Scarlet Bidco Limited Recommended Cash Offer for Servelec Group plc (2991X)

Share Name	Share Symbol	Market	Type	Share ISIN	Share Description
Servelec Group	LSE:SERV	London	Ordinary Share	GB00BFRBTP86	ORD 18P

	Price Change	% Change	Share Price	Bid Price	Offer Price	High Price	Low Price	Open Price	Shares Traded	Last Trade
	0.00	0.00%	312.00	312.00	313.00				0.00	01:00:00

Industry Sector	Turnover	Profit	EPS - Basic	PE Ratio	Market Cap
	0	0		N/A	0

Servelec (LSE:SERV)
Historical Stock Chart

From Apr 2019 to Apr 2024

TIDMSERV

RNS Number : 2991X

Scarlet Bidco Limited

23 November 2017

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

23 November 2017

RECOMMED CASH OFFER

for

Servelec Group plc

Scarlet Bidco Limited

(a newly formed company indirectly held by the Montagu Funds)

to be effected by means of a scheme of arrangement under Part 26 of the Companies Act 2006

Summary of the recommended cash offer

-- The boards of directors of Scarlet Bidco and Servelec are pleased to announce that they have reached agreement on the terms of a recommended cash offer pursuant to which Scarlet Bidco will acquire the entire issued and to be issued ordinary share capital of Servelec. The Offer is to be effected by means of a scheme of arrangement under Part 26 of the Companies Act 2006.

-- Under the terms of the Offer, Servelec Shareholders at the Scheme Record Time will be entitled to receive 313.1 pence in cash for each Servelec Share held, representing:

-- a premium of approximately 19.8 per cent. to the Closing Price per Servelec Share of 261.4 pence on 22 November 2017 (being the latest practicable date prior to the publication of this Announcement);

-- a premium of approximately 27.1 per cent. to the Volume Weighted Average Price per Servelec Share of 246.4 pence for the three months ended 22 November 2017 (being the latest practicable date prior to the publication of this Announcement); and

-- a premium of approximately 22.5 per cent. to the Volume Weighted Average Price per Servelec Share of 255.7 pence for the six months ended 22 November 2017 (being the latest practicable date prior to the publication of this Announcement).

-- The Offer values the entire issued and to be issued ordinary share capital of Servelec at approximately GBP223.9 million.

-- The Offer is conditional on, amongst other things, the approval of Servelec Shareholders and sanction of the Scheme by the Court. The Offer is further subject to the Conditions and further terms set out in Appendix I to this Announcement and to be set out in the Scheme Document.

Background to Montagu, Scarlet Bidco and Servelec

-- Montagu is one of Europe's longest-standing private equity firms and has been successfully investing in leading mid-market businesses for nearly fifty years. Since its formation in 1968, Montagu has invested in over 400 companies, across many different industry sectors including software, technology, transport, logistics, healthcare, business services, manufacturing and others. As at 31 October 2017, Montagu had EUR5.8 billion of assets under management.

-- Scarlet Bidco is a newly incorporated company which is indirectly held by the Montagu Funds. Scarlet Bidco was formed for the purpose of implementing the Offer. It has not traded prior to the date of this Announcement nor has it entered into any obligations other than in connection with the Offer.

-- Servelec is a UK-headquartered technology group, with significant intellectual property, providing software, hardware and services to the healthcare, social care and education, oil and gas, energy and utilities sectors. Servelec was founded in 1977 and has a strong technology and engineering heritage.

-- Servelec completed its initial public offering, listing on the Official List of the UKLA and being admitted to trading on the Main Market of the London Stock Exchange, on 2 December 2013 at a share price of 179 pence per Servelec Share, valuing the Servelec Group at GBP122.3 million. Since then, the Servelec Group has pursued a combined organic and acquisitive growth strategy, completing four acquisitions, funded by internally generated cash and bank debt.

-- The Servelec Group operates internationally and employs a highly skilled and knowledgeable workforce of approximately 600 people across its two divisions: Servelec HSC and Servelec Automation.

Background to and reasons for the Offer

-- Scarlet Bidco believes that the Servelec Group is one of the UK's leading technology businesses with strong, diverse product sets and market positions in both of its divisions. The Servelec Group has established and brought together a number of complementary businesses in Servelec HSC and has established specialist capabilities in Servelec Automation.

-- Scarlet Bidco, supported by Montagu, believes that it would be the best partner for the Servelec Group through its next stage of development as it seeks to capitalise on future growth opportunities. Montagu has significant experience of working with software and technology companies, bringing the benefits of its financial resources to help them achieve their longer term goals. Scarlet Bidco and Montagu believe that private ownership will enable Servelec to pursue opportunities that it would not be able to on the public markets. Scarlet Bidco will explore all options to support further growth by investing in operations, expanding the Servelec Group's domestic and international footprint and pursuing acquisition opportunities.

Background to and reasons for the recommendation

-- The Servelec Directors, in conjunction with Servelec's financial adviser, Investec, conducted a comprehensive review of the Servelec Group's strategic position. This review considered, amongst other options, the sale of the Servelec Group as a whole and the sale of one or both of the divisions. The review concluded that a sale of Servelec HSC would leave a sub-scale Servelec Automation business, whereas the sale of Servelec Automation would not provide sufficient additional financing to pursue Servelec HSC's organic and acquisitive growth strategy and as such a sale of the Servelec Group as a whole would be in the best interests of Servelec Shareholders.

-- The Servelec Directors have evaluated the Offer on behalf of Servelec Shareholders as a whole and have held detailed discussions regarding the terms of the potential acquisition of Servelec by Scarlet Bidco. These discussions have resulted in the Offer at a price of 313.1 pence in cash for each Servelec Share.

-- Whilst the Servelec Directors believe there is potential for future growth in the equity value of the Servelec Group for Servelec Shareholders, they recognise that the Servelec Group operates in a number of distinct markets, each of which is competitive and requires a different strategy. Given this context and the Servelec Group's business models, the Servelec Directors recognise the benefits to Servelec in having a partner like Scarlet Bidco, supported by Montagu's international presence, relevant industry network and commitment to the ongoing investment requirements of the Servelec Group.

-- The Offer will provide the Servelec Group with enhanced financial and operational flexibility as it seeks to execute its strategy.

-- The Servelec Directors have assessed the benefits of maintaining an independent public markets listing and the potential future growth in equity value for Servelec Shareholders against the inherent uncertainty of delivering this future value that exists in any business. The Servelec Directors have further considered the certainty for Servelec Shareholders of realising the value of their investment in cash and at an attractive premium to both the current share price and the share price of 179 pence per Servelec Share at the time of its initial public offering on 2 December 2013.

Recommendation

-- The Servelec Directors, who have been so advised by Investec as to the financial terms of the Offer, consider the terms of the Offer to be fair and reasonable and in the best interests of Servelec Shareholders as a whole. In providing advice to the Servelec Directors, Investec has taken into account the commercial assessments of the Servelec Directors.

-- Accordingly, the Servelec Directors intend to recommend unanimously that Servelec Shareholders vote in favour of the Scheme at the Court Meeting and that Servelec Shareholders vote in favour of the resolution to be proposed at the General Meeting as the Servelec Directors have irrevocably undertaken to do in respect of their own beneficial holdings amounting, in aggregate, to 1,522,374 Servelec Shares representing approximately 2.2 per cent. of the issued ordinary share capital of Servelec as at 22 November 2017 (being the latest practicable date prior to the publication of this Announcement).

Irrevocable undertakings and letters of intent

-- Scarlet Bidco has, in total, received irrevocable undertakings and letters of intent to vote in favour of the Scheme in respect of 22,957,294 Servelec Shares representing, in aggregate, approximately 32.9 per cent. of the issued ordinary share capital of Servelec as at 22 November 2017 (being the latest practicable date prior to the publication of this Announcement).

Next steps

-- The Offer will be put to Servelec Shareholders at the Court Meeting and at the General Meeting. In order to become effective, the Scheme must be approved by a majority in number of the Servelec Shareholders voting at the Court Meeting, either in person or by proxy, representing at least 75 per cent. in value of the Servelec Shares voted. In addition, a special resolution implementing certain matters in connection with the Scheme must be passed by Servelec Shareholders representing at least 75 per cent. of votes cast at the General Meeting.

-- The Scheme Document, containing further information about the Offer and notices of the Court Meeting and the General Meeting, will be published as soon as practicable and, in any event, (save with the consent of the Panel) within 28 days of this Announcement.

Commenting on the Offer, Edward Shuckburgh, Director of Scarlet Bidco, said:

"Servelec has two high quality divisions with significant growth opportunities, both organically and through potential acquisitions. We are excited to work with management and employees to support the Servelec Group's growth by investing in and expanding its strong market positions domestically and internationally, leveraging Montagu's experience, network and resources to strengthen the business."

Commenting on the Offer, Richard Last, Chairman and Non-Executive Director of Servelec, said:

"Servelec Group has made good progress in the four years since its IPO, growing both organically and through acquisition. The offer from Montagu represents an attractive and certain value, in cash, today for our shareholders. Investors who invested at the IPO will have achieved a total return of approximately 185% on that investment, including dividends. We are pleased that Montagu will continue to support the ongoing organic and acquisitive growth strategy in place. I would like to take this opportunity to thank all the employees at Servelec Group for all their hard work and support."

This summary should be read in conjunction with the full text of this Announcement. The Offer will be subject to the Conditions and further terms set out in Appendix I to this Announcement and to the full terms and conditions which will be set out in the Scheme Document. Appendix II to this Announcement contains the sources of information and bases of calculations of certain information contained in this Announcement, Appendix III contains a summary of the irrevocable undertakings and letters of intent received in relation to the Offer and Appendix IV contains definitions of certain expressions used in this summary and in this Announcement.

Enquiries:

 
 Scarlet Bidco                               via Greenbrook 
 Edward Shuckburgh / Neil Graham 
 
 Raymond James (financial adviser                +44 (0) 20 
  to Scarlet Bidco and Montagu)                   3798 5700 
 Dominic Emery / Joel Greenwood 
  Joseph Donnelly / Max Vandewall 
 
 Greenbrook Communications (PR adviser           +44 (0) 20 
  to Scarlet Bidco and Montagu)                   7952 2000 
 Andrew Honnor / Alex Jones / Ryan 
  Smith 
 
 Servelec                                       via Tulchan 
 Richard Last, Chairman and Non-Executive 
  Director 
  Alan Stubbs, Chief Executive Officer 
  Mike Cane, Chief Financial Officer 
  Pamela Weeks, Head of Corporate 
  Communications 
 Investec Bank plc (Rule 3 financial 
  adviser and corporate broker to                +44 (0) 20 
  Servelec)                                       7597 5970 
 Corporate Finance 
  Andrew Pinder / Sebastian Lawrence 
  Corporate Broking 
  Patrick Robb / Matt Lewis / Rob 
  Baker 
 Tulchan Communications (PR adviser              +44 (0) 20 
  to Servelec)                                    7353 4200 
 James Macey White / Matt Low

Important notices

Raymond James Financial International Limited is authorised and regulated by the Financial Conduct Authority in the UK. Raymond James is acting exclusively as financial adviser to Scarlet Bidco and Montagu and no one else in connection with the Offer and will not be responsible to anyone other than Scarlet Bidco and Montagu for providing the protections afforded to clients of Raymond James nor for providing advice in connection with the Offer or any matter referred to in this Announcement.

Investec Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the UK. Investec is acting exclusively for Servelec and no one else in connection with the Offer and will not be responsible to anyone other than Servelec for providing the protections afforded to clients of Investec nor for providing advice in connection with the Offer or any matter referred to in this Announcement.

This Announcement is for information purposes only and does not constitute an offer to sell or an invitation to purchase or subscribe for any securities or the solicitation of an offer to buy any securities or the solicitation of any vote or approval in any jurisdiction, pursuant to the Offer or otherwise. The Offer will be made solely by means of the Scheme Document (or, if Scarlet Bidco so elects, any document by which the Offer is made by way of a takeover offer) which will contain the full terms and conditions of the Offer, including details of how to vote in respect of the acquisition.

This Announcement has been prepared for the purpose of complying with English law and the Takeover Code and the information disclosed may not be the same as that which would have been disclosed if this Announcement had been prepared in accordance with the laws of jurisdictions outside of England.

Servelec will prepare the Scheme Document to be distributed to Servelec Shareholders. Servelec and Scarlet Bidco urge Servelec Shareholders to read the Scheme Document when it becomes available because it will contain important information relating to the Offer.

This Announcement does not constitute a prospectus or prospectus equivalent document.

Overseas Shareholders

The release, publication or distribution of this Announcement in certain jurisdictions may be restricted by law. Persons who are not resident in the United Kingdom or who are subject to other jurisdictions should inform themselves of, and observe, any applicable requirements.

Unless otherwise determined by Scarlet Bidco or required by the Takeover Code, and permitted by applicable law and regulation, the Offer will not be made available, directly or indirectly, in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction and no person may vote in favour of the Offer by any means, instrumentality or form within a Restricted Jurisdiction or any other jurisdiction if to do so would constitute a violation of the laws of that jurisdiction. Accordingly, copies of this Announcement and all documents relating to the Offer are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or from a Restricted Jurisdiction where to do so would violate the laws of that jurisdiction, and persons receiving this Announcement and all documents relating to the Offer (including custodians, nominees and trustees) must not mail or otherwise distribute or send them in, into or from such jurisdictions where to do so would violate the laws of that jurisdiction.

The availability of the Offer to Servelec Shareholders who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdiction in which they are resident. Persons who are not resident in the United Kingdom should inform themselves of, and observe, any applicable requirements. Any failure to comply with the applicable restrictions may constitute a violation of the securities laws of any such jurisdiction. To the fullest extent permitted by applicable law, the companies and persons involved in the Offer disclaim any responsibility or liability for the violation of such restrictions by any person.

The Offer will be subject to the applicable requirements of the Takeover Code, the Panel, the London Stock Exchange, the Financial Conduct Authority and the UKLA.

Notice to US Shareholders

The Offer relates to shares of an English incorporated and registered company and is proposed to be effected by means of a scheme of arrangement under English law. A transaction effected by means of a scheme of arrangement is not subject to proxy solicitation or tender offer rules under the US Securities Exchange Act of 1934 (the "US Exchange Act"). Accordingly, the Offer is subject to the disclosure requirements, rules and practices applicable in the United Kingdom to schemes of arrangement, which differ from the requirements of US proxy solicitation or tender offer rules. However, if Scarlet Bidco were to elect to implement the Offer by means of a takeover offer, such takeover offer will be made in compliance with all applicable US laws and regulations. Such a takeover would be made in the United States by Scarlet Bidco and no one else.

In accordance with normal UK practice and pursuant to Rule 14e-5(b) of the US Exchange Act, Scarlet Bidco, certain affiliated companies and their respective nominees or brokers (acting as agents) may make certain purchases of, or arrangements to purchase, Servelec Shares, other than pursuant to the Offer, until the date on which the Offer and/or Scheme becomes effective, lapses or is otherwise withdrawn. If such purchases or arrangements to purchase were to be made they would be made outside the United States and would comply with applicable law, including the US Exchange Act.

The information contained in this Announcement has neither been approved nor disapproved by the US Securities and Exchange Commission (the "SEC") or any US state securities commission. Neither the SEC, nor any state securities commission, has passed upon or determined the fairness or merits of the proposal described in, nor upon the accuracy or adequacy of the information contained in, this Announcement.

The financial information included in this Announcement has been prepared in accordance with accounting standards applicable in the United Kingdom that may not be comparable to the financial statements of US companies. US generally accepted accounting principles differ in certain respects from IFRS used in the United Kingdom. None of the financial information in this Announcement has been audited in accordance with auditing standards generally accepted in the United States or the auditing standards of the Public Accounting Oversights Board (United States).

The receipt of cash pursuant to the Offer by a US Shareholder as consideration pursuant to the terms of the Offer may be a taxable transaction for US federal income tax purposes and under applicable US state and local, as well as foreign and other, tax laws. Each US Shareholder is urged to consult his independent professional adviser immediately regarding the tax consequences of the Offer applicable to him or her.

It may be difficult for US Shareholders to enforce their rights and claims arising out of the US federal securities laws, since Scarlet Bidco and Servelec are located in countries other than the US and some or all of their officers and directors may be residents of countries other than the US. US Shareholders may not be able to sue a non-US company or its officers or directors in a non-US court for violations of US securities laws. Further, it may be difficult to compel a non-US company and its affiliates to subject themselves to a US court's judgement.

Forward-looking statements

This Announcement contains statements about Scarlet Bidco and Servelec that are or may be forward-looking statements. All statements other than statements of historical facts included in this Announcement may be forward-looking statements. Without limitation, any statements preceded or followed by or that include the words "targets", "plans", "believes", "expects", "aims", "intends", "will", "shall", "may", "anticipates", "estimates", "projects" or words or terms of similar substance or the negative thereof, are forward-looking statements. Forward-looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of Scarlet Bidco's or Servelec's operations and potential synergies resulting from the Offer; and (iii) the effects of government regulation on Scarlet Bidco's or Servelec's business.

Such forward-looking statements involve risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results to differ materially from those projected or implied in any forward-looking statements. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date of this Announcement. Other than in accordance with their legal or regulatory obligations (including, to the extent applicable, under the Listing Rules and the Disclosure Guidance and Transparency Rules, each of the Financial Conduct Authority), Scarlet Bidco and Servelec each disclaim any obligation to update any forward-looking or other statements contained in this Announcement, whether as a result of new information, future events or otherwise.

No profit forecasts or estimates

No statement in this Announcement is intended as a profit forecast or estimate for any period and no statement in this Announcement should be interpreted to mean that earnings or earnings per share for Servelec for the current or future financial years would necessarily match or exceed the historical published earnings or earnings per share for Servelec.

Disclosure requirements of the Takeover Code

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

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

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

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

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Panel's website at http://www.thetakeoverpanel.org.uk/, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

In accordance with Rule 2.9 of the Takeover Code, Servelec confirms that as at the date of this Announcement, it has in issue and admitted to trading on the Main Market of the London Stock Exchange 69,843,173 ordinary shares of 18 pence each (and holds no shares in treasury). The International Securities Identification Number (ISIN) of the ordinary shares is GB00BFRBTP86.

Electronic communications

Please be aware that addresses, electronic addresses and certain information provided by Servelec Shareholders, persons with information rights and other relevant persons for the receipt of communications from Servelec may be provided to Scarlet Bidco during the Offer Period if requested under Section 4 of Appendix 4 of the Takeover Code to comply with Rule 2.11(c) of the Takeover Code.

Publication on website and availability of hard copies

A copy of this Announcement will be made available subject to certain restrictions relating to persons resident in Restricted Jurisdictions on Servelec's website at www.servelec-group.com/investor-relations and Scarlet Bidco's website at www.montagu.com/news/ by no later than 12 noon (London time) on 24 November 2017. For the avoidance of doubt, the contents of those websites are not incorporated into and do not form part of this Announcement.

Servelec Shareholders may request a hard copy of this Announcement by contacting Link Asset Services at 34 Beckenham Road, Beckenham, Kent, BR3 4TU or on 0371 664 0300 or if calling from outside the UK on +44 (0) 371 664 0300. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Link Asset Services is open between 9.00 a.m. to 5.30 p.m., Monday to Friday excluding public holidays in England and Wales. You may also request that all future documents, announcements and information to be sent to you in relation to the Offer should be in hard copy form.

Rounding

Certain figures included in this Announcement have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

23 November 2017

RECOMMED CASH OFFER

for

Servelec Group plc

Scarlet Bidco Limited

(a newly formed company indirectly held by the Montagu Funds)

to be effected by means of a scheme of arrangement

under Part 26 of the Companies Act 2006

   1        Introduction

The boards of directors of Scarlet Bidco and Servelec are pleased to announce that they have reached agreement on the terms of a recommended cash offer pursuant to which Scarlet Bidco will acquire the entire issued and to be issued ordinary share capital of Servelec (the "Offer"). The Offer is to be effected by means of a scheme of arrangement under Part 26 of the Companies Act.

   2        The Offer

Under the terms of the Offer, which will be subject to the Conditions and further terms set out in Appendix I to this Announcement and to be set out in the Scheme Document, Servelec Shareholders at the Scheme Record Time will be entitled to receive:

   for each Servelec Share                                     313.1 pence in cash

The Offer values the entire issued and to be issued ordinary share capital of Servelec at approximately GBP223.9 million and represents:

If, after the date of this Announcement, any dividend and/or other distribution and/or other return of capital is declared, made or paid or becomes payable in respect of the Servelec Shares, Scarlet Bidco reserves the right to reduce the Offer Price by an amount up to the amount of such dividend and/or distribution and/or return of capital.

It is expected that the Scheme Document will be published as soon as practicable and, in any event, (save with the consent of the Panel) within 28 days of this Announcement and that the Scheme will become effective by the middle of January 2018, subject to the satisfaction or waiver of the Conditions and certain other terms set out in Appendix I to this Announcement.

   3        Background to the Offer

Scarlet Bidco believes that the Servelec Group is one of the UK's leading technology businesses with strong, diverse product sets and market positions in both of its divisions. The Servelec Group has established and brought together a number of complementary businesses in Servelec HSC and has established specialist capabilities in Servelec Automation.

Scarlet Bidco, supported by Montagu, believes that it would be the best partner for the Servelec Group through its next stage of development as it seeks to capitalise on future growth opportunities. Montagu has significant experience of working with software and technology companies, bringing the benefits of its financial resources to help them achieve their longer term goals. Scarlet Bidco and Montagu believe that private ownership will enable Servelec to pursue opportunities that it would not be able to on the public markets. Scarlet Bidco will explore all options to support further growth by investing in operations, expanding the Servelec Group's domestic and international footprint and pursuing acquisition opportunities.

   4        Recommendation

The Servelec Directors, who have been so advised by Investec as to the financial terms of the Offer, consider the terms of the Offer to be fair and reasonable and in the best interests of Servelec Shareholders as a whole. In providing advice to the Servelec Directors, Investec has taken into account the commercial assessments of the Servelec Directors.

Accordingly, the Servelec Directors intend to recommend unanimously that Servelec Shareholders vote in favour of the Scheme at the Court Meeting and the resolution to be proposed at the General Meeting as the Servelec Directors have irrevocably undertaken to do in respect of their own beneficial holdings amounting, in aggregate, to 1,522,374 Servelec Shares representing approximately 2.2 per cent. of the issued ordinary share capital of Servelec as at 22 November 2017 (being the latest practicable date prior to the publication of this Announcement).

   5        Background to and reasons for the recommendation

The Servelec Directors, in conjunction with Servelec's financial adviser, Investec, conducted a comprehensive review of the Servelec Group's strategic position. This review considered, amongst other options, the sale of the Servelec Group as a whole and the sale of one or both of the divisions. The review concluded that a sale of Servelec HSC would leave a sub-scale Servelec Automation business, whereas the sale of Servelec Automation would not provide sufficient additional financing to pursue Servelec HSC's organic and acquisitive growth strategy and as such a sale of the Servelec Group as a whole would be in the best interests of Servelec Shareholders.

The Servelec Directors have evaluated the Offer on behalf of Servelec Shareholders as a whole and have held detailed discussions regarding the terms of the potential acquisition of Servelec by Scarlet Bidco. These discussions have resulted in the Offer at a price of 313.1 pence in cash for each Servelec Share.

In evaluating the Offer, the Servelec Directors have considered the interests of Servelec's employees and customers, as well as the economic benefits to Servelec Shareholders.

Whilst the Servelec Directors believe there is potential for future growth in the equity value of the Servelec Group for Servelec Shareholders, they recognise that the Servelec Group operates in a number of distinct markets, each of which is competitive and requires a different strategy. Given this context and the Servelec Group's business models, the Servelec Directors recognise the benefits to Servelec in having a partner like Scarlet Bidco, supported by Montagu's international presence, relevant industry network and commitment to the ongoing investment requirements of the Servelec Group.

The Offer will provide the Servelec Group with enhanced financial and operational flexibility as it seeks to execute its strategy.

The Servelec Directors have assessed the benefits of maintaining an independent public markets listing and the potential future growth in equity value for Servelec Shareholders against the inherent uncertainty of delivering this future value that exists in any business. The Servelec Directors have further considered the certainty for Servelec Shareholders of realising the value of their investment in cash and at an attractive premium to both the current share price and the share price of 179 pence per Servelec Share at the time of its initial public offering on 2 December 2013.

   6        Irrevocable undertakings and letters of intent

Scarlet Bidco has received irrevocable undertakings from each of the Servelec Directors to vote in favour of the Scheme at the Court Meeting and the resolution to be proposed at the General Meeting, in respect of their entire beneficial holdings amounting to, in aggregate, 1,522,374 Servelec Shares, representing approximately 2.2 per cent. of the issued ordinary share capital of Servelec as at 22 November 2017 (being the latest practicable date prior to the publication of this Announcement).

Scarlet Bidco has also received irrevocable undertakings to vote in favour of the Scheme at the Court Meeting and the resolution to be proposed at the General Meeting from Herald Investment Management Limited (on behalf of Herald Investment Trust plc), LOIM, Marlborough Fund Managers Limited and NFU Mutual Insurance Society Limited in respect of, in aggregate, 7,602,938 Servelec Shares representing approximately 10.9 per cent. of the issued ordinary share capital of Servelec as at 22 November 2017 (being the latest practicable date prior to the publication of this Announcement).

Further, Scarlet Bidco has received non-binding letters of intent from GVQ Investment Management Limited, Harwood Capital LLP (on behalf of Oryx International Growth Fund Limited) and Schroder Investment Management Limited to vote in favour of the Scheme at the Court Meeting and the resolution to be proposed at the General Meeting in respect of, in aggregate, 13,821,982 Servelec Shares, representing approximately 19.8 per cent. of the issued ordinary share capital of Servelec as at 22 November 2017 (being the latest practicable date prior to the publication of this Announcement).

Scarlet Bidco has therefore received irrevocable undertakings or letters of intent in respect of a total of 22,957,294 Servelec Shares representing, in aggregate, approximately 32.9 per cent. of the issued ordinary share capital of Servelec as at 22 November 2017 (being the latest practicable date prior to the publication of this Announcement).

Further details of these irrevocable undertakings (including the circumstances in which they will fall away) and these letters of intent are set out in Appendix III to this Announcement.

   7        Information on Montagu

Montagu is one of Europe's longest standing private equity firms and has been successfully investing in leading mid-market businesses for nearly fifty years. Since its formation in 1968, Montagu has invested in over 400 companies, across many different industry sectors including software, technology, transport, logistics, healthcare, business services, manufacturing and others. As at 31 October 2017, Montagu had EUR5.8 billion of assets under management.

Montagu's investment model involves developing a company's strategy in cooperation with management and providing the financial, strategic and operational support necessary to realise it. Montagu focuses on supporting incumbent management teams and has significant experience in helping businesses execute on a range of growth strategies, for instance in supporting M&A, expanding internationally and investing into core operations.

Montagu has a long track record of investing in software, healthcare and industrial technology businesses similar to Servelec. Previous and current examples include: Clinisys, a clinical laboratory information management company; Open GI, an insurance software company; and ADB, an industrial technology company.

   8        Information on Scarlet Bidco

Scarlet Bidco is a newly incorporated company which is indirectly held by the Montagu Funds. Scarlet Bidco was formed for the purpose of implementing the Offer. It has not traded prior to the date of this Announcement nor has it entered into any obligations other than in connection with the Offer.

   9        Information on Servelec

Servelec is a UK-headquartered technology group, with significant intellectual property, providing software, hardware and services to the healthcare, social care and education, oil and gas, energy and utilities sectors. Servelec was founded in 1977 and has a strong technology and engineering heritage.

Servelec completed its initial public offering, listing on the Official List of the UKLA and being admitted to trading on the Main Market of the London Stock Exchange, on 2 December 2013 at a share price of 179 pence per Servelec Share, valuing the Servelec Group at GBP122.3 million. Since then, the Servelec Group has pursued a combined organic and acquisitive growth strategy, completing four acquisitions, funded by internally generated cash and bank debt.

The Servelec Group operates internationally and employs a highly skilled and knowledgeable workforce of approximately 600 people across its two divisions: Servelec HSC and Servelec Automation.

Servelec HSC specialises in the design, development, deployment and support of software in healthcare together with social care and education within local government. Servelec HSC has over 20 years' experience in developing clinically-driven, enterprise-wide solutions for use within the NHS and private healthcare organisations and has a software suite that covers Electronic Patient Records, Patient Administration Systems, Patient Flow Bed Management, Clinical Information Systems, e-Observations and e-Prescribing technologies which are fully supported on mobile and portal solutions. Within a social care setting, Servelec provides its case management system across adults, children and finance, supporting all the activities of a social care practice (case notes, reviews and demographic details) and also includes financial management systems (contract management, budget reviews, payments) to control effectively all financial elements related to the delivery of social care - all of which are fully supported on mobile and portal solutions. Supporting education services within local government, the Synergy suite records and manages all aspects of children's services to enable information sharing and provide full visibility of each and every individual giving users the insight they need to make key decisions, resulting in improved outcomes for children and young people.

Servelec Automation provides complex, mission-critical control systems and standalone products to large, blue-chip companies in industries essential to national infrastructure. Servelec Automation operates through two distinct businesses.

-- Servelec Controls develops and integrates mission-critical systems for blue-chip clients in national infrastructure sectors by bringing together specialist hardware, software and world-class engineering to provide control, monitoring and safety solutions. Vendor independent solutions save organisations time and money, minimising risk in hazardous and volatile settings.

-- Servelec Technologies provides a range of hardware and software that delivers end-to-end data acquisition, management, control and optimisation, to make customer operations more efficient and effective. Working across global infrastructure sectors including water, rail, energy, navigation and broadcast, Servelec Technologies sells telemetry products, including remote telemetry units ("RTUs") and associated software solutions through a global distribution network.

   10      Servelec trading update

On 11 September 2017, Servelec released its Interim Results for the six month period ended 30 June 2017, a copy of which can be found at www.servelec-group.com/investor-relations/results-reports/. Since 30 June 2017, Servelec has continued to trade in line with revised expectations.

In Servelec HSC, Corelogic has recently signed a large Mosaic contract which helps to underpin the current year's expectations, however there are delays in decisions on other Social Care procurements, which had previously been anticipated for Q4 2017. In Servelec Automation, large AMP-6 RTU opportunities have not yet materialised and the Servelec Board continues to monitor the previously advised GBP2.6 million debt position in Turkey where there has been no material progress.

   11      Employees, management and locations

Scarlet Bidco attaches importance to the skills, experience and industry knowledge of the existing management and employees of Servelec. It has worked closely with the Servelec management team to understand the key areas of their strategy and plans for the business.

Following completion of the Offer, Scarlet Bidco intends to support the Servelec Group and its employees in executing management's existing strategy, which entails:

-- in Servelec HSC, continuing to support the existing product range and customer base, as well as continuing to invest in development of the product range; and

-- in Servelec Automation, continuing to invest in the division's hardware and software products and further building on the division's sales and distribution infrastructure.

Under Servelec management's existing plans, Scarlet Bidco understands that there is no expectation of changes that would materially impact the number of Servelec employees or their conditions of employment (including their entitlement to pensions contributions), the locations of Servelec's places of business or its fixed assets.

Following completion of the Offer, Scarlet Bidco intends to work with Servelec management to complete a full evaluation of the Servelec Group and its strategy, operations and organisational structure, which will consider both the short and long-term objectives for the business. The evaluation will focus on all aspects of the Servelec business and the opportunities available to it, including:

-- investing in existing product ranges across the Servelec Group to ensure that they meet the needs of existing and future clients;

-- developing new product ranges to take advantage of growth opportunities fitting the capabilities of the business, particularly where Servelec's expertise and extensive intellectual property brings a competitive advantage;

-- both investing in existing, and developing new, distribution channels to expand the addressable market both domestically and internationally; and

-- making bolt-on acquisitions of companies that support the overall strategy of expanding the product range and the addressable customer base across both divisions.

Scarlet Bidco does not reasonably expect that this evaluation will lead to any changes that would materially impact the number of Servelec employees or their conditions of employment (including their entitlement to pensions contributions), the locations of Servelec's places of business or its fixed assets.

As part of the evaluation of the Servelec Group, Scarlet Bidco will consider whether to maintain both divisions as part of the Servelec Group or to move towards a business model of two separate stand-alone companies. In the event of a split into two separate companies, each company would cease to be part of a single Servelec Group. Scarlet Bidco does not reasonably expect that this would result in any changes that would materially impact the number of employees within each company or their conditions of employment (including their entitlement to pensions contributions), the locations of each company's existing and future places of business or each company's fixed assets.

Following completion of the Offer, the existing employment rights, including pension rights, of the management and employees of Servelec will be fully safeguarded.

Each of Richard Last and Roger McDowell has confirmed that he intends to resign from the Servelec Board conditional upon, and with effect from, the Scheme becoming effective.

Following the Effective Date, it is likely that Scarlet Bidco will put in place incentivisation scheme(s) for certain members of the Servelec management team. Scarlet Bidco envisages that the incentivisation under these scheme(s) would allow, subject to the performance of the Servelec Group, such persons and other senior employees to participate in an element of the proceeds on any future sale of the Servelec Group. At the time of this Announcement, there have been no discussions in respect of the terms of any such arrangements with any person.

The Servelec Board welcomes Scarlet Bidco's intention to support the existing strategy of the Servelec management team and to continue investing in developing the Servelec Group.

The Servelec Directors acknowledge that Scarlet Bidco will evaluate the business following completion of the Offer and understand the likely areas of focus of such evaluation. The Servelec Directors do not expect this will result in any changes materially impacting the number of employees within the Servelec Group or their conditions of employment (including their entitlement to pensions contributions), the locations of Servelec Group's existing and future places of business or Servelec Group's fixed assets.

   12      Servelec Share Schemes

Participants in the Servelec Share Schemes will be contacted regarding the effect of the Offer on their rights under the Servelec Share Schemes and appropriate proposals will be made to such participants in due course. The outstanding options under the Servelec SAYE will become exercisable on the sanction of the Scheme by the Court and will remain exercisable for the following six months. Outstanding options under the Servelec SAYE will be exercisable to the extent savings have been made up to the relevant exercise date. The Scheme will extend to any Servelec Shares which are unconditionally allotted, issued or transferred to satisfy the exercise of existing options or vesting of awards under the Servelec Share Schemes prior to the Scheme Record Time.

Further details of the terms of such proposals will be included in the Scheme Document and in separate letters to be sent to participants in the Servelec Share Schemes.

   13      Financing

The cash consideration payable under the Offer is being financed by equity to be invested indirectly by the Montagu Funds.

Pursuant to a subscription agreement entered into between (among others) the Montagu Funds, Scarlet Topco Limited and Scarlet Bidco dated 23 November 2017 (the "Subscription Agreement"), the Montagu Funds have entered into commitments to subscribe for securities in, or otherwise to provide financing to, Scarlet Topco Limited, the ultimate parent undertaking of Scarlet Bidco and certain intermediate holding companies of Scarlet Bidco, conditional upon the Scheme becoming effective or, if the Offer is implemented by way of a takeover offer, such takeover offer being declared unconditional as to acceptances. Scarlet Topco Limited and the intermediate holding companies of Scarlet Bidco have each given corresponding commitments to ensure that the cash proceeds of such commitments are provided to Scarlet Bidco.

Raymond James, financial adviser to Scarlet Bidco and Montagu, is satisfied that sufficient resources are available to satisfy in full the cash consideration payable to Servelec Shareholders under the terms of the Offer.

   14      Offer-related arrangements

Confidentiality Agreement

Montagu and Servelec have entered into the Confidentiality Agreement pursuant to which Montagu has undertaken to keep confidential information relating to Servelec and not to disclose it to third parties (other than to permitted disclosees) unless required by law or regulation. These confidentiality obligations will remain in force until the earlier of completion of the Offer and 30 September 2018. The Confidentiality Agreement further includes customary non-solicitation and standstill obligations on Montagu.

Cooperation Agreement

Scarlet Bidco and Servelec have entered into the Cooperation Agreement pursuant to which: (i) Scarlet Bidco has undertaken to cooperate with Servelec in providing it with necessary information and assistance in connection with preparation of the Scheme Document; (ii) Scarlet Bidco and Servelec have agreed to take actions necessary to implement certain proposals in relation to the Servelec Share Schemes; and (iii) Scarlet Bidco has reserved its right, with the consent of the Panel, to implement the Offer by way of a takeover offer in certain circumstances.

The Cooperation Agreement will terminate in certain circumstances, including if: (a) the Offer is not or ceases to be recommended by the Servelec Directors; (b) a competing proposal is recommended by the Servelec Directors; (c) the Offer is withdrawn or lapses (other than as a result of Scarlet Bidco switching to a takeover offer to acquire the issued and to be issued share capital of Servelec, or where such withdrawal or lapse is followed by an announcement by Scarlet Bidco or a person acting in concert with Scarlet Bidco of a firm intention to implement an offer on substantially the same or improved terms); (d) the Effective Date has not occurred on or before the Long Stop Date; or (e) Scarlet Bidco and Servelec otherwise agree.

   15      Structure of the Offer

It is intended that the Offer will be effected by means of a Court-approved scheme of arrangement between Servelec and Servelec Shareholders under Part 26 of the Companies Act.

The purpose of the Scheme is to provide for Scarlet Bidco to become the holder of the entire issued and to be issued ordinary share capital of Servelec. This is to be achieved by the transfer of the Servelec Shares to Scarlet Bidco, in consideration for which the Servelec Shareholders will receive cash consideration on the basis set out in paragraph 2 above.

The Scheme is subject to the Conditions and further terms set out in Appendix I to this Announcement and to be set out in the Scheme Document. In particular, the Scheme will be subject to the following conditions:

(i) its approval by a majority in number of the Servelec Shareholders who are present and vote, whether in person or by proxy, at the Court Meeting, representing 75 per cent. or more in value of the Servelec Shares voted by those Servelec Shareholders at that meeting;

(ii) the resolution required to implement certain matters in connection with the Scheme (including: (i) amendments to Servelec's articles of association to ensure that any Servelec Shares issued between approval of the Scheme at the Court Meeting and the Scheme Record Time will be subject to the Scheme and that any Servelec Shares issued after the Scheme Record Time will automatically be acquired by Scarlet Bidco; and (ii) the approval of the re-registration of Servelec as a private limited company and related change of name of Servelec Group plc, each conditional on the cancellation of trading in Servelec Shares on the Main Market of the London Stock Exchange as described in paragraph 17 below) being duly passed by Servelec Shareholders representing 75 per cent. or more of votes cast at the General Meeting; and

(iii) the approval of the Scheme by the Court (with or without modification but subject to any modification being on terms acceptable to Servelec and Scarlet Bidco) and the delivery of an office copy of the Court Order to the Registrar of Companies.

Subject to satisfaction of the Conditions, the Scheme is expected to become effective by the middle of January 2018.

The Offer will lapse if:

(i) the approvals of the requisite majorities of Servelec Shareholders at the Court Meeting and the General Meeting are not obtained on or before the 22nd day after the expected date of each such meeting as set out in the Scheme Document (or, in each case, such later date as may be agreed between Scarlet Bidco and Servelec and, in the case of the Court Meeting, the Court may allow);

(ii) the Scheme is not sanctioned by the Court by the 22nd day after the expected date of such hearing as set out in the Scheme Document (or such later date as may be agreed between Scarlet Bidco and Servelec); or

   (iii)      the Scheme does not become effective by the Long Stop Date,

provided however that the deadlines for the timing of the Court Meeting, the General Meeting and the Court hearing to approve the Scheme as set out above may be waived by Scarlet Bidco and the deadline for the Scheme to become effective may be extended by agreement between Servelec and Scarlet Bidco (with the consent of the Panel).

Upon the Scheme becoming effective, it will be binding on all Servelec Shareholders, irrespective of whether or not they attended or voted at the Court Meeting or the General Meeting.

Further details of the Scheme, including an indicative timetable for its implementation, will be set out in the Scheme Document. It is expected that the Scheme Document and the Forms of Proxy accompanying the Scheme Document will be published as soon as practicable and, in any event, (save with the consent of the Panel) within 28 days of this Announcement. The Scheme Document and Forms of Proxy will be made available to all Servelec Shareholders at no charge to them.

   16      Conditions to the Offer

The Offer will be subject to the Conditions and further terms set out in Appendix I to this Announcement and to be set out in the Scheme Document.

   17      De-listing

Prior to the Scheme becoming effective, Servelec will make an application for the cancellation of the listing of Servelec Shares on the Official List of the UKLA and for the cancellation of trading of the Servelec Shares on the London Stock Exchange's Main Market for listed securities, in each case to take effect shortly after the Effective Date. The last day of dealings in Servelec Shares on the Main Market of the London Stock Exchange is expected to be the business day immediately prior to the Effective Date and no transfers will be registered after 6.00 p.m. on that date.

On the Effective Date, share certificates in respect of Servelec Shares will cease to be valid and entitlements to Servelec Shares held within the CREST system will be cancelled.

   18      Disclosure of interests in Servelec

Save in respect of the irrevocable undertakings and letters of intent referred to in paragraph 6 above, as at the close of business on 22 November 2017 (being the latest practicable date prior to the publication of this Announcement) neither Scarlet Bidco nor any of its directors nor, so far as Scarlet Bidco is aware, any person acting in concert (within the meaning of the Takeover Code) with it has:

   (i)         any interest in or right to subscribe for any relevant securities of Servelec; nor

(ii) any short positions in respect of relevant Servelec Shares (whether conditional or absolute and whether in the money or otherwise), including any short position under a derivative, any agreement to sell or any delivery obligation or right to require another person to purchase or take delivery; nor

(iii) provided or procured an irrevocable commitment or letter of intent to accept or vote in favour of the Offer in respect of relevant securities of Servelec; nor

(iv) borrowed or lent any relevant Servelec Shares (including, for these purposes, any financial collateral arrangements of the kind referred to in Note 4 on Rule 4.6 of the Takeover Code), save for any borrowed shares which had been either on-lent or sold; nor

(v) any dealing arrangement of the kind referred to in Note 11 of the definition of 'acting in concert' in the Code in relation to Servelec Shares.

'Interests in securities' for these purposes arise, in summary, when a person has long economic exposure, whether absolute or conditional, to changes in the price of securities (and a person who only has a short position in securities is not treated as interested in those securities). In particular, a person will be treated as having an 'interest' by virtue of the ownership, voting rights or control of securities, or by virtue of any agreement to purchase, option in respect of, or derivative referenced to, securities.

   19      General

Scarlet Bidco reserves the right to elect (subject to the consent of the Panel) to implement the Offer by way of a takeover offer as an alternative to the Scheme. In such event, the acquisition will be implemented on substantially the same terms, so far as applicable, as those which would apply to the Scheme (subject to appropriate amendments, including an acceptance condition set at 90 per cent. of the Servelec Shares to which such offer relates or such lesser percentage, being more than 50 per cent., as Scarlet Bidco may decide or the Panel may require).

If the Offer is effected by way of a takeover offer and such takeover offer becomes or is declared unconditional in all respects and sufficient acceptances are received in respect of such Offer, Scarlet Bidco intends to: (i) procure that Servelec makes an application for the cancellation of the listing of Servelec Shares on the Official List and to the London Stock Exchange to cancel the trading of Servelec Shares on the London Stock Exchange's Main Market for listed securities; and (ii) exercise its rights (to the extent such rights are available) to apply the provisions of Chapter 3 of Part 28 of the Companies Act to acquire compulsorily the remaining Servelec Shares in respect of which such Offer has not been accepted.

The bases and sources of certain financial information contained in this Announcement are set out in Appendix II to this Announcement. A summary of the irrevocable undertakings and letters of intent given in relation to the Offer is contained in Appendix III to this Announcement. Certain terms used in this Announcement are defined in Appendix IV to this Announcement.

   20      Documents available on website

Copies of the following documents will be made available on Servelec's website at www.servelec-group.com/investor-relations and Scarlet Bidco's website at www.montagu.com/news/ until the end of the Offer:

(i) the irrevocable undertakings and letters of intent referred to in paragraph 6 above and summarised in Appendix III to this Announcement;

   (ii)      the documents relating to the financing of the Scheme referred to in paragraph 13 above; 
   (iii)     the Confidentiality Agreement; 
   (iv)     the Cooperation Agreement; and 
   (v)      this Announcement.

Enquiries:

 
 Scarlet Bidco                                      via Greenbrook 
 Edward Shuckburgh / Neil Graham 
 
 Raymond James (financial adviser                       +44 (0) 20 
  to Scarlet Bidco and Montagu)                          3798 5700 
 Dominic Emery / Joel Greenwood 
  Joseph Donnelly / Max Vandewall 
 
 Greenbrook Communications (PR adviser                  +44 (0) 20 
  to Scarlet Bidco and Montagu)                          7952 2000 
 Andrew Honnor / Alex Jones / Ryan 
  Smith 
 
 Servelec                                              via Tulchan 
 Richard Last, Chairman and Non-Executive 
  Director 
  Alan Stubbs, Chief Executive Officer 
  Mike Cane, Chief Financial Officer 
  Pamela Weeks, Head of Corporate Communications 
 Investec Bank plc (Rule 3 financial                    +44 (0) 20 
  adviser and corporate broker to Servelec)              7597 5970 
 Corporate Finance 
  Andrew Pinder / Sebastian Lawrence 
  Corporate Broking 
  Patrick Robb / Matt Lewis / Rob Baker 
 Tulchan Communications (PR adviser                     +44 (0) 20 
  to Servelec)                                           7353 4200 
 James Macey White / Matt Low

Important notices

This Announcement does not constitute a prospectus or prospectus equivalent document.

Overseas Shareholders

Unless otherwise determined by Scarlet Bidco or required by the Takeover Code, and permitted by applicable law and regulation, the Offer will not be made available, directly or indirectly, in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction and no person may vote in favour of the Offer by any means, instrumentality or form within a Restricted Jurisdiction or any other jurisdiction if to do so would constitute a violation of the laws of that jurisdiction. Accordingly, copies of this Announcement and all documents relating to the Offer are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or from a Restricted Jurisdiction where to do so would violate the laws of that jurisdiction and persons receiving this Announcement and all documents relating to the Offer (including custodians, nominees and trustees) must not mail or otherwise distribute or send them in, into or from such jurisdictions where to do so would violate the laws of that jurisdiction.

The Offer will be subject to the applicable requirements of the Takeover Code, the Panel, the London Stock Exchange, the Financial Conduct Authority and the UKLA.

Notice to US Shareholders

Forward-looking statements

No profit forecasts or estimates

Disclosure requirements of the Takeover Code

Electronic communications

Publication on website and availability of hard copies

Rounding

APPIX I

CONDITIONS AND FURTHER TERMS OF THE OFFER

Part A: Conditions of the Offer

The Offer will be conditional upon the Scheme becoming unconditional and effective, subject to the Takeover Code, by not later than the Long Stop Date or such later date (if any) as Scarlet Bidco and Servelec may agree and (if required) the Panel and the Court may allow.

   1        The Scheme will be subject to the following conditions:

1.1 its approval by a majority in number of Servelec Shareholders, who are present and vote, whether in person or by proxy, at the Court Meeting, representing 75 per cent. or more in value of the Servelec Shares voted by those Servelec Shareholders, on or before the 22nd day after the expected date of the Court Meeting as set out in the Scheme Document (or such later date as may be agreed between Scarlet Bidco and Servelec and the Court may allow);

1.2 the resolution required to implement certain matters in connection with the Scheme being duly passed by Servelec Shareholders representing 75 per cent. or more of votes cast at the General Meeting on or before the 22nd day after the expected date of the General Meeting as set out in the Scheme Document (or such later date as may be agreed by Scarlet Bidco and Servelec); and

1.3 the sanction of the Scheme by the Court (with or without modification but subject to any modification being on terms acceptable to Servelec and Scarlet Bidco) on or before the 22nd day after the expected date of the Court sanction hearing as set out in the Scheme Document (or such later date as may be agreed by Scarlet Bidco and Servelec and the Court may allow) and the delivery of a copy of the Court Order to the Registrar of Companies.

2 In addition, subject as stated in Part B below and to the requirements of the Panel, the Offer will be conditional upon the following Conditions and, accordingly, the Court Order will not be delivered to the Registrar of Companies unless such Conditions (as amended if appropriate) have been satisfied or, where relevant, waived:

(a) other than the matters referred to in Condition 1, all notifications, notices, filings or applications which, in the reasonable opinion of Scarlet Bidco, are necessary or required under any applicable legislation or regulation of any relevant jurisdiction having been made in connection with the Offer or any aspect of the Offer or its financing and all necessary waiting periods (including any extensions thereof) under any applicable legislation or regulation of any jurisdiction having expired, lapsed or been waived (as appropriate) and all applicable statutory and regulatory obligations in any relevant jurisdiction having been complied with in each case in respect of the Offer and all Authorisations necessary or required in any jurisdiction for or in respect of the Offer and the acquisition or the proposed acquisition of any shares or other securities in, or control or management of, Servelec or any other member of the Wider Servelec Group by any member of the Wider Scarlet Bidco Group having been obtained, or deemed by effluxion of time to have been given, in terms and in a form satisfactory to Scarlet Bidco (acting reasonably) from all appropriate Third Parties or (without prejudice to the generality of the foregoing) from any person or bodies with whom any member of the Wider Servelec Group has entered into contractual arrangements, and all such Authorisations necessary or appropriate to carry on the business of any member of the Wider Servelec Group in any jurisdiction having been obtained and all such Authorisations which are material in the context of the Wider Servelec Group (taken as a whole) remaining in full force and effect at the time at which the Offer becomes otherwise wholly unconditional and there being no notice or intimation of an intention to revoke, suspend, restrict, modify or not to renew such Authorisations;

(b) other than the matters referred to in Condition 1, no anti-trust regulator or Third Party having given notice of a decision to take, institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference (and in each case, not having withdrawn the same), or having required any action to be taken or otherwise having done anything, or having enacted, made or proposed any statute, regulation, decision, order or change to published practice (and in each case, not having withdrawn the same) and there not continuing to be outstanding any statute, regulation, decision or order which would or might reasonably be expected to:

(i) require, prevent or delay the divestiture or alter the terms envisaged for such divestiture by any member of the Wider Scarlet Bidco Group or by any member of the Wider Servelec Group of all or any material part of its businesses, assets or property or impose any material limitation on the ability of all or any of them to conduct their businesses (or any part thereof) or to own, control or manage any of their assets or properties (or any part thereof);

(ii) except pursuant to Chapter 3 of Part 28 of the Companies Act, require any member of the Wider Scarlet Bidco Group or the Wider Servelec Group to acquire or offer to acquire any shares, other securities (or the equivalent) or interest in any member of the Wider Servelec Group or any asset owned by any Third Party (other than in the implementation of the Offer);

(iii) impose any material limitation on, or result in a material delay in, the ability of any member of the Wider Scarlet Bidco Group directly or indirectly to acquire, hold or to exercise effectively all or any rights of ownership in respect of shares or other securities in Servelec or on the ability of any member of the Wider Servelec Group or any member of the Wider Scarlet Bidco Group directly or indirectly to hold or exercise effectively all or any rights of ownership in respect of shares or other securities (or the equivalent) in, or to exercise voting or management control over, any member of the Wider Servelec Group;

(iv) otherwise materially adversely affect any or all of the business, assets, profits or prospects of any member of the Wider Servelec Group or any member of the Wider Scarlet Bidco Group;

(v) result in any member of the Wider Servelec Group or any member of the Wider Scarlet Bidco Group ceasing to be able to carry on business under any name under which it presently carries on business;

(vi) make the Offer, its implementation or the acquisition or proposed acquisition of any shares or other securities in, or control or management of, Servelec by any member of the Wider Scarlet Bidco Group void, unenforceable and/or illegal under the laws of any relevant jurisdiction, or otherwise, directly or indirectly materially prevent or materially prohibit, restrict or restrain, or materially delay or otherwise interfere with the implementation of, or impose material additional conditions or obligations with respect to, or otherwise challenge, impede, interfere or require amendment of the Offer or the acquisition or proposed acquisition of any shares or other securities in, or control or management of, Servelec by any member of the Wider Scarlet Bidco Group;

(vii) require, prevent or materially delay a divestiture by any member of the Wider Scarlet Bidco Group of any shares or other securities (or the equivalent) in any member of the Wider Servelec Group or any member of the Wider Scarlet Bidco Group; or

(viii) impose any material limitation on the ability of any member of the Wider Scarlet Bidco Group or any member of the Wider Servelec Group to conduct, integrate or co-ordinate all or any part of its business with all or any material part of the business of any other member of the Wider Scarlet Bidco Group and/or the Wider Servelec Group,

and all applicable waiting and other time periods (including any extensions thereof) during which any such antitrust regulator or Third Party could decide to take, institute, implement or threaten any such action, proceeding, suit, investigation, enquiry or reference or take any other step under the laws of any jurisdiction in respect of the Offer or the acquisition or proposed acquisition of any Servelec Shares or otherwise intervene having expired, lapsed or been terminated;

(c) except as Disclosed, there being no provision of any arrangement, agreement, lease, licence, franchise, permit or other instrument to which any member of the Wider Servelec Group is a party or by or to which any such member or any of its material assets is or may be bound, entitled or be subject or any event or circumstance which, as a consequence of the Offer or the acquisition or the proposed acquisition by any member of the Wider Scarlet Bidco Group of any shares or other securities (or the equivalent) in Servelec or because of a change in the control or management of any member of the Wider Servelec Group or otherwise, would or might reasonably be expected to, to an extent which is material in the context of the Wider Servelec Group (taken as a whole), result in:

(i) any monies borrowed by, or any other indebtedness, actual or contingent, of, or any grant available to, any member of the Wider Servelec Group being or becoming repayable, or capable of being declared repayable, immediately or prior to its or their stated maturity date or repayment date, or the ability of any such member to borrow monies or incur any indebtedness being withdrawn or inhibited or being capable of becoming or being withdrawn or inhibited;

(ii) the creation, save in the ordinary and usual course of business, or enforcement of any mortgage, charge or other security interest over the whole or any part of the business, property or assets of any member of the Wider Servelec Group or any such mortgage, charge or other security interest (whenever created, arising or having arisen) becoming enforceable;

(iii) any such arrangement, agreement, lease, licence, franchise, permit or other instrument being terminated or the rights, liabilities, obligations or interests of any member of the Wider Servelec Group being adversely modified or adversely affected or any obligation or liability arising or any adverse action being taken or arising thereunder;

(iv) any liability of any member of the Wider Servelec Group to make any severance, termination, bonus or other payment to any of its directors, or other officers;

(v) the rights, liabilities, obligations, interests or business of any member of the Wider Servelec Group under any such arrangement, agreement, licence, permit, lease or instrument or the interests or business of any member of the Wider Servelec Group in or with any other person or body or firm or company (or any arrangement or arrangement relating to any such interests or business) being or becoming capable of being terminated, or adversely modified or affected or any onerous obligation or liability arising or any adverse action being taken thereunder;

(vi) any member of the Wider Servelec Group ceasing to be able to carry on business under any name under which it presently carries on business;

(vii) the value of, or the financial or trading position or prospects of, any member of the Wider Servelec Group being prejudiced or adversely affected; or

(viii) the creation or acceleration of any liability (actual or contingent) by any member of the Wider Servelec Group other than trade creditors or other liabilities incurred in the ordinary course of business,

and no event having occurred which, under any provision of any arrangement, agreement, licence, permit, franchise, lease or other instrument to which any member of the Wider Servelec Group is a party or by or to which any such member or any of its assets are bound, entitled or subject, would or might reasonably be expected to result in any of the events or circumstances as are referred to in Conditions (c)(i) to (viii);

   (d)        except as Disclosed, no member of the Wider Servelec Group having since 30 June 2017:

(i) issued or agreed to issue or authorised or proposed or announced its intention to authorise or propose the issue, of additional shares of any class, or securities or securities convertible into, or exchangeable for, or rights, warrants or options to subscribe for or acquire, any such shares, securities or convertible securities or transferred or sold or agreed to transfer or sell or authorised or proposed the transfer or sale of Servelec Shares out of treasury (except, where relevant, as between Servelec and wholly owned subsidiaries of Servelec or between the wholly owned subsidiaries of Servelec and except for the issue or transfer out of treasury of Servelec Shares on the exercise of employee share options or vesting of employee share awards in the ordinary course under the Servelec Share Schemes);

(ii) recommended, declared, paid or made or proposed to recommend, declare, pay or make any bonus issue of shares, dividend or other distribution (whether payable in cash or otherwise) other than dividends (or other distributions whether payable in cash or otherwise) lawfully paid or made by any wholly owned subsidiary of Servelec to Servelec or any of its wholly owned subsidiaries;

(iii) other than pursuant to the Offer (and except for transactions between Servelec and its wholly owned subsidiaries or between the wholly owned subsidiaries of Servelec and transactions in the ordinary course of business) implemented, effected, authorised or announced its intention to implement, effect, authorise or propose any merger, demerger, reconstruction, amalgamation, scheme, binding commitment or acquisition or disposal of assets or shares or loan capital (or the equivalent thereof) in any undertaking or undertakings;

(iv) except for transactions between Servelec and its wholly owned subsidiaries or between the wholly owned subsidiaries of Servelec and for disposals of assets in the ordinary course of business, disposed of, or transferred, mortgaged or created any security interest over any asset or any right, title or interest in any asset or authorised, proposed or announced any intention to do so;

(v) except for transactions between Servelec and its wholly owned subsidiaries or between the wholly owned subsidiaries of Servelec, issued, authorised or proposed or announced an intention to authorise or propose, the issue of or made any change in or to the terms of any debentures or incurred or materially increased any indebtedness or, except in the ordinary course of business, become subject to any contingent liability;

(vi) entered into or materially varied or authorised or announced its intention to enter into or materially vary any contract, arrangement, agreement, transaction or binding commitment (whether in respect of capital expenditure or otherwise) except in the ordinary course of business on terms which are (a) of a long term, unusual or onerous nature or magnitude or which are or (b) which involve or could involve an obligation of a nature or magnitude which is likely to be materially restrictive on the business of any member of the Wider Servelec Group;

(vii) entered into or materially varied the terms of, or made any offer (which remains open for acceptance) to enter into or materially vary the terms of any contract, service agreement, commitment or arrangement with any director or senior executive of any member of the Wider Servelec Group;

(viii) proposed, agreed to provide or modified the terms of any share option scheme, incentive scheme or other benefit relating to the employment or termination of employment of any employee of the Wider Servelec Group;

(ix) purchased, redeemed or repaid or announced any proposal to purchase, redeem or repay any of its own shares or other securities or reduced or, except in respect of the matters mentioned in sub-paragraph (i) above, made any other change to any part of its share capital;

(x) except in the ordinary course of business, waived, compromised or settled any claim which is material in the context of the Wider Servelec Group (taken as a whole);

(xi) terminated or varied the terms of any agreement or arrangement between any member of the Wider Servelec Group and any other person in a manner which would or might reasonably be expected to have a material adverse effect on the financial position of the Wider Servelec Group (taken as a whole) or in the context of the Offer;

(xii) made any alteration to its memorandum or articles of association or other incorporation documents;

(xiii) except in relation to changes made or agreed as a result of, or arising from, changes to legislation, made or agreed or consented to any change to:

(a) the terms of the trust deeds and rules constituting the pension scheme(s) established by any member of the Wider Servelec Group for its directors, employees or their dependants;

(b) the contributions payable to any such scheme(s) or to the benefits which accrue, or to the pensions which are payable, thereunder;

(c) the basis on which qualification for, or accrual or entitlement to, such benefits or pensions are calculated or determined; or

(d) the basis upon which the liabilities (including pensions) of such pension schemes are funded, valued, made, agreed or consented to;

(xiv) been unable, or admitted in writing that it is unable, to pay its debts or commenced negotiations with one or more of its creditors with a view to rescheduling or restructuring any of its indebtedness, or having stopped or suspended (or threatened to stop or suspend) payment of its debts generally or ceased or threatened to cease carrying on all or a substantial part of its business;

(xv) (other than in respect of a member of the Wider Servelec Group which is dormant and was solvent at the relevant time) taken or proposed any steps, corporate action or had any legal proceedings instituted or threatened against it in relation to the suspension of payments, a moratorium of any indebtedness, its winding-up (voluntary or otherwise), dissolution, reorganisation or for the appointment of a receiver, administrator, manager, administrative receiver, trustee or similar officer of all or any of its assets or revenues or any analogous or equivalent steps or proceedings in any jurisdiction or appointed any analogous person in any jurisdiction or had any such person appointed;

(xvi) (except for transactions between Servelec and its wholly owned subsidiaries or between the wholly owned subsidiaries), made, authorised, proposed or announced an intention to propose any change in its loan capital;

(xvii) entered into, implemented or authorised the entry into, any joint venture, asset or profit sharing arrangement, partnership or merger of business or corporate entities; or

(xviii) entered into any agreement, arrangement, binding commitment or contract or passed any resolution or made any offer (which remains open for acceptance) with respect to or announced an intention to, or to propose to, effect any of the transactions, matters or events referred to in this Condition (d);

   (e)        except as Disclosed, since 30 June 2017 there having been:

(i) no adverse change and no circumstance having arisen which would or might reasonably be expected to result in any adverse change in, the business, assets, financial or trading position or profits or prospects or operational performance of any member of the Wider Servelec Group which is material in the context of the Wider Servelec Group or in the context of the Offer;

(ii) no litigation, arbitration proceedings, prosecution or other legal proceedings having been threatened, announced or instituted by or against or remaining outstanding against or in respect of, any member of the Wider Servelec Group or to which any member of the Wider Servelec Group is or may become a party (whether as claimant, defendant or otherwise) having been threatened, announced, instituted or remaining outstanding by, against or in respect of, any member of the Wider Servelec Group, in each case which might reasonably be expected to have a material adverse effect on the Wider Servelec Group (taken as a whole) or in the context of the Offer;

(iii) no enquiry, review or investigation by, or complaint or reference to, any Third Party against or in respect of any member of the Wider Servelec Group having been threatened, announced or instituted or remaining outstanding by, against or in respect of any member of the Wider Servelec Group, in each case which might reasonably be expected to have a material adverse effect on the Wider Servelec Group (taken as a whole) or in the context of the Offer;

(iv) no contingent or other liability having arisen or become apparent to Scarlet Bidco or increased other than in the ordinary course of business which is reasonably likely to affect adversely the business, assets, financial or trading position or profits or prospects of any member of the Wider Servelec Group to an extent which is material in the context of the Wider Servelec Group (taken as a whole) or in the context of the Offer; and

(v) no steps having been taken and no omissions having been made which are likely to result in the withdrawal, cancellation, termination or modification of any licence held by any member of the Wider Servelec Group which is necessary for the proper carrying on of its business and the withdrawal, cancellation, termination or modification of which might reasonably be expected to have a material adverse effect on the Wider Servelec Group (taken as a whole) or in the context of the Offer;

   (f)         except as Disclosed, Scarlet Bidco not having discovered:

(i) that any financial, business or other information concerning the Wider Servelec Group publicly announced prior to this date of the announcement or disclosed at any time to any member of the Wider Scarlet Bidco Group by or on behalf of any member of the Wider Servelec Group prior to the date of this announcement is misleading, contains a material misrepresentation of any fact, or omits to state a fact necessary to make that information not misleading, in any such case to a material extent in the context of the Wider Servelec Group (taken as a whole) or in the context of the Offer;

(ii) that any member of the Wider Servelec Group or any partnership, company or other entity in which any member of the Wider Servelec Group has a significant economic interest and which is not a subsidiary undertaking of Servelec is subject to any liability, contingent or otherwise and which is material in the context of the Wider Servelec Group (taken as a whole) or in the context of the Offer;

(iii) that any past or present member of the Wider Servelec Group has not complied in all material respects with all applicable legislation, regulations or other requirements of any jurisdiction or any Authorisations relating to the use, treatment, storage, carriage, disposal, discharge, spillage, release, leak or emission of any waste or hazardous substance or any substance likely to impair the environment (including property) or harm human health or otherwise relating to environmental matters or the health and safety of humans, which non-compliance would be likely to give rise to any material liability including any penalty for non-compliance (whether actual or contingent) on the part of the Wider Servelec Group (taken as a whole);

(iv) that there is or is likely to be any obligation or liability (whether actual or contingent) or requirement to make good, remediate, repair, reinstate or clean up any property or asset currently or previously owned, occupied, operated or made use of or controlled by any past or present member of the Wider Servelec Group (or on its behalf), or in which any such member may have or previously have had or be deemed to have had an interest, under any environmental legislation, common law, regulation, notice, circular, Authorisation or order of any Third Party in any jurisdiction or to contribute to the cost thereof or associated therewith or indemnify any person in relation thereto, in each case which is material in the context of the Wider Servelec Group (taken as a whole) or in the context of the Offer;

(v) that circumstances exist (whether as a result of making the Offer or otherwise) which would be likely to lead to any Third Party taking any steps which would in any such case be reasonably likely to result in any actual or contingent liability to improve or install new plant or equipment or to make good, repair, reinstate or clean up any property of any description or any asset now or previously owned, occupied or made use of by any past or present member of the Wider Servelec Group (or on its behalf) or by any person for which a member of the Wider Servelec Group is or has been responsible, or in which any such member may have or previously have had or be deemed to have had an interest, which is material in the context of the Wider Servelec Group (taken as a whole) or in the context of the Offer;

(vi) that circumstances exist whereby a person or class of persons would be likely to have a claim in respect of any product or process of manufacture or materials used therein now or previously manufactured, sold or carried out by any past or present member of the Wider Servelec Group which is or would be material in the context of the Servelec Group (taken as a whole);

(g) no member, director or officer of the Wider Servelec Group nor any person that performs or has performed services for or on behalf of any such company is or has engaged in any activity, practice or conduct which would constitute an offence under the Bribery Act 2010, the U.S. Foreign Corrupt Practices Act of 1977 or any other applicable anti-corruption legislation or regulation (including, without limitation the Organisation for Economic Co-operation and Development's Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and any laws or regulations implementing the same);

(h) no past or present member, director or officer of the Wider Servelec Group is or has engaged in any activity or business with, or made any investments in, or made any payments to any government, entity or individual covered by any of the economic sanctions administered by the United Nations or the European Union (or any of their respective member states) or the United States Office of Foreign Assets Control or any other governments or supranational body or authority in any jurisdiction;

(i) no member of the Servelec Group has engaged in any transaction which would cause Scarlet Bidco to be in breach of any law or regulation upon its acquisition of Servelec, including the economic sanctions of the United States Office of Foreign Assets Control, or HM Treasury, or any government, entity or individual targeted by any of the economic sanctions of the United Nations, the United States, the European Union or any of its member states;

(j) no asset of any member of the Wider Servelec Group constitutes criminal property as defined by section 340(3) of the Proceeds of Crime Act 2002 (but disregarding paragraph (b) of that definition); or

(k) Scarlet Bidco not having discovered that circumstances have arisen or events have occurred since the date of this Announcement in relation to any intellectual property owned, used or licensed by the Wider Servelec Group or to any third parties, including:

(i) any member of the Wider Servelec Group losing its title to any intellectual property or any intellectual property owned by the Wider Servelec Group being revoked, cancelled or declared invalid;

(ii) any agreement regarding the use of any intellectual property licensed to or by any member of the Wider Servelec Group being terminated or varied; or

(iii) any claim being filed suggesting that any member of the Wider Servelec Group infringed the intellectual property rights of a third party or any member of the Wider Servelec Group being found to have infringed the intellectual property rights of a third party,

in each case, which is material in the context of the Wider Servelec Group (taken as a whole) or in the context of the Offer.

Part B: Certain further terms of the Offer

   1        Subject to the requirements of the Panel, Scarlet Bidco reserves the right to waive:

(a) any of the Conditions set out in Condition 1 for the timing of the Court Meeting, General Meeting, and the Court hearing to sanction the Scheme and the effectiveness of the Scheme. If any such deadline is not met, Scarlet Bidco will make an announcement by 8.00 a.m. on the business day following such deadline confirming whether it has invoked or waived the relevant Condition or agreed with Servelec to extend the deadline in relation to the relevant Condition; and

   (b)        in whole or in part, all or any of the above Conditions 2(a) to (k) (inclusive).

2 If Scarlet Bidco is required by the Panel to make an offer for Servelec Shares under the provisions of Rule 9 of the Takeover Code, Scarlet Bidco may make such alterations to any of the above Conditions and terms of the Offer as are necessary to comply with the provisions of that Rule.

   3        The Offer will lapse if:

(a) in so far as the Offer or any matter arising from or relating to the Scheme or Offer constitutes a concentration with a Community dimension within the scope of the Regulation, the European Commission either initiates proceedings under Article 6(1)(c) of the Regulation or makes a referral to a competent authority in the United Kingdom under Article 9(1) of the Regulation and there is then a CMA Phase 2 Reference; or

(b) in so far as the Offer or any matter arising from the Scheme or Offer does not constitute a concentration with a Community dimension within the scope of the Regulation, the Scheme or Offer or any matter arising from or relating to the Offer becomes subject to a CMA Phase 2 Reference,

in each case, before the date of the Court Meeting.

4 Conditions 2(a) to 2(k) (inclusive) must be fulfilled, or be or remain satisfied or (if capable of waiver) be waived, prior to the commencement of the Court hearing to sanction the Scheme, failing which the Offer will lapse and the Scheme will not proceed. Scarlet Bidco will be under no obligation to waive (if capable of waiver), to determine to be or remain satisfied or to treat as fulfilled any of Conditions 2(a) to (k) (inclusive) by a date earlier than the latest date for the fulfilment of that Condition notwithstanding that the other Conditions of the Offer may at such earlier date have been waived or fulfilled and that there are at such earlier date no circumstances indicating that any of such Conditions may not be capable of fulfilment.

5 If, on or after the date of this Announcement, but prior to the Effective Date, any dividend or other distribution or other return of capital is declared, made or paid or becomes payable by Servelec (a "relevant distribution"), Scarlet Bidco reserves the right (without prejudice to any right of Scarlet Bidco, with the consent of the Panel, to invoke Condition 2(d)(ii)) to reduce the consideration payable under the Offer in respect of a Servelec Share by an amount up to the aggregate amount of such dividend or distribution or return of capital.

If any such dividend or distribution or return of capital occurs, any reference in this Announcement to the Offer Price will be deemed to be a reference to the Offer Price as so reduced. If such reduction occurs, notwithstanding the terms on which the Servelec Shares are expressed to be acquired by Scarlet Bidco pursuant to the Offer in this Appendix I, the Servelec Shares will be acquired by or on behalf of Scarlet Bidco pursuant to the Offer fully paid and free from all liens, equities, charges, encumbrances, options, rights of pre-emption and any other third party rights and interests of any nature and together with all rights now and hereafter attaching to such shares, including, without limitation, voting rights and the right to receive and retain in full all dividends and other distributions (if any) declared, made or paid, or any other return of capital (whether by reduction of share capital or share premium account or otherwise) made, on or after the date of this Announcement.

To the extent that such a dividend, distribution or return of capital has been declared, paid, made or is payable and is or will be: (i) transferred pursuant to the Offer on a basis which entitles Scarlet Bidco to receive the dividend or distribution and to retain it; or (ii) cancelled, the Offer Price will not be subject to change in accordance with this paragraph.

Any exercise by Scarlet Bidco of its rights referred to in this paragraph will be the subject of an announcement and, for the avoidance of doubt, will not be regarded as constituting any revision or variation of the Offer.

6 Scarlet Bidco reserves the right to elect (with the consent of the Panel) to implement the Offer by way of a takeover offer as it may determine in its absolute discretion. In such event, the acquisition will be implemented on substantially the same terms, so far as applicable, subject to appropriate amendments, including (without limitation) an acceptance condition set at 90 per cent. (or such lesser percentage, being more than 50 per cent., as Scarlet Bidco may decide or the Panel may require) of the Servelec Shares to which such offer relates, so far as applicable, as those which would apply to the Scheme.

7 The Servelec Shares acquired under the Offer (whether by way of the Scheme or a takeover offer) will be acquired fully paid and free from all liens, equities, charges, encumbrances, options, rights of pre-emption and any other third party rights and interests of any nature and together with all rights now or hereafter attaching or accruing to them, including, without limitation, voting rights and the right to receive and retain in full all dividends and other distributions (if any) declared, made or paid, or any other return of capital (whether by reduction of share capital or share premium account or otherwise) made, on or after the date of this Announcement.

8 The availability of the Offer to persons not resident in the United Kingdom may be affected by the laws of the relevant jurisdiction. Persons who are not resident in the United Kingdom should inform themselves about and observe any applicable requirements.

9 The Offer is not being made, directly or indirectly, in, into or from, or by use of the mails of, or by any means of instrumentality (including, but not limited to, facsimile, e-mail or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or of any facility of a national, state or other securities exchange of, any jurisdiction where to do so would violate the laws of that jurisdiction.

10 The Offer is governed by the law of England and Wales and is subject to the jurisdiction of the English courts and to the Conditions and further terms set out in this Appendix I and to be set out in the Scheme Document. The Offer will be subject to the applicable requirements of the Takeover Code, the Panel, the London Stock Exchange, the Financial Conduct Authority and the UKLA.

11 Each of the Conditions will be regarded as a separate Condition and will not be limited by reference to any other Condition.

12 Under Rule 13.5 of the Takeover Code, Scarlet Bidco may not invoke a condition to the Offer so as to cause the Offer not to proceed, to lapse or to be withdrawn unless the circumstances which give rise to the right to invoke the Condition are of material significance to Scarlet Bidco in the context of the Offer. Condition 1 is not subject to this provision of the Takeover Code.

APPIX II

SOURCES OF INFORMATION AND BASES OF CALCULATION

1 The value placed by the Offer on the existing issued and to be issued share capital of Servelec is based on a fully diluted figure of 71,503,988 Servelec Shares consisting of:

(a) 69,843,173 Servelec Shares in issue as at 22 November 2017, being the latest practicable date prior to the publication of this Announcement; and

(b) 1,660,815 Servelec Shares in respect of which options may become exercisable as a result of the Offer.

   2        The Closing Price on 22 November 2017 is taken from the Daily Official List. 
   3        The Volume Weighted Average Prices for Servelec Shares are derived from FactSet.

4 Unless otherwise stated, the financial information relating to Servelec is extracted from the audited consolidated financial statements of Servelec for the financial year ended 31 December 2016, prepared in accordance with IFRS or the unaudited interim financial statements for the financial year ending 31 December 2017.

5 The number of Servelec Shares in respect of which options may become exercisable as a result of the Offer is 1,660,815 Servelec Shares. Vesting of options under the Servelec Share Schemes is dependent on the time for which they have been held (unless the remuneration committee of Servelec in its discretion determines otherwise) and the degree to which performance targets are satisfied. This figure is calculated as at 22 November 2017 (being the latest practicable date prior to the publication of this Announcement) and assumes: (i) that the remuneration committee of Servelec will waive the requirement to calculate the number of option shares by reference to the time which has elapsed since the date of grant; (ii) that all options will be exercised to the maximum possible extent; and (iii) no options are excercised where the exercise price is above the Offer price.

APPIX III

IRREVOCABLE UNDERTAKINGS AND LETTERS OF INTENT

Servelec Directors' irrevocable undertakings

 
                     Number of Servelec 
                      Shares in respect         % of Servelec 
 Name of Servelec     of which undertaking    issued ordinary 
  Director            is given                  share capital 
 Richard Last        418,994                             0.6% 
 Roger McDowell      186,053                             0.3% 
 Alan Stubbs         838,000                             1.2% 
 Mike Cane           79,327                              0.1%

Each irrevocable undertaking outlined above binds the relevant Servelec Director to, amongst other things, vote in favour of the Scheme at the Court Meeting and the resolution to be proposed at the General Meeting, in respect of his entire beneficial holding of Servelec Shares. The irrevocable undertakings will cease to have effect if:

(a) the Scheme Document is not despatched within 28 days of the date of this Announcement (or such longer period as the Panel may agree) or, if Scarlet Bidco elects to implement the Offer by way of a takeover offer, within 28 days of the date of the announcement that the Offer will be implemented by way of a takeover offer;

(b) Scarlet Bidco announces that it does not intend to proceed with the Offer and no new, revised or replacement Scheme or takeover offer (on no less favourable terms) is announced by Scarlet Bidco within three business days' of such announcement; or

(c) the Offer does not become effective, lapses or is withdrawn and no new, revised or replacement Scheme or takeover offer is announced by Scarlet Bidco within three business days of such lapse or withdrawal.

These irrevocable undertakings remain binding in the event of a competing offer.

Other Servelec Shareholders' irrevocable undertakings

 
                                                              % of Servelec 
                         Number of Servelec          Higher          issued 
                          Shares in respect       Competing        ordinary 
 Name of Servelec         of which undertaking        Offer           share 
  Shareholder             is given                    Price         capital 
 NFU Mutual Insurance 
  Society Limited        4,125,200                330 pence            5.9% 
 Marlborough 
  Fund Managers 
  Limited                2,000,000                344 pence            2.9% 
 Herald Investment 
  Management Limited 
  (on behalf of 
  Herald Investment 
  Trust plc)             1,007,025                345 pence            1.4% 
 LOIM                    470,713                  330 pence            0.7%

Each irrevocable undertaking outlined above binds the relevant shareholder to, amongst other things, vote in favour of the Scheme at the Court Meeting and the resolution to be proposed at the General Meeting, in respect of its entire beneficial holding of Servelec Shares. The irrevocable undertakings will cease to have effect if:

(a) Scarlet Bidco announces that it does not intend to proceed with the Offer and no new, revised or replacement Scheme or takeover offer is announced by Scarlet Bidco at or about the same time;

(b) the Offer lapses or is withdrawn and no new, revised or replacement Scheme or takeover offer is announced by Scarlet Bidco at or about the same time; or

(c) a third party announces a firm intention to make an offer for the Servelec Shares where the cash price offered for each Servelec Share is at least the Higher Competing Offer Price (as set out opposite the name of the relevant shareholder in the table above) unless an equivalent or higher offer is announced by Scarlet Bidco.

Servelec Shareholders' letters of intent

The following holders, controllers, or beneficial owners of Servelec Shares have delivered to Scarlet Bidco non-binding letters of intent to vote in favour of the Scheme:

 
                              Number of Servelec 
                               Shares in respect        % of Servelec 
 Name of Servelec              of which the letter    issued ordinary 
  Shareholder                  is given                 share capital 
 Schroder Investment 
  Management Limited          7,849,055                         11.2% 
 GVQ Investment Management 
  Limited                     5,082,927                          7.3% 
 Harwood Capital 
  LLP on behalf of 
  Oryx International 
  Growth Fund Limited         900,000                            1.3%

If a third party announces a firm intention to make an offer for the Servelec Shares, each of Harwood Capital LLP (on behalf of Oryx International Growth Fund) and Schroder Investment Management Limited has indicated that it would remain supportive of the Offer unless the consideration offered by such third party was, in such shareholder's opinion, at least 5 per cent. higher than the Offer Price. In such circumstances, it is expected that each of Harwood Capital LLP (on behalf of Oryx International Growth Fund) and Schroder Investment Management Limited would no longer intend to vote in favour of the Scheme at the Court Meeting and the resolution to be proposed at the General Meeting.

APPIX IV

DEFINITIONS

The following definitions apply throughout this Announcement unless the context requires otherwise:

 
 "Announcement"              this announcement dated 23 
                              November 2017; 
 "Authorisations"            regulatory authorisations, 
                              orders, recognitions, grants, 
                              consents, clearances, confirmations, 
                              certificates, licences, permissions, 
                              approvals or notifications 
                              of no objection; 
 "business day"              a day (other than Saturdays, 
                              Sundays and public holidays 
                              in England) on which clearing 
                              banks are generally open for 
                              business in the City of London; 
 "Closing Price"             the closing middle market price 
                              of a Servelec Share on a particular 
                              trading day as derived from 
                              the Daily Official List; 
 "CMA Phase 2 Reference"     a reference of the Offer to 
                              the chair of the Competition 
                              and Markets Authority for the 
                              constitution of a group under 
                              Schedule 4 to the Enterprise 
                              and Regulatory Reform Act 2013; 
 "Companies Act"             the Companies Act 2006, as 
                              amended from time to time; 
 "Competition and            a UK statutory body established 
  Markets Authority"          under the Enterprise and Regulatory 
  or "CMA"                    Reform Act 2013; 
 "Conditions"                the conditions to the implementation 
                              of the Offer and the Scheme, 
                              as set out in Appendix I to 
                              this Announcement and to be 
                              set out in the Scheme Document; 
 "Confidentiality            the confidentiality agreement 
  Agreement"                  entered into by Montagu and 
                              Servelec on 30 September 2017; 
 "Cooperation Agreement"     the cooperation agreement dated 
                              23 November 2017 entered into 
                              between Montagu and Servelec; 
 "Court"                     the High Court of Justice in 
                              England and Wales; 
 "Court Meeting"             the meeting(s) of Servelec 
                              Shareholders to be convened 
                              pursuant to an order of the 
                              Court under the Companies Act 
                              for the purpose of considering 
                              and, if thought fit, approving 
                              the Scheme, including any adjournment 
                              of it; 
 "Court Order"               the order of the Court sanctioning 
                              the Scheme; 
 "CREST"                     the relevant system (as defined 
                              in the Uncertificated Securities 
                              Regulations 2001 (SI 2001/3755)) 
                              for the paperless settlement 
                              of trades in securities and 
                              the holding of uncertificated 
                              securities operated by Euroclear; 
 "Daily Official             the Daily Official List published 
  List"                       by the London Stock Exchange; 
 "dealing day"               a day on which dealing in domestic 
                              securities may take place on, 
                              and with the authority of, 
                              the London Stock Exchange; 
 "Dealing Disclosure"        has the same meaning as in 
                              Rule 8 of the Takeover Code; 
 "Disclosed"                 the information fairly disclosed 
                              by or on behalf of Servelec 
                              (i) in the annual report and 
                              accounts of Servelec for the 
                              financial year ended 31 December 
                              2016; (ii) the interim results 
                              of Servelec for the six month 
                              period ended on 30 June 2017; 
                              (iii) in this Announcement; 
                              (iv) in any other announcement 
                              to a Regulatory Information 
                              Service by or on behalf of 
                              Servelec prior to the publication 
                              of this Announcement; or (v) 
                              as otherwise fairly disclosed 
                              to Scarlet Bidco (or its respective 
                              officers, employees or advisers) 
                              in sufficient detail to enable 
                              such person(s) to make a reasonable 
                              assessment of the nature and 
                              scope of the matter disclosed, 
                              in each case before the date 
                              of this Announcement;

 "Effective Date"            the date on which the Scheme 
                              becomes effective in accordance 
                              with its terms; 
 "Euroclear"                 Euroclear UK & Ireland Limited; 
 "Forms of Proxy"            the form of proxy in connection 
                              with each of the Court Meeting 
                              and the General Meeting, which 
                              will accompany the Scheme Document; 
 "General Meeting"           the general meeting of Servelec 
                              Shareholders to be convened 
                              in connection with the Scheme, 
                              including any adjournment of 
                              it; 
 "IFRS"                      International Financial Reporting 
                              Standards, as adopted in the 
                              European Union; 
 "Investec"                  Investec Bank plc of 2 Gresham 
                              Street, London EC2V 7QP, Rule 
                              3 financial adviser and corporate 
                              broker to Servelec for the 
                              purposes of Rule 3 of the Takeover 
                              Code; 
 "Listing Rules"             the rules and regulations made 
                              by the Financial Conduct Authority 
                              in its capacity as the UKLA 
                              under the Financial Services 
                              and Markets Act 2000 and contained 
                              in the UKLA's publication of 
                              the same name; 
 "LOIM"                      Lombard Odier Investment Managers 
                              Group (LOIM) entity for and 
                              on behalf of funds and/or accounts 
                              for which it acts as investment 
                              manager; 
 "London Stock Exchange"     London Stock Exchange Group 
                              plc; 
 "Long Stop Date"            28 February 2018, or such later 
                              date (if any) as Scarlet Bidco 
                              and Servelec may agree and 
                              (if required) the Panel and 
                              the Court may allow; 
 "Montagu"                   Montagu Private Equity LLP, 
                              together with its affiliates 
                              as the context may require; 
 "Montagu Funds"             the limited partnerships being 
                              Montagu V LP, Montagu V (Non-US) 
                              LP, Montagu V (US) LP and Montagu 
                              V (D) LP; 
 "Offer"                     the recommended cash offer 
                              being made by Scarlet Bidco 
                              to acquire the entire issued 
                              and to be issued ordinary share 
                              capital of Servelec to be effected 
                              by means of the Scheme and, 
                              where the context admits, any 
                              subsequent revision, variation, 
                              extension or renewal of it; 
 "Offer Period"              the offer period (as defined 
                              by the Takeover Code) relating 
                              to Servelec, which commences 
                              on the date of this Announcement; 
 "Offer Price"               the consideration of 313.1 
                              pence payable under the Offer 
                              in respect of a Servelec Share 
 "Official List"             the Official List maintained 
                              by the UKLA; 
 "Opening Position           has the same meaning as in 
  Disclosure"                 Rule 8 of the Takeover Code; 
 "Overseas Shareholders"     Servelec Shareholders (or nominees 
                              of, or custodians or trustees 
                              for Servelec Shareholders) 
                              not resident in, or nationals 
                              or citizens of the United Kingdom; 
 "Panel"                     the Panel on Takeovers and 
                              Mergers; 
 "Raymond James"             Raymond James Financial International 
                              Limited of 56 Conduit Street, 
                              London W1S 2YZ, financial adviser 
                              to Scarlet Bidco and Montagu; 
 "Registrar of Companies"    the Registrar of Companies 
                              in England and Wales; 
 "Regulation"                Council Regulation (EC) 139/2004; 
 "Regulatory Information     any of the services set out 
  Service"                    in Appendix III to the Listing 
                              Rules; 
 "Restricted Jurisdiction"   any jurisdiction where local 
                              laws or regulations may result 
                              in a significant risk of civil, 
                              regulatory or criminal exposure 
                              if information concerning the 
                              Offer is sent or made available 
                              to Servelec Shareholders in 
                              that jurisdiction; 
  "Scarlet Bidco"            Scarlet Bidco Limited, a private 
                              limited company incorporated 
                              in England and Wales with registered 
                              number 11073051 and with its 
                              registered office at 2 More 
                              London Riverside, London SE1 
                              2AP; 
 "Scheme"                    the scheme of arrangement proposed 
                              to be made under Part 26 of 
                              the Companies Act between Servelec 
                              and the Servelec Shareholders 
                              in connection with the Offer, 
                              with or subject to any modification, 
                              addition or condition approved 
                              or imposed by the Court and 
                              agreed by Servelec and Scarlet 
                              Bidco; 
 "Scheme Document"           the document to be sent to 
                              Servelec Shareholders containing, 
                              amongst other things, the Scheme 
                              and the notices convening the 
                              Court Meeting and the General 
                              Meeting; 
 "Scheme Record Time"        the time and date specified 
                              in the Scheme Document, expected 
                              to be 6.00 p.m. on the date 
                              of the Court Order; 
 "Servelec"                  Servelec Group plc; 
 "Servelec Automation"       a division of the Servelec 
                              Group which provides complex, 
                              mission-critical control systems 
                              and standalone products to 
                              large, blue-chip companies 
                              in industries essential to 
                              national infrastructure; 
 "Servelec Board"            the Servelec board of directors; 
 "Servelec Directors"        the directors of Servelec; 
 "Servelec Share             the Servelec Long Term Incentive 
  Schemes"                    Plan, the Servelec SAYE, the 
                              Servelec Deferred Share Bonus 
                              Plan and the Servelec Executive 
                              Share Option Plan; 
 "Servelec Group"            Servelec and its subsidiary 
                              undertakings and, where the 
                              context permits, each of them; 
 "Servelec HSC"              a division of the Servelec 
                              Group which specialises in 
                              the design, development, deployment 
                              and support of software in 
                              healthcare together with social 
                              care and education within local 
                              government; 
 "Servelec SAYE"             the Servelec Save-As-You-Earn 
                              Option Plan; 
 "Servelec Shares"           the existing unconditionally 
                              allotted or issued and fully 
                              paid ordinary shares of 18 
                              pence each in the capital of 
                              Servelec and any further such 
                              ordinary shares which are unconditionally 
                              allotted or issued before the 
                              Scheme becomes effective; 
 "Servelec Shareholders"     holders of Servelec Shares; 
  or "Shareholders" 
 "Significant Interest"      in relation to an undertaking, 
                              a direct or indirect interest 
                              of 20 per cent. or more of 
                              the total voting rights conferred 
                              by the equity share capital 
                              (as defined in section 548 
                              of the Companies Act) of such 
                              undertaking; 
 "Subscription Agreement"    the subscription agreement 
                              dated 23 November 2017 entered 
                              into between, among others, 
                              the Montagu Funds, Scarlet 
                              Topco Limited and Scarlet Bidco; 
 "Takeover Code"             the City Code on Takeovers 
                              and Mergers; 
 "Third Party"               each of a central bank, government 
                              or governmental, quasi-governmental,

                              supranational, statutory, regulatory, 
                              environmental, administrative, 
                              fiscal or investigative body, 
                              court, trade agency, association, 
                              institution, environmental 
                              body, employee representative 
                              body or any other body or person 
                              whatsoever in any jurisdiction; 
 "UKLA"                      the UK Listing Authority, being 
                              the Financial Conduct Authority 
                              acting in its capacity as the 
                              competent authority for the 
                              purposes of Part VI of the 
                              Financial Services and Markets 
                              Act 2000; 
 "United Kingdom"            the United Kingdom of Great 
  or "UK"                     Britain and Northern Ireland; 
 "United States"             the United States of America, 
  or "US"                     its territories and possessions, 
                              any state of the United States 
                              of America, the District of 
                              Columbia and all other areas 
                              subject to its jurisdiction 
                              and any political sub-division 
                              thereof; 
 "US Shareholders"           holders of Servelec Shares 
                              ordinarily resident in the 
                              United States or with a registered 
                              address in the US and any custodian, 
                              nominee or trustee holding 
                              Servelec Shares for persons 
                              in the United States or with 
                              a registered address in the 
                              United States; 
 "Volume Weighted            for any period is calculated 
  Average Price"              using the daily Closing Price 
                              of each day in the period and 
                              the total shares traded for 
                              that day; 
 "Wider Scarlet Bidco        Scarlet Bidco, its parent undertakings, 
  Group"                      subsidiary undertakings and 
                              associated undertakings and 
                              any other body corporate, partnership, 
                              joint venture or person in 
                              which Scarlet Bidco and all 
                              such undertakings (aggregating 
                              their interests) have a Significant 
                              Interest; and 
 "Wider Servelec             Servelec, its parent undertakings, 
  Group"                      subsidiary undertakings and 
                              associated undertakings and 
                              any other body corporate, partnership, 
                              joint venture or person in 
                              which Servelec and such undertakings 
                              (aggregating their interests) 
                              have a Significant Interest.

For the purposes of this Announcement, "subsidiary", "subsidiary undertaking", "undertaking" and "associated undertaking" have the respective meanings given to those terms by the Companies Act.

All references to "pounds", "pounds Sterling", "Sterling", "GBP", "pence" and "p" are to the lawful currency of the United Kingdom.

All the times referred to in this Announcement are London, England times unless otherwise stated.

References to the singular include the plural and vice versa.

This information is provided by RNS

The company news service from the London Stock Exchange

END

OFFOKNDNNBDKODB

(END) Dow Jones Newswires

November 23, 2017 02:01 ET (07:01 GMT)

Market Data

News

Trading Tools

Markets

Discover

Hot Features

Follow Feed

Options Flow

Monitor

SERV Servelec Group