16 FEBRUARY 2023
INCREASED AND FINAL 1 RECOMMENDED CASH ACQUISITION OF DEVRO PLC (“DEVRO”) BY SARIA NEDERLAND B.V. (“BIDCO”) an indirect subsidiary undertaking of S ARIA SE & CO. KG (“BIDCO PARENT”) to be effected by means of a Scheme of Arrangement under Part 26 of the Companies Act 2006.
INCREASED AND FINAL RECOMMENDED CASH CONSIDERATION, DECLARATION OF SECOND PERMITTED DIVIDEND AND ADJOURNMENT OF THE COURT MEETING AND THE GENERAL MEETING
Summary
· On 25 November 2022, the boards of Bidco and Devro announced (the “Original Announcement“) that they had reached agreement on the terms of a recommended cash acquisition of the entire issued and to be issued ordinary share capital of Devro, to be implemented by way of a Court-sanctioned scheme of arrangement of Devro under Part 26 of the Companies Act (the “Acquisition“).
· The scheme document in respect of the Acquisition (the “Scheme Document“) was published and made available on 13 January 2023 to Devro Shareholders and, for information only, to participants in the Devro Share Plan and persons with information rights. This announcement should be read in conjunction with the Scheme Document and the full text of the Original Announcement.
· This announcement is being made jointly by Bidco and Devro.
· Capitalised terms used but not defined in this announcement have the meanings given to them in the Scheme Document.
1 Except that Bidco reserves the right to increase the offer price if there is an announcement on or after the date of this announcement of an offer or a possible offer for Devro by a third party offeror or potential offeror.
Revised Proposal
· Since the Original Announcement, Devro and Bidco have engaged with Devro Shareholders, and in particular have noted the views of certain Devro Shareholders about the terms of the original offer. The board of Devro has engaged with Bidco and its advisers in relation to the terms of the offer. The boards of Bidco and Devro are pleased to announce that they have reached agreement on the terms of an increased and final Revised Proposal (as defined below) for the acquisition of the entire issued and to be issued ordinary share capital of Devro.
· Under the terms of the Revised Proposal, eligible Devro Shareholders will be entitled to receive, for each Devro share held:
320 pence in cash (the “Increased Cash Consideration”)
and
a second permitted interim dividend of 10 pence (the “Second Permitted Dividend”)
(together, the “Revised Proposal”)
· The Revised Proposal values the entire issued and to be issued share capital of Devro at approximately £564 million on a fully diluted basis, implying an enterprise value of £692 million, equivalent to a multiple of 11.3 times enterprise value to EBITDA for the 52 weeks ended 30 June 2022.
· The Revised Proposal represents an attractive premium of approximately:
– 71.9 per cent. to the Closing Price of 192.0 pence per Devro Share on 24 November 2022 (being the last Business Day before the commencement of the Offer Period);
– 87.6 per cent. to the one-month volume weighted average price of 175.9 pence per Devro Share to 24 November 2022 (being the last Business Day before the commencement of the Offer Period);
– 82.1 per cent. to the six-month volume weighted average price of 181.2 pence per Devro Share to 24 November 2022 (being the last Business Day before the commencement of the Offer Period); and
– 100.2 per cent. to the Closing Price of 164.8 pence per Devro Share on 25 October 2022 (being the last Business Day before receipt by the Devro Board of Bidco’s conditional indicative proposed offer).
· The Increased Cash Consideration of 320.0 pence per Devro Share represents an attractive premium of approximately 66.7 per cent. to the Closing Price of 192.0 pence per Devro Share on 24 November 2022 (being the last Business Day before the commencement of the Offer Period).
· The Revised Proposal represents an increase of 13.9 pence (or 4.4 per cent.) per Devro Share as compared to the original offer price of 316.1 pence per Devro Share.
· In addition, each Devro Shareholder who was on the register of members at 6.00 p.m. on 2 December 2022 (the “Dividend Record Time“) was entitled to receive and retain the 2.9 pence cash dividend for each Devro Share held at the Dividend Record Time (the “Permitted Dividend“) which was announced on 2 August 2022 in respect of the six-month period ended 30 June 2022, without any reduction in the cash consideration payable under the terms of the Acquisition. The Permitted Dividend was paid on 13 January 2023.
· Bidco announces that the Revised Proposal is its final offer and will not be increased, except that it reserves the right to increase the offer price if there is an announcement on or after the date of this announcement of an offer or a possible offer for Devro by a third party offeror or potential offeror.
· The Revised Proposal is subject to the terms and conditions set out in the Scheme Document (save as modified by the terms of the Revised Proposal contained in this announcement). Devro Shareholders should note that Devro does not intend to publish a revised scheme document in respect of the Revised Proposal.
· The Increased Cash Consideration payable to the Devro Shareholders by Bidco under the terms of the Revised Proposal will be fully funded by existing resources available to Bidco.
· J.P. Morgan Cazenove and PwC, as financial advisers to Bidco, are satisfied that sufficient resources are available to Bidco to enable it to satisfy in full the Increased Cash Consideration payable to Devro Shareholders under the terms of the Acquisition.
Second Permitted Dividend
· The board of Devro has resolved to declare and pay, by way of an interim dividend, the Second Permitted Dividend to Devro Shareholders on the register of members at 6.00 p.m. on the Business Day prior to the date on which the Acquisition becomes Effective (the “Second Permitted Dividend Record Date“), without any reduction in the Increased Cash Consideration payable under the terms of the Revised Proposal. The Second Permitted Dividend will be conditional upon, and only payable if, the Scheme becomes Effective (or, if the Acquisition is implemented by way of a Takeover Offer, the Takeover Offer is declared unconditional in all respects).
· If the Scheme does not become Effective (or, if the Acquisition is implemented by way of a Takeover Offer, the Takeover Offer is not declared unconditional in all respects), no Second Permitted Dividend will be paid and no equivalent payment will be made to Devro Shareholders by Bidco.
· If the Scheme becomes Effective (or, if the Acquisition is implemented by way of a Takeover Offer, the Takeover Offer is declared unconditional in all respects), the Second Permitted Dividend will be paid not more than 14 days after the Effective Date and in a manner consistent with the payment of dividends in the ordinary course by Devro.
· The Second Permitted Dividend is being declared, made and paid with the consent of Bidco pursuant to a side letter entered into between Bidco and Devro on 16 February 2023 (the “Side Letter“). If, on or after 25 November 2022 and on or prior to the Effective Date, any other dividend or other distribution is authorised, declared, made or paid in respect of Devro Shares (other than the Permitted Dividend or the Second Permitted Dividend, or in excess of the Permitted Dividend or the Second Permitted Dividend, as applicable), Bidco reserves the right to reduce the Increased Cash Consideration payable under the terms of the Revised Proposal by an amount equal to all or part of any such excess, in the case of a dividend or other distribution in excess of the Permitted Dividend or Second Permitted Dividend (as applicable), or otherwise by the amount of any such dividend or other distribution, in which case any reference in this announcement to the Increased Cash Consideration payable under the terms of the Revised Proposal will be deemed to be reduced by an amount equal to all or part of any such excess. In such circumstances, Devro Shareholders would be entitled to retain any such dividend or distribution or other return of value authorised, declared, made or paid.
· Dividend equivalents in respect of the Second Permitted Dividend shall be payable in accordance with the Devro Share Plan. For the avoidance of doubt, dividend equivalents in respect of the Second Permitted Dividend will not be payable in respect of Awards under the Devro Share Plan that are unvested at the Court Sanction Date and do not vest on the Court Sanction Date.
Devro recommendation
· The Devro Directors, who have been so advised by Lazard as to the financial terms of the Acquisition as amended by this announcement, consider the terms of the Acquisition to be fair and reasonable. In providing advice to the Devro Directors, Lazard has taken into account the commercial assessments of the Devro Directors. Lazard is providing independent financial advice to the Devro Directors for the purposes of Rule 3 of the Takeover Code.
· The Devro Directors believe that the Acquisition as amended by this announcement is in the best interests of Devro Shareholders as a whole and continue to recommend unanimously that Devro Shareholders vote or procure votes in favour of the Scheme at the Court Meeting and to vote or procure votes in favour of the Devro Resolutions to be proposed at the General Meeting as they have irrevocably undertaken to do (or procure to be done) in respect of their own beneficial holdings totalling 392,892 Devro Shares, in aggregate representing approximately 0.2 per cent. of Devro’s ordinary share capital in issue as at 15 February 2023 (being the last Business Day prior to the publication of this announcement and in this announcement, the “Latest Practicable Date“). Further background regarding the reasons for the recommendation are set out below (see paragraph headed “General“).
Consent for a switch to a Takeover Offer
· The board of Devro has today given its consent pursuant to the Co-operation Agreement to Bidco implementing, if it so decides, the Acquisition by way of a Takeover Offer (with the consent of the Panel) rather than by way of the Scheme.
· If Bidco exercises its right to implement the Acquisition by way of a Takeover Offer, then such Takeover Offer would be conditional upon, among other things, valid acceptances being received (and not, where permitted, withdrawn) by not later than 1.00 p.m. (London time) on the Unconditional Date (as defined in the offer document of such Takeover Offer) (or such other times and/or dates as Bidco may specify, subject to the rules of the Takeover Code and where applicable with the consent of the Panel) which together with any Devro Shares that may be acquired or agreed unconditionally to be acquired during the applicable Offer Period (as defined in the offer document of such Takeover Offer), will result in Bidco and/or another member of the Bidco Group holding in aggregate more than 50 per cent. of the Devro Shares to which the Takeover Offer relates (or such higher percentage as Bidco may decide after, to the extent necessary, consultation with the Panel, and in any case such higher percentage not exceeding 75 per cent. of the Devro Shares to which the Takeover Offer relates).
· A copy of the Side Letter (which contains Devro’s consent to a switch to a Takeover Offer and the agreement of Devro and Bidco to modify the terms of the Acquisition as set out in this announcement) will, by no later than 12 noon (London time) on the Business Day following the date of this announcement, be published on Bidco’s website at https://saria.com/announcement/ and Devro’s website at www.Devro.com/investors/recommended-offer-for-Devro/ (as applicable) until the Effective Date.
Adjournment of the Court Meeting and the General Meeting
· In order to allow all Devro Shareholders sufficient time to properly consider the Revised Proposal, the board of Devro intends to adjourn the Court Meeting and the General Meeting scheduled to be held on 16 February 2023 to 3 March 2023.
· At the Court Meeting and the General Meeting on 16 February 2023 the only business to be dealt with at those meetings will be to adjourn the respective meetings to 3 March 2023 and, accordingly, there is no need for Devro Shareholders to attend the meetings on 16 February 2023. The adjourned Court Meeting will start at 10.45 a.m. on 3 March 2023 and the adjourned General Meeting will start at 11.00 a.m. on 3 March 2023 (or as soon thereafter as the Court Meeting shall have concluded or adjourned). The adjourned Court Meeting and adjourned General Meeting will each be held at The Westerwood Hotel, St Andrews Drive, Cumbernauld, G68 0EW. Devro Shareholders who have not yet returned their Forms of Proxy in respect of the Court Meeting and the General Meeting, or appointed a proxy electronically by one of the methods mentioned in the Scheme Document, should therefore now do so as soon as possible and in any event not later than the relevant time set out below.
· In respect of each adjourned meeting, the relevant Form of Proxy (or electronic proxy appointment) should be received as soon as possible and in any event no later than:
| BLUE Forms of Proxy for the Court Meeting | 10.45 a.m. on 1 March 2023 |
| WHITE Forms of Proxy for the General Meeting | 11.00 a.m. on 1 March 2023 |
· If the BLUE Form of Proxy for use at the adjourned Court Meeting is not lodged by the time set out above, it may be handed to the Chair of the adjourned Court Meeting before the start of that meeting.
Action to be taken by Devro Shareholders
· As further detailed in the Scheme Document, to become Effective, the Scheme will require, among other things, the approval of Scheme Shareholders at the adjourned Court Meeting and the passing of the Devro Resolutions at the adjourned General Meeting. It is important, that, for the Court Meeting in particular, as many votes as possible are cast, so that the Court may be satisfied that there is a fair representation of the opinion of Scheme Shareholders.
· Devro Shareholders who have not yet done so are therefore requested to sign and return their Forms of Proxy, or appoint a proxy electronically using CREST (or any other procedure described in pages 9 to 11 of the Scheme Document), whether or not they intend to attend the adjourned Court Meeting and/or the adjourned General Meeting in person, as soon as possible and in any event by the revised deadlines set out above and in the revised indicative timetable set out below.
· Devro Shareholders are reminded that completion and return of a Form of Proxy, or the electronic appointment of a proxy or the submission of a proxy via CREST (or any other procedure described in pages 9 to 11 of the Scheme Document), will not prevent them from attending and voting in person at either the adjourned Court Meeting or the adjourned General Meeting, or any postponement or adjournment thereof, if they wish and are entitled to do so.
Devro Shareholders who do NOT wish to change their voting instructions
· Devro Shareholders who have already submitted Forms of Proxy, or who have appointed a proxy electronically or via CREST (or any other procedure described in pages 9 to 11 of the Scheme Document), for the Court Meeting and/or the General Meeting and do not wish to change their voting instructions, need take no further action as their Forms of Proxy (or proxy appointment by such other procedure described in pages 9 to 11 of the Scheme Document) will continue to be valid in respect of the adjourned Court Meeting and the adjourned General Meeting.
Devro Shareholders who DO wish to change their voting instructions
· Devro Shareholders who have already submitted Forms of Proxy for the Court Meeting and/or the General Meeting and who now wish to change their voting instructions, should contact Computershare by contacting the Devro Shareholder helpline between 8.30 a.m. and 5.30 p.m. Monday to Friday (except UK public holidays) on 0370 889 4050 from within the UK (or on +44 370 889 4050 if calling from outside the UK). Calls to the helpline from outside the UK will be charged at applicable international rates. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. Please note that Computershare cannot provide advice on the merits of the Acquisition or give any financial, legal or tax advice.
· Devro Shareholders who have already appointed a proxy electronically or via CREST (or any other procedure described in pages 9 to 11 of the Scheme Document), for the Court Meeting and/or the General Meeting and who now wish to change their voting instructions are able to do so via CREST or using such other procedure as was used in respect of the original appointment.
· Devro Shareholders should note that Devro does not intend to publish a revised notice for the adjourned Court Meeting and/or the adjourned General Meeting. No business may be transacted at the adjourned Court Meeting or the adjourned General Meeting other than the business which might properly have been transacted at the Court Meeting and General Meeting had such adjournments not taken place.
Letters of Intent
· NN Investment Partners has given a non-binding confirmation in writing to vote in favour of the resolutions at the Court Meeting and General Meeting in respect of 29.02 million Devro Shares (together with any Devro Shares which they become the registered holder and/or beneficial owner (or in relation to which they become able to control the exercise of all rights attaching to, including voting rights) after the date of the written confirmation).
· M&G Investment Management Limited has given a non-binding letter of intent to support the resolutions at the Court Meeting and General Meeting in relation to the Scheme in respect of 7.46 million Devro Shares.
· Blackmoor Investment Partners Limited has given a non-binding letter of intent to vote in favour of the resolutions at the Court Meeting and General Meeting (or, in the event the Acquisition is revised to be implemented by way of a Takeover Offer, to accept or procure the acceptance of such Takeover Offer) in respect of 4.12 million Devro Shares (together with any Devro Shares which they become the registered holder and/or beneficial owner (or in relation to which they become able to control the exercise of all rights attaching to, including voting rights) after the date of the letter of intent).
· Devro and Bidco have therefore received written confirmation and letters of intent (together, the “Letters of Intent“) in respect of a total of 40.59 million Devro Shares representing, in aggregate, approximately 24.25 per cent. of the existing issued share capital of Devro on the Latest Practicable Date.
· All of the irrevocable undertakings described in the Original Announcement and the Scheme Document continue to remain valid in relation to the Revised Proposal.
Revised Indicative Timetable
An updated indicative timetable for the Acquisition reflecting the dates of the adjourned Court Meeting and the adjourned General Meeting is set out below. All times shown are London times. All dates and times are based on Devro’s and Bidco’s current expectations and are subject to change. If any of the dates and/or times in this expected timetable change, the revised dates and/or times will be notified to Devro Shareholders by announcement through a Regulatory Information Service. Copies of any such announcements will be made available on Devro’s website at www.devro.com/investors/recommendedoffer-for-devro/ and Bidco’s website at https://saria.com/announcement/.
| Event | Time/date | ||
| Latest time for lodging Forms of Proxy for the: | |||
| Court Meeting (BLUE Form of Proxy) | 10.45 a.m. on 1 March 2023(1) | ||
| General Meeting (WHITE Form of Proxy) | 11.00 a.m. on 1 March 2023(2) | ||
| Voting Record Time | 6.00 p.m. on 1 March 2023(3) | ||
| Court Meeting | 10.45 a.m. on 3 March 2023 | ||
| General Meeting | 11.00 a.m. on 3 March 2023(4) | ||
| Certain of the following dates are subject to change (please see Note (5) below): | |||
| Court Hearing to sanction the Scheme | A date expected to fall before the end of Q2 2023 (“D“) | ||
| Last day of dealings in, and for registration of transfers of, and disablement in CREST of, Devro Shares | 6.00 p.m. on D | ||
| Second Permitted Dividend Record Date | 6.00 p.m. on D | ||
| Scheme Record Time | 6.00 p.m. on D | ||
| Effective Date | D+1 Business Day(6) | ||
| Cancellation of listing of Devro Shares on the premium segment of the Main Market of the London Stock Exchange | By no later than 8.00 a.m. on D+1 Business Day | ||
| Latest date for despatch of cheques in respect of the Increased Cash Consideration and for settlement of the Increased Cash Consideration through CREST or other form of payment | within 14 days of the Effective Date | ||
| Latest date for payment of the Second Permitted Dividend | within 14 days of the Effective Date | ||
| Long Stop Date | 11.59 p.m. on 11 October 2023(7) | ||
| The Court Meeting and the General Meeting will each be held at The Westerwood Hotel, St Andrews Drive, Cumbernauld, G68 0EW. | |||
| (1) | It is requested that BLUE Forms of Proxy for the Court Meeting be lodged before 10.45 a.m. on 1 March 2023 or, if the Court Meeting is further postponed or adjourned, not later than 48 hours before the time appointed for the holding of the further postponed or adjourned meeting. However, BLUE Forms of Proxy not so lodged may be handed to the Chair of the Court Meeting before the start of that meeting. | ||
| (2) | WHITE Forms of Proxy for the General Meeting must be lodged before 11.00 a.m. on 1 March 2023 in order for it to be valid or, if the General Meeting is further postponed or adjourned, not later than 48 hours before the time appointed for the holding of the further postponed or adjourned meeting. WHITE Forms of Proxy cannot be handed to the Chair of the General Meeting at that meeting. | ||
| (3) | If either of the Devro Shareholder Meetings are further postponed or adjourned, the Voting Record Time will be 6.00 p.m. on the date which is 48 hours (excluding any part of a day that is not a working day) before the time fixed for any such further postponed or adjourned meeting. | ||
| (4) | Or as soon thereafter as the Court Meeting has been concluded or further adjourned. | ||
| (5) | The dates and times given are indicative only and are based on current expectations and are subject to change (including as a result of changes to the regulatory timetable). If any of the times and/or dates above change, the revised times and/or dates will be notified to Devro Shareholders by announcement through a Regulatory Information Service. | ||
| (6) | Following sanction of the Scheme by the Court, the Scheme will become Effective in accordance with its terms upon a copy of the Court Order being delivered to the Registrar of Companies. This is presently expected to occur within one Business Day of receipt of the Court Order, subject to satisfaction or (where capable of waiver), waiver of the Conditions. | ||
| (7) | This date may be extended to such date as Devro and Bidco may (with the consent of the Panel and, if required, the consent of the Court) agree. | ||
Anti-trust and regulatory clearances
Devro and Bidco are pleased to announce that:
· on 12 January 2023, the CMA indicated in a response to a briefing paper that it had no further questions at that stage in relation to the Acquisition; and
· on 23 January 2023, the Austrian Competent Authorities confirmed that they have cleared the Acquisition.
Current trading
· On 20 January 2023, Devro released a trading update for the period from 1 January 2022 to 31 December 2022. The group has continued to trade in line with statements made by Devro in the trading update.
Conditions
· The Conditions to the Acquisition are set out in full in Part 3 (Conditions to and Further Terms of The Acquisition) of the Scheme Document. As noted above, Condition 3(b) to the Acquisition has now been satisfied.
· The Scheme will be modified to reflect the terms of the Revised Proposal. Save as disclosed in this announcement, the Revised Proposal is subject to the same terms and conditions set out in the Scheme Document.
· Subject to the satisfaction or, where applicable, the waiver of the remaining Conditions to the Scheme (including (i) approval of the Scheme at the Court Meeting and Scheme Resolution at the General Meeting (ii) sanction of the Scheme by the Court and (iii) the delivery of the Court Order with the Registrar of Companies) the Scheme is expected to become effective by the end of Q2 2023.
General
· The strategic rationale for the Acquisition remains unchanged and is set out in paragraph 3 of Part 1 of the Scheme Document. In particular, in considering the recommendation of the Acquisition as amended by this announcement to Devro Shareholders, the board of Devro:
– has given due consideration to financial terms of the Acquisition as amended by this announcement, the current trading performance of Devro and Bidco’s plans for the business;
– has been open to competing offers and confirms that it is not currently in receipt of any approaches or offers from other bidders; and
– in the event the Acquisition as amended by this announcement is not implemented, notes that there is likely to be an overhang on the Company’s share price given that a material proportion of Devro’s share register has moved from the long term shareholders to hedge funds since the original offer was announced.
· The Revised Proposal does not change Bidco’s intentions in relation to the management, employees, pensions, research and development and locations of Devro, as set out in paragraph 6 of Part 1 of the Scheme Document. There are no disclosures required to be made under Rule 27.2(a), 27.2(b) or 27.2(c) of the Takeover Code by Bidco, or by Devro, respectively.
· Each of J.P. Morgan Cazenove, PwC, Lazard and Numis, has given and not withdrawn its written consent to the inclusion in this announcement of the references to its name in the form and context in which they appear.
· The sources of information and bases of calculation of certain information contained in this announcement are set out in the Appendix to this announcement.
· A copy of each of the following documents will be published on Bidco’s website at https://saria.com/announcement/ and Devro’s website at www.Devro.com/investors/recommended-offer-for-Devro/ by no later than 12.00 p.m. (London Time) on the Business Day following the publication of this announcement (as applicable) until the Effective Date:
– this announcement;
– the Side Letter;
– the Letters of Intent; and
– the consent letters from each of J.P. Morgan Cazenove, PwC, Lazard and Numis referred to above.
Enquiries:
| Bidco | Tel: +49 (0) 2592/210-422 |
| Dustin Crefeld | |
| J.P. Morgan Cazenove (Financial Adviser to Bidco) | Tel: +44 (0) 20 7742 4000 |
| Dwayne Lysaght | |
| Karim Taha | |
| PwC (Financial Adviser to Bidco ) | Tel: +44 (0) 20 7583 5000 |
| Jon Raggett | |
| Duncan Skailes | |
| Powerscourt (Communications adviser to Bidco ) | Tel: +44 (0) 20 7250 1446 |
| James WhiteGenevieve Ryan | |
| Devro | Tel: +44 (0) 20 3727 1340 |
| Rutger HelbingRohan Cummings | |
| Lazard (Financial Adviser to Devro) | Tel: +44 (0) 20 7187 2000 |
| Richard ShawMatt KnottJames Cliffe | |
| Numis Securities (Corporate Broker to Devro) | Tel: +44 (0) 20 7260 1000 |
| Stuart DicksonTom JacobEdmund van der Klugt | |
| FTI Consulting (Communications Adviser to Devro) | |
| Richard MountainAriadna D. Peretz | Tel: +44 (0) 20 3727 1340Tel: +44 (0) 7890 417 764 |