TIDMSMS
RNS Number : 0133W
Smart Metering Systems PLC
07 December 2023
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
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
FOR IMMEDIATE RELEASE
7 December 2023
RECOMMED CASH ACQUISITION
of
Smart Metering Systems plc ("SMS")
by
Sienna Bidco Limited ("Bidco")
a newly formed company wholly-owned by funds advised by Kohlberg
Kravis Roberts & Co. L.P. and its affiliates
to be effected by means of a scheme of arrangement
under Part 26 of the UK Companies Act 2006
Summary
-- The boards of SMS and Bidco are pleased to announce that they
have reached agreement on the terms of a recommended all cash
acquisition of the entire issued and to be issued ordinary share
capital of SMS by Bidco. The Acquisition is to be effected by means
of a scheme of arrangement under Part 26 of the Companies Act.
-- Under the terms of the Acquisition, each SMS Shareholder shall be entitled to receive:
for each SMS Share 955 pence in cash
-- The Acquisition Price represents an attractive premium of approximately:
o 40.4 per cent. to the Closing Price of 680 pence per SMS Share
on 6 December 2023 (being the last Business Day prior to the date
of this Announcement and the commencement of the Offer Period) (the
"Latest Practicable Date");
o 50.7 per cent. to the three-month Volume Weighted Average
Price of 634 pence per SMS Share on the Latest Practicable Date;
and
o 43.8 per cent. to the six-month Volume Weighted Average Price
of 664 pence per SMS Share on the Latest Practicable Date.
-- The Acquisition values the entire issued and to be issued
ordinary share capital of SMS at approximately GBP1.3 billion on a
fully diluted basis, and this implies an enterprise value of
approximately GBP1.4 billion.
-- The Acquisition values SMS at an EV / EBITDA multiple of
20.0x (calculated based on LTM Pre-exceptional EBITDA of GBP71
million as of June 2023).
-- SMS Shareholders will be entitled to receive and retain the
Second FY 2023 Dividend Instalment of 8.31875 pence per SMS Share
as announced by SMS on 12 September 2023, which is expected to be
paid on 25 January 2024 to those SMS Shareholders who appear on the
register of members of the Company on 5 January 2024.
-- If any other dividend or distribution is announced, declared,
made or paid in respect of SMS Shares on or after the date of this
Announcement (including the Third and Fourth FY 2023 Dividend
Instalments), Bidco reserves the right to reduce the Acquisition
Price by the amount of such dividend or other distribution, except
where the SMS Shares are or will be acquired pursuant to the Scheme
on a basis which entitles Bidco to receive such dividend or other
distribution and retain it. If Bidco exercised this right or made
such a reduction in respect of a dividend or other distribution,
SMS Shareholders would be entitled to retain that dividend or other
distribution and any reference in this Announcement to the
consideration payable under the Scheme shall be deemed to be a
reference to the consideration as so reduced.
Transaction overview
-- All-cash acquisition of SMS by Bidco, intended to be
recommended unanimously by the SMS Board.
-- The offer price represents a significant premium to the
current share price and allows shareholders to realise immediate
and attractive value for their shareholding.
-- KKR believes that SMS is a business of high quality, with a
best-in-class management team and long-term, contracted and
inflation-protected cashflow streams. The business has the
potential to substantially contribute to and enable the energy
transition. SMS represents an established smart meters platform
with a growing capability in grid-scale battery storage assets and
other carbon reduction activities, and is expected to play a
leading role to support the UK Government's ambition to be net zero
by 2050.
-- KKR believes that SMS, under private ownership, will be able
to accelerate its growth and continued transition from a metering
provider and grid-scale battery storage operator to a fully
integrated, end-to-end energy infrastructure company which owns,
installs and manages carbon reduction assets.
-- The SMS Group has a large and attractive pipeline of broader
opportunities including the ongoing Battery Energy Storage Systems
("BESS") rollout, together with the development of wider carbon
reduction ("CaRe") products. The size of these opportunities and
the capital that would be required to maximise the return on those
opportunities is substantial. The SMS Group may not be able to
fully capitalise on these opportunities with internally-generated
cash flows, additional debt facilities or asset recycling alone. A
private setting will enable SMS to operate in a way which is not
capital constrained, and which facilitates the investment needed to
fully realise the growth opportunity presented by the UK's energy
transition.
-- KKR's operational capability, partnership approach and
extensive experience with investing behind the energy transition
will enable it to be a strong partner to SMS as it progresses
through its next phase of development, particularly in terms of
flexible access to long term competitive capital.
SMS recommendation
-- The SMS Directors, who have been so advised by Investec and
RBC as to the financial terms of the Acquisition, consider the
terms of the Acquisition to be fair and reasonable. In providing
their advice to the SMS Directors, Investec and RBC have taken into
account the commercial assessments of the SMS Directors. Investec
is providing independent financial advice to the SMS Directors for
the purposes of Rule 3 of the Takeover Code.
-- Accordingly, the SMS Directors intend to recommend
unanimously that SMS Shareholders vote in favour of the Scheme at
the Court Meeting and that SMS Shareholders vote in favour of the
Special Resolutions to be proposed at the SMS General Meeting (or,
if Bidco, with the consent of the Panel, subsequently structures
the Acquisition as a Takeover Offer, to accept any Takeover Offer
made by Bidco in accordance with the terms of the irrevocable
undertaking), as the SMS Directors who hold interests in SMS Shares
have irrevocably undertaken to do in respect of their own legal
and/or beneficial holdings which are under their control of 141,341
SMS Shares, in aggregate, representing approximately 0.1 per cent.
of SMS's issued ordinary share capital on the Latest Practicable
Date, as detailed in Appendix III to this Announcement.
Information on the SMS Group
-- SMS was incorporated in Scotland in October 2009 and the SMS
Shares were admitted to trading on AIM on 8 July 2011.
-- SMS is a fully integrated energy infrastructure company
owning and managing meter assets, energy data, grid-scale batteries
and other carbon reduction (CaRe) assets. The group manages and
optimises these assets through its in-house technology and data
analytical platform "METIS".
-- Established in 1995, SMS provides a full end-to-end service
in metering and other carbon reduction assets, from funding and
installation to management and maintenance, with a highly skilled
workforce, deep engineering expertise and well-established
industrial partnerships.
-- Since its IPO, SMS has grown to become one of the UK leaders
in smart energy assets and related data services. SMS provides a
fully-integrated offering, as an end-to-end installer, owner and
operator of smart energy assets, including smart meters, grid-scale
battery storage systems, electric vehicle chargers and other behind
the meter assets such as solar, storage and heat pumps. Its
solutions are widely used across a number of settings, primarily
industrial, commercial and public sectors, and the wider domestic
market.
-- SMS is one of the leaders in the low carbon, smart energy
revolution in the UK and is committed to reducing its own carbon
emissions to net zero by 2030. SMS has been recognised with the
London Stock Exchange's Green Economy Mark every year since it was
introduced in 2019.
-- SMS is headquartered in Glasgow with a presence across over
eight locations. SMS is quoted on AIM.
-- SMS employs approximately 1,500 people, primarily in the UK,
and for the financial year ended 31 December 2022, SMS reported
Pre-exceptional EBITDA of GBP63.8 million and Underlying Profit
Before Tax of GBP24.5 million. At 31 December 2022 SMS had
index-linked annualised recurring revenue (ILARR) of GBP97.1
million.
-- At 30 June 2023 SMS reported ILARR of GBP110.0 million. For
the six month period ended 30 June 2023, SMS reported
Pre-exceptional EBITDA of GBP36.1 million and Underlying Profit
Before Tax of GBP11.2 million.
Information on Bidco and KKR
-- Bidco is a newly formed company indirectly wholly-owned by
funds advised by KKR. KKR is a leading global investment firm that
offers alternative asset management as well as capital markets and
insurance solutions, with approximately US$528 billion in assets
under management as of 30 September 2023. KKR aims to generate
attractive investment returns by following a patient and
disciplined investment approach, employing world-class people, and
supporting growth in its portfolio companies and communities.
-- KKR has significant experience and deep roots in
infrastructure investing. KKR established its Global Infrastructure
strategy in 2008 and has since been one of the most active
infrastructure investors around the world, with a team of over 115
individuals, including more than 90 investment professionals and
over 25 additional value-creation executives that are fully
dedicated to Infrastructure. The firm has made over 80
infrastructure investments spanning the globe across various
sectors including renewables, utilities, midstream, transportation,
water and communications. Its portfolio companies have assets
across many geographies, including the US, Canada, Mexico, Germany,
France, Spain, and the UK, amongst others.
-- KKR will invest in the Acquisition largely through KKR Global
Infrastructure Investors IV, a US$17 billion fund focused on
critical infrastructure investments with low volatility and strong
downside protection where KKR believes it can achieve attractive
risk-adjusted returns by leveraging its experienced team,
risk-based strategy, long track record of operational value
creation, and global network of industry experts.
Timetable and Conditions
-- The Acquisition will be put to SMS Shareholders at the Court
Meeting and at the SMS General Meeting. The Court Meeting and the
SMS General Meeting are required to enable SMS Shareholders to
consider and, if thought fit, vote in favour of the Scheme and the
resolutions to approve and implement the Scheme. In order to become
Effective, the Scheme must be approved by a majority in number of
the SMS Shareholders present, entitled to vote and voting at the
Court Meeting, either in person or by proxy, representing at least
75 per cent. in value of the SMS Shares voted. In addition, Special
Resolutions approving and implementing the Scheme must be passed by
SMS Shareholders representing at least 75 per cent. of votes cast
at the SMS General Meeting.
-- The Acquisition will be subject to the Conditions and further
terms set out in Appendix I to this Announcement. It is expected
that the Scheme will become Effective in Q1 2024.
-- Bidco will work with SMS to engage constructively with all
relevant stakeholders to satisfy these Conditions.
-- The Scheme Document, containing further information about the
Acquisition and notices of the Court Meeting and the SMS General
Meeting, together with the forms of proxy, is expected to be
published within 28 days of the date of this Announcement (unless
otherwise agreed by the Panel, Bidco and SMS).
Commenting on the Acquisition, Tim Mortlock, Chief Executive
Officer of SMS, said:
"KKR's offer recognises the strength and resilience of our model
and will ensure SMS has the necessary capital to accelerate and
unlock its full growth potential. The offer price represents a
significant premium to the current share price and allows
shareholders to realise immediate and attractive value for their
shareholding."
Commenting on the Acquisition, Tara Davies, Partner and Co-Head
of European Infrastructure at KKR, said:
"SMS has a strong asset base and a clear strategy across
different business lines which are critical enablers of the UK's
Net Zero goals, and we share the team's vision of putting SMS at
the heart of the UK's energy transition. Achieving this growth
opportunity requires significant capital of a scale, flexibility
and certainty which is best facilitated in the private markets. KKR
is a major investor in UK infrastructure and behind the energy
transition, and we will bring our expertise and operational
resources to bear in supporting SMS to invest at the level required
and successfully scale its business over the long-term."
This summary should be read in conjunction with, and is subject
to, the full text of this Announcement. The Acquisition shall be
subject to the Conditions and further terms set out in Appendix I
to this Announcement and to the full terms and conditions which
shall 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 summary and
the Announcement, Appendix III contains a summary of the
irrevocable undertakings received in relation to this Acquisition
and Appendix IV contains definitions of certain expressions used in
this summary and in this Announcement.
This Announcement is being made on behalf of SMS by Craig
McGinn, Group Company Secretary.
Enquiries:
Morgan Stanley (Joint Financial
Adviser to KKR)
Shirav Patel / Francesco Puletti
/ Andrew Foster / George Chalaris
/ Nagib Ahmad +44 (0) 20 7425 8000
Macquarie Capital (Joint Financial
Adviser to KKR)
Adam Hain / Ashish Mehta +44 (0) 20 3037 2000
FGS Global (PR Adviser to KKR-LON@fgsglobal.com
KKR) +44 (0) 20 725 13801
Faeth Birch / Alastair Elwen
/ Sophia Johnston
Smart Metering Systems plc
Miriam Greenwood, Chairman
Tim Mortlock, Chief Executive
Officer
Gail Blain, Chief Financial
Officer
Dilip Kejriwal, Head of Investor
Relations +44 (0) 141 249 3850
RBC Capital Markets (Joint
Financial Adviser and Joint
Broker to SMS)
Mark Preston / Evgeni Jordanov
/ Matthew Coakes / Sam Jackson +44 (0) 20 7653 4000
Investec Bank plc (Joint Financial
Adviser and Joint Broker to
SMS)
Henry Reast / James Rudd /
Shalin Bhamra +44 (0) 20 7597 5970
Cavendish Securities plc (Nomad
and Joint Broker to SMS)
Neil McDonald / Peter Lynch
/ Adam Rae +44 (0) 131 220 6939
Instinctif Partners (Public sms@instinctif.com
Relations Adviser to SMS)
Tim Linacre +44 (0) 7949 939 237
Guy Scarborough +44 (0) 7917 178 920
Hogan Lovells International LLP is acting as legal adviser to
SMS in connection with the Acquisition. Simpson Thacher &
Bartlett LLP is acting as legal adviser to KKR and Bidco. Burness
Paull LLP are providing legal advice to SMS as to Scottish law.
Important Notices
RBC Europe Limited (trading as RBC Capital Markets), which is
authorised by the Prudential Regulation Authority and regulated by
the Financial Conduct Authority and the Prudential Regulation
Authority in the United Kingdom, is acting for SMS and no one else
in connection with the matters referred to in this announcement and
will not be responsible to anyone other than SMS for providing the
protections afforded to clients of RBC Capital Markets, or for
providing advice in connection with matters referred to in this
announcement.
Investec, which is authorised by the Prudential Regulation
Authority (the "PRA") and regulated by the Financial Conduct
Authority and PRA in the United Kingdom, is acting exclusively as
financial adviser to SMS and for no one else in connection with the
Offer and will not be responsible to any person other than SMS for
providing the protections afforded to clients of Investec, nor for
providing advice in relation to the Offer, the content of this
announcement or any matter referred to in this announcement.
Neither Investec nor any of its subsidiaries, branches or
affiliates owes or accepts any duty, liability or responsibility
whatsoever (whether direct or indirect, whether in contract, in
tort, under statute or otherwise) to any person who is not a client
of Investec in connection with this announcement, any statement
contained herein or otherwise.
Cavendish Securities, which is authorised and regulated in the
United Kingdom by the Financial Conduct Authority, is acting
exclusively for SMS and no one else in connection with the subject
matter of this Announcement and will not be responsible to anyone
other than SMS for providing the protections afforded to clients of
Cavendish Securities or for providing advice in relation to the
subject matter of this Announcement, the contents of this
Announcement and any other matters referred to in this
Announcement.
Morgan Stanley & Co. International plc ("Morgan Stanley")
which is authorised by the Prudential Regulation Authority and
regulated by the Financial Conduct Authority and the Prudential
Regulation Authority in the UK is acting as financial adviser
exclusively for KKR and no one else in connection with the matters
set out in this announcement. In connection with such matters,
Morgan Stanley, its affiliates and their respective directors,
officers, employees and agents will not regard any other person as
their client, nor will they be responsible to any other person for
providing the protections afforded to their clients or for
providing advice in connection with the contents of this
announcement or any other matter referred to herein.
Macquarie Capital (Europe) Limited ("Macquarie Capital") which
is regulated by the Financial Conduct Authority in the UK is acting
as financial adviser exclusively for KKR and no one else in
connection with the matters set out in this announcement. In
connection with such matters, Macquarie Capital, its affiliates and
their respective directors, officers, employees and agents will not
regard any other person as their client, nor will they be
responsible to any other person for providing the protections
afforded to their clients or for providing advice in connection
with the contents of this announcement or any other matter referred
to herein. Macquarie Capital (Europe) Limited is not an authorised
deposit-taking institution for the purposes of the Banking Act 1959
(Commonwealth of Australia), and its obligations do not represent
deposits or other liabilities of Macquarie Bank Limited ABN 46 008
583 542. Any investments are subject to investment risk including
possible delays in repayment and loss of income and principal
invested. Macquarie Bank Limited does not guarantee or otherwise
provide assurance in respect of the obligations of Macquarie
Capital (Europe) Limited.
Further Information
This Announcement is for information purposes only and does not
constitute or form any part of an offer to sell or subscribe for or
an invitation to purchase or subscribe for any securities or the
solicitation of an offer to buy any securities, pursuant to the
Acquisition or otherwise. The Acquisition shall be made solely by
means of the Scheme Document (or, if, with the consent of the
Panel, the Acquisition is implemented by way of a Takeover Offer,
any document by which the Acquisition is made) which, together with
the Forms of Proxy (or forms of acceptance), shall contain the full
terms and Conditions of the Acquisition, including details of how
to vote in respect of the Acquisition. SMS Shareholders are
strongly advised to read the formal documentation in relation to
the Acquisition once it has been despatched. Each SMS Shareholder
is urged to consult its independent professional adviser
immediately regarding the tax consequences to it (or its beneficial
owners) of the Acquisition.
The statements contained in this Announcement are made as at the
date of this Announcement, unless some other time is specified in
relation to them, and publication of this Announcement shall not
give rise to any implication that there has been no change in the
facts set forth in this Announcement since such date.
This Announcement has been prepared for the purpose of complying
with English and Scots 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 and Scotland.
This Announcement does not constitute a prospectus or prospectus
equivalent document.
Overseas Shareholders
The release, publication or distribution of this Announcement in
or into certain jurisdictions other than the United Kingdom may be
restricted by law. Persons who are not resident in the United
Kingdom should inform themselves of, and observe, any applicable
requirements.
Unless otherwise determined by Bidco or required by the Takeover
Code, and permitted by applicable law and regulation, the
Acquisition shall 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 Acquisition by any such use, 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 Scheme and the Acquisition 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 in that
jurisdiction, and persons receiving this Announcement and all
documents relating to the Acquisition (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 in that jurisdiction. Doing so may render invalid
any related purported vote in respect of the Acquisition.
The availability of the Acquisition to SMS Shareholders who are
not resident in the United Kingdom (and, in particular, their
ability to vote their SMS Shares with respect to the Scheme at the
Court Meeting, or to appoint another person as proxy to vote at the
Court Meeting on their behalf) may be affected by the laws of the
relevant jurisdictions in which they are resident. Persons who are
not resident in the United Kingdom should inform themselves of, and
observe, any applicable requirements, as any failure to comply with
such requirements 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
Acquisition disclaim any responsibility or liability for the
violation of such restrictions by any person.
The Acquisition shall be subject to the applicable requirements
of the Takeover Code, the Panel, the London Stock Exchange, the
Financial Conduct Authority and the AIM Rules. Further details in
relation to Overseas Shareholders will be contained in the Scheme
Document.
Additional Information for US Investors
The Acquisition is being made to acquire the securities of a
Scottish company by means of a scheme of arrangement provided for
under Scots law. A transaction effected by means of a scheme of
arrangement is not subject to the tender offer or proxy
solicitation rules under the US Exchange Act. Accordingly, the
Scheme will be subject to disclosure requirements and practices
applicable in the United Kingdom to schemes of arrangement, which
are different from the disclosure requirements of the US tender
offer and proxy solicitation rules. Certain financial information
included in this Announcement and the Scheme documentation has been
or will have been prepared in accordance with accounting standards
applicable in the United Kingdom and thus may not be comparable to
financial information of US companies or companies whose financial
statements are prepared in accordance with generally accepted
accounting principles in the US. If Bidco were to elect to
implement the Acquisition by means of a Takeover Offer, such
Takeover Offer would be made in compliance with applicable US laws
and regulations, including Section 14(e) of the US Exchange Act and
Regulation 14E thereunder. Such a takeover would be made in the
United States by Bidco and no one else.
The receipt of cash pursuant to the Acquisition by a US SMS
Shareholder as consideration for the transfer of its SMS Shares
pursuant to the Scheme will likely be a taxable transaction for
United States federal income tax purposes and under applicable
United States state and local, as well as foreign and other, tax
laws. SMS Shareholders are urged to consult their independent
professional advisers immediately regarding the tax consequences of
the Acquisition applicable to them.
It may be difficult for US SMS Shareholders to enforce their
rights and claims arising out of the US federal securities laws,
since Bidco and SMS 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 SMS 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 jurisdiction and judgement.
In accordance with normal UK practice and pursuant to Rule
14e-5(b) of the US Exchange Act, Bidco, certain affiliated
companies and their nominees or brokers (acting as agents) may make
certain purchases of, or arrangements to purchase, shares in SMS
outside of the US, other than pursuant to the Acquisition, until
the date on which the Acquisition and/or Scheme becomes Effective,
lapses or is otherwise withdrawn. Also, in accordance with Rule
14e-5(b) of the US Exchange Act, each of Morgan Stanley, Macquarie
Capital, Investec and RBC will continue to act as a connected
exempt principal trader in SMS Shares on the London Stock Exchange.
If such purchases or arrangements to purchase were to be made they
would occur either in the open market at prevailing prices or in
private transactions at negotiated prices and comply with
applicable law, including the US Exchange Act. Any information
about such purchases or arrangements to purchase will be disclosed
as required in the United Kingdom, will be reported to a Regulatory
Information Service and will be available on the London Stock
Exchange website at http://www.londonstockexchange.com .
Forward Looking Statements
This Announcement (including information incorporated by
reference in this Announcement), oral statements made regarding the
Acquisition, and other information published by KKR, Bidco or SMS
may contain statements about Bidco and SMS that are or may be
deemed to 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", "may",
"shall", "should", "anticipates", "estimates", "projects", "is
subject to", "budget", "scheduled", "forecast" 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 Bidco's or SMS's operations and potential synergies
resulting from the Acquisition; and (iii) the effects of government
regulation on Bidco's or SMS's business.
Such forward looking statements are prospective in nature and
are not based on historical facts, but rather on current
expectations and projections of the management of Bidco and SMS
about future events, and are therefore subject to 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, including: increased
competition, the loss of or damage to one or more key customer
relationships, changes to customer ordering patterns, delays in
obtaining customer approvals for engineering or price level
changes, the failure of one or more key suppliers, the outcome of
business or industry restructuring, the outcome of any litigation,
changes in economic conditions, currency fluctuations, changes in
interest and tax rates, changes in raw material or energy market
prices, changes in laws, regulations or regulatory policies,
developments in legal or
public policy doctrines, technological developments, the failure
to retain key management, or the timing and success of future
acquisition opportunities or major investment projects. Other
unknown or unpredictable factors could cause actual results to
differ materially from those in the forward looking statements.
Such forward looking statements should therefore be construed in
the light of such factors. Neither Bidco nor SMS, nor any of their
respective associates or directors, officers or advisers, provides
any representation, assurance or guarantee that the occurrence of
the events expressed or implied in any forward looking statements
in this Announcement will actually occur. 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
hereof. All subsequent oral or written forward looking statements
attributable to any member of the Bidco Group or the SMS Group, or
any of their respective associates, directors, officers, employees
or advisers, are expressly qualified in their entirety by the
cautionary statement above.
Bidco and SMS expressly disclaim any obligation to update any
forward looking or other statements contained herein, except as
required by applicable law or by the rules of any competent
regulatory authority, whether as a result of new information,
future events or otherwise.
No Profit Forecasts or Profit Estimates or Quantified Financial
Benefit Statements
No statement in this Announcement is intended as, or is to be
construed as, a profit forecast, profit estimate or quantified
financial benefits statement for any period and no statement in
this Announcement should be interpreted to mean that earnings or
earnings per share for SMS for the current or future financial
years would necessarily match or exceed the historical published
earnings or earnings per share for SMS.
Disclosure Requirements of the Takeover Code
Under Rule 8.3(a) of the Takeover Code, any person who is
interested in 1 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 1 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. If you are in any doubt as to whether you are required
to make an Opening Position Disclosure or a Dealing Disclosure, you
should contact the Panel's Market Surveillance Unit on +44 (0)20
7638 0129.
Electronic Communications
Please be aware that addresses, electronic addresses and certain
information provided by SMS Shareholders, persons with information
rights and other relevant persons for the receipt of communications
from SMS may be provided to Bidco during the Offer Period as
required 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 and the documents required to be
published by Rule 26 of the Takeover Code shall be made available
subject to certain restrictions relating to persons resident in
Restricted Jurisdictions on SMS's website at www.sms-plc.com by no
later than 12 noon (London time) on the Business Day following the
date of this Announcement. For the avoidance of doubt, neither the
contents of this website nor the content of any other website
accessible from hyperlinks on such website is incorporated into, or
forms part of, this Announcement .
In accordance with Rule 30.3 of the Takeover Code, SMS
Shareholders, persons with information rights and participants in
the SMS Share Plans may request a hard copy of this Announcement by
contacting Computershare Investor Services PLC during business
hours on 0370 707 4087 or by submitting a request in writing to
Registrar at Computershare Investor Service PLC, The Pavilions,
Bridgwater Road, Bristol BS99 6ZZ. In accordance with Rule 30.3 of
the Takeover Code, a person so entitled may also request that all
future documents, announcements and information in relation to the
Acquisition should be sent to them in hard copy form. If you have
received this Announcement in electronic form or via a website
notification, hard copies of this Announcement and any document or
information incorporated by reference into this document will not
be provided unless such a request is made.
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.
Rule 2.9 Disclosure
In accordance with Rule 2.9 of the Takeover Code, SMS confirms
that as at the date of this Announcement, it has in issue and
admitted to trading on AIM 133,606,918 ordinary shares of GBP0.01
each (excluding ordinary shares held in treasury). The
International Securities Identification Number (ISIN) of the
ordinary shares is GB00B4X1RC86.
General
If you are in any doubt about the contents of this Announcement
or the action you should take, you are recommended to seek your own
independent financial advice immediately from your stockbroker,
bank manager, solicitor, accountant or independent financial
adviser duly authorised under FSMA if you are resident in the
United Kingdom or, if not, from another appropriately authorised
independent financial adviser.
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
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
FOR IMMEDIATE RELEASE
7 December 2023
RECOMMED CASH ACQUISITION
of
Smart Metering Systems plc ("SMS")
by
Sienna Bidco Limited ("Bidco")
a newly formed company wholly-owned by funds advised by Kohlberg
Kravis Roberts & Co. L.P. and its affiliates
to be effected by means of a scheme of arrangement
under Part 26 of the UK Companies Act 2006
1 Introduction
The boards of Bidco and SMS are pleased to announce that they
have reached agreement on the terms of a recommended all cash
acquisition of the entire issued and to be issued ordinary share
capital of SMS by Bidco. The Acquisition is to be effected by means
of a scheme of arrangement under Part 26 of the Companies Act.
Upon completion of the Acquisition, SMS will be wholly-owned by
Bidco.
2 The Acquisition
Under the terms of the Acquisition, which shall 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, SMS
Shareholders who are on the register of members of SMS at the
Scheme Record Time shall be entitled to receive:
for each SMS Share 955 pence in cash
The Acquisition Price per SMS Share represents an attractive
premium of approximately:
-- 40.4 per cent. to the Closing Price of 680 pence per SMS
Share on the Latest Practicable Date;
-- 50.7 per cent. to the three-month Volume Weighted Average
Price of 634 pence per SMS Share on the Latest Practicable Date;
and
-- 43.8 per cent. to the six-month Volume Weighted Average Price
of 664 pence per SMS Share on the Latest Practicable Date.
The Acquisition values the entire issued and to be issued
ordinary share capital of SMS at approximately GBP1.3 billion on a
fully diluted basis, and this implies an enterprise value of
approximately GBP1.4 billion.
The Acquisition values SMS at an EV / EBITDA multiple of 20.0x
(calculated based on LTM Pre-exceptional EBITDA of GBP71 million as
of June 2023).
SMS Shareholders will be entitled to receive and retain the
Second FY 2023 Dividend Instalment of 8.31875 pence per SMS Share
as announced by SMS on 12 September 2023, which is expected to be
paid on 25 January 2024 to those SMS Shareholders who appear on the
register of members of the Company on 5 January 2024. If any other
dividend or distribution is announced, declared, made or paid in
respect of SMS Shares on or after the date of this Announcement
(including the Third and Fourth FY 2023 Dividend Instalments),
Bidco reserves the right to reduce the Acquisition Price by the
amount of such dividend or other distribution except where the SMS
Shares are or will be acquired pursuant to the Scheme on a basis
which entitles Bidco to receive such dividend or other distribution
and retain it. If any such dividend or distribution is paid after
the date of this Announcement and Bidco exercised its rights
described in the preceding sentence, SMS Shareholders would be
entitled to retain any such dividend or other distribution and any
reference in this Announcement to the consideration payable under
the Scheme shall be deemed to be a reference to the consideration
as so reduced.
The Scheme Document, containing further information about the
Acquisition and notices of the Court Meeting and the SMS General
Meeting, together with the forms of proxy, is expected to be
published within 28 days of the date of this Announcement unless
otherwise agreed by the Panel, Bidco and SMS.
3 Background to and reasons for the Acquisition
KKR believes that SMS is a business of high quality, with a
strong and highly experienced management team and with the
potential to substantially contribute to and enable the energy
transition. Today, the business has an established smart meters
platform with growing presence in grid-scale battery storage assets
and the potential to further scale carbon reduction assets, and
play a leading role to support the UK Government's ambition to be
net zero by 2050.
KKR believes that SMS is successfully executing a transition
from a metering provider to a fully integrated, end-to-end energy
infrastructure company which owns, installs and manages carbon
reduction assets. The profile of SMS's metering and battery storage
assets together with their long-term, highly contracted, and
inflation-protected cash flow streams display the key attributes
KKR seeks in its infrastructure investments.
The energy transition is driving substantial changes in the
underlying energy markets and there is a clear opportunity for SMS
to invest at scale behind the low carbon revolution and further
develop its platform and carbon reduction asset base. This
strategy, however, is highly capital-intensive and KKR does not
believe that SMS's current financial structure allows the business
to invest at the level required to execute successfully and make
the most of the growth opportunity. Private ownership can better
facilitate this by allowing SMS to make sustained capital
investments, take a more agile approach and avoid the need for
asset recycling to fund growth initiatives. To this effect, KKR
believes it has made an attractive offer to SMS's shareholders
which delivers the certainty of cash today, in contrast to the
risks, uncertainty and significant capital requirements associated
with delivering SMS's strategy and future growth.
KKR's experience, capabilities and long-term partnership
approach will enable it to be a committed and responsible partner
and to add value as SMS progresses through its next phase of
development, in particular by enabling significantly greater access
to long-term flexible capital and leveraging KKR's operational
expertise as an active investor. KKR has significant experience in
investing at scale behind the energy transition in the UK and
globally, as well as a track record of successful execution in
growing and scaling energy and infrastructure businesses through
active management. KKR will provide SMS and its management team
with operational expertise and the firm's full global platform and
value creation resources.
4 Recommendation
The SMS Directors, who have been so advised by Investec and RBC
as to the financial terms of the Acquisition, consider the terms of
the Acquisition to be fair and reasonable. In providing their
advice to the SMS Directors, Investec and RBC have taken into
account the commercial assessments of the SMS Directors. Investec
is providing independent financial advice to the SMS Directors for
the purposes of Rule 3 of the Takeover Code.
Accordingly, the SMS Directors intend to recommend unanimously
that SMS Shareholders vote in favour of the Scheme at the Court
Meeting and that SMS Shareholders vote in favour of the Special
Resolutions to be proposed at the SMS General Meeting (or, if
Bidco, with the consent of the Panel, subsequently structures the
Acquisition as a Takeover Offer, to accept any Takeover Offer made
by Bidco in accordance with the terms of the irrevocable
undertaking), as the SMS Directors who hold interests in SMS Shares
have irrevocably undertaken to do in respect of their own legal
and/or beneficial holdings which are under their control of 141,341
SMS Shares, in aggregate, representing approximately 0.1 per cent.
of SMS's issued ordinary share capital on the Latest Practicable
Date, as detailed in Appendix III to this Announcement.
Miriam Greenwood, Chairman of the SMS Board, has a potential
interest in the Acquisition by virtue of being appointed on 16
November 2023 as a non-executive director of Liontrust Asset
Management PLC, a subsidiary of which is SMS's largest indirect
beneficial shareholder as at the date of this Announcement. In
addition, Tim Mortlock (Chief Executive Officer of SMS) and Gail
Blain (Chief Financial Officer of SMS) have a potential interest in
the Acquisition as it is expected that they will continue as SMS
Directors following the Effective Date. These possible conflicts
have been authorised by the Company's non-conflicted directors in
accordance with the Articles.
5 Background to and reasons for the recommendation
Background to the recommendation
In 2011 SMS undertook an initial public offering ("IPO") as it
considered the public equity market to be the optimum route to
access capital to grow the business. Since then, SMS has developed
into a fully integrated energy infrastructure company which owns,
installs and manages a wide range of carbon reduction ("CaRe")
products and solutions, playing an important part in the UK's
energy transition.
The SMS Group has established a significant asset base
generating long-term secure recurring cashflows, a strong growth
pipeline and substantial additional opportunities as the UK
transitions to Net Zero whilst, the SMS Directors believe, creating
long-term sustainable value for its stakeholders. During this
period, SMS has grown its market capitalisation from GBP50 million
at listing to GBP909 million as at 6 December 2023 (being the last
Business Day before the Announcement Date).
SMS has built a leading market position in its metering business
with a portfolio of c. 4.5 million metering and data assets under
management, including c. 2.3 million domestic smart electricity and
gas meters and a contracted smart meter order pipeline of c. 1.95
million meters.
Further, management has diversified SMS's operations. SMS's
infrastructure team design, install, own, operate, maintain and
optimise grid-scale battery energy storage systems ("BESS") across
the UK. The SMS Group has the UK's fourth-largest portfolio of
operational BESS assets, and a pipeline for 860MW of assets, of
which 240MW are currently operational, 370MW secured (of which 50MW
is under construction and 320MW in pre-construction) and a further
250MW under exclusivity.
In addition, the SMS Group's Energy Services division provides
utility connections and energy consultancy services, funding and
delivery solutions to Industrial & Commercial ("I&C")
customers, whilst its residential division is developing
Behind-the-Meter solar, storage, heat and electric vehicle services
to domestic households. SMS is also actively deploying electric
vehicle charging solutions, working alongside a wide range of
industry partners and stakeholders.
Underpinning all of these services is the SMS Group's
cloud-based data platform, METIS, which operates CaRe assets
distributed across the energy system. The SMS Group's industry
accredited services, which the SMS Directors believe are critical
to a decentralised and flexible energy system, provide a strong
basis from which to deliver these asset and data solutions
efficiently to the SMS Group's I&C customers, energy suppliers
and other energy industry participants, and, through its growing
grid-scale battery business, the SMS Group's participation in the
wholesale electricity market alongside national energy
networks.
The SMS Group's near-term pipeline of 1.95 million smart meters
and 620MW of BESS (together, the "Existing Pipeline") will deliver
substantial growth over the next four years, and can be fully
funded from asset-backed internally-generated cash flows and
additional debt facilities. However, this would result in peak
leverage levels of approximately 4x net debt / EBITDA limiting the
SMS Group's further growth. Interest rates, and therefore the cost
of capital are also materially more expensive today than during the
prior period since IPO. The SMS Board believes that public market
investors are currently cautious of such levels of leverage for
mid-cap companies, notwithstanding the stable, infrastructure-style
characteristics of the SMS Group's asset base. Accordingly, as
disclosed in the SMS Group's recent half year results, the Company
has considered selective asset recycling to maintain a more
conservative level of gearing and to provide capacity for further
pipeline growth. This however has potential to dilute the Company's
ability to deliver its stated wider strategy and, ultimately, grow
beyond its Existing Pipeline over the long-term.
In addition to the Existing Pipeline, the SMS Directors believe
the SMS Group has a large and attractive pipeline of broader
opportunities including, but not limited to, the ongoing BESS
rollout with an aggregate minimum target of 1,500MW operational by
2030 (plus an extension of this pipeline to longer duration
two-hour storage), together with the development of wider CaRe
products and services in strategically aligned adjacent markets
with differing revenue profiles. In order to fully capitalise on
these additional BESS and CaRe opportunities, SMS would need to
continue to transition its engineering resources to deliver these
new asset classes. The size of these opportunities and the capital
that would be required to maximise the return on those
opportunities is substantial. The SMS Group may not be able to
fully capitalise on these opportunities with internally-generated
cash flows, additional debt facilities or asset recycling
alone.
Factors considered by the SMS Board
Against this backdrop, the SMS Board received an approach from
KKR, a highly experienced infrastructure investor with expertise
investing behind the energy transition, which, following a period
of negotiation, led to the agreement of a proposal to acquire the
SMS Group at a price of 955 pence per SMS Share.
The SMS Board carefully considered this proposal and, while the
SMS Board believes SMS is well-positioned to make continued
operational and financial progress, the SMS Board has concluded
that the terms of the Acquisition recognise the strengths of SMS's
business, and provides SMS shareholders with an immediate and
attractive outcome, with certainty in cash, compared with the SMS
Group continuing to pursue its independent strategy.
In considering the terms of the Acquisition, the SMS Directors
have taken into account a number of factors including:
-- the significant premium of approximately:
o 40.4 per cent. to the Closing Price of 680 pence per SMS Share
on 6 December 2023 (being the last Business Day before the
commencement of the Offer Period); and
o 50.7 per cent. to the volume-weighted average price of 634
pence per SMS Share for the three-month period ended 6 December
2023 (being the last Business Day before the commencement of the
Offer Period).
-- that the Acquisition values SMS at an EV / EBITDA multiple of
20.0x (calculated based on LTM Pre-exceptional EBITDA of GBP71
million as of June 2023);
-- that the certainty of the all-cash nature of the
consideration payable pursuant to the Acquisition will provide SMS
Shareholders with the opportunity to receive an immediate and
attractive cash sum for all of their SMS Shares, weighed against
the risks associated with the delivery of future potential value in
the business given the uncertainty and volatility in the broader
capital markets and macroeconomic environment which are expected to
persist for a period;
-- that the delivery of the Existing Pipeline and additional
pipeline is subject to commercial and market risks and will require
significant additional funding which, given an increasing cost of
capital environment, may be challenging for SMS as a publicly
listed business. The SMS Board believes that, under private
ownership, SMS would be able to fund and accelerate the delivery of
its strategy and growth pipeline through access to significant
flexible, long-term capital from KKR, a highly supportive investor
which invests over the long-term and brings extensive operational
expertise and resources from its global platform;
-- that SMS's trading performance and growth potential have not,
in the view of the SMS Board, been appropriately reflected in the
price and valuation of SMS's Shares. In the current equity market
environment, the SMS Board believes that the terms of the
Acquisition represent attractive value relative to the risk of
ongoing volatility in capital markets;
-- that the risks and uncertainties of the current market
environment, including the prevailing global economic and
geopolitical uncertainty, may increase the execution risk
associated with the execution of SMS's growth strategy;
-- that the constraints imposed by the public capital markets
place the Company at a competitive disadvantage when compared with
comparable businesses;
-- that, in light of the valuation of SMS's listed Shares,
raising significant capital from the public market to enable the
SMS Group to fulfil its growth potential beyond the Existing
Pipeline would likely be challenging and dilutive to shareholder
value; and
-- that, based on the statements and assurances made by Bidco
regarding its intentions for the business (as set out in more
detail in paragraph 9 below), KKR fully supports SMS's current
strategy and management, which the SMS Board believes will provide
both access to capital for further growth and continuity for SMS's
customers, employees and other stakeholders.
Accordingly, having taken into account all of the above factors,
the SMS Directors intend unanimously to recommend the Acquisition
to SMS Shareholders.
6 Irrevocable undertakings
As described above, Bidco has received irrevocable undertakings
from the SMS Directors who hold interests in SMS Shares to vote in
favour of the Scheme at the Court Meeting and the Special
Resolutions to be proposed at the SMS General Meeting (or, if
Bidco, with the consent of the Panel, subsequently structures the
Acquisition as a Takeover Offer, to accept any Takeover Offer made
by Bidco in accordance with the terms of the irrevocable
undertaking) in respect of those SMS Shares that they legally
and/or beneficially hold which are under their control, in
aggregate, representing approximately 0.1 per cent. of SMS's issued
ordinary share capital on the Latest Practicable Date.
Further details of the irrevocable undertakings described above
are set out in Appendix III to this Announcement.
7 Information on Bidco and KKR
Bidco is a newly formed company indirectly wholly-owned by funds
advised by KKR. KKR is a leading global investment firm that offers
alternative asset management as well as capital markets and
insurance solutions, with approximately US$528 billion in assets
under management as of 30 September 2023. KKR aims to generate
attractive investment returns by following a patient and
disciplined investment approach, employing world-class people, and
supporting growth in its portfolio companies and communities.
KKR has significant experience and deep roots in infrastructure
investing. KKR established its Global Infrastructure strategy in
2008 and has since been one of the most active infrastructure
investors around the world, with a team of over 115 individuals,
including more than 90 investment professionals and over 25
additional value-creation executives that are fully dedicated to
Infrastructure. The firm has made over 80 infrastructure
investments spanning the globe across various sectors including
renewables, utilities, midstream, transportation, water and
communications. Its portfolio companies have assets across many
geographies, including the US, Canada, Mexico, Germany, France,
Spain, and the UK, amongst others.
KKR will invest in the Acquisition largely through KKR Global
Infrastructure Investors IV (the "Fund"), a US$17 billion fund
focused on critical infrastructure investments with low volatility
and strong downside protection where KKR believes it can achieve
attractive risk-adjusted returns by leveraging its experienced
team, risk-based strategy, long track record of operational value
creation, and global network of industry experts. The Fund has a
broad investment mandate across a number of infrastructure sectors
and predominantly pursues assets with strong existing cash flows
and attractive reinvestment opportunities for future growth.
KKR has a long track record in energy transition and
climate-related investments. Since launching the KKR Infrastructure
Platform in 2008, KKR has committed more than $15 billion to energy
transition and climate-related investments. KKR has been investing
in the UK for over two decades, having deployed over $24 billion in
equity across all investment platforms, including over $5.5 billion
in infrastructure sustainability-related investments over the past
seven years.
8 Information on the SMS Group
SMS was incorporated in Scotland in October 2009 and the SMS
Shares were admitted to trading on AIM on 8 July 2011.
SMS is a fully integrated energy infrastructure company owning
and managing meter assets, energy data, grid-scale batteries and
other carbon reduction (CaRe) assets. The group manages and
optimises these assets through its in-house technology and data
analytical platform "METIS".
Established in 1995, SMS provides a full end-to-end service in
metering and other carbon reduction assets, from funding and
installation to management and maintenance, with a highly skilled
workforce, deep engineering expertise and well-established
industrial partnerships.
Since its IPO, SMS has grown to become one of the UK leaders in
smart energy assets and related data services. SMS provides a
fully-integrated offering, as an end-to-end installer, owner and
operator of smart energy assets, including smart meters, grid-scale
battery storage systems, electric vehicle chargers and other behind
the meter assets such as solar, storage and heat pumps. Its
solutions are widely used across a number of settings, primarily
industrial, commercial and public sectors and the wider domestic
market.
SMS is one of the leaders in the low carbon, smart energy
revolution in the UK and is committed to reducing its own carbon
emissions to net zero by 2030. SMS has been recognised with the
London Stock Exchange's Green Economy Mark every year since it was
introduced in 2019.
SMS is headquartered in Glasgow with a presence across over
eight locations. SMS is quoted on AIM.
SMS employs approximately 1,500 people, primarily in the UK, and
for the financial year ended 31 December 2022, SMS reported
Pre-exceptional EBITDA of GBP63.8 million and Underlying Profit
Before Tax of GBP24.5 million. At 31 December 2022 SMS had
index-linked annualised recurring revenue (ILARR) of GBP97.1
million.
At 30 June 2023 SMS reported ILARR of GBP110.0 million. For the
six month period ended 30 June 2023, SMS reported Pre-exceptional
EBITDA of GBP36.1 million and Underlying Profit Before Tax of
GBP11.2 million.
9 Directors, management, employees, research and development and locations
Bidco's strategic plans for SMS
As set out in paragraph 3 (Background to and reasons for the
Acquisition), Bidco believes that the Acquisition represents an
attractive opportunity to support SMS in the next phase of its
growth.
Bidco is supportive of SMS's publicly stated strategy of
delivering and growing its smart meter and grid-scale battery
pipelines and building the pipeline in wider carbon reduction
assets. Bidco intends to provide capital, access to its global
network and operational expertise to support SMS's strategy under
private ownership. Bidco believes that its support will allow SMS
to deliver on its growth agenda underpinned by its focus on serving
its customers and protecting the environment.
In line with market practice for a public offer process, Bidco
completed a period of confirmatory due diligence on SMS prior to
the date of this Announcement; however, Bidco has not yet had
access to sufficiently detailed operational information to
formulate an agreed strategy for SMS. Following the Scheme becoming
Effective, Bidco intends to conduct, together with the management
team, a detailed review of SMS's business and operations, and
expects that the review will be completed within approximately
twelve months from the Effective Date. The review will include:
-- assessing SMS's existing portfolio of carbon reduction
assets, its asset pipeline and embedded growth opportunities;
-- identifying and executing acquisition and development opportunities;
-- assessing opportunities to leverage SMS's technology
platforms to enable a smart, data-driven, energy system
underpinning SMS's focus on decarbonisation; and
-- assessing SMS's capital structure and ongoing capital
requirements with a view to maximising the opportunities available
to SMS.
Employees, management and pensions
Bidco attaches great importance to the skills and experience of
SMS's management and employees and recognises that the employees
and management of SMS will be key to its future success. Bidco is
looking forward to working with SMS's management and employees to
support the future development of SMS and to ensure that the
business continues to thrive as a private company.
Once SMS ceases to be a publicly-listed company, Bidco intends
that there will be limited headcount reductions related to public
company-related functions which will no longer be required under
private ownership. Bidco will seek to reassign individuals involved
in these functions where possible and will comply with applicable
law (including any information and consultation obligations) in
connection with any headcount reductions. Bidco expects that, upon
the Scheme becoming Effective, the Chairman and each of the
non-executive directors on the SMS Board will resign from his or
her office as a director of SMS and for the Board's committees to
be disbanded.
Other than as described above, Bidco does not intend to make any
other material reductions to the SMS employee headcount.
Following completion of the Acquisition, Bidco confirms that it
will fully safeguard the existing contractual and statutory
employment rights, including pension rights, of all management and
employees of SMS in accordance with applicable law, and envisages
that there will be no material change in their terms and conditions
of employment or in the balance of their skills and functions.
Locations, headquarters and fixed assets
Bidco has no plans to change the locations of SMS's
headquarters, headquarter functions (other than as outlined in the
section above) or places of business or to redeploy the fixed
assets of SMS.
Research and development
Bidco does not intend to make any changes to SMS's research and
development functions.
Trading facilities
SMS Shares are currently admitted to trading on AIM and, as set
out in paragraph 14 below, subject to the Scheme becoming
Effective, an application will be made to the London Stock Exchange
to cancel the admission to trading of SMS Shares on AIM.
Management incentivisation
As noted above, Bidco attaches great importance to the skills,
experience and expertise of the existing employees of SMS. At this
stage, Bidco has not entered into, and has not discussed any form
of, incentivisation arrangements with members of SMS's management.
Bidco expects to put in place certain incentive arrangements for
the management of SMS and for the retention of key employees, in
each case following the Effective Date.
No statements in this paragraph 9 constitute "post-offer
undertakings" for the purpose of Rule 19.5 of the Code.
10 SMS Share Plans
Participants in the SMS Share Plans will be contacted regarding
the effect of the Acquisition on their rights under the SMS Share
Plans and, where required, appropriate proposals in accordance with
Rule 15 of the Takeover Code will be made to such participants in
due course. 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 SMS Share Plans.
11 Financing
Bidco is providing the cash consideration payable under the
Acquisition through a combination of equity and debt financing.
The financing will comprise:
-- equity to be drawn from funds, vehicles and/or accounts advised and/or managed by KKR; and
-- a term loan to be provided through an interim facilities
agreement between Bidco and certain interim lenders (the "Interim
Lenders").
Other potential investors may take indirect minority interests
in Bidco during the offer period or once the Acquisition
completes.
Morgan Stanley, as financial adviser to Bidco, is satisfied that
sufficient cash resources are available to Bidco to enable it to
satisfy in full the cash consideration payable to SMS Shareholders
under the terms of the Acquisition.
Further information on the financing of the Acquisition will be
set out in the Scheme Document.
12 Acquisition-related Arrangements
Confidentiality Agreement
Kohlberg Kravis Roberts & Co. Partners LLP, an affiliate of
Kohlberg Kravis Roberts & Co. L.P., and SMS entered into a
confidentiality agreement on 14 October 2023 (the "Confidentiality
Agreement"), pursuant to which KKR has undertaken to keep
information relating to SMS confidential and not to disclose it to
third parties (other than to permitted recipients) unless required
by law or regulation. These confidentiality obligations shall
remain in force until the earlier of completion of the Acquisition
or two years from the date of the Confidentiality Agreement.
The Confidentiality Agreement also contains undertakings from
KKR that, for a period ending on the earlier of the last day of the
eighteenth month following the date of Confidentiality Agreement
and completion of the Acquisition, KKR shall not solicit, employ or
otherwise engage certain of SMS's employees or officers without the
prior written consent of SMS.
The Confidentiality Agreement includes customary provisions
relating to restrictions on share dealings.
Clean Team Agreement
Kohlberg Kravis Roberts & Co. Partners LLP and SMS entered
into a clean team agreement on 16 November 2023 (the "Clean Team
Agreement"), the purpose of which is to stipulate the procedure for
the sharing of commercially sensitive information relating to the
SMS Group with identified external legal advisers, consultants and
experts hired by KKR in connection with: (i) undertaking commercial
and legal due diligence in order to evaluate the Acquisition; (ii)
planning the transition and integration process in relation to the
Acquisition; and (iii) undertaking the analysis of regulatory
clearance matters (including antitrust and investment screening
approvals) and undertaking the relevant regulatory processes
(including the preparation of antitrust or other regulatory filings
and communications) with any relevant regulatory authority as
required in the context of the Acquisition.
Co-operation Agreement
Bidco and SMS entered into a co-operation agreement on 7
December 2023 (the "Co-operation Agreement"), pursuant to which,
among other things: (i) Bidco has agreed to take all required or
necessary steps to promptly obtain the clearances and approvals
necessary and/or expedient to satisfy certain regulatory conditions
as soon as reasonably practicable and in any event, in sufficient
time to enable the Effective Date to occur by the Long Stop Date;
(ii) Bidco and SMS have agreed to certain undertakings to
co-operate in relation to such clearances and approvals; (iii)
Bidco has agreed to provide SMS with certain information for the
purposes of the Scheme Document and to otherwise assist SMS with
the preparation of the Scheme Document; (iv) Bidco has agreed to
take all such steps as are permissible by the Code and applicable
law and are within its power that are necessary to implement the
Acquisition in accordance with, and subject to the Code and the
terms and conditions set out in, the Co-operation Agreement, this
Announcement and the Scheme Document; (v) Bidco and SMS have agreed
to certain provisions if the Scheme should switch to a Takeover
Offer. The Co-operation Agreement also contains provisions that
will apply in respect of employee-related matters and the SMS Share
Plans.
The Co-operation Agreement can be terminated in a number of
customary circumstances, including (subject to certain exceptions):
(i) if Bidco and SMS agree in writing to terminate the Co-operation
Agreement; (ii) if the Effective Date has not occurred on or before
the Long Stop Date; (iii) if, prior to the Long Stop Date, any
Condition becomes incapable of satisfaction (in circumstances where
the invocation of the relevant Condition is permitted by the
Panel); (iv) at Bidco's election, if the SMS Directors withdraw,
adversely modify or qualify the recommendation provided in this
Announcement or, if the SMS Directors recommend a competing
proposal; or (v) if the Acquisition, with the permission of the
Panel, is withdrawn or lapses in accordance with its terms prior to
the Long Stop Date (other than in certain limited
circumstances).
13 Structure of and Conditions to the Acquisition
It is intended that the Acquisition will be effected by means of
a Court-approved scheme of arrangement between SMS and Scheme
Shareholders under Part 26 of the Companies Act.
The purpose of the Scheme is to provide for Bidco to become the
holder of the entire issued and to be issued ordinary share capital
of SMS. This is to be achieved by:
(i) the transfer of the Scheme Shares to Bidco, in consideration
for which the Scheme Shareholders who are on the register of
members at the Scheme Record Time will receive cash consideration
on the basis set out in paragraph 2 of this Announcement; and
(ii) passing of the Special Resolutions at the SMS General
Meeting (including amendments to SMS's Articles to ensure that any
SMS Shares issued or transferred out of treasury between the
approval of the Special Resolutions at the SMS General Meeting and
the Scheme Record Time will be subject to the Scheme and that any
SMS Shares issued or transferred after the Scheme Record Time will
automatically be acquired by Bidco).
The Acquisition 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 and the associated forms of proxy and will
only become Effective if, among other things, the following events
occur on or before the Long Stop Date:
(i) the approval of the Scheme by a majority in number of the
SMS Shareholders who are present, entitled to vote, and vote,
whether in person or by proxy, at the Court Meeting and who
represent 75 per cent. or more in value of the SMS Shares voted by
those SMS Shareholders at the Court Meeting;
(ii) the Special Resolutions required to approve and implement
the Scheme being duly passed by 75 per cent. or more of votes cast
at the SMS General Meeting;
(iii) following the Scheme being approved at the Court Meeting
and the Special Resolutions being passed at the SMS General
Meeting, the sanction of the Scheme by the Court (with or without
modification but subject to any modification being on terms
acceptable to SMS and Bidco); and
(iv) following the sanction of the Scheme by the Court, the
delivery of a copy of the Court Order to the Registrar of
Companies.
The Acquisition will lapse if:
-- the Court Meeting and the SMS General Meeting are not held on
or before the 22(nd) day after the expected date of such meetings
as set out in the Scheme Document in due course (or such later date
as may be agreed between Bidco and SMS and that the Court may
approve if required);
-- the Sanction Hearing is not held on or before the 22(nd) day
after the date of such hearing as set out in the Scheme Document
(or such later date as may be agreed between Bidco and SMS and that
the Court may approve if required); or
-- the Scheme does not become Effective on or before the Long Stop Date,
provided however that the deadlines for the timing of the Court
Meeting, the SMS General Meeting and the Sanction Hearing as set
out above may be waived by Bidco, and the Long Stop Date may, with
the approval of the Court and/or the Panel if required, be extended
by agreement between SMS and Bidco.
Upon the Scheme becoming Effective, it will be binding on all
Scheme Shareholders, irrespective of whether or not they attended
or voted at the Court Meeting or the SMS General Meeting and, if
they did vote, irrespective of whether or not they voted for or
against the Scheme or the resolutions proposed at those
meetings.
In accordance with the applicable provisions of the Takeover
Code, the consideration for the transfer of the Scheme Shares to
Bidco will be despatched no later than 14 days after the Effective
Date.
Any SMS Shares issued before the Scheme Record Time which remain
in issue at the Scheme Record Time will be subject to the terms of
the Scheme. The Special Resolutions to be proposed at the SMS
General Meeting will, among other things, provide that the Articles
be amended to incorporate provisions requiring, among other things
and subject to the Scheme becoming Effective, any SMS Shares issued
or transferred after the Scheme Record Time (other than to Bidco
and/or its nominees) to be automatically transferred to Bidco (or
as Bidco may direct) on the same terms as the Acquisition (other
than terms as to timings and formalities). The provisions of the
Articles (as amended) will avoid any person (other than Bidco, its
nominees and any person to whom Bidco may direct the transfer of
SMS Shares after the Effective Date) holding and retaining SMS
Shares after the Effective Date.
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 within 28 days
of this Announcement (unless otherwise agreed by the Panel, Bidco
and SMS). The Scheme Document and associated forms of proxy will be
made available to all SMS Shareholders at no charge to them, and,
for information only, to persons with information rights and to the
holders of options under the SMS Share Plans.
Subject, among other things, to the satisfaction or waiver of
the Conditions, it is expected that the Scheme will become
effective in Q1 2024.
Pursuant to the terms of the Interim Facilities Agreement, Bidco
may not waive, amend or treat as satisfied any material term or
condition relating to the Acquisition where to do so would be
materially adverse to the interests of the Interim Lenders (taken
as a whole) under the Interim Facilities Agreement, subject to
certain exceptions, including where it is reasonably determined by
Bidco as being necessary or desirable to comply with the
requirements or requests of the Takeover Code, the Panel or the
Court or any applicable law, regulation or regulatory body.
14 Cancellation of admission to trading on AIM and re-registration
Prior to the Scheme becoming Effective, an application will be
made to the London Stock Exchange for the admission of the SMS
Shares to trading on AIM to be cancelled shortly after the
Effective Date (but in any event after the Scheme becomes
Effective).
The last day of dealings in SMS Shares on AIM is expected to be
the Business Day immediately prior to the Effective Date and no
transfers will be registered after 6.00 p.m. (London time) on that
date.
On the Effective Date, share certificates held by Scheme
Shareholders in respect of Scheme Shares shall cease to be valid
and should be destroyed. In addition, entitlements to SMS Shares
held in CREST shall be cancelled on the Effective Date.
It is also proposed that, following the Effective Date and after
the cancellation of trading of the SMS Shares on AIM, SMS will be
re-registered as a private limited company under the relevant
provisions of the Companies Act.
15 Dividends
SMS Shareholders will be entitled to receive and retain the
Second FY 2023 Dividend Instalment of 8.31875 pence per SMS Share
as announced by SMS on 12 September 2023, which is expected to be
paid on 25 January 2024 to those SMS Shareholders who appear on the
register of members of the Company on 5 January 2024.
If any other dividend or distribution is announced, declared,
made or paid in respect of SMS Shares on or after the date of this
Announcement (including the Third and Fourth FY 2023 Dividend
Instalments), Bidco reserves the right to reduce the Acquisition
Price by the amount of such dividend or other distribution. If any
such dividend or distribution is paid after the date of this
Announcement and Bidco exercises its rights described in the
preceding sentence, SMS Shareholders would be entitled to retain
any such dividend or other distribution and any reference in this
Announcement to the consideration payable under the Scheme shall be
deemed to be a reference to the consideration as so reduced.
The Acquisition Price will not be reduced in circumstances where
the SMS Shares are or will be acquired pursuant to the Scheme on a
basis which entitles Bidco to receive a dividend or other
distribution in respect of its SMS Shares after the Scheme has
become effective and to retain such dividend or other
distribution.
16 Disclosure of interests in SMS
Save in respect of the irrevocable undertakings referred to in
paragraph 6 above, as at the close of business on the Latest
Practicable Date, neither Bidco, nor any of its directors, nor, so
far as Bidco is aware, any person acting, or presumed to be 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 SMS; (ii) any short positions in respect of relevant
SMS Shares (whether conditional or absolute and whether in the
money or otherwise), including any short positions under a
derivative, any agreement to sell or any delivery obligation or
right to require another person to purchase or take delivery; (iii)
any dealing arrangement of the kind referred to in Note 11 on the
definition of acting in concert in the Takeover Code, in relation
to SMS Shares or in relation to any securities convertible or
exchangeable into SMS Shares; (iv) borrowed or lent any relevant
SMS 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; or (v) procured an irrevocable undertaking or
letter of intent to accept the terms of the Acquisition in respect
of relevant securities in SMS.
'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.
Furthermore, save for the irrevocable undertakings described in
paragraph 6 above, no arrangement exists between Bidco and SMS or a
person acting in concert with Bidco and SMS in relation to SMS
Shares. For these purposes, an "arrangement" includes any indemnity
or option arrangement, and any agreement or any understanding,
formal or informal, of whatever nature, relating to SMS Shares
which may be an inducement to deal or refrain from dealing in such
securities.
It has not been possible for Bidco to make enquiries of all of
its concert parties in advance of the release of this Announcement.
Therefore, if Bidco becomes aware, following the making of such
enquiries, that any of its concert parties have any interests in
relevant securities of SMS, all relevant details in respect of
Bidco's concert parties will be included in Bidco's Opening
Position Disclosure in accordance with Rule 8.1(a) and Note 2(a)(i)
on Rule 8 of the Takeover Code.
17 General & right to switch to a Takeover Offer
Bidco reserves the right to elect (with the consent of the Panel
and subject to the terms of the Co-operation Agreement) to
implement the Acquisition by way of a Takeover Offer for the entire
issued and to be issued share capital of SMS as an alternative to
the Scheme. In such event, the Acquisition shall be implemented on
the same terms or, if Bidco so decides, such other terms being no
less favourable, so far as applicable, as those which would apply
to the Scheme (subject to appropriate amendments, including
(without limitation) an acceptance condition set (subject to the
Co-operation Agreement) at a level permitted by the Panel).
Further, if the Acquisition is effected by way of a Takeover
Offer, and if sufficient acceptances of the Takeover Offer are
received and/or sufficient SMS Shares are otherwise acquired, and
the Takeover Offer becomes or is declared unconditional in all
respects, it is the intention of Bidco to apply the provisions of
the Companies Act to acquire compulsorily any outstanding SMS
Shares to which such Takeover Offer relates. The Acquisition will
be made 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 and forms
of proxy. 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 given in
relation to the Acquisition is contained in Appendix III to this
Announcement. Certain terms used in this Announcement are defined
in Appendix IV to this Announcement.
Morgan Stanley, Macquarie Capital, Cavendish, Investec and RBC
have each given and not withdrawn their consent to the publication
of this Announcement with the inclusion herein of the references to
their names in the form and context in which they appear.
18 Documents available on website
Copies of the following documents shall be made available by no
later than 12 noon (London time) on the Business Day following the
date of this Announcement on SMS's website at www.sms-plc.com/
until the end of the Acquisition:
-- this Announcement;
-- the irrevocable undertakings listed in Appendix III to this Announcement;
-- the Co-operation Agreement;
-- the Confidentiality Agreement;
-- the Clean Team Agreement;
-- documents relating to the financing of the Acquisition
referred to in paragraph 11 above; and
-- consent letters from each of Morgan Stanley, Macquarie
Capital, Cavendish, Investec and RBC.
Enquiries:
Morgan Stanley (Joint Financial
Adviser to KKR)
Shirav Patel / Francesco Puletti
/ Andrew Foster / George Chalaris
/ Nagib Ahmad +44 (0) 20 7425 8000
Macquarie Capital (Joint Financial
Adviser to KKR)
Adam Hain / Ashish Mehta +44 (0) 20 3037 2000
FGS Global (PR Adviser to KKR-LON@fgsglobal.com
KKR) +44 (0) 20 725 13801
Faeth Birch / Alastair Elwen
/ Sophia Johnston
Smart Metering Systems plc
Miriam Greenwood, Chairman
Tim Mortlock, Chief Executive
Officer
Gail Blain, Chief Financial
Officer
Dilip Kejriwal, Head of Investor
Relations +44 (0) 141 249 3850
RBC Capital Markets (Joint
Financial Adviser and Joint
Broker to SMS)
Mark Preston / Evgeni Jordanov
/ Matthew Coakes / Sam Jackson +44 (0) 20 7653 4000
Investec Bank plc (Joint Financial
Adviser and Joint Broker to
SMS)
Henry Reast / James Rudd /
Shalin Bhamra +44 (0) 20 7597 5970
Cavendish Securities plc (Nomad
and Joint Broker to SMS)
Neil McDonald / Peter Lynch
/ Adam Rae +44 (0) 131 220 6939
Instinctif Partners (Public sms@instinctif.com
Relations Adviser to SMS) +44 (0) 7949 939 237
Tim Linacre +44 (0) 7917 178 920
Guy Scarborough
Hogan Lovells International LLP is acting as legal adviser to
SMS in connection with the Acquisition. Simpson Thacher &
Bartlett LLP is acting as legal adviser to KKR and Bidco. Burness
Paull LLP are providing legal advice to SMS as to Scottish law.
Important Notices
RBC Europe Limited (trading as RBC Capital Markets), which is
authorised by the Prudential Regulation Authority and regulated by
the Financial Conduct Authority and the Prudential Regulation
Authority in the United Kingdom, is acting for SMS and no one else
in connection with the matters referred to in this announcement and
will not be responsible to anyone other than SMS for providing the
protections afforded to clients of RBC Capital Markets, or for
providing advice in connection with matters referred to in this
announcement
Investec, which is authorised by the Prudential Regulation
Authority (the "PRA") and regulated by the Financial Conduct
Authority and PRA in the United Kingdom, is acting exclusively as
financial adviser to SMS and for no one else in connection with the
Offer and will not be responsible to any person other than SMS for
providing the protections afforded to clients of Investec, nor for
providing advice in relation to the Offer, the content of this
announcement or any matter referred to in this announcement.
Neither Investec nor any of its subsidiaries, branches or
affiliates owes or accepts any duty, liability or responsibility
whatsoever (whether direct or indirect, whether in contract, in
tort, under statute or otherwise) to any person who is not a client
of Investec in connection with this announcement, any statement
contained herein or otherwise.
Cavendish Securities, which is authorised and regulated in the
United Kingdom by the Financial Conduct Authority, is acting
exclusively for SMS and no one else in connection with the subject
matter of this Announcement and will not be responsible to anyone
other than SMS for providing the protections afforded to clients of
Cavendish Securities or for providing advice in relation to the
subject matter of this Announcement, the contents of this
Announcement and any other matters referred to in this
Announcement.
Morgan Stanley & Co. International plc ("Morgan Stanley")
which is authorised by the Prudential Regulation Authority and
regulated by the Financial Conduct Authority and the Prudential
Regulation Authority in the UK is acting as financial adviser
exclusively for KKR and no one else in connection with the matters
set out in this announcement. In connection with such matters,
Morgan Stanley, its affiliates and their respective directors,
officers, employees and agents will not regard any other person as
their client, nor will they be responsible to any other person for
providing the protections afforded to their clients or for
providing advice in connection with the contents of this
announcement or any other matter referred to herein.
Macquarie Capital (Europe) Limited ("Macquarie Capital") which
is regulated by the Financial Conduct Authority in the UK is acting
as financial adviser exclusively for KKR and no one else in
connection with the matters set out in this announcement. In
connection with such matters, Macquarie Capital, its affiliates and
their respective directors, officers, employees and agents will not
regard any other person as their client, nor will they be
responsible to any other person for providing the protections
afforded to their clients or for providing advice in connection
with the contents of this announcement or any other matter referred
to herein. Macquarie Capital (Europe) Limited is not an authorised
deposit-taking institution for the purposes of the Banking Act 1959
(Commonwealth of Australia), and its obligations do not represent
deposits or other liabilities of Macquarie Bank Limited ABN 46 008
583 542. Any investments are subject to investment risk including
possible delays in repayment and loss of income and principal
invested. Macquarie Bank Limited does not guarantee or otherwise
provide assurance in respect of the obligations of Macquarie
Capital (Europe) Limited.
Further Information
This Announcement is for information purposes only and does not
constitute or form any part of an offer to sell or subscribe for or
an invitation to purchase or subscribe for any securities or the
solicitation of an offer to buy any securities, pursuant to the
Acquisition or otherwise. The Acquisition shall be made solely by
means of the Scheme Document (or, if, with the consent of the
Panel, the Acquisition is implemented by way of a Takeover Offer,
any document by which the Acquisition is made) which, together with
the Forms of Proxy (or forms of acceptance), shall contain the full
terms and Conditions of the Acquisition, including details of how
to vote in respect of the Acquisition. SMS Shareholders are
strongly advised to read the formal documentation in relation to
the Acquisition once it has been despatched. Each SMS Shareholder
is urged to consult its independent professional adviser
immediately regarding the tax consequences to it (or its beneficial
owners) of the Acquisition.
The statements contained in this Announcement are made as at the
date of this Announcement, unless some other time is specified in
relation to them, and publication of this Announcement shall not
give rise to any implication that there has been no change in the
facts set forth in this Announcement since such date.
This Announcement has been prepared for the purpose of complying
with English and Scots 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 and Scotland.
This Announcement does not constitute a prospectus or prospectus
equivalent document.
Overseas Shareholders
The release, publication or distribution of this Announcement in
or into certain jurisdictions other than the United Kingdom may be
restricted by law. Persons who are not resident in the United
Kingdom should inform themselves of, and observe, any applicable
requirements.
Unless otherwise determined by Bidco or required by the Takeover
Code, and permitted by applicable law and regulation, the
Acquisition shall 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 Acquisition by any such use, 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 Acquisition 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 in that jurisdiction, and
persons receiving this Announcement and all documents relating to
the Acquisition (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 in that
jurisdiction. Doing so may render invalid any related purported
vote in respect of the Acquisition.
The availability of the Acquisition to SMS Shareholders who are
not resident in the United Kingdom (and, in particular, their
ability to vote their SMS Shares with respect to the Scheme at the
Court Meeting, or to appoint another person as proxy to vote at the
Court Meeting on their behalf) may be affected by the laws of the
relevant jurisdictions in which they are resident. Persons who are
not resident in the United Kingdom should inform themselves of, and
observe, any applicable requirements, as any failure to comply with
such requirements 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
Acquisition disclaim any responsibility or liability for the
violation of such restrictions by any person.
The Acquisition shall be subject to the applicable requirements
of the Takeover Code, the Panel, the London Stock Exchange and the
Financial Conduct Authority. Further details in relation to
Overseas Shareholders will be contained in the Scheme Document.
Additional Information for US Investors
The Acquisition is being made to acquire the securities of a
Scottish company by means of a scheme of arrangement provided for
under Scots law. A transaction effected by means of a scheme of
arrangement is not subject to the tender offer or proxy
solicitation rules under the US Exchange Act. Accordingly, the
Scheme will be subject to disclosure requirements and practices
applicable in the United Kingdom to schemes of arrangement, which
are different from the disclosure requirements of the US tender
offer and proxy solicitation rules. Certain financial information
included in this Announcement and the Scheme documentation has been
or will have been prepared in accordance with accounting standards
applicable in the United Kingdom and thus may not be comparable to
financial information of US companies or companies whose financial
statements are prepared in accordance with generally accepted
accounting principles in the US. If Bidco were to elect to
implement the Acquisition by means of a Takeover Offer, such
Takeover Offer would be made in compliance with applicable US laws
and regulations, including Section 14(e) of the US Exchange Act and
Regulation 14E thereunder. Such a takeover would be made in the
United States by Bidco and no one else.
The receipt of cash pursuant to the Acquisition by a US SMS
Shareholder as consideration for the transfer of its SMS Shares
pursuant to the Scheme will likely be a taxable transaction for
United States federal income tax purposes and under applicable
United States state and local, as well as foreign and other, tax
laws. SMS Shareholders are urged to consult their independent
professional advisers immediately regarding the tax consequences of
the Acquisition applicable to them.
It may be difficult for US SMS Shareholders to enforce their
rights and claims arising out of the US federal securities laws,
since Bidco and SMS 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 SMS 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 jurisdiction and judgement.
In accordance with normal UK practice and pursuant to Rule
14e-5(b) of the US Exchange Act, Bidco, certain affiliated
companies and their nominees or brokers (acting as agents) may make
certain purchases of, or arrangements to purchase, shares in SMS
outside of the US, other than pursuant to the Acquisition, until
the date on which the Acquisition and/or Scheme becomes Effective,
lapses or is otherwise withdrawn. Also, in accordance with Rule
14e-5(b) of the US Exchange Act, each of Morgan Stanley, Macquarie
Capital, Investec and RBC will continue to act as a connected
exempt principal trader in SMS Shares on the London Stock Exchange.
If such purchases or arrangements to purchase were to be made they
would occur either in the open market at prevailing prices or in
private transactions at negotiated prices and comply with
applicable law, including the US Exchange Act. Any information
about such purchases or arrangements to purchase will be disclosed
as required in the United Kingdom, will be reported to a Regulatory
Information Service and will be available on the London Stock
Exchange website at http://www.londonstockexchange.com .
Forward Looking Statements
This Announcement (including information incorporated by
reference in this Announcement), oral statements made regarding the
Acquisition, and other information published by KKR, Bidco or SMS
may contain statements about Bidco and SMS that are or may be
deemed to 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", "may",
"shall", "should", "anticipates", "estimates", "projects", "is
subject to", "budget", "scheduled", "forecast" 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 Bidco's or SMS's operations and potential synergies
resulting from the Acquisition; and (iii) the effects of government
regulation on Bidco's or SMS's business.
Such forward looking statements are prospective in nature and
are not based on historical facts, but rather on current
expectations and projections of the management of Bidco and SMS
about future events, and are therefore subject to 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, including: increased
competition, the loss of or damage to one or more key customer
relationships, changes to customer ordering patterns, delays in
obtaining customer approvals for engineering or price level
changes, the failure of one or more key suppliers, the outcome of
business or industry restructuring, the outcome of any litigation,
changes in economic conditions, currency fluctuations, changes in
interest and tax rates, changes in raw material or energy market
prices, changes in laws, regulations or regulatory policies,
developments in legal or public policy doctrines, technological
developments, the failure to retain key management, or the timing
and success of future acquisition opportunities or major investment
projects. Other unknown or unpredictable factors could cause actual
results to differ materially from those in the forward looking
statements. Such forward looking statements should therefore be
construed in the light of such factors. Neither Bidco nor SMS, nor
any of their respective associates or directors, officers or
advisers, provides any representation, assurance or guarantee that
the occurrence of the events expressed or implied in any forward
looking statements in this Announcement will actually occur. 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 hereof. All subsequent oral or written forward
looking statements attributable to any member of the Bidco Group or
the SMS Group, or any of their respective associates, directors,
officers, employees or advisers, are expressly qualified in their
entirety by the cautionary statement above.
Bidco and SMS expressly disclaim any obligation to update any
forward looking or other statements contained herein, except as
required by applicable law or by the rules of any competent
regulatory authority, whether as a result of new information,
future events or otherwise.
No Profit Forecasts or Profit Estimates or Quantified Financial
Benefit Statements
No statement in this Announcement is intended as, or is to be
construed as, a profit forecast, profit estimate or quantified
financial benefit statement for any period and no statement in this
Announcement should be interpreted to mean that earnings or
earnings per share for SMS for the current or future financial
years would necessarily match or exceed the historical published
earnings or earnings per share for SMS.
Disclosure Requirements of the Takeover Code
Under Rule 8.3(a) of the Takeover Code, any person who is
interested in 1 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 1 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. If you are in any doubt as to whether you are required
to make an Opening Position Disclosure or a Dealing Disclosure, you
should contact the Panel's Market Surveillance Unit on +44 (0)20
7638 0129.
Electronic Communications
Please be aware that addresses, electronic addresses and certain
information provided by SMS Shareholders, persons with information
rights and other relevant persons for the receipt of communications
from SMS may be provided to Bidco during the Offer Period as
required 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 and the documents required to be
published by Rule 26 of the Takeover Code shall be made available
subject to certain restrictions relating to persons resident in
Restricted Jurisdictions on SMS's website at www.sms-plc.com by no
later than 12 noon (London time) on the Business Day following the
date of this Announcement. For the avoidance of doubt, neither the
contents of this website nor the content of any other website
accessible from hyperlinks on such website is incorporated into, or
forms part of, this Announcement.
In accordance with Rule 30.3 of the Takeover Code, SMS
Shareholders, persons with information rights and participants in
the SMS Share Plans may request a hard copy of this Announcement by
contacting Computershare Investor Services PLC during business
hours on 0370 707 4087 or by submitting a request in writing to
Registrar at Computershare Investor Service PLC, The Pavilions,
Bridgwater Road, Bristol BS99 6ZZ. In accordance with Rule 30.3 of
the Takeover Code, a person so entitled may also request that all
future documents, announcements and information in relation to the
Acquisition should be sent to them in hard copy form. If you have
received this Announcement in electronic form or via a website
notification, hard copies of this Announcement and any document or
information incorporated by reference into this document will not
be provided unless such a request is made.
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.
Rule 2.9 Disclosure
In accordance with Rule 2.9 of the Takeover Code, SMS confirms
that as at the date of this Announcement, it has in issue and
admitted to trading on AIM 133,606,918 ordinary shares of GBP0.01
each (excluding ordinary shares held in treasury). The
International Securities Identification Number (ISIN) of the
ordinary shares is GB00B4X1RC86.
General
If you are in any doubt about the contents of this Announcement
or the action you should take, you are recommended to seek your own
independent financial advice immediately from your stockbroker,
bank manager, solicitor, accountant or independent financial
adviser duly authorised under FSMA if you are resident in the
United Kingdom or, if not, from another appropriately authorised
independent financial adviser.
APPIX I
CONDITIONS AND FURTHER TERMS OF THE SCHEME AND THE
ACQUISITION
Part A: Conditions to the Scheme and Acquisition
1. The Acquisition will be conditional upon the Scheme becoming
unconditional and becoming Effective, subject to the provisions of
the Takeover Code, by no later than 11.59 p.m. (London time) on the
Long Stop Date.
Conditions of the Scheme
2. The Scheme will be subject to the following Conditions:
(a) (i) its approval by a majority in number representing not
less than 75 per cent. in value of Scheme Shares held by SMS
Shareholders who are on the register of members of SMS (or the
relevant class or classes thereof) at the Voting Record Time,
present, entitled to vote and who vote, whether in person or by
proxy, at the Court Meeting and at any separate class meeting which
may be required by the Court (or, in each case, any adjournment
thereof), and (ii) such Court Meeting being held on or before the
22(nd) day after the expected date of the Court Meeting to be set
out in the Scheme Document in due course (or such later date as may
be agreed between Bidco and SMS with the consent of the Panel (and
that the Court may approve if required));
(b) (i) the Special Resolutions being duly passed by the
requisite majority of the SMS Shareholders at the SMS General
Meeting (or any adjournment thereof) and (ii) such SMS General
Meeting being held on or before the 22(nd) day after the expected
date of the SMS General Meeting to be set out in the Scheme
Document in due course (or such later date as may be agreed between
Bidco and SMS with the consent of the Panel (and that the Court may
approve if required)); and
(c) (i) the sanction of the Scheme by the Court (with or without
modification (but subject to such modification being acceptable to
Bidco and SMS)) and the delivery of a copy of the Court Order to
the Registrar of Companies; and (ii) the Sanction Hearing being
held on or before the 22(nd) day after the expected date of the
Sanction Hearing to be set out in the Scheme Document in due course
(or such later date as may be agreed between Bidco and SMS with the
Panel (and that the Court may approve if required)).
General Conditions
3. In addition, subject as stated in Part B below and to the
requirements of the Panel, Bidco and SMS have agreed that the
Acquisition will be conditional upon the following Conditions and,
accordingly, the necessary actions to make the Scheme Effective
will not be taken unless the following Conditions (as amended if
appropriate) have been satisfied or, where relevant, waived:
Other Third Party clearances
(a) no relevant government or governmental, quasi-governmental,
supranational, statutory, regulatory, administrative,
environmental, professional or investigative body, court, trade
agency, association, institution, any entity owned or controlled by
any relevant government or state, or any other body or person
whatsoever in any jurisdiction (each a "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 be
expected to:
(i) require, prevent or materially delay the divestiture, or
materially alter the terms envisaged for any proposed divestiture
by any member of the Wider Bidco Group or any member of the Wider
SMS Group of all or any portion of their respective businesses,
assets or property or impose any limitation on the ability of any
of them to conduct their respective businesses (or any of them) or
to own, control or manage any of their respective assets or
properties or any part thereof which, in each case, is or would be
material in the context of the Wider Bidco Group or the Wider SMS
Group taken as a whole;
(ii) impose any material limitation on, or result in a material
delay in, the ability of any member of the Wider Bidco Group
directly or indirectly to acquire or to hold or to exercise
effectively, directly or indirectly, all or any rights of ownership
in respect of shares or loans or securities convertible into shares
or any other securities (or the equivalent) in any member of the
Wider SMS Group or to exercise management control over any such
member, which, in each case, is or would be material in the context
of the Wider Bidco Group or the Wider SMS Group taken as a
whole;
(iii) otherwise adversely affect all or any of the business,
assets, profits or prospects of any member of the Wider Bidco Group
or of any member of the Wider SMS Group to an extent which is, in
each case, material in the context of the Wider Bidco Group or the
Wider SMS Group taken as a whole;
(iv) make the Acquisition or its implementation or the
acquisition or proposed acquisition by Bidco or any member of the
Wider Bidco Group of any shares or other securities in, or control
of SMS void, illegal, and/or unenforceable under the laws of any
relevant jurisdiction, or otherwise, directly or indirectly,
restrain, restrict, prevent, prohibit or delay or otherwise
adversely interfere with the same, or impose additional conditions
or obligations with respect thereto, or otherwise challenge or
interfere therewith;
(v) require (other than pursuant to the implementation of the
Scheme or, if applicable, sections 974 to 991 of the Companies Act)
any member of the Wider Bidco Group or the Wider SMS Group to
acquire or to offer to acquire any shares or other securities (or
the equivalent) or interest in any member of the Wider SMS Group or
the Wider Bidco Group or any asset owned by any third party where
such acquisition would, in each case, be material in the context of
the Wider Bidco Group or the Wider SMS Group taken as a whole;
(vi) impose any material limitation on or result in any material
delay in the ability of any member of the Wider Bidco Group or any
member of the Wider SMS Group to conduct, integrate or co-ordinate
its business, or any part of it, with the businesses or any part of
the businesses of any other member of the Wider Bidco Group and/or
the Wider SMS Group in a manner which is material in the context of
the Wider SMS Group taken as a whole or in the context of the
Acquisition; or
(vii) result in any member of the Wider SMS Group ceasing to be
able to carry on business under any name under which it presently
does so, to an extent which is material in the context of the Wider
SMS Group taken as a whole,
and all applicable waiting and other time periods (including any
extensions thereof) during which any such 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
Acquisition or proposed acquisition of any SMS Shares or otherwise
intervene having expired, lapsed, or been terminated;
(b) all filings, applications and/or notifications which are
necessary or considered appropriate by Bidco (acting reasonably)
having been made in connection with the Acquisition and all
relevant waiting periods and other time periods (including any
extensions thereof) under any applicable legislation or regulation
of any jurisdiction having expired, lapsed or been terminated and
all statutory or regulatory obligations in any jurisdiction having
been complied with in connection with the Acquisition or the
acquisition by any member of the Wider Bidco Group of any shares or
other securities in, or control or management of, SMS or any member
of the Wider SMS Group or the carrying on by any member of the
Wider SMS Group of its business;
(c) all necessary authorisations, orders, recognitions, grants,
consents, licences, confirmations, clearances, permissions and
approvals (including following a referral to a Member State) for
the proposed Acquisition and, except pursuant to Chapter 3 of Part
28 of the Companies Act, the proposed acquisition of any shares or
other securities in, or control of, SMS by any member of the Wider
Bidco Group having been obtained in terms and in a form reasonably
satisfactory to Bidco from all necessary Third Parties or persons
with whom any member of the Wider SMS Group has entered into
contractual arrangements, and all such authorisations, orders,
recognitions, grants, consents, licences, confirmations,
clearances, permissions and approvals, together with all
authorisations, orders, recognitions, grants, licences,
confirmations, clearances, permissions and approvals, which are
necessary or appropriate to carry on the business of any member of
the Wider SMS Group, remaining in full force and effect and all
filings necessary for such purpose have been made and there being
no notice or intimation of any intention to revoke, suspend,
restrict, modify or not to renew any of the same at the time at
which the Acquisition becomes otherwise unconditional and all
necessary statutory or regulatory
obligations in any jurisdiction having been complied with;
Circumstances arising as a result of any arrangement, agreement
etc.
(d) except as Disclosed, there being no provision of any
arrangement, agreement, licence, permit, franchise, lease or other
instrument to which any member of the Wider SMS Group is a party or
by or to which any such member or any of its assets is or may be
bound, entitled or be subject or any event or circumstance which,
as a consequence of the Acquisition or the proposed acquisition by
any member of the Wider Bidco Group of any shares or other
securities in SMS or because of a change in the control or
management of any member of the Wider SMS Group or otherwise, would
reasonably be expected to result in, in each case to an extent
which is material in the context of the Wider SMS Group taken as a
whole or in the context of the Acquisition:
(i) any monies borrowed by, or any other indebtedness or
liabilities, actual or contingent of, or any grant available to,
any member of the Wider SMS 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 rights, liabilities, obligations, interests or business
of any member of the Wider SMS Group under any such arrangement,
agreement, licence, permit, lease or instrument or the interests or
business of any member of the Wider SMS Group in or with any other
firm or company or body or person (or any agreement or arrangement
relating to any such business or interests) being or becoming
capable of being terminated or adversely modified or affected or
any onerous obligation or liability arising or any action being
taken or arising thereunder;
(iii) any member of the Wider SMS Group ceasing to be able to
carry on business under any name under which it presently carries
on business;
(iv) any assets or interests of any member of the Wider SMS
Group being or failing to be disposed of or charged or ceasing to
be available to any such member or any right arising under which
any such asset or interest could be required to be disposed of or
charged or could cease to be available to any member of the Wider
SMS Group otherwise than in the ordinary course of business;
(v) 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 SMS Group or any such mortgage,
charge or other security interest (whenever created, arising or
having arisen), becoming enforceable;
(vi) the financial or trading position or prospects of any
member of the Wider SMS Group being prejudiced or adversely
affected;
(vii) the creation or acceleration of any liabilities (actual or
contingent) by any member of the Wider SMS Group other than trade
creditors or other liabilities incurred in the ordinary course of
business;
(viii) any liability of any member of the Wider SMS Group to
make any severance, termination, bonus or other payment to any of
its directors or other officers other than in the ordinary course
of business; or
(ix) any requirement of any member of the Wider SMS Group to
acquire, subscribe, pay up or repay any shares or other securities
(or the equivalent),
and no event having occurred which, under any provision of any
such agreement, arrangement, licence, permit or other instrument to
which any member of the Wider SMS Group is a party or by or to
which any such member or any of its assets may be bound, entitled
or subject, would or would reasonably be expected to result in any
of the events or circumstances as are referred to in sub-paragraphs
(i) to (ix) of this Condition occurring, in each case which is or
would be material in the context of the Wider SMS Group taken as a
whole, or in the context of the Acquisition;
No material transactions, claims or changes in the conduct of
the business of the Wider SMS Group
(e) except as Disclosed, no member of the Wider SMS Group having since 31 December 2022:
(i) save as between SMS and the Wider SMS Group and/or on or in
respect of the grant, exercise or vesting of options or awards
granted in the ordinary course under the SMS Share Plans, 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 or convertible securities or
transferred or sold or agreed to transfer or sell or authorised or
proposed the transfer or sale of SMS Shares out of treasury;
(ii) recommended, declared, paid or made or proposed or agreed
to recommend, declare, pay or make any bonus issue, dividend or
other distribution (whether payable in cash or otherwise) other
than: (a) to SMS or one of its wholly-owned subsidiaries; and (b)
the Second FY 2023 Dividend Instalment;
(iii) save as between SMS and its wholly-owned subsidiaries or
between such wholly-owned subsidiaries and other than pursuant to
the Acquisition, merged with (by statutory merger or otherwise) or
demerged from or acquired any body corporate, partnership or
acquired or disposed of, or transferred, mortgaged or charged or
created any security interest over, any material assets or any
right, title or interest in any material asset or authorised,
proposed or announced any intention to do so, in each case other
than in the ordinary course of business;
(iv) save as between SMS and its wholly-owned subsidiaries or
between such wholly-owned subsidiaries, made, authorised, proposed
or announced an intention to propose any change in its loan
capital;
(v) 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 (save in the ordinary course of
business and as between SMS and its wholly-owned subsidiaries or
between such wholly-owned subsidiaries) incurred or increased any
indebtedness or become subject to any contingent liability;
(vi) entered into, varied, authorised or proposed entry into or
variation of, or announced its intention to enter into or vary, any
material contract, transaction, arrangement or commitment (whether
in respect of capital expenditure or otherwise) except in the
ordinary course of business which is of a long term, unusual or
onerous nature or magnitude, or which is or is likely to be
restrictive on the business of any member of the Wider SMS Group or
which involves or could reasonably be expected to involve any
obligation of such a nature or magnitude, in any such case to an
extent which is material in the context of the Wider SMS Group
taken as a whole or in the context of the Acquisition;
(vii) entered into, varied, authorised or proposed entry into or
variation of, or announced its intention to enter into or vary the
terms of or made any offer (which remains open for acceptance) to
enter into or vary to a material extent the terms of, any contract,
commitment, arrangement or any service agreement with any director
or senior executive of the Wider SMS Group (save for salary
increases, bonuses or variations of terms in the ordinary
course);
(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 SMS Group and in each case which is material in the context
of the Wider SMS Group taken as a whole or in the context of the
Acquisition, other than in the ordinary course or in accordance
with the terms of the Acquisition or as agreed with the Panel
and/or Bidco;
(ix) in relation to any pension scheme or other retirement,
leaving service or death benefit arrangement established for any
directors, former directors, employees or former employees of any
entity in the Wider SMS Group or their dependants and established
by a member of the Wider SMS Group (a "Relevant Pension Plan"),
made, agreed or consented to or procured any significant change to
the basis on which benefits accrue, pensions are payable or the
persons entitled to accrue or be paid benefits, under any Relevant
Pension Plan which is material in the context of the Wider SMS
Group taken as a whole or in the context of the Acquisition, and
other than as required in accordance with applicable law;
(x) established or proposed the establishment of any Relevant
Pension Plan to the extent which is material in the context of the
Wider SMS Group taken as a whole or in the context of the
Acquisition, and other than as required in accordance with
applicable law;
(xi) entered into, implemented or effected, or authorised the
entry into, any joint venture, asset or profit sharing arrangement,
partnership or merger of business or corporate entities (other than
the Scheme and otherwise than in the ordinary course of business)
which in any such case is material in the context of the Wider SMS
Group taken as a whole or in the context of the Acquisition;
(xii) purchased, redeemed or repaid or announced any proposal to
purchase, redeem or repay any of its own shares or other securities
or reduced or, save in respect of the matters mentioned in
sub-paragraph (i) above, made any other change to any part of its
share capital;
(xiii) other than with respect to claims between SMS and its
wholly owned subsidiaries (or between such subsidiaries), waived,
compromised or settled any claim which is material in the context
of the Wider SMS Group taken as a whole or in the context of the
Acquisition;
(xiv) made any alteration to its articles of association or
other constitutional documents which is material in the context of
the Acquisition (in each case, other than in connection with the
Scheme);
(xv) (other than in respect of a member of the Wider SMS 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 any administrator, receiver, manager, administrative
receiver, trustee or similar officer of all or any of its assets or
revenues or any analogous proceedings in any jurisdiction or
appointed any analogous person in any jurisdiction or had any such
person appointed;
(xvi) been unable, or admitted in writing that it is unable, to
pay its debts, 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 which is material in the context of the Wider SMS Group
taken as a whole or in the context of the Acquisition;
(xvii) commenced negotiations with or entered into any
arrangement with any of its creditors with a view to rescheduling
or restructuring any of its indebtedness which, in any such case,
is material in the context of the Wider SMS Group taken as a whole
or in the context of the Acquisition;
(xviii) entered into any contract, commitment, agreement or
arrangement otherwise than in the ordinary course of business 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;
(xix) terminated or varied the terms of any agreement or
arrangement between any member of the Wider SMS Group and any other
person in a manner which would have a material adverse effect on
the financial position of the Wider SMS Group taken as a whole;
or
(xx) having taken (or agreed or proposed to take) any action
which requires, or would require, the consent of the Panel or the
approval of SMS Shareholders in general meeting in accordance with,
or as contemplated by, Rule 21.1 of the Takeover Code;
No material adverse change, litigation or regulatory enquiry
(f) since 31 December 2022, and except as Disclosed, there having been:
(i) no adverse change and no circumstances having arisen which
would be expected to result in any adverse change in the business,
assets, financial or trading position, profits, prospects or
operational performance of any member of the Wider SMS Group to an
extent which is material to the Wider SMS Group taken as a whole or
in the context of the Acquisition;
(ii) no litigation, arbitration proceedings, prosecution or
other legal proceedings to which any member of the Wider SMS Group
is or may become a party (whether as claimant or defendant or
otherwise), and no enquiry, review, investigation or enforcement
proceedings by, or complaint or reference to, any Third Party
against or in respect of any member of the Wider SMS Group having
been threatened, announced or instituted by or against, or
remaining outstanding in respect of, any member of the Wider SMS
Group, in each case, which is material in the context of the Wider
SMS Group taken as a whole or in the context of the
Acquisition;
(iii) no contingent or other liability having arisen, increased
or become apparent to Bidco other than in the ordinary course of
business which is reasonably likely to adversely affect the
business, assets, financial or trading position, or profits of any
member of the Wider SMS Group, to an extent which is material in
the context of the Wider SMS Group taken as a whole;
(iv) 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 SMS Group, which is necessary for the proper carrying on
of its business and the withdrawal, cancellation, termination or
modification of which would reasonably be expected to have a
material adverse effect on the Wider SMS Group taken as a whole or
in the context of the Acquisition; and
(v) no member of the Wider SMS Group having conducted its
business in material breach of any applicable laws and regulations
which in any case is material in the context of the Wider SMS Group
taken as a whole;
(g) except as Disclosed, Bidco not having discovered:
(i) that any financial, business or other information concerning
the Wider SMS Group publicly announced and delivered by or on
behalf of SMS via a Regulatory Information Service or otherwise or
disclosed to any member of the Wider Bidco Group at any time prior
to this Announcement by or on behalf of any member of the Wider SMS
Group is misleading, contains a misrepresentation of fact or omits
to state a fact necessary to make that information not misleading
and which was not subsequently corrected before the date of this
Announcement by disclosure by or on behalf of the Wider SMS Group
through the publication of an announcement via a Regulatory
Information Service or otherwise, in any case, which is material in
the context of the Wider SMS Group taken as a whole or in the
context of the Acquisition; or
(ii) that any member of the Wider SMS Group, otherwise than in
the ordinary course of business, is subject to any liability
(actual or contingent) and which is not disclosed in the 2022 SMS
Annual Report, which is material in the context of the Wider SMS
Group taken as a whole or in the context of the Acquisition;
Environmental liabilities
(h) except as Disclosed, Bidco not having discovered, in each
case, to an extent which is materially adverse in the context of
the Wider SMS Group taken as a whole or in the context of the
Acquisition, that:
(i) any past or present member of the Wider SMS Group has failed
to comply in any material respect with any applicable legislation
or regulations, of any jurisdiction with regard to the use,
storage, carriage, disposal, spillage, release, discharge, leak or
emission of any waste or hazardous substance or any substance
likely to impair materially the environment (including property) or
harm human health or otherwise relating to environmental matters or
the health and safety of humans, which would be likely to give rise
to any material liability (actual or contingent) on the part of any
member of the Wider SMS Group; or
(ii) there is, or is likely to be, for that or any other reason
whatsoever, any material liability (actual or contingent) of any
past or present member of the Wider SMS Group to make good, repair,
reinstate or clean up any property now or previously owned,
occupied, operated or made use of or controlled by any such past or
present member of the Wider SMS Group, under any environmental
legislation, regulation, notice, circular or order of any
government, governmental, quasi-governmental, state or local
government, supranational, statutory or other regulatory body,
agency, court, association or any other person or body in any
jurisdiction;
Intellectual property
(i) except as Disclosed and since 31 December 2022, no
circumstance having arisen or event having occurred in relation to
any intellectual property owned or used by any member of the Wider
SMS Group which is materially adverse in the context of the Wider
SMS Group taken as a whole or in the context of the
Acquisition;
Anti-corruption and sanctions
(j) except as Disclosed, Bidco not having discovered that:
(i) any past or present member, director, officer or employee of
the Wider SMS Group or any person that performs or has performed
services for or on behalf of any such company is or has, at any
time engaged in any activity, practice or conduct (or omitted to
take any action) in contravention of the UK Bribery Act 2010 and/or
the US Foreign Corrupt Practices Act of 1977, as amended or any
other applicable anti-corruption legislation;
(ii) any past or present member, director, officer or employee
of the Wider SMS Group, or any other person for whom any such
person may be liable or responsible, has, engaged in any activity
or business with, or made any investments in, or made any funds or
assets available to or received any funds or assets from: (a) any
government, entity or individual in respect of which United States,
United Kingdom or European Union persons, or persons operating in
those territories, are prohibited from engaging in activities or
doing business, or from receiving or making available funds or
economic resources, by United States, United Kingdom or European
Union laws or regulations, including the economic sanctions
administered by the United States Office of Foreign Assets Control,
or HM Treasury; or (b) any government, entity or individual
targeted by any of the economic sanctions of the United Nations,
the United States, the United Kingdom the European Union or any of
its member states, or any other governmental or supranational body
or authority in any jurisdiction, except as may have been licensed
by the relevant authority; and
(iii) a member of the SMS Group has engaged in any transaction
which would cause any member of the SMS Group to be in breach of
any law or regulation on completion of the Acquisition, including
of the economic sanctions administered by 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, United States or the European Union or any of its
member states;
No criminal property
(k) except as Disclosed, Bidco not having discovered that any
asset of any member of the Wider SMS Group constitutes criminal
property as defined by section 340(3) of the Proceeds of Crime Act
2002 (but disregarding paragraph (b) of that definition).
Part B: Further terms of the Acquisition
1. Subject to the requirements of the Panel in accordance with
the Takeover Code, Bidco reserves the right in its sole discretion
to waive:
(a) any of the deadlines set out in paragraph 2 of Part A of
this Appendix I for the timing of the Court Meeting, the SMS
General Meeting and/or the Sanction Hearing. If any such deadline
is not met, Bidco shall make an announcement by 8.00 a.m. (London
time) on the Business Day following such deadline confirming
whether it has invoked or waived the relevant Condition or agreed
with SMS to extend the deadline in relation to the relevant
Condition; and
(b) in whole or in part, all or any of the Conditions listed in
Part A above, except for Conditions 1, 2(a) (i), 2(b) (i) and 2(c)
(i) (Conditions of the Scheme) which cannot be waived.
2. Conditions 3 (a) to (k) (inclusive) must each be fulfilled or
(if capable of waiver) be waived by Bidco by no later than 11.59
p.m. (London time) on the date immediately preceding the date of
the Sanction Hearing, failing which the Acquisition will lapse.
Bidco shall be under no obligation to waive (if capable of waiver)
or treat as satisfied any of the Conditions that it is entitled
(with the consent of the Panel) to invoke, by a date earlier than
the latest date specified above for the fulfilment or waiver
thereof, notwithstanding that the other Conditions 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.
3. If Bidco is required by the Panel to make an offer for SMS
Shares under the provisions of Rule 9 of the Takeover Code, Bidco
may make such alterations to any of the above Conditions and terms
of the Acquisition as are necessary to comply with the provisions
of that Rule.
4. Under Rule 13.5(a) of the Takeover Code, Bidco may only
invoke a Condition to the Acquisition so as to cause the
Acquisition not to proceed, to lapse or to be withdrawn with the
consent of the Panel. The Panel will normally only give its consent
if the circumstances which give rise to the right to invoke the
Condition are of material significance to Bidco in the context of
the Acquisition. This will be judged by reference to the facts of
each case at the time that the relevant circumstances arise. The
Conditions contained in paragraphs 1 and 2 of Part A above and, if
applicable, any acceptance condition if the Offer is implemented by
means of a Takeover Offer, are not subject to Rule 13.5(a) of the
Takeover Code. Any Condition that is subject to Rule 13.5(a) of the
Code may be waived by Bidco.
5. Bidco reserves the right to elect to implement the
Acquisition by way of a Takeover Offer as an alternative to the
Scheme (subject to the Panel's consent and the terms of the
Co-operation Agreement). In such event, the Acquisition will be
implemented on the same terms (subject to appropriate amendments
including (without limitation) the inclusion of an acceptance
condition set at a level permitted by the Panel and by the terms of
the Co-operation Agreement (for so long as it remains in force) of
the voting rights attaching to the SMS Shares) as those which would
apply to the Scheme. Further, if sufficient acceptances of such
offer are received and/or sufficient SMS Shares are otherwise
acquired, and the Takeover Offer becomes or is declared
unconditional in all respects, it is the intention of Bidco to
apply the provisions of the Companies Act to acquire compulsorily
any outstanding SMS Shares to which such Takeover Offer
relates.
6. The Scheme will be governed by Scots law and be subject to
the jurisdiction of the Court and to the Conditions set out above
and the full terms to be set out in the Scheme Document. The
Acquisition will be subject to the applicable requirements of the
Takeover Code, the Panel, the London Stock Exchange, the Financial
Conduct Authority, the AIM Rules and the Registrar of
Companies.
7. Each of the Conditions shall be regarded as a separate
Condition and shall not be limited by reference to any other
Condition.
8. The Scheme Shares will be acquired by Bidco fully paid and
free from all liens, equitable interests, charges, encumbrances,
options, rights of pre-emption and any other third party rights and
interests of any nature and together with all rights existing at
the Effective Date or thereafter attaching or accruing to them,
including (without limitation) the right to receive and retain in
full all dividends and other distributions (if any) declared, made
or paid, or any other return of value (whether by way of reduction
of share capital, repurchase or redemption or otherwise) made, on
or after the Effective Date in respect of the SMS Shares.
9. If, on or after the date of this Announcement and prior to
the Effective Date, any dividend, distribution or other return of
value is declared, paid or made or becomes payable by SMS in
respect of the SMS Shares (including the Third and Fourth FY 2023
Dividend Instalments, but other than the Second FY 2023 Dividend
Instalment expected to be paid on 25 January 2024), Bidco reserves
the right (without prejudice to any right of Bidco, with the
consent of the Panel, to invoke the Condition set out in paragraph
3(e)(ii) of Part A of this Appendix I) to reduce the consideration
payable under the terms of the Acquisition for the SMS Shares to
reflect the aggregate amount of such dividend, distribution or
other return of value or excess. In such circumstances, SMS
Shareholders would be entitled to retain any such dividend,
distribution or other return of value declared, made or paid.
If and to the extent that any such dividend, distribution or
other return of value is paid or made in respect of the SMS Shares
prior to the Effective Date, and Bidco exercises its rights under
this paragraph 9 to reduce the consideration payable under the
terms of the Acquisition for the SMS Shares, any reference in this
Announcement to the consideration payable under the terms of the
Acquisition shall be deemed to be a reference to the consideration
as so reduced.
If and to the extent that any such dividend, distribution or
other return of value has been declared or announced but not paid
or made or is not payable in respect of the SMS Shares prior to the
Effective Date or by reference to a record date prior to the
Effective Date or is (i) transferred pursuant to the Acquisition on
a basis which entitles Bidco to receive the dividend, distribution
or other return of value and to retain it; or (ii) cancelled before
payment, the consideration payable under the terms of the
Acquisition for the SMS Shares shall not be subject to change in
accordance with this paragraph 9 .
Any exercise by Bidco of its rights referred to in this
paragraph 9 shall be the subject of an announcement and, for the
avoidance of doubt, shall not be regarded as constituting any
revision or variation of the Scheme or the Acquisition.
10. Unless otherwise determined by Bidco or required by the Code
and permitted by applicable law and regulations, the Acquisition 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
Restricted Jurisdiction and will not be capable of acceptance by
any such use, means, instrumentality or facility or from within any
Restricted Jurisdiction.
11. The Acquisition will be subject, inter alia, to the
satisfaction (or waiver, if permitted) of the Conditions and
certain further terms which are set out in this Appendix I and
those terms which will be set out in the Scheme Document and such
further terms as may be required to comply with the AIM Rules and
the provisions of the Takeover Code.
12. The availability of the Acquisition to persons not resident
in the United Kingdom may be affected by the laws of the relevant
jurisdiction. 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. Further information
in relation to Overseas Shareholders will be contained in the
Scheme Document.
APPIX II
SOURCES OF INFORMATION AND BASES OF CALCULATION
1. As at the Latest Practicable Date, there were 133,606,918 SMS
Shares in issue.
2. As at the Latest Practicable Date, it is expected that a
maximum of a further 4,527,602 SMS Shares may be issued on or after
the date of this Announcement following the exercise of options
under the SMS Share Plans. This figure includes an estimate of the
number of SMS Shares that will be subject to ordinary course
options to be granted under the SMS Share Plans following the date
of this Announcement.
3. Any references to the issued and to be issued share capital
of SMS are each based on:
(a) the 133,606,918 SMS Shares referred to in paragraph (1)
above; and
(b) the 4,527,602 SMS Shares that it is estimated as at the
Latest Practicable Date may be issued pursuant to the SMS Share
Plans referred to in paragraph (2) above.
4. The value attributed to the existing issued and to be issued
ordinary share capital of the Company is based upon a fully diluted
share capital figure of 138,134,520 SMS Shares as calculated in
paragraph (3) above.
5. The fully diluted equity value is based on the issued and to
be issued share capital of SMS as set out above.
6. The enterprise value of approximately GBP1.4 billion is based
on the reported net debt of GBP96 million as at 30 June 2023 as set
out in the 2023 SMS Interim Results.
7. Unless stated otherwise, all prices quoted for SMS Shares are
Closing Prices.
8. Volume weighted average prices are derived from
Bloomberg.
9. Certain figures included in this announcement have been
subject to rounding adjustments.
APPIX III
IRREVOCABLE UNDERTAKINGS
SMS Directors' Irrevocable Undertakings
The following SMS Directors have given irrevocable undertakings
to vote in favour of the Scheme at the Court Meeting and the
Special Resolutions to be proposed at the SMS General Meeting (or,
if Bidco, with the consent of the Panel, subsequently structures
the Acquisition as a Takeover Offer, to accept any Takeover Offer
made by Bidco in accordance with the terms of the irrevocable
undertaking) in relation to the following SMS Shares:
Number of SMS Shares Percentage of SMS
in respect of which issued ordinary share
Name of SMS Director undertaking is given capital*
Tim Mortlock 72,228 0.0541%
---------------------- -----------------------
Gail Blain 2,717 0.0020%
---------------------- -----------------------
Miriam Greenwood 32,049 0.0240%
---------------------- -----------------------
Graeme Bissett 22,911 0.0171%
---------------------- -----------------------
Jamie Richards 8,611 0.0064%
---------------------- -----------------------
Ruth Leak 2,825 0.0021%
---------------------- -----------------------
* based on the number of SMS Shares in issue on the Latest
Practicable Date.
These undertakings will cease to be binding only if:
-- the Scheme or Offer has not become effective or been declared
unconditional in all respects in accordance with the requirements
of the Code (as the case may be) by 6.00pm on the Long Stop
Date;
-- the Scheme or Offer has become effective or unconditional (as
applicable) in accordance with its terms;
-- Bidco announces, with the consent of the Panel, that it does
not intend to make or proceed with the Acquisition and no new,
revised or replacement Offer or Scheme is announced in accordance
with Rule 2.7 of the Code at the same time;
-- the Offer or Scheme lapses or is withdrawn in accordance with
its terms and Bidco does not publicly confirm by such time that it
intends to proceed with the Acquisition or to implement the
Acquisition by way of a Takeover Offer or otherwise; or
-- any competing offer for the entire issued and to be issued
share capital of the Company becomes or is declared wholly
unconditional or, if proceeding by way of a scheme of arrangement,
becomes effective.
If Bidco exercises the right to switch to a Takeover Offer,
these irrevocable undertakings shall continue to be binding in
accordance with their terms.
APPIX IV
DEFINITIONS
The following definitions apply throughout this document unless
the context otherwise requires:
"2022 SMS Annual Report" the annual report and audited accounts of the SMS Group for the
year ended 31 December 2022;
"2023 SMS Interim Results" the interim results of the SMS Group for the half year ended 30
June 2023, as announced by
SMS on 12 September 2023;
"Acquisition" the proposed acquisition by Bidco of the entire issued, and to be
issued, ordinary share capital
of SMS not already owned or controlled by the Bidco Group, to be
implemented by means of the
Scheme, or should Bidco so elect in accordance with the terms of
the Co-operation Agreement
with the consent of the Panel, by means of a Takeover Offer, on the
terms and subject to the
conditions set out in the Scheme Document (or the Offer Document as
applicable) and where
the context admits, any subsequent revision, variation, extension
or renewal thereof;
"Acquisition Price" 955 pence per SMS Share;
"AIM" AIM, the market of that name operated by the London Stock Exchange;
"AIM Rules" the rules of AIM as set out in the "AIM Rules for Companies" issued
by the London Stock Exchange
from time to time relating to AIM traded securities and the
operation of AIM;
"Announcement" this Announcement made pursuant to Rule 2.7 of the Takeover Code,
including its summary and
Appendices;
"Appendices" the appendices to this Announcement and Appendix has a
corresponding meaning;
"Articles" the articles of association of SMS from time to time;
"Bidco" Sienna Bidco Limited, a newly-incorporated private limited company
incorporated in England
and Wales;
"Bidco Group" Bidco and its parent undertakings and its and such parent
undertakings' subsidiary undertakings
and associated undertakings;
"Business Day" a day, not being a public holiday, Saturday or Sunday, on which
clearing banks in London and
Edinburgh are open for normal business;
"Cavendish" Cavendish Securities plc;
"Clean Team Agreement" the clean team agreement between Kohlberg Kravis Roberts & Co.
Partners LLP and SMS dated
16 November 2023;
"Closing Price" the closing middle market price of a SMS Share as derived from the
Daily Official List on
any particular date;
"Companies Act" the Companies Act 2006, as amended from time to time;
"Conditions" the conditions to the implementation of the Acquisition, as set out
in Appendix I to this
Announcement and to be set out in the Scheme Document;
"Confidentiality Agreement" the confidentiality agreement between Kohlberg Kravis Roberts & Co.
Partners LLP and SMS dated
14 October 2023;
"Co-operation Agreement" the co-operation agreement between Bidco and SMS dated 7 December
2023;
"Court" the Court of Session at Parliament House, Parliament Square,
Edinburgh, EH1 1RQ;
"Court Meeting" the meeting of Scheme Shareholders (or the relevant class or
classes thereof) to be convened
at the direction of the Court pursuant to Part 26 of the Companies
Act at which a resolution
will be proposed to approve the Scheme, including any adjournment,
postponement or reconvening
thereof;
"Court Order" the order of the Court sanctioning the Scheme under Part 26 of the
Companies Act;
"CREST" the relevant system (as defined in the Regulations) in respect of
which Euroclear is the operator
(as defined in the Regulations);
"Daily Official List" the daily official list of the London Stock Exchange;
"Dealing Disclosure" an announcement by a party to an offer or a person acting in
concert as required by Rule 8
of the Takeover Code;
"Disclosed" the information: (i) disclosed by or on behalf of SMS in the 2023
SMS Interim Results or the
2022 SMS Annual Report; (ii) disclosed by or on behalf of SMS in
this Announcement; (iii)
disclosed by or on behalf of SMS in any other announcement to a
Regulatory Information Service
before the date of this Announcement; or (iv) and matters fairly
disclosed by or on behalf
of SMS, including via the Co-operation Agreement, the virtual data
room operated by or on
behalf of SMS in respect of the Acquisition or via e-mail, before
the date of this Announcement
to KKR or Bidco (including to their respective officers, employees,
agents or advisers in
their capacity as such in respect of the Acquisition);
"Effective" (i) if the Acquisition is implemented by way of the Scheme, the
Scheme having become effective
pursuant to its terms, upon the delivery of the Court Order to the
Registrar of Companies;
or (ii) if the Acquisition is implemented by way of the Offer, the
Offer having been declared
or having become unconditional in all respects in accordance with
the requirements of the
Takeover Code;
"Effective Date" the date on which the Acquisition becomes Effective;
"Euroclear" Euroclear UK & Ireland Limited;
"FCA" or "Financial Conduct Authority" Financial Conduct Authority of the UK or its successor from time to
time;
"FCA Handbook" the FCA's Handbook of rules and guidance as amended from time to
time;
"FSMA" the Financial Services and Markets Act 2000, as amended from time
to time;
"FY 2023" the financial year beginning on 1 January 2023 and ending on 31
December 2023;
"Interim Facilities Agreement" the interim facility agreement dated on or about the date hereof
between, amongst others,
Bidco and the Interim Lenders;
"Interim Lenders" BNP Paribas S.A., HSBC Bank plc, National Westminster Bank Plc and
Sumitomo Mitsui Banking
Corporation, London Branch;
"Investec" Investec Bank plc;
"KKR" Kohlberg Kravis Roberts & Co. L.P. and its affiliates;
"Latest Practicable Date" 6 December 2023, being the latest Business Day prior to date of
this Announcement;
"London Stock Exchange" the London Stock Exchange plc or its successor;
"Long Stop Date" 31 May 2024 or such later date as may be agreed in writing between
Bidco and SMS, with the
approval of the Court and the Panel if required;
"Macquarie Capital" Macquarie Capital (Europe) Limited;
"Morgan Stanley" Morgan Stanley & Co. International plc;
"Meetings" the Court Meeting and the SMS General Meeting;
"Offer" or "Takeover Offer" subject to the consent of the Panel and the terms of the
Cooperation Agreement, should the
Acquisition be implemented by way of a takeover offer as defined in
Chapter 3 of Part 28 of
the Companies Act, the offer to be made by or on behalf of Bidco to
acquire the entire issued
and to be issued share capital of SMS, other than SMS Shares owned
or controlled by the Bidco
Group and, where the context admits, any subsequent revision,
variation, extension or renewal
of such offer;
"Offer Document" if the Acquisition is implemented by means of a Takeover Offer, the
document to be sent or
made available to SMS Shareholders and persons with information
rights containing, amongst
other things, the full terms and conditions of the Acquisition;
"Offer Period" the Offer Period (as defined by the Takeover Code) relating to SMS
which commenced on 7 December
2023;
"Official List" the Official List of the FCA;
"Opening Position Disclosure" an announcement pursuant to Rule 8 of the Takeover Code containing
details of interests or
short positions in, or rights to subscribe for, any relevant
securities of a party to the
Acquisition;
"Overseas Shareholders" holders of Scheme Shares who are resident in, ordinarily resident
in, or citizens of, jurisdictions
outside the United Kingdom;
"Panel" the UK Panel on Takeovers and Mergers;
"Pre-exceptional EBITDA" statutory EBITDA excluding exceptional items;
"RBC" RBC Europe Limited (trading as RBC Capital Markets);
"Registrar of Companies" the registrar of companies in Scotland;
"Regulations" the Uncertificated Securities Regulations 2001 (SI 2001/3755),
including as it forms part
of the domestic law of the United Kingdom by virtue of the European
Union (Withdrawal) Act
2018;
"Regulatory Information Service" a regulatory information service as defined in the FCA Handbook;
"Relevant Authority" any central bank, ministry, governmental, quasigovernmental,
supranational (including the
European Union), statutory, regulatory or investigative body,
authority or tribunal (including
any national or supranational antitrust, competition or merger
control authority, any sectoral
ministry or regulator and any foreign investment review body),
national, state, municipal
or local government (including any subdivision, court, tribunal,
administrative agency or
commission or other authority thereof), any entity owned or
controlled by them, any private
body exercising any regulatory, taxing, importing or other
authority, trade agency, association,
institution or professional or environmental body in any
jurisdiction;
"relevant securities" as the context requires, SMS Shares, other SMS share capital and
any securities convertible
into or exchangeable for, and rights to subscribe for, any of the
foregoing;
"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
Acquisition is sent or made
available in that jurisdiction;
"Sanction Hearing" the Court hearing to sanction the Scheme and any adjournment,
postponement or reconvening
thereof;
"Scheme" the proposed scheme of arrangement under Part 26 of the Companies
Act to effect the Acquisition
between SMS and the holders of the Scheme Shares (the full terms of
which will be set out
in the Scheme Document), with or subject to any modification,
addition or condition which
SMS and Bidco may agree, and, if required, the Court may approve or
impose;
"Scheme Document" the document to be sent to (amongst others) SMS Shareholders and
persons with information
rights containing, amongst other things, the terms and conditions
of the Scheme and notices
of the Meetings and information regarding the proxy forms in
respect of the Meetings;
"Scheme Record Time" the time and date to be specified in the Scheme Document, expected
to be 6.00 p.m. (London
time) on the Business Day immediately preceding the Effective Date
(or such other date and/or
time as Bidco and SMS may agree);
"Scheme Shareholders" registered holders of Scheme Shares from time to time;
"Scheme Shares" all SMS Shares: (i) in issue at the date of the Scheme Document and
which remain in issue
at the Scheme Record Time; (ii) (if any) issued after the date of
the Scheme Document but
before the Voting Record Time and which remain in issue at the
Scheme Record Time; and (iii)
(if any) issued at or after the Voting Record Time but at or before
the Scheme Record Time
on terms that the holder thereof shall be bound by the Scheme or in
respect of which the original
or any subsequent holders thereof are, or shall have agreed in
writing to be, bound by the
Scheme which remain in issue at the Scheme Record Time, excluding,
in any case, any SMS Shares
registered in the name of a subsidiary owned by Bidco, any member
of the Bidco Group, funds,
vehicles and/or accounts advised and/or managed by KKR or any
nominee of any of the foregoing,
and any Treasury Shares, in each case immediately prior to the
Scheme Record Time;
"Second FY 2023 Dividend Instalment" the interim dividend announced by the Company on 12 September 2023
of 8.31875 pence per SMS
Share, comprising the second instalment of the intended dividend in
respect of FY 2023, expected
to be paid on 25 January 2024 to those SMS Shareholders who are on
the register of members
of the Company on 5 January 2024;
"SMS" or "Company" Smart Metering Systems plc;
"SMS Board" or "SMS Directors" the directors of SMS at the time of this Announcement or, where the
context so requires, the
directors of SMS from time to time;
"SMS General Meeting" the general meeting of SMS Shareholders to be convened to consider
and if thought fit pass,
inter alia, the Special Resolutions in relation to the Scheme,
including any adjournments,
postponements or reconvening thereof;
"SMS Group" SMS and its subsidiary undertakings and where the context permits,
each of them;
"SMS Share(s)" the existing unconditionally allotted or issued and fully paid
ordinary shares of GBP0.01
each in the capital of SMS and any further such ordinary shares
which are unconditionally
allotted or issued before the Scheme becomes Effective;
"SMS Share Plans" each of the SMS Unapproved Share Option Plan, adopted by SMS on 20
June 2011, the SMS Long
Term Incentive Plan, the rules of which were approved by the SMS
Shareholders on 19 May 2022,
and the SMS Share Incentive Plan (as amended) originally adopted by
SMS on 20 June 2011;
"SMS Shareholder(s)" holders of SMS Shares from time to time;
"Special Resolutions" the special resolution(s) to be proposed at the SMS General Meeting
necessary to implement
the Scheme, including (without limitation) a special resolution to
implement certain amendments
to be made to the articles of association of SMS;
"Takeover Code" the City Code on Takeovers and Mergers issued by the Panel on
Takeovers and Mergers, as amended
from time to time;
"Third and Fourth FY 2023 Dividend Instalments" the interim dividends announced by the Company on 12 September
2023, each of 8.31875 pence
per SMS Share, comprising the third and fourth instalments of the
intended dividend in respect
of FY 2023, expected to be paid (in respect of the third
instalment) on 25 April 2024 to those
SMS Shareholders who are on the register of members of the Company
on 5 April 2024 and (in
respect of the fourth instalment) on 25 July 2024 to those SMS
Shareholders who are on the
register of members of the Company on 5 July 2024;
"Treasury Shares" any SMS Shares which are held by or which become held by SMS as
treasury shares (within the
meaning of the Companies Act);
"UK" or "United Kingdom" United Kingdom of Great Britain and Northern Ireland;
"Underlying Profit Before Tax" profit before taxation excluding exceptional items and amortisation
of certain intangibles;
amortisation of the SMS Group's enterprise resource planning
system, which went live in full
in 2020, remains within the underlying cost base of the business
and is therefore a part of
the SMS Group's underlying profit measures;
"US" or "United States" United States of America, its territories and possessions, any
state of the United States
of America, the District of Columbia, and all other areas subject
to its jurisdiction;
"Volume Weighted Average Price" the volume weighted average of the per share trading prices of SMS
Shares on AIM as reported
through Bloomberg;
"Voting Record Time" the time and date to be specified in the Scheme Document by
reference to which entitlement
to vote on the Scheme will be determined, expected to be 6.00 p.m.
on the day which is two
Business Days before the date of the Court Meeting or, if the Court
Meeting is adjourned,
6.00 p.m. on the day which is two Business Days before the date of
such adjourned meeting;
"Wider Bidco Group" Bidco, funds, vehicles and/or accounts advised and/or managed by
KKR and their respective
associated undertakings and any other body corporate partnership,
joint venture or person
in which Bidco and all such undertakings (aggregating their
interests) have a direct or indirect
interest of more than 30 per cent. of the voting or equity capital
or the equivalent; and
"Wider SMS Group" SMS and its subsidiaries, subsidiary undertakings, associated
undertakings and any other body
corporate, partnership, joint venture or person in which SMS and
such undertakings (aggregating
their interests) have a direct or indirect interest of more than 30
per cent. of the voting
or equity capital or the equivalent (excluding, for the avoidance
of doubt, Bidco, funds,
vehicles and/or accounts advised and/or managed by KKR and all of
their respective associated
undertakings which are not members of the SMS Group).
For the purposes of this Announcement, "subsidiary", "subsidiary
undertaking", "undertaking" and "associated undertaking" have the
respective meanings given thereto by the Companies Act.
All references to "pounds", "pounds Sterling", "Sterling",
"GBP", "GBP", "pence" and "p" are to the lawful currency of the
United Kingdom.
All references to "US dollars", "USD", "US$", "$" and "cents"
are to the lawful currency of the United States.
All references to statutory provision or law or to any order or
regulation shall be construed as a reference to that provision,
law, order or regulation as extended, modified, replaced or
reenacted from time to time and all statutory instruments,
regulations and orders from time to time made thereunder or
deriving validity therefrom.
All times referred to are London time unless otherwise
stated.
References to the singular include the plural and vice
versa.
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ACQGLBDDCSGDGXR
(END) Dow Jones Newswires
December 07, 2023 02:01 ET (07:01 GMT)
Smart Metering Systems (LSE:SMS)
Historical Stock Chart
Von Jun 2024 bis Jul 2024
Smart Metering Systems (LSE:SMS)
Historical Stock Chart
Von Jul 2023 bis Jul 2024