (iii) carried out any act:
(a) which would or could reasonably be expected to lead to the commencement
of the winding up of any Relevant Pension Plan; (b) which would or is
reasonably likely to create a material debt owed by an employer to any
Relevant Pension Plan; (c) which would or might accelerate any obligation on
any employer to fund or pay additional contributions to any Relevant Pension
Plan; or (d) which would, having regard to the published guidance of the
Pensions Regulator give rise directly or indirectly to a liability in respect
of a Relevant Pension Plan arising out of the operation of sections 38 and 38A
of the Pensions Act 2004 in relation to a Relevant Pension Plan, in each case
to the extent which is material in the context of the Wider TEG Group taken as
a whole or in the context of the Acquisition and other than as required in
accordance with applicable law;
3.5.11 changed the trustee or trustee directors or other fiduciary of
any Relevant Pension Plan;
3.5.12 entered into, implemented or effected, or authorised, proposed or
announced its intention to implement or effect, any joint venture, asset or
profit sharing arrangement, partnership, composition, assignment,
reconstruction, amalgamation, commitment, scheme or other transaction or
arrangement (other than the Scheme) otherwise than in the ordinary course of
business which is material in the context of the Wider TEG Group taken as a
whole or in the context of the Acquisition;
3.5.13 purchased, redeemed or repaid or announced any proposal to
purchase, redeem or repay any of its own shares or other securities or reduced
made any other change to any part of its share capital to an extent which
(other than in the case of TEG) is material in the context of the Wider TEG
Group taken as a whole;
3.5.14 other than with respect to claims between TEG and its wholly
owned subsidiaries (or between such subsidiaries), waived, compromised or
settled any claim otherwise than in the ordinary course of business which is
material in the context of the Wider TEG Group taken as a whole or in the
context of the Acquisition;
3.5.15 made any alteration to its articles of association or other
constitutional documents (in each case, other than in connection with the
Scheme) which is material in the context of the Acquisition;
3.5.16 (other than in respect of a member of the Wider TEG Group which
is dormant and was solvent at the relevant time) taken or proposed any steps,
corporate action or had any legal proceedings instituted or threatened against
it in relation to the suspension of payments, a moratorium of any
indebtedness, its winding‑up (voluntary or otherwise), dissolution,
reorganisation or for the appointment of any administrator, receiver, manager,
administrative receiver, trustee or similar officer of all or any of its
assets or revenues or any analogous proceedings in any jurisdiction or
appointed any analogous person in any jurisdiction or had any such person
appointed which is material in the context of the Wider TEG Group taken as a
whole or in the context of the Acquisition;
3.5.17 been unable, or admitted in writing that it is unable, to pay its
debts or commenced negotiations with one or more of its creditors with a view
to rescheduling or restructuring any of its indebtedness, or having stopped or
suspended (or threatened to stop or suspend) payment of its debts generally or
ceased or threatened to cease carrying on all or a substantial part of its
business which is material in the context of the Wider TEG Group taken as a
whole or in the context of the Acquisition;
3.5.18 entered into any contract, commitment, agreement or arrangement
otherwise than in the ordinary course of business or passed any resolution or
made any offer (which remains open for acceptance) with respect to or
announced an intention to, or to propose to, effect any of the transactions,
matters or events referred to in this Condition;
3.5.19 terminated or varied the terms of any agreement or arrangement
between any member of the Wider TEG Group and any other person in a manner
which would or might be expected to have a material adverse effect on the
financial position of the Wider TEG Group taken as a whole; or
3.5.20 taken (or agreed or proposed to take) any action which requires,
or would require, the consent of the Panel or the approval of TEG Shareholders
in general meeting in accordance with, or as contemplated by, Rule 21.1 of
the Takeover Code;
No material adverse change
3.6 since 1 January 2023, and except as Disclosed, there having
been:
3.6.1 no adverse change and no circumstance having arisen which
would be expected to result in any adverse change or deterioration in the
business, assets, value, financial or trading position, profits, prospects or
operational performance of any member of the Wider TEG Group to an extent
which is material to the Wider TEG Group taken as a whole or to the financing
of the Acquisition;
3.6.2 no litigation, arbitration proceedings, prosecution or other
legal proceedings including, without limitation, with regard to intellectual
property rights used by the Wider TEG Group having been threatened, announced
or instituted by or against or remaining outstanding against any member of the
Wider TEG Group or to which any member of the Wider TEG Group is or may become
a party (whether as claimant or defendant or otherwise) which, in any such
case, might be expected to have a material adverse effect on the Wider TEG
Group taken as a whole, and no enquiry, review, investigation or enforcement
proceedings by, or complaint or reference to, any Third Party against or in
respect of any member of the Wider TEG Group having been threatened, announced
or instituted by or against, or remaining outstanding in respect of, any
member of the Wider TEG Group which, in any such case, might be expected to
have a material adverse effect on the Wider TEG Group taken as a whole;
3.6.3 no contingent or other liability having arisen, increased or
become apparent which is reasonably likely to adversely affect the business,
assets, financial or trading position, profits, prospects or operational
performance of any member of the Wider TEG Group to an extent which is
material to the Wider TEG Group taken as a whole;
3.6.4 no steps having been taken and no omissions having been made
which are reasonably likely to result in the withdrawal, cancellation,
termination or modification of any licence held by any member of the Wider TEG
Group, which is necessary for the proper carrying on of its business and the
withdrawal, cancellation, termination or modification of which is material and
reasonably likely to have a material adverse effect on the Wider TEG Group
taken as a whole; and
3.6.5 no member of the Wider TEG Group having conducted its business
in material breach of any applicable laws and regulations which in any case is
material in the context of the Wider TEG Group taken as a whole;
3.7 since 1 January 2023, except as Disclosed, Bidco not having
discovered:
3.7.1 that any financial, business or other information concerning
the Wider TEG Group publicly announced or disclosed to any member of the Wider
Bidco Group at any time prior to the date of this announcement by or on behalf
of any member of the Wider TEG Group or to any of their advisers is
misleading, contains a misrepresentation of fact or omits to state a fact
necessary to make that information not misleading and which is, in any case,
material in the context of the Wider TEG Group taken as a whole or in the
context of the Acquisition;
3.7.2 that any member of the Wider TEG Group is subject to any
liability, contingent or otherwise and which is material in the context of the
Wider TEG Group taken as a whole; or
3.7.3 any information which affects the import of any information
disclosed to Bidco at any time prior to the date of this announcement by or on
behalf of any member of the Wider TEG Group which is material in the context
of the Wider TEG Group taken as a whole;
Environmental liabilities
3.8 except as Disclosed, Bidco not having discovered that, in
relation to any release, emission, accumulation, discharge, disposal or other
similar circumstance which has impaired or is likely to impair the environment
(including property) or harmed or is likely to harm the health of humans,
animals or other living organisms or eco‑systems, no past or present member
of the Wider TEG Group, in a manner or to an extent which is material in the
context of the Wider TEG Group, (i) having committed any violation of any
applicable laws, statutes, regulations, Authorisations, notices or other
requirements of any Third Party giving rise to a material liability; and/or
(ii) having incurred any material liability (whether actual or contingent) to
any Third Party; and/or (iii) being likely to incur any material liability
(whether actual or contingent), or being required, to make good, remediate,
repair, re‑instate or clean up the environment (including any property) in
each case of (i), (ii) or (iii) which such liability or requirement would be
material to the Wider TEG Group taken as a whole;
Intellectual property
3.9 except as Disclosed, no circumstance having arisen or event
having occurred in relation to any intellectual property owned or used by any
member of the Wider TEG Group which would be reasonably likely to have a
material adverse effect on the Wider TEG Group taken as a whole or is
otherwise material in the context of the Acquisition, including:
3.9.1 any member of the Wider TEG Group losing its title to any
intellectual property material to its business, or any intellectual property
owned by the Wider TEG Group and material to its business being revoked,
cancelled or declared invalid;
3.9.2 any claim being asserted in writing or threatened in writing
by any person challenging the ownership of any member of the Wider TEG Group
to, or the validity or effectiveness of, any of its intellectual property; or
3.9.3 any agreement regarding the use of any intellectual property
licensed to or by any member of the Wider TEG Group being terminated or
varied;
Anti‑corruption and sanctions
3.10 except as Disclosed, Bidco not having discovered that (to an
extent that is material in the context of the Wider TEG Group taken as a
whole):
3.10.1 any past or present member of the Wider TEG Group or any person
that performs or has performed services for or on behalf of any such company
is or has at any time engaged in any activity, practice or conduct (or omitted
to take any action) in contravention of the UK Bribery Act 2010, the U.S.
Foreign Corrupt Practices Act of 1977, as amended or any other applicable
anti‑corruption legislation;
3.10.2 any member of the Wider TEG Group is ineligible to be awarded any
contract or business under section 23 of the Public Contracts
Regulations 2006 or section 26 of the Utilities Contracts Regulations 2006
(each as amended);
3.10.3 any past or present member of the Wider TEG Group has engaged in
any activity or business with, or made any investments in, or made any
payments to any government, entity or individual covered by any of the
economic sanctions administered by the United Nations or the European Union
(or any of their respective member states) or the United States Office of
Foreign Assets Control or any other governmental or supranational body or
authority in any jurisdiction; or
3.10.4 a member of the TEG Group has engaged in a transaction which
would cause the Bidco Group to be in breach of any law or regulation on
completion of the Acquisition, including the economic sanctions administered
by the United States Office of Foreign Assets Control or HM Treasury &
Customs or any government, entity or individual targeted by any of the
economic sanctions of the United Nations, United States or the European Union
or any of its member states; or
No criminal property
3.11 except as Disclosed, Bidco not having discovered that any asset
of any member of the Wider TEG Group constitutes criminal property as defined
by section 340(3) of the Proceeds of Crime Act 2002 (but disregarding
paragraph (b) of that definition).
Part B
Further terms of the Acquisition
1. Subject to the requirements of the Panel and the Takeover
Code, Bidco reserves the right in its sole discretion to waive, in whole or in
part, all or any of the Conditions set out in Part A of Appendix 1, except
Conditions 1, 2.1(i), 2.2(i), 2.3(i) and 2.4 which cannot be waived. If any of
Conditions 2.1(ii), 2.2(ii) or 2.3(ii) is not satisfied by the relevant
deadline specified in the relevant Condition, Bidco shall make an announcement
by 8.00 a.m. on the Business Day following such deadline confirming whether it
has invoked the relevant Condition, waived the relevant deadlines or agreed
with TEG to extend the relevant deadline.
2. Bidco shall be under no obligation to waive (if capable of
waiver), to determine to be or remain satisfied or to treat as fulfilled any
of the Conditions in Part A of Appendix 1 above that are capable of waiver
by a date earlier than the latest date for the fulfilment of that Condition
notwithstanding that the other Conditions of the Acquisition may at such
earlier date have been waived or fulfilled and that there are at such earlier
date no circumstances indicating that any of such Conditions may not be
capable of fulfilment.
3. Under Rule 13.5(a) of the Takeover Code and subject to
paragraph 4, Bidco may only invoke a Condition so as to cause the Acquisition
not to proceed, to lapse or to be withdrawn with the consent of the Panel.
The Panel will normally only give its consent if the circumstances which give
rise to the right to invoke the Condition are of material significance to
Bidco in the context of the Acquisition. This will be judged by reference to
the facts of each case at the time that the relevant circumstances arise.
4. Condition 1 (subject to Rule 12 of the Takeover Code),
Conditions 2.1(i), 2.2(i), 2.3(i) and 2.4 in Part A of Appendix 1 above,
and, if applicable, any acceptance condition if the Acquisition is implemented
by means of an Offer, are not subject to Rule 13.5(a) of the Takeover Code.
5. Any Condition that is subject to Rule 13.5(a) of the
Takeover Code may be waived by Bidco.
6. If the Panel requires Bidco to make an offer or offers for
TEG Shares under the provisions of Rule 9 of the Takeover Code, Bidco may make
such alterations to the Conditions as are necessary to comply with the
provisions of that Rule.
7. Bidco reserves the right to elect to implement the
Acquisition by way of an Offer as an alternative to the Scheme, subject to the
Panel's consent and (while the Cooperation Agreement is continuing) to the
terms of the Cooperation Agreement. In such an 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, including
(without limitation and for so long as the Cooperation Agreement is continuing
and the Offer arises in accordance with the terms of the Cooperation
Agreement) an acceptance condition set at 90 per cent. of the TEG Shares (or
such other percentage as Bidco may decide after, to the extent necessary,
consultation with the Panel, being in any case more than 50 per cent. of the
TEG Shares)). If the Acquisition is effected by way of an Offer, and such
Offer becomes or is declared unconditional and sufficient acceptances are
received in respect of such Offer, Bidco intends to exercise its rights to
apply the provisions of Chapter 3 of Part 28 of the 2006 Act so as to acquire
compulsorily the remaining TEG Shares in respect of which the Offer has not
been accepted.
8. The Acquisition will be subject, inter alia, to the
Conditions and certain further terms which are set out in this Appendix 1 and
to the full terms which will be set out in the Scheme Document and such
further terms as may be required to comply with the provisions of the Listing
Rules, the provisions of the Takeover Code and the applicable requirements of
the Panel and the London Stock Exchange.
9. TEG Shares will be acquired by Bidco pursuant to the
Acquisition fully paid and free from all liens, charges, encumbrances and
other third party rights of any nature whatsoever and together with all rights
attaching to them as at the Effective Date, including the right to receive and
retain all dividends and distributions (if any) declared, made or paid after
the Acquisition becomes Effective.
10. If, on or after the date of this announcement and prior to the
Acquisition becoming Effective, any dividend and/or distribution and/or other
return of capital or value is announced, declared, made or paid in respect of
the TEG Shares, Bidco reserves the right to reduce the consideration payable
under the terms of the Acquisition for the TEG Shares by an amount up to the
aggregate amount of such dividend and/or distribution and/or other return of
capital or value, in which case any reference in this announcement to the
consideration payable under the terms of the Acquisition will be deemed to be
a reference to the consideration as so reduced. Any exercise by Bidco of its
rights referred to in this paragraph 10 shall be the subject of an
announcement and, for the avoidance of doubt, shall not be regarded as
constituting any revision or variation of the Scheme or the Acquisition. In
such circumstances, TEG Shareholders would be entitled to retain any such
dividend, distribution and/or return of capital or value.
11. The availability of the Acquisition to persons not resident in
the United Kingdom may be affected by the laws or regulatory requirements of
the relevant jurisdictions. Persons who are not resident in the United Kingdom
should inform themselves about and observe any applicable requirements.
12. The Acquisition will be governed by English law and be subject
to the jurisdiction of the Court, to the Conditions set out above and full
terms to be set out in the Scheme Document. The Acquisition will be subject to
the applicable requirements of the Takeover Code, the Panel, the London Stock
Exchange, the FCA, the Listing Rules and the Registrar of Companies.
13. Each of the Conditions shall be regarded as a separate
Condition and shall not be limited by reference to any other Condition.
Appendix 2
Sources and Bases of Information
In this announcement, unless otherwise stated or the context otherwise
requires, the following sources and bases have been used.
1. The fully diluted issued ordinary share capital of
69,577,690 TEG Shares is based on:
1.1 68,496,118 TEG Shares in issue as at 5 December 2023 (being
the latest practicable date before this announcement); plus
1.2 1,081,572 TEG Shares which may be issued on or after the date
of this announcement pursuant to the TEG Share Plan and share awards as at 5
December 2023 (being the latest practicable date before this announcement).
2. A value of approximately £287 million for the entire
issued and to be issued share capital of TEG is based on:
2.1 the Acquisition Price of 412.5 pence per TEG Share; and
2.2 TEG's fully diluted issued ordinary share capital of
69,577,690 TEG Shares, as set out in paragraph 1 above.
3. Unless otherwise stated, the financial information of TEG
is extracted (without material adjustment) from the annual report and audited
accounts of the TEG Group for the 12 months ended 1 January 2023, and the
unaudited, consolidated financial statements of TEG for the six months ended 2
July 2023.
4. All closing prices for TEG Shares are closing middle market
quotations of a share derived from the Daily Official List of the London Stock
Exchange on the relevant date(s).
5. The volume-weighted average prices have been derived from
Factset.
6. Certain figures included in this announcement have been
subject to rounding adjustments.
7. Group Adjusted EBITDA consists of earnings before interest,
taxation, depreciation, amortisation costs, exceptional items, impairment
reversal, loss on joint venture and profit or loss on disposal of assets.
Group Adjusted EBITDA after rental costs is the Group Adjusted EBITDA less the
cash rent paid for rental of the long-term leasehold properties which are held
on the balance sheet as Right of Use Property assets. For 2019 this measure is
the IAS17 EBITDA as reported in FY19 when the Group was not reporting on an
IFRS16 basis. These are non-IFRS measures used by the Group in understanding
its underlying earnings. Group adjusted profit before tax is defined as profit
before tax adjusted for exceptional items and impairment reversals.
8. Multiple is calculated as Implied Enterprise Value divided
by Group Adjusted EBITDA after rental cost. Implied Enterprise Value for is
calculated excluding lease liabilities and by reference to the valuation of
the Acquisition less reported net cash of £5.1 million as at 2 July 2023.
Appendix 3
Details of Irrevocable Undertakings and Letters of Intent
1. Directors
The following TEG Directors have given irrevocable undertakings to vote (or
procure the voting) in favour of the resolutions (including the Scheme)
relating to the Acquisition at the Meetings (or in the event that the
Acquisition is implemented by way of an Offer, to accept, or procure the
acceptance of, the Offer) in respect of their own beneficial holdings (or
those TEG Shares over which they have control) of TEG Shares:
Name Total Number of Percentage of existing issued share capital
TEG Shares
Graham Blackwell 87,645 0.13
Antony Smith 92,403 0.13
Adam Bellamy 40,000 0.06
Julie Sneddon 80,000 0.12
Christopher Mills* 200,000 0.29
TOTAL 500,048 0.73
* The circumstances pursuant to which the obligations contained in the
irrevocable undertaking received from Christopher Mills will cease to have
effect are set out in paragraph 2a) below.
These irrevocable undertakings also extend to any TEG Shares acquired by the
TEG Directors as a result of the vesting of awards or the exercise of options
under the TEG Share Plan.
The irrevocable undertakings referred to in this paragraph 1 (other than
Christopher Mills) cease to be binding on the earlier of the following
occurrences:
(i) this announcement not having been released by 10.00 a.m. (London time) on
the date that is one Business Day from the date of the undertaking (or such
later date as Bidco and TEG may agree);
(ii) the Scheme Document is not sent to TEG Shareholders within 28 days (or
such later period as the Panel may agree) after the date of this announcement,
provided that if the Acquisition was initially being implemented by way of a
Scheme, and Bidco elects to exercise its right to implement the Acquisition by
way of an Offer or vice versa, such time period shall be extended to refer to
within 28 days of the issue of the press announcement announcing the change in
structure (or such other date for the posting of the Offer Document or Scheme
Document (as applicable) as the Panel may require);
(iii) Bidco announces, with the consent of the Panel, that it does not intend
to make or proceed with the Acquisition and no new, revised or replacement
offer or scheme is announced at the same time;
(iv) the Scheme lapses or is withdrawn in accordance with its terms and Bidco
publicly confirms that it does not intend to proceed with the Acquisition or
to implement the Acquisition by way of an Offer or otherwise;
(v) the Scheme has not become Effective by 11.59 p.m. on the Long Stop Date
(or such other time and date as agreed between Bidco and TEG, with the
approval of the Court and/or the Panel, if required (other than in
circumstances where Bidco has, prior to such date, elected to exercise its
right to proceed by way of an Offer and announced the same in accordance with
the requirements of Paragraph 8 of Appendix 7 to the Takeover Code, and such
Offer has not lapsed or been withdrawn)); or
(vi) the date on which any competing offer for the entire issued, and to be
issued, share capital of TEG is declared wholly unconditional or, if
proceeding by way of a scheme of arrangement, becomes Effective.
2. Shareholders
In addition to the TEG Directors, the following TEG Shareholders have each
given an irrevocable undertaking to vote (or procure the voting, as
applicable) in favour of the resolutions relating to the Acquisition at the
Meetings, or to accept, or procure the acceptance of, the Offer if the
Acquisition is implemented as an Offer, in respect of their interests in TEG
Shares:
Beneficial Holder Registered Holder Total Number of Percentage of existing issued share capital
TEG Shares
North Atlantic Smaller Companies Investment Trust plc (managed by Harwood) Bank of New York Nominees Limited 10,000,000 14.60
Harwood Capital LLP and the clients it represents Roy Nominees Limited 581,000 0.85
TOTAL 10,581,000 15.45
a) The obligations contained in the irrevocable undertaking
received from Christopher Mills in paragraph 1 above and Harwood (on behalf of
itself and funds managed or advised by it), and referred to in paragraph 2
above cease to have effect on the earlier of the following occurrences:
(i) this announcement not having been released by 12.00 p.m. (London time) on
7 December 2023 (or such later date as Bidco and TEG may agree);
(ii) the Scheme Document or Offer Document (as the case may be) has not been
posted within 28 days of the issue of this announcement (or within such longer
period as Bidco, with the consent of the Panel, determines), provided that if
the Acquisition was initially being implemented by way of a Scheme, and Bidco
elects to exercise its right to implement the Acquisition by way of an Offer
or vice versa, the time period shall be extended to refer to within 28 days of
the issue of the press announcement announcing the change in structure (or
such other date for the posting of the Offer Document or Scheme Document (as
applicable) as the Panel may require);
(iii) on the date on which the Acquisition (whether implemented by way of a
Scheme or an Offer) is withdrawn or lapses in accordance with its terms,
provided that this paragraph shall not apply where the Acquisition is
withdrawn or lapses as a result of Bidco exercising its right, in accordance
with the Takeover Code, to implement the Acquisition by way of an Offer rather
than by way of a Scheme or vice versa;
(iv) if the Scheme or the Offer (as applicable) has not, in accordance with
the requirements of the Takeover Code, become Effective on or before the Long
Stop Date (including as such Long Stop Date may be extended as set out in this
announcement), provided that the Scheme or Offer (as applicable) shall not be
treated as having failed to become Effective as a result of Bidco exercising
its right, in accordance with the Takeover Code, to implement the Acquisition
by way of an Offer rather than by way of a Scheme or vice versa;
(v) if Bidco announces that it does not intend to proceed with the Acquisition
and no new, revised or replacement Scheme or Offer is announced by Bidco in
accordance with Rule 2.7 of the Takeover Code at the same time; or
(vi) if Christopher Mills and/or Harwood are required to withdraw the
undertaking by any court or regulatory of competent jurisdiction.
b) In addition, the following TEG Shareholders have each
delivered a non-binding letter of intent to vote in favour of the resolutions
relating to the Acquisition at the Meetings, or to accept the Offer if the
Acquisition is implemented as an Offer, in respect of their interests in TEG
Shares:
Name Total Number of Percentage of existing issued share capital
TEG Shares
Slater Investments Limited 8,427,053 12.30
Gresham House Asset Management Ltd 7,558,050 11.03
TOTAL 15,985,103 23.34
Appendix 4
Definitions
The following definitions apply throughout this document unless the context
otherwise requires:
"2006 Act" the Companies Act 2006, as amended from time to time
"2022 TEG Annual Report" the annual report and audited accounts of the TEG Group for the year ended 1
January 2023
"Acquisition" the proposed cash acquisition by Bidco of the entire issued, and to be issued,
share capital of TEG to be implemented by way of the Scheme, or should Bidco
so elect, and where required the Panel consent (subject to the terms of the
Cooperation Agreement whilst it remains in force), by means of an Offer and,
where the context admits, any subsequent revision, variation, extension or
renewal thereof
"Acquisition Price" 412.5 pence per TEG Share
"Articles" the articles of association of TEG from time to time
"associated undertaking" shall be construed in accordance with paragraph 19 of Schedule 6 to The Large
and Medium sized Companies and Groups (Accounts and Reports) Regulations 2008
(SI 2008/410) but for this purpose ignoring paragraph 19(1)(b) of Schedule 6
to those regulations)
"Authorisations" authorisations, orders, grants, recognitions, confirmations, consents,
licences, clearances, certificates, permissions or approvals, in each case of
a Third Party
"Bidco" Neon Buyer Limited
"Bidco Board" the directors of Bidco
"Bidco Group" Bidco and its subsidiary undertakings and where the context permits, each of
them
"Business Day" a day, not being a public holiday, Saturday or Sunday, on which clearing banks
in London are open for normal business
"Cavendish" Cavendish Capital Markets Ltd
"certificated" or "certificated form" in relation to a share or other security, a share or other security title to
which is recorded in the relevant register of the share or other security as
being held in certificated form (that is, not in CREST)
"Closing Price" the closing middle market price of a TEG Share as derived from the Daily
Official List on any particular date
"Condition" each of the conditions listed in Part A of Appendix 1 and any reference to a
numbered Condition shall be a reference to the Condition set out in the
paragraph of Part A of Appendix 1 bearing such number
"Confidentiality Agreement" the confidentiality agreement dated 8 September 2023 between TCG and TEG
"Cooperation Agreement" the cooperation agreement dated on or around the date of this announcement
between Bidco and TEG
"Court" the High Court of Justice in England and Wales
"Court Meeting" the meeting of TEG Shareholders to be convened at the direction of the Court
pursuant to Part 26 of the 2006 Act at which a resolution will be proposed to
approve the Scheme (with or without amendment), including any adjournment
thereof
"Court Order" the order of the Court sanctioning the Scheme under Part 26 of the 2006 Act
"CREST" the relevant system (as defined in the Regulations) in respect of which
Euroclear UK & Ireland Limited is the Operator (as defined in the
Regulations)
"Daily Official List" the daily official list of the London Stock Exchange
"Dealing Disclosure" an announcement by a party to an offer or a person acting in concert as
required by Rule 8 of the Takeover Code
"Disclosed" the information disclosed by or on behalf of TEG:
(i) in the 2022 TEG Annual Report;
(ii) in the Half Year Results for the six months period ended 2 July 2023;
(iii) in this announcement;
(iv) in any other announcement to a Regulatory Information Service prior to
the publication of this announcement; and
(v) fairly disclosed by or on behalf of TEG in writing (including via the
virtual data room operated by or on behalf of TEG in respect of the
Acquisition) or orally in meetings and calls by TEG management prior to the
date of this announcement to Bidco or Bidco's officers or advisers (in their
capacity as such)
"Disclosure Guidance and Transparency Rules" the Disclosure Guidance and Transparency Rules sourcebook issued by the FCA
"Effective" in the context of the Acquisition: (i) if the Acquisition is implemented by
way of the Scheme, the Scheme having become effective pursuant to its terms;
or (ii) if the Acquisition is implemented by way of the Offer, the Offer
having been declared or having become unconditional in all respects in
accordance with the requirements of the Takeover Code
"Effective Date" the date on which the Acquisition becomes Effective
"FCA" the Financial Conduct Authority or its successor from time to time
"FCA Handbook" the FCA's Handbook of rules and guidance as amended from time to time
"General Meeting" the general meeting of TEG Shareholders to be convened to consider and if
thought fit pass, inter alia, the Resolution(s) (with or without amendment) in
relation to the Scheme including any adjournments thereof
"Gresham" Gresham House Asset Management Ltd
"Harwood" Harwood Capital Management Limited and its group and the funds and accounts it
represents
"Interim Facilities Agreement" the interim facilities agreement dated on or about the date of this
announcement between, amongst others, Neon Finance Limited as original
borrower and Global Loan Agency Services Limited as interim facility agent
incorporating an interim term facility in an aggregate principal amount of
£125 million
"Lazard" Lazard & Co., Limited
"Listing Rules" the rules and regulations made by the FCA under the Financial Services and
Markets Act 2000 (as amended), and contained in the publication of the same
name, as amended from time to time
"London Stock Exchange" the London Stock Exchange plc or its successor
"Long Stop Date" 6 June 2024 or such later date as may be agreed between Bidco and TEG and, if
required, the Panel and the Court may allow
"Market Abuse Regulation" Regulation (EU) 596/2014, as it forms part of domestic law of the United
Kingdom by virtue of the European Union (Withdrawal) Act 2018, as amended from
time to time
"Meetings" the Court Meeting and the General Meeting
"Official List" the Official List of the FCA
"Offer" should the Acquisition be implemented by way of a contractual takeover offer
as defined in Chapter 3 of Part 28 of the 2006 Act, subject to the terms of
the Cooperation Agreement, the offer to be made by or on behalf of Bidco to
acquire the entire issued and to be issued share capital of TEG and, where the
context admits, any subsequent revision, variation, extension or renewal of
such offer
"Offer Document" should the Acquisition be implemented by means of the Offer, the document to
be sent to TEG Shareholders which will contain, amongst other things, the
terms and conditions of the Offer
"Opening Position Disclosure" an announcement pursuant to Rule 8 of the Takeover Code containing details of
interests or short positions in, or rights to subscribe for, any relevant
securities of a party to the Acquisition
"Overseas Shareholders" holders of Scheme Shares who are resident in, ordinarily resident in, or
citizens of, jurisdictions outside the United Kingdom
"Panel" the Panel on Takeovers and Mergers
"PRA" the Prudential Regulation Authority or its successor from time to time
"Registrar of Companies" the Registrar of Companies in England and Wales
"Regulations" the Uncertificated Securities Regulations 2001 (SI2001 No. 3755), including:
(i) any enactment or subordinate legislation which amends or supersedes those
regulations and; (ii) any applicable rules made under those regulations or any
such enactment or subordinate legislation for the time being in force
"Regulatory Information Service" a regulatory information service as defined in the FCA Handbook
"relevant securities" as the context requires, TEG Shares, other TEG share capital and any
securities convertible into or exchangeable for, and rights to subscribe for,
any of the foregoing
"Resolution(s)" the resolution(s) to be proposed at the General Meeting necessary to implement
the Scheme, including, amongst other things, a special resolution proposed in
connection with, inter alia, implementation of the Scheme and certain
amendments to be made to the articles of association of TEG
"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
Offer is sent or made available to TEG Shareholders in that jurisdiction
"Sanction Hearing" the Court hearing to sanction the Scheme
"Scheme" the proposed scheme of arrangement under Part 26 of the 2006 Act between TEG
and the holders of the Scheme Shares, with or subject to any modification,
addition or condition approved or imposed by the Court and agreed by TEG and
Bidco
"Scheme Document" the document to be sent to TEG Shareholders and persons with information
rights containing, amongst other things, the Scheme and notices of the
Meetings
"Scheme Record Time" the time and date to be specified in the Scheme Document, expected to be 6.00
p.m. on the Business Day immediately following the date of the Sanction
Hearing, or such later time as Bidco and TEG may agree
"Scheme Shares" all TEG Shares: (i) in issue at the date of the Scheme Document; (ii) (if
any) issued after the date of the Scheme Document but before the Voting Record
Time; and (iii) (if any) issued at or after the Voting Record Time and before
the Scheme Record Time in respect of which the original or any subsequent
holders thereof are, or shall have agreed in writing to be, bound by the
Scheme
"Slater" Slater Investments Limited
"subsidiary", "subsidiary undertaking" and "undertaking" shall be construed in accordance with the 2006 Act
"Takeover Code" the Takeover Code issued by the Panel on Takeovers and Mergers, as amended
from time to time
"TCG" Trive Capital Group LLC
"TEG" Ten Entertainment Group plc
"TEG Board" or "TEG Directors" the directors of TEG
"TEG Group" TEG and its subsidiary undertakings and where the context permits, each of
them
"TEG Share Plan" the TEG Performance Share Plan adopted on 12 April 2017
"TEG Shareholder(s)" holders of TEG Shares
"TEG Share(s)" the existing unconditionally allotted or issued and fully paid ordinary shares
of 1p each in the capital of TEG and any further shares which are
unconditionally allotted or issued before the Scheme becomes Effective and
"TEG Share" means any one of them
"Trive" Trive Capital Partners LP, acting for and on behalf of the Trive Funds in its
capacity as manager
"Trive Funds" Trive Capital Fund IV LP and Trive Capital Fund IV-A LP
"UK" or "United Kingdom" means United Kingdom of Great Britain and Northern Ireland
"uncertificated" or "in uncertificated form" a share or other security title to which is recorded in the relevant register
of the share or security as being held in uncertificated form, in CREST, and
title to which, by virtue of the Regulations may be transferred by means of
CREST
"U.S." or "United States" means United States of America
"Voting Record Time" the time and date to be specified in the Scheme Document by reference to which
entitlement to vote on the Scheme will be determined
"Wider Bidco Group" Bidco Group and associated undertakings and any other body corporate,
partnership, joint venture or person in which Bidco and such undertakings
(aggregating their interests) have an interest of more than 30 per cent. of
the voting or equity capital or the equivalent
"Wider TEG Group" TEG and associated undertakings and any other body corporate, partnership,
joint venture or person in which TEG and such undertakings (aggregating their
interests) have an interest of more than 30 per cent. of the voting or equity
capital or the equivalent (excluding, for the avoidance of doubt, Bidco and
all of its associated undertakings which are not members of the TEG Group)
References to an enactment include references to that enactment as amended,
replaced, consolidated or re-enacted by or under any other enactment before or
after the date of this announcement.
All references to "pounds", "pounds Sterling", "Sterling", "GBP", "£",
"pence", "penny" and "p" are to the lawful currency of the United Kingdom.
All times referred to are London time unless otherwise stated.
A reference to "includes" shall mean "includes without limitation", and
references to "including" and any other similar term shall be construed
accordingly.
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