IP Group PLC Statement re Possible Offer (9310F)

TIDMIPO TIDMIVO

RNS Number : 9310F

IP Group PLC

23 May 2017

THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR INTO THE UNITED STATES OR IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION.

THIS IS AN ANNOUNCEMENT OF A POSSIBLE OFFER UNDER RULE 2.4 OF THE CITY CODE ON TAKEOVERS AND MERGERS (THE "CODE"). THIS ANNOUNCEMENT IS NOT AN ANNOUNCEMENT OF A FIRM INTENTION TO MAKE AN OFFER UNDER RULE 2.7 OF THE CODE AND THERE CAN BE NO CERTAINTY THAT AN OFFER WILL BE MADE.

THIS ANNOUNCEMENT CONSTITUTES INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATION (EU) NO.596/2014

IP Group plc ("IP Group" or the "Company") - possible offer for Touchstone Innovations plc ("Touchstone")

Introduction

IP Group announces that it recently made an approach to the Board of Touchstone regarding a possible combination with Touchstone (the "Combination"). The Board of Touchstone rejected the proposed Combination.

IP Group is also announcing today that it intends to raise gross proceeds of up to GBP200m through the issue of new IP Group shares at a price of 140 pence per share pursuant to a firm placing, placing, open offer and offer for subscription (the "Capital Raise"). The Combination is not conditional on the completion of the Capital Raise and the Capital Raise is not conditional on the completion of the Combination.

IP Group is required to make this announcement regarding the Combination ahead of the announcement of the Capital Raise.

The IP Group Directors consider that the Combination would create an international leader in IP commercialisation and an enlarged business with substantial capabilities that would be greater than the sum of the two parts. The Combination would allow both the Company's and Touchstone's shareholders to participate in any future value generated by the enlarged Group and its more diversified portfolio.

The possible all-share offer for Touchstone is being considered on the basis of the terms set out below (the "Possible Offer"). IP Group has received support for the Possible Offer from Touchstone shareholders representing, in aggregate, 51.8 per cent of Touchstone's issued share capital (further details of the irrevocable undertaking and letters of intent are set out in Schedule 1).

The IP Group Directors look forward to further engagement with Touchstone regarding this proposal.

The Possible Offer

The terms of the Possible Offer would comprise the issue of 2.1490 IP Group shares for each Touchstone share, subject to adjustment as set out below (the "Exchange Ratio") which, prior to the Capital Raise:

-- would result in Touchstone shareholders owning approximately 38 per cent of the enlarged share capital of IP Group; and

-- implies an offer value of 307 pence per Touchstone share, based on IP Group's closing share price of 143 pence on 22 May 2017.

The Exchange Ratio will be adjusted:

1. following admission and settlement of the new IP Group shares issued pursuant to the Capital Raise, to take into account the scale of the Capital Raise and the 2.1 per cent discount offered on IP Group shares offered as part of the Capital Raise. For example, if the amount raised by the Capital Raise is GBP200 million at 140 pence per IP Group share:

   a)       the Exchange Ratio would increase to 2.1581; 

b) Touchstone shareholders would own approximately 33 per cent of the enlarged share capital of IP Group; and

c) on the basis of the closing IP Group share price on 22 May 2017, the implied offer value would remain 307 pence per Touchstone share,

2. if, as a result of an increase in the IP Group share price, the implied offer value per Touchstone share were to become worth more than 320 pence (the "Offer Cap"). In such event, the number of IP Group shares to be issued per Touchstone share will be reduced such that the implied offer value per Touchstone share remains at 320 pence. The IP Group share price used for this adjustment will be calculated by reference to the volume weighted average price of an IP Group share over a set period.

The mechanics for the amendment of the Exchange Ratio under adjustment (2) above (including the date when it will be made) will be described fully in any announcement of a firm offer for Touchstone made under Rule 2.7 of the Code, if and when made. The Offer Cap is not a no increase statement and should not be taken to mean that the Exchange Ratio or Offer Cap cannot be increased in any announcement of a firm intention to make an offer pursuant to Rule 2.7 of the Code.

Background to and reasons for the Possible Offer

The IP Group Directors consider that the combination of Touchstone and IP Group would create an international leader in IP commercialisation and a combined business with substantial capabilities that is greater than the sum of the two parts.

Specifically, the IP Group Directors believe that a combination with Touchstone would provide the combined group with the following key benefits:

   1.       An enlarged platform for growth and investment; 
   2.       A larger portfolio with diversification across sectors and maturity of assets; 
   3.       An experienced team with complementary industry backgrounds; and 

4. Access to IP developed at Imperial College London and University College London adding to IP Group's existing partnerships with other leading UK research universities.

Management and employees

IP Group attaches great importance to the skills, knowledge and expertise of the existing management and employees of both companies. IP Group believes that the combined group will lead to opportunities for employees from both companies to progress in a business of greater scale.

IP Group confirms that it intends to safeguard fully the existing employment and pension rights of the management and employees of both companies in accordance with applicable law.

General and reservations to the Possible Offer

Under Rule 2.6(a) of the Code, IP Group must, by 5:00pm on 20 June 2017, either announce a firm intention to make an offer in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. This deadline will only be extended with the consent of the Takeover Panel in accordance with Rule 2.6(c) of the Code.

IP Group reserves the right to make an offer on less favourable terms than those set out in this announcement in the event that:

i. an agreement or recommendation in respect of such terms is reached with the Board of Touchstone; or

   ii.       an offer or possible offer for Touchstone is announced by a third party. 

In the event Touchstone announces, declares, pays or makes any dividend or distribution to Touchstone shareholders at any time, IP Group reserves the right to make an equivalent reduction in the terms of the Possible Offer.

In addition, IP Group reserves the right to introduce other forms of consideration and/or vary the proposed mix of consideration in any offer.

The Directors of IP Group accept responsibility for the information contained in this announcement. To the best of the knowledge and belief of the IP Group Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this document for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information.

For further information contact:

 
 IP Group plc 
 Alan Aubrey, Chief Executive 
  Officer                             [phone] 
 Greg Smith, Chief Financial 
  Officer                             [phone] 
                                      [phone]/+44 
 Liz Vaughan-Adams, Communications     (0) 7979 853802 
 
 Numis Securities Limited 
  (Joint Financial Adviser            [phone] 
  and Broker)                          1000 
 Michael Meade 
 James Black 
 Freddie Barnfield 
 
 Rothschild (Joint Financial          [phone] 
  Adviser)                             5000 
 Warner Mandel 
 Anton Black 
 
 Charlotte Street Partners 
 Andrew Wilson                        [phone] 
 Martha Walsh                         [phone] 
 

Important notices

This announcement is not intended to, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities whether pursuant to this announcement or otherwise. This announcement does not constitute a prospectus or a prospectus equivalent document. The shareholders of IP Group and Touchstone are advised to read carefully the formal documentation in relation to the Possible Offer once it has been despatched.

Overseas jurisdictions

The release, publication or distribution of this announcement in jurisdictions other than the United Kingdom may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the United Kingdom should inform themselves about, and observe any applicable requirements. This announcement has been prepared for the purposes of complying with English law and the Code and the information disclosed in this announcement may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws of jurisdictions outside the United Kingdom.

This announcement is not for publication or distribution, directly or indirectly, in or into the United States of America. This announcement is not an offer of securities for sale into the United States. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1993, as amended, and may not be offered or sold in the United States, except pursuant to an applicable exemption from registration. No public offering of securities is being made in the United States.

Disclosure requirements of the Code

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on [phone] if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Publication of this announcement

In accordance with Rule 26.1 of the Code, a copy of this announcement will be available on the website of IP Group at www.ipgroupplc.com/investor-relations/ by no later than 12 noon (London time) on the business day following this announcement. The content of the website referred to in this announcement is not incorporated into and does not form part of this announcement. A further announcement will be made by IP Group as and when appropriate.

Forward-looking statements

This announcement may contain certain "forward-looking statements". The forward-looking statements contained in this announcement include statements relating to IP Group's proposal to the Board of Touchstone, and other statements other than historical facts. Forward-looking statements often use words such as "believe", "expect", "estimate", "intend", "anticipate" and words of a similar meaning. You should not place undue reliance on these forward-looking statements, which reflect the current views of IP Group, are subject to risks and uncertainties about Touchstone and are dependent on many factors, some of which are outside of the control of IP Group. There are important factors, risks and uncertainties that could cause actual outcomes and results to be materially different, including that there can be no certainty that the approach in respect of the proposed transaction described in this announcement will result in a formal offer, nor as to the terms on which any such offer may be made. Except as required by law, IP Group undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

N M Rothschild & Sons Limited ("Rothschild"), which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively for IP Group and for no one else in connection with the subject matter of this announcement and Rothschild will not be responsible to anyone other than IP Group for providing the protections afforded to its clients or for providing advice in connection with the subject matter of this announcement.

Numis Securities Limited ("Numis") which is authorised and regulated by the Financial Conduct Authority is acting exclusively for IP Group and no-one else in connection with the subject matter of this announcement and Numis will not be responsible to anyone other than IP Group for providing the protections afforded to its clients or for providing advice in connection with the subject matter of this announcement.

Schedule 1

In accordance with Rule 2.10 of the Code, the Company announces that Woodford Investment Management Ltd has entered into a hard irrevocable undertaking in favour of the Company representing a shareholding of approximately 10.0 per cent in Touchstone to vote in favour of or accept any offer which is made by the Company (the "Irrevocable Undertaking"). Further details regarding the Irrevocable Undertaking are set out below.

The Company has also received a non-binding letter of intent from Woodford Investment Management Ltd in favour of the Company representing approximately 12.8 per cent of the share capital of Touchstone in issue on 31 January 2017.

In addition, the Company has received a non-binding letter of intent from Invesco Asset Management Ltd in favour of the Company representing approximately 29.0 per cent of the share capital of Touchstone in issue on 31 January 2017.

The Irrevocable Undertaking and the letters of intent in favour of the Company represent total shareholdings of approximately 51.8 per cent in Touchstone to vote in favour of, or accept, any offer which is made by the Company.

The Irrevocable Undertaking remains binding in the event of a higher, or any other, bid or offer for Touchstone.

The Irrevocable Undertaking will cease to be binding if, among other things:

i. the Company announces, with the consent of the Panel, and before the publication of any document containing details of any takeover offer within the meaning of section 974 of the Companies Act 2006 or the publication of any document to be sent to Touchstone shareholders containing amongst other things, details of any proposed scheme of arrangement under Part 26 of the Companies Act 2006 between Touchstone and Touchstone's shareholders in connection with any offer by the Company, that it does not intend to proceed with the Possible Offer and no new, revised or replacement scheme of arrangement or takeover offer is announced by the Company in accordance with Rule 2.7 of the Code;

ii. the takeover offer (or scheme of arrangement as applicable) does not become effective, is withdrawn or lapses in accordance with its terms, save for where the Possible Offer is withdrawn or lapses solely as a result of the Company exercising its right to implement the Possible Offer by way of takeover offer rather than a scheme of arrangement or vice versa or any competing offer is made which is declared wholly unconditional or otherwise becomes effective.

 
 Name of Touchstone     Number of Touchstone   Percentage of 
  shareholder            shares over which      Touchstone issued 
                         undertaking is         share capital 
                         given                  as at 31 January 
                                                2017 
---------------------  ---------------------  ------------------- 
 Woodford Investment 
  Management Ltd        16,120,413             10.0000 
---------------------  ---------------------  ------------------- 
 
 
 Name of Touchstone          Number of Touchstone   Percentage of 
  shareholder                 shares over which      Touchstone issued 
                              letter of intent       share capital 
                              is given               as at 31 January 
                                                     2017 
--------------------------  ---------------------  ------------------- 
 Woodford Investment 
  Management Ltd             20,636,738             12.8016 
--------------------------  ---------------------  ------------------- 
 Invesco Asset Management 
  Ltd                        46,750,000             29.0005 

--------------------------  ---------------------  ------------------- 
 

Schedule 2

Bases and sources

In this announcement:

i. Unless otherwise stated, all prices for IP Group shares are the closing price for the relevant date provided by the London Stock Exchange.

ii. References to the existing issued share capital of IP Group are to the number of IP Group shares in issue as at 22 May 2017, being the last Business Day prior to the date of this announcement, which was 565,221,967 IP Group shares. The international securities identification number for the IP Group shares is GB00B128J450.

iii. References to the existing issued share capital of Touchstone are to the number of Touchstone shares in issue as at 31 January 2017 and taken from Touchstone's results for the six months ended 31 January 2017, published on 31 March 2017, which was 161,204,124 Touchstone shares. The international securities identification number for the Touchstone shares is GB00B170L953.

This information is provided by RNS

The company news service from the London Stock Exchange

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May 23, 2017 02:02 ET (06:02 GMT)