TIDMNGH
FOR IMMEDIATE RELEASE
3 FEBRUARY 2012
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION (DIRECTLY OR INDIRECTLY), IN WHOLE
OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
VIOLATION OF ANY RELEVANT LAWS OF THAT JURISDICTION
RECOMMENDED CASH OFFER
by
NGH TOPCO LIMITED
for
NETWORK GROUP HOLDINGS PLC
Summary
* The boards of NGH Topco Limited and Network Group Holdings PLC announce
that they have reached agreement on the terms of a recommended cash offer,
with a share alternative, for the whole of the issued and to be issued
share capital of Network.
* Under the terms of the Offer, Network Shareholders will be entitled to
receive 26 pence per Network Share in cash. As an alternative, for every
Network Share, Network Shareholders will be entitled to elect to receive
0.26 A ordinary shares of GBP0.01 each in NGH Topco Limited. On this basis,
the terms of the Offer value the existing issued share capital of Network
at approximately GBP19.6 million.
* The Offer Price represents a premium of approximately 40.5 per cent. to the
Closing Price of a Network Share of 18.5 pence on the last dealing day
prior to the release of this announcement.
* The Independent Directors, who have been so advised by Arden Partners plc,
consider the terms of the Offer to be fair and reasonable. In providing its
advice to the Independent Directors, Arden Partners plc has taken into
account the commercial assessments of the Independent Directors.
Accordingly, the Independent Directors have agreed unanimously to recommend
Network Shareholders to accept the Offer. The Independent Directors have
irrevocably undertaken to accept the Offer in respect of their entire
beneficial holdings of Network Shares amounting to, in aggregate, 3,827,023
Network Shares, representing approximately 5.08 per cent. of the existing
issued share capital of Network. All of these undertakings contain an
undertaking to elect for the NGH Topco Share Alternative in respect of
their entire holdings of Network Shares.
* In addition, NGH Topco has received irrevocable undertakings to accept the
Offer or to procure that any other person accepts the Offer from certain
other shareholders of Network, in respect of a total of 65,288,987 Network
Shares representing approximately 86.73 per cent. of the issued share
capital of Network.
* In aggregate, NGH Topco has therefore received irrevocable undertakings to
accept the Offer, or to procure that any other person accepts the Offer, in
respect of a total of 69,116,010 Network Shares, representing approximately
91.81 per cent. of the issued share capital of Network.
* Of the irrevocable undertakings received, NGH Topco has received
undertakings to elect for the NGH Topco Share Alternative in respect of an
aggregate of 63,738,078 Network Shares, representing 84.66 per cent. of the
issued share capital of Network.
* NGH Topco has today entered into the Acquisition Agreement pursuant to
which it has agreed (subject to the Offer becoming or being declared
unconditional in all respects) to acquire 90.22 per cent. of the entire
issued share capital of Pertemps.
* Pertemps and Network were established in connection with the demerger of
one business and they share management and shareholders. The directors of
NGH Topco believe that the re-amalgamation of the two entities represents
an attractive investment opportunity, due to the complementary nature of
each entity's activities together with the potential specific synergies to
be obtained and the reduction in integration risks, such as cultural fit,
that are commonplace in mergers.
Commenting on the Offer, Roger Englefield, on behalf of NGH Topco, said:
* "It gives me great pleasure to welcome our new acquisition. I look forward
to a long, happy and prosperous relationship with everybody involved within
the Network Group."
John Smith, senior independent director of Network, said:
* "Having been involved with Network since its inception in 2007, I am
delighted that this amalgamation of the two entities, backed by LDC,
represents an attractive offer for shareholders and protects employees,
whilst allowing the enlarged group to bring in the next generation of
management and move forward to its next stage of development."
This summary should be read in conjunction with the full text of the following
announcement. Appendix IV to the following announcement contains definitions of
certain terms used in this summary and the following announcement.
Mazars Corporate Finance Limited is acting exclusively for NGH Topco in
connection with the Offer and will not be responsible to any person other than
NGH Topco for providing the protections afforded to customers of Mazars
Corporate Finance Limited or for providing advice in relation to the Offer or
any other matter referred to in this announcement.
Arden Partners plc is acting exclusively for Network in connection with the
Offer and will not be responsible to any person other than Network for
providing the protections afforded to clients of Arden Partners plc or for
providing advice in relation to the Offer or any other matter referred to in
this announcement.
This announcement does not constitute, or form part of, any offer for, or any
solicitation of any offer for, securities. Any acceptance or other response to
the Offer should be made only on the basis of information referred to in the
Offer Document which NGH Topco intends to despatch shortly to Network
Shareholders and, for information only, to holders of options under the Network
Share Schemes.
This announcement has been prepared for the purposes of complying with English
Law and the Code and the information disclosed may not be the same as that
which would have been disclosed if this announcement had been prepared in
accordance with the laws of jurisdictions outside the United Kingdom.
Overseas Shareholders
The availability of the Offer to persons who are not resident in the United
Kingdom may be affected by the laws of their relevant jurisdiction. Such
persons should inform themselves of, and observe, any applicable legal or
regulatory requirements of their jurisdiction. Further details in relation to
overseas shareholders will be contained in the Offer Document.
The Offer referred to in this announcement will not be made, directly or
indirectly, in, into or by use of the mails of, or by any means or
instrumentality (including, without limitation, telephonically or
electronically) of interstate or foreign commerce of, or any facilities of a
nationals securities exchange of any Restricted Jurisdiction. This announcement
does not constitute an offer in any Restricted Jurisdiction and the Offer will
not be capable of acceptance by any such use, means, instrumentally or
facilities or otherwise from or within any Restricted Jurisdiction. Accordingly
this announcement is not being, and should not be, mailed, transmitted or
otherwise distributed, in whole or in part, in or into or from any Restricted
Jurisdiction.
Network Shareholders (including, without limitation, nominees, trustee or
custodians) must not forward this announcement to any Restricted Jurisdiction.
The NGH Topco Shares have not been, and will not be, listed on any stock
exchange or registered under the US Securities Act or under the securities laws
of any jurisdiction of the United States; the relevant clearances have not
been, nor will they be, obtained from the securities commission of any province
or territory of Canada; no prospectus in relation to the NGH Topco Shares has
been, or will be, lodged with, or registered by, the Australian Securities and
Investments Commission; and no steps have been, or will be, taken to enable the
NGH Topco Shares to be offered in compliance with the applicable securities
laws of any state, province, territory or jurisdiction of the United States,
Canada, Australia or Japan or any other country or jurisdiction outside the
United Kingdom. Accordingly, the NGH Topco Shares are not being, nor (unless an
exemption under relevant securities laws is applicable) can they be, offered,
sold, resold or delivered, directly or indirectly, in or into or from the
United States, Canada, Australia or Japan or any other jurisdiction if to do so
would constitute a violation of the relevant laws of, or require registration
of them in, such jurisdiction or to, or for the account or benefit of, any US
person or any resident, citizen or national of Canada, Australia or Japan.
CAUTIONARY NOTICE REGARDING FORWARD LOOKING STATEMENTS
This announcement contains certain forward looking statements with respect to
the financial condition, results of operations and business of Network or
Network Group and certain plans and objectives of the boards of directors of
Network and NGH Topco. These forward looking statements can be identified by
the fact that they do not relate to historical or current facts. Forward
looking statements often use words such as "anticipate", "target", "expect",
"estimate", "intend", "plan", "goal", "believe", "will", "may", "should",
"would", "could" or other words of similar meaning. These statements are based
on assumptions and assessments made by the boards of directors of Network and
NGH Topco in the light of their experience and their perception of historical
trends, current conditions, expected future developments and other factors they
believe appropriate. By their nature, forward looking statements involve risk
and uncertainty and the factors described in the context of such forward
looking statements in this announcement could cause actual results and
developments to differ materially from those expressed in or implied by such
forward looking statements.
Should one or more of these risks or uncertainties materialise, or should
underlying assumptions prove incorrect, actual results may vary materially from
those described in this announcement. Network and NGH Topco assume no
obligation to update or correct the information contained in this announcement.
DEALING DISCLOSURE REQUIREMENTS
Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of
any class of relevant securities of Network or of any paper 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. 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) Network
and (ii) any paper offeror(s). An Opening Position Disclosure by a person to
whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on
the 10th business day following the commencement of the offer period. Relevant
persons who deal in the relevant securities of Network or of a paper offeror
prior to the deadline for making an Opening Position Disclosure must instead
make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1%
or more of any class of relevant securities of Network or of any paper offeror
must make a Dealing Disclosure if the person deals in any relevant securities
of Network or of any paper 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) Network and
(ii) any paper offeror, save to the extent that these details have previously
been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3
(b) applies must be made by no later than 3.30 pm (London time) on the business
day following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or understanding,
whether formal or informal, to acquire or control an interest in relevant
securities of Network or a paper 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 Network and by any offeror
and Dealing Disclosures must also be made by Network, by any offeror and by any
persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant
securities Opening Position Disclosures and Dealing Disclosures must be made
can be found in the Disclosure Table on the Takeover Panel's website at
www.thetakeoverpanel.org.uk, including details of the number of relevant
securities in issue, when the offer period commenced and when any offeror was
first identified. If you are in any doubt as to whether you are required to
make an Opening Position Disclosure or a Dealing Disclosure, you should contact
the Panel's Market Surveillance Unit on +44 (0)20 7638 0129.
The defined terms used in this section "Dealing Disclosure Requirements" are
defined in the Code which can be found on the Panel's website.
Publication on Website
A copy of this announcement will be made available subject to certain
restrictions relating to persons resident in restricted jurisdictions at http:/
/www.networkgroupholdings.co.uk/Corporate/Press_Centre/News/Latest_News/
newsList.aspx?id=58 by no later than 12 noon (London time) on 6 February 2012,
being the business day following date of this announcement. You may request a
hard copy of this announcement by contacting Nigel Dudley at Meriden Hall, Main
Road, Meriden, Coventry, West Midlands CV7 7PT (tel: 01676 525000). You may
also request that all future documents, announcements and information to be
sent to you in relation to the offer should be in hard copy form.
Rule 2.10 Requirements
In accordance with Rule 2.10 of the City Code, the current issued share capital
of Network comprises 75,283,446 ordinary shares of 0.1 pence each (ISIN number
GB00B243R294). Details of the issued share capital of NGH Topco are set out in
Appendix II to this announcement.
FOR IMMEDIATE RELEASE
3 FEBRUARY 2012
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION (DIRECTLY OR INDIRECTLY), IN WHOLE
OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
VIOLATION OF ANY RELEVANT LAWS OF THAT JURISDICTION
RECOMMENDED CASH OFFER
by
NGH TOPCO LIMITED
for
NETWORK GROUP HOLDINGS PLC
1. Introduction
The boards of NGH Topco and Network announce that they have reached agreement
on the terms of a recommended offer, with a share alternative, to be made by
NGH Topco for the whole of the issued and to be issued share capital of
Network.
The Offer values each Network Share at 26 pence and Network's existing issued
share capital at approximately GBP19.6 million.
The Offer Price represents a premium of approximately 40.5 per cent. to the
Closing Price of 18.5 pence for each Network Share on 2 February 2012, being
the last dealing day prior to the date of this announcement.
2. Recommendation
The Independent Directors, who have been so advised by Arden, consider the
terms of the Offer to be fair and reasonable. In providing its advice to the
Independent Directors, Arden has taken into account the commercial assessments
of the Independent Directors. Accordingly, the Independent Directors have
agreed unanimously to recommend Network Shareholders to accept the Offer, as
the Independent Directors have themselves irrevocably undertaken to do (or
procure to be done) in respect of their entire beneficial holdings of Network
Shares amounting to, in aggregate, 3,827,023 Network Shares, representing
approximately 5.08 per cent. of Network's existing issued share capital. All of
these undertakings contain an undertaking to elect for the NGH Topco Share
Alternative in respect of their entire holdings of Network Shares.
3. The Offer
The Offer, which will be subject to the conditions and certain further terms
set out in Appendix I, and to be set out in full in the formal Offer Document
and Form of Acceptance, will be made on the following basis:
For every Network Share 26 pence in cash
Network Shares will be acquired by NGH Topco pursuant to the Offer fully paid
and free from all liens, equities, charges, equitable interests, encumbrances,
rights of pre-emption and other third party rights and/or interests of any
nature whatsoever and together with all rights attaching to them, now or in the
future, including the right to receive and retain all dividends, interest and
other distributions declared, paid or made in the future.
4. The NGH Topco Share Alternative
As an alternative to some or all of the cash consideration to which they would
otherwise be entitled under the Offer, accepting Network Shareholders (other
than certain Overseas Shareholders) will be able to elect to receive NGH Topco
Shares to be issued by NGH Topco on the following basis:
For every Network Share 0.26 NGH Topco Shares*
*rounded down to the nearest whole NGH Topco Share (as the case may be).
5. Irrevocable undertakings
NGH Topco has received irrevocable undertakings to accept the Offer from the
Network Directors and their immediate families, related trusts and any other
person whose interests in Network Shares a director is taken to be interested
in pursuant to Part 22 of the Companies Act 2006 in respect of 43,068,231
Network Shares, being all of the Network Shares in which they are interested,
representing approximately 57.20 per cent. of the issued share capital of
Network. These contain undertakings to elect for the NGH Topco Share
Alternative in respect of 39,222,236 Network Shares. These undertakings will
remain binding (unless the Offer is withdrawn or lapses) even in the event of a
higher competing offer for Network.
In addition, NGH Topco has received irrevocable undertakings to accept the
Offer from certain other Network Shareholders, in respect of a total of
24,515,842 Network Shares representing approximately 32.58 per cent. of the
issued share capital of Network. Each of these undertakings contains a
commitment from the Network Shareholder to elect for the NGH Topco Share
Alternative in respect of their entire holding of Network Shares. These
undertakings will remain binding (unless the Offer is withdrawn or lapses) even
in the event of a higher competing offer for Network.
In addition, NGH Topco has received irrevocable undertakings to accept the
Offer, in respect of a total of 1,531,937 Network Shares representing
approximately 2.03 per cent. of the issued share capital of Network. These
undertakings will remain binding (unless the Offer is withdrawn or lapses) even
in the event of a higher competing offer for Network.
In aggregate, NGH Topco has therefore received irrevocable undertakings to
accept the Offer in respect of a total of 69,116,010 Network Shares,
representing approximately 91.81 per cent. of the issued share capital of
Network which include irrevocable undertakings to elect for the NGH Topco Share
Alternative in respect of a total of 63,738,078 Network Shares, representing
approximately 84.66 per cent. of the issued share capital of Network.
6. Information on NGH Topco, LDC and Lloyds Banking Group
(a) NGH Topco
NGH Topco is a single purpose vehicle incorporated in England and Wales as a
private limited company for the sole purpose of holding shares in Network and
Pertemps. NGH Topco was formed by the LDC Investors for the purpose of making
the Offer and acquiring Pertemps.
NGH Topco has today entered into the Acquisition Agreement pursuant to which it
has agreed (subject to the Offer becoming or being declared unconditional in
all respects) to acquire 90.22 per cent. of the the entire issued share capital
of Pertemps. NGH Topco has not traded to date or entered into any agreements
save for those entered into in connection with the Offer and the Acquisition
Agreement.
(b) LDC
LDC is one of the UK's leading mid-market private equity firms with over 30
years' history supporting ambitious management teams. LDC is a wholly owned
subsidiary of Lloyds TSB Bank PLC which itself is a wholly owned subsidiary of
Lloyds Banking Group. LDC has been investing with funds provided by its parent
throughout the economic cycle.
LDC has a portfolio of over 70 businesses valued in excess of GBP1.3 billion, a
network of 10 offices across the UK and a presence in Hong Kong. LDC assists
the businesses it invests in by providing access to new market opportunities
and potential synergies, including from its portfolio and within the Lloyds
Banking Group.
(c) Lloyds Banking Group
Lloyds Banking Group is a UK based financial services group providing a wide
range of banking and financial services, primarily in the UK, to personal and
corporate customers. Its main business activities include retail, commercial
and corporate banking, general insurance and life, pensions and investment
provision. Its latest published annual accounts (for the financial year ended
31 December 2010) showed that Lloyds Banking Group and its affiliates earned
consolidated revenues of approximately GBP43.5 billion.
7. Information on Pertemps
The principal activity of the Pertemps Group is the operation of staff
agencies.
For the financial year ended 31 December 2010, Pertemps reported turnover of GBP
286.0 million (an increase of GBP54.5 million or 23.5 per cent. on the prior
year) and profit before tax of GBP8.5 million (an increase of GBP5.5 million or 180
per cent.).
The increase in turnover during its financial year ended 31 December 2010 was
predominantly in respect of the supply of flexible workers. This arose, in
part, from contract successes during the year and building on contract wins in
2009. Permanent sales also grew in 2010. Margins were eroded in the financial
year ended 31 December 2010 but comparatively less than the reduction between
2008 and 2009.
8. Information on Network
The Network Shares were admitted to trading on AIM in September 2007 at 26
pence per Network Share. Network comprises two operating divisions:
* specialist recruitment comprising 24 niche recruitment companies covering
private and public sectors each of which has between two and 43 employees;
and
* ESOS, a business process outsourcing group.
Network's specialist recruitment business involves the placement of candidates
into permanent and/or temporary/contract positions of employment across a range
of sectors including sales & marketing, health & safety, human resources,
management, finance, engineering, construction, IT, catering and health &
social care (home carers).
ESOS provides support services to Network's operating subsidiaries, parts of
the Pertemps Group as well as to a number of third party organisations. The
primary services provided by ESOS include payroll services, credit management
services, information and communications technology strategy, solutions and
services.
For the financial year ended 30 November 2010, Network reported revenue of GBP
52.2 million (an increase of GBP0.1 million or 0.2 per cent. on the prior year)
and profit before tax of GBP1.9 million (before other items), an increase of GBP1.2
million or 155 per cent..
Interim results announced on 26 August 2011 for the six months ended 31 May
2011 reported revenue of GBP27.5 million, (an increase of GBP2.4 million or 9.5 per
cent. on the corresponding period in the prior year) and profit before tax
(before other items) of GBP1.2 million (an increase of GBP0.5 million or 86.2 per
cent. on the corresponding period in the prior year).
In that announcement the Network Directors commented that the second half of
the year to 30 November 2011 had started well, significantly ahead of the
corresponding period in the prior year. The Network Directors concluded that
they were optimistic that the results for the full year will meet their
expectations.
9. Background to and reasons for the Offer
NGH Topco was formed by LDC specifically for the purpose of making the Offer to
acquire Network and acquire Pertemps pursuant to the Acquisition Agreement.
Pertemps and Network were established in connection with the demerger of one
business and they share management and shareholders. The board of NGH Topco
considers that the re-amalgamation of the two entities represents an attractive
investment opportunity, due to the complementary nature of each entity's
activities together with the potential specific synergies to be obtained and
the reduction in integration risks, such as cultural fit, that are commonplace
in mergers.
Although there are obvious common elements between the two entities, Pertemps
and Network currently have different market niches and the NGH Topco Board
believe that the combination of these two entities will produce an enlarged
business with enhanced market coverage. The board of NGH Topco believes that
the Enlarged Group will be able to provide a wider offering of recruitment
services covering both specialist recruitment and more general opportunities
and that significant scope for the cross selling of opportunities exists.
Currently, Pertemps alone has no presence in the provision of employees for
technical and professional based roles. Network, however, has a presence in
both these areas and can therefore utilise Pertemps' nationwide branch network
to develop these areas further.
Additionally, the board of NGH Topco believes that the Enlarged Group will be
able to provide a wider recruitment solution to existing and prospective
customers which may be a significant factor when competing for larger
contracts.
The board of NGH Topco believes that the Offer presents a good opportunity for
Network Shareholders to realise their investment in Network for cash or for
equity if the Network Shareholders elect to receive the NGH Topco Share
Alternative, or a combination of cash and equity.
10. Background to and reasons for recommending the Offer
In considering the Offer and their recommendation, the Independent Directors
have taken into account a number of factors in relation to Network and its
current structure.
The Network Shares were admitted to trading on AIM in September 2007 primarily
to enable the Network Group to provide potential equity incentivisation to both
existing and prospective subsidiary company management in Network Shares. It
was also thought that admission to AIM would allow Network to issue Network
Shares as consideration for future acquisitions as well as enhancing the
Network Group's profile.
However since listing Network's shares have been illiquid. Indeed, there have
only been 27 days in the 12 months prior to the date of this announcement when
Network Shares have been traded on market.
Furthermore, in the current economic environment it has become much harder for
smaller AIM quoted companies like Network to raise finance for development from
the public markets. A combination of a lack of institutional shareholders and
the concentrated shareholder base of Network have led to this illiquid market
in its shares.
As an AIM listed company, Network's market capitalisation could also hinder it
from making sizable acquisitions. Acquisitions of a size greater than Network's
current market capitalisation would be classified as a "Reverse Take-over"
requiring a detailed re-admission document supported by an extensive and
expensive due diligence exercise. Such acquisitions require approval in a
general meeting by shareholders.
The Independent Directors have come to the conclusion that the Offer would
provide an exit for Network Shareholders which is not available through the
market, at a premium to the market price prior to the announcement of the
Offer.
The Independent Directors have taken the following additional key factors into
consideration when deciding to recommend the Offer:
* the Offer Price represents an immediate cash return at a premium of
approximately 40.5 per cent. to the Closing Price of 18.5 pence per Network
Share on 2 February 2012 (being the last Business Day prior to the
announcement of the Offer);
* Network Shareholders have the opportunity to elect to receive NGH Topco
Shares through the NGH Topco Share Alternative. Network Shareholders should
be aware that NGH Topco has stated that the NGH Topco Shares will not be
listed on any stock exchange nor is it NGH Topco's current intention to
seek any listing for its shares;
* NGH Topco has received irrevocable undertakings from Network Directors,
members of their immediate families and certain other Network Shareholders
to accept the Offer in respect of 69,116,010 Network Shares, representing
approximately 91.81 per cent. of the issued share capital of Network; and
* NGH Topco has stated its intention, should the Offer be declared
unconditional, to cancel trading in Network Shares on AIM which will
significantly reduce the liquidity and marketability of Network Shares.
11. Current trading and prospects of Network
Network released its interim results for the six month period ended on 31 May
2011 on 26 August 2011 which contained the following update:
"The Group has experienced increased revenue and profitability in the first six
months of the year significantly exceeding performance for the corresponding
period last year. The recruitment division, particularly those businesses
operating in the IT, health and social care, and construction sectors, has
shown good revenue growth and margins have been maintained.
The reported profit for the period is GBP829,000 (6 months ended 31 May 2010: GBP
2,880,000; year ended 30 November 2010: GBP3,805,000). In the comparative
periods ended 31 May 2010 and 30 November 2010 the Statement of Comprehensive
Income includes a credit of GBP2,363,000 and GBP2,434,000 respectively for other
items that have not recurred in 2011. Both of these figures include GBP2,301,000
in respect of the movement in the value of the liabilities associated with the
Group's equity conversion mechanism.
Revenue for the Group was 9.5% higher than revenue for the corresponding period
in 2010 whilst the gross profit for the Group was 7.3% higher than the
corresponding period in 2010.
Operating profit for the Group was 59.7% higher than the corresponding period
in 2010. Profit before tax and other items was GBP1,162,000 compared to GBP624,000
in the corresponding period in 2010. The profit before other items
attributable to the shareholders of NGH has more than doubled compared to the
corresponding period in 2010.
During the first half of the year the Group increased its portfolio of
specialist recruitment agencies with the acquisition of four companies.
In April, the Group acquired Sheridan Maine Recruitment Limited, specialising
in accountancy and finance recruitment. Following the half year end date the
Group's shareholding has been diluted to 75.1% following the issue of equity to
the management. Also in April the Group acquired Options Network Limited,
specialising in construction and engineering recruitment. The Group is
currently diluting its shareholding to 25.1% through an issue of equity to the
management.
In May the Group acquired 75.1% of Network Professional Recruitment Limited,
specialising in recruitment in the financial services and insurance sectors.
Also in May the Group acquired a majority stake in Procurement People
Recruitment Limited, a recruitment company specialising in procurement
professionals.
The Group also increased its shareholding in existing subsidiary Network
Catering Limited during the period.
Following the half year end date in August the Group acquired 51% of SSR
Contract & Technical Limited and 51% of SSR General & Management Limited,
recruitment companies specialising in the security and allied sectors.
The second half of the year has started well, significantly ahead of the
corresponding period last year. The Board is optimistic that the results for
the full year will meet their expectations.
The Group is continually seeking acquisitions to increase the Group's offering
in the recruitment and business process outsourcing sectors."
Save as disclosed in the Offer Document, the Network Directors are not aware of
any material change in the financial or trading position of the Network Group
since 31 May 2011, being the date to which its last published unaudited interim
financial statements were drawn up.
12. Management, Employees, Network Directors and locations
NGH Topco intends that, following the Offer becoming or being declared
unconditional in all respects, the existing employment rights, including
pension rights, of all the employees of Network will be fully safeguarded and
the Offer will not have any adverse repercussions on Network's employees or
management and will provide continuity of employment for staff.
NGH Topco has stated that the skills, knowledge and expertise of Network's
employee workforce are valued by NGH Topco and the Independent Directors have
been given assurances that the employment rights of all Network's employees
will be safeguarded. NGH Topco has no current intention to change the strategic
plans, the location of Network's operations, to redeploy any of Network's fixed
assets or effect a material change in any conditions of employment.
It is intended that the employment arrangements of the Network Directors (save
for Timothy Watts, Michael Owen and Spencer Jones) which are currently in place
will continue following the Offer becoming or being declared wholly
unconditional. John James will resign as a non-executive Network Director upon
the Offer becoming or being declared wholly unconditional, if so requested.
It is intended that Spencer Jones will enter into a new service agreement with
NGH Topco on terms (other than notice period) which are the same as those that
he currently enjoys. The notice period applicable to Spencer Jones' service
agreement is being extended to 3 months' notice given by either employer or
employee.
Timothy Watts and Michael Owen are party to arrangements with NGH Topco
relating to the reduction of their time commitments to and related benefits
from NGH Topco following the Offer becoming or being declared unconditional in
all respects.
No favourable conditions have been proposed by NGH Topco and no management
incentivisation arrangements have been proposed or discussed by NGH Topco or
any persons acting in concert with NGH Topco or with any member of Network's
management.
13. Network Shares Schemes
The Offer extends to any Network Shares which are unconditionally allotted or
issued fully paid (or credited as fully paid) prior to the date on which the
Offer closes (or such earlier date as NGH Topco may, subject to the Code,
decide, not being earlier than the date on which the Offer becomes or is
declared unconditional as to acceptances or, if later, the First Closing Date)
including any such shares unconditionally allotted or issued pursuant to the
exercise of options under the Network Share Schemes. The Offer also extends to
Network Shares held in Network's employee benefit trust.
To the extent that options remain unexercised at the time the Offer becomes or
is declared wholly unconditional, appropriate proposals will be made by NGH
Topco to participants in the Network Share Schemes once the Offer becomes or is
declared wholly unconditional. It is intended that equity-based incentivisation
and sharing of value creation is going to be a continuing feature of NGH
Topco's business.
14. Financing of the Offer
NGH Topco's obligation to pay cash pursuant to the Offer will be funded by loan
note subscriptions by the LDC Investors in NGH Topco.
Mazars, the financial adviser to NGH Topco, is satisfied that sufficient
resources are available to NGH Topco to satisfy the consideration payable as a
result of full acceptance of the Offer in cash by all NGH Shareholders.
15. Opening Position Disclosures and Interests
NGH Topco confirms that it will make an Opening Position Disclosure shortly
following this announcement, setting out the details required to be disclosed
by it under Rule 8.1(a) of the Code.
16. Documents on display
Copies of the documents referred to below will be available for inspection at
the offices of NGH Topco's solicitors, Eversheds LLP of One Wood Street, London
EC2V 7WS, during normal business hours on any weekdays (Saturdays, Sundays and
public holidays excepted) and online at http://www.networkgroupholdings.co.uk/
Corporate/Press_Centre/News/Latest_News/newsList.aspx?id=58 while the Offer
remains open for acceptance:
a. the Articles of Association of Network;
b. the Articles of Association of NGH Topco;
c. the letters of consent from Mazars and Arden;
d. the Investment Agreement and the Loan Note Instrument;
e. the irrevocable undertakings; and
f. the valuation letter from Mazars.
17. General
The Offer Document and the Form of Acceptance will be sent to Network
Shareholders today.
The Offer will be made subject to the conditions and certain further terms set
out in Appendix 1 to this announcement. This announcement does not constitute
an offer or an invitation to purchase any securities. The Offer will be made
solely by the Offer Document and the Form of Acceptance, which will contain the
full terms and conditions of the Offer, including details of how the Offer may
be accepted.
Appendix III sets out the sources and bases of certain financial information
contained in this announcement. Appendix IV contains definitions of the terms
used in this announcement.
PRESS ENQUIRIES
For further information contact:
NGH Topco
Roger Englefield 01676 525000
Mazars
Stephen Skeels 020 7063 4000
Andrew Millington
Network
John Smith 01676 525000
Arden
Steve Douglas 0121 423 8900
Jamie Cameron
Mazars is acting exclusively for NGH Topco in connection with the Offer and
will not be responsible to any person other than NGH Topco for providing the
protections afforded to customers of Mazars or for providing advice in relation
to the Offer nor any other matter referred to in this announcement.
Arden is acting exclusively for Network in connection with the Offer and will
not be responsible to any person other than Network for providing the
protections afforded to clients of Arden nor for providing advice in relation
to the Offer nor any other matter referred to in this announcement.
This announcement does not constitute, or form part of, any offer for, or any
solicitation of any offer for, securities. Any acceptance or other response to
the Offer should be made only on the basis of information referred to in the
Offer Document which NGH Topco intends to despatch shortly to Network
Shareholders and, for information only, to holders of options under the Network
Share Schemes.
This announcement has been prepared for the purposes of complying with English
Law and the Code and the information disclosed may not be the same as that
which would have been disclosed if this announcement had been prepared in
accordance with the laws of jurisdictions outside the United Kingdom.
Overseas Shareholders
The availability of the Offer to persons who are not resident in the United
Kingdom may be affected by the laws of their relevant jurisdiction. Such
persons should inform themselves of, and observe, any applicable legal or
regulatory requirements of their jurisdiction. Further details in relation to
overseas shareholders will be contained in the Offer Document.
The Offer referred to in this announcement will not be made, directly or
indirectly, in, into or by use of the mails of, or by any means or
instrumentality (including, without limitation, telephonically or
electronically) of interstate or foreign commerce of, or any facilities of a
nationals securities exchange of any Restricted Jurisdiction. This announcement
does not constitute an offer in any Restricted Jurisdiction and the Offer will
not be capable of acceptance by any such use, means, instrumentally or
facilities or otherwise from or within any Restricted Jurisdiction. Accordingly
this announcement is not being, and should not be, mailed, transmitted or
otherwise distributed, in whole or in part, in or into or from any Restricted
Jurisdiction.
Network Shareholders (including, without limitation, nominees, trustee or
custodians) must not forward this announcement to any Restricted Jurisdiction.
The NGH Topco Shares have not been, and will not be, listed on any stock
exchange or registered under the US Securities Act or under the securities laws
of any jurisdiction of the United States; the relevant clearances have not
been, nor will they be, obtained from the securities commission of any province
or territory of Canada; no prospectus in relation to the NGH Topco Shares has
been, or will be, lodged with, or registered by, the Australian Securities and
Investments Commission; and no steps have been, or will be, taken to enable the
NGH Topco Shares to be offered in compliance with the applicable securities
laws of any state, province, territory or jurisdiction of the United States,
Canada, Australia or Japan or any other country or jurisdiction outside the
United Kingdom. Accordingly, the NGH Topco Shares are not being, nor (unless an
exemption under relevant securities laws is applicable) can they be, offered,
sold, resold or delivered, directly or indirectly, in or into or from the
United States, Canada, Australia or Japan or any other jurisdiction if to do so
would constitute a violation of the relevant laws of, or require registration
of them in, such jurisdiction or to, or for the account or benefit of, any US
person or any resident, citizen or national of Canada, Australia or Japan.
CAUTIONARY NOTICE REGARDING FORWARD LOOKING STATEMENTS
This announcement contains certain forward looking statements with respect to
the financial condition, results of operations and business of Network or
Network Group and certain plans and objectives of the boards of directors of
Network and NGH Topco. These forward looking statements can be identified by
the fact that they do not relate to historical or current facts. Forward
looking statements often use words such as "anticipate", "target", "expect",
"estimate", "intend", "plan", "goal", "believe", "will", "may", "should",
"would", "could" or other words of similar meaning. These statements are based
on assumptions and assessments made by the boards of directors of Network and
NGH Topco in the light of their experience and their perception of historical
trends, current conditions, expected future developments and other factors they
believe appropriate. By their nature, forward looking statements involve risk
and uncertainty and the factors described in the context of such forward
looking statements in this announcement could cause actual results and
developments to differ materially from those expressed in or implied by such
forward looking statements.
Should one or more of these risks or uncertainties materialise, or should
underlying assumptions prove incorrect, actual results may vary materially from
those described in this announcement. Network and NGH Topco have no obligation
to update or correct the information contained in this announcement.
DEALING DISCLOSURE REQUIREMENTS
Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of
any class of relevant securities of Network or of any paper 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 paper 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) Network and (ii) any paper offeror(s). An Opening Position
Disclosure by a person to whom Rule 8.3(a) applies must be made by no later
than 3.30 pm (London time) on the 10th business day following the commencement
of the offer period and, if appropriate, by no later than 3.30pm (London time)
on the 10th business day following the announcement in which any paper offeror
is first identified. Relevant persons who deal in the relevant securities of
Network or of a paper offeror prior to the deadline for making an Opening
Position Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1%
or more of any class of relevant securities of Network or of any paper offeror
must make a Dealing Disclosure if the person deals in any relevant securities
of Network or of any paper 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) Network and
(ii) any paper offeror, save to the extent that these details have previously
been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3
(b) applies must be made by no later than 3.30 pm (London time) on the business
day following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or understanding,
whether formal or informal, to acquire or control an interest in relevant
securities of Network or a paper 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 Network and by any offeror
and Dealing Disclosures must also be made by Network, by any offeror and by any
persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant
securities Opening Position Disclosures and Dealing Disclosures must be made
can be found in the Disclosure Table on the Takeover Panel's website at
www.thetakeoverpanel.org.uk, including details of the number of relevant
securities in issue, when the offer period commenced and when any offeror was
first identified. If you are in any doubt as to whether you are required to
make an Opening Position Disclosure or a Dealing Disclosure, you should contact
the Panel's Market Surveillance Unit on +44 (0)20 7638 0129.
The defined terms used in this section "Dealing Disclosure Requirements" are
defined in the Code which can be found on the Panel's website.
APPENDIX I
Conditions and Certain Further Terms of the Offer
A. Conditions Of The Offer
The Offer, which will be made by NGH Topco, will be subject to the following
conditions:
1. Acceptances
Valid acceptances being received (and not, where permitted, withdrawn) by no
later than 3.00 pm on the first closing date of the Offer (or, subject to the
Code, such later time(s) and/or dates(s) as NGH Topco may decide) in respect of
not less than 90 per cent. of Network Shares to which the Offer relates and not
less than 90 per cent. of the voting rights carried by those shares (or, in
either case, such lower percentage as NGH Topco may decide). However, this
condition will not be satisfied unless NGH Topco and/or its wholly-owned
subsidiaries have acquired or agreed to acquire Network Shares carrying, in
aggregate, over 50 per cent. of the voting rights then normally exercisable at
general meetings of Network including, for this purpose, to the extent (if any)
required by the Code, the voting rights attaching to any Network Shares which
may be unconditionally allotted or issued before the Offer becomes or is
declared unconditional as to acceptances. In this condition:
a. the expression "Network Shares to which the Offer relates" shall be
construed in accordance with sections 974 to 991 (inclusive) of the
Companies Act 2006; and
b. Network Shares which have been unconditionally allotted but not issued
shall be deemed to carry the voting rights which they will carry when they
are issued; and
c. valid acceptances shall be treated as having been received in respect of
any Network Shares that NGH Topco shall, pursuant to section 979(8) and, if
applicable, section 979(9) of the Companies Act 2006, be treated as having
acquired or unconditionally contracted to acquire by virtue of acceptances
of the Offer.
18. Competition Issues
a. Without limitation to condition 3 below and in addition to paragraphs (b)
and (c) below, one of the following subparagraphs (i), (ii) (iii) or (iv)
below having been fulfilled or this paragraph (a) having been waived by NGH
Topco:
i. the Office of Fair Trading ("OFT") not having indicated to NGH Topco that
the Offer or any part of the Offer creates a relevant merger situation
within the meaning of section 23 of the Enterprise Act 2002 ("Enterprise
Act"); or
ii. the OFT not having indicated to NGH Topco that it has decided to refer the
Offer or any part of the Offer to the Competition Commission under section
33 of the Enterprise Act regardless of whether or not NGH Topco has offered
undertakings in lieu of such a reference, or the statutory period for the
making of such a reference having expired without any such reference being
made; or
iii. the period for considering any merger notice given to the OFT by NGH Topco
under section 96 of the Enterprise Act having expired without any such
reference being made, provided that section 100 of the Enterprise Act does
not apply in relation to such merger notice; or
iv. a request to the European Commission having been made either by the
competent authorities of one or more EU member states under Article 22(1)
of Council Regulation (EC) No. 139/2004 ("ECMR"), or by NGH Topco or
Network under Article 4(5) of the ECMR, and such request having been
accepted by the European Commission.
g. Without limitation to condition 3 below and in addition to paragraph (a)
above and paragraph (c) below, one of the following subparagraphs (i), (ii)
or (iii) having been fulfilled, or this paragraph (b) having been waived by
NGH Topco:
i. the Secretary of State for Trade and Industry ("the Secretary of State")
not having given an intervention notice to the OFT under section 42(2) of
the Enterprise Act in respect of the Offer prior to the OFT's indication
referred to in paragraph (a)(ii) above; or
ii. where the Secretary of State has given an intervention notice to the OFT
under the said section 42(2) in respect of the Offer, the matters to which
the said notice relates being finally determined within the meaning of
section 43(4) of the Enterprise Act without any enforcement action being
taken by the Secretary of State pursuant to section 55(2) of the Enterprise
Act; or
iii. where the Secretary of State has given an intervention notice to the OFT
under the said section 42(2) in respect of the Offer, NGH Topco agreeing to
give such undertakings to the Secretary of State as NGH Topco considers
acceptable and such undertakings being accepted by the Secretary of State
under paragraph 9 of Schedule 7 of the Enterprise Act.
h. Without limitation to condition 3 below and in addition to paragraphs (a)
and (b) above, one of the following subparagraphs (i), (ii) or (iii) having
been fulfilled:
i. no request to the European Commission having been made either by the
competent authorities of one or more EU member states under Article 22(1)
of the ECMR, nor by NGH Topco or Network under Article 4(5) of the ECMR; or
ii. such request having been made but not having been accepted by the European
Commission; or
iii. such request having been made and having been accepted by the European
Commission, one of the following sub subparagraphs (1) or (2) having been
met:
(1) NGH Topco having received in terms satisfactory to it (acting reasonably)
confirmation from the European Commission under Article 6(1)(b) of the ECMR
that the European Commission has decided not to oppose the Offer and has
declared it to be compatible with the common market, whether or not such
confirmation is subject to the fulfilment of one or more conditions or
obligations which are satisfactory to NGH Topco (acting reasonably); or
(2) the time limit (including any applicable extension) for the taking by the
European Commission of a decision under Article 6(1) of the ECMR having passed
with no such decision having been taken.
19. Authorisations
a. All authorisations in any jurisdiction which NGH Topco reasonably considers
necessary or appropriate for, or in respect of, the Offer, its
implementation or any acquisition of any shares in, or control of, Network
or any other member of the Wider Network Group by any member of the Wider
Network Group having been obtained in terms and in a form satisfactory to
NGH Topco acting reasonably from any relevant person or from any person or
body with whom any member of the Wider Network Group has entered into
contractual arrangements and all such authorisations remaining in full
force and effect and there being no intimation of any intention to revoke
or not renew the same; and
b. all authorisations which NGH Topco reasonably considers material and
necessary to carry on the business of any member of the Wider Network Group
remaining in full force and effect and there being no intimation of any
intention to revoke or not to renew the same; and
c. all filings which NGH Topco reasonably considers material and necessary
having been made and all applicable waiting and other periods having
expired, lapsed or been terminated and all applicable statutory or
regulatory obligations in any jurisdiction having been complied with.
20. Regulatory Intervention
No relevant person having taken, instituted, implemented or threatened any
legal proceedings, or having required any action to be taken or otherwise
having done anything or having enacted, made or proposed any statute,
regulation, order or decision or taken any other step and there not continuing
to be outstanding any statute, regulation, order or decision that would or
might reasonably be expected to:
a. make the Offer, its implementation or the acquisition or proposed
acquisition of any shares in, or control or management of, the Wider
Network Group by NGH Topco illegal, void or unenforceable; or
b. otherwise directly or indirectly prevent, prohibit or otherwise materially
restrict, restrain, delay or interfere in the implementation of or impose
additional conditions or obligations with respect to or otherwise challenge
or require amendment of the Offer or the proposed acquisition of Network by
NGH Topco or any acquisition of shares in Network by NGH Topco; or
c. require, prevent or materially delay the divestiture by NGH Topco of any
shares or other securities in Network; or
d. impose any material limitation on the ability of any member of the Wider
NGH Topco Group or any member of the Wider Network Group to acquire or hold
or exercise effectively, directly or indirectly, any rights of ownership of
shares or other securities or the equivalent in any member of the Wider
Network Group or management control over any member of the Wider Network
Group; or
e. require, prevent or materially delay the disposal by Network or any member
of the Wider NGH Topco Group, or require the disposal or alter the terms of
any proposed disposal by any member of the Wider Network Group, of all or
any part of their respective businesses, assets or properties or impose any
limitation on the ability of any of them to conduct their respective
businesses or own their respective assets or properties; or
f. require any member of the Wider NGH Topco Group or of the Wider Network
Group to offer to acquire any shares or other securities (or the
equivalent) in any member of the Wider Network Group or any member of the
Wider NGH Topco Group owned by any third party (in each case, other than in
implementation of the Offer); or
g. impose any material limitation on the ability of any member of the Wider
NGH Topco Group or the Wider Network Group to integrate or co-ordinate its
business, or any part of it, with the businesses or any part of the
businesses of any other member of the Wider NGH Topco Group and/or the
Wider Network Group; or
h. result in any member of the Wider NGH Topco Group or the Wider Network
Group ceasing to be able to carry on business under any name under which it
presently does so; or
i. otherwise adversely and materially affect any or all of the businesses,
assets, prospects or profits of any member of the Wider NGH Topco Group or
the Wider Network Group,
and all applicable waiting and other time periods during which any such
relevant person could institute, or implement or threaten any legal
proceedings, having expired, lapsed or been terminated.
21. Consequences Of The Offer
Save as Publicly Announced or Disclosed there being no provision of any
material agreements to which any member of the Wider Network Group is a party,
or by or to which any such member, or any part of its assets, may be bound,
entitled or subject, which would or might, in each case as a consequence of the
Offer or of the acquisition or proposed acquisition of all or any part of the
issued share capital of, or change of control or management of, Network or any
other member of the Wider Network Group reasonably be expected to result (in
each case to an extent which is material to NGH Topco in the context of the
Offer) in:
a. any assets or interests of any member of the Wider Network Group being or
falling to be disposed of or charged in any way or ceasing to be available
to any member of the Wider Network Group or any rights arising under which
any such asset or interest could be required to be disposed of or charged
in any way or could cease to be available to any member of the Wider
Network Group; or
b. any moneys borrowed by or other indebtedness (actual or contingent) of, or
any grant available to, any member of the Wider Network Group being or
becoming repayable or capable of being declared repayable immediately or
earlier than the repayment date stated in such agreement or the ability of
such member of the Wider Network Group to incur any such borrowing or
indebtedness becoming or being capable of becoming withdrawn, inhibited or
prohibited; or
c. any such agreement or the rights, liabilities, obligations or interests of
any such member under it being terminated or adversely modified or affected
or any onerous obligation arising or any adverse action being taken under
it; or
d. the interests or business of any such member in or with any third party (or
any arrangements relating to any such interests or business) being
terminated or adversely modified or affected; or
e. the financial or trading position or prospects or value of any member of
the Wider Network Group being prejudiced or adversely affected; or
f. the creation 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 Network Group or any such security (whenever arising or having
arisen) becoming enforceable or being enforced; or
g. any member of the Wider Network Group ceasing to be able to carry on
business under any name under which or on the terms on which it currently
does so or any person presently not able to carry on business under any
name under which any member of the Wider Network Group currently does
becoming able to do so; or
h. the creation of actual or contingent liabilities by any member of the Wider
Network Group; or
i. the ability of any member of the Wider NGH Topco Group to carry on its
business being adversely affected,
and no event having occurred which, under any provision of any such agreement
to which any member of the Wider Network Group is a party, or by or to which
any such member, or any of its assets, may be bound, entitled or subject, could
result, to an extent which is material to NGH Topco in the context of the Offer
in any of the events or circumstances as are referred to in subparagraphs (a)
to (i) inclusive.
22. No Corporate Action Taken Since The Accounting Date
Since the Accounting Date, save as otherwise Publicly Announced or Disclosed or
pursuant to transactions in favour of Network or a wholly-owned subsidiary of
Network, no member of the Wider Network Group having to any material extent (in
the context of the Wider Network Group):
a. issued or agreed to issue or authorised or proposed the issue or grant of
additional shares or securities convertible into or exchangeable for, or
rights, warrants or options to subscribe for or acquire, any such shares or
convertible securities; or
b. redeemed, purchased, repaid or reduced or proposed the redemption,
purchase, repayment or reduction of any part of its share capital or made
or proposed the making of any other change to its share capital; or
c. recommended, declared, paid or made or proposed to recommend, declare, pay
or make any dividend, bonus issue or other distribution whether payable in
cash or otherwise; or
d. merged or demerged with or from, or acquired, any body corporate or
authorised or proposed or announced any intention to propose any such
merger or demerger; or
e. other than in the ordinary course of business acquired or disposed of,
transferred, mortgaged or charged, or created or granted any security
interest over, any assets (including shares and trade investments) or
authorised or proposed or announced any intention to propose any
acquisition, disposal, transfer, mortgage, charge or creation or grant of
any security interest (which in any case is material in the context of the
Wider Network Group taken as a whole); or
f. issued or authorised or proposed the issue of any debentures or incurred or
increased any borrowings, indebtedness or liability (actual or contingent);
or
g. entered into or varied, or authorised or proposed the entry into or
variation of, or announced its intention to enter into or vary, any
transaction, arrangement, contract or commitment (whether in respect of
capital expenditure or otherwise) which is of a long term, onerous or
unusual nature or magnitude or could involve an obligation of such nature
or magnitude or which is or could be restrictive to the existing business
of any member of the Wider Network Group or which is other than in the
ordinary course of business; or
h. entered into, implemented, effected, authorised or proposed or announced
its intention to enter into, implement, effect, authorise or propose any
contract, reconstruction, amalgamation, scheme, commitment or other
transaction or arrangement otherwise than in the ordinary course of
business; or
i. waived or compromised any claim which is material in the context of the
Wider Network Group taken as a whole; or
j. entered into or varied or made any offer (which remains open for
acceptance) to enter into or vary the terms of any contract with any of the
directors or senior executives of Network or any of the directors or senior
executives of any other member of the Wider Network Group; or
k. taken or proposed any corporate action or had any legal proceedings
instituted or threatened against it or petition presented for its
winding-up (voluntary or otherwise), dissolution or reorganisation or for
the appointment of a receiver, administrator, administrative receiver,
trustee or similar officer of all or any material part of its assets and
revenues or for any analogous proceedings or steps in any jurisdiction or
for the appointment of any analogous person in any jurisdiction; or
l. been unable, or admitted in writing that it is unable, to pay its debts or
has 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; or
m. made any alteration to its articles of association, or other incorporation
documents; or
n. entered into any agreement or passed any resolution or made any offer
(which remains open for acceptance) or proposed or announced any intention
with respect to any of the transactions, matters or events referred to in
this condition 6.
23. Other Events Since the Accounting Date
In the period since the Accounting Date save as Publicly Announced or
Disclosed:
a. no litigation or arbitration proceedings, prosecution, investigation or
other legal proceedings having been announced, instituted, threatened or
remaining outstanding by, against or in respect of, any member of the Wider
Network Group or to which any member of the Wider Network Group is or may
become a party (whether as claimant, defendant or otherwise) which is
material in the context of the Wider Network Group taken as a whole; or
b. no adverse change or deterioration having occurred in the business or
assets or financial or trading position or prospects, assets or profits of
any member of the Wider Network Group which is material in the context of
the Wider Network Group taken as a whole; or
c. no enquiry or investigation by, or complaint or reference to, any relevant
person against or in respect of any member of the Wider Network Group
having been threatened, announced, implemented or instituted or remaining
outstanding by, against or in respect of, any member of the Wider Network
Group which in any such case is material in the context of the Wider
Network Group taken as a whole; or
d. no contingent or other liability having arisen or become apparent or
increased which is material in the context of the Wider Network Group taken
as a whole.
24. Information and Other Issues
Save as Publicly Announced or Disclosed, NGH Topco not having discovered that:
Information
a. the financial, business or other information disclosed at any time by any
member of the Wider Network Group, whether publicly or in the context of
the Offer either contained a material misrepresentation of fact or omitted
to state a fact necessary to make the information disclosed not materially
misleading; or
b. any contingent liability disclosed in such disclosed information would or
might materially and adversely affect, directly or indirectly, the
business, profits or prospects of the Wider Network Group taken as a whole;
or
c. any information disclosed at any time by or on behalf of any member of the
Wider Network Group is or becomes materially incorrect; or
d. any information which affects the import of any information disclosed at
any time by or on behalf of any member of the Wider Network Group to an
extent which is material in the context of the Wider Network Group taken as
a whole;
Accounts
e. any member of the Wider Network Group is subject to any liability,
contingent or otherwise, which is material in the context of the Wider
Network Group taken as a whole;
Criminal Property
f. any asset of any member of the Wider Network Group constitutes criminal
property as defined by section 340(3) of the Proceeds of Crime Act 2002
(but disregarding paragraph (b) of that definition).
The conditions are inserted for the benefit of NGH Topco and no Network
Shareholder shall be entitled to waive any of the conditions without the prior
consent of NGH Topco (acting reasonably).
Subject to the requirements of the Panel, NGH Topco reserves the right to waive
all or any of conditions 2 to 8 (inclusive) in whole or in part.
Each of conditions 1 to 8 shall be regarded as a separate condition and shall
not be limited by reference to any other condition.
The Offer will lapse if the proposed acquisition of Network is referred to the
Competition Commission or if the European Commission either initiates
proceedings under Article 6(1)(c) of the ECMR or makes a referral to a
competent authority of the United Kingdom under Article 9(1) of the ECMR before
3.00 pm on the First Closing Date or the time and date on which the Offer
becomes or is declared unconditional as to acceptances (whichever is the
later).
If the Offer lapses, it will cease to be capable of further acceptance and
persons accepting the Offer and NGH Topco shall thereupon cease to be bound by
acceptances submitted before the time the Offer lapses.
The Offer will lapse unless all of the conditions relating to the Offer have
been fulfilled or (if capable of waiver) waived by, or, where appropriate, have
been determined by NGH Topco to be and remain satisfied by, midnight on the
twenty-first day after the later of:
(a) the First Closing Date; or
(b) the date on which the Offer becomes unconditional as to acceptances,
or such later date as NGH Topco may, with the consent of the Panel, decide. NGH
Topco shall be under no obligation to waive or treat as satisfied any condition
by a date earlier than the latest date specified above for its satisfaction
even though the other conditions of the Offer may, at such earlier date, have
been waived or fulfilled and there are, at such earlier date, no circumstances
indicating that any such conditions may not be capable of fulfilment.
If NGH Topco is required by the Panel to make an offer for Network Shares under
Rule 9 of the Code, NGH Topco may make such alterations to the conditions of
the Offer set out above, including condition 1, as are necessary to comply with
that Rule.
Network Shares will be acquired by NGH Topco fully paid and free from all
liens, equities, charges, equitable interests, encumbrances, rights of
pre-emption and any other third party right and/or interests of any nature
whatsoever and together with all rights attaching to them, now or in the
future, including the right to receive and retain all dividends, interest and
other distributions declared, paid or made after the Announcement Date.
The Offer will not be made, directly or indirectly, in, into or by use of the
mails of, or by any means or instrumentality (including, without limitation,
telephonically, or electronically) of interstate or foreign commerce of, or any
facilities of a national securities exchange of, the United States, Canada,
Australia or Japan or any other jurisdiction if to do so would constitute a
violation of the relevant laws of such jurisdiction. This announcement does not
constitute an offer in the United States, Canada, Australia or Japan or any
such other jurisdiction and the Offer should not be accepted by any such use,
means, instrumentality or facilities or otherwise from or within the United
States, Canada, Australia or Japan or any such other jurisdiction. Accordingly,
copies of this announcement are not being and must not be mailed, transmitted
or otherwise distributed in whole or in part, in, into or from the United
States, Canada, Australia or Japan or any such other jurisdiction and persons
receiving this announcement (including, without limitation, custodians,
nominees and trustees) must not mail or otherwise forward, distribute or send
it in, into or from the United States, Canada, Australia or Japan or any such
other jurisdiction. Doing so may render invalid any purported acceptance of the
Offer.
The NGH Topco Shares have not been, and will not be, listed on any stock
exchange or registered under the US Securities Act or under the securities laws
of any jurisdiction of the United States; the relevant clearances have not
been, and will not be, obtained from the securities commission of any province
or territory of Canada; no prospectus has been, or will be, lodged with, or
registered by, the Australian Securities and Investments Commission; and no
steps have been, or will be, taken to enable the NGH Topco Shares to be offered
in compliance with the applicable securities laws of any state, province,
territory or jurisdiction of the United States, Canada, Australia or Japan or
any other country or jurisdiction outside the United Kingdom. Accordingly, the
NGH Topco Shares are not being, nor (unless an exemption under relevant
securities laws is applicable) can they be, offered, sold, resold or delivered,
directly or indirectly, in, into or from the United States, Canada, Australia
or Japan, or any other jurisdiction if to do so would constitute a violation of
the relevant laws of, or require registration thereof in, such jurisdiction, or
to, or for the account or benefit of, any US person or any resident, citizen or
national of Canada, Australia or Japan.
The Offer will comply with English law and the Code.
NGH Topco reserves the right, with the consent of the Independent Directors, to
elect to implement the acquisition of the Network Shares by way of a Scheme of
Arrangement under sections 895 to 901 of the Companies Act 2006. In such event,
the Scheme of Arrangement will be implemented on the same terms (subject to
appropriate amendments), so far as applicable, as those which could apply to
the Offer. In particular, condition 1 will not apply and the Scheme of
Arrangement will become effective and binding following:
(i) approval at the Court Meeting by a majority in number, representing 75 per
cent. in value present and voting, either in person or by proxy, of the holders
of the Network Shares;
(ii) the resolution(s) required to approve and implement the Scheme of
Arrangement and to be set out in the notice of General Meeting to the holders
of Network Shares being passed by the requisite majority at such General
Meeting; and
(iii) sanction of the Scheme of Arrangement and confirmation of the reduction
of capital involved therein by the Court (in both cases with or without
modifications on terms reasonably acceptable to NGH Topco) and a copy of the
orders of the Court sanctioning the Scheme of Arrangement and confirming the
reduction of share capital which forms part of it and a statement of capital
being delivered to the Registrar of Companies in England and Wales or, if the
Court so orders, registration of the Court order confirming the reduction of
capital of Network and the statement of capital by the Registrar of Companies.
APPENDIX II
NGH Topco share capital
On or shortly after the Offer becoming or being declared unconditional in all
respects, the capital structure of NGH Topco will be increased and is expected
to comprise NGH Topco Shares and LDC Shares which are expected to be held:
* 36,599,877 NGH Topco Shares to be issued pursuant to the Acquisition
Agreement;
* 20,000,000 LDC Shares held by the LDC Investors; and
* 16,571,900 NGH Topco Shares to be issued to those persons who have provided
irrevocable undertakings to elect for the NGH Topco Share Alternative.
On the assumption no Network Shareholder (other than those who have provided
irrevocable undertakings to do so) validly exercises the NGH Topco Share
Alternative, the persons owning or controlling 5 per cent. or more of the
voting rights of NGH Topco are anticipated to be:
Name Number of Shares Voting Rights
LDC 20,000,000 LDC Shares 27.50%
Timothy Watts* 28,087,238 NGH Topco 38.26%
Shares
Pertemps Trustees Limited 7,502,338 NGH Topco Shares 10.22%
* includes 3,290,546 NGH Topco Shares held by PIL and 2,626,546 NGH Topco
Shares held as the executor of the estate of Constance Watts.
Any Network Shareholder (other than those persons who have provided Irrevocable
Undertakings to do so) validly exercising the NGH Topco Share Alternative will
also receive NGH Topco Shares.
APPENDIX III
Sources and bases of information
1. Bases and sources of information
Save as otherwise set out in this announcement, the following constitute the
bases and sources of information referred to in this announcement:
a. Financial information relating to Network has been extracted from the
audited financial statements of Network for the year ended on the
Accounting Date and Network's interim announcement for the six months ended
31 May 2011.
b. Financial information relating to Pertemps has been extracted from the
audited financial statements of Pertemps for the year ended 31 December
2010.
c. Financial information on LDC has been extracted from the audited financial
statements of LDC for each of the financial years ended 31 December 2010
and 31 December 2009.
d. Financial information on Lloyds Banking Group has been extracted from the
audited financial statements of Lloyds Banking Group for each of the
financial years ended 31 December 2010 and 31 December 2009.
e. References to the value of the Offer for the whole of the issued and to be
issued ordinary share capital of Network assume the number of Network
Shares currently in issue to be 75,283,446.
f. References to the availability to NGH Topco of the necessary resources to
implement the Offer in full also assume that there are currently options
outstanding in respect of 3,415,920 unissued Network Shares (excluding
options whose exercise price is above the Offer Price or where the relevant
performance criteria have not been met).
APPENDIX IV
Definitions
DEFINITIONS
For the purposes of these conditions the following expressions have the
following meaning:
"the Accounting Date" 30 November 2010
"Acquisition Agreement" an agreement dated 3 February 2012 made
between (1) Timothy Watts and others and (2)
NGH Topco in respect of 90.22 per cent. of
the entire issued share capital of Pertemps
"agreements" arrangements, agreements, commitments,
licences, permits, franchises, partnerships,
joint ventures, authorisations or other
instrument
"AIM" the AIM Market of the London Stock Exchange
plc
"Arden" Arden Partners plc
"Australia" the commonwealth of Australia, its
possessions and territories and all areas
subject to its jurisdiction or any political
subdivision thereof
"authorisations" authorisations, orders, recognitions, grants,
consents, licences, confirmations,
clearances, permissions and approvals
"business day" a day (excluding Saturdays, Sundays and
public holidays) on which banks are generally
open for business in the City of London
"Canada" Canada, its possessions and territories and
all areas subject to its jurisdiction or any
political subdivision thereof
"certificated" or "in not in uncertificated form
certificated form"
"Closing Price" the closing middle market quotation of a
Network Share as derived from the AIM
Appendix to the daily official list of the
London Stock Exchange plc
"Code or "City Code" the City Code on Takeovers and Mergers as
from time to time interpreted by the Panel
"Companies Act 2006" the Companies Act 2006, as amended
"Conditions" the conditions to the Offer which are set out
in Appendix 1 of this announcement
"Disclosed" fairly disclosed in writing by or on behalf
of Network to NGH Topco
"Enlarged Group" NGH Topco, Network and Pertemps following
completion of the Acquisition Agreement and
this Offer
"First Closing Date" 24 February 2012
"Form of Acceptance" the form of acceptance, election and
authority relating to the Offer and
accompanying this document
"Independent Directors" John Edward Smith, John Anthony James, Paul
Thomas Davis and Nigel John Dudley
"Investment Agreement" the subscription and shareholders' agreement
dated 3 February 2012 made between (1)
Timothy Watts and others (2) certain other
shareholders of NGH Topco (3) NGH Topco (4)
LDC and (5) LDC Co-invest relating to an
investment in NGH Topco
"Japan" Japan, its possessions and territories and
all areas subject to its jurisdiction or any
political subdivision thereof
"LDC" Lloyds Development Capital (Holdings) Limited
"LDC Co-invest" LDC Parallel I LP
"LDC Investors" LDC and the LDC Co-invest
"LDC Shares" the B ordinary shares of 1p each in NGH Topco
"Lloyds Banking Group" Lloyds Banking Group plc
"legal proceedings" actions, suits, proceedings, investigations,
references or enquiries
"Loan Note Instrument" the instrument constituting the GBP28,400,000
guaranteed, unsecured loan notes 2022 of NGH
Topco subscribed by the LDC Investors
pursuant to the Investment Agreement
"Mazars" Mazars Corporate Finance Limited
"Network" Network Group Holdings plc
"Network Directors" the board of directors of Network
"Network Group" Network, its subsidiaries and subsidiary
undertakings
"Network Share Schemes" the Network Group Share Option Scheme and the
Network Group Holdings 2010 Share Option Plan
"Network Shareholders" the holders of Network Shares
"Network Shares" the existing unconditionally allotted or
issued and fully paid ordinary shares of 0.1
pence each of Network and any further such
shares which are unconditionally allotted or
issued fully paid, or credited as fully paid,
before the date on which the Offer closes (or
such earlier date as NGH Topco may, subject
to the Code, decide, not being earlier than
(a) the date on which the Offer becomes or is
declared unconditional as to acceptances or
(b), if later, the First Closing Date)
"NGH Topco" NGH Topco Limited
"NGH Topco Board" the board of directors of NGH Topco
"NGH Topco Share Alternative" the arrangements pursuant to which Network
Shareholders (other than certain overseas
shareholders) who validly accept the Offer
may elect to receive NGH Topco Shares instead
of some or all of the cash consideration to
which they would otherwise be entitled under
the Offer
"NGH Topco Shares" the A ordinary shares of 1p each in NGH Topco
"Offer" the recommended cash offer made by NGH Topco
to acquire all of the Network Shares on the
terms and subject to the conditions set out
in the Offer Document and (in respect of
Network Shares held in certificated form) in
the Form of Acceptance and, where the context
so requires, any subsequent revision,
variation, extension or renewal thereof
"Offer Document" the document containing the Offer to be
posted as soon as possible and in any event
within 28 days of the date of this
announcement to Network Shareholders, and for
information those persons with information
rights and holders of options under the
Network Share Schemes
"Offer Price" 26 pence for each Network Share
"offer period" the period commencing on 3 February 2012
until whichever of the following dates shall
be the later (a) the First Closing Date and
(b) the date on which the Offer lapses or is
withdrawn and (c) the date on which the Offer
becomes unconditional as to acceptances
"Overseas Shareholders" Network Shareholders who are citizens,
nationals or residents of or otherwise
subject to jurisdictions outside the UK or
their nominees, custodians or trustees
"Pertemps" Pertemps Limited
"Pertemps Group" Pertemps, its subsidiaries and subsidiary
undertakings
"PIL" P Investments Limited
"Publicly Announced" specifically disclosed in the annual report
and accounts of Network for the year ended on
the Accounting Date or in this announcement
or in any other announcement made to a
Regulatory Information Service since the date
of publication of such report and accounts
and prior to the Announcement Date
"Regulatory Information Service" as defined in the listing rules made by the
Financial Services Authority under Part VI of
the Financial Services and Markets Act 2000
"relevant persons" governments, governmental,
quasi-governmental, supra-national,
statutory, investigative, regulatory or
administrative bodies or trade agencies,
associations, institutions or courts, or
professional or environmental bodies, or any
other persons or bodies whatsoever in any
jurisdiction
"Restricted Jurisdiction" any state, province, territory or
jurisdiction of the United States, Canada,
Australia or Japan or any other country or
jurisdiction if making the Offer in such
jurisdiction would constitute a violation of
the relevant laws of, or require registration
of the Offer in, such jurisdiction
"third party" person, firm, company or body
"UK" or "United Kingdom" the United Kingdom of Great Britain and
Northern Ireland
"uncertificated" or "in recorded on the relevant register of the
uncertificated form" share or security concerned as being held in
uncertificated form in CREST, and title to
which, by virtue of the CREST Regulations,
may be transferred by means of CREST
"US" or "United States" the United States of America, its territories
and possessions, any state of the United
States of America and the District of
Columbia and all other areas subject to its
jurisdiction
"US person" as defined in Regulation S under the US
Securities Act
"US Securities Act" the US Securities Act 1933, as amended, and
the rules and regulations promulgated under
such Act
"Wider Lloyds Banking Group" Lloyds Banking Group and its subsidiaries and
subsidiary undertakings
"Wider NGH Topco Group" NGH Topco and its subsidiaries, subsidiary
undertakings, associated undertakings and any
other undertakings in which NGH Topco and/or
such subsidiaries or undertakings
(aggregating their interests) have a direct
or indirect interest in 20 per cent. or more
of the equity capital
"Wider Network Group" Network and its subsidiaries, subsidiary
undertakings, associated undertakings and any
other undertakings in which Network and/or
such subsidiaries or undertakings
(aggregating their interests) have a direct
or indirect interest in 20 per cent. or more
of the equity capital
In this announcement:
* the expressions "subsidiary", "associated undertaking", "subsidiary
undertaking" and "undertaking" have the meanings given by the Companies Act
2006; and
* references to time are to London time.
END
Network Group (LSE:NGH)
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