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
9 August
2024
RECOMMENDED FINAL* CASH
ACQUISITION
of
Hargreaves Lansdown
plc
by
Harp Bidco Limited
(a newly formed company to
be indirectly
owned by CVC Private Equity Funds, Nordic Capital XI Delta, SCSp
(acting through its general partner, Nordic Capital XI Delta GP
SARL) and Platinum Ivy B 2018 RSC Limited)
to be implemented by means of a scheme
of arrangement
under Part 26 of the Companies Act
2006
Summary
· The
independent directors of Hargreaves Lansdown plc ("HL") and the board of directors of Harp
Bidco Limited ("Bidco") are
pleased to announce that they have reached agreement on the terms
and conditions of a recommended final* cash acquisition by Bidco of the entire issued,
and to be issued, ordinary share capital of HL.
·
Under the terms of the Acquisition, each HL Shareholder will
be entitled to receive:
for each HL Share:
1,140 pence in
cash
comprised of:
·
cash consideration of 1,110 pence per HL Share (the
"Cash Consideration");
and
· a
dividend of 30 pence per HL Share in respect of the Financial Year
ended 30 June 2024 (the "2024
Full-Year Dividend"),
together, the "Cash Offer".
The 2024 Full-Year Dividend is expected to be
paid by HL by no later than the end of November 2024.
· The
Cash Offer values HL's entire issued, and to be issued, ordinary
share capital at approximately £5,443 million on a fully diluted
basis.
· The
Cash Offer represents a premium of approximately:
·
54.1 per cent. to the Closing Price of 740.0 pence per HL
Share on 11 April 2024 (being the last Business Day before the
Consortium's initial approach to the HL Board);
·
48.5 per cent. to the volume-weighted average price of 767.7
pence per HL Share for the three-month period ended 21 May 2024
(being the last Business Day before the commencement of the Offer
Period); and
·
51.7 per cent. to the volume-weighted average price of 751.5
pence per HL Share for the six-month period ended 21 May 2024
(being the last Business Day before the commencement of the Offer
Period).
· The
financial terms of the Cash Offer and the Alternative Offer (as
described below) are final* and will
not be increased or improved, except that Bidco reserves the right
to increase the amount of the Cash Consideration and improve the
financial terms of the Alternative Offer if there is an
announcement on or after the date of this announcement of an offer
or a possible offer for HL by a third party offeror or potential
offeror. Bidco reserves the right to elect to implement the
Acquisition by way of an Offer as an alternative to the Scheme
(with the consent of the Panel (where necessary) and subject
to the terms of the Cooperation Agreement (if
applicable)).
· As
an alternative to the Cash Consideration, eligible HL Shareholders
may elect to participate in the Alternative Offer by exchanging
some or all of their HL Shares for rollover loan notes issued by
Bidco which will, subject to implementation of the Rollover,
ultimately be exchanged for rollover ordinary shares in the capital
of Topco having the rights of "Rollover Shares" set out in the
Topco Articles (as amended from time to time) (the "Rollover Securities"), subject to the
terms and conditions of the Alternative Offer (detailed in
paragraph 12 below). Eligible HL
Shareholders will be able to elect for the Alternative Offer in
relation to some or all of their holdings of HL Shares and will
receive (subject to implementation of the Rollover):
for each HL Share: 1 Rollover
Security
* The
financial terms of the Cash Offer and the Alternative Offer are
final and will not be increased or improved, except that Bidco
reserves the right to increase the amount of the Cash Consideration
and improve the financial terms of the Alternative Offer if there
is an announcement on or after the date of this announcement of an
offer or a possible offer for HL by a third party offeror or
potential offeror. Bidco reserves the right to elect to implement
the Acquisition by way of an Offer as an alternative to the Scheme
(with the consent of the Panel (where necessary) and subject to the
terms of the Cooperation Agreement (if applicable)).
If the Scheme becomes Effective, assuming all
eligible HL Shareholders validly elect to receive consideration by
means of the Alternative Offer in respect of 35 per cent. of their
holdings of HL Shares and no such elections are scaled back as a
result of the US Holders Cap or the Shareholding Cap, following
satisfaction of the Cash Consideration and subject to
implementation of the Rollover, HL Shareholders will hold up to 35
per cent. of the economic rights in Topco. Following the
implementation of the Rollover, Consortium JVCo will subscribe for
Topco A Ordinary Shares (at the same subscription price per share
as Consortium JVCo paid in respect of its subscription for Topco A
Ordinary Shares to fund the payment of the Cash Consideration to HL
Shareholders) for an aggregate subscription amount equal to the
total costs and expenses incurred and to be incurred by or on
behalf of the Topco Group and the Consortium Members in connection
with the Acquisition. This issuance will be implemented on a
non-pre-emptive basis in order to enable the relevant members of
the Topco Group to settle such costs and expenses, meaning that
holders of Rollover Securities will not be entitled to participate
and their economic rights in Topco will therefore be diluted by
such issuance with effect from the Costs Issuance Date. Such
costs and expenses incurred and to be incurred in connection with
the Acquisition are currently expected to be approximately
£100 million, which would result in a limited dilution of
participating HL Shareholders of up to approximately 3 per cent. of
the holding of HL Shareholders who elect to receive the Rollover
Securities. An updated estimate of such costs and expenses will be
included in the Scheme Document.
* The
financial terms of the Cash Offer and the Alternative Offer are
final and will not be increased or improved, except that Bidco
reserves the right to increase the amount of the Cash Consideration
and improve the financial terms of the Alternative Offer if there
is an announcement on or after the date of this announcement of an
offer or a possible offer for HL by a third party offeror or
potential offeror. Bidco reserves the right to elect to implement
the Acquisition by way of an Offer as an alternative to the Scheme
(with the consent of the Panel (where necessary) and subject to the
terms of the Cooperation Agreement (if applicable)).
2024 Full-Year
Dividend
· The
HL Directors have today proposed the 2024 Full-Year Dividend for
the Financial Year ended 30 June 2024. The 2024 Full-Year Dividend
is expected to be paid no later than the end of November 2024 to HL
Shareholders on the register of members of HL at the relevant
record time. If the 2024 Full-Year Dividend is for any reason not
approved by HL Shareholders for payment by reference to a record
date that falls before the Effective Date, the HL Directors expect
to declare the 2024 Full-Year Dividend instead as an interim
dividend payable to HL Shareholders on the register of members of
HL at a record time prior to the Acquisition becoming
Effective.
· HL
Shareholders who are not entitled to receive the 2024 Full-Year
Dividend, including HL Shareholders who are not on the register of
members of HL at the relevant record time in respect of the 2024
Full-Year Dividend, shall receive the Cash Consideration and/or
(subject to implementation of the Rollover) Rollover Securities (if
applicable) only.
Background to and reasons for the
Acquisition
· Bidco
views HL as one of the leading UK investment platforms with an
impressive position and a strong purpose in the attractive UK
wealth market. HL is expected to benefit from numerous tailwinds
over the coming decade, driven by increased individual
responsibility for savings, pension freedom, an aging population,
further digitalisation of the wealth process, the increasing
importance of data, and AI-led activities. At the same time, the
direct-to-consumer market will become significantly more
competitive, driven by a combination of increasing sophistication
of established competitors, technology advancements and new
entrants continuing to disrupt the market.
· Since it
was founded in 1981, HL has built an impressive market position,
widespread brand awareness, trusted position, and high customer Net
Promoter Scores. HL has a strong brand heritage and is operating in
a market where holding one of the leading market positions provides
opportunities for relative outperformance, as well as capitalising
on scale benefits to improve the client proposition, cost-to-serve
and value. Bidco believes that HL is fundamentally well-positioned
to maintain, and build on, its market position to deliver growth
despite increasing competition and other near-term headwinds.
· HL has an
important purpose; making it easy for the UK consumer to save and
invest for a better future. Bidco understands HL has a
responsibility to support clients, throughout their savings
lifetime, be better in managing their financial wealth and enabling
clients to get the right outcomes; regardless of their
accessibility needs.
· Bidco
supports the important role HL plays in promoting savings and
investing in society and believes that a substantial transformation
is required to accelerate the delivery of these objectives for HL's
clients. The ambition of this transformation is to give more retail
investors in the UK access to the tools, information and services
required to make sound investment decisions, combined with a
transparent approach and good value in line with Consumer Duty.
· A
transformation of the scale Bidco envisages as appropriate requires
investment, in particular in the technology platform to position HL
to offer its clients user-friendly digital channels, inspiring
client journeys (both online and through the Helpdesk) and
differentiated financial products. Further investment by Bidco in
the technology platform is expected to improve operational
resilience, enhance capacity in systems, and deliver significant
scalability and operating leverage in its cost base going
forward.
· HL will
be repositioned and further strengthened by the transformation.
However, to deliver such a transformation, it will require change,
investment, time to implement fully and time for the benefits to be
reflected in the future financial performance of HL. As a result,
Bidco believes HL will be able to execute more effectively,
accelerate implementation and deliver the growth potential of its
transformation plan better as a private company without all the
requirements of a public company.
· CVC
Private Equity Funds, Nordic Capital and Platinum Ivy (a
wholly-owned subsidiary of ADIA, managed by ADIA PED) and its
affiliates each have a strong track record of deploying capital,
expertise in successfully accelerating and delivering complex
transformations and extensive experience in investing across
regulated financial services companies globally and in the UK. With
their investment and detailed engagement through Bidco, CVC Private
Equity Funds, Nordic Capital and Platinum Ivy and its affiliates
will leverage their highly relevant experience and capabilities
developed through prior investments, including Nordic Capital's
investment in Nordnet, the digital savings and
investment platform in the Nordics. CVC Private Equity Group,
Nordic Capital and Platinum Ivy believe that, following the
completion of the Acquisition, they will be able to accelerate and
enhance the transformation of HL as a private company for the
benefit of clients, employees and other stakeholders.
HL recommendation
· The
HL Independent Directors, who have been so advised by Fenchurch,
Barclays, Deutsche Numis and Morgan Stanley as to the financial
terms of the Cash Offer, consider the terms of the Cash Offer to be
fair and reasonable. In providing their financial advice to the HL
Independent Directors, Fenchurch, Barclays, Deutsche Numis and
Morgan Stanley have taken into account the commercial assessments
of the HL Independent Directors. Fenchurch is providing independent
financial advice to the HL Independent Directors for the purposes
of Rule 3 of the Takeover Code.
·
Accordingly, the HL Independent Directors intend to
unanimously recommend HL Shareholders to vote in favour of the
Scheme at the Court Meeting and the Resolutions at the General
Meeting as they have irrevocably undertaken to do in respect of
their own HL Shares (representing, in aggregate, approximately 0.01
per cent. of the issued ordinary share capital of HL as at 8 August
2024, being the last Business Day before the date of this
announcement).
· Bidco and
the Consortium are also separately making the Alternative Offer.
The HL Independent Directors have reviewed the terms of the
Alternative Offer, but for the reasons described in the following
announcement, the HL Independent Directors are unable to form a
view as to whether or not the terms of the Alternative Offer are
fair and reasonable and accordingly are not making any
recommendation to holders of HL Shares in relation to the
Alternative Offer. In reviewing the terms of the Alternative Offer
proposed by Bidco and the Consortium, the HL
Independent Directors, Fenchurch, Barclays, Deutsche Numis and
Morgan Stanley have identified certain key disadvantages and
advantages of electing for the Alternative Offer which are set out
in further detail in paragraph 4 of the following announcement.
HL Shareholders are strongly encouraged to take into account
such disadvantages and advantages, as well as a number of
investment considerations and risk factors outlined in paragraph 14
of the following announcement and their particular
circumstances, when deciding whether to elect for the Alternative
Offer in respect of some or all of their HL
Shares.
· Further
details of the Alternative Offer are set out in paragraphs 12, 13
and 14 of the following announcement and in Appendix 4
below.
Background to and reasons for the
recommendation
HL Group context
· Founded
in 1981, HL is the largest and one of the longest-standing Direct
to Consumer (D2C) investment platforms in the growing UK wealth
management market, with a large and loyal client base, a strong and
trusted brand, and a broad range of products and services that
cater for every life stage.
· HL has a
clear ambition to provide its clients with the best savings and
investment platform to help them to achieve their financial goals.
The Independent HL Board believes that achieving this ambition will
enable HL to remain the UK's largest savings and investment
platform, grow its client base, and capture the significant
long-term opportunity in the wealth and savings market.
· Since
HL's shares were admitted to the London Stock Exchange in May 2007,
HL's AuA has grown from £10.2 billion as at 30 June 2007 to £155.3
billion as at 30 June 2024 and active clients have increased from
218,000 to almost 1.9 million over the same period. HL's current
Net Promoter Score, which stands at +44, is strong positive
evidence of its ability to attract and retain customers in the
market.
· The
Independent HL Board believes that HL is well positioned to benefit
from market growth in future years. HL's ambition to help clients
invest and achieve their financial goals is fully aligned with a
broader UK political and regulatory focus on addressing the UK
'savings gap' and delivering better client outcomes. An improved UK
macroeconomic outlook, following a period of extreme shocks
including Covid and the negative impact of global conflicts on
broader market confidence, is expected to have a positive impact on
HL's business, specifically on client inflows and retention over
the medium term.
· The
improving macroeconomic backdrop and the execution of HL's stated
strategy are, together, delivering early signs of improvement in
the business against the challenges faced in recent periods as
demonstrated in HL's most recent trading updates, including in its
preliminary results for FY 2024 announced today, which set out:
· net
new business of £1.6 billion for Q4 2024, driving record closing
AuA of £155.3 billion;
·
total revenue of £764.9 million, up 4 per cent. compared to
FY 2023;
·
underlying costs of £338.5 million, up 8 per cent. compared
to FY 2023, slightly below guidance; and
·
underlying profit before tax of £456.0 million, up 4 per
cent. compared to FY 2023.
· At the
same time, the Independent HL Board recognises that the market has
evolved significantly in recent years and expects this rate of
transformation to continue, with:
· an
increasingly competitive market environment, with existing D2C
market participants investing significantly in price and
proposition, the entrance of large international groups into the UK
investment platform market, digital-led Fintech providers launching
low cost wealth propositions, and increasing strategic focus on
wealth management by certain UK retail banks, life insurers and
asset managers;
· a
changing regulatory environment including greater regulatory focus
on UK wealth participants (e.g., implementation of the Consumer
Duty framework in July 2023), in turn driving increased associated
resource requirements and costs; and
· an
evolution in client behaviours and expectations relating to digital
engagement and personalised services, requiring increasing and
ongoing investment in HL's client proposition, digital capabilities
and underlying technology.
· Following
Dan Olley's appointment as HL's CEO in August 2023, HL commenced a
comprehensive business-wide review of the progress and strategic
direction of the HL Group, its overall performance and its client
value proposition. Based on early observations, HL's CEO set
initial priorities to focus the business and start to accelerate
the transformation while this review was carried out. At HL's
interim results in February 2024, HL's CEO laid out the evolved
strategy, some initial findings from the review and how these had
now been included into the organisation's transformation
programme.
Conclusions from the
review
· HL
undertook to update the market further at its FY 2024 results in
August 2024 irrespective of the Cash Offer from the Consortium.
With the business-wide review now complete, HL is therefore
updating the market on its key findings, as set out below:
·
Fundamental Strengths -
With its more than 40-year heritage and a strong sense of purpose,
HL already has many of the foundational elements in place to
execute on its strategy. As set out by the CEO at HL's interim
results in February 2024, HL is distinguished by the strength of
its culture and the dedication of its colleagues, its strong sense
of purpose and its clear focus on serving clients every day.
More specifically, HL benefits from a strong
and trusted brand, having been rated the #1 classic investment
platform by Boring Money in 2023 and is recognised by more than 30
per cent. of adults in the UK. HL has a client-first service-led
approach embedded throughout its culture and embodied by over 2,400
colleagues serving a large, diverse and loyal base of almost 1.9
million clients - the largest client base of any wealth manager in
the UK. Together with one of the broadest ranges of products and
services in the UK savings and investment market including over
14,000 different investment options, HL is able to cater for
clients across every life stage.
Building on these key strengths and with the
benefit of a strong and robust balance sheet and predictable cash
flow, the review has confirmed that HL is therefore especially well
placed to take advantage of the clear opportunity ahead in the UK's
large and growing savings and investment market.
·
Client Engagement &
Retention - Despite a long term track record of growth in an
increasingly competitive environment, HL has been growing at a
slower pace over several years as set out in HL's 2024 interim
results. This is primarily driven by reducing asset and client
retention rates. Analysis has demonstrated that once key service
issues had been addressed as a reason for attrition, outflows are
now largely being driven by specific factors including friction and
gaps in the digital experience and certain aspects of the client
value proposition, which have remained largely unchanged since
2017. This is in the context of an increasingly competitive
environment where, in areas, competitors are now offering
propositions approaching that currently offered by HL and at lower
cost as a result of ongoing revenue investment.
o Net new business has
reduced from £8.7 billion in FY 2021 to £4.2 billion in FY 2024,
reflecting declining client and asset retention rates, which have
fallen from 92.1 per cent. to 91.4 per cent. and 91.4 per cent. to
88.5 per cent. respectively over the same time period.
o Investment is
required in both the digital experience and the overall client
value proposition, including revenue investment, to address this
declining retention.
·
Client Acquisition - Whilst
HL's strong and established brand generates consistently strong
inflows, HL's marketing approach has not reflected industry trends
towards digital and performance marketing. Use of social media
channels has been limited, as is the ability to target new
archetype clients, which requires more sophisticated data-driven
marketing capabilities.
o While HL continues to
attract new and younger clients, the level of gross new inflows it
is able to attract in the platform from new clients each year has
dropped by 35 per cent. since FY 2021.
o HL needs to
significantly evolve its marketing capability and approach to
achieve new target client acquisition at lower cost.
·
Client Service -
Best-in-class service from experienced and knowledgeable colleagues
is an essential element of HL's proposition. Whilst service levels
have stabilised since the decline seen in FY 2023, further work is
required to bring service levels back to the consistently high
standards expected by HL's clients.
o HL's monthly Net
Promoter Score declined to a low of +33 during the 2023 tax year
end, reflecting challenges associated with Helpdesk capacity and
call volumes. With a clear focus on resetting service levels in FY
2024, HL's Net Promoter Score has ranged between a monthly level of
+40 and +48 in the last quarter, which demonstrates good progress
but HL's management are seeking to target a Net Promoter Score of
50+ on a consistent basis.
o HL needs to improve
and extend its service proposition to ensure a consistent
best-in-class client experience.
·
Operational Transformation &
Cost Efficiency - HL's highly manual processes and legacy
technology systems need to be addressed as they are directly
driving headcount growth and increased compliance controls,
regulatory reporting and monitoring leading to increased cost to
serve as client and asset numbers grow. These manual processes and
systems have led to increased complexity, increased error rates
and, at times, reduced client experience. Whilst the need for
change in this regard has been clear for some time, progress in
delivering this transformation has been limited as a result of the
execution and delivery approach adopted by the business.
o HL's underlying cost
growth to date, which has exceeded revenue and AuA growth, with
cost to serve increasing from 22.3 bps to 23.7 bps from FY 2021 to
FY 2024.
o HL needs to
accelerate delivery of its transformation programme to improve the
client experience, build scale and enhance efficiency, driving a
different cost trajectory.
·
Colleague Engagement - HL's
latest colleague survey results reflected the limited progress that
had been made historically in addressing manual processes and
legacy technology, siloed working practices and inconsistent
strategic priorities. It was also clear that the organisation had
experience and capability gaps in key areas required to deliver the
strategy.
o HL's colleague
engagement score has been below management's expectations at 62 per
cent. today versus a target of 70 per cent.+.
o HL needs to evolve to
a focused client and outcome-based performance culture and embed
new ways of working (e.g., cross functional delivery teams) to help
to accelerate the pace of delivery across the
organisation.
·
Investment Spend - HL
identified the need to invest in a major multi-year transformation
programme in 2022 to enhance its proposition, automate and scale
its processes, and update its legacy technology. This programme was
expected to conclude in FY 2026. HL is now two years into this
investment programme and, whilst good progress has been made in
certain areas (e.g., new HLFM fund launches have been successful,
and the evolution of Active Savings has led to significant growth
in both AuA and margin), progress has been less tangible to date in
regard to operational automation and the evolution of its
technology platform.
o A change in
technology leadership and operating model was required; this has
taken place during FY 2024 with the technology function now
directly aligned and integrated with the business structure and a
new function established to manage the delivery of large
cross-functional transformation programmes.
o Certain business
automation and transaction processing programmes have been reset to
address an extended scope including revised regulatory
requirements; the completion date for these programmes has been
extended as a result.
o The programme to
support the Advice offering has been reset and a £14.4 million
impairment recognised in HL's FY 2024 Interim Results.
o As a fintech, HL's
operating cost base is now planned to include costs associated with
having the capability to deliver propositional development and
improvement on a continuous basis without the need for additional
or catch up significant one-off investment spend.
· HL needs
to complete its investment programme to achieve the benefits
outlined above, which is still expected to be delivered within the
total investment spend of £225 million announced in February 2022
(£175 million of strategic spend and £50 million of dual running
costs) but with completion of specific programmes extending into FY
2027. Any further material capital investment would only be
incurred to drive innovation and step change business efficiency
opportunities, measured against specific investment return
criteria.
Go-forward strategy
· HL has a
clear and refreshed strategy, which the Independent HL Board is
confident will deliver over the longer term, with good progress
already made against the initial priorities identified in FY 2024.
The refreshed strategy comprises five strategic priorities intended
to address the findings from the review, consistent with the
priorities set out at HL's interim results in February 2024:
(1)
Transform the investing experience: Removing
jargon, terminology and complexity and making it easy for its
clients to set their financial goals and work towards achieving
them with minimum effort and fuss. A key focus will be improving
HL's digital experience and proposition as well as evolving its
marketing capability.
(2)
Combine the best of colleague and digital capability:
Bringing together the deep experience of HL's colleagues with
advances in AI and other digital technologies to serve clients on
their terms. HL will continue to invest in its employees and
technology to deliver a service continuum from DIY investing to
full financial advice.
(3)
Leverage economies of scale to drive client value:
Decoupling cost from growth through the successful
implementation of HL's transformation programme enabling greater
process simplification, automation and standardisation, alongside
agile ways of working to enhance efficiency and increase delivery
pace. Through HL's 'Save to Invest' philosophy, cost benefits
realised are intended to moderate future cost growth and fund the
capability for continuous and ongoing investment in the client
proposition.
(4)
Responsible and resilient business: Continuing
to invest to provide the robust, resilient and available services
expected from the UK's largest retail investment platform enabled
by the migration of HL's data centre to the cloud and the
transition off core legacy systems to modern architecture. HL
intends to ensure its operating model is resilient and compliant by
design, with risk and compliance requirements assessed during
development and embedded into systems and processes.
(5)
Great people, great culture: Attracting top
talent to drive focus, pace and performance, building on a strong
set of values centred around putting clients first. HL is focused
on enhancing its performance culture to align the organisation to
the refreshed strategy and its successful
implementation.
Conclusions on the Cash
Offer
· Although
it is still early in the execution of this refreshed strategy, the
Independent HL Board has been pleased with the progress made by the
new management team to date, with some tangible results visible in
HL's preliminary FY 2024 results. The Independent HL Board has
confidence in HL's ability over time to deliver on its strategic
ambition to transform the business and maintain its market position
in the face of the evolving market dynamics and create shareholder
value over the medium to longer term.
· At the
same time, the Independent HL Board is cognisant that delivery of
HL's core priorities involves significant change across significant
parts of its business, coupled with on-going investment over the
medium term as set out above. As with any transformation of this
complexity, there is significant execution risk over the
short-to-medium term given the duration and scale of the actions
required to deliver the strategy. Combined with a dynamic
competitive and regulatory environment, the realisation of the
associated benefits and the timeframe for doing so involves an
inherent level of uncertainty and delivery which is unlikely to be
linear over the medium term.
· In
assessing and recommending the Cash Offer, the Board has carefully
considered the following matters:
1) the opportunities and continued
execution risks associated with the transformation and the delivery
of HL's strategy;
2) the duration, scale and
comprehensive level of change required for the business to address
fully the findings of the review as outlined above;
3) the considerable investment into
the HL proposition identified as part of the business-wide review -
combining revenue investment alongside previously announced
strategic investment - to support long-term client and asset
retention, as well as the impact of this revenue investment, which,
were it to be implemented, would be expected to be largely
mitigated through a combination of asset growth, and both lower
cost growth and a return to pre-Covid platform asset retention
levels over the medium term; and
4) the external risks facing HL,
including an increasingly competitive market backdrop and the
evolving regulatory environment.
· The
Independent HL Board considers it is important for HL Shareholders
to take these matters into account when evaluating the Acquisition.
In that context, the Independent HL Board believes the Cash Offer
represents an attractive opportunity for HL's shareholders to
realise an immediate and certain cash value today for their
investment at a level which may not be achievable until the
execution of the strategy is delivered over the medium to longer
term, with that execution subject to a wide range of potential
outcomes.
· At 1,140
pence per HL Share, the Cash Offer represents a premium of
approximately:
·
54.1 per cent. to the Closing Price of
740.0 pence per HL Share on 11 April 2024 (being
the last Business Day before the Consortium's initial approach to
the HL Board);
·
48.5 per cent. to the volume-weighted average price of 767.7
pence per HL Share for the three-month period ended 21 May 2024
(being the last Business Day before the commencement of the Offer
Period); and
·
51.7 per cent. to the volume-weighted average price of 751.5
pence per HL Share for the six-month period ended 21 May 2024
(being the last Business Day before the commencement of the Offer
Period).
· In
addition, the Independent HL Board notes the Consortium's history
of investing in UK and European financial services businesses,
including wealth management, and the expertise they bring to help
develop HL's client proposition. The Independent HL Board believes
that this expertise has the potential to enable an accelerated
transformation aligned with HL's strategy to transform the
investing experience and create the best savings and investment
platform for its clients. Should the Acquisition become Effective,
HL's management would work alongside the Consortium on the
strategic direction of the HL Group and execution of the associated
strategy.
· In
reaching its decision, the Independent HL Board has also taken into
account the Consortium's other stated intentions for the business,
management, employees and other stakeholders of HL.
·
Accordingly, following careful consideration with its financial
advisers, the Independent HL Board intends unanimously to recommend
the Cash Offer to HL Shareholders.
Irrevocable undertakings and non-binding
written confirmations of intent
·
Bidco has received irrevocable undertakings from the HL
Independent Directors who hold HL Shares and from Adrian Collins,
the director of HL appointed following nomination by Peter
Hargreaves pursuant to the terms of the shareholder agreement
between Peter Hargreaves and HL dated 20 October 2020, to
vote (or, where applicable, procure voting) in favour of the Scheme
at the Court Meeting and the Resolutions at the General Meeting
(or, in the event that the Acquisition is implemented by way of an
Offer, to accept or procure acceptance of such Offer), in respect
of, in aggregate 82,129 HL Shares (representing approximately 0.02
per cent. of the existing issued ordinary share capital of HL as at
8 August 2024, being the last Business Day before the date of this
announcement). These undertakings will remain binding in the event
that a higher competing offer for HL is made.
· In
addition to the irrevocable undertakings given by the HL
Independent Directors and Adrian Collins as set out above, Bidco
has also received an irrevocable undertaking from Peter
Hargreaves to vote (or, where applicable, procure voting) in
favour of the Scheme at the Court Meeting and the Resolutions at
the General Meeting (or, in the event that the Acquisition is
implemented by way of an Offer, to accept or procure acceptance of
such Offer) in respect of a total of 93,838,474 HL Shares
(representing approximately 19.8 per cent. of the existing issued
ordinary share capital of HL as at 8 August 2024, being the last
Business Day before the date of this announcement), and to elect to
receive (i) the Cash Consideration in respect of 50 per cent. of
his HL Shares and (ii) the Alternative Offer in respect of
the remaining 50 per cent. of his HL Shares. The undertaking
will remain binding in the event that a higher competing offer for
HL is made.
·
Stephen Lansdown has also provided a non-binding written
confirmation of intent to vote in favour of the Scheme at the Court
Meeting and the Resolutions at the General Meeting (or, in the
event that the Acquisition is implemented by way of an Offer, to
accept such Offer) and to elect to receive
the Cash Consideration in respect of all of his
HL Shares being a total of 27,087,419 HL Shares (representing approximately 5.7 per cent.
of the existing issued ordinary share capital of HL as
at 8 August 2024, being the last Business Day before the date of
this announcement).
·
Bidco has, therefore, received irrevocable undertakings and
non-binding written confirmations of intent in respect of a total
of 121,008,022 HL Shares (representing approximately 25.5 per cent.
of the existing issued ordinary share capital of HL as at 8 August
2024, being the last Business Day before the date of this
announcement).
·
Further details of these irrevocable undertakings and
non-binding written confirmations of intent, including the
circumstances in which the irrevocable undertakings may lapse or
cease to be binding, are set out in
Appendix 3 to this announcement.
Information on Bidco and the
Consortium
·
Bidco is a private limited company formed for the purposes of
the Acquisition. As at the Effective Date and prior to
implementation of the Rollover, it is intended that Bidco will be
indirectly owned in equal shares by: (i) CVC Private Equity Funds;
(ii) Nordic Capital Vehicles; and (iii) Platinum Ivy.
· The
CVC Group is a leading global private markets
manager with a network of 29 offices throughout EMEA,
the Americas, and Asia, with approximately €193 billion of assets
under management. The CVC Group has seven complementary strategies
across private equity, secondaries, credit and infrastructure, for
which vehicles in the CVC Group have secured commitments of
approximately €235 billion from some of the world's leading pension
funds and other institutional investors. CVC Private Equity Funds
have invested in over 130 companies worldwide (which have combined
annual sales of approximately €155 billion and employ more than
600,000 people). CVC Private Equity Group has a repeatable
approach to value creation, partnering with the best management
teams to drive operational efficiency and reinvest for growth.
Since 2008, CVC Private Equity Funds have made 15 financial
services investments spanning the globe. CVC Private Equity Funds
invest regularly in regulated financial services businesses, being
current investors in several companies regulated by the FCA, PRA
and/or Lloyd's of London, and has a strong regulatory reputation
and track record.
·
Nordic Capital is a leading sector-specialist private equity
investor with approximately €31 billion of assets under management
and invests in selected sectors and companies in Northern Europe
and North America, offering partnership, deep sector knowledge,
capital and experience to drive sustainable growth. Since its
founding over 35 years ago, the Nordic Capital Vehicles have
invested in over 145 companies with an ambition to create long-term
sustainable value through active ownership. Nordic Capital focuses
on sectors where it has deep experience and a proven history such
as Healthcare, Technology & Payments, Financial Services and
Services & Industrial Technology and its portfolio has a
combined annual sales of around €18 billion and employs more than
80,000 people. Nordic Capital is one of the most experienced
private equity investors in Financial Services in Northern Europe
with a dedicated Financial Services team and has completed over 18
financial services and financial technology transactions over the
last six years including Nordnet, Ascot Lloyd, Max Matthiessen and
Qred.
·
Platinum Ivy is a wholly-owned subsidiary of ADIA, managed by
ADIA PED. ADIA is a globally-diversified investment institution
that prudently invests funds on behalf of the Government of Abu
Dhabi through a strategy focused on long-term value creation. ADIA
PED is an investment department of ADIA. ADIA manages a substantial
global diversified portfolio of investments, with assets under
management in excess of US$100 billion of which ADIA PED represents
between 10-15 per cent. ADIA is a long term, value driven investor,
mandated to build value in a systematic and structured
manner.
Information on HL
· HL
is the UK's largest savings and investment platform and the UK's
biggest retail stockbroker, with almost 1.9 million clients and
£155.3 billion savings and investments. For over 40 years, from its
Bristol headquarters, it has helped clients improve their financial
futures. Its purpose is making it easy to save and invest for a
better future, which it does via an easy-to-use platform and broad
proposition supporting clients' financial needs across their
lifetime.
·
HL's award-winning digital platform gives clients access to a
broad range of savings and investment solutions and products to
manage their finances and facilitate their investment goals. This
includes a full suite of tax-efficient lifetime pension investment
solutions; a comprehensive investment proposition; and a cash
management platform, Active Savings, with access to highly
competitive savings rates and the ability to spread cash savings
across providers, maturities and accounts.
·
Finally, HL's funds provide clients with a range of options,
from simple solutions (Ready Made) for low confidence clients,
through to single asset funds that invest into tailored mandates,
depending on clients' risk profiles.
· HL
provides its services via four channels: Direct to Consumer through
the app or website; Helpdesk, via phone or email; Financial Advice;
and Workplace, HL's B2B arm, offering variety of services adjacent
to its core pension proposition.
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 Scheme will be put to HL Shareholders at the Court
Meeting and the Resolutions will be put to HL Shareholders at the
General Meeting. The Court Meeting and the General Meeting are
required to enable HL 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 Scheme
Shareholders, present and voting and entitled to vote at the Court
Meeting, whether in person or by proxy, representing 75 per cent.
or more in value of the Scheme Shares held by such Scheme
Shareholders;
· the
Resolutions include a special resolution in connection with
implementing the Scheme which must be passed by HL Shareholders
representing at least 75 per cent. of the votes cast at the General
Meeting; and
·
following the Meetings, the Scheme must be sanctioned by the
Court.
· The
Acquisition is subject to the satisfaction or, where applicable,
waiver of the Conditions. 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. The Conditions
include the receipt of regulatory approvals, including: (i) the
receipt or waiver of China Antitrust Clearance, EU Antitrust
Clearance, Swiss Antitrust Clearance, Turkish Antitrust Clearance
and UK Antitrust Clearance; and (ii) the receipt of approval of the
change in control of certain regulated entities within the HL Group
by the FCA (or it otherwise being regarded under FSMA as having
approved the same), each as further described in this
announcement.
· 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
and the Form of Election, will be published as soon as practicable
and in any event within 28 days of this announcement (or such later
time as HL, 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 following publication on HL's website at
www.hl.co.uk/investor-relations.
· The
Acquisition is currently expected to complete during the first
quarter of 2025, 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, Alison Platt,
the Chair of HL,
said:
"HL is on an
important journey to transform the saving and investing experience
for clients and make it easy to save and invest for a better
future.
While the
Independent HL Board has been pleased with the progress made by the
new management team, the Independent HL Board believes that the
Cash Offer represents an attractive opportunity for HL Shareholders
to realise an immediate and certain cash value for their investment
at a level which may not be achievable until the execution of the
strategy is delivered over the medium to longer term, and therefore
intends to unanimously recommend HL Shareholders vote to approve
it.
We are
pleased to see that the Consortium is aligned that
HL has
an important purpose making it easy for the UK consumer to save and
invest for a better
future."
·
Commenting on this announcement, Pev Hooper, Managing Partner
at CVC Private Equity Group, Emil Anderson, Partner at Nordic
Capital Advisors and Hamad Shahwan Aldhaheri, Executive Director of
the Private Equities Department at ADIA said:
"HL has an
important purpose: to make it easy for people to save and invest
for a better future. Over the 40 years since it was founded, HL has
built a strong, trusted brand, underpinned by high levels of
customer loyalty and advocacy. As a consortium, we are aligned with
management that, despite these strengths, the company now requires
substantial investment in an extensive technology-led
transformation to improve HL's proposition and resilience, and to
drive the next phase of HL's growth and
development.
The
Consortium brings extensive experience in supporting businesses
undergoing transformation, and its members have long records of
investing in regulated financial services companies to build better
businesses and create better customer
experiences.
We look
forward to partnering with HL's management to accelerate its
transformation plan - including investment in technology
infrastructure, digital channels, and service enhancement - all
with client value, service, speed of innovation, and HL's clear
purpose at the core."
This summary
should be read in conjunction with, and is subject to, the full
text of this announcement (including its Appendices). The
conditions to, and certain further terms of, the Acquisition are
set out in Appendix 1 and will be set out in full in the Scheme
Document. The bases and sources for certain financial information
contained in this summary and this announcement are set out in
Appendix 2. Details of the irrevocable undertakings and non-binding
written confirmations of intent received by Bidco are set out in
Appendix 3. Details of Topco and the Rollover Securities are set
out in Appendix 4. Certain definitions and terms used in this
announcement are set out in Appendix 5.
Enquiries
CVC Private
Equity Group
Carsten Huwendiek
Nick Board
|
+44 (0) 20
7420 4200
|
Nordic
Capital
Elin Ljung (of Nordic Capital
Advisors)
|
+46 8 440
5050
|
Platinum
Ivy
Garry Nickson
|
+971 2 415
0000
|
Goldman Sachs International (Financial Adviser to
Bidco and the Consortium)
Mark Sorrell
Nick Harper
James Lucas
Cara Pazdon
Camila Rodriguez-Bedoya
|
+44 (0) 20
7774 1000
|
FGS
Global (PR Adviser to Bidco and the Consortium)
Guy Lamming
Mike Turner
Anjali Unnikrishnan
|
+44 (0) 20
7251 3801
|
Hargreaves
Lansdown
James Found, Head of Investor
Relations
Lucy Thomas, Corporate Affairs
Director
|
+44 (0) 7970 066
634
+44 (0) 7779 639
460
|
Fenchurch
Advisory Partners (Lead Financial Adviser to
HL)
Kunal Gandhi
Rob Williams
Graham Marchant
Josh Needham
|
+44 (0) 20 7382
2222
|
Barclays Bank
PLC, acting through its Investment Bank (Joint Financial Adviser
and Corporate Broker to
HL)
Alisdair Gayne
Adrian Beidas
Richard Bassingthwaighte
Callum West
|
+44 (0) 20 7623
2323
|
Deutsche Numis
(Joint Financial Adviser and Corporate Broker to
HL)
Charles Farquhar
Daniel Werchola
Derek Shakespeare
Rajesh Iyer
|
+44 (0) 20 7260
1000
|
Morgan Stanley
& Co. International plc (Special Financial Adviser to the
Independent HL Board)
Gillian
Sheldon
Ben Grindley
Adrian Doyle
Nishil Bhagani
|
+44 (0) 20 7425
8000
|
Brunswick (PR
Adviser to
HL)
Nick Cosgrove
Joanna Donne
|
+44 (0) 20 7404
5959
|
Kirkland & Ellis International LLP is
acting as legal adviser to Bidco and Nordic Capital XI Delta.
Latham & Watkins (London) LLP is acting as legal adviser to
CVC. Linklaters LLP is acting as legal adviser to Platinum
Ivy.
Freshfields Bruckhaus Deringer LLP is acting as
legal adviser to HL.
Further information
Goldman Sachs
International ("Goldman
Sachs"), which is authorised by the PRA and regulated by the
FCA and the PRA in the United Kingdom is acting exclusively for
Bidco and the Consortium as financial advisers and no one else in
connection with the Acquisition and other matters set out in this
announcement and will not be responsible to anyone other than Bidco
and the Consortium for providing the protections afforded to
clients of Goldman Sachs, nor for providing advice in connection
with the Acquisition, the content of this announcement or any
matter referred to herein. Neither Goldman Sachs nor any of Goldman
Sachs' subsidiaries, affiliates or branches owes or accepts any
duty, liability or responsibility whatsoever (whether direct,
indirect, consequential, whether in contract, in tort, under
statute or otherwise) to any person who is not a client of Goldman
Sachs in connection with this announcement, any statement contained
herein or otherwise.
Fenchurch
Advisory Partners LLP ("Fenchurch"), which is authorised and
regulated in the United Kingdom by the FCA, is acting exclusively
for HL and no one else in connection with the Acquisition described
in this announcement and accordingly will not be responsible to
anyone other than HL for providing the protections afforded to its
clients nor for providing advice in relation to the matters
described in this announcement.
Barclays Bank
PLC ("Barclays"), acting
through its Investment Bank, is authorised by the PRA and regulated
in the United Kingdom by the FCA and the PRA, is acting exclusively
for HL and no one else in connection with the subject matter of
this announcement and will not be responsible to anyone other than
HL for providing the protections afforded to clients of Barclays
nor for providing advice in relation to the Acquisition, the
content of this announcement or any other matter referred to in
this announcement.
Numis
Securities Limited ("Deutsche
Numis"), which is authorised and regulated in the United
Kingdom by the FCA, is acting exclusively for HL and no one else in
connection with the matters set out in this announcement and will
not regard any other person as its client in relation to the
matters in this announcement and will not be responsible to anyone
other than HL for providing the protections afforded to clients of
Deutsche Numis, nor for providing advice in relation to any matter
referred to herein. Neither Deutsche Numis nor any of its
affiliates (nor any of their respective directors, officers,
employees or agents), owes or accepts any duty, liability or
responsibility whatsoever (whether direct or indirect, whether in
contract, in tort, under statute or otherwise) to any person who is
not a client of Deutsche Numis in connection with this
announcement, any statement contained herein or
otherwise.
Morgan
Stanley & Co. International plc ("Morgan Stanley") which is authorised by
the PRA and regulated by the FCA and the PRA in the United Kingdom
is acting as special financial adviser exclusively for the
Independent HL Board and no one else in connection with the matters
contained in this announcement Morgan Stanley, its affiliates and
their respective directors, officers, employees and agents will not
regard any other person as their client, nor will they be
responsible to any person other than the Independent HL Board for
providing the protections afforded to clients of Morgan Stanley or
for providing advice with the matters contained in
this announcement or any other matter referred to
herein.
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 HL in any jurisdiction in
contravention of applicable law. The Acquisition will be made
solely by means 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). HL and Bidco
encourage HL Shareholders to read the Scheme Document
when it becomes available because it will contain important
information relating to the Acquisition.
This
announcement does not constitute a prospectus, prospectus
equivalent document or exempted document.
This
announcement contains inside information in relation to HL for the
purposes of Article 7 of the Market Abuse Regulation. The person
responsible for arranging the release of this announcement on
behalf of HL is Claire Chapman, Group General Counsel and Company
Secretary. HL's Legal Entity Identifier is
2138008ZCE93ZDSESG90.
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 FSMA 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 (including the Alternative Offer)
to HL 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. In particular, the
ability of persons who are not resident in the UK to vote their HL
Shares with respect to the Scheme at the Court Meeting, or to
appoint another person as proxy to vote at the Court Meeting on
their behalf, may be affected by the laws of the relevant
jurisdictions in which they are located. Persons who are not
resident in the UK should inform themselves of, and observe, any
applicable legal or regulatory requirements of their jurisdictions.
To the fullest extent permitted by applicable law, the companies
and persons involved in the Acquisition (including the Alternative
Offer) disclaim any responsibility or liability for the violation
of such restrictions by any person.
Unless
otherwise determined by Bidco or required by the Takeover Code, and
permitted by applicable law and regulation, the Acquisition
(including the Alternative Offer) will not be made available, in
whole or in part, directly or indirectly, in, into, from, 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 where to do so would violate the laws in
that jurisdiction and no person may vote in favour of the Scheme by
any such use, means, instrumentality or from within a Restricted
Jurisdiction or any other jurisdiction if to do so would constitute
a violation of the laws of that jurisdiction. Copies of this
announcement and any formal documentation relating to the
Acquisition (including the Alternative Offer) 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 them 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 (including
the Alternative Offer) may not be made directly or indirectly, in,
into, from, 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 (including the Alternative Offer) may not be capable of
acceptance by any such use, means, instrumentality or facilities or
from within any Restricted Jurisdiction.
HL
Shareholders should be aware that the transaction contemplated
herein may have tax consequences and that such consequences, if
any, are not described herein. HL Shareholders are urged to consult
with appropriate legal, tax and financial advisers in connection
with the consequences of the Acquisition (including any election
for the Alternative Offer) on them. It is intended that the Bidco Rollover
Securities, Finco Rollover Securities, Midco 2 Rollover Securities
and Midco 1 Rollover Securities constitute non-qualifying corporate
bonds for holders of such securities who are UK tax resident
individuals.
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.
HL Shareholders
The
Acquisition relates to the shares of an English company with a
listing on the London Stock Exchange and is being made by means of
a scheme of arrangement provided for under English law. A
transaction effected by means of a scheme of arrangement is not
subject to the tender offer or proxy solicitation rules under
the US
Exchange Act.
Accordingly, the Scheme is subject to the disclosure requirements
and practices applicable in the UK to takeover offers and 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 U.S.,
such Offer
will be made in compliance
with applicable U.S. laws and regulations.
It may be
difficult for US holders of HL Shares to enforce their rights and
any claim arising out of U.S. federal laws, since Bidco and HL 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.
US holders of HL 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 US
Exchange Act, Bidco, its nominees or its brokers (acting as
agents), may from time to time make certain purchases of, or
arrangements to purchase, HL 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 US Exchange Act,
Goldman Sachs will continue to act as an exempt principal trader in
HL 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 UK, will be reported
to a Regulatory Information Service and will be available on the
London Stock Exchange website,
www.londonstockexchange.com.
U.S. HL
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. HL
Shareholders are urged to consult with appropriate legal, tax and
financial advisers in connection with the tax consequences of the
Acquisition applicable to them.
The Rollover
Securities issued under the Alternative Offer will not be
registered under the US Securities Act or under relevant securities laws of
any state or territory or other jurisdiction of the United
States. Bidco
expects to issue the Rollover Securities in reliance upon the
exemption from the registration requirements under the US
Securities Act provided by Section 3(a)(10) thereof ("Section 3(a)(10)"). Section 3(a)(10)
exempts securities issued in specified exchange transactions from
the registration requirement under the US Securities Act where,
among other requirements, the fairness of the terms and conditions
of the issuance and exchange of such securities have been approved
by a court or governmental authority expressly authorised by law to
grant such approval, after a hearing upon the fairness of the terms
and conditions of the exchange at which all persons to whom the
Rollover Securities are proposed to be issued have the right to
appear (and will not encounter any improper impediments to appear)
and receive adequate and timely notice thereof. If the exemption
afforded by Section 3(a)(10) is not available to Bidco, then Bidco
expects to avail itself of another available exemption to the
registration requirements under the US Securities Act. If Bidco
exercises its right to implement the acquisition of the HL Shares
by way of an Offer, the Rollover Securities will not be offered in
the U.S. except pursuant to an exemption from or in a transaction
not subject to registration under the US Securities
Act.
The Rollover
Securities will not be listed on any stock exchange. Neither the
U.S. Securities and Exchange Commission nor any U.S. state
securities commission has approved or disapproved of the
Alternative Offer or has determined or will determine if the Scheme
Document is accurate or complete. Any representation to the
contrary is a criminal offence.
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 HL 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 HL 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 HL (including their future prospects, developments and
strategies), the expected timing and scope of the Acquisition and
other statements other than historical facts. Often, but not
always, forward-looking statements can be identified by the use of
forward-looking words such as "prepares", "plans", "expects" or
"does not expect", "is expected", "is subject to", "budget",
"projects", "synergy", "strategy", "scheduled", "goal",
"estimates", "forecasts", "cost-saving", "intends", "anticipates"
or "does not anticipate", or "believes", or variations of such
words and phrases or statements that certain actions, events or
results "may", "could", "should", "would", "might" or "will" be
taken, occur or be achieved. Forward looking statements may include
statements relating to the following: (i) future capital
expenditures, expenses, revenues, earnings, synergies, economic
performance, indebtedness, financial condition, dividend policy,
losses and future prospects; (ii) business and management
strategies and the expansion and growth of Bidco's, HL's, any
member of the Bidco Group or any member of the HL Group's
operations and potential synergies resulting from the Acquisition;
and (iii) the effects of global economic conditions and
governmental regulation on Bidco's, HL's, any member of the Bidco
Group or any member of the HL Group's business.
Although
Bidco and HL believe that the expectations reflected in such
forward-looking statements are reasonable, Bidco and HL can give no
assurance that such expectations will prove to be correct. By their
nature, forward-looking statements involve risk and uncertainty
because they relate to events and depend on circumstances that will
occur in the future. There are a number of factors that could cause
actual results and developments to differ materially from those
expressed or implied by such forward-looking
statements.
These factors
include, but are not limited to: the ability to complete the
Acquisition; the ability to obtain requisite regulatory and
shareholder approvals and the satisfaction of other Conditions on
the proposed terms and schedule; changes in the global political,
economic, business and competitive environments and in market and
regulatory forces; changes in future exchange and interest rates;
changes in tax rates; future business combinations or disposals;
changes in general economic and business conditions; changes in the
behaviour of other market participants; changes in the anticipated
benefits from the Acquisition not being realised as a result of
changes in general economic and market conditions in the countries
in which Bidco and HL 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 HL 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 HL, 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. The
forward-looking statements speak only at the date of
this announcement. All subsequent oral or written forward-looking
statements attributable to Bidco or any member of the Wider Bidco
Group or the HL Group, or any of their respective associates,
directors, officers, employees or advisers, are expressly qualified
in their entirety by the cautionary statement
above.
Other than in
accordance with their legal or regulatory obligations, neither
Bidco nor HL is under any obligation, and Bidco and HL 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 per cent. or more of any class of relevant
securities of an offeree company or of any securities exchange
offeror (being any offeror other than an offeror in respect of
which it has been announced that its offer is, or is likely to be,
solely in cash) must make an Opening Position Disclosure following
the commencement of the offer period and, if later, following the
announcement in which any securities exchange offeror is first
identified. An Opening Position Disclosure must contain details of
the person's interests and short positions in, and rights to
subscribe for, any relevant securities of each of (i) the offeree
company and (ii) any securities exchange offeror(s). An Opening
Position Disclosure by a person to whom Rule 8.3(a) of the Takeover
Code applies must be made by no later than 3.30 p.m. (London time)
on the 10th business day following the commencement of
the offer period and, if appropriate, by no later than 3.30 p.m.
(London time) on the 10th business day following the
announcement in which any securities exchange offeror is first
identified. Relevant persons who deal in the relevant securities of
the offeree company or of a securities exchange offeror prior to
the deadline for making an Opening Position Disclosure must instead
make a Dealing Disclosure.
Under Rule 8.3(b) of the Takeover Code, any person who is, or
becomes, interested in 1 per cent. or more of any class of relevant
securities of the offeree company or of any securities exchange
offeror must make a Dealing Disclosure if the person deals in any
relevant securities of the offeree company or of any securities
exchange offeror. A Dealing Disclosure must contain details of the
dealing concerned and of the person's interests and short positions
in, and rights to subscribe for, any relevant securities of each of
(i) the offeree company and (ii) any securities exchange
offeror(s), save to the extent that these details have previously
been disclosed under Rule 8. A Dealing Disclosure by a person to
whom Rule 8.3(b) applies must be made by no later than 3.30 p.m.
(London time) on the business day following the date of the
relevant dealing.
If
two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire or control an
interest in relevant securities of an offeree company or a
securities exchange offeror, they will be deemed to be a single
person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree
company and by any offeror and Dealing Disclosures must also be
made by the offeree company, by any offeror and by any persons
acting in concert with any of them (see Rules 8.1, 8.2 and
8.4).
Details of the offeree and offeror companies in respect of
whose relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on
the Panel's website at www.thetakeoverpanel.org.uk, including
details of the number of relevant securities in issue, when the
offer period commenced and when any offeror was first identified.
You should contact the Panel's Market Surveillance Unit on +44
(0)20 7638 0129 if you are in any doubt as to whether you are
required to make an Opening Position Disclosure or a Dealing
Disclosure.
Publication on
a website
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 HL's website at www.hl.co.uk/investor-relations
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 set out in this announcement is incorporated by
reference or form 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 HL for the current or future
financial years would necessarily match or exceed the historical
published earnings or earnings per share for HL.
Requesting Hard Copy Documents
In accordance
with Rule 30.3 of the Takeover Code, HL Shareholders, persons with
information rights and participants in HL Share Plans may request a
hard copy of this announcement (and any document or information
incorporated into it by reference to another source) by contacting
HL's registrars, Equiniti, by writing to Equiniti Limited, Aspect
House, Spencer Road, Lancing, United Kingdom, BN99 6DA or by
calling them during business hours on 0371 384 2030 from within the
UK or on +44 371 384 2030 if calling from outside the UK. For
persons who receive a copy of this announcement in electronic form
or via a website notification, a hard copy of this announcement
(and any document or information incorporated by
reference into this announcement) will not be sent unless so requested.
In accordance with Rule 30.3 of the Takeover Code, such persons may
also request that all future documents, announcements and
information to be sent to them in relation to the Acquisition
should be sent in hard copy form.
Electronic communications
Please be
aware that addresses, electronic addresses and certain other
information provided by HL Shareholders, persons with information
rights and other relevant persons for the receipt of communications
from HL 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.
General
Bidco
reserves the right to elect, with the consent of the Panel (where
necessary) and subject to the terms of the Cooperation Agreement,
to implement the Acquisition by way of an Offer as an alternative
to the Scheme. In such an event, such an Offer will be implemented
on substantially the same terms, so far as applicable, as those
which would apply to the Scheme (subject to appropriate amendments
to reflect the change in method of implementation and the terms of
the Cooperation Agreement).
If the
Acquisition is effected by way of an Offer, and such an Offer
becomes or is declared unconditional and sufficient acceptances are
received, 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 HL Shares in respect of which the Offer
has not been accepted.
Investors
should be aware that Bidco may purchase HL Shares otherwise than
under any Offer or the Scheme, including pursuant to privately
negotiated purchases.
Disclaimer
The Acquisition will be subject to English law, the
jurisdiction of the Court, and the applicable requirements of the
2006 Act, the Takeover Code, the Panel, the London Stock Exchange
and the FCA.
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
9 August
2024
RECOMMENDED FINAL* CASH
ACQUISITION
of
Hargreaves Lansdown
plc
by
Harp Bidco Limited
(a newly formed company to
be indirectly
owned by CVC Private Equity Funds, Nordic Capital XI Delta, SCSp
(acting through its general partner, Nordic Capital XI Delta GP
SARL) and Platinum Ivy B 2018 RSC Limited)
to be implemented by means of a scheme
of arrangement
under Part 26 of the Companies Act
2006
1
Introduction
The independent directors of HL and the board
of directors of Bidco are pleased to announce that they have
reached agreement on the terms and conditions of a recommended
final* cash acquisition by Bidco of the entire issued, and to be
issued, ordinary share capital of HL.
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. 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
and further terms of the Acquisition are set out in
Appendix 1 to this announcement and the
full terms and conditions of the Acquisition will be set out in the
Scheme Document.
* The
financial terms of the Cash Offer and the Alternative Offer are
final and will not be increased or improved, except that Bidco
reserves the right to increase the amount of the Cash Consideration
and improve the financial terms of the Alternative Offer if there
is an announcement on or after the date of this announcement of an
offer or a possible offer for HL by a third party offeror or
potential offeror. Bidco reserves the right to elect to implement
the Acquisition by way of an Offer as an alternative to the Scheme
(with the consent of the Panel (where necessary) and subject to the
terms of the Cooperation Agreement (if applicable)).
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 HL Shareholder will be entitled to
receive:
for each HL Share:
1,140 pence in
cash
comprised of:
·
cash consideration of 1,110 pence per HL Share (the
"Cash Consideration");
and
· a
dividend of 30 pence per HL Share in respect of the Financial Year
ended 30 June 2024 (the "2024
Full-Year Dividend"),
together, the "Cash
Offer".
The 2024 Full-Year Dividend is expected to be
paid by HL by no later than the end of November 2024.
The Cash Offer values HL's entire issued, and
to be issued, ordinary share capital at approximately £5,443
million on a fully diluted basis.
The Cash Offer represents a premium of
approximately:
·
54.1 per cent. to the Closing Price of 740.0 pence per HL
Share on 11 April 2024 (being the last Business Day before the
Consortium's initial approach to the HL Board);
·
48.5 per cent. to the volume-weighted average price of 767.7
pence per HL Share for the three-month period ended 21 May 2024
(being the last Business Day before the commencement of the Offer
Period); and
·
51.7 per cent. to the volume-weighted average price of 751.5
pence per HL Share for the six-month period ended 21 May 2024
(being the last Business Day before the commencement of the Offer
Period).
The financial
terms of the Cash Offer and the Alternative Offer (as described
below) are final* and will not be increased or improved, except
that Bidco reserves the right to increase the amount of the Cash
Consideration and improve the financial terms of the Alternative
Offer if there is an announcement on or after the date of this
announcement of an offer or a possible offer for HL by a third
party offeror or potential offeror. Bidco reserves the right to
elect to implement the Acquisition by way of an Offer as an
alternative to the Scheme (with the consent of the Panel (where
necessary) and subject to the terms of the Cooperation Agreement
(if applicable)).
Alternative Offer
As an alternative to the Cash Consideration,
eligible HL Shareholders may elect to exchange some or all of their
HL Shares for rollover loan notes issued by Bidco which will,
subject to implementation of the Rollover, ultimately be exchanged
for rollover ordinary shares in the capital of Topco having the
rights of "Rollover Shares" set out in the Topco Articles (as
amended from time to time), subject to the terms and
conditions of the Alternative Offer (detailed in paragraph
12 below). Eligible HL Shareholders will be able
to elect for the Alternative Offer in relation to some or all of
their holding of HL Shares and will receive (subject to
implementation of the Rollover):
for each HL Share: 1 Rollover
Security
If the Scheme becomes Effective, assuming all
eligible HL Shareholders validly elect to receive consideration by
means of the Alternative Offer in respect of 35 per cent. of their
holding of HL Shares and no such elections are scaled back as a
result of the US Holders Cap or the Shareholding Cap, following
satisfaction of the Cash Consideration and the issuance of the
Rollover Securities, HL Shareholders will hold up to 35 per cent.
of the economic rights in Topco. Following the implementation of
the Rollover, Consortium JVCo will subscribe for Topco A Ordinary
Shares (at the same subscription price per share as Consortium JVCo
paid in respect of its subscription for Topco A Ordinary Shares to
fund the payment of the Cash Consideration to HL Shareholders) for
an aggregate subscription amount equal to the total costs and
expenses incurred and to be incurred by or on behalf of the Topco
Group and the Consortium Members in connection with the
Acquisition. This issuance will be implemented on a non-pre-emptive
basis in order to enable the relevant members of the Topco Group to
settle such costs and expenses, meaning that holders of Rollover
Securities will not be entitled to participate and their economic
rights in Topco will therefore be diluted by such issuance (the
date on which such issuance is completed being the "Costs Issuance Date"). Such costs and
expenses incurred and to be incurred in connection with the
Acquisition are currently expected to be approximately £100
million, which would result in a limited dilution of participating
HL Shareholders of up to approximately 3 per cent. of the holding
of HL Shareholders who elect to receive the Rollover Securities. An
updated estimate of such costs and expenses will be included in the
Scheme Document. For the avoidance of doubt, electing for the
Alternative Offer will not affect the eligibility of HL
Shareholders in relation to the 2024 Full-Year Dividend.
The Rollover Securities will be independently
valued by Goldman Sachs (as financial adviser to Bidco) and an
estimate of the value of the Rollover Securities, together with the
assumptions, qualifications and caveats forming the basis of that
estimate of value, will be set out in a letter to be included in
the Scheme Document. Further information about the Rollover
Securities and the Alternative Offer are set out in
paragraphs 12, 13 and 14 and Appendix 4
below and will be included in the Scheme Document.
Holders of Rollover Securities may be diluted over
time, potentially significantly, should holders of Rollover
Securities not elect to participate in further issues of additional
shares, loan notes or other securities of the Topco Group. In
addition, holders of Rollover Securities shall not always be
entitled to participate in such issues and the holder(s) of a
majority of the Rollover Securities (also referred to as the "Topco
B Ordinary Shares") in issue at the relevant time (a "Topco B Shareholder Majority") may
agree with Consortium JVCo to waive the right to participate in any
such issue on behalf of all holders of Rollover
Securities.
2024 Full-Year Dividend
The HL Directors have today proposed the 2024
Full-Year Dividend for the Financial Year ended 30 June 2024. The
2024 Full-Year Dividend is expected to be paid no later than the
end of November 2024 to HL Shareholders on the register of members
of HL at the relevant record time. If the 2024 Full-Year Dividend
is for any reason not approved by HL Shareholders for payment by
reference to a record date that falls before the Effective Date,
the HL Directors expect to declare the 2024 Full-Year Dividend
instead as an interim dividend payable to HL Shareholders on the
register of members of HL at a record time prior to the Acquisition
becoming Effective.
HL Shareholders who are not entitled to receive
the 2024 Full-Year Dividend, including HL Shareholders who are not
on the register of members of HL at the relevant record time in
respect of the 2024 Full-Year Dividend, shall receive the Cash
Consideration and/or (subject to implementation of the Rollover)
Rollover Securities (if applicable) only.
Other terms of the
Acquisition
The HL 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 as at the Effective
Date, 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.
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,
other than the 2024 Full-Year Dividend, is announced, declared,
made or paid or becomes payable in respect of the HL Shares (in
each case, with a record date prior to the Effective Date), Bidco
will reduce the Cash Consideration payable under the terms of the
Cash Offer (and, as the case may be, the number of Rollover
Securities due, subject to implementation of the Rollover, under
the terms of the Alternative Offer) at such date by an amount up to
the 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 Cash Consideration payable under the terms of
the Cash Offer (or consideration due under the Alternative Offer)
will be deemed to be a reference to the consideration as so
reduced. Any such reduction of the Cash Consideration payable under
the terms of the Cash Offer (and, as the case may be, the number of
Rollover Securities due, subject to implementation of the Rollover,
under the terms of the Alternative Offer) by Bidco 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 the event of any such
reduction of the Cash Consideration payable under the terms of the
Cash Offer (and, as the case may be, the number of Rollover
Securities due, subject to implementation of the Rollover, under
the terms of the Alternative Offer), HL Shareholders would be
entitled to retain the relevant dividend, distribution and/or other
return of capital or value.
* The
financial terms of the Cash Offer and the Alternative Offer are
final and will not be increased or improved, except that Bidco
reserves the right to increase the amount of the Cash Consideration
and improve the financial terms of the Alternative Offer if there
is an announcement on or after the date of this announcement of an
offer or a possible offer for HL by a third party offeror or
potential offeror. Bidco reserves the right to elect to implement
the Acquisition by way of an Offer as an alternative to the Scheme
(with the consent of the Panel (where necessary) and subject to the
terms of the Cooperation Agreement (if applicable)).
3
Background to and reasons for the Acquisition
Bidco views HL as one of the leading UK investment
platforms with an impressive position and a strong purpose in the
attractive UK wealth market. HL is expected to benefit from
numerous tailwinds over the coming decade, driven by increased
individual responsibility for savings, pension freedom, an aging
population, further digitalisation of the wealth process, the
increasing importance of data, and AI-led activities. At the same
time, the direct-to-consumer market will become significantly more
competitive, driven by a combination of increasing sophistication
of established competitors, technology advancements and new
entrants continuing to disrupt the market.
Since it was founded in 1981, HL has built an
impressive market position, widespread brand awareness, trusted
position, and high customer Net Promoter Scores. HL has a strong
brand heritage and is operating in a market where holding one of
the leading market positions provides opportunities for relative
outperformance, as well as capitalising on scale benefits to
improve the client proposition, cost-to-serve and value. Bidco
believes that HL is fundamentally well-positioned to maintain, and
build on, its market position to deliver growth despite increasing
competition and other near-term headwinds.
HL has an important purpose; making it easy for the
UK consumer to save and invest for a better future. Bidco
understands HL has a responsibility to support clients, throughout
their savings lifetime, be better in managing their financial
wealth and enabling clients to get the right outcomes; regardless
of their accessibility needs.
Bidco supports the important role HL plays in
promoting savings and investing in society and believes that a
substantial transformation is required to accelerate the delivery
of these objectives for HL's clients. The ambition of this
transformation is to give more retail investors in the UK access to
the tools, information and services required to make sound
investment decisions, combined with a transparent approach and good
value in line with Consumer Duty.
A transformation of the scale Bidco envisages as
appropriate requires investment, in particular in the technology
platform to position HL to offer its clients user-friendly digital
channels, inspiring client journeys (both online and through the
Helpdesk) and differentiated financial products. Further investment
by Bidco in the technology platform is expected to improve
operational resilience, enhance capacity in systems, and deliver
significant scalability and operating leverage in its cost base
going forward.
HL will be repositioned and further strengthened by
the transformation. However, to deliver such a transformation, it
will require change, investment, time to implement fully and time
for the benefits to be reflected in the future financial
performance of HL. As a result, Bidco believes HL will be able to
execute more effectively, accelerate implementation and deliver the
growth potential of its transformation plan better as a private
company without all the requirements of a public company.
CVC Private Equity Funds, Nordic Capital and Platinum
Ivy (a wholly-owned subsidiary of ADIA, managed by ADIA PED) and
its affiliates each have a strong track record of deploying
capital, expertise in successfully accelerating and delivering
complex transformations and extensive experience in investing
across regulated financial services companies globally and in the
UK. With their investment and detailed engagement through Bidco,
CVC Private Equity Funds, Nordic Capital and Platinum Ivy and its
affiliates will leverage their highly relevant experience and
capabilities developed through prior investments, including Nordic
Capital's investment in Nordnet, the digital savings and investment
platform in the Nordics. CVC Private Equity Group, Nordic Capital
and Platinum Ivy believe that, following the completion of the
Acquisition, they will be able to accelerate and enhance the
transformation of HL as a private company for the benefit of
clients, employees and other stakeholders.
4 HL
Recommendation
Cash Offer
The HL Independent Directors, who have been so
advised by Fenchurch, Barclays, Deutsche Numis and Morgan Stanley
as to the financial terms of the Cash Offer, consider the terms of
the Cash Offer to be fair and reasonable. In providing their
financial advice to the HL Independent Directors, Fenchurch,
Barclays, Deutsche Numis and Morgan Stanley have taken into account
the commercial assessments of the HL Independent Directors.
Fenchurch is providing independent financial advice to the HL
Independent Directors for the purposes of Rule 3 of the Takeover
Code.
Accordingly, the HL Independent Directors
intend to unanimously recommend HL Shareholders to vote in favour
of the Scheme at the Court Meeting and the Resolutions at the
General Meeting as they have irrevocably undertaken to do in
respect of their own HL Shares (representing, in aggregate,
approximately 0.01 per cent. of the issued ordinary share capital
of HL as at 8 August 2024, being the last Business Day before 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.
Adrian Collins, a non-executive director of HL,
is not considered by HL to be independent for the purposes of the
Acquisition by virtue of his appointment to the HL Board as a
representative of Peter Hargreaves (a founder and existing major
shareholder of HL who the HL Independent Directors believed the
Consortium may seek to engage with early on in the pre-announcement
period). Adrian Collins has not been treated as a HL Independent
Director and has not participated in the consideration of the
Acquisition by the HL Independent Directors or the decision of the
HL Independent Directors to recommend the Cash Offer as set out
above.
Alternative Offer
As mentioned in paragraph 2 of this
announcement, Bidco and the Consortium are also separately making
an Alternative Offer which eligible HL Shareholders may elect for
in respect of some or all of their HL Shares as an alternative to
the Cash Consideration.
Fenchurch, Barclays, Deutsche Numis and Morgan
Stanley are unable to advise the HL Independent Directors as to
whether or not the terms of the Alternative Offer are fair and
reasonable. This is because Fenchurch, Barclays, Deutsche Numis and
Morgan Stanley have not had any involvement in the development and
validation of any financial projections for Topco or the Topco
Group. As a result, Fenchurch, Barclays, Deutsche Numis and Morgan
Stanley are unable to assess any plans Topco may have for the
development of HL or the Topco Group to the degree necessary to
form an assessment of the value of the Alternative Offer.
Fenchurch, Barclays, Deutsche Numis and Morgan Stanley also note
the significant and variable impact that the disadvantages and
advantages of the Alternative Offer may have for individual
eligible HL Shareholders. In terms of the advantages, these
include, in particular, the ability to participate in the potential
future value creation of the HL Group. In terms of the
disadvantages, these include, in particular, the level of
uncertainty in their future value which will depend on the
performance of HL in future which itself will be impacted by the
business plan and strategy of the business under Consortium JVCo's
control, as well as the terms of the Rollover Securities including
the fact that the Rollover Securities are illiquid and
non-transferable (save in very limited circumstances such as with
Consortium JVCo consent or pursuant to drag along and tag along
provisions), the potential dilution that would result if a Topco B
Shareholder did not fund their pre-emptive entitlement pursuant to
any catch-up issue of securities by Topco in the period following
the Effective Date or in the event a permitted non-pre-emptive
issue of securities is made without reference to such catch-up
rights and the fact that the Rollover Securities do not carry
voting rights.
Accordingly,
the HL Independent Directors are unable to form an opinion as to
whether or not the terms of the Alternative Offer are fair and
reasonable and are not making any recommendation to eligible HL
Shareholders as to whether or not they should elect for the
Alternative Offer.
In reviewing the terms of the Alternative Offer
proposed by Bidco and the Consortium, the HL Independent Directors,
Fenchurch, Barclays, Deutsche Numis and Morgan Stanley have
identified certain key disadvantages and advantages of electing for
the Alternative Offer as set out below. Further investment
considerations are outlined in paragraph 14 of this
announcement.
Each of the HL Independent Directors has
confirmed that they do not intend to elect for the Alternative
Offer in respect of any HL Shares of which they are the registered
or beneficial holder, and that they instead wish to
receive the Cash Consideration pursuant to the terms of the Cash
Offer.
HL Shareholders are encouraged to take into
account the key advantages and disadvantages outlined below and the
investment considerations and the risk factors set out in paragraph
14 below in relation to the Alternative Offer, as well as their
particular circumstances, when deciding whether to elect for the
Alternative Offer in respect of some or all of their HL Shares. HL
Shareholders should also ascertain whether acquiring or holding
Rollover Securities is affected by the laws of the relevant
jurisdiction in which they reside and consider whether Rollover
Securities are a suitable investment in light of their own personal
or individual circumstances. Accordingly, HL Shareholders are
strongly recommended to seek their own independent financial, tax
and legal advice in light of their own particular circumstances and
investment objectives before deciding whether to elect for the
Alternative Offer. Any decision to elect for the Alternative Offer
should be based on any such independent financial, tax and legal
advice and full consideration of the information in this
announcement, the Topco Shareholders' Agreement, the Topco Articles
and the Scheme Document (when published).
Disadvantages
of electing for the Alternative Offer
· The
Rollover Securities will be:
·
unlisted and will not be admitted to trading on any stock
exchange or market for the trading of securities and will therefore
be illiquid. Any assessment of the value of the Rollover Securities
should therefore take into account an individual shareholder's
assessment of an appropriate liquidity discount;
·
non-transferrable (save in very limited circumstances such as
with the prior consent of Consortium JVCo, to limited permitted
transferees, or pursuant to the drag along and tag along provisions
or otherwise in connection with an Exit initiated by Consortium
JVCo or the Consortium); and
· of
uncertain value and there can be no assurance that they will be
capable of being sold in the future or that they will be capable of
being sold at the value to be estimated by Goldman Sachs in the
Scheme Document.
· Upon the
Effective Date, the Topco Group will be controlled by Consortium
JVCo. The Rollover Securities will not carry any general voting
rights (whether at a general meeting or pursuant to a written
resolution of Topco) nor any governance rights (except those
associated with any Substantial B Shareholder) other than very
limited minority protections prescribed by Jersey law (including in
relation to a variation of their class rights) and rights in
respect of a very limited number of reserved matters (being
those matters set out in paragraph 5 of Appendix 4 to this
announcement) which require the consent of the Substantial B
Shareholder(s). Further, no holders of Rollover Securities other
than the Substantial B Shareholder(s) will have the right to
appoint directors to the board of Topco. Holders of Rollover
Securities will therefore have no influence over decisions made by
the Topco Group in relation to its investment in HL or in any other
business or in relation to any member of the Topco Group's (or HL
Group's) strategy.
· Any
Exit, Indirect Liquidity Event or Refinancing will occur at the
sole discretion of Consortium JVCo and holders of Rollover
Securities will therefore not have control over the date(s), terms
or value(s) on or at which they may be able to realise their
investment in the Topco Group (if at all). In
particular:
· holders
of Rollover Securities may be required in the future to sell their
Rollover Securities on a pro rata basis on the same terms at those
agreed to by Consortium JVCo under the terms of a 'drag along'
provision set out in the Topco Shareholders' Agreement. There is no
requirement for Consortium JVCo or any of its affiliates to proceed
with an Exit or to do so at any particular minimum price or, if
they do proceed with an Exit, to exercise the 'drag along' right,
and certain exceptions to the 'drag along' right apply. This 'drag
along' right could be exercised at any time following completion of
the Acquisition, including at a value that is less than the value
of the Cash Consideration. In the event of only a partial
exit by Consortium JVCo or its affiliates, the drag would not
provide a full exit for holders of Rollover Securities. The 'drag
along' right described above could be exercised at any time
following completion of the Acquisition. Any transfer triggering
the 'drag along' right may be at a value that is less than the
value of the Cash Consideration and the consideration payable to
holders of Rollover Securities in such circumstances may or may not
be cash;
· in
relation to the 'tag along' right in the Topco Shareholders'
Agreement:
· it is
only exercisable by holders of Rollover Securities on a direct or
indirect transfer of Topco A Ordinary Shares at any time when
Consortium JVCo, the Consortium Members and/or their affiliates
together hold, or would as a result of the relevant transfer hold,
directly or indirectly, less than 90 per cent. of the Topco A
Ordinary Shares in issue on the Costs Issuance Date and on any
direct or indirect transfer of Topco A Ordinary Shares by
Consortium JVCo, the Consortium Members or their affiliates
thereafter. Certain exceptions apply which would therefore not give
rise to a 'tag along' right (and in respect of which there is no
subsequent 'tag along' right), including (amongst others) (i) any
initial transfers of up to 10 per cent. of the Topco A
Ordinary Shares in issue on the Costs Issuance Date, (ii) in
relation to transfers in connection with a Refinancing, or (iii) in
connection with a syndication of equity interests by Consortium
JVCo or its affiliates. Therefore, this 'tag along' right may not
provide for a full (or any) exit for holders of Rollover
Securities;
· it
enables holders of Rollover Securities to sell Rollover Securities
only pro rata to the proportion of Topco A Ordinary Shares
transferred by Consortium JVCo or its affiliates in the
transaction(s) giving rise to the 'tag along' right. Therefore, if
Topco A Ordinary Shares have been transferred pursuant to one of
the exceptions to the 'tag along' right, then the 'tag along' right
would not apply to the subsequent transfer of those shares by such
transferee;
· there is
no requirement for Consortium JVCo to transfer Topco A Ordinary
Shares on any known timeline;
· holders
of Rollover Securities who exercise the 'tag along' right described
above will be required to agree to the same terms and conditions as
Consortium JVCo (or, if applicable the Consortium Members or their
affiliates) in relation to the relevant transfer, including as to
price and any covenants as a selling shareholder. The consideration
payable to holders of Rollover Securities in such circumstances may
or may not be cash and is not subject to any minimum threshold;
and
· in the event of
any Exit, Indirect Liquidity Event or Refinancing, holders of
Rollover Securities will be required to cooperate with the Topco
Group and Consortium JVCo, including to provide certain covenants,
indemnities and commitments in connection with such process and to
agree to pay their pro rata share of related costs incurred by or
attributable to the Topco Group and bear related liabilities.
Holders of Rollover Securities will undertake upon entering into
the Topco Shareholders' Agreement not to take actions which
are inconsistent with any proposed Exit, Indirect Liquidity Event
or Refinancing.
· The
rights of holders of Rollover Securities to participate in future
issues of securities by Topco will apply on a catch-up basis only
(i.e. to allow holders of Rollover Securities the opportunity to
take up their pro rata entitlements to securities following
completion of a related issue of securities to the Topco A
Shareholders or other persons) and will be subject to a number of
important exceptions (described in paragraph 7 of Appendix 4 to
this announcement, including the ability of the holder(s) of
a majority of the Rollover Securities to waive catch-up rights in
connection with issues of securities by any member of the Topco
Group). Such events may result in the economic entitlements
of holders of Rollover Securities suffering significant dilution.
Any securities issued by members of the Topco Group in future may
have different (including, potentially, preferential) rights or
characteristics to the Rollover Securities.
· The
percentage ownership of Topco attributable to holders of Rollover
Securities who do not provide the cash funds or related
documentation required to accept their entitlements pursuant to any
catch-up issue of securities by any member of Topco Group in the
period following the Effective Date would be significantly reduced.
The price of and valuation methodology in relation to such
further issuances is not known and may be different to the value
per Rollover Security to be estimated by Goldman Sachs in the
Scheme Document.
· The
HL Shares are currently admitted to trading on the Main Market of
the London Stock Exchange and HL Shareholders are afforded certain
standards and protections, including in respect of disclosure, as a
result. HL Shareholders who, subject to implementation of the
Rollover and the other terms in this announcement, receive Rollover
Securities (being unlisted securities in a private company) will
not be afforded protections commensurate with those that they
currently benefit from as shareholders in HL. Except for
information to be provided to persons who qualify as Substantial B
Shareholders (but not to other holders of Rollover Securities),
neither the Topco Articles nor the Topco Shareholders' Agreement
will provide holders of Rollover Securities with information
rights, and the default information rights available to minority
shareholders in the position of the holders of Rollover Securities
under Jersey law are very limited.
·
Payments in respect of Rollover Securities will not be
guaranteed or secured and any return of proceeds, whether in
connection with an Exit or otherwise, will be paid net of costs
incurred by the Topco Group with respect to such return of
proceeds.
·
Consortium JVCo intends that the costs and expenses
incurred and to be incurred by or on behalf of the Topco Group and
the Consortium Members in connection with the Acquisition
will be borne by the Topco Group. Following the implementation of
the Rollover, Consortium JVCo will subscribe for Topco A Ordinary
Shares (at the same subscription price per share as Consortium JVCo
paid in respect of its subscription for Topco A Ordinary Shares to
fund the payment of the Cash Consideration to HL Shareholders) for
an aggregate subscription amount equal to the total costs and
expenses incurred and to be incurred by or on behalf of the
Topco Group and the Consortium Members in connection with the
Acquisition. This issuance will be implemented on a non-pre-emptive
basis in order to enable the relevant members of the Topco Group to
settle such costs and expenses, meaning that holders of Rollover
Securities will not be entitled to participate and their economic
rights in Topco will therefore be diluted by such issuance with
effect from the Costs Issuance Date. Such costs and expenses
incurred and to be incurred in connection with the Acquisition are
currently expected to be approximately £100 million, which would
result in a dilution of participating HL Shareholders of up to
approximately 3 per cent. of the holding of HL Shareholders who
elect to receive the Rollover Securities. An updated estimate of
such costs and expenses will be included in the Scheme
Document.
·
Consortium JVCo intends that reasonable, properly incurred
costs in connection with any Exit, reorganisation transaction or
Refinancing or return of proceeds in future will be borne by the
Topco Group and/or the holders of Topco Shares. Such costs would
therefore result, directly or indirectly, in a pro rata reduction
in the value of the investment made by holders of Rollover
Securities in the Topco Group. The quantum of such costs is not
known.
· Certain
consent rights under the Topco Shareholders' Agreement are
exercisable by the holder(s) of a majority of the Rollover
Securities. These include waiving catch-up rights of holders of
Rollover Securities in connection with issues of securities by any
member of the Topco Group. Depending on the number of persons
who elect for the Alternative Offer and in what proportions,
it is possible that such consent may in practice be capable of
being given by one or a small number of holder(s) of Rollover
Securities who hold a majority of the Rollover Securities (without
any requirement to consult with or refer to the other holder(s) of
Rollover Securities).
·
Consortium JVCo may, acting reasonably, make any amendment to, or
variation of, the Topco Shareholders' Agreement and/or the Topco
Articles and/or related documents (notwithstanding any class
rights) without the consent of, or notification to, holders of
Rollover Securities provided that such amendments or variations are
not disproportionately adverse to the economic, tax or legal
position of the holders of Rollover Securities (as a whole)
or the governance rights of the holders of Rollover Securities, in
each case as compared to Consortium JVCo. Any such amendment or
variation must be for bona fide purposes and shall not be used to
frustrate, terminate or reduce the rights of the holders of
Rollover Securities. Consortium JVCo may make any other amendment
to, or variation of, the Topco Shareholders' Agreement and/or the
Topco Articles and/or related documents on reasonable notice to the
Topco B Shareholders and with the prior consent of (i) the holders
of a majority of the Rollover Securities (excluding, for the
purposes of this limb (i), any such Rollover Securities held by a
Substantial B Shareholder) and (ii) the approval of each
Substantial B Shareholder.
· The Topco
Shareholders' Agreement includes a number of continuing obligations
on holders of Rollover Securities, including (i) broad restrictions
on saying or doing anything which may be harmful or prejudicial to
the goodwill or reputation of the Topco Group, the HL Group or any
Consortium Member or their affiliates (amongst others) and (ii) a
compliance covenant, which requires the parties to observe and
fully comply therewith, and includes an undertaking by the holders
of Rollover Securities to exercise their rights to give full effect
thereto, including passing certain resolutions and/or class
consents, including in connection with an Exit or issue of
securities (which means that circumstances may arise whereby the
holders of Rollover Securities are obliged to vote in a particular
way to comply with this covenant, or their right to object to a
variation of class rights may be otherwise restricted). The
Topco Shareholders' Agreement also contains a power of attorney
whereby the Topco B Shareholders appoint Topco or Consortium JVCo
as their attorney to provide the consents and approvals referred to
above. A combination of such compliance covenants, the power of
attorney and the variation provisions described above and certain
other requirements in the Topco Shareholders' Agreement and Topco
Articles therefore narrow the scope of class rights protections
which would otherwise be available to holders of Rollover
Securities under Jersey law.
· Certain
rights and protections attaching to the Rollover Securities will
depend on the number of Rollover Securities held by each relevant
HL Shareholder. HL Shareholders will have no certainty as to the
amount of Rollover Securities they would receive because:
· the
maximum number of Rollover Securities available to eligible HL
Shareholders under the Alternative Offer will be limited to the
equivalent of 35 per cent. of the issued ordinary share capital of
Topco at completion of the Acquisition (following implementation of
the Rollover). To the extent that elections for the Alternative
Offer cannot be satisfied in full, the number of Rollover
Securities to be issued (subject to implementation of the Rollover)
to each eligible HL Shareholder who has elected for the Alternative
Offer will be reduced on a pro rata basis, and the consideration
due to HL Shareholders in respect of the balance of their HL Shares
will be paid in cash in accordance with the terms of the Cash
Offer; and
· if:
(i) 2,000 or more HL Shareholders; or (ii) 500 or more HL
Shareholders who are not "accredited investors" as defined under
Rule 501(a) of the US Securities Act ("Accredited Investors"), in either case,
where 300 or more of such HL Shareholders are US holders,
elect for the Alternative Offer, Bidco may, at its discretion,
determine that the Alternative Offer will not be made available,
and the consideration payable to all HL Shareholders will be
settled entirely in cash in accordance with the terms of the Cash
Offer.
Advantages of
electing for the Alternative Offer
· The
Alternative Offer allows eligible HL Shareholders to invest
directly in Topco, providing continued economic exposure
(indirectly) to HL under private ownership.
· The
Alternative Offer allows eligible HL Shareholders to participate in
potential future value creation and may ultimately deliver greater
value than the Cash Consideration (although this cannot be
guaranteed).
· From
completion of the Acquisition, the Rollover Securities will rank
economically pari passu
with the Topco A Ordinary Shares held by and issued to Consortium
JVCo in connection with the Acquisition, including the right to
receive and retain any distributions, dividends, buy-back, any
other capital redemption or other returns of income or capital made
by Topco.
Further details of the Alternative Offer are
set out in paragraphs 12, 13 and 14 of this
announcement and in Appendix 4 below.
5
Background to and reasons for the recommendation
HL Group context
Founded in 1981, HL is the largest and one of the
longest-standing Direct to Consumer (D2C) investment platforms in
the growing UK wealth management market, with a large and loyal
client base, a strong and trusted brand, and a broad range of
products and services that cater for every life stage.
HL has a clear ambition to provide its clients with
the best savings and investment platform to help them to achieve
their financial goals. The Independent HL Board believes that
achieving this ambition will enable HL to remain the UK's largest
savings and investment platform, grow its client base, and capture
the significant long-term opportunity in the wealth and savings
market.
Since HL's shares were admitted to the London Stock
Exchange in May 2007, HL's AuA has grown from £10.2 billion as at
30 June 2007 to £155.3 billion as at 30 June 2024 and active
clients have increased from 218,000 to almost 1.9 million over the
same period. HL's current Net Promoter Score, which stands at +44,
is strong positive evidence of its ability to attract and retain
customers in the market.
The Independent HL Board believes that HL is well
positioned to benefit from market growth in future years. HL's
ambition to help clients invest and achieve their financial goals
is fully aligned with a broader UK political and regulatory focus
on addressing the UK 'savings gap' and delivering better client
outcomes. An improved UK macroeconomic outlook, following a period
of extreme shocks including Covid and the negative impact of global
conflicts on broader market confidence, is expected to have a
positive impact on HL's business, specifically on client inflows
and retention over the medium term.
The improving macroeconomic backdrop and the
execution of HL's stated strategy are, together, delivering early
signs of improvement in the business against the challenges faced
in recent periods as demonstrated in HL's most recent trading
updates, including in its preliminary results for FY 2024 announced
today, which set out:
· net
new business of £1.6 billion for Q4 2024, driving record closing
AuA of £155.3 billion;
·
total revenue of £764.9 million, up 4 per cent. compared to
FY 2023;
·
underlying costs of £338.5 million, up 8 per cent. compared
to FY 2023, slightly below guidance; and
·
underlying profit before tax of £456.0 million, up 4 per
cent. compared to FY 2023.
At the same time, the Independent HL Board recognises
that the market has evolved significantly in recent years and
expects this rate of transformation to continue, with:
· an
increasingly competitive market environment, with existing D2C
market participants investing significantly in price and
proposition, the entrance of large international groups into the UK
investment platform market, digital-led Fintech providers launching
low cost wealth propositions, and increasing strategic focus on
wealth management by certain UK retail banks, life insurers and
asset managers;
· a
changing regulatory environment including greater regulatory focus
on UK wealth participants (e.g., implementation of the Consumer
Duty framework in July 2023), in turn driving increased associated
resource requirements and costs; and
· an
evolution in client behaviours and expectations relating to digital
engagement and personalised services, requiring increasing and
ongoing investment in HL's client proposition, digital capabilities
and underlying technology.
Following Dan Olley's appointment as HL's CEO in
August 2023, HL commenced a comprehensive business-wide review of
the progress and strategic direction of the HL Group, its overall
performance and its client value proposition. Based on early
observations, HL's CEO set initial priorities to focus the business
and start to accelerate the transformation while this review was
carried out. At HL's interim results in February 2024, HL's CEO
laid out the evolved strategy, some initial findings from the
review and how these had now been included into the organisation's
transformation programme.
Conclusions from the
review
HL undertook to update the market further at its FY
2024 results in August 2024 irrespective of the Cash Offer from the
Consortium. With the business-wide review now complete, HL is
therefore updating the market on its key findings, as set out
below:
·
Fundamental Strengths -
With its more than 40-year heritage and a strong sense of purpose,
HL already has many of the foundational elements in place to
execute on its strategy. As set out by the CEO at HL's interim
results in February 2024, HL is distinguished by the strength of
its culture and the dedication of its colleagues, its strong sense
of purpose and its clear focus on serving clients every day.
More specifically, HL benefits from a strong
and trusted brand, having been rated the #1 classic investment
platform by Boring Money in 2023 and is recognised by more than 30
per cent. of adults in the UK. HL has a client-first service-led
approach embedded throughout its culture and embodied by over 2,400
colleagues serving a large, diverse and loyal base of almost 1.9
million clients - the largest client base of any wealth manager in
the UK. Together with one of the broadest ranges of products and
services in the UK savings and investment market including over
14,000 different investment options, HL is able to cater for
clients across every life stage.
Building on these key strengths and with the
benefit of a strong and robust balance sheet and predictable cash
flow, the review has confirmed that HL is therefore especially well
placed to take advantage of the clear opportunity ahead in the UK's
large and growing savings and investment market.
·
Client Engagement &
Retention - Despite a long term track record of growth in an
increasingly competitive environment, HL has been growing at a
slower pace over several years as set out in HL's 2024 interim
results. This is primarily driven by reducing asset and client
retention rates. Analysis has demonstrated that once key service
issues had been addressed as a reason for attrition, outflows are
now largely being driven by specific factors including friction and
gaps in the digital experience and certain aspects of the client
value proposition, which have remained largely unchanged since
2017. This is in the context of an increasingly competitive
environment where, in areas, competitors are now offering
propositions approaching that currently offered by HL and at lower
cost as a result of ongoing revenue investment.
o Net new business has
reduced from £8.7 billion in FY 2021 to £4.2 billion in FY 2024,
reflecting declining client and asset retention rates, which have
fallen from 92.1 per cent. to 91.4 per cent. and 91.4 per cent. to
88.5 per cent. respectively over the same time period.
o Investment is
required in both the digital experience and the overall client
value proposition, including revenue investment, to address this
declining retention.
·
Client Acquisition - Whilst
HL's strong and established brand generates consistently strong
inflows, HL's marketing approach has not reflected industry trends
towards digital and performance marketing. Use of social media
channels has been limited, as is the ability to target new
archetype clients, which requires more sophisticated data-driven
marketing capabilities.
o While HL continues to
attract new and younger clients, the level of gross new inflows it
is able to attract in the platform from new clients each year has
dropped by 35 per cent. since FY 2021.
o HL needs to
significantly evolve its marketing capability and approach to
achieve new target client acquisition at lower cost.
·
Client Service -
Best-in-class service from experienced and knowledgeable colleagues
is an essential element of HL's proposition. Whilst service levels
have stabilised since the decline seen in FY 2023, further work is
required to bring service levels back to the consistently high
standards expected by HL's clients.
o HL's monthly Net
Promoter Score declined to a low of +33 during the 2023 tax year
end, reflecting challenges associated with Helpdesk capacity and
call volumes. With a clear focus on resetting service levels in FY
2024, HL's Net Promoter Score has ranged between a monthly level of
+40 and +48 in the last quarter, which demonstrates good progress
but HL's management are seeking to target a Net Promoter Score of
50+ on a consistent basis.
o HL needs to improve
and extend its service proposition to ensure a consistent
best-in-class client experience.
·
Operational Transformation &
Cost Efficiency - HL's highly manual processes and legacy
technology systems need to be addressed as they are directly
driving headcount growth and increased compliance controls,
regulatory reporting and monitoring leading to increased cost to
serve as client and asset numbers grow. These manual processes and
systems have led to increased complexity, increased error rates
and, at times, reduced client experience. Whilst the need for
change in this regard has been clear for some time, progress in
delivering this transformation has been limited as a result of the
execution and delivery approach adopted by the business.
o HL's underlying cost
growth to date, which has exceeded revenue and AuA growth, with
cost to serve increasing from 22.3 bps to 23.7 bps from FY 2021 to
FY 2024.
o HL needs to
accelerate delivery of its transformation programme to improve the
client experience, build scale and enhance efficiency, driving a
different cost trajectory.
·
Colleague Engagement - HL's
latest colleague survey results reflected the limited progress that
had been made historically in addressing manual processes and
legacy technology, siloed working practices and inconsistent
strategic priorities. It was also clear that the organisation had
experience and capability gaps in key areas required to deliver the
strategy.
o HL's colleague
engagement score has been below management's expectations at 62 per
cent. today versus a target of 70 per cent.+.
o HL needs to evolve to
a focused client and outcome-based performance culture and embed
new ways of working (e.g., cross functional delivery teams) to help
to accelerate the pace of delivery across the
organisation.
·
Investment Spend - HL
identified the need to invest in a major multi-year transformation
programme in 2022 to enhance its proposition, automate and scale
its processes, and update its legacy technology. This programme was
expected to conclude in FY 2026. HL is now two years into this
investment programme and, whilst good progress has been made in
certain areas (e.g., new HLFM fund launches have been successful,
and the evolution of Active Savings has led to significant growth
in both AuA and margin), progress has been less tangible to date in
regard to operational automation and the evolution of its
technology platform.
o A change in
technology leadership and operating model was required; this has
taken place during FY 2024 with the technology function now
directly aligned and integrated with the business structure and a
new function established to manage the delivery of large
cross-functional transformation programmes.
o Certain business
automation and transaction processing programmes have been reset to
address an extended scope including revised regulatory
requirements; the completion date for these programmes has been
extended as a result.
o The programme to
support the Advice offering has been reset and a £14.4 million
impairment recognised in HL's FY 2024 Interim Results.
o As a fintech, HL's
operating cost base is now planned to include costs associated with
having the capability to deliver propositional development and
improvement on a continuous basis without the need for additional
or catch up significant one-off investment spend.
HL needs to complete its investment programme to
achieve the benefits outlined above, which is still expected to be
delivered within the total investment spend of £225 million
announced in February 2022 (£175 million of strategic spend and £50
million of dual running costs) but with completion of specific
programmes extending into FY 2027. Any further material capital
investment would only be incurred to drive innovation and step
change business efficiency opportunities, measured against specific
investment return criteria.
Go-forward strategy
HL has a clear and refreshed strategy, which the
Independent HL Board is confident will deliver over the longer
term, with good progress already made against the initial
priorities identified in FY 2024. The refreshed strategy comprises
five strategic priorities intended to address the findings from the
review, consistent with the priorities set out at HL's interim
results in February 2024:
(1)
Transform the investing experience: Removing
jargon, terminology and complexity and making it easy for its
clients to set their financial goals and work towards achieving
them with minimum effort and fuss. A key focus will be improving
HL's digital experience and proposition as well as evolving its
marketing capability.
(2)
Combine the best of colleague and digital capability:
Bringing together the deep experience of HL's colleagues with
advances in AI and other digital technologies to serve clients on
their terms. HL will continue to invest in its employees and
technology to deliver a service continuum from DIY investing to
full financial advice.
(3)
Leverage economies of scale to drive client value:
Decoupling cost from growth through the successful
implementation of HL's transformation programme enabling greater
process simplification, automation and standardisation, alongside
agile ways of working to enhance efficiency and increase delivery
pace. Through HL's 'Save to Invest' philosophy, cost benefits
realised are intended to moderate future cost growth and fund the
capability for continuous and ongoing investment in the client
proposition.
(4)
Responsible and resilient business: Continuing
to invest to provide the robust, resilient and available services
expected from the UK's largest retail investment platform enabled
by the migration of HL's data centre to the cloud and the
transition off core legacy systems to modern architecture. HL
intends to ensure its operating model is resilient and compliant by
design, with risk and compliance requirements assessed during
development and embedded into systems and processes.
(5)
Great people, great culture: Attracting top
talent to drive focus, pace and performance, building on a strong
set of values centred around putting clients first. HL is focused
on enhancing its performance culture to align the organisation to
the refreshed strategy and its successful
implementation.
Conclusions on the Cash
Offer
Although it is still early in the execution of this
refreshed strategy, the Independent HL Board has been pleased with
the progress made by the new management team to date, with some
tangible results visible in HL's preliminary FY 2024 results. The
Independent HL Board has confidence in HL's ability over time to
deliver on its strategic ambition to transform the business and
maintain its market position in the face of the evolving market
dynamics and create shareholder value over the medium to longer
term.
At the same time, the Independent HL Board is
cognisant that delivery of HL's core priorities involves
significant change across significant parts of its business,
coupled with on-going investment over the medium term as set out
above. As with any transformation of this complexity, there is
significant execution risk over the short-to-medium term given the
duration and scale of the actions required to deliver the strategy.
Combined with a dynamic competitive and regulatory environment, the
realisation of the associated benefits and the timeframe for doing
so involves an inherent level of uncertainty and delivery which is
unlikely to be linear over the medium term.
In assessing and recommending the Cash Offer, the
Board has carefully considered the following matters:
1) the opportunities and continued
execution risks associated with the transformation and the delivery
of HL's strategy;
2) the duration, scale and
comprehensive level of change required for the business to address
fully the findings of the review as outlined above;
3) the considerable investment into
the HL proposition identified as part of the business-wide review -
combining revenue investment alongside previously announced
strategic investment to support long-term client and asset
retention, as well as the impact of this revenue investment, which,
were it to be implemented, would be expected to be largely
mitigated through a combination of asset growth, and both lower
cost growth and a return to pre-Covid platform asset retention
levels over the medium term; and
4) the external risks facing HL,
including an increasingly competitive market backdrop and the
evolving regulatory environment.
The Independent HL Board considers it is important
for HL Shareholders to take these matters into account when
evaluating the Acquisition. In that context, the Independent HL
Board believes the Cash Offer represents an attractive opportunity
for HL's shareholders to realise an immediate and certain cash
value today for their investment at a level which may not be
achievable until the execution of the strategy is delivered over
the medium to longer term, with that execution subject to a wide
range of potential outcomes.
At 1,140 pence per HL Share, the Cash Offer
represents a premium of approximately:
· 54.1 per
cent. to the Closing Price of 740.0 pence per HL Share on 11 April
2024 (being the last Business Day before the Consortium's initial
approach to the HL Board);
· 48.5 per
cent. to the volume-weighted average price of 767.7 pence per HL
Share for the three-month period ended 21 May 2024 (being the last
Business Day before the commencement of the Offer Period); and
· 51.7 per
cent. to the volume-weighted average price of 751.5 pence per HL
Share for the six-month period ended 21 May 2024 (being the last
Business Day before the commencement of the Offer Period).
In addition, the Independent HL Board notes the
Consortium's history of investing in UK and European financial
services businesses, including wealth management, and the expertise
they bring to help develop HL's client proposition. The Independent
HL Board believes that this expertise has the potential to enable
an accelerated transformation aligned with HL's strategy to
transform the investing experience and create the best savings and
investment platform for its clients. Should the Acquisition become
Effective, HL's management would work alongside the Consortium on
the strategic direction of the HL Group and execution of the
associated strategy.
In reaching its decision, the Independent HL Board
has also taken into account the Consortium's other stated
intentions for the business, management, employees and other
stakeholders of HL.
Accordingly, following careful consideration with its
financial advisers, the Independent HL Board intends unanimously to
recommend the Cash Offer to HL Shareholders.
6
Information ON Bidco AND THE CONSORTIUM
Bidco
Bidco is a private limited company incorporated
in England and Wales on 1 July 2024, which is indirectly
wholly-owned by Topco. 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.
Further details in relation to Bidco will be
contained in the Scheme Document.
Topco
Topco is a private limited company
incorporated under the laws of Jersey on 27 June 2024. Topco was
formed for the purposes of the Acquisition. Topco is a wholly-owned
subsidiary of Consortium JVCo. Topco has not traded since its date
of incorporation, nor has it entered into any
obligations other than in connection with the
Acquisition.
Consortium JVCo
Consortium JVCo is a newly formed
private limited joint venture company incorporated under the laws
of Jersey on 27 June
2024. As at the Effective Date, it is
intended that Consortium JVCo will be indirectly owned in equal
shares by: (i) CVC Private Equity Funds; (ii) Nordic Capital
Vehicles; and (iii) Platinum Ivy. Consortium JVCo 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.
Certain further information relating
to Topco and the Rollover Securities is contained in
Appendix 4 below.
CVC Group
The CVC Group is a leading global
private markets manager with a network of 29 offices
throughout EMEA, the Americas, and Asia, with approximately €193
billion of assets under management. The CVC Group has seven
complementary strategies across private equity, secondaries, credit
and infrastructure, for which vehicles in the CVC Group have
secured commitments of approximately €235 billion from some of the
world's leading pension funds and other institutional investors.
CVC Private Equity Funds have invested in over 130 companies
worldwide (which have combined annual sales of approximately €155
billion and employ more than 600,000 people). CVC Private
Equity Group has a repeatable approach to value creation,
partnering with the best management teams to drive operational
efficiency and reinvest for growth. Since 2008, CVC Private Equity
Funds have made 15 financial services investments spanning the
globe. CVC Private Equity Funds invest regularly in regulated
financial services businesses, being current investors in several
companies regulated by the FCA, PRA and/or Lloyd's of London, and
has a strong regulatory reputation and track record.
Nordic Capital
Nordic Capital is a leading sector-specialist
private equity investor with approximately €31 billion of assets
under management and invests in selected sectors and companies in
Northern Europe and North America, offering partnership, deep
sector knowledge, capital and experience to drive sustainable
growth. Since its founding over 35 years ago, the Nordic Capital
Vehicles have invested in over 145 companies with an ambition to
create long-term sustainable value through active ownership. Nordic
Capital focuses on sectors where it has deep experience and a
proven history such as Healthcare, Technology & Payments,
Financial Services and Services & Industrial Technology and its
portfolio has a combined annual sales of around €18 billion and
employs more than 80,000 people. Nordic Capital is one of the most
experienced private equity investors in Financial Services in
Northern Europe with a dedicated Financial Services team and has
completed over 18 financial services and financial technology
transactions over the last six years including Nordnet, Ascot
Lloyd, Max Matthiessen and Qred.
Platinum Ivy
Platinum Ivy is a wholly-owned subsidiary of
ADIA, managed by ADIA PED. ADIA is a globally-diversified
investment institution that prudently invests funds on behalf of
the Government of Abu Dhabi through a strategy focused on long-term
value creation. ADIA PED is an investment department of ADIA. ADIA
manages a substantial global diversified portfolio of investments,
with assets under management in excess of US$100 billion of which
ADIA PED represents between 10-15 per cent. ADIA is a long term,
value driven investor, mandated to build value in a systematic and
structured manner.
7
Information ON HL
HL is the UK's largest savings and investment
platform and the UK's biggest retail stockbroker, with almost 1.9
million clients and £155.3 billion savings and investments. For
over 40 years, from its Bristol headquarters, it has helped clients
improve their financial futures. Its purpose is making it easy to
save and invest for a better future, which it does via an
easy-to-use platform and broad proposition supporting clients'
financial needs across their lifetime.
HL's award-winning digital platform gives
clients access to a broad range of savings and investment solutions
and products to manage their finances and facilitate their
investment goals. This includes a full suite of tax-efficient
lifetime pension investment solutions; a comprehensive investment
proposition; and a cash management platform, Active Savings, with
access to highly competitive savings rates and the ability to
spread cash savings across providers, maturities and
accounts.
Finally, HL's funds provide clients with a
range of options, from simple solutions (Ready Made) for low
confidence clients, through to single asset funds that invest into
tailored mandates, depending on clients' risk profiles.
HL provides its services via four channels:
Direct to Consumer through the app or website; Helpdesk, via phone
or email; Financial Advice; and Workplace, HL's B2B arm, offering
variety of services adjacent to its core pension
proposition.
8
Irrevocable undertakings and non-binding written
Confirmations of Intent
As described above, Bidco has received
irrevocable undertakings from the HL Independent Directors who hold
HL Shares and from Adrian Collins, the director of HL
appointed following nomination by Peter
Hargreaves pursuant to the terms of the
shareholder agreement between Peter Hargreaves
and HL dated 20 October 2020, to vote (or, where applicable,
procure voting) in favour of the Scheme at the Court Meeting and
the Resolutions at the General Meeting (or, in the event that the
Acquisition is implemented by way of an Offer, to accept or procure
acceptance of such Offer), in respect of, in aggregate 82,129 HL
Shares (representing approximately 0.02 per cent. of the existing
issued ordinary share capital of HL as at 8 August 2024, being the
last Business Day before the date of this announcement). These
undertakings will remain binding in the event that a higher
competing offer for HL is made.
In addition to the irrevocable undertakings
given by the HL Independent Directors and Adrian Collins as set out
above, Bidco has also received an irrevocable undertaking from
Peter Hargreaves to vote (or, where applicable, procure voting) in
favour of the Scheme at the Court Meeting and the Resolutions at
the General Meeting (or, in the event that the Acquisition is
implemented by way of an Offer, to accept or procure acceptance of
such Offer) in respect of a total of 93,838,474 HL Shares
(representing approximately 19.8 per cent. of the existing issued
ordinary share capital of HL as at 8 August 2024, being the last
Business Day before the date of this announcement), and to elect to
receive (i) the Cash Consideration in respect of 50 per cent. of
his HL Shares, and (ii) the Alternative Offer in respect of the
remaining 50 per cent. of his HL Shares. The undertaking will
remain binding in the event that a higher competing offer for HL is
made.
Stephen Lansdown has also provided a
non-binding written confirmation of intent to vote in favour of the
Scheme at the Court Meeting and the Resolutions at the General
Meeting (or, in the event that the Acquisition is implemented by
way of an Offer, to accept such Offer) and
to elect to receive the Cash Consideration in respect
of all of his HL Shares being a total
of 27,087,419 HL
Shares (representing approximately
5.7 per cent. of the existing issued ordinary share capital
of HL as at 8 August 2024, being the last
Business Day before the date of this announcement).
Bidco has, therefore, received irrevocable
undertakings and non-binding written confirmations of intent in
respect of a total of 121,008,022 HL Shares (representing
approximately 25.5 per cent. of the existing issued ordinary share
capital of HL as at 8 August 2024, being the last Business Day
before the date of this announcement).
Further details of these irrevocable
undertakings and non-binding written confirmations of intent,
including the circumstances in which the irrevocable undertakings
may lapse or cease to be binding, are set out in
Appendix 3 to this announcement.
9
Financing of the Acquisition
Following completion of the Acquisition, Bidco
will have a robust and conservative capital structure consistent
with the strategic and financial priorities of HL during a period
of transformation.
The cash consideration payable to HL
Shareholders under the terms of the Acquisition will be financed by
a combination of: (i) equity to be invested by CVC Private Equity
Funds, Nordic Capital Fund XI and Platinum
Ivy; and (ii) debt to be provided under an Interim
Facilities Agreement provided by certain third party lenders
comprising of a £1.75 billion interim senior term loan facility. It
is expected that on or following the Effective Date, certain of the
equity commitments described at (i) above will be provided by
equity co-investors in investment vehicles advised or managed by an
entity or entities within the CVC Group and Nordic Capital
respectively (such co-investors would be passive and not be granted
any governance or control rights over Bidco or any member of the
Bidco Group or HL Group). Further information will be set out in
the Scheme Document.
Goldman Sachs, in its capacity as financial
adviser to Bidco, confirms that it is satisfied
that sufficient cash resources are
available to Bidco to satisfy in full the cash consideration
payable to HL 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 22 June 2024, CVC
Advisers, Nordic Capital XI Delta, Platinum Ivy and HL entered into
a confidentiality agreement in relation to the
Acquisition, pursuant to which, amongst other
things, CVC Advisers, Nordic Capital XI Delta and Platinum Ivy have
undertaken to: (i) subject to certain exceptions, keep information
relating to HL and the Acquisition confidential and not to disclose
it to third parties; and (ii) use such confidential information for
the sole purpose of evaluating, negotiating, advising on or
implementing the potential Acquisition. These confidentiality
obligations will remain in force until the earlier of: (i)
completion of the Acquisition; and (ii) 22 June
2026. The Confidentiality Agreement also contains
undertakings from CVC Advisers, Nordic Capital XI Delta and
Platinum Ivy that for a period of 12 months after the date of the
Confidentiality Agreement, neither CVC Advisers, Nordic Capital XI
Delta and Platinum Ivy nor any of their respective affiliates /
affiliated entities who have received confidential information will
solicit or offer to employ or solicit for employment any individual
who is at any time during that 12 month period an officer of, or an
employee holding an executive or management position with any
member of the HL Group (subject to customary
carve-outs).
Cooperation Agreement
Pursuant to the Cooperation Agreement, Bidco
has agreed to use all reasonable endeavours to satisfy the
conditions set out in paragraphs 3.1 to 3.6 of Part A of Appendix 1
to this announcement as soon as is reasonably practicable and, in
any event, in sufficient time to allow the Effective Date to occur
by the Long Stop Date, provided always that: (i) any remedy applies
only to a member or members of the Topco Group and/or
HL Group and/or its or their respective business(es) and/or (in
relation to the regulatory condition set out in
paragraph 3.6 of Part A of Appendix 1 only), any
person in respect of whom FCA approval is required who
is or would become a controller as a result of the
Acquisition (and, other than in respect of any such
controller, nothing shall require Bidco to offer or accept or agree
to offer or accept any remedy in relation to: (a) any
member of the CVC Network (as defined therein); (b) Nordic Capital,
any Nordic Capital Vehicles, any portfolio company in which Nordic
Capital Vehicles or any of Nordic Capital Vehicles' associated
companies or entities, have an equity or any other interest; or (c)
any member of the Platinum Ivy Group, ADIA or any portfolio
companies in which any of them, or any of their associated
companies or entities, have an equity or any other interest, but
excluding in each case any member of the Topco Group); and (ii) in
respect of the regulatory condition set out in paragraph 3.6 of
Part A of Appendix 1, nothing shall require Bidco to offer or
accept or agree to offer or accept any remedy which: (A) would
require any change to the proposed transaction capital structure
(including as to the debt and/or equity structure); or (B) would
require any change to, or impede the implementation of, the
proposed capital or distribution policies, in respect of the Topco
Group and HL Group following completion of the
Acquisition.
In addition, Bidco and HL have each agreed to
certain related cooperation provisions and obligations in relation
to the making of filings to Relevant Authorities in connection with
the Acquisition.
The Cooperation Agreement records the parties'
intention to implement the Acquisition by way of the Scheme and set
outs the circumstances in which Bidco may elect to switch from a
Scheme to an Offer and the obligations which would apply to Bidco
in such circumstances.
The Cooperation Agreement is capable of
termination in certain circumstances, including if the Acquisition
is withdrawn, terminated or lapses, a third party announces a firm
intention to make an offer for HL which completes, becomes
effective or becomes unconditional, if prior to the Long Stop Date
any Condition has been invoked by Bidco (with the consent of the
Panel), if the HL Independent Directors withdraw or adversely
modify or qualify their recommendation of the Cash Offer, if the
Scheme does not become Effective in accordance with its terms by
the Long Stop Date or otherwise as agreed between Bidco and
HL.
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 HL and the Panel on the Business Day prior to
the Sanction Hearing confirming either: (i) the satisfaction or
waiver of the Conditions (other than the Scheme Conditions); 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.
The Cooperation Agreement also contains
provisions that apply in respect of the HL Share Plans and certain
other employee-related matters.
Bid Conduct Agreement
Nordic Cidron, CVC and Platinum Ivy (together,
the "Investors") and Nordic
Capital XI, L.P. have entered into the Bid Conduct Agreement,
pursuant to which they have agreed certain principles in accordance
with which they intend to cooperate in respect of the
Acquisition.
Pursuant to the Bid Conduct Agreement, it is
agreed that each of the Investors will make all material decisions
with respect to the conduct of the Acquisition
unanimously.
The terms of the Bid Conduct Agreement also
include an agreement not to pursue a competing proposal to the
Acquisition with respect to HL or take any action which might be
prejudicial to completion of the Acquisition or directly or
indirectly encourage, solicit, initiate facilitate, participate in
or otherwise continue any discussion or negotiation with any person
in connection with a competing proposal to the Acquisition, in each
case for so long as the Bid Conduct Agreement is in
force.
The Bid Conduct Agreement will terminate in
certain circumstances, including: (i) 14 days after the date on
which the Acquisition becomes effective or unconditional; (ii) at
such time as the Acquisition is withdrawn or lapses; (iii) at such
time as a competing bid in relation to HL becomes effective or
unconditional; or (iv) at such time as the parties thereto
agree.
Clean Team Agreement
On 21 July 2024, CVC Advisers,
Nordic Capital XI Delta, Platinum Ivy and HL entered
into an amended and restated clean team agreement, the
purpose of which is to set out the terms governing the
disclosure of competitively sensitive information by HL to: (i)
certain employees of CVC Advisers, Nordic Capital XI Delta and
Platinum Ivy and their affiliates; (ii) outside counsel and experts
engaged by the Consortium in connection with the Acquisition; and
(iii) subject to the prior written consent of HL, employees,
officers, directors or partners of proposed sources of debt or
equity finance to the Consortium Members in connection with the
Acquisition, and related obligations on the receiving persons in
relation to the permitted use and handling of such
information.
Joint Defence Agreement
On 18 July 2024, CVC
Advisers, Nordic Capital XI Delta, Platinum Ivy, the
Consortium's external legal counsel, HL and HL's external legal
counsel entered into a joint defence agreement, the purpose of
which is to ensure that the exchange or disclosure of certain
materials relating to the parties only takes place between their
respective external legal counsels and external experts, and does
not diminish in any way the confidentiality of such materials and
does not result in a waiver of privilege, right or immunity that
might otherwise be available.
11 Directors,
management, employees, pensions, research and development and
locations
Strategic plans for HL
As set out in paragraph 3, HL is one of the
market leading UK investment platforms with an impressive position
in the attractive UK wealth market. Bidco believes that HL has
significant potential but will need to continue to
invest across its proposition, client service, retention,
innovation and technology to build an enhanced modern platform and
user experience to deliver a leading client proposition under the
HL brand. This will need to be provided securely, reliably and in a
differentiated way to competitors in order to capture this
potential. Bidco believes it is well positioned to support and
accelerate HL's next phase of development, but this will require
investment in a technology transformation.
Prior to this announcement, consistent with
market practice, Bidco was granted access to HL's senior management
for the purposes of confirmatory due diligence. However, Bidco has
not yet had access to sufficiently detailed information to
formulate specific final plans or intentions regarding the impact
of the Acquisition and accelerated transformation process on HL.
Significant further work is required and will be undertaken to
define the nature, scope and activities within this
transformation.
Following the Acquisition becoming Effective,
Bidco intends to partner with HL's management to undertake a review
of HL's operations and proposition to refine and accelerate the
transformation. While HL management continues to implement its
existing initiatives, Bidco expects to undertake and complete this
review within approximately six months from the Effective Date. The
strategic review will focus on:
·
initiatives to enable clients to meet their savings and wealth
goals and encourage more UK consumers to save and invest for a
better future, in line with Consumer Duty;
· fostering
a technology-enabled, client-centric and product-oriented culture
with client value, speed of innovation, and speed of delivery at
its core - this will also include investing in training and
capability to support and empower HL's client Helpdesk with high
calibre, engaged and motivated colleagues;
· HL's
digital channels and underlying technology infrastructure, striving
to create a modern and best-in-class user interface and client
experience - ensuring that customers receive a premium service both
online and through the Helpdesk;
·
supporting HL management's ambitions to use HL's scale and
experience to deliver an innovative and inspiring range of products
and services with features and benefits that deliver value for its
clients and address their needs at all critical points of their
financial lifecycle;
·
investment in marketing to enhance client engagement and advocacy
and leverage the strength of its client base;
· applying
Bidco's extensive experience to expand and drive automation
initiatives to reduce manual processes, enhance operational
resilience, improve operational efficiency and create a more nimble
and responsive business;
· reviewing
HL's allocation and level of employee resources across and within
business areas to enable the accelerated delivery of technology and
related efficiency initiatives and best-in-class client proposition
and experience;
· continued
prioritisation of HL's ESG priorities including being a responsible
savings and investment provider, a responsible fund manager, and a
responsible employer with an inclusive and diverse culture for
all;
· fostering
an outcome-based performance culture that will drive greater
employee engagement and providing a range of new opportunities for
employees focused on putting them closer to the client; and
·
maintaining HL's high regulatory and governance standard for the
business that focuses on enabling the best experience and outcomes
for the client.
Employees and
management
Bidco attaches great importance to the skill
and experience of HL's management and employees and recognises that
the employees and management of HL are key to its success. Bidco
looks forward to partnering with the employees and the management
team to accelerate and enhance the continued success of HL
following completion of the Acquisition.
Once HL ceases to be a listed company, a
limited number of listed company-related functions will be reduced
in scope or be reorientated to align with HL's new status as a
private company. This may impact a limited number of roles in these
specific areas.
Following completion of the strategic review,
Bidco intends for HL to continue a transformation of the business
which will take several years and be implemented over a number of
phases. Bidco intends for the initial phase of the transformation
to be implemented over a period of two to three years. It is
expected to focus on technology and related efficiency initiatives
where Bidco anticipates the scale, impact and implications for
employees will be broadly consistent with areas already set out in
the findings of the strategic review by HL's management in
paragraph 5 of this announcement but is expected to be delivered on
an expedited basis. This phase would focus on improving the client
experience and technology architecture and strengthening HL's
operational resilience through the use of better technology and
automation of manual processes. Consequently, while these
initiatives could impact certain roles in the relevant areas within
HL, the impact on the overall employee headcount is anticipated to
be in line with the current expectations of HL's management over
this period and will result in head count levels through the
initial phase at least in line with the average over the last three
financial years of HL's average head count for the relevant
financial year. Bidco intends that service improvements and
initiatives in this phase will result in operational and process
efficiencies across Client Management, Service, Digital and IT, as
well as across Marketing, Finance and HR areas of the HL
business.
Following completion, Bidco does not intend to
make a material reduction in the level of the overall headcount of
HL in the first 12 months. Beyond this period and through the
initial phase of the transformation, it is anticipated that
employee head count may reduce by up to 3 per cent. of the current
level of employees per annum. Based on historical experience of
employee turnover, it is anticipated any impact on employees will
be largely addressed through redeployment opportunities, natural
attrition and voluntary redundancies. Bidco confirms that its
intention is for any individuals impacted to be treated in a manner
consistent with HL's high standards, culture and
practices.
Beyond this initial phase, further
transformation initiatives will be undertaken on an accelerated
basis to enhance the technology architecture and underlying
scalability of the HL business. The scope and details of these
initiatives and their implications for employees will be subject to
the progress and implementation achieved within the first phase. As
a result, any impact on areas of the HL business and the employees
within these businesses during the later phases of the
transformation process is not yet certain and subject to change.
Based on its current expectations, Bidco estimates that the impact
on head count over the later stages of the transformation process
will be in line with the initial phase at up to 3 per cent. of the
current level of employees per annum.
As is customary, it is intended that, with
effect from the Effective Date, each of the Non-Executive Directors
of HL shall resign from their office.
Existing employment rights and
pensions
Bidco confirms that, following the Scheme
becoming Effective, the existing contractual and statutory
employment rights, including in relation to pensions, of all HL
management and employees will be fully safeguarded in accordance
with applicable law and as specified further in the Cooperation
Agreement. Bidco does not intend to make any material change to the
conditions of employment of the employees of HL.
Bidco does not intend to make any changes to
the benefits provided by HL's defined contribution pension
arrangements and intends for the employer to continue to make
contributions in line with current arrangements. No member of the
HL Group participates in any defined benefit pension
scheme.
Management incentive
arrangements
Following completion of the Acquisition, Bidco
intends to review the management incentive structures and
governance of HL. Bidco has not entered into, and has not had
discussions on proposals to enter into, any form of incentivisation
arrangements with members of HL's management, but may have
discussions and enter into such discussions for certain members of
the HL management team following the Effective Date.
Headquarters, HQ functions, locations,
fixed assets and research and development
Bidco does not intend to make any material
changes to HL's fixed assets or asset base. Bidco does not intend
to carry out any changes in the location or HQ functions of HL's
Bristol headquarters or with regard to HL's operations and places
of business, other than in respect of the listed company-related
functions as described above. HL does not have a material research
and development function and accordingly Bidco has no plans in this
regard.
Trading Facilities
HL Shares are currently listed on the Official
List and admitted to trading on the London Stock Exchange. As set
out in paragraph 18, applications will be
made for the cancellation of the listing of HL Shares on the
Official List and the cancellation of trading of HL Shares on the
London Stock Exchange, and steps will be taken to re-register HL as
a private company.
None of the statements in this paragraph
11 are "post-offer undertakings" for the
purposes of Rule 19.5 of the Takeover Code.
12 The
Alternative Offer
Under the Alternative Offer, eligible HL
Shareholders may elect to exchange some or all of their HL Shares
for rollover loan notes issued by Bidco which will, subject to
implementation of the Rollover, ultimately be exchanged for the
following Rollover Securities:
for each HL Share: 1 Rollover
Security
If the Scheme becomes Effective, assuming all
eligible HL Shareholders validly elect to receive consideration by
means of the Alternative Offer in respect of 35 per cent. of their
holding of HL Shares and no such elections are scaled back as a
result of the US Holders Cap or the Shareholding Cap, following
satisfaction of the Cash Consideration and subject to
implementation of the Rollover, HL Shareholders will hold up to 35
per cent. of the economic rights in Topco. Following the
implementation of the Rollover, Consortium JVCo will subscribe for
Topco A Ordinary Shares (at the same subscription price per share
as Consortium JVCo paid in respect of its subscription for Topco A
Ordinary Shares to fund the payment of the Cash Consideration to HL
Shareholders) for an aggregate subscription amount equal to the
total costs and expenses incurred and to be incurred by or on
behalf of the Topco Group and the Consortium Members in connection
with the Acquisition. This issuance will be implemented on a
non-pre-emptive basis in order to enable the relevant members of
the Topco Group to settle such costs and expenses, meaning that
holders of Rollover Securities will not be entitled to participate
and their economic rights in Topco will therefore be diluted by
such issuance with effect from the Costs Issuance Date. The
costs and expenses incurred and to be incurred in connection with
the Acquisition are currently expected to be approximately £100
million, which would result in a limited dilution of participating
HL Shareholders of up to approximately 3 per cent. of the holding
of HL Shareholders who elect to receive the Rollover Securities. An
updated estimate of such costs and expenses will be included in the
Scheme Document.
The maximum number of Rollover Securities
available to HL Shareholders under the Alternative Offer will be
limited to 35 per cent. of the issued ordinary share capital of
Topco at completion of the Acquisition (the "Alternative Offer Maximum"). References
to the issued ordinary share capital of Topco at completion of the
Acquisition in this announcement shall refer to the issued ordinary
share capital of Topco as at completion of the Rollover.
If elections are validly received from eligible
HL Shareholders in respect of a number of HL Shares that would,
subject to implementation of the Rollover, ultimately require the
issue of Rollover Securities exceeding the Alternative Offer
Maximum, such elections will be unable to be satisfied in full. In
these circumstances the number of rollover loan notes and, in turn
and subject to implementation of the Rollover, the number of
Rollover Securities to be issued to each eligible HL Shareholder
who has validly elected for the Alternative Offer will be scaled
back on a pro rata basis (being pro rata to the number of HL Shares
in respect of which elections have been validly received), and the
balance of the consideration due to each such HL Shareholder will
be paid in cash in accordance with the terms of the Cash
Offer.
The availability of the Alternative Offer is
conditional upon valid elections being made that would, subject to
implementation of the Rollover, ultimately require the issue of
such number of Rollover Securities as represent at least
5 per cent. of the issued ordinary share capital
of Topco at completion of the Acquisition (the "Alternative Offer Minimum"), failing
which it will lapse. In these circumstances, no Rollover Securities
will be issued and the consideration payable in respect of each HL
Share will be settled entirely in cash in accordance with the terms
of the Cash Offer. However, given the undertaking to elect to
receive the Alternative Offer provided for in the irrevocable
undertaking from Peter Hargreaves, as described in paragraph
8, it is not expected that the Alternative Offer
will lapse as a result of this minimum
requirement.
Unless otherwise determined by Bidco and
permitted by applicable law and regulation, the Alternative Offer
will not be offered, sold or delivered, directly or indirectly, in
or into any Restricted Jurisdiction and individual acceptances of
the Alternative Offer will only be valid if all regulatory
approvals (if any) required by a HL Shareholder to acquire the
Rollover Securities have been obtained.
The Rollover Securities have not been, and will
not be, registered under the US Securities Act nor under the
securities laws of any state or territory or other jurisdiction of
the United States, will not be listed on any stock exchange in the
United States and may not be offered or sold in the United States
absent registration or an available exemption, or a transaction not
subject to, the registration requirements of the US Securities Act.
Accordingly, they will not be issued to HL Shareholders unless
Bidco considers that they may be so issued pursuant to an exemption
from, or in a transaction not subject to, the registration
requirements of the US Securities Act provided by Section 3(a)(10)
of the US Securities Act or another available exemption under the
US Securities Act.
In addition, if: (i) 2,000
or more HL Shareholders; or (ii) 500 or more HL Shareholders
who are not Accredited Investors, in either case, where
300 or more of such HL Shareholders are US
holders, elect for the Alternative Offer (the
"US Holders
Cap"), Bidco may, at its discretion, determine
that the Alternative Offer will not be made available and all HL
Shareholders will instead receive cash consideration in respect of
the HL Shares which were subject to such an election in accordance
with the terms of the Cash Offer.
Where Bidco reasonably believes that an
election for the Alternative Offer by any HL Shareholder may result
in a requirement for a registration or qualification under the US
Securities Act, US Exchange Act or any other securities laws in any
state or territory or other jurisdiction of the United States,
Bidco will have the right to deem that such HL Shareholder has not
elected for the Alternative Offer and such HL Shareholder will
instead receive cash consideration in respect of the HL Shares
which were subject to such an election in accordance with the terms
of the Cash Offer.
Following the Scheme becoming Effective and
except with the approval of Consortium JVCo, the Rollover
Securities may not be offered, sold, resold, taken up, delivered or
transferred, directly or indirectly, in or into the United States
or to or for the account or benefit of any person believed to be a
US Person, or in any other manner whatsoever, as a result of which
a registration under the US Securities Act or the US Exchange Act
would be required, nor will any transfer of Rollover Securities be
permitted that would result in there being (i)
2,000 or more HL Shareholders; or (ii) 500 or
more HL Shareholders who are not Accredited Investors, in either
case, where 300 or more of such HL
Shareholders are US holders. Any transfer of Rollover Securities to
a US Person shall require the approval of Consortium
JVCo.
If an electing HL Shareholder would require
approval from the FCA under Part XII of the FSMA to acquire or
increase control of any member of the HL Group that is a UK
authorised person as a result of their election and the completion
of the Acquisition, the maximum amount of Rollover Securities any
eligible HL Shareholder who elects to receive the Alternative Offer
shall be entitled to will be limited to 9.99 per cent. (or, if
applicable, the maximum percentage that will not require approval
from the FCA for that eligible HL Shareholder) of the issued
ordinary share capital of Topco at completion of the Acquisition
either on a solo basis, or when aggregated with any other electing
shareholder or any Consortium Member (or affiliate thereof) with
whom they might reasonably be deemed to be acting in concert (the
"Shareholding Cap"). If
elections are validly received from an eligible HL Shareholder in
respect of a number of HL Shares that would require the issue of
Rollover Securities to such eligible HL Shareholder exceeding the
Shareholding Cap, such elections will be unable to be satisfied in
full. In such circumstances, the number of Rollover Securities to
be issued to such HL Shareholder would be rounded down to the
Shareholding Cap and the balance of the consideration for each HL
Share will be paid in cash in accordance with the terms of the Cash
Offer.
Eligible HL Shareholders who wish to make an
election for the Alternative Offer will be required, as a condition
to their election being treated as valid and to Rollover Securities
being issued to them, to provide certain preliminary 'know your
customer' information to Topco's Administrative Agent (being such
information required in order to comply with applicable anti-money
laundering, sanctions or 'know your customer' laws) or as otherwise
reasonably required by Bidco and the Consortium. Details regarding
the information to be provided, and the manner in which it must be
provided, will be set out in the Scheme Document.
Failure to provide the required information will result in
elections for the Alternative Offer being invalid and eligible HL
Shareholders who made such an invalid election will instead receive
the Cash Consideration for the number of HL Shares in respect of
which they purported to make an election for the Alternative Offer.
Furthermore, if and to the extent required by applicable anti-money
laundering, sanctions or 'know your customer' laws, eligible HL
Shareholders who receive Rollover Securities may be required to
provide Topco's Administrative Agent with further 'know your
customer' information following the issue of Rollover Securities to
them and information regarding this will be set out in the Scheme
Document. Failure to provide such further information may result in
the directors of Topco placing such restrictions as they think fit
on the relevant holders of the Rollover Securities pursuant to the
Topco Articles. These restrictions may include suspending a
person's ability to transfer the Rollover Securities or to receive
dividends or other distributions in respect of them, as well as
possibly cancelling the relevant Rollover Securities.
The issue of any Rollover Security pursuant to
the Alternative Offer will be in accordance with the mechanism
described in this paragraph 12 and in
Appendix 4 to this announcement and subject to the Conditions and
further terms set out in Appendix 1
to this announcement and to be set out in the Scheme
Document. Further details of the Topco Group and the rights of the
Rollover Securities are set out in paragraph 13
and in Appendix 4 to this
announcement.
For the purposes of Rule 24.11 of the Takeover
Code, Goldman Sachs, as financial adviser to the Bidco, will
provide an estimate of the value of a Rollover Security, together
with the assumptions, qualifications and caveats forming the basis
of its estimate of value, in a letter to be included in the Scheme
Document.
If the Scheme becomes Effective, eligible HL
Shareholders who: (i) do not validly elect to receive some or all
their consideration by means of the Alternative Offer; or (ii) who
make an election for the Alternative Offer but fail to provide the
required 'know your customer' information, will automatically
receive the full amount of the Cash Consideration for their entire
holding of HL Shares.
If the Scheme becomes Effective, eligible HL
Shareholders that validly elect to receive consideration by means
of the Alternative Offer will receive: (i) their Rollover
Securities pursuant to a rollover mechanism in the Scheme whereby
on or shortly following the Effective Date such number of HL Shares
in respect of which eligible HL Shareholders validly elect for the
Alternative Offer (subject to the terms of this announcement) will
be exchanged for loan notes to be issued by Bidco pursuant to the
Scheme which will then be exchanged, directly or indirectly and
subject to exercise of associated put or call options, for the
relevant number of Rollover Securities in Topco that eligible HL
Shareholders are entitled to in accordance with the Alternative
Offer (the "Rollover"); and
(ii) if applicable, as a result of a partial election for the
Alternative Offer and/or any scaling back as described above, the
Cash Consideration in respect of such HL Shareholders' remaining
holdings of HL Shares not exchanged pursuant to the Alternative
Offer.
Further details of the Rollover mechanics are
set out in Appendix 4 to this announcement.
13 the Rollover
securities
Terms of issue of Rollover
Securities
The Rollover Securities
to be issued to eligible HL Shareholders who validly elect
for the Alternative Offer in accordance with the
Rollover will be issued credited as fully paid and
will rank economically pari
passu with the Topco A Ordinary Shares held and issued to
Consortium JVCo in connection with the Acquisition as described
above, including the right to receive and retain dividends and
other distributions declared, made or paid by reference to a record
date falling on or after the date of this announcement.
Summary of Rollover
Securities
A summary of the key rights of the Rollover
Securities is included at Appendix 4
and will be set out in the Scheme Document. HL Shareholders
are encouraged to read in full Appendix 4 and the advantages and
disadvantages and investment considerations set out in paragraphs 4
and 14 of this announcement, together with the Topco Shareholders'
Agreement and the Topco Articles and, in due course, the Scheme
Document. References to "Topco B Ordinary Shares" have the same
meaning as references to "Rollover Securities", and references to
"Topco B Shareholders" have the same meaning as references to
"holders of Rollover Securities / Topco B Ordinary Shares". As an
overview, the Rollover Securities will be subject to the following
terms and conditions:
· the
Rollover Securities will not carry any general voting rights at
general meetings of Topco;
· the
Rollover Securities will not be transferable (save in very limited
circumstances such as where required or permitted pursuant to an
Exit or reorganisation transaction or in accordance with customary
'drag along' and 'tag along' provisions, or to close family
members, vehicles under their (or their close family's) sole
control and/or family trust(s) established for tax planning
purposes subject to customary transfer back requirements or
otherwise with the prior consent of Consortium JVCo);
· the
Rollover Securities will be unlisted;
·
eligible HL Shareholders who validly elect for the
Alternative Offer will, pursuant to a power of attorney to be
included in the Form of Election and/or the Scheme, deliver a fully
executed deed of adherence pursuant to which they will be bound by
the Topco Shareholders' Agreement;
· any
proposed transferee of Rollover Securities:
·
shall adhere to the Topco Shareholders' Agreement;
·
shall provide such information and materials as Consortium
JVCo or any other relevant person (including any corporate
administrator) reasonably requires and requests in respect of such
transferee and/or its affiliated or related persons in order to
satisfy their respective obligations in respect of any 'know
your customer', proceeds of crime, anti-terrorism financing
and/or anti-money laundering legislation or regulation from time to
time, or in connection with any anti-trust or regulatory change in
control approvals required by any regulator (which Topco shall
provide reasonable information and assistance in obtaining, if
required); and
·
must not be a sanctioned person;
· if
Consortium JVCo or any Consortium Member proposes to
directly or indirectly transfer any of its securities in the Topco
Group to a bona fide third-party purchaser which is not affiliated
with any Consortium Member as part of a single
transaction or series of connected transactions, Consortium JVCo
shall have a right to 'drag along' (i.e., force the sale of)
Rollover Securities held by Topco B Shareholders in Topco on a pro
rata basis on the same economic terms as Consortium JVCo to such
third-party purchaser, provided that Consortium JVCo shall be
entitled to elect for Topco B Shareholders to receive a cash
alternative to any non-cash component of consideration;
and
· if
Consortium JVCo or any Consortium Member proposes to directly or
indirectly transfer Topco A Ordinary Shares to a third-party
purchaser as part of a single transaction or series of connected
transactions following which Consortium JVCo, the Consortium
Members and/or their affiliates together hold, or would as a result
of the relevant transfer hold, directly or indirectly, less than 90
per cent. of the Topco A Ordinary Shares in issue on the Costs
Issuance Date (or on any direct or indirect transfer of Topco A
Ordinary Shares by Consortium JVCo, any Consortium Member or their
affiliates thereafter), Topco B Shareholders shall have a 'tag
along' right exercisable on a pro rata basis in relation to such
transfer and any transfer of Topco A Ordinary Shares by Consortium
JVCo, the Consortium Members or their affiliates thereafter. Any
transfer by Topco B Shareholders of their rights under the 'tag
along' provision shall be at the same price and otherwise on the
same terms as agreed to by Consortium JVCo (or selling Consortium
Member or its affiliates, if applicable), save that Consortium JVCo
shall be entitled to elect for Topco B Shareholders to receive a
cash alternative to any non-cash component of consideration. This
right is subject to a number of exceptions, including (amongst
others) (i) in relation to transfers to Consortium Members or their
affiliates, (ii) on or following an IPO in respect of ordinary
shares of any member of the Topco Group, or (iii) in relation to
transfers in connection with a Refinancing.
14 Risk factors
and other investment considerations
The attention of eligible HL Shareholders who
may consider electing to receive some or all their consideration by
means of the Alternative Offer is drawn to certain risk factors and
other investment considerations relevant to such an election. These
will be set out in full in the Scheme Document but will include,
inter alia, the
following:
· upon the
Scheme becoming Effective, the Topco Group will be controlled by
Consortium JVCo. The Rollover Securities will not carry any general
voting rights (whether at a general meeting or pursuant to a
written resolution of Topco) nor any governance rights (except
those associated with any Substantial B Shareholder) other than
very limited minority protections prescribed by Jersey law
(including in relation to a variation of their class rights) and
rights in respect of a very limited number of reserved matters
(being those matters set out in paragraph 5 of Appendix 4 to
this announcement) which require the consent of the Substantial B
Shareholder(s). Further, no holders of Rollover Securities other
than the Substantial B Shareholder(s) will have the right to
appoint directors to the board of Topco. Holders of Rollover
Securities will therefore have no influence over decisions made by
the Topco Group in relation to its investment in HL or in any other
business or in relation to any member of the Topco Group's (or HL
Group's) strategy;
· the board
of Bidco shall be the principal decision-making board of the Topco
Group and a majority of the members of such board shall be
comprised of representatives appointed by the Consortium and/or
Consortium JVCo;
· the
Rollover Securities will comprise securities in a private and
unquoted company, and there is no current expectation that they
will be listed or admitted to trading on any exchange or market for
the trading of securities, and they will therefore be
illiquid;
· the
value and performance of the Rollover Securities will at all times
be uncertain and there can be no assurance or guarantee that any
such securities will be capable of being sold in the future or that
they will be capable of being sold at the value to be estimated by
Goldman Sachs in the Scheme Document;
·
payments in respect of Rollover Securities will not be
guaranteed or secured and any return of proceeds,
whether in connection with an Exit or otherwise, will be paid net
of costs incurred by the Topco Group with respect to such return of
proceeds;
· the
Rollover Securities will not be transferable (save in very limited
circumstances such as: (i) where required or permitted pursuant to
an Exit or reorganisation transaction or in accordance with 'drag
along' and 'tag along' provisions in the Topco Shareholders'
Agreement; or (ii) to close family members, vehicles under their
(or their close family's) sole control and/or family trust(s)
established for tax planning purposes, subject to transfer back
requirements or otherwise with the prior consent of
Consortium JVCo);
· any
Exit, Indirect Liquidity Event or Refinancing will occur at the
sole discretion of Consortium JVCo and holders of Rollover
Securities will therefore not have control over the date(s), terms
or value(s) on or at which they may be able to realise their
investment in the Topco Group (if at all). In
particular:
· holders
of Rollover Securities may be required in the future to sell their
Rollover Securities on a pro rata basis on the same terms at those
agreed to by Consortium JVCo under the terms of a 'drag along'
provision set out in the Topco Shareholders' Agreement. There is no
requirement for Consortium JVCo or any of its affiliates to proceed
with an Exit or to do so at any particular minimum price or, if
they do proceed with an Exit, to exercise the 'drag along' right,
and certain exceptions to the 'drag along' right apply. In
the event of only a partial exit by Consortium JVCo or its
affiliates, the drag would not provide a full exit for holders of
Rollover Securities. The 'drag along' right described above could
be exercised at any time following completion of the Acquisition.
Any transfer triggering the 'drag along' right may be at a value
that is less than the value of the Cash Consideration and the
consideration payable to holders of Rollover Securities in such
circumstances may or may not be cash;
· in
relation to the 'tag along' right in the Topco Shareholders'
Agreement:
· it is
only exercisable by holders of Rollover Securities on a direct or
indirect transfer of Topco A Ordinary Shares at any time when
Consortium JVCo, the Consortium Members and/or their affiliates
together hold, or would as a result of the relevant transfer hold,
directly or indirectly, less than 90 per cent. of the Topco A
Ordinary Shares in issue on the Costs Issuance Date and on any
direct or indirect transfer of Topco A Ordinary Shares by
Consortium JVCo, the Consortium Members or their affiliates
thereafter. Certain exceptions apply which would therefore not give
rise to a 'tag along' right (and in respect of which there is no
subsequent 'tag along' right), including (amongst others) (i) any
initial transfers of up to 10 per cent. of the Topco A Ordinary
Shares in issue on the Costs Issuance Date, (ii) in relation to
transfers in connection with a Refinancing, or (iii) in connection
with a syndication of equity interests by Consortium JVCo or its
affiliates. Therefore, this 'tag along' right may not provide for a
full (or any) exit for holders of Rollover Securities;
· it
enables holders of Rollover Securities to sell Rollover Securities
only pro rata to the proportion of Topco A Ordinary Shares
transferred by Consortium JVCo or its affiliates in the
transaction(s) giving rise to the 'tag along' right. Therefore, if
Topco A Ordinary Shares have been transferred pursuant to one of
the exceptions to the 'tag along' right, then the 'tag along' right
would not apply to the subsequent transfer of those shares by such
transferee;
· there is
no requirement for Consortium JVCo to transfer Topco A Ordinary
Shares on any known timeline;
· holders
of Rollover Securities who exercise the 'tag along' right described
above will be required to agree to the same terms and conditions as
Consortium JVCo (or, if applicable the Consortium Members or their
affiliates) in relation to the relevant transfer, including as to
price and any covenants as a selling shareholder. The consideration
payable to holders of Rollover Securities in such circumstances may
or may not be cash and is not subject to any minimum threshold;
and
· in the
event of any Exit, Indirect Liquidity Event or Refinancing, holders
of Rollover Securities will be required to cooperate with the Topco
Group and Consortium JVCo, including to provide certain covenants,
indemnities and commitments in connection with such process and to
agree to pay related costs incurred by or attributable to the Topco
Group and bear related liabilities. Holders of Rollover Securities
will undertake upon entering into the Topco Shareholders' Agreement
not to take actions which are inconsistent with any proposed Exit,
Indirect Liquidity Event or Refinancing;
· in
relation to any further issues of securities, if holders of
Rollover Securities wish to avoid their percentage interest in
Topco being reduced by any such issue, they will need to invest
further cash sums in the Topco Group and provide related
documentation. In particular, holders of Rollover Securities who do
not elect to exercise their catch-up rights by investing the
necessary cash sums and providing related documentation in respect
of any further issues of securities by the Topco Group will suffer
significant dilution in their percentage ownership. The price of
and valuation methodology in relation to such further issuances is
not known and may be different to the value per Rollover Security
to be estimated by Goldman Sachs in the Scheme Document;
·
the rights of holders of Rollover Securities to
participate in future issues of securities by Topco will apply on a
catch-up basis only (i.e. to allow holders of Rollover Securities
the opportunity to take up their pro rata entitlements to
securities following completion of a related issue of securities to
the Topco A Shareholders or other persons) and will be subject to a
number of important exceptions (described in paragraph
7 of Appendix 4 to this announcement, including
the ability of the holder(s) of a majority of the Rollover
Securities to waive catch-up rights in connection with issues of
securities by any member of the Topco Group). Such events may
result in the economic entitlements of holders of Rollover
Securities suffering significant dilution. Any securities issued by
members of the Topco Group in future may have different (including,
potentially, preferential) rights or characteristics to the
Rollover Securities. For example, holders of Rollover Securities
will not be entitled to participate in any issues of
securities:
· to
actual or potential employees, directors, officers or consultants
of the Topco Group (whether of the same or different classes to the
Rollover Securities). If any member of the Topco Group introduces
one or more management incentive plans for actual or potential
employees, directors, officers and consultants of the Topco Group
after the Effective Date that provide participants with an interest
in securities in the Topco Group, such issue(s) could potentially
significantly dilute the Rollover Securities. In addition, the
Topco Group may not receive material cash sums on the issue of any
such securities and the returns on any such securities may
potentially be structured to increase their proportionate interest
in the value of the Topco Group as it increases in value (whether
pursuant to a ratchet mechanism or otherwise);
· to
third-party lenders in connection with debt financing, in
connection with an IPO or pre-IPO reorganisation or to third
parties as non-cash consideration on the acquisition of, or merger
with, all or part of another business, undertaking, company or
assets. Any securities issued by members of the Topco
Group in future may have different (including, potentially,
preferential) rights or characteristics to the Rollover Securities;
and
· if a
Topco B Shareholder Majority agrees with Consortium JVCo to waive
the right to participate in any such issue on behalf of all Topco B
Shareholders;
· the
HL Shares are currently admitted to trading on the Main Market of
the London Stock Exchange and HL Shareholders are afforded certain
standards and protections, including in respect of disclosure, as a
result. HL Shareholders who, subject to implementation of the
Rollover and the other terms in this announcement, receive Rollover
Securities (being unlisted securities in a private company) will
not be afforded protections commensurate with those that they
currently benefit from as shareholders in HL. Except for
information to be provided to persons who qualify as Substantial B
Shareholders (but not to other holders of Rollover Securities),
neither the Topco Articles nor the Topco Shareholders' Agreement
will provide holders of Rollover Securities with information
rights, and the default information rights available to minority
shareholders in the position of the holders of Rollover Securities
under Jersey law are very limited;
· the
value of the Rollover Securities will depend on the future
performance of the HL business under Consortium JVCo's ownership.
This remains uncertain and could result in the amount received on
any Exit or other transfer being less than the Cash Consideration
foregone under the Cash Offer. There can be no certainty or
guarantee as to the performance of the Topco Group or the HL Group
following the Effective Date, and past performance cannot be relied
upon as an indication of future performance growth;
·
Consortium JVCo intends that the costs and expenses
incurred and to be incurred by or on behalf of the Topco Group and
the Consortium Members in connection with the Acquisition
will be borne by the Topco Group. Following the
implementation of the Rollover, Consortium JVCo will subscribe for
Topco A Ordinary Shares (at the same subscription price per share
as Consortium JVCo paid in respect of its subscription for Topco A
Ordinary Shares to fund the payment of the Cash Consideration to HL
Shareholders) for an aggregate subscription amount equal to the
total costs and expenses incurred and to be incurred by or
on behalf of the Topco Group and the Consortium Members in
connection with the Acquisition. This issuance will be implemented
on a non-pre-emptive basis in order to enable the relevant members
of the Topco Group to settle such costs and expenses, meaning that
holders of Rollover Securities will not be entitled to participate
and their economic rights in Topco will therefore be diluted by
such issuance with effect from the Costs Issuance Date. Such
costs and expenses incurred and to be incurred in connection with
the Acquisition are currently expected to be approximately £100
million, which would result in a dilution of participating HL
Shareholders of up to approximately 3 per cent. of the holding of
HL Shareholders who elect to receive the Rollover Securities. An
updated estimate of such costs and expenses will be included in the
Scheme Document;
·
Consortium JVCo intends that reasonable, properly incurred
costs in connection with any Exit, reorganisation transaction or
Refinancing or return of proceeds in future will be borne by the
Topco Group and/or the holders of Topco Shares. Such costs would
therefore result, directly or indirectly, in a pro rata reduction
in the value of the investment made by holders of Rollover
Securities in the Topco Group. The quantum of such costs is not
known;
·
certain consent rights under the Topco Shareholders'
Agreement are exercisable by the holder(s) of a majority of the
Rollover Securities. These include waiving catch-up rights of
holders of Rollover Securities in connection with issues of
securities by any member of the Topco Group. Depending on the
number of persons who elect for the Alternative Offer and in what
proportions, it is possible that such consent may in practice be
capable of being given by one or a small number of holder(s) of
Rollover Securities who hold a majority of the Rollover Securities
(without any requirement to consult with or refer to the other
holder(s) of Rollover Securities);
·
Consortium JVCo may, acting reasonably, make any amendment
to, or variation of, the Topco Shareholders' Agreement and/or Topco
Articles and/or related documents (notwithstanding any class
rights) without the consent of, or notification to, holders of
Rollover Securities provided that such amendments or variations are
not disproportionately adverse to the economic, tax or legal
position of the holders of Rollover Securities (as a
whole) or the governance rights of the holders of Rollover
Securities, in each case as compared to Consortium
JVCo. Any such amendment or variation must be for bona fide
purposes and shall not be used to frustrate, terminate or reduce
the rights of holders of Rollover Securities. Consortium JVCo may
make any other amendment to, or variation of, the Topco
Shareholders' Agreement and/or the Topco Articles and/or related
documents on reasonable notice to the Topco B Shareholders and with
the prior consent of (i) the holders of a majority of the Rollover
Securities (excluding, for the purposes of this limb (i), any such
Rollover Securities held by a Substantial B Shareholder) and (ii)
the approval of each Substantial B Shareholder;
· the
Topco Shareholders' Agreement includes a number of continuing
obligations on holders of Rollover Securities, including (i) broad
restrictions on saying or doing anything which may be harmful or
prejudicial to the goodwill or reputation of the Topco Group, the
HL Group or any Consortium Member or their affiliates (amongst
others) and (ii) a compliance covenant, which requires the holders
of Rollover Securities to observe and fully comply therewith and
includes an undertaking by the parties to exercise their rights to
give full effect thereto, including passing certain resolutions
and/or class consents, including in connection with an Exit
or issue of securities (which means that circumstances may
arise whereby the holders of Rollover Securities are obliged to
vote in a particular way to comply with this covenant, or their
right to object to a variation of class rights may be otherwise
restricted). The Topco Shareholders' Agreement also contains a
power of attorney whereby the Topco B Shareholders appoint Topco or
Consortium JVCo as their attorney to provide the consents and
approvals referred to above. A combination of such compliance
covenants, the power of attorney and the variation provisions
described above and certain other requirements in the Topco
Shareholders' Agreement and Topco Articles therefore narrow the
scope of class rights protections which would otherwise be
available to holders of Rollover Securities under Jersey law;
and
·
certain rights and protections attaching to the Rollover
Securities will depend on the number of Rollover Securities held by
each relevant HL Shareholder. HL Shareholders will have no
certainty as to the amount of Rollover Securities they would
receive because:
· the
maximum number of Rollover Securities available to eligible HL
Shareholders under the Alternative Offer will be limited to the
equivalent of 35 per cent. of the issued ordinary share capital of
Topco at completion of the Acquisition (following implementation of
the Rollover). To the extent that elections for the Alternative
Offer cannot be satisfied in full, the number of Rollover
Securities to be issued to each eligible HL Shareholder who has
validly elected for the Alternative Offer will be reduced on a pro
rata basis, and the consideration due to HL Shareholders in respect
of the balance of their HL Shares will be paid in cash in
accordance with the terms of the Cash Offer; and
· if
(i) 2,000 or more HL Shareholders; or (ii) 500 or more
HL Shareholders who are not Accredited Investors, in either case,
where 300 or more of such HL Shareholders are US
holders, elect for the Alternative Offer, Bidco may,
at its discretion, determine that the Alternative Offer will not be
made available, and the consideration payable to all HL
Shareholders will be settled entirely in cash in accordance with
the terms of the Cash Offer.
Further details on the Topco Group and the
principal rights of the Rollover Securities are set out in
Appendix 4 and will be summarised in the
Scheme Document.
15 Disclosure of
interests in HL securities
Except for the irrevocable undertakings
referred to in paragraph 8 above
and Appendix 3 and as disclosed
below, as at 7 August 2024 (being the
last practicable day before 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 HL Shares or securities convertible or exchangeable into HL
Shares; or (ii) had any short positions in respect of relevant
securities of HL (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 HL
(including, for these purposes, any financial collateral
arrangements of the kind referred to in Note 3 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(a) on the definition of acting in
concert in the Takeover Code.
Interests
Name
|
Nature of
interest
|
Number of HL
Shares
|
Percentage of
HL's fully diluted share capital
|
Platinum Ivy (or persons presumed to be acting
in concert with it)
|
Securities owned and/or controlled
|
375,212
|
0.08
|
Platinum Ivy (or persons presumed to be acting
in concert with it)
|
Cash-settled derivatives
|
614,233
|
0.13
|
Goldman Sachs Bank Europe SE
|
Securities borrowed
|
63,089
|
0.01
|
David Wells (acting in concert with CVC
Advisers in relation to the Acquisition)
|
Securities owned and/or controlled
|
100
|
0.00
|
Short positions
Name
|
Nature of
interest
|
Number of HL
Shares
|
Percentage of
HL's fully diluted share capital
|
Platinum Ivy (or persons presumed to be acting
in concert with it)
|
Cash-settled derivatives
|
60,650
|
0.01
|
16 HL Share
Plans
Participants in the HL Share Plans will be
contacted regarding the effect of the Acquisition on their rights
under the HL Share Plans and, where required, appropriate proposals
will be made to such participants pursuant to Rule 15 of the
Takeover Code in due course. Details of the impact of the Scheme on
the HL Share Plans and the proposals referred to above will be set
out in the Scheme Document.
17 Scheme
process
Structure and mechanism
It is intended that the Acquisition will be
implemented by way of a Court-sanctioned scheme of arrangement
between HL and the Scheme Shareholders under Part 26 of the 2006
Act.
The purpose of the Scheme is to provide for
Bidco to become the holder of the entire issued, and to be issued,
ordinary share capital of HL. This is to be achieved:
·
under the Cash Offer by the transfer of the Scheme Shares to
Bidco, in consideration for which relevant Scheme Shareholders
shall receive the Cash Consideration on the basis set out in
paragraph 2 of this announcement;
and
· in
respect of those Scheme Shareholders that validly elect for the
Alternative Offer (and subject to the Alternative Offer Maximum,
the Shareholding Cap and the US Holders Cap), through the receipt
of Rollover Securities pursuant to the Rollover mechanic set out in
paragraph 12 and Appendix 4 in exchange
for the transfer to Bidco of the relevant number of Scheme Shares
of the relevant eligible Scheme Shareholder,
in each case, to be effected pursuant to the
Scheme.
Conditions to the
Acquisition
The Acquisition is 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 (or, if the Acquisition is implemented by way
of an Offer, the Offer Document) and will only become Effective if,
among other things, the following events occur on or before 11.59
p.m. on the Long Stop Date:
· a
resolution to approve the Scheme is passed by a majority in number
of Scheme Shareholders present and voting (and entitled to vote) at
the Court Meeting, either in person or by proxy, representing 75
per cent. or more in value of the Scheme Shares held by those
Scheme Shareholders;
· the
Resolutions necessary to implement the Scheme and the Acquisition
are passed by the requisite majority of HL 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 Bidco and
HL); and
·
following such sanction, a copy of the Court Order is
delivered to the Registrar of Companies.
Bidco may only invoke a Condition so as to cause the
Acquisition not to proceed, lapse or to be withdrawn with the
consent of the Panel. Certain Conditions are not subject to this
requirement. Further details are set out below and in Part B of
Appendix 1.
The Conditions in paragraphs
1 and 2.1(ii),
2.2(ii) and
2.3(ii) of
Part A 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, such date to be set out in the Scheme Document in due
course (or such later date as may be agreed between Bidco and HL),
unless such Condition is waived by Bidco;
· the
Sanction Hearing 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 HL), unless such Condition is waived by Bidco; or
· the
Scheme does not become Effective on or by 11.59 p.m. on
the Long Stop Date.
If any of the Conditions in paragraph
2.1(ii), 2.2(ii)
or 2.3(ii) of
Part A of
Appendix 1 to this announcement is not
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 HL and where required, the
consent of the Panel, specified a new date by which that Condition
must be satisfied.
Once the necessary approvals from HL
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 2025.
Upon the Scheme becoming Effective: (i) it will
be binding on all Scheme Shareholders, irrespective of whether or
not they attended or voted at the Court Meeting (and if they
attended and voted, whether or not they voted in favour); and (ii)
share certificates in respect of HL Shares will cease to be valid
and entitlements to HL 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 (pursuant to the Cash Offer or the Alternative
Offer, as applicable) will be despatched within 14 days of the
Effective Date.
Any HL Shares (other than any Excluded Shares)
issued before the Scheme Record Time will be subject to the terms
of the Scheme. The Resolutions to be proposed at the General
Meeting will, amongst other matters, provide that the Articles be
amended to incorporate provisions requiring any HL Shares issued
after the Scheme Record Time (other than to Bidco and/or its
nominees) to be automatically transferred to Bidco on the same
terms as the Acquisition (other than terms as to timings and
formalities). The provisions of the Articles (as amended) will
avoid any person (other than Bidco and its nominees) holding shares
in the capital of HL after the Effective Date.
Full 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 and the Form of Election accompanying the Scheme Document
will be published as soon as practicable and in any event within 28
days of this announcement (or on such later date as Bidco and HL
may, with the consent of the Panel, agree and, if required, the
Court may approve).
18 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 HL
Shares on the London Stock Exchange's Main Market and the listing
of the HL Shares on the Official List with effect on or shortly
after the Effective Date.
It is expected that the last day of dealings in
HL Shares on the Main Market of the London Stock Exchange will 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.
It is also intended that HL will be
re-registered as a private limited company and for this to take
effect as soon as practicable following the Effective
Date.
19
Documents
Copies of the following documents will be
available promptly on HL's website, subject to certain restrictions
relating to persons resident in Restricted Jurisdictions, at
www.hl.co.uk/investor-relations and in any event by no later than
noon on the Business Day following this announcement until the end
of the Offer Period:
·
this announcement;
· the
Confidentiality Agreement;
· the
Cooperation Agreement;
· the
Bid Conduct Agreement;
· the
Clean Team Agreement;
· the
Joint Defence Agreement;
· the
Topco Shareholders' Agreement;
· the
Topco Articles;
· the
Bidco Articles;
· the
irrevocable undertakings referred to in paragraph
8 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
consent letters 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 set out in this announcement, is incorporated into or
forms part of this announcement.
20
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 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 is
applicable, as those which would apply to the Scheme, subject to
the replacement of Conditions 2.1, 2.2, 2.3 and 2.4 set out
in Part A of
Appendix 1 with an acceptance condition set
(subject to the terms of the Cooperation Agreement) at a level
permitted by the Panel.
If the Acquisition is effected by way of an
Offer, and such an Offer becomes or is declared unconditional and
sufficient acceptances are received, Bidco intends to:
(i) make a request to the FCA to cancel the listing of the HL
Shares on the Official List; (ii) make a request to the London
Stock Exchange to cancel the trading of HL 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 HL Shares in respect of which the Offer
has not been accepted.
Investors should be aware that Bidco may
purchase HL 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 the irrevocable
undertakings and non-binding written confirmations of intent
received by Bidco are set out in
Appendix 3. Details of Topco and the
Rollover Securities are set out in
Appendix 4. Certain definitions and terms
used in this announcement are set out in
Appendix 5.
The Scheme Document, the related forms of proxy
and the Form of Election are expected to be sent to HL Shareholders
within 28 days of this announcement (or on such later date as
Bidco, HL and the Panel may agree). A copy of the Scheme Document
is also expected to be sent (for information only) to persons with
information rights and participants in the HL Share Plans at the
same time as it is posted to HL Shareholders.
Goldman Sachs (as financial adviser to Bidco
and the Consortium), Fenchurch, Barclays and Deutsche Numis (as
joint financial advisers to HL) and Morgan Stanley (as special
financial adviser to the HL Independent Directors) have each given
and not withdrawn their consent to the publication of this
announcement with the inclusion herein of the references to their
names in the form and context in which they appear.
Enquiries
CVC Private
Equity Group
Carsten Huwendiek
Nick Board
|
+44 (0) 20
7420 4200
|
Nordic
Capital
Elin Ljung (of Nordic Capital
Advisors)
|
+46 8 440
5050
|
Platinum
Ivy
Garry Nickson
|
+971 2 415
0000
|
Goldman Sachs International (Financial Adviser to
Bidco and the Consortium)
Mark Sorrell
Nick Harper
James Lucas
Cara Pazdon
Camila Rodriguez-Bedoya
|
+44 (0) 20
7774 1000
|
FGS
Global (PR Adviser to Bidco and the Consortium)
Guy Lamming
Mike Turner
Anjali Unnikrishnan
|
+44 (0) 20
7251 3801
|
Hargreaves
Lansdown
James Found, Head of Investor
Relations
Lucy Thomas, Corporate Affairs
Director
|
+44 (0) 7970 066
634
+44 (0) 7779 639
460
|
Fenchurch
Advisory Partners (Lead Financial Adviser to
HL)
Kunal Gandhi
Rob Williams
Graham Marchant
Josh Needham
|
+44 (0) 20 7382
2222
|
Barclays Bank
PLC, acting through its Investment Bank (Joint Financial Adviser
and Corporate Broker to
HL)
Alisdair Gayne
Adrian Beidas
Richard Bassingthwaighte
Callum West
|
+44 (0) 20 7623
2323
|
Deutsche Numis
(Joint Financial Adviser and Corporate Broker to
HL)
Charles Farquhar
Daniel Werchola
Derek Shakespeare
Rajesh Iyer
|
+44 (0) 20 7260
1000
|
Morgan Stanley
& Co. International plc (Special Financial Adviser to the
Independent HL Board)
Gillian
Sheldon
Ben Grindley
Adrian Doyle
Nishil Bhagani
|
+44 (0) 20 7425
8000
|
Brunswick (PR
Adviser to
HL)
Nick Cosgrove
Joanna Donne
|
+44 (0) 20 7404
5959
|
Kirkland & Ellis International LLP is
acting as legal adviser to Bidco and Nordic Capital XI Delta.
Latham & Watkins (London) LLP is acting as legal adviser to
CVC. Linklaters LLP is acting as legal adviser to Platinum
Ivy.
Freshfields Bruckhaus Deringer LLP is acting as
legal adviser to HL.
Further information
Goldman Sachs
International ("Goldman
Sachs"), which is authorised by the PRA and regulated by the
FCA and the PRA in the United Kingdom is acting exclusively for
Bidco and the Consortium as financial advisers and no one else in
connection with the Acquisition and other matters set out in this
announcement and will not be responsible to anyone other than Bidco
and the Consortium for providing the protections afforded to
clients of Goldman Sachs, nor for providing advice in connection
with the Acquisition, the content of this announcement or any
matter referred to herein. Neither Goldman Sachs nor any of Goldman
Sachs' subsidiaries, affiliates or branches owes or accepts any
duty, liability or responsibility whatsoever (whether direct,
indirect, consequential, whether in contract, in tort, under
statute or otherwise) to any person who is not a client of Goldman
Sachs in connection with this announcement, any statement contained
herein or otherwise.
Fenchurch
Advisory Partners LLP ("Fenchurch"), which is authorised and
regulated in the United Kingdom by the FCA, is acting exclusively
for HL and no-one else in connection with the Acquisition described
in this announcement and accordingly will not be responsible to
anyone other than HL for providing the protections afforded to its
clients nor for providing advice in relation to the matters
described in this announcement.
Barclays Bank
PLC ("Barclays"), acting
through its Investment Bank, is authorised by the PRA and regulated
in the United Kingdom by the FCA and the PRA, is acting exclusively
for HL and no one else in connection with the subject matter of
this announcement and will not be responsible to anyone other than
HL for providing the protections afforded to clients of Barclays
nor for providing advice in relation to the Acquisition, the
content of this announcement or any other matter referred to in
this announcement.
Numis
Securities Limited ("Deutsche
Numis"), which is authorised and regulated in the United
Kingdom by the FCA, is acting exclusively for HL and no one else in
connection with the matters set out in this announcement and will
not regard any other person as its client in relation to the
matters in this announcement and will not be responsible to anyone
other than HL for providing the protections afforded to clients of
Deutsche Numis, nor for providing advice in relation to any matter
referred to herein. Neither Deutsche Numis nor any of its
affiliates (nor any of their respective directors, officers,
employees or agents), owes or accepts any duty, liability or
responsibility whatsoever (whether direct or indirect, whether in
contract, in tort, under statute or otherwise) to any person who is
not a client of Deutsche Numis in connection with this
announcement, any statement contained herein or
otherwise.
Morgan
Stanley & Co. International plc ("Morgan Stanley") which is authorised by
the PRA and regulated by the FCA and the PRA in the United Kingdom
is acting as special financial adviser exclusively for the Independent
HL Board and no one else in connection with the matters contained
in this announcement Morgan Stanley, its affiliates and their
respective directors, officers, employees and agents will not
regard any other person as their client, nor will they be
responsible to any person other than the Independent HL Board for
providing the protections afforded to clients of Morgan Stanley or
for providing advice with the matters contained in this
announcement or any other matter referred to
herein.
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 HL in any jurisdiction in
contravention of applicable law. The Acquisition will be made
solely by means 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). HL and Bidco
encourage HL Shareholders to read the Scheme Document
when it becomes available because it will contain important
information relating to the Acquisition.
This
announcement does not constitute a prospectus, prospectus
equivalent document or exempted document.
This
announcement contains inside information in relation to HL for the
purposes of Article 7 of the Market Abuse Regulation. The person
responsible for arranging the release of this announcement on
behalf of HL is Claire Chapman, Group General Counsel and Company
Secretary. HL's Legal Entity Identifier is
2138008ZCE93ZDSESG90.
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 FSMA 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 (including the Alternative Offer)
to HL 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. In particular, the
ability of persons who are not resident in the UK to vote their HL
Shares with respect to the Scheme at the Court Meeting, or to
appoint another person as proxy to vote at the Court Meeting on
their behalf, may be affected by the laws of the relevant
jurisdictions in which they are located. Persons who are not
resident in the UK should inform themselves of, and observe, any
applicable legal or regulatory requirements of their jurisdictions.
To the fullest extent permitted by applicable law, the companies
and persons involved in the Acquisition (including the Alternative
Offer) disclaim any responsibility or liability for the violation
of such restrictions by any person.
Unless
otherwise determined by Bidco or required by the Takeover Code, and
permitted by applicable law and regulation, the Acquisition
(including the Alternative Offer) will not be made available, in
whole or in part, directly or indirectly, in, into, from, 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 where to do so would violate the laws in
that jurisdiction and no person may vote in favour of the Scheme by
any such use, means, instrumentality or from within a Restricted
Jurisdiction or any other jurisdiction if to do so would constitute
a violation of the laws of that jurisdiction. Copies of this
announcement and any formal documentation relating to the
Acquisition (including the Alternative Offer) 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 them 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 (including
the Alternative Offer) may not be made directly or indirectly, in,
into, from, 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 (including the Alternative Offer) may not be capable of
acceptance by any such use, means, instrumentality or facilities or
from within any Restricted Jurisdiction.
HL
Shareholders should be aware that the transaction contemplated
herein may have tax consequences and that such consequences, if
any, are not described herein. HL Shareholders are urged to consult
with appropriate legal, tax and financial advisers in connection
with the consequences of the Acquisition (including any election
for the Alternative Offer) on them. It is intended that the Bidco
Rollover Securities, Finco Rollover Securities, Midco 2 Rollover
Securities and Midco 1 Rollover Securities constitute
non-qualifying corporate bonds for holders of such securities who
are UK tax resident individuals.
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.
HL Shareholders
The
Acquisition relates to the shares of an English company with a
listing on the London Stock Exchange and is being made by means of
a scheme of arrangement provided for under English law. A
transaction effected by means of a scheme of arrangement is not
subject to the tender offer or proxy solicitation rules under
the US
Exchange Act.
Accordingly, the Scheme is subject to the disclosure requirements
and practices applicable in the UK to takeover offers and 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 U.S.,
such Offer
will be made in compliance
with applicable U.S. laws and regulations.
It may be
difficult for US holders of HL Shares to enforce their rights and
any claim arising out of U.S. federal laws, since Bidco and HL 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.
US holders of HL 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 US
Exchange Act, Bidco, its nominees or its brokers (acting as
agents), may from time to time make certain purchases of, or
arrangements to purchase, HL 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 US Exchange Act,
Goldman Sachs will continue to act as an exempt principal trader in
HL 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 UK, will be reported
to a Regulatory Information Service and will be available on the
London Stock Exchange website,
www.londonstockexchange.com.
U.S. HL
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. HL
Shareholders are urged to consult with appropriate legal, tax and
financial advisers in connection with the tax consequences of the
Acquisition applicable to them.
The Rollover
Securities issued under the Alternative Offer will not be
registered under the US Securities Act or under relevant securities laws of
any state or territory or other jurisdiction of the United
States. Bidco
expects to issue the Rollover Securities in reliance upon the
exemption from the registration requirements under the US
Securities Act provided by Section 3(a)(10) thereof ("Section 3(a)(10)"). Section 3(a)(10)
exempts securities issued in specified exchange transactions from
the registration requirement under the US Securities Act where,
among other requirements, the fairness of the terms and conditions
of the issuance and exchange of such securities have been approved
by a court or governmental authority expressly authorised by law to
grant such approval, after a hearing upon the fairness of the terms
and conditions of the exchange at which all persons to whom the
Rollover Securities are proposed to be issued have the right to
appear (and will not encounter any improper impediments to appear)
and receive adequate and timely notice thereof. If the exemption
afforded by Section 3(a)(10) is not available to Bidco, then Bidco
expects to avail itself of another available exemption to the
registration requirements under the US Securities Act. If Bidco
exercises its right to implement the acquisition of the HL Shares
by way of an Offer, the Rollover Securities will not be offered in
the U.S. except pursuant to an exemption from or in a transaction
not subject to registration under the US Securities
Act.
The Rollover
Securities will not be listed on any stock exchange. Neither the
U.S. Securities and Exchange Commission nor any U.S. state
securities commission has approved or disapproved of the
Alternative Offer or has determined or will determine if the Scheme
Document is accurate or complete. Any representation to the
contrary is a criminal offence.
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 HL 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 HL 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 HL (including their future prospects, developments and
strategies), the expected timing and scope of the Acquisition and
other statements other than historical facts. Often, but not
always, forward-looking statements can be identified by the use of
forward-looking words such as "prepares", "plans", "expects" or
"does not expect", "is expected", "is subject to", "budget",
"projects", "synergy", "strategy", "scheduled", "goal",
"estimates", "forecasts", "cost-saving", "intends", "anticipates"
or "does not anticipate", or "believes", or variations of such
words and phrases or statements that certain actions, events or
results "may", "could", "should", "would", "might" or "will" be
taken, occur or be achieved. Forward looking statements may include
statements relating to the following: (i) future capital
expenditures, expenses, revenues, earnings, synergies, economic
performance, indebtedness, financial condition, dividend policy,
losses and future prospects; (ii) business and management
strategies and the expansion and growth of Bidco's, HL's, any
member of the Bidco Group or any member of the HL Group's
operations and potential synergies resulting from the Acquisition;
and (iii) the effects of global economic conditions and
governmental regulation on Bidco's, HL's, any member of the Bidco
Group or any member of the HL Group's business.
Although
Bidco and HL believe that the expectations reflected in such
forward-looking statements are reasonable, Bidco and HL can give no
assurance that such expectations will prove to be correct. By their
nature, forward-looking statements involve risk and uncertainty
because they relate to events and depend on circumstances that will
occur in the future. There are a number of factors that could cause
actual results and developments to differ materially from those
expressed or implied by such forward-looking
statements.
These factors
include, but are not limited to: the ability to complete the
Acquisition; the ability to obtain requisite regulatory and
shareholder approvals and the satisfaction of other Conditions on
the proposed terms and schedule; changes in the global political,
economic, business and competitive environments and in market and
regulatory forces; changes in future exchange and interest rates;
changes in tax rates; future business combinations or disposals;
changes in general economic and business conditions; changes in the
behaviour of other market participants; changes in the anticipated
benefits from the Acquisition not being realised as a result of
changes in general economic and market conditions in the countries
in which Bidco and HL 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 HL 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 HL, 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. The
forward-looking statements speak only at the date of
this announcement. All subsequent oral or written forward-looking
statements attributable to Bidco or any member of the Wider Bidco
Group or the HL Group, or any of their respective associates,
directors, officers, employees or advisers, are expressly qualified
in their entirety by the cautionary statement
above.
Other than in
accordance with their legal or regulatory obligations, neither
Bidco nor HL is under any obligation, and Bidco and HL 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 per cent. or more of any class of relevant
securities of an offeree company or of any securities exchange
offeror (being any offeror other than an offeror in respect of
which it has been announced that its offer is, or is likely to be,
solely in cash) must make an Opening Position Disclosure following
the commencement of the offer period and, if later, following the
announcement in which any securities exchange offeror is first
identified. An Opening Position Disclosure must contain details of
the person's interests and short positions in, and rights to
subscribe for, any relevant securities of each of (i) the offeree
company and (ii) any securities exchange offeror(s). An Opening
Position Disclosure by a person to whom Rule 8.3(a) of the Takeover
Code applies must be made by no later than 3.30 p.m. (London time)
on the 10th business day following the commencement of
the offer period and, if appropriate, by no later than 3.30 p.m.
(London time) on the 10th business day following the announcement
in which any securities exchange offeror is first identified.
Relevant persons who deal in the relevant securities of the offeree
company or of a securities exchange offeror prior to the deadline
for making an Opening Position Disclosure must instead make a
Dealing Disclosure.
Under Rule 8.3(b) of the Takeover Code, any person who is, or
becomes, interested in 1 per cent. or more of any class of relevant
securities of the offeree company or of any securities exchange
offeror must make a Dealing Disclosure if the person deals in any
relevant securities of the offeree company or of any securities
exchange offeror. A Dealing Disclosure must contain details of the
dealing concerned and of the person's interests and short positions
in, and rights to subscribe for, any relevant securities of each of
(i) the offeree company and (ii) any securities exchange
offeror(s), save to the extent that these details have previously
been disclosed under Rule 8. A Dealing Disclosure by a person to
whom Rule 8.3(b) applies must be made by no later than 3.30 p.m.
(London time) on the business day following the date of the
relevant dealing.
If
two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire or control an
interest in relevant securities of an offeree company or a
securities exchange offeror, they will be deemed to be a single
person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree
company and by any offeror and Dealing Disclosures must also be
made by the offeree company, by any offeror and by any persons
acting in concert with any of them (see Rules 8.1, 8.2 and
8.4).
Details of the offeree and offeror companies in respect of
whose relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on
the Panel's website at www.thetakeoverpanel.org.uk, including
details of the number of relevant securities in issue, when the
offer period commenced and when any offeror was first identified.
You should contact the Panel's Market Surveillance Unit on +44
(0)20 7638 0129 if you are in any doubt as to whether you are
required to make an Opening Position Disclosure or a Dealing
Disclosure.
Publication on
a website
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 HL's website at www.hl.co.uk/investor-relations
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 set out in this announcement is incorporated by
reference or form 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 HL for the current or future
financial years would necessarily match or exceed the historical
published earnings or earnings per share for HL.
Requesting Hard Copy Documents
In accordance
with Rule 30.3 of the Takeover Code, HL Shareholders, persons with
information rights and participants in HL Share Plans may request a
hard copy of this announcement (and any document or information
incorporated into it by reference to another source) by contacting
HL's registrars, Equiniti, by writing to Equiniti Limited, Aspect
House, Spencer Road, Lancing, United Kingdom, BN99 6DA or by
calling them during business hours on 0371 384 2030 from within the
UK or on +44 371 384 2030 if calling from outside the UK. For
persons who receive a copy of this announcement in electronic form
or via a website notification, a hard copy of this announcement
(and any document or information incorporated by
reference into this announcement) will not be sent unless so requested.
In accordance with Rule 30.3 of the Takeover Code, such persons may
also request that all future documents, announcements and
information to be sent to them in relation to the Acquisition
should be sent in hard copy form.
Electronic communications
Please be
aware that addresses, electronic addresses and certain other
information provided by HL Shareholders, persons with information
rights and other relevant persons for the receipt of communications
from HL 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.
General
Bidco
reserves the right to elect, with the consent of the Panel (where
necessary) and subject to the terms of the Cooperation Agreement,
to implement the Acquisition by way of an Offer as an alternative
to the Scheme. In such an event, such an Offer will be implemented
on substantially the same terms, so far as applicable, as those
which would apply to the Scheme (subject to appropriate amendments
to reflect the change in method of implementation and the terms of
the Cooperation Agreement).
If the
Acquisition is effected by way of an Offer, and such an Offer
becomes or is declared unconditional and sufficient acceptances are
received, 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 HL Shares in respect of which the Offer
has not been accepted.
Investors
should be aware that Bidco may purchase HL Shares otherwise than
under any Offer or the Scheme, including pursuant to privately
negotiated purchases.
Disclaimer
The Acquisition will be subject to English law, the
jurisdiction of the Court, and the applicable requirements of the
2006 Act, the Takeover Code, the Panel, the London Stock Exchange
and the FCA.
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 of,
representing not less than 75 per cent. in value of the Scheme
Shares held by, the Scheme Shareholders who are on the register of
members of HL (or the relevant class or classes thereof, if
applicable) at the Voting Record Time, present and voting (and
entitled to vote), whether in person or by proxy, at the Court
Meeting and at any separate class meeting which may be required (or
any adjournment thereof); and (ii) such Court Meeting (and any
separate class meeting which may be required) 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 HL with the consent of the Panel
(and that the Court may approve if required));
2.2
(i) the Resolutions being duly passed by the requisite
majority or majorities at the General Meeting (or at 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 HL 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
HL)); 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 HL 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 HL 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:
Antitrust approvals
China
3.1
either:
3.1.1 the State
Administration for Market Regulation of the People's Republic of
China ("SAMR") having
declined jurisdiction over the Acquisition or all relevant parts of
it; or
3.1.2 the SAMR
having issued a decision under Article 30 or 31 of the China
Anti-monopoly Law ("China
AML") to approve (including
not to conduct further review of or not to prohibit) the
Acquisition or all relevant parts of it (whether unconditionally or
subject to such conditions, obligations, undertakings or
modifications pursuant to Article 35 of the China AML);
or
3.1.3 the SAMR not
having issued any decision, under Article 30 or 31 of the China
AML, but being deemed to have cleared the Acquisition due to the
expiration or termination of the legal statutory limitation period
provided for such purposes,
("China Antitrust
Clearance");
European Union
3.2 insofar
as the Acquisition or any part of it constitutes, or is deemed to
constitute, a concentration with a Community dimension within the
scope of Council Regulation (EC) 139/2004 (as amended) (the
"EU Regulation") or the
European Commission otherwise accepts jurisdiction to examine the
Acquisition under the EU Regulation:
3.2.1 the European
Commission having issued a decision under Article 6(1)(b) of the EU
Regulation, or being deemed to have done so under Article 10(6) of
the EU Regulation, declaring the Acquisition and any and all
relevant parts of it compatible with the internal market;
and/or
3.2.2 following a
referral by the European Commission of the Acquisition (or parts of
it) to a relevant national competition authority, regulatory body
or governmental department within any EU/EFTA Member State (under
Article 9 of the EU Regulation), Bidco having received confirmation
from the national competition authority concerned that the
Acquisition (or any and all relevant parts of it) has been approved
in accordance with the relevant national legislation of that EU
Member State,
("EU Antitrust
Clearance");
Switzerland
3.3 the Swiss
Competition Commission: (i) having unconditionally approved the
Acquisition or any and all relevant parts of it in writing; (ii)
having conditionally approved the Acquisition or any and all
relevant parts of it in writing; (iii) having denied jurisdiction
over the Acquisition or any and all relevant parts of it in
writing; or (iv) being deemed to have approved the Acquisition or
any and all relevant parts of it due to expiry of the applicable
Phase I review period ("Swiss
Antitrust Clearance");
Turkey
3.4
either:
3.4.1 the Turkish
Competition Board (the "TCB") having issued a decision
pursuant to the Act on the Protection of Competition (Law No. 4054,
as amended (the "Turkish
Competition Act")) and Communique No. 2010/4 on the Mergers
and Acquisitions Calling for the Authorisation of the Competition
Board (as amended) (the "Turkish
Merger Communiqué"), stating that the Acquisition is not
subject to notification or otherwise having declined jurisdiction
over the Acquisition or any and all relevant parts of it;
or
3.4.2 the TCB
having issued a decision under the Turkish Competition Act and
Turkish Merger Communiqué approving the Acquisition after a
preliminary examination either unconditionally or subject to
conditions; or
3.4.3 the statutory
waiting period of 30 days specified in Article 10 of the Turkish
Competition Act expiring without the TCB responding to or taking
any action in relation to the notification made regarding the
Acquisition or any and all relevant parts of it,
("Turkish
Antitrust Clearance");
United Kingdom
3.5 one of
the following having occurred:
3.5.1 the
Competition and Markets Authority ("CMA") having indicated, in terms
satisfactory to Bidco (acting reasonably), in response to a
briefing paper submitted by Bidco, that it has no further questions
or that it does not intend to open a CMA merger investigation in
relation to the Acquisition or any matters arising therefrom in
either case at that stage and, as at the date on which all other
Conditions are satisfied or waived, the CMA having confirmed the
same following responses by Bidco or other parties involved in the
Acquisition (as applicable) to subsequent questions raised by the
CMA (if applicable); or
3.5.2 if the CMA
opens such a CMA merger investigation: (i) confirmation having been
received in writing from the CMA, in terms satisfactory to Bidco
(acting reasonably), that the CMA does not intend to make a CMA
Phase 2 Reference in connection with the Acquisition or any matters
arising there from; or (ii) the period within which the CMA is
required to decide whether the duty to make a CMA Phase 2 reference
applies with respect to the Acquisition or any matters arising
therefrom has expired without such a decision having been
made,
("UK Antitrust
Clearance");
Regulatory approvals
3.6 receipt
of written notice from the FCA in accordance with section 189(4) or
189(7) of FSMA either unconditionally or with conditions
satisfactory to Bidco, acting reasonably of the FCA's approval of
the acquisition or increase of control (within the meaning of
section 181 of FSMA) over each member of the Wider HL Group that is
a UK authorised person (as defined in section 191G(1) of FSMA) by
each member of the Wider Bidco Group or any Consortium Member or
any affiliate thereof whose acquisition or increase of control (as
also defined in section 191G(1) of FSMA) over such entities would
take place as a result of the Acquisition or its implementation or
the FCA has otherwise been deemed to have given such approval
pursuant to section 189(6) of FSMA;
Other Third Party clearances
3.7 other
than in respect of the matters referred to in Conditions
3.1 to 3.6, 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 (and, in each case, not having
withdrawn the same), or having required any action to be taken or
otherwise having done anything or having enacted, made or proposed
any statute, regulation, decision, order or change to published
practice (and, in each case, not having withdrawn the same) and
there not continuing to be outstanding any statute, regulation,
decision or order which would or would reasonably be expected
to:
3.7.1 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 HL 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 materially restrain, restrict,
impede, challenge, delay or otherwise materially 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 HL Group by any member of the Wider Bidco
Group;
3.7.2 require,
prevent or materially delay the divestiture or materially alter the
terms envisaged for such divestiture by any member of the Wider
Bidco Group or by any member of the Wider HL 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) in any case 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;
3.7.3 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 HL
(or any member of the Wider HL Group) or on the ability of any
member of the Wider HL 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 HL Group in any case to an extent which is material in
the context of the Wider HL Group taken as a whole or in the
context of the Acquisition;
3.7.4 other than
pursuant to the terms or 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 HL Group to acquire or offer
to acquire any shares, other securities (or the equivalent) or
interest in any member of the Wider HL Group owned by any
third-party in any case which is material in the context of the
Wider HL Group or the Wider Bidco Group, in either case, taken as a
whole;
3.7.5 require,
prevent or materially 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 HL Group;
3.7.6 result in any
member of the Wider HL 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
HL Group taken as a whole or in the context of the
Acquisition;
3.7.7 impose any
limitation on the ability of any member of the Wider Bidco Group or
any member of the Wider HL 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 HL Group in a manner and to an extent which
is adverse and material to the Wider Bidco Group and/or the Wider
HL Group, in either case, taken as a whole or in the context of the
Acquisition; or
3.7.8 except as
Disclosed, otherwise affect the business, assets, value, profits or
prospects of any member of the Wider HL Group or any member of the
Wider Bidco Group in each case in a manner and to an extent which
is adverse to and material in the context of the Wider HL 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 relevant
jurisdiction in respect of the Acquisition or proposed acquisition
of any HL Shares having expired, lapsed, or been
terminated;
3.8 other
than in respect of the matters referred to in Conditions
3.1 to 3.6, all
notifications, filings or applications which are deemed by Bidco
(acting reasonably) 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 relevant jurisdiction
having expired, lapsed or been terminated (as appropriate) and all
statutory and regulatory obligations in any jurisdiction having
been complied with and all Authorisations which are deemed by Bidco
(acting reasonably) to be necessary or reasonably considered to be
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, HL 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 HL 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 HL Group or any member of the Bidco Group (in each case,
taken as a whole) 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 Effective and there being no
notice or intimation of an intention to revoke, suspend, restrict,
modify or not to renew such Authorisations;
3.9 no
injunction, 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 its implementation, void, voidable, illegal and/or
unenforceable under the laws of any relevant jurisdiction, or
otherwise directly or indirectly prohibiting, preventing or
materially restraining, restricting or delaying or otherwise
materially interfering with the completion of the
Acquisition;
Confirmation of absence of adverse
circumstances
3.10
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 HL 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 HL or because of a change in the control or
management of any member of the Wider HL Group or otherwise, would
or would reasonably be expected to result in, in each case to an
extent which is material in the context of the Wider HL Group taken
as a whole or to the financing of the Acquisition:
3.10.1
any monies borrowed by, or any other indebtedness, actual or
contingent of, or any grant available to, any member of the Wider
HL 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
becoming capable of being withdrawn or inhibited;
3.10.2
the rights, liabilities, obligations, interests or business
of any member of the Wider HL 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 HL 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
reasonably being expected to become terminated or adversely
modified or affected or any onerous obligation or liability arising
or any adverse action being taken or arising thereunder;
3.10.3
any member of the Wider HL 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 HL
Group taken as a whole or in the context of the
Acquisition;
3.10.4
any assets or interests of, or any asset the use of which is
enjoyed by, any member of the Wider HL 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 HL Group
otherwise than in the ordinary course of business;
3.10.5
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 HL Group or any such mortgage, charge or
other security interest (whenever created, arising or having
arisen), becoming enforceable;
3.10.6
the business, assets, value, financial or trading position,
profits or prospects of any member of the Wider HL Group being
prejudiced or adversely affected;
3.10.7
the creation or acceleration of any material liability
(actual or contingent) by any member of the Wider HL Group other
than trade creditors or other liabilities incurred in the ordinary
course of business; or
3.10.8
any liability of any member of the Wider HL 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 HL Group
3.11
except as Disclosed, no member of the Wider HL Group having
since 30 June 2023:
3.11.1
save as between HL and its wholly‑owned subsidiaries or
between such wholly‑owned subsidiaries and save for the issue or
transfer out of treasury of HL Shares on the exercise of options or
vesting of awards granted in the ordinary course under the HL Share
Plans, issued or agreed to issue or authorised the issue of
additional shares of any class, 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 the
transfer or sale of HL Shares out of treasury;
3.11.2
recommended, declared, paid or made any bonus issue, dividend
or other distribution (whether payable in cash or otherwise) other
than to HL or one of its wholly‑owned subsidiaries or (for the
avoidance of doubt) the 2024 Full-Year Dividend;
3.11.3
save as between HL 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 the same, in each case
to an extent which is material in the context of the Wider HL Group
taken as a whole;
3.11.4
save as between HL and its wholly‑owned subsidiaries or
between such wholly‑owned subsidiaries, made or authorised 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 HL Group taken as a whole;
3.11.5
issued, authorised or proposed or made any change in or to
the terms of, any debentures or (save in the ordinary course of
business and save as between HL 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 HL Group
taken as a whole or in the context of the Acquisition;
3.11.6
entered into, varied or authorised 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 such nature or magnitude which is or would reasonably
be expected to be restrictive on the business of any member of the
Wider HL Group to an extent which is or would reasonably be
expected to be material to the Wider HL Group taken as a
whole;
3.11.7
outside the normal course of business, entered into any
licence or other disposal of intellectual property rights of any
member of the Wider HL Group which are material in the context of
the Wider HL Group;
3.11.8
entered into, varied or authorised the entry into 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 HL
Group, save for salary increases, bonuses or variations of terms in
the ordinary course;
3.11.9
except as permitted by or pursuant to the terms of the
Cooperation Agreement, 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 HL Group which, taken as a whole, are
material in the context of the Wider HL Group taken as a
whole;
3.11.10 (i)
(excluding the trustee of any pension scheme(s) established by a
member of the Wider HL Group other than where that trustee is HL
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
HL Group or their dependants and established by a member of the
Wider HL 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 HL Group taken as a whole or in the
context of the Acquisition and other than as required in accordance
with applicable law; (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 HL Group taken as a whole or in the context of the
Acquisition and other than as required in accordance with
applicable law;
3.11.11 other
than to fill a vacancy on the board of directors of a corporate
trustee, changed the trustee or trustee directors or other
fiduciary of any Relevant Pension Plan;
3.11.12 entered
into, implemented or effected, or authorised 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 HL Group taken as a whole or in the context of
the Acquisition;
3.11.13
purchased, redeemed or repaid any of its own shares or other
securities or reduced or, save in respect of the matters mentioned
in sub-paragraph 3.11.1 above, made any
other change to any part of its share capital to an extent which
(other than in the case of HL) is material in the context of the
Wider HL Group taken as a whole;
3.11.14 other
than with respect to claims between HL 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 HL Group taken as a
whole or in the context of the Acquisition;
3.11.15 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;
3.11.16 (other
than in respect of a member of the Wider HL Group which is dormant
and was solvent at the relevant time) taken any 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, 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 in any case
material in the context of the Wider HL Group taken as a whole or
in the context of the Acquisition;
3.11.17 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 HL Group taken as a whole or
in the context of the Acquisition;
3.11.18 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 effect any of the transactions,
matters or events referred to in this Condition;
3.11.19
terminated or varied the terms of any agreement or
arrangement between any member of the Wider HL 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 HL
Group taken as a whole; or
3.11.20 following
the date of this announcement (and except for any matters referred
to herein), taken any action which requires, or would require, the
consent of the Panel or the approval of HL Shareholders in general
meeting in accordance with, or as contemplated by, Rule 21.1
of the Takeover Code;
No material adverse change
3.12
since 30 June 2023, and except as Disclosed:
3.12.1
no adverse change and no circumstance having arisen which
would be expected to result in any adverse change or deterioration
in the business, assets, financial or trading position, profits or
prospects of any member of the Wider HL Group to an extent which is
material to the Wider HL Group taken as a whole or to the financing
of the Acquisition;
3.12.2
no litigation, arbitration proceedings, prosecution or other
legal proceedings having been threatened, announced or instituted
by or against or remaining outstanding against any member of the
Wider HL Group or to which any member of the Wider HL Group is or
may become a party (whether as claimant or defendant or otherwise)
which, in any such case, would reasonably be expected to have a
material adverse effect on the Wider HL Group taken as a whole, and
(other than as a result of the Acquisition) 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 HL Group having been threatened, announced or
instituted by or against, or remaining outstanding in respect of,
any member of the Wider HL Group which, in any such case, would
reasonably be expected to have a material adverse effect on the
Wider HL Group taken as a whole;
3.12.3
no contingent or other liability of any member of the Wider
HL Group having arisen, increased or become apparent which would
reasonably be expected to adversely affect the business, assets,
financial or trading position, profits or prospects of any member
of the Wider HL Group to an extent which is material to the Wider
HL Group taken as a whole;
3.12.4
other than in respect of the matters referred to in
Conditions 3.1 to
3.6, 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 HL 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 HL Group taken as a whole; or
3.12.5
no member of the Wider HL 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 HL Group taken as
a whole;
3.13
in relation to the period since 30 June 2023, and except as
Disclosed, Bidco not having discovered:
3.13.1
that any financial, business or other information concerning
the Wider HL 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 HL 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 HL Group taken as a whole or
in the context of the Acquisition;
3.13.2
that any member of the Wider HL Group is subject to any
liability (actual or contingent) and which is material in the
context of the Wider HL Group taken as a whole; or
3.13.3
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 HL Group
which is material in the context of the Wider HL Group taken as a
whole;
Environmental liabilities
3.14
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, any past or present member of the Wider
HL Group, in a manner and to an extent which is material in the
context of the Wider HL Group: (i) has 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) has incurred any material
liability (whether actual or contingent) to any Third Party; and/or
(iii) would be likely to incur any material liability (whether
actual or contingent), or is required, to make good, remediate,
repair, re‑instate or clean up the environment (including any
property) in each case of (i), (ii) or (iii), which such liability
or requirement is or would reasonably be expected to be material to
the Wider HL Group taken as a whole;
Intellectual Property
3.15
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 HL Group which would reasonably be
expected to have a material adverse effect on the Wider HL Group
taken as a whole or is otherwise material in the context of the
Acquisition, including:
3.15.1
any member of the Wider HL Group losing its title to any
intellectual property material to its business, or any intellectual
property owned by the Wider HL Group and material to its business
being revoked, cancelled or declared invalid;
3.15.2
any claim being asserted in writing by any person challenging
the ownership of any member of the Wider HL Group to, or the
validity or effectiveness of, any such intellectual property;
or
3.15.3
any agreement regarding the use of any such intellectual
property licensed to or by any member of the Wider HL Group being
terminated or varied;
Anti‑corruption and sanctions
3.16
except as Disclosed, Bidco not having discovered that (to an
extent that is material in the context of the Wider HL Group taken
as a whole):
3.16.1
any past or present member of the Wider HL 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;
3.16.2
any past or present member of the Wider HL 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
3.16.3
a member of the HL 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; and
No criminal property
3.17
except as Disclosed, Bidco not having discovered that any
asset of any member of the Wider HL Group constitutes criminal
property as defined by section 340(3) of the Proceeds of Crime
Act 2002 (but disregarding paragraph (b) of that
definition).
Part B
Further terms of the Acquisition
1.
Subject to the requirements of the Panel, Bidco reserves the
right in its sole discretion to waive, in whole or in part, all or
any of the Conditions set out in Part A
of Appendix 1, except
Conditions 1,
2.1(i), 2.2(i),
2.3(i) and 2.4 which
cannot be waived. The deadlines in any of Conditions
2.1(ii), 2.2(ii)
or 2.3(ii) may be extended to such later
date as may be agreed in writing by Bidco and HL (with the consent
of the Panel and the approval of the Court, in each case if
required). 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 HL 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 by a date
and time earlier than 11.59 p.m. on the Business Day prior to the
date of the Sanction Hearing, 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 below, 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 HL
Shares under the provisions of Rule 9 of the Takeover Code, Bidco
may make such alterations to the Conditions and the Acquisition 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 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 is applicable, as those which
would apply to the Scheme (subject to appropriate amendments to
reflect the change in method of implementing the Acquisition and
the terms of the Cooperation Agreement, including (without
limitation and for so long as clause 5.2 of the Cooperation
Agreement applies) an acceptance condition set at 75 per cent. of
the HL Shares (which shall be, if Bidco so elects and with the
prior consent of the Panel, calculated as 75 per cent. of HL Shares
on a fully diluted basis) (or such other percentage as Bidco and HL
may agree in accordance with the terms of the Cooperation Agreement
and, to the extent necessary, with the consent of the Panel, being
in any case more than 50 per cent. of the HL 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 HL 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.
HL 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 with a record date on
or after the Effective Date.
10. If, on or
after the date of this announcement and prior to the Acquisition
becoming Effective, any dividend and/or other distribution and/or
other return of capital or value, other than the 2024 Full-Year
Dividend, is announced, declared, made or paid or becomes payable
in respect of the HL Shares (in each case, with a record date prior
to the Effective Date), Bidco will reduce the Cash Consideration
payable under the terms of the Cash Offer (and, as the
case may be, the number of Rollover Securities due under the terms
of the Alternative Offer) at such date by an amount up
to the 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 Cash Consideration payable under the terms of
the Cash Offer (or consideration due under the Alternative Offer)
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 terms of the
Scheme or the Acquisition. In the event of any exercise of Bidco's
rights referred to in this paragraph, HL Shareholders would be
entitled to retain the relevant dividend, distribution and/or other
return of capital or value. To the extent that any
such dividend and/or distribution and/or other return of capital or
value is announced declared, made or paid or is payable and it is:
(i) transferred pursuant to the Acquisition on a basis which
entitles Bidco to receive the dividend or distribution and to
retain it; or (ii) cancelled, the consideration payable under the
terms of the Acquisition will not be subject to change in
accordance with this paragraph
10.
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. This
announcement and any rights or liabilities arising hereunder, the
Acquisition and the Scheme will be governed by English law and be
subject to the jurisdiction of the Court, to the Conditions set out
above and to the 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,
except as expressly stated, 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
477,549,398 HL Shares is based on:
1.1
474,318,625 HL Shares in issue as at 8 August 2024 (being the
latest Business Day before this announcement); plus
1.2 3,381,168
HL Shares which may be issued on or after the date of this
announcement pursuant to the HL Share Plans and share awards, less
150,395 ordinary shares held by the trustee of the Employee Benefit
Trust which can be used to satisfy the exercise of options under
the HL Share Plans, as at 7 August 2024 (being the latest
practicable day before this announcement).
2.
The value of approximately £5,443,093,905 for the entire
issued, and to be issued, share capital of HL is based
on:
2.1 Cash
Consideration of 1,110 pence per HL Share;
2.2 HL's
fully diluted issued ordinary share capital of 477,549,398 HL
Shares, as set out in paragraph 1 above;
and
2.3 a
dividend of 30 pence per HL Share in respect of the Financial Year
ended 30 June 2024 to be received by holders of the 474,318,625 HL
Shares in issue as at 8 August 2024 as set out in paragraph 1.1
above.
3.
Unless otherwise stated, the financial information of HL is
extracted (without material adjustment) from the 2023 HL Annual
Report, audited accounts of the HL Group for the 12 months ended 30
June 2023 and the unaudited, consolidated financial statements of
HL for the six months ended 31 December 2023 and the twelve months
ended 30 June 2024.
4.
The volume-weighted average prices have been derived from
Bloomberg data based on volumes traded from 21 February 2024 (for
three-month) and 21 November 2023 (for six-month) and have been
rounded to the nearest whole number.
5.
Certain figures included in this announcement have been
subject to rounding adjustments.
Appendix 3
Details of Irrevocable Undertakings and Non-Binding Written
Confirmations of Intent
1.
Directors
The following HL Independent Directors and
Adrian Collins have given irrevocable undertakings to vote (or,
where applicable, procure the voting) in favour of the Scheme at
the Court Meeting and the Resolutions 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, the Offer) in
respect of their own registered and beneficial holdings
(or those HL Shares
over which they have control) of HL Shares:
Name
|
Total Number of
HL Shares
|
Percentage of existing issued
share capital
|
Alison
Platt
|
18,696
|
0.00
|
Dan Olley
|
7,242
|
0.00
|
Amy
Stirling
|
24,392
|
0.01
|
John
Troiano
|
14,400
|
0.00
|
Darren Scott
Pope
|
3,999
|
0.00
|
Adrian
Collins
|
13,400
|
0.00
|
These irrevocable undertakings also extend to
any HL Shares acquired by the HL Independent
Directors and Adrian Collins as a result of the vesting of
awards or the exercise of options under the HL Share
Plans.
The irrevocable undertakings referred to in
this paragraph 1 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 of the
undertaking (or such later date as Bidco and HL may agree); (ii)
the Scheme Document is not sent to HL Shareholders within 28 days
(or such later period as the Panel may agree) after the date of
this announcement; (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 no new, revised or replacement
offer or scheme is announced at the same time; (v) at 11.59 p.m. on
the Long Stop Date (or, 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, on the longstop
date provided for in the terms of such offer in accordance with
Rule 12 of the Takeover Code); or (vi) the date on which any
competing offer for HL becomes or is declared unconditional or, if
proceeding by way of a scheme of arrangement, becomes
Effective.
2.
Shareholders
In addition to the HL Independent Directors and
Adrian Collins, the following HL Shareholder has given irrevocable
undertakings to vote (or, where applicable, procure the voting) in
favour of the Scheme at the Court Meeting and the Resolutions 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, the Offer) in respect of his own beneficial holdings
(or those HL Shares
over which he has control) of HL Shares, and to
elect to receive the Cash Consideration, in respect of 50 per cent.
of his HL Shares and the Alternative Offer, in respect of the
remaining 50 per cent. of his HL Shares:
Name
|
Total Number of
HL Shares
|
Percentage of existing issued
share capital
|
Peter
Hargreaves
|
93,838,474
|
19.8
|
(a) The
irrevocable undertaking referred to in this paragraph 2 will remain
binding in the event that a higher competing offer for HL is made.
It ceases to be binding on the earlier of the following
occurrences:
(i)
this announcement not having been released by 6.30 p.m.
(London time) on 9 August 2024 (or such later date as Bidco and HL
may agree);
(ii)
the earlier of: (a) the Long Stop Date; and (b) 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 or (if
the Acquisition is implemented by way of a Scheme) otherwise
becomes incapable of ever becoming effective (as agreed by the
Panel (if required)), in each case, other than in circumstances
where the Acquisition is withdrawn or lapses as a result of Bidco
electing prior to such applicable date, to exercise its right to
implement the Acquisition by way of an Offer and announcing the
same in accordance with the requirements of Paragraph 8 of Appendix
7 of the Takeover Code, and such Offer has not lapsed or been
withdrawn;
(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 Scheme or Offer is announced by Bidco (or any
affiliate) pursuant to and in accordance with Rule 2.7 of the
Takeover Code at the same time; or
(iv) a
competing offer for the entire issued, and to be issued, ordinary
share capital of HL is made, and such offer becomes or is declared
unconditional (if implemented by way of takeover offer (within the
meaning of section 974 of the 2006 Act)) or effective (if
implemented by way of a scheme of arrangement under Part 26 of the
2006 Act).
(b) In
addition, Stephen Lansdown has provided a non-binding written
confirmation of intent to vote in favour of the Scheme at the Court
Meeting and the Resolutions at the General Meeting (or, in the
event that the Acquisition is implemented by way of an Offer, to
accept the Offer) and to elect to receive
the Cash Consideration, in respect of all of his HL
Shares:
Name
|
Total Number of
HL Shares
|
Percentage of existing issued
share capital
|
Stephen
Lansdown
|
27,087,419
|
5.7
|
Appendix 4
Details on the Topco Group and the Rollover Securities
1.
Information on Topco and the
Intermediate Holding Companies
Consortium JVCo will at the Effective Date be
jointly owned by CVC Private Equity Funds, affiliates
of Nordic Capital XI Delta and Platinum Ivy (or any of
its affiliates) in equal shares. Topco is
a wholly-owned subsidiary of Consortium JVCo and was formed for the
purpose of implementing the Acquisition. Each of Bidco, Finco,
Midco 2 and Midco 1 (together the "Intermediate Holding Companies") is a
direct or indirect wholly-owned subsidiary company of Topco. None
of Consortium JVCo, Topco, or any of the Intermediate Holding
Companies have traded since the date of their incorporation nor
entered into any obligations, other than in connection with the
Acquisition.
Consortium JVCo is a private limited company
incorporated on 27 June 2024 under the
laws of Jersey. The share capital of Consortium JVCo currently
comprises of 3,000 ordinary shares of
£0.01.
Topco is directly wholly-owned by Consortium
JVCo. Topco is a private limited company incorporated on
27 June 2024 under the laws of Jersey. The share
capital of Topco currently comprises 1
ordinary share of £0.01 but will be
reorganised on or prior to the Effective Date so that it comprises
Topco A Ordinary Shares and Rollover Securities on the terms to be
set out in the Scheme Document. The Topco A Ordinary Shares in
Topco will be held by Consortium JVCo, and the Rollover Securities
will be held by eligible HL Shareholders who elect for the
Alternative Offer.
Midco 1 is wholly-owned by Topco. Midco 1 is a
private limited company incorporated on 27 June
2024 under the laws of Jersey. The share capital of
Midco 1 currently comprises 1 ordinary
share of £0.01.
Midco 2 is wholly-owned by Midco 1. Midco 2 is
a private limited company incorporated on 27 June
2024 under the laws of Jersey. The share capital of
Midco 2 currently comprises 1 ordinary
share of £0.01.
Finco is wholly-owned by Midco 2. Finco is a
private limited company incorporated on 27 June
2024 under the laws of Jersey. The share capital of
Finco currently comprises 1 ordinary
share of £0.01.
Bidco is wholly-owned by Finco. Bidco is a
private limited company incorporated on 1 July
2024 under the laws of England and Wales. The share capital
of Bidco currently comprises 1 ordinary
share of £0.01.
Between the date of this announcement and
completion of the Rollover, no member of the Topco Group is
expected to conduct any business or activities other than in
connection with the Acquisition.
Set out below is a summary of the proposed
provisions of the Topco Shareholders' Agreement and the Topco
Articles governing the terms on which eligible HL Shareholders who
elect for the Alternative Offer will, subject to implementation of
the Rollover, hold interests in Rollover Securities. Further
details will be included in the Scheme Document.
Eligible HL Shareholders who validly elect for
the Alternative Offer will, pursuant to a power of attorney to be
included in the Form of Election and/or the Scheme, deliver a fully
executed deed of adherence pursuant to which they will be bound by
the Topco Shareholders' Agreement.
2.
Rollover
Mechanics
If the Scheme becomes Effective, eligible HL
Shareholders that validly elect to receive consideration by means
of the Alternative Offer will receive their Rollover Securities in
Topco pursuant to the Rollover whereby on or shortly following the
Effective Date:
·
First Exchange
- firstly, the relevant HL Shares of the relevant electing HL
Shareholders will be exchanged for loan notes of a commensurate
value to be issued by Bidco pursuant to the Scheme (the
"Bidco Rollover
Securities");
·
Second
Exchange - secondly, and immediately following
the first exchange, the Bidco Rollover Securities will be exchanged
for loan notes of a commensurate value to be issued by Finco (the
"Finco Rollover
Securities");
·
Third Exchange
- thirdly, and immediately following the second exchange, the
Finco Rollover Securities will be exchanged for loan notes of a
commensurate value to be issued by Midco 2 (the "Midco 2 Rollover
Securities");
·
Fourth
Exchange - fourthly, and immediately following
the third exchange, the Midco 2 Rollover Securities will be
exchanged for loan notes of a commensurate value to be issued by
Midco 1 (the "Midco 1 Rollover
Securities"); and
·
Fifth Exchange
- finally, and immediately following the fourth exchange, the
Midco 1 Rollover Securities will be exchanged for the relevant
number of Rollover Securities in Topco to which eligible HL
Shareholders are entitled in accordance with the Alternative
Offer,
provided that each of the second exchange, the
third exchange and the fourth exchange will be subject to and
conditional on the exercise of a put option by the relevant
transferor, or a call option by the relevant transferee, in
relation to the securities to be exchanged. As noted above, HL
Shareholders who elect for the Alternative Offer will be required,
pursuant to a power of attorney granted by them pursuant to the
Scheme, to adhere to the Topco Shareholders' Agreement relating to
Topco as a condition of such election. The power of attorney will
also provide for the signing on behalf of such HL Shareholder (in
such form as Bidco may require) of the put and call deeds and/or
any exchange agreement, transfer, instrument, or other document
deemed by Bidco (in its absolute discretion) to be necessary or
desirable to effect the Rollover as conditions of such election,
including any appropriate employment tax elections.
3.
Terms of Issue of Rollover
Securities
The Rollover Securities to be issued to
eligible HL Shareholders who elect for the Alternative Offer in
accordance with the Rollover will be issued credited as fully paid
and will rank economically pari
passu with the Topco A Ordinary Shares held by and issued to
Consortium JVCo in connection with the Acquisition, including the
right to receive and retain dividends and other distributions
declared, made or paid by reference to a record date falling on or
after the date of this announcement.
4.
Economic
Rights
The economic rights described below are subject
to the risks also described below and in paragraph
14 of this announcement (for example, that: (i)
holders of Rollover Securities may be diluted over time,
potentially significantly, should holders of Rollover Securities
not elect to participate in further issues of additional shares,
loan notes or other securities of the Topco Group; (ii) holders of
Rollover Securities are not always entitled to participate in such
issues; and (iii) such additional securities may have different
(including, potentially, preferential) rights to the Rollover
Securities).
Subject to the above, any return of proceeds to
security holders of Topco, whether on a future share
sale, asset sale, merger, listing or initial public offering
("IPO"), or solvent
winding-up, in each case relating to the Topco Group (each an
"Exit") or
otherwise, including the right to receive and retain dividends and
all other distributions and returns of capital made or paid, shall,
after payment of all reasonable, properly incurred costs in
relation to any such Exit and/or return of proceeds (excluding, for
the avoidance of doubt, any management fees (or similar) charged by
Consortium JVCo or any Consortium Member), be distributed to each
holder of Topco A Ordinary Shares and Rollover Securities, pro rata
to their shareholdings. The Topco A Ordinary Shares and the
Rollover Securities shall rank equally as regards any
distributions, dividends, buy-back, any other capital redemption or
other returns of income or capital made by Topco.
5.
Governance and Voting
Rights
Every holder of one or more Topco A Ordinary
Shares on the date on which either a written resolution is
circulated or a general meeting is held and who is present at such
meeting shall, subject to the Topco Articles, have one vote for
each Topco A Ordinary Share.
Rollover Securities will not carry any general
voting rights at general meetings of Topco and, save as set out
below in relation to Substantial B Shareholders, will not carry the
right to appoint directors to the board of Topco.
Consortium JVCo may,
acting reasonably, make any amendment to, or variation of, the
Topco Shareholders' Agreement and/or the Topco Articles and/or
related documents (notwithstanding any class rights) without the
consent of, or notification to, holders of Rollover Securities
provided that such amendments or variations are not
disproportionately adverse to the economic, tax or legal position
of the holders of Rollover Securities (as a whole) or the
governance rights of the holders of Rollover Securities, in each
case as compared to Consortium JVCo. Any such amendment or
variation must be for bona fide purposes and shall not be used to
frustrate, terminate or reduce the rights of the holders of
Rollover Securities. Consortium JVCo may
make any other amendment to, or variation of, the
Topco Shareholders' Agreement and/or the Topco Articles and/or
related documents on reasonable notice to the Topco B
Shareholders and with the prior consent of (i) the holders of a
majority of the Rollover Securities (excluding, for the purposes of
this limb (i), any such Rollover Securities held by a Substantial B
Shareholder) and (ii) the approval of each Substantial B
Shareholder.
The following reserved matters shall require
the prior consent of each Substantial B Shareholder:
·
non-arm's length transactions between Consortium JVCo,
any Consortium Member or their affiliates/related
parties and the Topco Group, other than: (i) transactions
between the Topco Group and any portfolio company of a Consortium
Member undertaken for good faith commercial purposes; (ii) any
issuance of securities to Consortium JVCo, any other
member of the Topco Group and/or any other Consortium Member or any
of their affiliates, in each case, undertaken for good faith
commercial purposes; or (iii) to the extent otherwise set out in
the Topco Shareholders' Agreement;
· dividends
or distributions to the holders, or redemptions or repurchases of
any securities issued by the Topco Group
otherwise than in accordance with the distribution provisions of
the Topco Shareholders' Agreement;
·
variations of any coupon, or imposition of any redemption
premium or fee, attaching to shareholder debt, loan notes,
preference shares or other debt securities, if that would be
materially and disproportionately adverse to the economic position
of the Substantial B Shareholders (as a whole) as compared to
Consortium JVCo;
·
issuances of any securities by the Topco Group other than in
accordance with the terms of the Topco Shareholders' Agreement;
and
· any
alteration or variation to the Topco Shareholders' Agreement or the
articles of association of any Topco Group Company which would be
disproportionately adverse to the economic, tax or legal
position of the Topco B Shareholders (as a whole) or
the governance rights of the holders of Rollover Securities, in
each case as compared to Consortium JVCo.
6.
Transfers
Consortium JVCo and each
Consortium Member shall be permitted to directly
or indirectly transfer Topco A Ordinary Shares or other securities
in Topco at any time.
No Rollover Securities will be transferable
without the prior written consent of Consortium JVCo, except where
required or permitted pursuant to an Exit or reorganisation
transaction, or the 'drag along' and 'tag along' rights, each as
described below or in respect of permitted transfers
to close family members, vehicles under their (or their close
family's) sole control and/or family trust(s) established for tax
planning purposes or affiliates of any corporate shareholder, in
each case subject to transfer back requirements and subject to an
exclusion in respect of sanctioned persons.
No changes in direct or indirect interests or
economic entitlements in Rollover Securities which circumvent such
restrictions on transfer shall be permitted.
Any proposed transferee of Rollover
Securities:
·
shall adhere to the Topco Shareholders' Agreement;
·
shall provide such information and materials as Consortium
JVCo or any other relevant person (including any corporate
administrator) reasonably requires and requests in respect of such
transferee and/or its affiliated or related persons in order to
satisfy their respective obligations in respect of any 'know
your customer', proceeds of crime, anti-terrorism financing
and/or anti-money laundering legislation or regulation from time to
time, or in connection with any anti-trust or regulatory change in
control approvals required by any regulator (which Topco shall
provide reasonable information and assistance in obtaining, if
required); and
·
must not be subject to applicable sanctions restrictions.
7.
Additional Topco Securities
Issues
The Topco B Shareholders will be entitled to
participate pro rata (on a catch-up basis only) in issues of
securities by the Topco Group after the Effective Date of the
Acquisition, excluding any such securities issued:
· to
Consortium JVCo and/or its affiliates to finance the
Acquisition;
·
to Consortium JVCo and/or its affiliates following the
implementation of the Rollover (at the same subscription price per
share as Consortium JVCo paid in respect of its subscription for
Topco A Ordinary Shares to fund the payment of the Cash
Consideration to HL Shareholders) for an aggregate subscription
amount equal to the total costs and expenses reasonably and
properly incurred and to be incurred by or on behalf of the Topco
Group and the Consortium Members in connection with the Acquisition
(including in relation to preparation of Acquisition documentation,
financing of the Cash Consideration and the Consortium's due
diligence exercise), expected to be in the amount of approximately
£100 million (and an updated estimate of such costs and expenses
shall be set out in the Scheme Document);
·
subject to implementation of the Rollover, to HL
Shareholders that validly elect to receive consideration by
means of the Alternative Offer pursuant to the
Scheme;
· by
one wholly-owned member of the Topco Group to another wholly-owned
member of the Topco Group;
· to
actual or potential employees, directors or consultants of the
Topco Group (whether directly or indirectly), which shall dilute
Topco A Ordinary Shares and Topco B Ordinary Shares pro
rata;
· to
any third-party lender in connection with the debt financing
arrangements of the Topco Group, which shall dilute Topco A
Ordinary Shares and Topco B Ordinary Shares pro rata;
· in
connection with an IPO or pre-IPO reorganisation which
shall dilute Topco A Ordinary Shares and Topco B Ordinary Shares
pro rata;
·
pursuant to the terms of any class of convertible securities
of the Topco Group which may be issued following the Effective Date
in accordance with, and subject to, the terms of the Topco
Shareholders' Agreement and the Topco Articles (which, if issued,
would dilute Topco A Ordinary Shares and Topco B Ordinary Shares
pro rata);
· to
any vendor(s) as non-cash consideration on the acquisition of, or
merger with, all or part of another business, undertaking, company
or assets, which shall dilute Topco A Ordinary Shares and Topco B
Ordinary Shares pro rata; and
· in
respect of which Consortium JVCo and a Topco B Shareholder Majority
agree in writing is excluded.
References to rights on a catch-up basis mean
that Topco B Shareholders will be given the
opportunity to take up their pro rata entitlements to securities
following completion of a related issue of securities to the Topco
A Shareholders or other persons.
8.
Terms of Alternative Offer
in the event of a switch
In the event that Bidco elects, with the
consent of the Panel and subject to the Cooperation Agreement, to
switch to an Offer, and less than one hundred per cent. of the HL
Shares are acquired by Bidco, the Alternative Offer
Maximum and the Alternative Offer Minimum may each be amended by
Bidco with the consent of the Panel.
9.
Board Representation and
Information Rights
Each Substantial B Shareholder shall be
entitled to:
·
nominate one director to the board of Bidco subject to
appropriate qualification and suitability criteria, provided that a
majority of the board of Bidco shall be comprised of directors
appointed by the Consortium and/or Consortium JVCo;
·
nominate an observer to the board of Bidco, who shall only be
entitled to attend board meetings by telephone or video call
software only and shall not speak or vote at such
meetings;
·
hold a regular, monthly meeting with the chairperson of the
board of Bidco (in addition to the board meetings) to discuss
strategy and performance of the Topco Group;
· the
same information rights as lenders to the Topco Group and annual
audited accounts of any holding company of Bidco not included in
the annual audited consolidated accounts of the Topco Group;
and
·
regular meetings, no more than once a quarter, with CVC (on
behalf of the Consortium).
10.
Exit
Arrangements
Any Exit shall occur at the absolute discretion
of the Consortium, including as to conduct, implementation,
structuring and timing.
All holders of Rollover Securities are required
to take such reasonable actions as are reasonably requested by the
board of Bidco or Consortium JVCo to achieve, and to actively
co-operate with the Topco Group and Consortium JVCo to maximise the
value for holders of securities in the Topco Group achieved as a
result of, any such process. This shall include without limitation:
(i) providing customary representations and warranties as to the
title to the Rollover Securities held by such holder and its
capacity to transfer such Rollover Securities; (ii) giving a
customary locked box covenant or a customary covenant in relation
to any completion accounts adjustment that Consortium JVCo has
agreed to give in connection with such Exit process on a pro rata,
several basis; (iii) bearing their pro rata share of costs in
relation to such Exit; and (iv) in the case of an IPO, entering
into any "lock-up", sell-down or other related arrangements as may
be reasonably recommended by the underwriter(s) advising on such
IPO and to the same extent and on the same terms as Consortium
JVCo; and (iv) taking a number of related actions including voting
in favour of or consenting to the relevant process. Equivalent
obligations also apply in relation to certain indirect liquidity
events for members of the Consortium (an "Indirect Liquidity Event") and
any raising of additional debt or equity financing
for or refinancing of the Topco Group (a "Refinancing").
Holders of Rollover Securities are also
required to enter into documentation and provide any consents as
are reasonably required to give effect to any reorganisation of the
Topco Group approved by Consortium JVCo and the board of Bidco,
provided that such reorganisation would not be materially and
disproportionately adverse to the economic (including capital and
income rights) position of the holders of Rollover Securities (as a
whole) as compared to Consortium JVCo.
11.
Drag along and Tag
along
If Consortium JVCo or any
Consortium Member proposes to directly or
indirectly transfer any of its securities in the Topco Group to a
bona fide third-party purchaser which is not affiliated with
any Consortium Member as part of a single
transaction or series of connected transactions, Consortium JVCo
shall have a right to 'drag along' (i.e., force the sale of)
Rollover Securities held by Topco B Shareholders in Topco on a pro
rata basis on the same economic terms as Consortium JVCo to such
third-party purchaser, provided that Consortium JVCo shall be
entitled to elect for Topco B Shareholders to receive a cash
alternative to any non-cash component of consideration.
If Consortium JVCo or any Consortium Member
proposes to directly or indirectly transfer Topco A Ordinary Shares
to a third-party purchaser as part of a single transaction or
series of connected transactions following which Consortium JVCo,
the Consortium Members and/or their affiliates together hold, or
would as a result of the relevant transfer hold, directly or
indirectly, less than 90 per cent. of the Topco A Ordinary Shares
in issue on the Costs Issuance Date (or on any direct or indirect
transfer of Topco A Ordinary Shares by Consortium JVCo, any
Consortium Member or their affiliates thereafter), Topco B
Shareholders shall have a 'tag along' right exercisable on a pro
rata basis in relation to such transfer and any
transfer of Topco A Ordinary Shares by Consortium JVCo, the
Consortium Members or their affiliates thereafter. Any transfer by
Topco B Shareholders of their rights under the 'tag along'
provision shall be at the same price and otherwise on the same
terms as agreed to by Consortium JVCo (or selling Consortium Member
or its affiliates, if applicable), save that Consortium JVCo shall
be entitled to elect for Topco B Shareholders to receive a cash
alternative to any non-cash component of consideration. This right
is subject to a number of exceptions, including, amongst others,
(i) any initial transfers of up to 10 per cent. of the Topco A
Ordinary Shares in issue on the Costs Issuance Date, (ii) in
relation to transfers in connection with a Refinancing, or (iii) in
connection with a syndication of equity interests by Consortium
JVCo or its affiliates.
12.
Fees
No Topco B Shareholder
or any of their respective affiliates will be entitled to
receive any management, transaction, investment, or monitoring fees
from any member of the Topco Group (including, following the
Effective Date, the HL Group).
The Topco Shareholders' Agreement provides that
reasonable, properly incurred costs associated with any Exit,
Refinancing, reorganisation transaction or return of proceeds in
future will be borne by the Topco Group.
13.
Governing Law and
Jurisdiction
The Topco Shareholders' Agreement and any
non-contractual or other obligations arising out of or in
connection with them shall be governed by English law. Any dispute
shall be resolved by arbitration under the Rules of the London
Court of International Arbitration for which there shall be three
arbitrators and the seat of the arbitration shall be
London.
Appendix 5
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
|
"2023 HL Annual Report"
|
the annual report and audited accounts of the
HL Group for the year ended 30 June 2023
|
"2024 Full-Year Dividend"
|
has the meaning given to it in paragraph
2
|
"Accredited Investors"
|
has the meaning given to it in paragraph
4
|
"Acquisition"
|
the proposed acquisition by Bidco of the entire
issued, and to be issued, share capital of HL by means of the
Scheme, or should Bidco so elect, and where required, the Panel
consent (subject to the terms of the Cooperation Agreement), by
means of an Offer and, where the context admits, any subsequent
revision, variation, extension or renewal thereof
|
"ADIA"
|
Abu Dhabi Investment Authority
|
"ADIA PED"
|
the Private Equities investment department of
ADIA
|
"Administrative Agent"
|
TMF Group (Jersey) Limited, Topco's
administrative agent
|
"Alternative Offer"
|
the alternative to the Cash Consideration
pursuant to which eligible HL Shareholders may elect to receive
rollover loan notes in Bidco in exchange for some or all of their
HL Shares, which loan notes will, subject to implementation of the
Rollover, ultimately be exchanged for Rollover Securities,
on the terms and conditions set out in this
announcement and to be set out in the Scheme Document
(or, if applicable, the Offer Document) in due course, further
details of which are set out in paragraph
12
|
"Alternative Offer
Maximum"
|
has the meaning given to it in paragraph
12
|
"Alternative Offer
Minimum"
|
has the meaning given to it in paragraph
12
|
"Articles"
|
the articles of association of HL 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
|
"Barclays"
|
Barclays Bank PLC, acting through its
Investment Bank
|
"Bid Conduct Agreement"
|
the agreement between the Investors and Nordic
Capital XI, L.P. relating to bid conduct in connection with the
Acquisition dated 9 August 2024
|
"Bidco"
|
Harp Bidco Limited
|
"Bidco Articles"
|
the articles of association of Bidco
|
"Bidco Group"
|
Bidco and its subsidiary undertakings and where
the context permits, each of them
|
"Bidco Rollover
Securities"
|
has the meaning given to it in paragraph
2 of Appendix 4
|
"Business Day"
|
a day, not being a public holiday, Saturday or
Sunday, on which clearing banks in London, Jersey and Luxembourg
are open for normal business
|
"Cash Consideration"
|
has the meaning given to it in paragraph
2
|
"Cash Offer"
|
has the meaning given to it in paragraph
2
|
"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)
|
"China AML"
|
has the meaning given to it in paragraph
3.1.2 of Part A of
Appendix 1
|
"China Antitrust
Clearance"
|
has the meaning given to it in paragraph
3.1 of Part A
of Appendix 1
|
"Clean Team Agreement"
|
the clean team agreement dated 25 June 2024
(and amended and restated on 21 July 2024) between CVC
Advisers, Nordic Capital XI Delta, Platinum Ivy and HL entered into
in connection with the Acquisition, further details of which are
set out in paragraph 10
|
"Closing Price"
|
the closing middle market price of a HL Share
as derived from the Daily Official List on any particular
date
|
"CMA"
|
has the meaning given to it in paragraph
3.5.1 of Part A
of Appendix 1
|
"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 22 June
2024 between CVC Advisers, Nordic
Capital XI Delta, Platinum Ivy and
HL entered into in connection with the Acquisition,
further details of which are set out in paragraph
10
|
"Consortium" or "Consortium Members"
|
CVC, Nordic Cidron and Platinum Ivy (and/or any
of its affiliates) and "Consortium
Member" means any one of them
|
"Consortium JVCo"
|
Harp Group Holdings Jersey Limited
|
"Cooperation Agreement"
|
the cooperation agreement dated on or around
the date of this announcement between Bidco and HL
|
"Costs Issuance Date"
|
has the meaning given to it in paragraph
2
|
"Court"
|
the High Court of Justice in England and
Wales
|
"Court Meeting"
|
the meeting of Scheme Shareholders to be
convened at the direction of the Court pursuant to Part 26 of
the 2006 Act at which a resolution will be proposed to approve the
Scheme (with or without amendment), including any adjournment,
postponement or reconvening 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 is the operator (as
defined in the Regulations)
|
"CVC"
|
Harp Jersey Limited, a company incorporated in
Jersey with registered number 155054, which is indirectly wholly
owned by a member of the CVC Private Equity Group
|
"CVC Advisers"
|
CVC Advisers Limited, a company incorporated
under the laws of England and Wales with registered number
04726084, whose registered office is at 111 Strand, London, WC2R
0AG
|
"CVC Group"
|
CVC Capital Partners plc, CVC Capital Partners
SICAV-FIS S.A., each of their respective successors or assigns and
any of their respective subsidiary undertakings (as that term is
defined in section 1162 and Schedule 7 of the 2006 Act) from time
to time, together with any investment funds or vehicles advised or
managed by any of the foregoing and any portfolio companies of such
investment funds or vehicles
|
"CVC Private Equity Funds"
|
investment funds or vehicles advised or managed
by an entity or entities in the CVC Private Equity Group
|
"CVC Private Equity Group"
|
entities within the CVC Group which carry out
private equity advisory or management activities from time to
time
|
"Daily Official List"
|
the daily official list of the London Stock
Exchange
|
"Dealing Disclosure"
|
has the same meaning as in Rule 8 of the
Takeover Code
|
"Deutsche Numis"
|
Numis Securities Limited
|
"Disclosed"
|
the information fairly disclosed by or on
behalf of HL: (i) in the 2023 HL Annual Report; (ii) in the half
year results for the six months period ended 31 December 2023;
(iii) in this announcement; (iv) in any other announcement to a
Regulatory Information Service prior to the publication of this
announcement; and (v) in writing (including via the virtual data
room operated by or on behalf of HL in respect of the Acquisition)
or orally in meetings and calls by HL management prior to the date
of this announcement to Bidco, any Consortium Member or any of its
or their (or their affiliates') respective officers, employees,
agents, consultants 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 and in accordance with its terms; or
(ii) if the Acquisition is implemented by way of the Offer, the
Offer having been declared or having become unconditional in
accordance with the requirements of the Takeover Code
|
"Effective Date"
|
the date on which the Acquisition becomes
Effective
|
"Euroclear"
|
Euroclear UK & International
Limited
|
"EU Antitrust
Clearance"
|
has the meaning given to it in paragraph
3.2 of Part A of
Appendix 1
|
"EU Regulation"
|
has the meaning given to it in paragraph
3.2 of Part A of
Appendix 1
|
"Excluded Shares"
|
any HL Shares which are: (i) registered in the
name of or beneficially owned by Bidco and/or any member of the
Bidco Group (and/or any nominee of the foregoing); or (ii) held by
HL in treasury, in each case, at any relevant date or
time
|
"Exit"
|
has the meaning given to it in paragraph
4 of Appendix 4
|
"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
|
"Fenchurch"
|
Fenchurch Advisory Partners LLP
|
"Finco"
|
Harp Finco Limited
|
"Finco Rollover
Securities"
|
has the meaning given to it in paragraph
2 of Appendix 4
|
"Form of Election"
|
the form of election for use by HL Shareholders
electing for the Alternative Offer
|
"FSMA"
|
Financial Services and Markets Act 2000, as
amended from time to time
|
"General Meeting"
|
the general meeting of HL to be convened to
consider and if thought fit approve the Resolutions (with or
without amendment) including any adjournments, postponement or
reconvening thereof
|
"Goldman Sachs"
|
together, Goldman Sachs International and
Goldman Sachs & Co. LLC
|
"HL"
|
Hargreaves Lansdown plc
|
"HL Board" or "HL Directors"
|
the directors of HL
|
"HL Group"
|
HL and its subsidiary undertakings and where
the context permits, each of them
|
"HL Independent Directors" or
"Independent HL
Board"
|
the HL Board from time to time, other than
Adrian Collins (or his alternate director) and (to the extent
applicable) any other director of HL appointed from time to time
following nomination by Peter Hargreaves
pursuant to the terms of the shareholder
agreement between Peter Hargreaves and HL dated 20
October 2020 (and any alternate director of such
director)
|
"HL Share(s)"
|
ordinary shares of 0.4 pence each in the
capital of HL and "HL
Share" means any one of them
|
"HL Share Plans"
|
each of: (i) the HL plc Performance Share Plan;
(ii) the HL Company Share Option (2010) Scheme; (iii) the HL
Deferred Performance Bonus Plan 2012; (iv) the HL Sustained
Performance Plan 2017; (v) the HL plc Sustained Performance Plan
II; (vi) the HL plc Savings Related Share Option Scheme 2019; and
(vii) the HL Share Incentive Plan, as amended from time to
time
|
"HL Shareholder(s)"
|
the registered holders of HL Shares
|
"Indirect Liquidity Event"
|
has the meaning given to it in paragraph 10 of
Appendix 4
|
"Interim Facilities
Agreement"
|
the interim facilities agreement dated 2 August
2024 between Finco as borrower, Global Loan Agency Services Limited
as Interim Facility Agent, GLAS Trust Corporation Limited and the
Interim Lenders named therein
|
"Intermediate Holding
Companies"
|
has the meaning given to it in paragraph
1 of Appendix 4
|
"Investors"
|
has the meaning given to it in paragraph
10
|
"IPO"
|
has the meaning given to it in paragraph
4 of Appendix 4
|
"Joint Defence Agreement"
|
the joint defence agreement dated 18 July 2024
between CVC Advisers, Nordic Capital XI Delta,
Platinum Ivy, HL and the external legal counsels
to the Consortium and HL entered into in connection
with the Acquisition, further details of which are set out in
paragraph 10
|
"Listing Rules"
|
the rules and regulations made by the FCA under
FSMA, and contained in the publication of the same name, as amended
or renamed from time to time
|
"London Stock Exchange"
|
London Stock Exchange plc or its
successor
|
"Long Stop Date"
|
9 May 2025 or such later date: (i)
as may be agreed between Bidco and HL and, if required, the Panel
and the Court may allow; or (ii) set at the direction of the Panel
under the Note on Section 3 of Appendix 7 to the Takeover
Code
|
"Main Market"
|
the London Stock Exchange's main market for
listed securities
|
"Market Abuse Regulation"
|
assimilated Regulation (EU) 596/2014, as it
forms part of the 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
|
"Midco 1"
|
Harp Midco I Limited
|
"Midco 1 Rollover
Securities"
|
has the meaning given to it in paragraph
2 of Appendix 4
|
"Midco 2"
|
Harp Midco II Limited
|
"Midco 2 Rollover
Securities"
|
has the meaning given to it in paragraph
2 of Appendix 4
|
"Morgan Stanley"
|
Morgan Stanley & Co. International
plc
|
"Nordic Capital"
|
the general partners and/or delegated portfolio
managers (as applicable) of the Nordic Capital Vehicles, and as the
context permits or requires the Nordic Capital Advisors (for the
avoidance of doubt: (i) this shall not imply from a legal,
regulatory or tax perspective, nor should it be inferred, that
these entities are not separate and distinct entities, nor that
there is any single Nordic Capital entity; and (ii) references to
Nordic Capital making investments or acting as an investor should
be read as references to the Nordic Capital Vehicles making such
investments/acting as investor)
|
"Nordic Capital Advisors"
|
any, or all, of the non-discretionary
sub-advisory entities exclusively engaged by the general partners
and/or delegated portfolio managers of the Nordic Capital Vehicles
as the context permits or requires
|
"Nordic Capital Fund XI"
|
the entities comprising the fund known as
"Nordic Capital Fund XI"
|
"Nordic Capital Vehicles"
|
Nordic Capital branded funds, co-investment
arrangements and other entities, vehicles and structures
|
"Nordic Capital XI Delta"
|
Nordic Capital XI Delta, SCSp (acting through
its general partner, Nordic Capital XI Delta GP S.à
r.l.)
|
"Nordic Cidron"
|
Cidron Harp 2 Limited, a company incorporated
in Jersey with registered number 154991, which is indirectly wholly
owned by Nordic Capital XI Delta
|
"Offer"
|
subject to the consent of the Panel and the
terms of the Cooperation Agreement, should the Acquisition be
implemented by way of a takeover offer as defined in Chapter 3 of
Part 28 of the 2006 Act, the offer to be made by or on behalf of
Bidco to acquire the entire issued, and to be issued, share capital
of HL on the terms and subject to the conditions to be set out in
the related Offer Document, and, where the context admits, any
subsequent revision, variation, extension or renewal of such
offer
|
"Offer Document"
|
should the Acquisition be implemented by way of
an Offer, the document to be sent to HL Shareholders which will
contain, amongst other things, the terms and conditions of the
Offer
|
"Offer Period"
|
the offer period (as defined by the Takeover
Code) relating to HL which commenced on 22 May 2024
|
"Official List"
|
the official list of the FCA
|
"Opening Position Disclosure"
|
has the same meaning as in Rule 8 of the
Takeover Code
|
"Overseas Shareholders"
|
holders of HL Shares who are resident in,
ordinarily resident in, or citizens of, jurisdictions outside the
United Kingdom
|
"Panel"
|
the Panel on Takeovers and Mergers
|
"Platinum Ivy"
|
Platinum Ivy B 2018 RSC Limited
|
"Platinum Ivy Group"
|
Platinum Ivy and its affiliates which are
directly or indirectly managed by the ADIA PED from time to time
and excludes, for the avoidance of doubt: (a) any portfolio company
in which Platinum Ivy has, or Platinum Ivy's associated companies
or entities have, an equity or any other interest; (b) persons
owned, controlled or managed either directly or indirectly by any
other division, part or department of ADIA; and (c) the Government
of Abu Dhabi and any other person owned or (if applicable)
controlled either directly or indirectly by the Government of Abu
Dhabi
|
"PRA"
|
the Prudential Regulation Authority or its
successor from time to time
|
"Refinancing"
|
has the meaning given
to it in paragraph 10 of
Appendix 4
|
"Registrar of Companies"
|
the Registrar of Companies in England and
Wales
|
"Regulations"
|
the Uncertificated Securities Regulations
2001
|
"Regulatory Information
Service"
|
a regulatory information service as defined in
the FCA Handbook
|
"relevant securities"
|
has the meaning given in the Takeover
Code
|
"Resolutions"
|
the resolution(s) to be proposed at the General
Meeting necessary to implement the Scheme, including a special
resolution proposed in connection with implementation of the Scheme
and certain amendments to be made to the articles of association of
HL
|
"Restricted Jurisdiction"
|
(i) any jurisdiction where local laws or
regulations may result in a significant risk of civil, regulatory
or criminal exposure if, in each case, information concerning the
Acquisition (or Offer if applicable) is sent or made available to
HL Shareholders in that jurisdiction; and (ii) any sanctioned
jurisdiction from time to time
|
"Rollover"
|
has the meaning given to it in paragraph
12
|
"Rollover Completion Shareholding
Proportion"
|
a percentage (A) calculated in accordance with
the following formula: , where: B = the
proportion of Topco Shares held by such Substantial B
Shareholder (together with its permitted transferees,
associates and nominees and other Topco B Shareholders who are
under common control with such Substantial B Shareholder) as at
completion of the Rollover (disregarding, for the purpose of
determining such proportion of Topco Shares, (i) any Topco Shares
issued to management from time to time; and (ii) the Topco A
Ordinary Shares to be issued to Consortium JVCo on the Costs Issue
Date for an aggregate subscription amount equal to the total costs
and expenses incurred and to be incurred by or on behalf of the
Topco Group and the Consortium Members in connection with the
Acquisition);
|
"Rollover Securities"
|
ordinary shares in the capital of Topco having
the rights of "Rollover Shares" set out in the articles of
association of Topco (as amended from time to time), being the
Topco B Ordinary Shares available under the Alternative
Offer
|
"SAMR"
|
has the meaning given to it in paragraph
3.1.1 of Part A of
Appendix 1
|
"Sanction Hearing"
|
the Court hearing to sanction the
Scheme
|
"Scheme"
|
the proposed scheme of arrangement
under Part 26 of the 2006 Act between HL
and the holders of the Scheme
Shares, with or subject to any modification,
addition or condition approved or imposed by the Court and agreed
to by HL and
Bidco
|
"Scheme
Document"
|
the document to be sent
to (amongst others) HL 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
|
"Scheme
Shareholders"
|
holders of Scheme Shares
|
"Scheme Shares"
|
all HL 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, in each case (where the context
requires), remaining in issue at the Scheme Record Time but
excluding any Excluded Shares at any relevant date or
time
|
"Shareholding Cap"
|
has the meaning given to it in paragraph
12
|
"subsidiary", "subsidiary undertaking" and
"undertaking"
|
shall be construed in accordance with the 2006
Act
|
"Substantial B Shareholder"
|
any Topco B Shareholder that, at completion of
the Rollover, holds at least the Substantial B Shareholder Upper
Threshold Percentage of the Topco Shares then in issue, such status
as a Substantial B Shareholder continuing until the later of: (i)
three years following completion of the Rollover; and (ii) the date
on which such Substantial B Shareholder ceases to hold at least the
Substantial B Shareholder Lower Threshold Percentage of the Topco
Shares
|
"Substantial B Shareholder Lower Threshold
Percentage"
|
the Rollover Completion Shareholding
Proportion, or if the Acquisition is implemented by means of an
Offer, such lower percentage as may be obtained as a result of the
following adjustment:
Rollover Completion Shareholding Proportion x
(A),
where: (A) is the proportion (expressed as a
decimal number to two decimal places) that the HL Shares in respect
of which HL Shareholders have accepted the Offer bear to the total
HL Shares the subject of the Offer
|
"Substantial B Shareholder Upper Threshold
Percentage"
|
means 7.5 per cent., or if the Acquisition is
implemented by means of an Offer, such lower percentage as may be
obtained as a result of the following adjustment: 7.5 x (A), where:
(A) is the proportion (expressed as a decimal number to two decimal
places) that the HL Shares in respect of which HL Shareholders have
accepted the Offer bear to the total HL Shares the subject of the
Offer
|
"Swiss Antitrust
Clearance"
|
has the meaning given to it in paragraph
3.3 of Part A of
Appendix 1
|
"Takeover Code"
|
the City Code on Takeovers and Mergers issued
by the Panel on Takeovers and Mergers, as amended from time to
time
|
"Topco"
|
Harp Topco Limited
|
"Topco A Ordinary Shares"
|
the A ordinary shares in the capital of
Topco
|
"Topco Articles"
|
the articles of association of Topco
|
"Topco B Ordinary Shares"
|
the B ordinary shares in the capital of
Topco
|
"Topco B Shareholder"
|
any holder of Rollover Securities
|
"Topco B Shareholder
Majority"
|
has the meaning given to it in paragraph
2
|
"Topco Group"
|
Topco and its subsidiary undertakings from time
to time and where the context permits, each of them and references
to "Topco Group Company" shall be construed
accordingly
|
"Topco Shareholders'
Agreement"
|
the shareholders' agreement to be entered into
by the holders of securities of Topco and the Intermediate Holding
Companies
|
"Topco Shares"
|
the Topco A Ordinary Shares and the Topco B
Ordinary Shares
|
"Turkish Antitrust
Clearance"
|
has the meaning given to it in paragraph
3.4 of Part A
of Appendix 1
|
"Turkish Competition
Act"
|
has the meaning given to it in paragraph
3.4 of Part A
of Appendix 1
|
"UK" or "United Kingdom"
|
United Kingdom of Great Britain and Northern
Ireland
|
"UK Antitrust
Clearance"
|
has the meaning given to it in paragraph
3.5 of Part A
of Appendix 1
|
"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"
|
United States of America
|
"US Exchange Act"
|
the United States Securities Exchange Act of
1934, as amended
|
"US Holders Cap"
|
has the meaning given to it in paragraph
12
|
"US Person"
|
a US person as defined in Regulation S under
the US Securities Act and any nominee thereof
|
"US Securities Act"
|
the United States Securities Act of 1933, as
amended
|
"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 HL Group"
|
HL and associated undertakings and any other
body corporate, partnership, joint venture or person in which HL
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 HL
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.
References to the singular include the plural
and vice versa.