TIDMAPI
RNS Number : 5875G
API Group PLC
05 March 2015
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 THAT JURISDICTION
5 March 2015
API Group plc ("API" or the "Company")
Publication of a second circular to shareholders in response to
the unsolicited cash offer for the Company by Cedar 2015 Limited
("Cedar")
Following the Company's announcement of 18 February 2015 and the
publication of the Initial Response Circular on the same day, the
Independent Board of the Company (comprising Mr. Andrew Turner and
Mr. Andrew Walker (the "Independent Board")) confirms that it has
today posted a circular to Shareholders (and, for information only,
to persons with information rights and participants in the API
Share Plans) setting out the Independent Board's further response
to the offer document posted by Cedar on 4 February 2015 in
relation to its unsolicited cash offer for the Company (the
"Circular"). The text of the letter from the Interim Chairman of
the Company (set out in full within the Circular) is reproduced
below.
Documents published on the website
Copies of the Circular will be available, subject to certain
restrictions relating to persons resident in restricted
jurisdictions, on the Company's website at http://www.apigroup.com/
by no later than 8am (London time) on 5 March 2015.
The Independent Board is also announcing that, in accordance
with Rule 26.3 of the Code, the Company's website has been updated
to include: (i) the written consent of Numis Securities Limited to
the inclusion in the Circular of its name in the form and context
in which it appears; (ii) the written consent of Cushman &
Wakefield of New Jersey, Inc to the inclusion in the Circular of
its name in the form and context in which it appears; and (iii) the
Valuation Report.
Terms and expressions used in this announcement shall, unless
the context otherwise requires, have the same meanings as given to
them in the Circular.
LETTER FROM THE INTERIM CHAIRMAN
To API Shareholders and, for information only, to persons with
information rights and participants in the API Share Plans.
Dear API Group Shareholder,
Further Response to Unsolicited Offer
1. Introduction
On 18 February 2015 the Company published the Initial Response
Circular setting out the initial response of the Independent Board
to the Offer by Cedar Bidco, an indirect subsidiary of Steel, of 60
pence in cash per API Share to acquire the entire issued and to be
issued ordinary share capital of the Company not already owned by
Steel and its subsidiary undertakings.
In the Initial Response Circular the Independent Board set out
certain reasons for and against accepting the Offer but did not
provide a definitive recommendation to Shareholders, pending
receipt of an up-to-date valuation relating to the Rahway Property
(the "Valuation Report"). The Valuation Report has now been
received and a summary is included in this circular at Appendix IV,
with the full report posted on the Company's website at
www.apigroup.com/investor-relations/company-reports.
THE INDEPENDENT BOARD RECOMMENDS THAT SHAREHOLDERS ACCEPT THE
OFFER Following careful consideration of the Valuation Report and
the factors set out in the Initial Response
Circular, the Independent Board, which has been so advised by
Numis, recommends that Shareholders accept the Offer (as each
member of the Independent Board intends to do in respect of his
entire beneficial holding of shares in the Company). In providing
advice, Numis has taken into account the commercial assessment of
the Independent Board.
2. The Rahway Property Valuation Report
The recently-commissioned Valuation Report places a market value
on the Rahway Property of US$8.7 million (approximately GBP5.65
million) compared with its book value of US$2.967m (approximately
GBP1.929 million). The valuation was carried out in accordance with
the Uniform Standards of Professional Appraisal Practice (USPAP), a
copy of which can be found at www.uspap.org.
From time to time, the Board has been made aware of the
potential to redevelop the Rahway Property for a higher (non
industrial) use and a long term environmental clean-up (funded by a
previous owner) has recently been completed, to bring the land up
to a standard suitable for residential development. However, the
property is currently zoned solely for industrial purposes under
local planning regulations and the Independent Board understands
that there is no reliable means of establishing the probability of
securing a re-zoning at this point in time. In this regard, the
Independent Board notes that the valuation set out within the
Valuation Report has been carried out on the basis of "highest and
best use" within the existing zoning restrictions, which in the
circumstances is considered by the valuers to be its current use,
as an industrial property.
After taking into account the transaction costs associated with
selling the Rahway Property (estimated at 6 per cent. of the sale
price) and taxation payable upon such sale (estimated at zero), the
Independent Board believes that the net proceeds would cover a
substantial proportion of the cash costs of consolidating the
Group's US manufacturing activities at the Group's other facility
in Lawrence, Kansas. The Independent Board would expect such a
project to yield substantial cost savings and make a material
contribution to the Group's profit improvement objectives.
Whilst the Independent Board considers that the Offer does not
reflect any upside from a potential, largely self- funding
consolidation of the Group's US manufacturing operations, the
associated execution risks and uncertainties, together with the
lack of reliance which may be placed on any additional financial
surplus from the Rahway Property sale over and above what is
required to fund the project, lead the Independent Board to
conclude that its overall view on the Offer ought not be swayed one
way or the other by the results of the Valuation Report.
Further to its consideration of the Valuation Report, the
Independent Board became aware on 3 March 2015 of an expression of
interest from a third party in relation to an offer to purchase the
Rahway Property at a price significantly in excess of its value on
a continuing use basis. At this stage, the Independent Board has
not received any offer or specific proposals, in writing or
otherwise, in respect of such proposed acquisition. Given the
uncertainty surrounding any offer for the Rahway Property and the
timetable in respect of the Offer generally, the Independent Board
has decided to disregard the expression of interest in formulating
its recommendation within this circular.
3. Background to, and Reasons for, Recommending Acceptance of the Offer
As detailed in the Initial Response Circular, the Offer is at a
premium of 27.7 per cent. to the closing share price of 47 pence on
21 January 2015, the day prior to the announcement of the Offer.
Whilst acknowledging that the pre-Offer share price was affected by
a deterioration in trading results during the current financial
year, the Independent Board expects an improvement in the Group's
performance in the year ahead, together with additional medium term
financial benefits associated with the Group's recent capital
investments and the proposed manufacturing consolidation in the US.
Overall, the Independent Board is of the view that the Offer price
does not fully recognise the Shareholder value which may be
generated if current plans and expectations come to fruition.
Nevertheless, the Offer does provide the certainty of a cash
exit and an opportunity for Shareholders to realise their
investment in the Company. As explained in the Initial Response
Circular, the Board ran a formal sale process between 26 September
2012 and 13 February 2013 which was terminated when the Directors
concluded that there was little prospect of securing a sufficiently
attractive price for Shareholders. Of particular relevance is the
Independent Board's belief that the price required to secure a sale
on that occasion would likely have been below the value of the
current Offer. Since the cessation of the formal sale process, with
the exception of the Offer, there has been no substantive approach
on behalf of any other potential party wishing to instigate
discussions with a view to making an offer for the Group.
The Offer has already met its acceptance condition and was
declared unconditional in all respects on 9 February
2015. Therefore, in due course, Cedar Bidco will own at least 62
per cent. of the Shares. Without recourse to other Shareholders,
Cedar Bidco will then be able to propose and pass any ordinary
resolution at a general meeting of the Company, allowing it to
determine the membership of the board of directors and, through
board appointments, potentially the strategy and operation of the
Group, as well as the Company's policy on future dividend payments
(subject always to the directors' obligations to act in accordance
with the Companies Act). It is possible that Cedar Bidco's strategy
and policies may differ from the Board's current intentions and its
priorities may be at variance with other Shareholders who, even
acting collectively, will have limited scope for influencing the
affairs of the Company by the exercise of their voting rights.
Furthermore, the Independent Board considers it reasonably
likely that Cedar Bidco will gain control over more than 75 per
cent. of the voting rights of the Company. Even if it did not do so
as a direct consequence of the Offer, Cedar Bidco may pass that
threshold at some point in the future as a result of further API
Share acquisitions which, having already secured majority control,
would not then trigger an obligation to make a general offer for
the remaining Shares. A stake of 75 per cent. would enable Cedar
Bidco to propose and pass special resolutions, including a
resolution to achieve its stated objective of cancelling the
admission of API Shares to trading on AIM and taking the Company
private.
Therefore, following the Offer, any Shareholders who have not
accepted the Offer are faced with the prospect of holding Shares in
a Cedar Bidco-controlled company, possibly constituted as a private
company with shares no longer traded on a public market. The
Independent Board believes that, in these circumstances, demand
for, and liquidity in, API Shares is likely to be adversely
impacted and there is no guarantee that Shareholders will have
another opportunity to sell at or above the current Offer price in
the near future, or at all. For this reason, in particular, the
Independent Board recommends that Shareholders accept the
Offer.
4. The Independent Board's Views on the Effect of the
Implementation of the Offer on API's Interests, Employees and
Locations
The Code requires the Independent Board to give its views on the
effect of the Offer on API's interests, including, specifically,
employment, and its views on Cedar Bidco's strategic plans for API
and their likely repercussions on employment and the locations of
the Group's places of business. In fulfilling its obligations under
the Code, the Independent Board can only comment on the details
provided in the Offer Document.
As set out in the Initial Response Circular, due to the lack of
detail provided by Cedar Bidco, the Independent
Board is unable to comment on the effect of Cedar Bidco's plans
on API's interests.
5. Conclusion
The Independent Board has considered carefully the
recently-commissioned Valuation Report pertaining to the Rahway
Property in addition to the various other factors previously set
out in the Initial Response Circular. Whilst the Independent Board
believes that the Offer price falls short of a full recognition of
the value which could be generated for Shareholders from an
expected recovery in trading, the benefit of recent capital
investment and other growth and profit improvement initiatives
implemented by the Group, the Offer does present Shareholders with
a cash exit at a premium to the prevailing share price prior to the
announcement of the Offer and a release from the risks and
uncertainties that have affected, and may continue to affect, the
value and marketability of API Shares.
Most significantly, since Cedar Bidco has already secured
acceptances giving it 62 per cent. of the Shares and the
Independent Board considers that there is a reasonable
likelihood that control will be secured over more than
75 per cent. of the voting rights of the Company (either
pursuant to the Offer or subsequently), Shareholders who do not
accept the Offer are faced with the prospect of holding Shares in a
Cedar Bidco-controlled company, with reduced share liquidity and
marketability, as well as the potential loss of the regulatory
protection afforded to Shareholders under the AIM Rules (should the
Company be taken private).
THE INDEPENDENT BOARD RECOMMENDS THAT SHAREHOLDERS ACCEPT THE
OFFER
The Independent Board, which has been so advised by Numis,
recommends that all Shareholders accept the Offer (as each member
of the Independent Board intends to do in respect of his entire
beneficial holding of Shares in the Company). In providing advice
to the Independent Board, Numis has taken into account the
commercial assessment of the Independent Board.
Yours faithfully
Andrew Turner
Interim Chairman of the Board of API Group plc
For further information:
API Group plc
Andrew Turner, Group Chief Executive Tel: +44 (0) 1625
650 334
www.apigroup.com
Numis Securities (Financial Adviser and
Broker)
James Serjeant Tel: +44 (0) 20 7260
Nick Westlake 1000
Jamie Lillywhite www.numis.com
Cairn Financial Advisers (Nominated Adviser)
Tony Rawlinson / Avi Robinson Tel: +44 (0) 20 7148
7900
www.cairnfin.com
Media enquiries:
Abchurch
Henry Harrison-Topham / Quincy Allan Tel: +44 (0) 20 7398
7710
quincy.allan@abchurch-group.com www.abchurch-group.com
Important information
Numis Securities Limited, which is authorised and regulated in
the United Kingdom by the Financial Conduct Authority, is acting
exclusively for API and no one else in connection with the Offer
and this Announcement and will not be responsible to anyone other
than API for providing the protections afforded to clients of Numis
Securities Limited nor for providing advice in connection with the
Offer or any matter referred to herein.
Cairn Financial Advisers, which is authorised and regulated in
the United Kingdom by the Financial Conduct Authority, is acting
exclusively for API and no one else in connection with the Offer
and this Announcement and will not be responsible to anyone other
than API for providing the protections afforded to clients of Cairn
Financial Advisers nor for providing advice in connection with the
Offer or any matter referred to herein.
This Announcement has been prepared for the purpose of complying
with English law and the City Code on Takeovers and Mergers and the
information disclosed may not be the same as that which would have
been disclosed if this Announcement had been prepared in accordance
with the laws of jurisdictions outside the United Kingdom.
Notice to overseas shareholders
The ability of API shareholders who are not resident in and
citizens of the United Kingdom to accept the Offer (if made) may be
affected by the laws of the relevant jurisdictions in which they
are located or of which they are citizens. Persons who are not
resident in the United Kingdom should inform themselves of, and
observe, any applicable legal or regulatory requirements of their
jurisdictions.
The release, publication or distribution of this announcement in
jurisdictions other than in the United Kingdom may be restricted by
law and therefore any persons who are subject to the laws of any
jurisdiction other than the United Kingdom should inform themselves
about, and observe, any applicable requirements.
Copies of this announcement will not be, and must not be, mailed
or otherwise forwarded, distributed or sent in, into or from any
jurisdiction where the publication or distribution of such
documentation is restricted. Persons receiving this announcement
(including, without limitation, custodians, nominees and trustees)
must not distribute, mail or send it in or into any jurisdiction
where the publication or distribution of such documentation is
restricted.
Publication on website & hard copies
A copy of this Announcement will be made available, free of
charge subject to certain restrictions relating to persons resident
in Restricted Jurisdictions, at http://www.apigroup.com by no later
than 8am (London time) on 5 March 2015.
Neither the content of the website referred to in this
Announcement nor the content of any websites accessible from
hyperlinks on the Company's websites (or any other websites) is
incorporated into, or forms part of, this Announcement.
You may request a hard copy of this announcement by contacting
Company Secretary, Claire Chadwick, on +44 (0) 1625 650 570. You
may also request that all future documents, announcements and
information in relation to the Offer be sent to you in hard copy
form by contacting Company Secretary, Claire Chadwick, on +44 (0)
1625 650 570.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCEAEDLESFSEAF
Abrdn Property Income (LSE:API)
Historical Stock Chart
From Mar 2024 to Apr 2024
Abrdn Property Income (LSE:API)
Historical Stock Chart
From Apr 2023 to Apr 2024