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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Horizon Discovery Group Plc | LSE:HZD | London | Ordinary Share | GB00BK8FL363 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 184.50 | 184.50 | 185.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMHZD
RNS Number : 4698L
Horizon Discovery Group plc
19 July 2017
Horizon Discovery Group plc
19 July 2017
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND, SUBJECT TO CERTAIN EXCEPTIONS, IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY IN, OR INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA (EXCEPT IN COMPLIANCE WITH CANADIAN SECURITIES LAWS), JAPAN, NEW ZEALAND, THE REPUBLIC OF IRELAND OR THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL.
FURTHER, THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND SHALL NOT CONSTITUTE AN OFFER TO SELL OR ISSUE OR THE SOLICITATION TO BUY, SUBSCRIBE FOR OR OTHERWISE ACQUIRE ANY ORDINARY SHARES OF HORIZON IN ANY JURISDICTION IN WHICH ANY SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. THIS ANNOUNCEMENT SHOULD BE READ IN ITS ENTIRETY. IN PARTICULAR, YOU SHOULD READ AND UNDERSTAND THE INFORMATION PROVIDED IN THE "IMPORTANT NOTICES" SECTION AND IN THE APPICES.
THE SECURITIES REFERRED TO HEREIN MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION OR AN EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMED. THE COMPANY DOES NOT INT TO REGISTER ANY OF THE SECURITIES IN THE UNITED STATES OR TO CONDUCT A PUBLIC OFFERING OF THE SECURITIES IN THE UNITED STATES.
19 July 2017
Horizon Discovery Group plc ("Horizon" or the "Company")
$85 million (GBP65 million) Acquisition of GE Healthcare Dharmacon, Inc. ("Dharmacon") (the "Acquisition")
And
Proposed placing of 39,024,390 new Ordinary Shares at 205 pence per share (the "Placing") raising gross proceeds of GBP80 million
Acquisition highlights:
-- Acquisition of a strong global brand in RNAi and gene expression technology accelerates route for Horizon becoming a leading player in gene manipulation, RNAi tools and gene editing tools and services
-- Acquisition consideration of $85 million (comprising $50 million cash consideration and $35 million equity consideration)
-- $50 million cash consideration element funded by a non-pre-emptive placing of GBP80 million with the balance of proceeds providing additional working capital for the Enlarged Group
-- $35 million equity consideration being satisfied by the issue of 13.06 million shares to a subsidiary of General Electric Company as part of the Acquisition, resulting in General Electric Company indirectly, owning 8.8 per cent. of the Enlarged Share Capital of Horizon
-- Highly complementary technologies, products, brands and sales channels
-- Enhances and expands RNAi and gene-editing product offering with the ability to leverage Dharmacon's highly reputed brand amongst academic research customers
-- Provides access for Horizon's products on Dharmacon's high-quality eCommerce platform and established global distribution channels
-- Immediately financially accretive to earnings given Dharmacon's revenue and profit profile, with significant additional revenue and cost synergy potential
-- Attractive financial return metrics with an expected ROIC of 10 per cent. by 2020
-- Integration plans in place to achieve revenue and cost synergies within 12 months by optimising best of pooled talent, eliminating duplicate costs, reducing R&D costs through shared scale, and exploiting cross-selling opportunities for combined business across global customer base
Cambridge, UK, 19 July 2017: Horizon Discovery Group plc (LSE: HZD), a global leader in the application of gene editing technologies, today announces that it has entered into an agreement to acquire Dharmacon from General Electric Company for a total consideration of $85 million (GBP65 million), subject to a working capital adjustment at completion of the Acquisition ("Completion").
Upon Completion, which is conditional, inter alia, on the approval of the Placing by Horizon shareholders and anti-trust clearance of the Acquisition in the US, General Electric Company will receive $50 million in cash and a subsidiary of General Electric Company will be issued with $35 million in new Ordinary Shares in Horizon to be valued at the Placing Price of 205 pence, equating to 13,064,868 new Ordinary Shares (representing 8.8 per cent. of the Enlarged Share Capital of Horizon) (the "Consideration Shares").
The Company also announces that it will raise GBP76.4 million, net of expenses, through the issue by the Company of 39,024,390 new Ordinary Shares at the Placing Price of 205 pence. The Placing is being effected by Numis and Cowen, with Numis acting as the Company's Nominated Adviser and Broker, on, and subject to, the terms of the Placing Agreement. In addition to satisfying the cash consideration for the Acquisition, the proceeds from the Placing will also provide additional working capital for the Enlarged Group.
A subsidiary of General Electric Company is expected to own 8.8 per cent. of Horizon following the Acquisition and the Placing. A standstill and lock-up agreement will be entered into with Horizon, which provides for a 12 month standstill period and a separate 12-month lock-up period for the Consideration Shares, followed by a further 6-month orderly market period.
Dharmacon is an indirect wholly owned subsidiary of General Electric Company and is a global leader in RNAi products with a fast growing gene editing product portfolio especially in CRISPR reagents and arrayed libraries. Dharmacon has a strong brand which is instantly recognisable and trusted in the academic research community for quality, cost, delivery and support.
The Acquisition will create immediate market access for Horizon's next generation research product and service offerings through a robust eCommerce platform and established global distribution channels, especially in Asia-Pacific. Dharmacon delivered revenues of $36.7 million in the year ended 31 December 2016 and EBITDA of $5.4 million.
The combination will create a leading global player in the application of gene-editing and gene modulation in life science research and further underpins Horizon's Cell Builders model where gene editing and modulation platforms are used to design, engineer and apply cells for the advancement of human healthcare.
Darrin Disley, CEO of Horizon commented: "Through the combination of complementary technology, product portfolios and manufacturing capabilities, the acquisition of Dharmacon by Horizon creates an emerging leader in the application of gene modulation technologies in life science research. We expect that the brand recognition, and sales, marketing (including eCommerce) and distribution channel particularly in the academic community as well as intimate relationships in Biotech and Pharma that Dharmacon will bring to Horizon, will transform the opportunity for Horizon's product portfolio as well as generate attractive cost-base synergies."
Kieran Murphy, President and CEO of GE Healthcare commented: "We are pleased to reach an agreement that combines the strong Dharmacon brand and technologies with the industry leading gene editing technologies, products and services of Horizon. We believe that the combination creates a global leader in gene modulation and are excited to retain a meaningful stake in the combination."
Conference Call
Darrin Disley, CEO, and Richard Vellacott, CFO, will host a conference call for analysts at 13:00pm BST today. The presentation will be available on the Group's website at www.horizondiscovery.com.
Please visit the website approximately five minutes before the conference call, at 12:55pm BST, to download the presentation slides. Conference call details:
Participant dial-in: 08006940257 International dial-in: +44 (0) 1452 555566 Participant code: 56156076
An audio replay file will be made available by the end of the day on the Group's website at https://www.horizondiscovery.com/about-us/investor-relations.
Additional Information on the Transaction
Evercore is acting as Lead Financial Advisor and Numis is acting as joint Financial Advisor to Horizon. Lazard is acting as Financial Advisor to General Electric Company.
Enquiries:
Horizon Discovery Group plc
Darrin Disley, Chief Executive Officer
Richard Vellacott, Chief Financial Officer
Chris Claxton, VP Investor Relations
Tel: +44 (0) 1223 655 580
Evercore Partners
Simon Elliott
Tel: +44 (0) 207 653 6000
Numis Securities Limited (Broker and NOMAD)
Michael Meade
Freddie Barnfield
Tom Ballard
Tel: +44 (0) 207 260 1000
Cowen and Company LLC
Jamie Streator
Michael Campbell
Tel: +1 646 562 1010
Consilium Strategic Communications (Financial Media and Investor Relations)
Mary-Jane Elliott / Susan Stuart / Matthew Neal / Melissa Gardiner
Tel: +44 (0) 20 3709 5701
Email: horizon@consilium-comms.com
Notes to Editors:
About Horizon Discovery Group plc -- see www.horizondiscovery.com
Horizon Discovery Group plc (LSE: HZD) ("Horizon"), is a leading global gene editing company that designs and engineers genetically-modified cells and then applies them in research and clinical applications that advance human health.
Horizon's core capabilities are built around its proprietary translational genomics platform, a highly precise and flexible suite of gene editing tools (rAAV, ZFN, CRISPR and Transposon) able to alter almost any gene sequence in human or mammalian cell-lines.
Horizon offers over 23,000 catalogue products and related research services based on the generation and application of cell and animal models that accurately recapitulate the disease-causing genetic anomalies found in diseases like cancer. Horizon's commercial offering has been adopted by over 1,600 unique research organisations in over 50 countries, as well as in the Company's own pipeline of innovation, to support a greater understanding of the genetic drivers of disease and the development of molecular, cell and gene therapies that can be prescribed on a personalised basis.
Horizon is headquartered in Cambridge, UK, and is listed on the London Stock Exchange's AIM market under the ticker "HZD".
IMPORTANT NOTICES
THIS ANNOUNCEMENT, INCLUDING THE APPICES AND THE INFORMATION CONTAINED THEREIN, IS RESTRICTED AND, SUBJECT TO CERTAIN EXCEPTIONS, IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA, THE REPUBLIC OF IRELAND, JAPAN, NEW ZEALAND OR ANY JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL.
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS ANNOUNCEMENT AND THE TERMS AND CONDITIONS SET OUT IN THE APPICES ARE FOR INFORMATION PURPOSES ONLY AND ARE DIRECTED ONLY AT: (A) PERSONS IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA WHO ARE QUALIFIED INVESTORS WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE PROSPECTUS DIRECTIVE ("QUALIFIED INVESTORS"); (B) IN THE UNITED KINGDOM, PERSONS WHO (I) HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS AND FALL WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE "ORDER"); OR (II) ARE PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) ("HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC") OF THE ORDER; (C) IN THE UNITED STATES, TO "QUALIFIED INSTITUTIONAL BUYERS", AS DEFINED IN RULE 144A OF THE U.S SECURITIES ACT OF 1933, AS AMED (THE "SECURITIES ACT") AND (D) OTHER PERSONS TO WHOM IT CAN LAWFULLY BE COMMUNICATED (ALL SUCH PERSONS REFERRED TO IN (A), (B), (C) AND (D) TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS").
THIS ANNOUNCEMENT AND THE APPICES AND THE TERMS AND CONDITIONS SET OUT THEREIN MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. PERSONS DISTRIBUTING THIS ANNOUNCEMENT MUST SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS ANNOUNCEMENT AND THE TERMS AND CONDITIONS SET OUT HEREIN RELATE IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. THIS ANNOUNCEMENT DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY.
EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL, TAX, BUSINESS AND RELATED ASPECTS OF A SUBSCRIPTION FOR OR PURCHASE OF THE PLACING SHARES.
ANY FAILURE TO COMPLY WITH THESE RESTRICTIONS MAY CONSTITUTE A VIOLATION OF THE SECURITIES LAWS OF ANY SUCH JURISDICTIONS.
Numis, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for the Company in relation to the transaction referred to herein. Numis is not acting for, and will not be responsible to, any person other than the Company for providing the protections afforded to customers of Numis or for advising any other person on the contents of this announcement or any other matter, transaction or arrangement referred to herein.
Cowen, which is authorised in the US by the Financial Industry Regulatory Authority ("FINRA"), is acting exclusively for the Company in relation to the transaction referred to herein. Cowen is not acting for, and will not be responsible to, any person other than the Company for providing the protections afforded to customers of Cowen or for advising any other person on the contents of this announcement or any other matter, transaction or arrangement referred to herein.
Evercore Partners International LLP ("Evercore"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting as financial adviser exclusively for Horizon and no one else in connection with the Transaction referred to in this announcement and will not regard any other person as its client in relation to the matters referred to in this announcement and will not be responsible to anyone other than Horizon for providing the protections afforded to clients of Evercore, nor for providing advice in relation to the matters referred to in this announcement.
Lazard & Co., Limited, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, and Lazard Frères & Co. LLC, which is authorised in the US by FINRA, are acting exclusively for General Electric Company and for no one else in connection with the Acquisition and will not be responsible to anyone other than General Electric Company for providing the protections afforded to their clients or for providing advice in connection with the Acquisition. None of Lazard & Co., Limited, Lazard Frères & Co. LLC and their respective affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Lazard & Co., Limited and Lazard Frères & Co. LLC in connection with this announcement, any statement contained herein, the Acquisition or otherwise.
Subject to applicable law, none of Numis, Cowen, Evercore and Lazard accepts any responsibility whatsoever and makes no representation or warranty, express or implied, for the contents of the information in this announcement, including its accuracy, completeness or verification or for any other statement made or purported to be made in connection with the Company, Dharmacon, the Acquisition and the Placing and nothing in this announcement shall be relied upon as a promise or representation in this respect, whether as to the past or the future. Numis, Cowen, Evercore and Lazard accordingly disclaim all and any liability whatsoever, whether arising in tort, contract or otherwise (save as referred to above) which any of them might otherwise have in respect of this announcement.
The distribution of this announcement and the offering, placing and/or issue of the Placing Shares in any jurisdictions other than the United Kingdom may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about and observe any such restrictions. Any failure to comply with any such restrictions may constitute a violation of the securities laws or regulations of such jurisdictions.
In particular, subject to certain exceptions, this announcement should not be distributed, forwarded, transmitted or otherwise disseminated in or into the United States or any of the Excluded Jurisdictions. This announcement does not constitute an offer to sell or issue or the solicitation of an offer to buy or subscribe for Placing Shares in the United States or any other jurisdiction. The Placing Shares have not been and will not be registered under the Securities Act, or under the applicable securities laws of any state or other jurisdiction of the United States, and may not be offered, sold, taken up, resold, transferred or delivered, directly or indirectly within, into or in the United States, except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with the securities laws of any relevant state or other jurisdiction of the United States. There will be no public offer of the Placing Shares in the United States.
Any offering of Placing Shares to be made (i) in the United States will be made only to a limited number of "qualified institutional buyers" within the meaning of Rule 144A under the Securities Act pursuant to an exemption from registration under the Securities Act in a transaction not involving any public offering and (ii) outside the United States will be made in offshore transactions within the meaning of, and in reliance on, Regulation S under the Securities Act.
In the opinion of the Directors, there is a significant risk of civil, regulatory or criminal exposure to the Company and its Directors were the Placing to be made into any of the Excluded Jurisdictions. On this basis, none of the Placing Shares have been, or will be, registered under the relevant laws of any state, province or territory of any of the Excluded Jurisdictions. Subject to certain limited exceptions, none of the Placing Shares may be offered, sold, taken up, resold, transferred or delivered, directly or indirectly, in, into or within any of the Excluded Jurisdictions or to any national, resident or citizen of, or any corporation, partnership or other entity created or organised under the laws of, any Excluded Jurisdiction. None of the Placing Shares, this announcement or any other document connected with the Placing have been or will be approved or disapproved by the US Securities and Exchange Commission or by the securities commissions of any state or other jurisdiction of the United States or any other regulatory authority, nor have any of the foregoing authorities or any securities commission passed comment upon or endorsed the merits of the offering of the Placing Shares or the accuracy or adequacy of this announcement or any other document connected with the Placing. Any representation to the contrary is a criminal offence.
This announcement is not being distributed by, nor has it been approved for the purposes of section 21 of the Financial Services and Markets Act, as amended ("FSMA") by, a person authorised under FSMA. This announcement is being distributed and communicated to persons in the UK only in circumstances in which section 21(1) of FSMA does not apply.
No prospectus has been or will be approved in the United Kingdom or any other jurisdiction in respect of the Placing Shares or Consideration Shares. By participating in the Placing, Placees are deemed to have read and understood this announcement in its entirety, to be participating, making an offer and acquiring Placing Shares on the terms and conditions contained herein and to be providing the representations, warranties, indemnities, acknowledgements and undertakings contained herein.
This announcement includes statements that are, or may be deemed to be, forward-looking statements that are based on current expectations or beliefs, as well as assumptions about future events. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "anticipates", "milestones", "targets", "aims", "continues", "expects", "intends", "hopes", "may", "will", "would", "could" or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include matters that are not facts. They appear in a number of places throughout this announcement and include statements regarding the Directors' intentions, beliefs or current expectations concerning, amongst other things, the Company's results of its operations, financial condition, liquidity, prospects, growth and strategy. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Any forward-looking statements contained in this announcement based on past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Subject to any requirement under FSMA or the regulatory regime established thereunder or the AIM Rules or other applicable legislation or regulation, none of the Company, the Directors, Numis nor Cowen undertakes any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Undue reliance should not be placed on forward-looking statements, which speak only as of the date of this announcement.
There are several factors which could cause actual results to differ materially from those expressed or implied in forward-looking statements. Among the factors that could cause actual results to differ materially from those described in the forward-looking statements are changes in expectations and assumptions used and changes in the global, political, economic, business, competitive, market and regulatory forces, future exchange and interest rates and changes in tax rates.
1. Introduction
Horizon today announces that it has entered into an agreement to acquire Dharmacon from General Electric Company for a total consideration of $85 million (GBP65 million), subject to a post-closing working capital adjustment.
Upon completion of the Acquisition ("Completion"), which is conditional, inter alia, on the approval of the Placing by Horizon shareholders and anti-trust clearance of the Acquisition in the US, General Electric Company will receive $50 million in cash and a subsidiary of General Electric Company will be issued with $35 million in new Ordinary Shares in Horizon to be valued at the Placing Price of 205 pence, equating to 13,064,868 new Ordinary Shares (representing 8.8 per cent. of the Enlarged Share Capital of Horizon).
The Company also announces that it will raise GBP76.4 million, net of expenses, through the issue by the Company of 39,024,390 new Ordinary Shares to Placees at the Placing Price of 205 pence. The Placing is being effected by Numis and Cowen, with Numis acting as the Company's Nominated Adviser and Broker, on, and subject to, the terms of the Placing Agreement.
The proceeds of the Placing, of GBP80 million, will be used to satisfy the initial cash consideration for the Acquisition of $50 million payable at Completion. The balance of the proceeds are expected to be used to support accelerated growth (GBP7.7 million for increased brand awareness, APAC expansion and execution of a global distribution and shipping logistics network), sustainable revenue growth and gross margin expansion (GBP12 million for maximisation of eCommerce channel, increased focus on products, additional product innovation and product aggregation), exploitation of synergies to drive profitability (GBP2 million for expansion of strategic alliances channel to drive revenue growth, restructuring costs to drive improved EBITDA and PBIT via site/cost rationalisation) and strengthening of the balance sheet (GBP20 million for improved working capital position, debt repayment and transaction fees).
The Acquisition and the Placing are conditional, inter alia, upon shareholders' approval of the Resolutions that will grant the Directors the authority to allot the Placing Shares and the Consideration Shares and to disapply statutory pre-emption rights in respect of the Placing Shares. The Board unanimously considers the Acquisition to be in the best interests of Horizon and its shareholders as a whole.
2. Information on Dharmacon
Since its foundation in 1996, Dharmacon has been a major global provider of gene modulation technologies and products, and in 2016, was a global leader in RNAi products with a growing CRISPR product portfolio. Dharmacon has a strong global brand in RNAi, gene expression and gene editing products. Dharmacon's products are highly complementary to those of Horizon which have been developed through the Group's broad gene editing platform (consisting of rAAV, ZFN, CRISPR and Transposon gene editing technologies). Dharmacon focuses on silencing genes (RNAi), expressing genes (cDNA, ORFs) and editing genes (CRISPR) through its product offering including RNAi reagents, RNAi libraries, cDNA & ORD reagents, cDNA & ORF libraries, CRISPR reagents & libraries, lentivirus manufacturing and custom nucleic acid synthesis.
Revenues are well diversified across Dharmacon's customer base, with a weighting towards academic and government customers which provides approximately 60 per cent. of revenue with the balance largely to pharma and biotech customers. An established and robust eCommerce platform generates approximately 90 per cent. of direct sales. On a geographic basis, Dharmacon generates approximately 54 per cent. of its total revenues in North America, approximately 28 per cent. from EMEA and approximately 18 per cent. from Asia Pacific and the rest of the world.
Dharmacon has a strong IP position, with a portfolio comprised of more than 40 licenses, including a siRNA license and a CRISPR license from the Broad Institute of MIT.
Based in Lafayette (Colorado, US), Dharmacon has two ISO-certified chemistry and biology production facilities and a stand-alone operating entity of more than 70,000 square feet, of which 30,000 square feet are currently under-utilised and at a footprint cost estimated to be 30 per cent. lower than Horizon's facilities. Dharmacon has approximately 135 full time equivalent employees globally.
Dharmacon was acquired by General Electric Company from Thermo Fisher Scientific in 2014 in the context of the larger acquisition by General Electric Company of Thermo Fisher's cell culture, gene modulation and magnetic beads businesses.
For the years ended 31 December 2016 and 2015, Dharmacon was accounted for as a subsidiary of General Electric Company and was not separately audited. The carve-out accounts for Dharmacon (which have been derived from the consolidated US GAAP financial accounts of General Electric Company) show that for the years ended 31 December 2016 and 2015, Dharmacon generated unaudited carve-out stand-alone revenues of $36.7 million and $37.7 million, respectively. Dharmacon's unaudited carve-out stand-alone earnings before interest, tax, depreciation and amortisation and exceptional items for the years ended 31 December 2016 and 2015 were $5.4 million and $4.9 million, respectively. The modest decline in revenue of 2.4 per cent. was driven by a decline in commercial focus on gene expression product lines partially off-set by double digit growth in revenues contributed by the successful launch and rapid growth of Dharmacon's gene editing products. The carve-out accounts for Dharmacon show that for the years ended 31 December 2016 and 2015, Dharmacon had total unaudited assets of $11.7 million and $10.6 million, respectively. Additional financial details are available in the tables below. Gross margins in 2016 were 55.9 per cent. (FY 2015: 62.8 per cent.) and include absorption of certain fixed overhead costs such as depreciation which Horizon would expect to reclassify to operating costs under its accounting policies. EBITDA in both years includes an approximately $4 million investment in R&D focused primarily on the development of new CRISPR gene editing products. Following the Acquisition, Horizon expects to review the R&D programs of the Enlarged Group with a view to identifying efficiencies for reduced costs through operating at a larger scale and using a similar talent / asset base in both RNAi and CRISPR offerings to improve the flexibility and efficiency of resource allocation.
Hot Features
Premium
DHARMACON STAND ALONE P&L
ITEMS
General Electric Company
carve-out, UNAUDITED(1)
2016(2) 2015
$'000 $'000
REVENUE 36,744 37,651
Gross profit 20,549 23,663
Gross profit margin
(%) 55.9% 62.8%
EBITDA 5,151[3] 4,870(3)
EBITDA margin (%) 14.0% 12.9%
Exceptional items 271[4] n.a.
EBITDA before exceptional
items 5,422 4,870
--------- ---------
EBITDA before exceptional
items (%) 14.8% 12.9%
Y-o-Y growth (%) 11.3%
DHARMACON STAND ALONE BALANCE
SHEET
General Electric Company
carve-out, UNAUDITED[5]
2016[6] 2015
$'000 $'000
Non Current Assets 3,855 4,448
Current Assets 7,811 6,135
Total Assets 11,666 10,584
======== =======
Current Liabilities 2,937 3,915
Non Current Liabilities 752 236
Total Equity 7,977 6,433
Total Liabilities and
Equity 11,666 10,584
======== =======
3. Horizon's Strategy and Rationale for the Acquisition
The focus of the Group since IPO has been to invest for scale and position Horizon for long-term growth and sustainable profitability. The Products business has a target to deliver at least 30 per cent. revenue growth with at least a 70 per cent. gross margin, while the Services business has a target to deliver at least 15 per cent. revenue growth at a greater than 50 per cent. gross margin. As a result of successfully achieving its strategy to date, the Group's revenue mix is increasingly driven by Products (47 per cent. in 2016) versus Services (53 per cent. in 2016), which, in turn, supports Horizon's path to profitability and high sales growth trajectory. In the year ended 31 December 2016 Horizon reported total revenue of GBP24.1 million, approximately 90 per cent. of which was from exports.
As a leading global player in the application of gene editing working with over 1,600 unique customers in over 50 countries, including 30 of the top 50 pharmaceutical companies, Horizon's strategy is to continue building and delivering a fully-integrated business that leverages value and builds scale across the whole life sciences continuum, either organically or through acquisitions and in-licensing opportunities. Investments in Horizon's eCommerce platform are increasingly driving sales and inbound inquiries via the Horizon website (with over 85 per cent. of all inbound inquiries generated from the Horizon website); however, the eCommerce platform concluded less than 10 per cent. of potential transactions in 2016. Horizon currently has a team of 27 business development and direct sales representatives and 30 business management and marketing employees.
The Board considers that opportunities for the Enlarged Group following the Acquisition are substantial, including: (1) expansion of the product portfolio to gene modulation and gene expression technologies, products and services to scale the Cell Builders business model; (2) accessing a global academic/government research customer base where Horizon historically has had little brand awareness, engagement and commensurately low sales (less than 20 per cent.); (3) increasing the scalability and global reach of the business by delivering a high proportion of product sales through Dharmacon's eCommerce platform; and (4) the potential for both revenue and cost synergies and accelerating business profitability and cash generation to create value for its shareholders.
The acquisition of Dharmacon will underpin Horizon's stated objective of building a profitable business with an 80 per cent. products to 20 per cent. service revenue model. Horizon's target product portfolio includes (i) RNAi, cDNA/ORF, vectors, in vitro & in vivo models and CRISPR reagents, (ii) diagnostics reagents under OEM agreements and (iii) bioproduction of cell lines.
RNAi, cDNA/ORF, Vectors, in vitro & in vivo models and CRISPR reagents are characterised by high volumes, strong margins (target of more than 60 per cent. gross margin), cash generation and lower growth (target of more than 10 per cent. per annum). Diagnostics reagents under OEM agreements are characterised by high volumes, strong margins (target of more than 70 per cent. gross margin), cash generation and strong growth (target of more than 30 per cent. per annum). Bioproduction cell lines are characterised by lower volumes, the highest margins (target of more than 80 per cent. gross margin), cash generation and very high growth (target of more than 40 per cent. per annum).
In this context, the acquisition of Dharmacon is well aligned with Horizon's strategy. Dharmacon is a product driven business that significantly expands the Enlarged Group's catalogue of products resulting in an excellent reach across the drug discovery continuum and in the academic research market, adds market reach through a robust and effective eCommerce platform, global sales and distribution networks (particularly in Asia Pacific, where Horizon currently generates less than 8 per cent. of revenues), and provides potential cross selling opportunities for the products of both Dharmacon and Horizon. The Enlarged Group's combined sales and business development teams as well as marketing, distribution, customer and technical support teams (including the eCommerce platform and analytics) are expected to drive commercial efforts across a wider geographic spread resulting in sales synergies, margin expansion and improved customer reach. Furthermore, Horizon's and Dharmacon's brands and sales channels are highly complementary with Dharmacon having a strong presence in academia and government, while Horizon has a leading position with pharma / biotech customers. The acquisition of Dharmacon aligns with Horizon's existing and aspirational product and manufacturing capabilities, will allow the Enlarged Group to deploy Horizon's / Dharmacon's know-how at the point where scale and risk are optimised and incentivises customers to partner with the Enlarged Group across a significantly broader value chain.
The combined market size of RNAi and CRISPR products in Horizon's served available markets ("SAM") is expected to grow from approximately $175 million to approximately $340 million over 2017 and 2021 (CAGR of +18 per cent.). The market size of RNAi products in Horizon's SAM is estimated to represent approximately $140 million, or approximately 80 per cent. of combined RNAi and CRISPR products market sales, and is expected to grow at a CAGR of approximately 12 per cent. over 2017 and 2021. The market size of CRISPR products in Horizon's SAM is expected to grow at a CAGR of approximately 36 per cent. over 2017 and 2021 and represent around 37.5 per cent. of combined RNAi and CRISPR products market sales by 2021.([7])
The RNAi market has historically grown rapidly due to the need for novel therapeutic approaches, superior specificity and flexibility of RNAi compared to available alternatives and advances in lentiviral delivery mechanisms. Due to their perceived benefits over RNAi, CRISPR products are expected to shift customers from RNAi, while increasing the range of applications in the research tools market. CRISPR products are considered to be more flexible and versatile, have a broader portfolio of applications and a lower risk of off-target effects than RNAi products as well as the ability to turn-off a gene completely. However, it is expected that there will remain unique applications for RNAi as it is still considered easier and less costly to use than CRISPR, while providing experimental results faster, which makes it an ideal tool for academic and other researchers looking to test hypotheses. In addition, it is considered that there is a strong benefit to combining both CRISPR and RNAi for target identification and validation for more meaningful hits. Therefore, we expect that there is likely to remain significant growth potential for RNAi in the near term, while the larger opportunity for growth would come from CRISPR.
On a pro-forma basis, the Enlarged Group would have generated unaudited revenues of GBP51.3 million and GBP48.0 million for the years ended 31 December 2016 and 2015, respectively. Similarly, the Enlarged Group would have generated unaudited pro-forma earnings before interest, tax, depreciation and amortisation and exceptional items of GBP(2.6) million and GBP(3.4) million for the years ended 31 December 2016 and 2015, respectively. The unaudited pro-forma financial information for the years ended 31 December 2016 and 2015 were prepared using carve-out financials derived from consolidated US GAAP financial information of General Electric Company. For the year ended 31 December 2016, the unaudited pro forma financial information reflects IFRS adjustments of the Dharmacon carve-out financials, in line with Horizon accounting policies as presented in the table below.
HORIZON AND DHARMACON 2016 PRO FORMA
P&L ITEMS
UNAUDITED[8]
Dharmacon Horizon Pro Forma
---------------------------------- ---------- ----------
General
Electric
Company IFRS
carve-out[9] Adj. IFRS IFRS IFRS
-------------- -------- -------- ---------- ----------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
REVENUE 27,194 0 27,194 24,074 51,268
Gross profit 15,208 0 15,208 13,093 28,301
Gross profit
margin (%) 55.9% n.m. 55.9% 54.4% 55.2%
EBITDA 3,812 444[10] 4,256 (8,368) (4,112)
EBITDA margin
(%) 14.0% n.m. 15.7% (34.8%) (8.0%)
Exceptional
items 201[11] 0 201 1,270(11) 1,471
EBITDA before
exceptional
items 4,012 444 4,456 (7,098) (2,642)
-------------- -------- -------- ---------- ----------
EBITDA margin
before exceptional
items (%) 14.8% n.m. 16.4% (29.5%) (5.2%)
Dharmacon is expected to be synergistic at top line and bottom line levels, accelerating profit and cash generation. Revenue synergies are expected via returning the core Dharmacon business to sales growth via increasing sales of new CRISPR products into Horizon's key account Biotech/Pharma channel, cross-selling across Horizon and Dharmacon's complementary global client base, developing products out of Horizon's suite of gene editing technologies and CRISPR knock-out, CRISPRi and CRISPRa services and rapid penetration into the market using Dharmacon's sales platform, as well as the ability to use RNAi/ CRISPR libraries and Horizon's HT genetic and molecular screening services to offer deeper service offerings across the client base. Cost synergies are expected to be realised through the elimination of any duplicate costs at management level, optimisation of the best of the pooled talent as well as elimination of shared services costs and shared organisation for back-office and support functions per country / region, rationalisation of sales forces across key product lines and geographies, reduction in R&D costs through efficiencies realised by operating at a larger scale and using a similar talent / asset base in both RNAi and CRISPR offerings to improve the flexibility and efficiency of resource allocation, and reduced product manufacturing costs by utilising Dharmacon's significantly lower cost facility (less than 30 per cent. than that of Horizon's). Horizon is targeting to reduce the Enlarged Group's operating costs by 10 -15 per cent. within 18 months of Completion, biased towards FY 2018.
The Directors consider that the acquisition of Dharmacon creates a leading global player in gene editing and modulation technologies, RNAi research tools and gene editing research tools and services. The combined entity will have a unique strategic positioning in RNAi and gene editing, benefiting from complementary technologies to create a stronger R&D platform and greater scope for value generation. The Acquisition also adds scale across RNAi and CRISPR products with the Enlarged Group having a unique IP portfolio in RNAi and gene editing technologies. The combination of Horizon's and Dharmacon's respective and complementary strengths is expected to accelerate Horizon's penetration of multiple fast-growing gene-modulation and gene editing market segments, including engineered in vitro and in vivo disease models (addressable market of GBP500 million in 2018 with an estimated market growth of more than 30 per cent. per annum), cell based assays and screening (addressable market of GBP450 million in 2018 with an estimated market growth of 15 per cent. - 20 per cent. per annum), bioproduction (addressable market of GBP200 million in 2018 with an estimated market growth of 10 per cent. - 15 per cent. per annum) and molecular diagnostics (addressable market of GBP450 million in 2018 with an estimated market growth of more than 10 per cent. - 15 per cent. per annum).
The Enlarged Group is expected to have a market share of approximately 4.0 per cent. of its estimated GBP1.6 billion served available market in 2018. The global demand for gene editing is expected to grow at a CAGR of 31.1 per cent., reaching a value of almost GBP2.7 billion[12] by 2022 and growth is accelerating disproportionately in each of the above markets.
The Acquisition is expected to strengthen Horizon's current positioning at the nexus of the three major areas in life sciences: the demand for powerful life science tools designed to elucidate the genetic basis of disease and the development of personalised medicines and companion diagnostics, the emergence of cell and gene therapies, and immuno-oncology attracting significant investment with its potential to revolutionise the treatment of cancer. Other companies that are active in life science tools / genetics, and which the Company is well positioned to support, include Illumina, Nanthealth, Pacific Biosciences, Nanostring, Foundation Medicine, Danaher, Waters and Thermo Fisher. Other companies that are active in cell and gene therapy, and which the Company is well positioned to support, include Cellectis, Intellia Therapeutics, Editas, Kite Pharma and Bluebird. Other companies that are active in immuno-oncology, and which the Company is well positioned to support, include CytomX, Compass Therapeutics, Adaptimmune, Immunocore and Regeneron.
Post transaction, the Enlarged Group is expected to generate approximately 70 per cent. of revenues from high value and high margin product sales, as well as benefiting from revenue and cost synergies. The combination of Horizon and Dharmacon is also expected to deliver a strong, scalable cash generation profile driven by "sum-of-parts" Services and Products business profile, providing further firepower for greater investment in fast-growing existing markets and new ones (i.e., CRISPRi, CRISPRa) as well as accelerating the commercialisation of next-generation technologies.
The Acquisition is expected to be immediately accretive to earnings and accelerates the Group's path to sustainable profit. The Acquisition is also expected to generate a ROIC of 10 per cent. by 2020 but it should however be noted that this estimate only reflects expected cost synergies and does not factor in the anticipated product innovation which may lead to a higher return.
4. Principal Terms of the Acquisition Agreement
Horizon and General Electric Company have entered into the Acquisition Agreement, which sets out the terms for Horizon's acquisition of Dharmacon for a total consideration of $85 million. The acquisition will be subject to a working capital adjustment at Completion.
The total consideration payable under the Acquisition Agreement will comprise a cash payment of $50 million, subject to a post-closing working capital/debt adjustment, and the allotment and issue to a subsidiary of General Electric Company of new Ordinary Shares in Horizon having a value equivalent to $35 million at the Placing Price (based on an agreed GBP1.00/$1.3068 exchange rate).
The Consideration Shares shall rank equally in all respects with, and carry the same rights as the Existing Ordinary Shares except that the Consideration Shares will not rank for any dividend or other distribution of Horizon declared, made or paid by reference to a record date before Completion. Application will be made to the London Stock Exchange for the admission of the Consideration Shares to trading on AIM and such admission is expected to become effective on the business day following Completion.
As part of the Acquisition, General Electric Company, Horizon and Dharmacon have agreed that General Electric Company will provide certain transitional services to the Company for a period of up to 18 months.
The Acquisition is subject to and conditional upon the completion of the Placing, by 5.00 p.m. on 31 October 2017, which requires shareholder approval for the issue of the Placing Shares and Consideration Shares and admission of the Placing Shares to trading on AIM. Completion is also subject to clearance by the United States antitrust authorities under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act by 10.00 p.m. on 29 December 2017. If the Resolutions are not passed at the shareholder meeting to be convened in connection with the Placing either General Electric Company or Horizon can terminate the Acquisition Agreement, in which event Horizon is obliged to pay a $1 million break fee to General Electric Company. Subject to the Acquisition Agreement becoming unconditional, the Acquisition is expected to complete within four business days of completion of the Placing.
5. Details of the Placing
The Company has conditionally raised GBP80.0 million (c. $105 million) before expenses (GBP76.4 million net of transaction expenses) by way of a non pre-emptive placing of 39,024,390 Placing Shares at the Placing Price with the Placees. The Placing Shares are not subject to clawback in favour of Horizon's shareholders. The Placing is underwritten by Numis. The Placing Price represents a discount of approximately 4.4 per cent. to the closing mid-market price of the Ordinary Shares of 214.5 pence on 18 July 2017 (being the last practicable dealing day prior to the date of this announcement). The Placing Shares will represent approximately 26.25 per cent. of the Ordinary Share capital as enlarged by the Placing and the issue of the Consideration Shares and will, when issued, rank pari passu in all respects with the other Ordinary Shares then in issue, including all rights to all dividends and other distributions declared, made or paid following Admission.
The Placing is conditional, inter alia, upon:
-- the passing of all of the Resolutions;
-- the Acquisition Agreement having become unconditional (except for any condition relating to the Placing), and not having been terminated before Admission;
-- the Placing Agreement becoming or being declared unconditional in all respects and not having been terminated in accordance with its terms prior to Admission; and
-- Admission becoming effective by no later than 8.00 a.m. on 22 August 2017 or such later time and/or date (being no later than 8.00 a.m. on 31 August 2017) as Numis, Cowen and the Company may agree.
If any of the conditions are not satisfied, the Placing Shares will not be issued and all monies received from the Placees will be returned to them. The Placing Agreement contains warranties from the Company in favour of Numis and Cowen in relation to (amongst other things) the Group and its business. In addition, the Company has agreed to indemnify Numis and Cowen in relation to certain liabilities they may incur in undertaking the Placing. Each of Numis and Cowen has the right to terminate the Placing Agreement in certain limited circumstances prior to Admission, in particular, they may terminate in the event that there has been a material breach of any of the warranties or for force majeure.
Application will be made to the London Stock Exchange for the admission of the Placing Shares to trading on AIM. Subject to expiration or early termination of the waiting period required under the Hart-Scott Rodino (HSR) Antitrust Improvements Act, which is currently anticipated to occur no later than 4.59 a.m. on 19 August 2017, it is expected that Admission will occur and that dealings in the Placing Shares will commence at 8.00 a.m. on 22 August 2017, at which time it is also expected that the Placing Shares will be enabled for settlement in CREST.
6. Current Trading and Outlook
2017 is set to be an exciting year for Horizon. The Company's disciplined approach to strategy and execution has served Horizon well, placing the Group in a strong position for 2017 and beyond. Horizon has delivered a strong start to 2017, with Q1 revenue up approximately 25 per cent. compared to the equivalent quarter in the prior year, underpinning revenue guidance of GBP30 million to GBP35 million for FY2017. Together with the realisation of significant operational efficiencies through reorganising the business in FY16, Horizon remains on track to reach positive EBITDA on its trading business this year.
The Company's future prospects are very encouraging, with recently hired commercial leadership in place, and the personnel, capabilities, and operational excellence to deliver significant value to its customers. The Company is confident in its ability to build a sustainably profitable business that continues to deliver strong growth and have a real impact on the improvement of healthcare through the expert application of gene editing.
The Board of Horizon expects Dharmacon's revenues to grow in 2017 excluding revenue synergies in the mid to high single digit per cent range.
7. Related Party Transactions
As part of the Placing, each of Woodford Investment Management Ltd and Invesco Perpetual, each of which is a related party for the purpose of the AIM Rules by virtue of it being a "substantial shareholder", has agreed to subscribe for 7,900,000 and 5,450,000 Placing Shares respectively, representing in aggregate 9.85 per cent. of the Company's issued share capital on Admission (and prior to the issue of the Consideration Shares).
As at 18 July 2017 (being the last practicable date prior to publication of this announcement), Woodford Investment Management Ltd held approximately 23.98 per cent. and Invesco Perpetual approximately 10.65 per cent. of the voting rights attached to the issued share capital of the Company. In aggregate, the Related Parties hold 34.63 per cent. of the voting rights attached to the issued share capital of the Company. Immediately upon Admission (and prior to the issue of the Consideration Shares), the Related Parties are expected to hold 46,790,642 Ordinary Shares in aggregate representing 34.51 per cent. of the Enlarged Share Capital following Admission (and prior to the issue of the Consideration Shares). Following the issue of the Consideration Shares the aggregate shareholding of the Related Parties will represent 31.47 per cent. of the Enlarged Share Capital.
The Directors consider, having consulted with the Company's nominated adviser, Numis, that the participation by each of the Related Parties in the Placing is fair and reasonable in so far as the Company's shareholders are concerned.
The AIM Rules do not prohibit each of the Related Parties from exercising the voting rights attached to its holding of Ordinary Shares at the meeting of Horizon's shareholders to be convened by the GM Notice.
8. General Meeting
The Circular will be sent to Horizon's shareholders today and includes the GM Notice convening a meeting of Horizon's shareholders to be held at the offices of Covington & Burling LLP, 265 Strand, London, WC2R 1BH on 7 August 2017, commencing at 10.00 a.m. At this meeting, an ordinary resolution will be proposed to authorise the Directors under section 551 of the Companies Act 2006 to allot 52,089,258 Ordinary Shares pursuant to the Placing and the Acquisition and a special resolution will be proposed to authorise the Directors under section 570 of the Companies Act 2006 to allot 39,024,390 Ordinary Shares for cash pursuant to the Placing on a non-pre-emptive basis.
The Directors believe that the Placing and the Acquisition are in the best interests of the Company and its shareholders as a whole. Accordingly, the Directors unanimously recommend that you vote in favour of the Resolutions to be proposed at the shareholder meeting as they have irrevocably undertaken to do in respect of their own beneficial holdings amounting to, in aggregate 10,739,732 Ordinary Shares, representing approximately 11.12 per cent. of the Existing Ordinary Shares.
The Company has also received irrevocable undertakings from each of Woodford Investment Management Ltd, Invesco Perpetual and Hargreave Hale Limited in respect of, in aggregate, 40,015,642 Existing Ordinary Shares representing, in aggregate, 41.44 per cent. of the Existing Ordinary Shares, to vote in favour, or procure the vote in favour of the Resolutions in respect of each of their own shareholdings in the Company.
Appendix I - Definitions
The following words and expressions shall have the following meanings in this announcement unless the context otherwise requires:
"Acquisition" the acquisition of
Dharmacon
------------------------- ------------------------------
"Acquisition Agreement" the share purchase
agreement in respect
of the Acquisition
------------------------- ------------------------------
"Admission" the admission to trading
on AIM of the Placing
Shares becoming effective
in accordance with
Rule 6 of the AIM Rules
------------------------- ------------------------------
"AIM" the AIM market operated
by the London Stock
Exchange
------------------------- ------------------------------
"AIM Rules" the rules for AIM companies
as published by the
London Stock Exchange
from time to time
------------------------- ------------------------------
"Board" or "Directors" the directors of the
Company
------------------------- ------------------------------
"CAGR" compound annual growth
rate
------------------------- ------------------------------
"Circular" the circular which
incorporates the GM
Notice to be sent to
shareholders of the
Company in connection
with the Placing
------------------------- ------------------------------
"COGS" cost of goods sold
------------------------- ------------------------------
"Company" or "Horizon" Horizon Discovery Group
plc
------------------------- ------------------------------
"Completion" completion of the Acquisition
------------------------- ------------------------------
"Cowen" Cowen and Company,
LLC a limited liability
company organized under
the laws of the State
of Delaware, USA and
having its principal
place of business at
599 Lexington Avenue,
New York, New York,
10022, USA
------------------------- ------------------------------
"Dharmacon" GE Healthcare Dharmacon,
Inc.
------------------------- ------------------------------
EMEA Europe, Middle-East
and Africa
------------------------- ------------------------------
"Enlarged Group" the Group and Dharmacon
------------------------- ------------------------------
"Enlarged Share Capital" the issued Ordinary
Share capital of the
Company immediately
following the issue
of the Placing Shares
and the Consideration
Shares
------------------------- ------------------------------
"Excluded Jurisdictions" the Republic of Ireland,
Canada, Australia,
the Republic of South
Africa, Japan and New
Zealand
------------------------- ------------------------------
"Existing Ordinary the 96,571,853 Ordinary
Shares" Shares in issue as
at the date of this
announcement, all of
which are admitted
to trading on AIM
------------------------- ------------------------------
"FSMA" the Financial Services
and Markets Act 2000
(as amended)
------------------------- ------------------------------
"GM Notice" the notice of general
meeting incorporated
in the Circular
------------------------- ------------------------------
"Group" the Company and its
subsidiary undertakings
and "member of the
Group" shall be construed
accordingly
------------------------- ------------------------------
"Invesco Perpetual" Invesco Asset Management
Limited, acting as
agent for and on behalf
of discretionary managed
clients
------------------------- ------------------------------
"Lazard" Lazard & Co., Limited
and Lazard Frères
& Co. LLC
------------------------- ------------------------------
"Nominated Advisor, Numis
Co-Bookrunner, and
Broker"
------------------------- ------------------------------
"Numis" Numis Securities Limited,
a company incorporated
in England and Wales
(registered number
02285918) and having
its registered office
at 10 Paternoster Square,
London, United Kingdom,
EC4M 7LT
------------------------- ------------------------------
"OEM" original equipment
manufacturer
------------------------- ------------------------------
"Ordinary Shares" ordinary shares of
GBP0.01 each in the
Company
------------------------- ------------------------------
"Placees" the persons who agree
conditionally to subscribe
for Placing Shares
------------------------- ------------------------------
"Placing" the conditional placing
of the Placing Shares
with Placees pursuant
to the Placing Agreement
------------------------- ------------------------------
"Placing Agreement" the conditional placing
agreement entered into
between the Company
and Numis and Cowen
on 19 July 2017 (or,
if such agreement does
not become unconditional
and is terminated,
any other placing agreement
entered into by the
Company in connection
with the Placing and
the Acquisition)
------------------------- ------------------------------
"Placing Price" the price of 205 pence
per Ordinary Share
------------------------- ------------------------------
"Placing Shares" 39,024,390 new Ordinary
Shares which are to
be issued by the Company
pursuant to the Placing
------------------------- ------------------------------
Related Parties Woodford Investment
Management Ltd and
Invesco Perpetual
------------------------- ------------------------------
"Resolutions" the resolutions set
out in the GM Notice
------------------------- ------------------------------
"ROIC" return on invested
capital
------------------------- ------------------------------
"US" or "United States" the United States of
America, each state
thereof, it territories
and possessions, and
all areas subject to
its jurisdiction
------------------------- ------------------------------
"Vector" tool used to deliver
genetic material into
a cell
------------------------- ------------------------------
Appendix II - Terms and Conditions of the Placing
IMPORTANT INFORMATION ON THE PLACING FOR INVITED PLACEES ONLY
THIS ANNOUNCEMENT INCLUDES STATEMENTS, ESTIMATES, OPINIONS AND PROJECTIONS WITH RESPECT TO ANTICIPATED FUTURE PERFORMANCE OF THE GROUP ("FORWARD-LOOKING STATEMENTS") WHICH REFLECT VARIOUS ASSUMPTIONS CONCERNING ANTICIPATED RESULTS TAKEN FROM THE GROUP'S CURRENT BUSINESS PLAN OR FROM PUBLIC SOURCES WHICH MAY OR MAY NOT PROVE TO BE CORRECT. THESE FORWARD LOOKING STATEMENTS CAN BE IDENTIFIED BY THE USE OF FORWARD LOOKING TERMINOLOGY, INCLUDING THE TERMS "ANTICIPATES", "TARGET", "BELIEVES", "ESTIMATES", "EXPECTS", "INTS", "MAY", "PLANS", "PROJECTS", "SHOULD" OR "WILL", OR, IN EACH CASE, THEIR NEGATIVE OR OTHER VARIATIONS OR COMPARABLE TERMINOLOGY OR BY DISCUSSIONS OF STRATEGY, PLANS, OBJECTIVES, GOALS, FUTURE EVENTS OR INTENTIONS. SUCH FORWARD-LOOKING STATEMENTS REFLECT CURRENT EXPECTATIONS BASED ON THE CURRENT BUSINESS PLAN AND VARIOUS OTHER ASSUMPTIONS AND INVOLVE SIGNIFICANT RISKS AND UNCERTAINTIES AND SHOULD NOT BE READ AS GUARANTEES OF FUTURE PERFORMANCE OR RESULTS AND WILL NOT NECESSARILY BE ACCURATE INDICATIONS OF WHETHER OR NOT SUCH RESULTS WILL BE ACHIEVED. AS A RESULT, PROSPECTIVE INVESTORS SHOULD NOT RELY ON SUCH FORWARD-LOOKING STATEMENTS DUE TO THE INHERENT UNCERTAINTY THEREIN. NO REPRESENTATION OR WARRANTY IS GIVEN AS TO THE COMPLETENESS OR ACCURACY OF THE FORWARD-LOOKING STATEMENTS CONTAINED IN THIS ANNOUNCEMENT. FORWARD-LOOKING STATEMENTS SPEAK ONLY AS OF THE DATE OF SUCH STATEMENTS AND, EXCEPT AS REQUIRED BY THE FCA, THE LONDON STOCK EXCHANGE, THE AIM RULES OR APPLICABLE LAW, THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE PUBLICLY ANY FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE. NO STATEMENT IN THIS ANNOUNCEMENT IS INTED TO BE A PROFIT FORECAST AND NO STATEMENT IN THIS ANNOUNCEMENT SHOULD BE INTERPRETED TO MEAN THAT EARNINGS PER SHARE OF THE COMPANY FOR THE CURRENT OR FUTURE FINANCIAL YEARS WOULD NECESSARILY MATCH OR EXCEED THE HISTORICAL PUBLISHED EARNINGS PER SHARE OF THE COMPANY.
THIS ANNOUNCEMENT, INCLUDING THE APPICES (TOGETHER THE "ANNOUNCEMENT") AND THE INFORMATION CONTAINED THEREIN IS RESTRICTED AND, SUBJECT TO CERTAIN EXCEPTIONS, IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA (EXCEPT IN COMPLIANCE WITH CANADIAN SECURITIES LAWS), JAPAN, NEW ZEALAND, THE REPUBLIC OF IRELAND OR SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL.
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN ARE FOR INFORMATION PURPOSES ONLY AND ARE DIRECTED ONLY AT: (A) PERSONS IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA WHO ARE QUALIFIED INVESTORS WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE PROSPECTUS DIRECTIVE ("QUALIFIED INVESTORS"); (B) IN THE UNITED KINGDOM, PERSONS WHO (I) HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS AND FALL WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE "ORDER"); OR (II) ARE PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) ("HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC") OF THE ORDER; (C) IN THE UNITED STATES, TO "QUALIFIED INSTITUTIONAL BUYERS", AS DEFINED IN RULE 144A OF THE U.S SECURITIES ACT OF 1933, AS AMED (THE "SECURITIES ACT") AND (D) OTHER PERSONS TO WHOM IT CAN LAWFULLY BE COMMUNICATED (ALL SUCH PERSONS REFERRED TO IN (A), (B), (C) AND (D) TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS").
THIS ANNOUNCEMENT MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. PERSONS DISTRIBUTING THIS ANNOUNCEMENT MUST SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS ANNOUNCEMENT RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. THIS ANNOUNCEMENT DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY.
EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL, TAX, BUSINESS AND RELATED ASPECTS OF A SUBSCRIPTION FOR OR PURCHASE OF THE PLACING SHARES.
ANY FAILURE TO COMPLY WITH THESE RESTRICTIONS MAY CONSTITUTE A VIOLATION OF THE SECURITIES LAWS OF ANY SUCH JURISDICTIONS.
In this Appendix, unless the context requires, "Placee" means a Relevant Person (including individuals, funds or others) who has been invited to, and who chooses to, participate in the Placing and by whom or on whose behalf a commitment to subscribe for Placing Shares has been given.
No representation or warranty, express or implied, is made or given by or on behalf of the Company or Numis Securities Ltd ("Numis"), the Company's nominated adviser, or any of their respective affiliates (within the meaning of Rule 405 under the Securities Act ("Affiliates") or any of such persons' directors, officers or employees or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this Announcement and no liability whatsoever is accepted by the Company, Numis or any of such persons' Affiliates, directors, officers or employees or any other person for any loss howsoever arising, directly or indirectly, from any use of such information or opinions or otherwise arising in connection therewith.
This Announcement does not constitute an offer to sell or issue or the solicitation of an offer to buy or subscribe for Placing Shares in any jurisdiction in which such offer or solicitation is or may be unlawful. In particular the Placing Shares referred to in this Announcement have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States and will be offered or sold in the United States only in a transaction not subject to the registration requirements of the Securities Act or outside of the United States in accordance with Regulation S under the Securities Act.
The relevant clearances have not been, nor will they be, obtained from the securities commission of any province or territory of Canada; no prospectus has been lodged with or registered by, the Australian Securities and Investments Commission or the Japanese Ministry of Finance; and the Placing Shares have not been, nor will they be, registered under or offered in compliance with the securities laws of any state, province or territory of the United States, Australia, Canada, Japan or South Africa. Accordingly, the Placing Shares may not (unless an exemption under the relevant securities laws is applicable) be offered, sold, resold or delivered, directly or indirectly, in or into the United States, Australia, Canada, Japan or South Africa or any other jurisdiction outside the United Kingdom.
Persons distributing any part of this Announcement must satisfy themselves that it is lawful to do so. Persons (including, without limitation, nominees and trustees) who have a contractual or other legal obligation to forward a copy of this Announcement should seek appropriate advice before taking any action. Persons into whose possession this Announcement comes are required by the Company and Numis to inform themselves about, and observe, any such restrictions.
1. Details of the Placing
1.1 Numis and Cowen have today entered into an agreement with the Company (the "Placing Agreement") under which, subject to certain conditions, Numis and Cowen, as agents for and on behalf of the Company, have each agreed to use its reasonable endeavours to procure placees ("Placees") for the Placing Shares at the Placing Price or, failing which, Numis has agreed to subscribe as principal for the Placing Shares itself.
1.2 The Placing Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with the existing Ordinary Shares, including the right to receive dividends and other distributions declared or made after the date of issue of the Placing Shares.
2. Applications for admission to trading
2.1 Application will be made to the London Stock Exchange for admission to trading of the Placing Shares on its AIM market ("Application").
2.2 Subject to expiration or early termination of the waiting period required under the Hart-Scott Rodino (HSR) Antitrust Improvements Act, which is currently anticipated to occur no later than 4:59 a.m. on 19 August 2017, it is expected that admission will occur and that dealings in the Placing Shares will commence at 8.00 a.m. on 22 August 2017 ("Admission"), at which time it is also expected that the Placing Shares will be enabled for settlement in CREST.
3. Participation in, and principal terms of, the Placing
3.1 Numis and Cowen are acting as the bookrunners and as agents for the Company in connection with the Placing, Application and Admission. Numis is authorised and regulated in the United Kingdom by the FCA, and is acting exclusively for the Company and no one else in connection with the matters referred to in this Announcement and will not be responsible to anyone other than the Company for providing the protections afforded to the customers of Numis or for providing advice in relation to the matters described in this Announcement. Save as otherwise provided in this paragraph 3.1, participation in the Placing is only available to persons who may lawfully be, and are, invited to participate in it by Numis. Numis and its affiliates are each entitled to participate in the Placing as principal. Cowen is authorised and regulated in the United States by the Financial Industry Regulatory Authority ("FINRA"), and is acting exclusively for the Company and no one else in connection with the matters referred to in this Announcement and will not be responsible to anyone other than the Company for providing the protections afforded to the customers of Cowen or for providing advice in relation to the matters described in this Announcement. Save as otherwise provided in this paragraph 3.1, participation in the Placing is only available to persons who may lawfully be, and are, invited to participate in it by Cowen. Cowen and its affiliates are each entitled to participate in the Placing as principal.
3.2 The placing price will be a fixed price of 205 pence per Placing Share (the "Placing Price"). No commissions will be paid to Placees or by the Placees in respect of any Placing Shares.
3.3 Each prospective Placee's allocation of Placing Shares will be confirmed to prospective Placees orally by Numis or Cowen or one of its affiliates, and a contract note will be dispatched once the settlement date is known, which will be when the key conditions have been satisfied, as evidence of such Placee's allocation and commitment. The terms and conditions of this Appendix will be deemed incorporated into the contract note. That oral confirmation will constitute an irrevocable legally binding commitment upon that person (who at that point will become a Placee) in favour of the Company, Numis and Cowen to subscribe for the number of Placing Shares allocated to it at the Placing Price on the terms and conditions set out in this Appendix and in accordance with the Company's articles of association. An offer to acquire Placing Shares, which has been communicated by a prospective Placee to Numis or Cowen which has not been withdrawn or revoked prior to publication of this Announcement shall not be capable of withdrawal or revocation immediately following the publication of this Announcement without the consent of Numis and Cowen.
3.4 Each Placee will also have an immediate, separate, irrevocable and binding obligation, owed to Numis and Cowen (as agents of the Company), to pay Numis (or as Numis may direct) in cleared funds an amount equal to the product of the Placing Price and the number of Placing Shares such Placee has agreed to subscribe for and the Company has agreed to allot and issue to that Placee. Each Placee's obligation will be owed to the Company and to Numis and Cowen.
3.5 Irrespective of the time at which a Placee's allocation pursuant to the Placing is confirmed, settlement for all Placing Shares to be subscribed for pursuant to the Placing will be required to be made at the same time, on the basis explained below under "Registration and Settlement".
3.6 All obligations under the Placing will be subject to fulfilment of the conditions referred to below under "Conditions of the Placing" and to the Placing not being terminated on the basis referred to below under "Termination of the Placing Agreement".
3.7 By participating in the Placing, each Placee will agree that its rights and obligations in respect of the Placing will terminate only in the circumstances described below and will not be capable of rescission or termination by the Placee.
3.8 To the fullest extent permitted by law and applicable FCA rules, neither (i) Numis, (ii) Cowen, (iii) any of their directors, officers, employees or consultants, or (iv) to the extent not contained within (i), (ii) or (iii), any person connected with Numis or Cowen as defined in FSMA ((i), (ii) and (iii) being together "affiliates" and individually an "affiliate"), shall have any liability (including to the extent permissible by law, any fiduciary duties) to Placees or to any person other than the Company in respect of the Placing.
4. Conditions of the Placing
4.1 Numis' and Cowen's obligations under the Placing Agreement in respect of the Placing Shares are conditional on:
(a) the passing of certain resolutions by the board of directors of the Company on or before the date of the Placing Agreement and prior to Admission;
(b) the Company having complied with all of its obligations under the Placing Agreement to the extent that they fall to be performed prior to Admission;
(c) publication of the Announcement;
(d) the Application being submitted to the London Stock Exchange not later than 9.00 a.m. 3 business days prior to Admission;
(e) delivery of certain documents and the delivery of such other information or documents as required under the Placing Agreement;
(f) the Placing Agreement not having been terminated; (g) Admission occurring no later than 8.00 a.m. on the date of Admission;
(h) certain required shareholder resolutions having been passed without amendment by the required majority at the general meeting of the shareholders of the Company;
(i) the Acquisition Agreement having become unconditional in all respects (save for any condition relating to the Placing Agreement becoming unconditional or the Placing having been completed) not later than Admission and not having been terminated or rescinded; and
(j) delivery immediately prior to Admission by the Company to the Placing Agents of a certificate in the form set out in the Placing Agreement signed for and on behalf of the Company.
4.2 If (i) any condition contained in the Placing Agreement in relation to the Placing Shares is not fulfilled or waived by Numis and Cowen, by the respective time or date where specified (or such later time or date as the Company, Cowen and Numis may agree), (ii) any such condition becomes incapable of being fulfilled or (iii) the Placing Agreement is terminated in accordance with its terms, the Placing will not proceed and the Placee's rights and obligations hereunder in relation to the Placing Shares shall cease and terminate at such time and each Placee agrees that no claim can be made by the Placee in respect thereof.
4.3 Numis and Cowen may, at their discretion and upon such terms as they think fit, waive compliance by the Company with the whole or any part of any of the Company's obligations in relation to the conditions in the Placing Agreement, save that conditions (c), (g) and (h) above relating to Admission may not be waived. Any such extension or waiver will not affect the Placees' commitments as set out in this Announcement.
4.4 Neither Numis nor Cowen nor the Company shall have any liability to any Placee (or to any other person whether acting on behalf of a Placee or otherwise) in respect of any decision they may make as to whether or not to waive or to extend the time and/or the date for the satisfaction of any condition to the Placing nor for any decision they may make as to the satisfaction of any condition or in respect of the Placing generally, and by participating in the Placing each Placee agrees that any such decision is within the absolute discretion of Numis and Cowen.
5. Termination of the Placing Agreement
5.1 Either Numis and Cowen may, in its sole discretion, after consultation with the other and following consultation with the Company, at any time prior to Admission, terminate the Placing Agreement in respect of the Placing Shares in accordance with the terms of the Placing Agreement by giving notice to the Company in certain circumstances, including (a) a breach of the warranties given to Numis and Cowen in the Placing Agreement, which Numis and Cowen (acting in good faith) consider to be material in the context of the Placing, Application or Admission, (b) the failure of the Company to comply with its obligations under the Placing Agreement, which Numis and Cowen (acting in good faith) consider to be material in the context of the Placing, Application or Admission, (c) a material adverse change in the Enlarged Group's condition or prospects or (d) where any statement in the placing documents or certain other documents issued by the Company has become or is discovered to be untrue, inaccurate or misleading in any respect which (in either case), Numis and Cowen (acting in good faith) consider to be material in the context of the Placing, Application or Admission or (e) where matters have arisen or have been discovered which would, if the placing documents or certain other documents issued by the Company were to be issued at that time, constitute an inaccuracy or omission therefrom, which Numis and Cowen (acting in good faith) consider to be material in the context of the Placing, Application or Admission or (f) where there has been (i) an outbreak or escalation of hostilities, any attack or act of terrorism, any declaration of a national emergency or war and any other calamity or crisis of national or international effect, (ii) trading in any securities of the Company has been suspended or limited, (iii) a banking moratorium has been declared by the United Kingdom, the United States or by any other member states of the EEA, or (iv) any material adverse change in national or international, financial, monetary, economic, political or market conditions, which, in each case, in the opinion of Numis and Cowen (acting in good faith) makes it impractical or inadvisable to proceed with the Placing.
5.2 By participating in the Placing, Placees agree that the exercise by Numis or Cowen of any right of termination or other discretion under the Placing Agreement shall be within the absolute discretion of Numis or Cowen and that it need not make any reference to Placees and that it and the Company (or its directors, officers or employees) shall have no liability to Placees whatsoever in connection with any such exercise.
6. No prospectus
6.1 No offering document or prospectus has been or will be submitted to be approved by the FCA or any other governmental or regulatory agency in any other jurisdiction in relation to the Placing or the Placing Shares and Placees' commitments will be made solely on the basis of the information contained in this Announcement (including this Appendix) and the "Acquisition of Dharmacon presentation" prepared by the Company for prospective investors ("the Investor Presentation").
6.2 Each Placee, by accepting a participation in the Placing, agrees that the content of this Announcement is exclusively the responsibility of the Company and confirms that it has neither received nor relied on any other information (other than the Investor Presentation), representation, warranty, or statement made by or on behalf of the Company or Numis or Cowen or any other person and neither Numis nor Cowen nor the Company nor any other person will be liable for any Placee's decision to participate in the Placing based on any other information, representation, warranty or statement which the Placees may have obtained or received. Each Placee acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of the Company in accepting a participation in the Placing. Nothing in this paragraph shall exclude the liability of any person for fraudulent misrepresentation.
7. Registration and settlement
7.1 Settlement of transactions in the Placing Shares (ISIN: GB00BK8FL363) following Admission will take place within the system administered by Euroclear UK & Ireland Limited ("CREST"), subject to certain exceptions. Numis reserves the right to require settlement for, and delivery of, the Placing Shares (or a portion thereof) to Placees in certificated form if, in Numis' opinion, delivery or settlement is not possible or practicable within the CREST system within the timetable set out in this Announcement or would not be consistent with the regulatory requirements in any Placee's jurisdiction.
7.2 Each Placee allocated Placing Shares in the Placing will be sent a contract note in accordance with the standing arrangements in place with Numis, stating the number of Placing Shares allocated to it at the Placing Price, the aggregate amount owed by such Placee to Numis and settlement instructions. The contract note will be sent once the settlement date is known, which will be after the key conditions of the Placing have been satisfied. Each Placee agrees that it will do all things necessary to ensure that delivery and payment is completed in accordance with either the standing CREST or certificated settlement instructions that it has in place with Numis.
7.3 The Company will deliver the Placing Shares to a CREST account operated by Numis as agent for the Company and Numis will enter its delivery (DEL) instruction into the CREST system. Numis will hold any Placing Shares delivered to this account as nominee for the Placees. The input to CREST by a Placee of a matching or acceptance instruction will then allow delivery of the relevant Placing Shares to that Placee against payment.
7.4 It is expected that settlement will take place on 22 August 2017 in accordance with the instructions set out in the contract note.
7.5 Interest is chargeable daily on payments not received from Placees on the due date in accordance with the arrangements set out above at the rate of two percentage points above LIBOR as determined by Numis.
7.6 Each Placee agrees that, if it does not comply with these obligations, Numis may sell any or all of the Placing Shares allocated to that Placee on such Placee's behalf and retain from the proceeds, for Numis' account and benefit, an amount equal to the aggregate amount owed by the Placee plus any interest due. The relevant Placee will, however, remain liable for any shortfall below the aggregate amount owed by it and may be required to bear any stamp duty or stamp duty reserve tax (together with any interest or penalties) which may arise upon the sale of such Placing Shares on such Placee's behalf.
7.7 If Placing Shares are to be delivered to a custodian or settlement agent, Placees should ensure that the contract note is copied and delivered immediately to the relevant person within that organisation.
7.8 Insofar as Placing Shares are registered in a Placee's name or that of its nominee or in the name of any person for whom a Placee is contracting as agent or that of a nominee for such person, such Placing Shares should, subject as provided below, be so registered free from any liability to UK stamp duty or stamp duty reserve tax.
7.9 Placees will not be entitled to receive any fee or commission in connection with the Placing.
8. Representations and warranties
8.1 By participating in the Placing, each Placee (and any person acting on such Placee's behalf) acknowledges, undertakes, represents, warrants and agrees (as the case may be) that:
(a) it has read and understood this Announcement (including the Appendix) in its entirety and its subscription for the Placing Shares is subject to and based on the terms and conditions of the Placing as referred to and included in this Announcement and undertakes not to redistribute or duplicate this Announcement;
(b) no offering document or prospectus has been prepared in connection with the Placing and that it has not received and will not receive a prospectus or other offering document in connection with the Placing;
(c) (i) it has received all information relating to the Company, Dharmacon, the Acquisition, the Placing and the Placing Shares that it deems necessary and appropriate in connection with its participation into the Placing; and (ii) has had a reasonable opportunity to conduct due diligence on, and has had a full opportunity to ask questions of and receive satisfactory answers from the Company or any person or persons acting on behalf of the Company concerning, such matters that it considers appropriate, including in relation to the business, operations, financial condition and results of operations of the Company, Dharmacon, the Acquisition, the Placing and the Placing Shares;
(d) (i) it has made its own assessment of the Company, the Placing Shares and the terms and conditions of the Placing and has relied on its own investigation of the business, financial or other position of the Company in accepting a participation in the Placing and has satisfied itself that the information is still current; (ii) none of Numis, Cowen, the Company, any of their respective affiliates or any person acting on behalf of any of them has provided, or will provide it, with any material regarding the Placing Shares in addition to the Investor Presentation and this Announcement; and (iii) it has not requested Numis, Cowen, the Company or any of their respective affiliates or any person acting on behalf of any of them to provide it with any such information;
(e) the content of this Announcement and the Investor Presentation is exclusively the responsibility of the Company and that none of Numis, Cowen, their affiliates or any person acting on its or their behalf has or shall have any liability for any information, representation or statement contained in this Announcement or the Investor Presentation or any other information previously or concurrently published by or on behalf of the Company and will not be liable for any Placee's decision to participate in the Placing based on any information, representation or statement contained in this Announcement, the Investor Presentation or elsewhere;
(f) it has knowledge and experience in financial, business and international investment matters and is able to evaluate the merits and risks of subscribing for the Placing Shares; (ii) it is experienced in investing in securities of this nature and is aware that it may be required to bear, and is able to bear, the economic risk of, and is able to sustain a complete loss in connection with, the Placing; and (iii) it has relied upon its own examination and due diligence of the Company and its associates taken as a whole, and the terms of the Placing, including the merits and risks involved and has satisfied itself concerning the relevant tax, legal, currency and other economic considerations relevant to its subscription for Placing Shares;
(g) the only information on which it has relied in committing itself to subscribe for the Placing Shares is contained in this Announcement and the Investor Presentation and that it has not received or relied on any information given or any representations, warranties or statements, express or implied, made by Numis, Cowen or the Company or any of their affiliates or any person acting on behalf of any of them and none of Numis, Cowen, the Company, any of their affiliates or any person acting on behalf of any of them will be liable for its decision to accept an invitation to participate in the Placing based on any information, representation, warranty or statement other than that contained in this Announcement and the Investor Presentation;
(h) it has neither received nor relied on any confidential price sensitive information concerning the Company in accepting this invitation to participate in the Placing and is not purchasing Placing Shares on the basis of material non-public information;
(i) it has the funds available to pay for the Placing Shares it has agreed to subscribe for and acknowledges, agrees and undertakes that it will pay the total subscription amount in accordance with the terms of this Announcement, failing which the relevant Placing Shares may be placed with other placees or sold at such price as Numis determines;
(j) it: (i) is entitled to subscribe for the Placing Shares under the laws of all relevant jurisdictions; (ii) has fully observed such laws; (iii) has the requisite capacity and authority and is entitled to enter into and to perform its obligations as a subscriber for Placing Shares and will honour such obligations; and (iv) has obtained all necessary consents and authorities (including, without limitation, in the case of any person on whose behalf it is acting, all necessary consents and authorities to agree to the terms set out or referred to in this Announcement) to enable it to enter into the transactions contemplated hereby and to perform its obligations in relation thereto and, in particular, if it is a pension fund or investment company it is aware of and acknowledges it is required to comply with all applicable laws and regulations with respect to its subscription for Placing Shares;
(k) it is not, and any person who it is acting on behalf of is not, and at the time the Placing Shares are subscribed will not be, a resident of, or with an address in Australia, Canada, Japan or South Africa, and it acknowledges and agrees that the Placing Shares have not been and will not be registered or otherwise qualified under the securities legislation of the United States, Australia, Canada (except in compliance with Canadian securities laws), Japan, New Zealand, the Republic of Ireland or the Republic of South Africa and may not be offered, sold, or acquired, directly or indirectly, within those jurisdictions;
(l) (i) it is a "qualified institutional buyer" ("QIB") as that term is defined in Rule 144A under the Securities Act and, if it is acquiring the Placing Shares as a fiduciary or agent for one or more investor accounts, each owner of such accounts is a QIB and/or (ii) it is located outside of the United States (within the meaning of Regulation S under the Securities Act), and it is not a "U.S. person" (as defined in Regulation S) nor is it purchasing the Shares for the account or benefit of a person in the United States or a U.S. person;
(m) (i) the offer and sale of the Placing Shares in the United States is being made in a private placement transaction and no action has been or will be taken that would, or is intended to, permit a public offering of the Placing Shares; (ii) it is not acquiring the Placing Shares pursuant to any form of "general solicitation" or "general advertising" as defined in Regulation D under the Securities Act or "directed selling efforts" as defined in Regulation S under the Securities Act; (iii) the Placing Shares are being sold pursuant to an exemption from registration under the Securities Act contained in Rule 144A promulgated thereunder, and the Placing Shares have not been, and will not be registered under the Securities Act;
(n) if it is located in the United States, it is acquiring the Placing Shares for its own account or for the account of a QIB as to which it has full investment discretion (and full power and authority to make the acknowledgements, representations and agreements herein on behalf of each owner of such account), in each case, for investment purposes and not with a view to, or for offer or sale in connection with, any distribution (within the meaning of the United States securities laws) thereof;
(o) if it is located in the United States, it is aware that the Placing Shares it acquires will be "restricted securities" within the meaning of Rule 144(a)(3) under the Securities Act;
(p) if it is located in the United States, it understands and agrees that offers and sales of the Placing Shares are being made in the United States only to QIBs and that such Placing Shares may not be reoffered, resold, pledged or otherwise transferred, except: (i) pursuant to an effective registration statement under the Securities Act, (ii) outside the United States in accordance with Rule 903 or Rule 904 of Regulation S (and not in a pre-arranged transaction resulting in the resale of such shares into the United States); (iii) to another QIB in compliance with Rule 144A; or (iv) pursuant to an exemption from registration under the Securities Act provided by Rule 144 thereunder (if available) or any other exemption from the registration requirements of the Securities Act, subject to delivery to the Company of (A) an opinion of counsel (and of such other evidence that the Company may reasonably require) that such transfer or sale may be effected without registration of the Placing Shares under the Securities Act or any applicable securities laws of any state or other jurisdiction of the United States and is in compliance with the Securities Act, in each case, in accordance with any applicable securities laws of any state of the United States or any other jurisdiction and (B) an investor representation letter from the transferee or purchaser, in the form as the Company may prescribe from time to time, certifying that it is a QIB and agreeing to the representations and resale restrictions contained therein;
(q) if it is located in the United States, if it transfers any Placing Shares in a transaction described in 8.1(p) (iii) and (iv) above, it will require its transferee to execute an investor representation letter in the form as the Company may prescribe from time to time and deliver it to the Company, Numis and Cowen;
(r) if it is located in the United States, it acknowledges that, to the extent any Placing Shares are delivered in certificated form, the certificate delivered in respect of such Placing Shares will bear a legend substantially to the following effect for so long as the securities are "restricted securities" within the meaning of Rule 144(a)(3) under the Securities Act:
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMED (THE "SECURITIES ACT"), OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (B) TO A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN AND IN COMPLIANCE WITH RULE 144A, (C) OUTSIDE THE UNITED STATES PURSUANT TO RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT IN AN "OFFSHORE TRANSACTION" (AND NOT IN A PRE-ARRANGED TRANSACTION RESULTING IN THE RESALE OF SUCH SHARES INTO THE UNITED STATES) OR (D) IN ACCORDANCE WITH RULE 144 (IF AVAILABLE) UNDER THE SECURITIES ACT OR ANY OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO ITS DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL IF REQUESTED BY THE COMPANY (AND OF SUCH OTHER EVIDENCE THAT THE COMPANY MAY REASONABLY REQUIRE) THAT SUCH TRANSFER OR SALE MAY BE EFFECTED WITHOUT REGISTRATION OF THE SHARES UNDER THE SECURITIES ACT OR ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND IS IN COMPLIANCE WITH THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND OF ANY OTHER JURISDICTION. NO REPRESENTATION IS MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT FOR RESALES OF THE SHARES REPRESENTED HEREBY. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE FOREGOING, THE SHARES MAY NOT BE DEPOSITED INTO ANY UNRESTRICTED DEPOSITARY RECEIPT FACILITY MAINTAINED BY A DEPOSITARY BANK. EACH HOLDER, BY ITS ACCEPTANCE OF THESE SHARES, REPRESENTS THAT IT UNDERSTANDS AND AGREES TO THE FOREGOING RESTRICTIONS.
(s) if it is located in the United States, it will deliver an investor representation letter to the Company, Numis and Cowen, in the form provided by the Company, at the time it subscribes for the Placing Shares;
(t) it is a person of a kind described in (i) Article 19(5) (Investment Professionals) and/or 49(2) (high net worth companies etc.) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended, and/or an authorised person as defined in section 31 of FSMA; and (ii) section 86(7) of FSMA ("Qualified Investor"), being a person falling within Article 2.1(e) of Directive 2003/71/EC as amended (the "Prospectus Directive"). For such purposes, it undertakes that it will acquire, hold, manage and (if applicable) dispose of any Placing Shares that are allocated to it for the purposes of its business only;
(u) it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) relating to the Placing Shares in circumstances in which section 21(1) of FSMA does not require approval of the communication by an authorised person and it acknowledges and agrees that neither the Announcement nor the Investor Presentation has been approved by Numis or Cowen in its capacity as an authorised person under section 21 of FSMA and it may not therefore be subject to the controls which would apply if it was made or approved as financial promotion by an authorised person;
(v) it is aware of and acknowledges that it has complied with and will comply with all applicable provisions of FSMA with respect to anything done by it in relation to the Placing Shares in, from or otherwise involving, the United Kingdom;
(w) it will not make any offer to the public of the Placing Shares and has not offered or sold and will not offer or sell any Placing Shares to persons in the United Kingdom or elsewhere in the European Economic Area prior to Admission except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted in and which will not result in an offer to the public in the United Kingdom within the meaning of section 85(1) of FSMA or an offer to the public in any other member state of the European Economic Area within the meaning of the Prospectus Directive (which includes any relevant implementing measure in any Member State of the European Economic Area);
(x) it has not been engaged to subscribe for the Placing Shares on behalf of any other person who is not a Qualified Investor unless the terms on which it is engaged enable it to make decisions concerning the acceptance of offers of transferable securities on the client's behalf without reference to the client as described in section 86(2) of FSMA;
(y) it is aware of and acknowledges that it is required to comply with its obligations in connection with money laundering under the Proceeds of Crime Act 2002, the Terrorism Act 2000, the Terrorism Act 2006 and the Money Laundering Regulations 2007 (the "Regulations") and, if making payment on behalf of a third party, that satisfactory evidence has been obtained and recorded by it to verify the identity of the third party as required by the Regulations;
(z) it is aware of the obligations regarding insider dealing in the Criminal Justice Act 1993, with all applicable provisions of FSMA, the EU Market Abuse Regulation 596/2014 and the Proceeds of Crime Act 2002 and confirms that it has and will continue to comply with those obligations;
(aa) the allocation, allotment, issue and delivery to it, or the person specified by it for registration as a holder of Placing Shares, will not give rise to a stamp duty or stamp duty reserve tax liability under any of sections 67, 70, 93 or 96 of the Finance Act 1986 (depositary receipts and clearance services) and that no instrument under which it subscribes for Placing Shares (whether as principal, agent or nominee) would be subject to stamp duty or the increased rates referred to in those sections and that it, or the person specified by it for registration as a holder of Placing Shares, is not participating in the Placing as nominee or agent for any person or persons to whom the allocation, allotment, issue or delivery of Placing Shares would give rise to such a liability;
(bb) it, or the person specified by it for registration as a holder of the Placing Shares, will be liable for any stamp duty and all other stamp, issue, securities, transfer, registration, documentary or other duties or taxes (including any interest, fines or penalties relating thereto), if any, payable on acquisition of any of the Placing Shares or the agreement to subscribe for the Placing Shares and acknowledges and agrees that none of Numis, Cowen, the Company, any of their respective affiliates or any person acting on behalf of them will be responsible for any liability to stamp duty or stamp duty reserve tax resulting from a failure to observe this requirement. Each Placee and any person acting on behalf of such Placee agrees to participate in the Placing, and agrees to indemnify the Company and Numis on an after--tax basis in respect of the same, on the basis that the Placing Shares will be allotted to the CREST stock account of Numis who will hold them as nominee on behalf of such Placee until settlement in accordance with its standing settlement instructions;
(cc) none of Numis, Cowen, any of their affiliates or any person acting on behalf of any of them has or shall have any liability for any information, representation or statement contained in this Announcement, the Investor Presentation, or for any information previously published by or on behalf of the Company or any other written or oral information made available to or publicly available or filed information or any representation, warranty or undertaking relating to the Company, and will not be liable for its decision to participate in the Placing based on any information, representation, warranty or statement contained in this Announcement, the Investor Presentation or elsewhere, provided that nothing in this paragraph shall exclude any liability of any person for fraud;
(dd) none of Numis, Cowen, any of their affiliates or any person acting on behalf of any of them, is making any recommendations to it, advising it regarding the suitability of any transactions it may enter into in connection with the Placing and that its participation in the Placing is on the basis that it is not and will not be a client of Numis or Cowen and that neither Numis nor Cowen has any duties or responsibilities to it for providing the protections afforded to its clients or customers under the rules of the FCA or FINRA, for providing advice in relation to the Placing, in respect of any representations, warranties, undertakings or indemnities contained in the Placing Agreement or for the exercise or performance of any of its rights and obligations thereunder, including any rights to waive or vary any conditions or exercise any termination right;
(ee) in order to ensure compliance with the Regulations, Numis (for itself and as agent on behalf of the Company) or the Company's registrars may, in their absolute discretion, require verification of its identity. Pending the provision to Numis or the Company's registrars, as applicable, of evidence of identity, definitive certificates in respect of the Placing Shares may be retained at Numis' absolute discretion or, where appropriate, delivery of the Placing Shares to it in uncertificated form, may be retained at Numis' or the Company's registrars', as the case may be, absolute discretion. If within a reasonable time after a request for verification of identity Numis (for itself and as agent on behalf of the Company) or the Company's registrars have not received evidence satisfactory to them, Numis and/or the Company may, at its absolute discretion, terminate its commitment in respect of the Placing, in which event the monies payable on acceptance of allotment will, if already paid, be returned without interest to the account of the drawee's bank from which they were originally debited;
(ff) Numis or Cowen may, and its affiliates acting as an investor for its or their own account(s) may subscribe for and/or purchase Placing Shares and, in that capacity may retain, purchase, offer to sell or otherwise deal for its or their own account(s) in the Placing Shares, any other securities of the Company or other related investments in connection with the Placing or otherwise. Accordingly, references in this Announcement to the Placing Shares being offered, subscribed, acquired or otherwise dealt with should be read as including any offer to, or subscription, acquisition or dealing by, Numis or Cowen and/or any of their respective affiliates acting as an investor for its or their own account(s). Neither Numis, Cowen nor the Company intend to disclose the extent of any such investment or transaction otherwise than in accordance with any legal or regulatory obligation to do so;
(gg) these terms and conditions and any agreements entered into by it pursuant to these terms and conditions, and all non-contractual or other obligations arising out of or in connection with them, shall be governed by and construed in accordance with the laws of England and Wales and it submits (on behalf of itself and on behalf of any person on whose behalf it is acting) to the exclusive jurisdiction of the English courts as regards any claim, dispute or matter arising out of any such contract, except that enforcement proceedings in respect of the obligation to make payment for the Placing Shares (together with any interest chargeable thereon) may be taken by the Company, Numis or Cowen in any jurisdiction in which the relevant Placee is incorporated or in which any of its securities have a quotation on a recognised stock exchange;
(hh) the Company, Numis and Cowen and their respective affiliates and others will rely upon the truth and accuracy of the foregoing agreements, acknowledgements, representations, warranties and undertakings (including in order to comply with United States and other securities laws) which are given to Numis and Cowen, on its own behalf and on behalf of the Company, and are irrevocable;
(ii) it irrevocably appoints any duly authorised officer of Numis as its agent for the purpose of executing and delivering to the Company and/or its registrars any documents on its behalf necessary to enable it to be registered as the holder of any of the Placing Shares for which it agrees to subscribe or purchase upon the terms of this Announcement;
(jj) it will indemnify on an after tax basis and hold the Company, Numis and Cowen and their respective affiliates harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of the representations, warranties, undertakings, agreements and acknowledgements in this Appendix and further agrees that the provisions of this Appendix shall survive after completion of the Placing;
(kk) its commitment to subscribe for Placing Shares on the terms set out herein and in the contract note will continue notwithstanding any amendment that may in future be made to the terms of the Placing and that Placees will have no right to be consulted or require that their consent be obtained with respect to the Company's conduct of the Placing; and
(ll) if at any time prior to delivery of the Placing Shares it becomes aware that any of the representations or warranties contained in this Appendix was false when made or has, as a result of changes in circumstances, become false or misleading, it undertakes to immediately notify Numis, Cowen and the Company of that fact.
8.2 The representations, warranties, acknowledgements and undertakings contained in this Appendix are given to Numis and Cowen for itself and on behalf of the Company and are irrevocable.
8.3 The agreement to settle a Placee's subscription (and/or the subscription of a person for whom such Placee is contracting as agent) free of stamp duty and stamp duty reserve tax depends on the settlement relating only to a subscription by it and/or such person direct from the Company for the Placing Shares in question. Such agreement assumes that the Placing Shares are not being subscribed for in connection with arrangements to issue depositary receipts or to transfer the Placing Shares into a clearance service. If there are any such arrangements, or the settlement relates to any other subsequent dealing in the Placing Shares, UK stamp duty or stamp duty reserve tax may be payable, for which neither the Company nor Numis nor Cowen will be responsible, and the Placee to whom (or on behalf of whom, or in respect of the person for whom it is participating in the Placing as an agent or nominee) the allocation, allotment, issue or delivery of Placing Shares has given rise to such UK stamp duty or stamp duty reserve tax undertakes to pay such UK stamp duty or stamp duty reserve tax forthwith and to indemnify on an after-tax basis and to hold harmless the Company, Numis and Cowen in the event that any of the Company and/or Numis and/or Cowen has incurred any such liability to UK stamp duty or stamp duty reserve tax. If this is the case, each Placee should seek its own advice and notify Numis accordingly.
8.4 In addition, Placees should note that they will be liable for any stamp duty and all other stamp, issue, securities, transfer, registration, documentary or other duties or taxes (including any interest, fines or penalties relating thereto) payable outside the United Kingdom by them or any other person on the subscription by them of any Placing Shares or the agreement by them to subscribe for any Placing Shares.
8.5 Each Placee, and any person acting on behalf of the Placee, acknowledges and agrees that Numis and Cowen do not owe any fiduciary or other duties to any Placee in respect of any representations, warranties, undertakings or indemnities in the Placing Agreement.
8.6 Each Placee and any person acting on behalf of each Placee, acknowledges and agrees that Numis and/or Cowen or any of its affiliates may, at their absolute discretion, agree to become a Placee in respect of some or all of the Placing Shares.
8.7 When a Placee or person acting on behalf of the Placee is dealing with Numis, any money held in an account with Numis on behalf of the Placee and/or any person acting on behalf of the Placee will not be treated as client money within the meaning of the rules and regulations of the FCA made under FSMA. The Placee acknowledges and agrees that the money will not be subject to the protections conferred by the client money rules; as a consequence, this money will not be segregated from Numis' money in accordance with the client money rules and will be used by Numis in the course of its own business; and the Placee will rank only as a general creditor of Numis (as applicable).
8.8 Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser.
8.9 Neither the content of the Company's website nor any website accessible by hyperlinks on the Company's website is incorporated in, or forms part of, this Announcement.
8.10 All times and dates in this Announcement may be subject to amendment. Numis and/or Cowen shall notify the Placees and any person acting on behalf of a Placee of any changes.
1 Dharmacon financial information is derived from consolidated US GAAP financial information of General Electric Company and prepared under carve-out accounting policies of General Electric Company; Dharmacon financial information was reviewed as part of the due diligence
2 Adjusted for additional transaction perimeter adjustments under carve-out accounting policies of General Electric Company
3 EBITDA is stated after $4 million of expensed R&D
4 Including restructuring costs
5 Dharmacon financial information is derived from consolidated US GAAP financial information of General Electric Company and prepared under carve-out accounting policies of General Electric Company; Dharmacon financial information was reviewed as part of the due diligence
6 Adjusted for additional transaction perimeter adjustments under carve-out accounting policies of General Electric Company
7 Based on Horizon's internal estimate
8 Dharmacon carve-out financial information is derived from consolidated US GAAP financials of General Electric Company and prepared under carve-out accounting policies of General Electric Company; Dharmacon financial information was reviewed as part of the due diligence; Based on GBP / USD of 1.3512 for the 2016 calendar year
9 Dharmacon's 2016 carve-out financials derived from consolidated US GAAP financials of General Electric Company
10 IFRS adjustments to research and development costs and corporate and administrative expenses
11 Including restructuring costs
12 Genome Editing Global Market-Forecast to 2022, IQ4I Research & Consultancy Pvt. Ltd, 2016
This information is provided by RNS
The company news service from the London Stock Exchange
END
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(END) Dow Jones Newswires
July 19, 2017 02:00 ET (06:00 GMT)
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