19 Oct 2016 10:29
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.
For Immediate Release |
19 October 2016 |
Recommended Final Increased Cash Offer
For
Bond International Software plc ("Bond" or the "Company")
By
Constellation Software UK HoldCo Ltd ("Constellation UK")
Recommendation by the Bond Directors of the Final Increased Offer for the entire issued and to be issued ordinary share capital of Bond International Software plc not already owned by Constellation UK and parties acting in concert with Constellation UK
Introduction
The Bond Directors, together with its advisers, have considered the terms of the final increased cash offer of 121 pence per Bond Share to be made by Constellation UK ("Final Increased Offer"). The Bond Directors consider the greater certainty in timing and the amount of cash distribution to better promote the interest of the Bond Shareholders as a whole than a distribution to Bond Shareholders via a members' voluntary liquidation of Bond, following completion of the Sale.
The Bond Directors have taken into consideration that Constellation UK has confirmed that it attaches great importance to the skills, expertise and knowledge of the employees of Bond and its subsidiaries, and expects them to continue to play a significant role in developing the business, as well as Constellation UK's intentions for Bond as set out in the Final Increased Offer Document.
The Bond Directors, so advised by financial adviser, Houlihan Lokey Capital, Inc. ("Houlihan Lokey"), as to the financial terms of the Final Increased Offer, consider the terms of the Final Increased Offer to be fair and reasonable and accordingly the Bond Directors recommend unanimously that Bond Shareholders accept the Final Increased Offer. In providing advice to the Bond Directors, Houlihan Lokey has taken into account the commercial assessments of the Bond Directors. Houlihan Lokey is providing independent financial advice for the purposes of Rule 3 of the City Code to the Bond Directors. The Bond Directors have therefore withdrawn their recommendation to vote in favour of the Sale.
Bond will be writing to Bond Shareholders with its formal response to the Final Increased Offer.
Background
On 30 June 2016, Constellation UK announced the terms of a cash offer of 105p per Bond Share for the entire issued and to be issued share capital of Bond not already owned by it or by persons acting in concert with it (the "Original Offer"). The Original Offer was made without the recommendation of the Bond Directors.
On 12 September 2016, Bond announced that it had entered into a conditional agreement with funds managed by Symphony Technology Group, LLC ("STG") pursuant to which Bond had conditionally agreed to sell the entire issued share capital of the Recruitment Software Subsidiaries to STG (the "Sale") for a total cash consideration of £17.25 million, subject to adjustment for net debt and net working capital (on a cash free debt free basis) to be calculated through a completion accounts process. This adjustment was expected to increase the cash payable to Bond on completion of such Sale to £18.4 million.
On 23 September 2016, Bond and Constellation UK jointly announced the Revised Offer at 115.5 pence per Bond Share which, at that time, was recommended by the Bond Directors. The Revised Offer was posted to Bond Shareholders on 3 October 2016.
On 28 September 2016, the Company announced that the original general meeting convened for 28 September 2016 would be adjourned to 5 October 2016.
On 5 October 2016, the Company announced that it had entered into a Deed of Amendment with STG in relation to the Sale Agreement pursuant to which STG improved the terms and agreed to pay a total consideration of £19.4 million thereby increasing the cash payable on completion to £20.65 million. STG also agreed to purchase the Courtlands Property for £1.8 million payable in cash on completion. The principal terms of the Deed of Amendment were summarised in the Company's circular to the Bond Shareholders dated 5 October 2016, which also contained a Notice convening a New General Meeting for 24 October 2016 to approve the revised terms of the Sale, (the "Amended Sale Resolution"). The Independent Directors recommended that the Bond Shareholders vote in favour of the Amended Sale Resolution, as the total anticipated distribution to the Bond Shareholders from a members' voluntary liquidation of the Company following the sale represented a premium to the Revised Offer of 115.5p per Bond Share.
On 11 October 2016, Constellation UK announced the terms of the Final Increased Offer of 121 pence per Bond Share to be made by Constellation UK for the entire issued and to be issued ordinary share capital of Bond not already owned by Constellation UK or parties acting in concert with Constellation UK (the "Final Increased Offer"). The Final Increased Offer Document was posted to Bond Shareholders on 12 October 2016. The Final Increased Offer represents a premium of 15.2 per cent. of the Original Offer price of 105 pence and values the existing ordinary share capital of Bond at approximately £51.2 million.
The Bond Directors have now agreed to recommend Constellation UK's Final Increased Offer.
Summary key terms of the Final Increased Offer
Under the terms of the Final Increased Offer, Bond Shareholders will be entitled to receive:
For each Bond Share: 121pence in cash
The Final Increased Offer represents a premium of 38.3 per cent. to the Closing Price of 87.5p per Bond Share on 2 June 2016, being the last Business Day prior to the commencement of the Offer Period.
The maximum amount of cash payable pursuant to the Final Increased Offer will be approximately £35.9 million (based on the existing issued ordinary share capital of Bond and assuming the exercise of all outstanding options with an exercise price of less than 121p per Bond Share under the Bond Employee Share Schemes and the acceptance of the Final Increased Offer by all Bond Shareholders before the Final Increased Offer closes). An additional payment of approximately £1.1 million will be paid to Mark Leonard in return for his Bond Shares to be transferred to Constellation UK in order to satisfy the Acceptance Condition under Rule 10 of the City Code.
The Bond Shares to which the Final Increased Offer relates will be acquired by Constellation UK fully paid, or credited as fully paid, and free from all liens, charges, equitable interests, encumbrances, rights of pre-emption and any other third party rights or interests of any nature whatsoever and together with all rights now and hereafter attaching to them, including, without limitation, the right to receive in full and retain all dividends and other distributions, (if any) declared, made or paid in respect of the Bond Shares on or after 17 August 2016.
The Final Increased Offer is subject to the conditions and certain further terms set out in the Final Increased Offer Document and, in the case of Bond Shares held in Certificated Form, in the Form of Acceptance. The Final Increased Offer can only become effective if all conditions to the Final Increased Offer have been satisfied or waived (to the extent permissible).
Constellation UK announced on 11 October 2016 that, Constellation UK and parties acting in concert with Constellation UK either owned, or have received valid acceptances in respect of a total of 18,198,638 Bond Shares (as at 10 October 2016), based on the issued share capital of the Bond, as at 18 October 2016, this represents approximately 43.0 per cent of Bond's existing issued ordinary share capital. Further, on 17 October 2016, a further 231,609 Bond Shares were allotted to parties acting in concert with Constellation UK, following the conversion of 231,609 Non-Voting Convertible Shares into Bond Shares.
As Constellation UK and parties acting in concert with Constellation UK own 100 per cent. of the Bond Non-Voting Convertible Shares outstanding in Bond, the Panel has waived the requirement under Rule 14 of the City Code to make a comparable offer for these securities. Accordingly the Bond Non-Voting Convertible Shares shall not be taken into account for the purposes of the acceptance condition in Rule 10 of the City Code.
Background to and reasons for the recommendation
The Bond Directors consider the greater certainty in timing and amount of the cash distribution of 121 pence per Bond Share provided by the Final Increased Offer to better promote the interests of the Bond Shareholders as a whole than a distribution to Bond Shareholders via a members' voluntary liquidation of Bond, following completion of the Sale. After the payment of all relevant transaction costs and taxes, the Bond Directors estimate the proceeds of a members' voluntary liquidation would to be between 121 pence and 122.5 pence per Bond Share which includes the sale proceeds of the Courtlands Property which now forms part of the Sale. This is based on the assumptions set out in the circular to Bond Shareholders published by Bond on 5 October 2016.The Bond Directors agree that if any of their assumptions in relation to the final distribution are incorrect this could have a material impact upon the timing and/ or the amount of cash distributed to the Bond Shareholders, whereas the Final Increased Offer represents a certain payment of 121p per Bond Share, stated by Constellation UK to be payable by the earliest, 11 November 2016.
The Bond Directors have taken into consideration that Constellation UK has confirmed that it attaches great importance to the skills, expertise and knowledge of the employees of Bond and its subsidiaries, and expects them to continue to play a significant role in developing the business, as well as Constellation UK's intentions for Bond as set out in the Final Increased Offer Document.
Recommendation
The Bond Directors, so advised by financial adviser, Houlihan Lokey Capital, Inc. ("Houlihan Lokey"), as to the financial terms of the Final Increased Offer, consider the terms of the Final Increased Offer to be fair and reasonable and accordingly the Bond Directors recommend unanimously that Bond Shareholders accept the Final Increased Offer. In providing advice to the Bond Directors, Houlihan Lokey has taken into account the commercial assessments of the Bond Directors. Houlihan Lokey is providing independent financial advice for the purposes of Rule 3 of the City Code to the Bond Directors. The Bond Directors have therefore withdrawn their recommendation to vote in favour of the Sale.
As explained below, the Bond Directors are obliged under the irrevocable undertakings that they have given to Bond to vote in favour of the Amended Sale Resolution to authorise the Sale of the Recruitment Software Subsidiaries to STG. If the Amended Sale Resolution is not passed, or the Sale otherwise lapses or terminates, the Bond Directors (and, where applicable, their wives) intend to accept the Revised Offer in respect of the 6,831,631 Bond Shares in which they are interested, representing approximately 15.94 per cent. of the issued share capital of Bond (as at 18 October 2016).
New General Meeting in connection with the Sale
On 5 October 2016 the Company announced that the original General Meeting would be adjourned indefinitely due to the fact that the resolution to be proposed at that meeting was to approve the original terms of the sale agreed with STG which had been replaced by the Amended Sale Resolution.
On 5 October 2016, Bond gave notice convening a general meeting of the Bond Shareholders (the "New General Meeting"), to be held on 24 October 2016, at which (inter alia) the Amended Sale Resolution will be proposed.
The Bond Directors gave irrevocable undertakings to Bond (on a several basis) that they and their wives (where applicable) would vote in favour of the Amended Sale Resolution in respect of a total holding of 6,751,631 Bond Shares representing approximately 15.94 per cent. of the issued share capital of Bond (as at 18 October 2016). The irrevocable undertakings given by the Bond Directors terminate if the Sale lapses or is terminated, or if the Amended Sale Resolution is not passed at the New General Meeting or any adjournment thereof, or if the Revised Offer or any further revised offer from Constellation UK is declared unconditional as to acceptances. These irrevocable undertakings did not lapse as a result of the Revised Offer or the Final Increased Offer.
Constellation UK has announced that the total number of Bond Shares that parties acting in concert with Constellation UK have submitted proxies to vote against, the Amended Sale Resolution represent approximately 29.99 per cent. of the voting rights exercisable at the New General Meeting.
Bond Shareholders should note the following important information in respect of the Sale and the New General Meeting:
• the New General Meeting at which the Amended Sale Resolution will be proposed will be held at 11.30 a.m. on 24 October 2016 at the offices of Memery Crystal LLP at 44 Southampton Buildings, London, WC2A 1AP. The Amended Sale Resolution is an ordinary resolution which would be passed by a simple majority of those Bond Shareholders voting in person or by proxy;
• the Bond Directors are still obliged under the terms of the irrevocable undertakings that they have given to procure that they and their wives (where applicable) will vote in favour of the Amended Sale Resolution in respect of in aggregate the 6,751,631 Bond Shares in which they are interested, which represents approximately 15.94per cent. of the issued share capital of Bond (as at 18 October 2016);
• as explained above, the Bond Directors now unanimously recommend that Bond Shareholders accept the Final Increased Offer, as they (and their wives, where applicable) intend to do in respect of their holdings of Bond Shares if the Amended Sale Resolution is not passed or the Sale otherwise lapses or is terminated.
• the Final Increased Offer is conditional upon no member of the Bond Group having either (i) entered into an unconditional binding commitment, or (ii) entered into a binding conditional contract in respect of which all conditions have been fulfilled which, when aggregated together with any and all other binding commitments entered into by the members of the Bond Group, would, upon completion of such commitments, result in the disposal by the Bond Group of all or substantially all of the assets of the Recruitment Software Division (whether by way of asset sale, share sale or otherwise As indicated in the Final Increased Offer document, if the Amended Sale Resolution is passed, the Final Increased Offer will lapse.
In accordance with the terms of the conditional agreement entered into between Bond and STG in respect of the Sale, following termination of the Sale Agreement (as amended by the Deed of Amendment), Bond shall pay STG a contribution to their reasonable costs and expenses subject to a cap of £350,000.
Bond Directors and Employees
It is intended that Stephen Russell, Richard Hall and Martin Baldwin will agree to resign upon the Final Increased Offer becoming or being declared wholly unconditional, subject to their terms of engagement. Bruce Morrison and Tim Richards shall remain with the Bond Group under the ownership of Constellation UK and subject to their existing terms of engagement.
The Bond Directors are pleased to note the statements made by Constellation UK in its Final Increased Offer Document that it attaches great importance to the skills, expertise and knowledge of the employees of Bond and its subsidiaries, and expects them to continue to play a significant role in developing the business.
The Bond Directors are also pleased to note that Constellation UK intends to honour the existing employment and pension rights of Bond's employees in accordance with applicable law and has no intention of making any changes to Bond's ongoing employer pension contribution obligations for existing employees and members of Bond's pension schemes, the accrual of benefits for existing members of Bond's pension schemes or the admission of new members to Bond's pension schemes. The Bond Directors welcome Constellation UK's confirmations that it has no immediate plans to change the locations of Bond's places of business or to redeploy the fixed assets of Bond in any material way.
However the Bond Directors have been told that if the Final Increased Offer is declared unconditional in all respects Constellation UK will conduct a review of the strategy and operations of Bond and consider how best to integrate Bond into the CSI Group. Until such a review occurs Constellation UK cannot be certain what the impact will be on the employment of the management and employees of Bond and its subsidiaries, including with respect to their continued employment and relating to any material change in the conditions of their employment, although Constellation UK have said that it may result in some reduction of the headcount and rationalisation of locations.
Action to Be Taken
Acceptances received from Bond Shareholders for the Original Offer shall count as valid acceptances towards the Final Increased Offer. Accordingly, such Bond Shareholders should take no further action and if the Final Increased Offer becomes or is declared unconditional in all respects such Bond Shareholders will receive the increased cash consideration of 121 pence per Bond Share.
Further information on how to accept the Final Increased Offer is set out in the Final Increased Offer Document, which is available via Constellation's financial advisers, Herax Partners', website at www.heraxpartners.com.
Definitions
Terms defined in the Circular (which was published on 12 September 2016) have the same meaning in this announcement. A copy of the Circular can also be viewed on the Company's website.
For further information, please contact:
Bond International Software plc: Tel: 01903 707070
www.bondinternationalsoftware.com
Steve Russell: Group Chief Executive
Bruce Morrison: Group Finance Director
Buchanan: Tel: 020 7466 5000
Richard Darby
Steph Watson
Houlihan Lokey Capital, Inc. (Financial adviser)
Thomas Bailey Tel: 001 404 495 7056
Cenkos Securities plc (Nomad) Tel: 020 7397 8900
Stephen Keys
Camilla Hume
Disclaimer
This announcement is for information purposes only. It is not intended to, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities whether pursuant to this announcement or otherwise.
Houlihan Lokey Capital, Inc. ("Houlihan Lokey") is acting as financial adviser exclusively for Bond and no-one else in connection with the matters referred to in this announcement and will not be responsible to anyone other than Bond for providing the protections afforded to clients of Houlihan Lokey, nor for providing advice in relation to the Offer, the Revised Offer or the Final Increased Offer or any matter referred to in this announcement. Neither Houlihan Lokey or 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 Houlihan Lokey in connection with the matters referred to in this announcement.
Houlihan Lokey has given and not withdrawn its written consent to the issue of this announcement with the inclusion herein of the reference to its name in the form and context in which it appears.
The statements contained in this announcement are not to be construed as legal, business, financial or tax advice.
This announcement has been prepared for the purpose of complying with English law, the City Code and the AIM Rules, and 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 Wales.
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 service of this announcement shall not give rise to any implication that there has been no change in the facts set out in this announcement since such date. No dealer, salesperson or other person is authorised to give any information or to make any representations with respect to the Offer, the Revised Offer of the Final Increased Offer other than such information or representations contained in this announcement and, if given or made, such information or representations must not be relied upon as having been authorised by Bond.
Overseas Shareholders
The release, publication or distribution of this announcement in, or into, jurisdictions other than the United Kingdom may be restricted by laws and/or regulations of those jurisdictions. Therefore any persons who are subject to the laws and regulations of any jurisdiction other than the United Kingdom should inform themselves about and observe any applicable requirements in their jurisdiction. Any failure to comply with the applicable requirements may constitute a violation of the laws and/or regulations of any such jurisdiction. In particular, copies of this announcement are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any Restricted Jurisdiction and persons receiving such documents (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send it in or into or from any Restricted Jurisdiction.
Forward-looking statements
This announcement, including the information included in this announcement, contains certain forward-looking statements. The forward-looking statements contained herein include statements about the expected effects of the Final Increased Offer on the Bond Group, strategic options, the expected timing and scope of the Final Increased Offer, and all other statements in this announcement other than historical facts. These statements are based on the current expectations and are naturally subject to uncertainty and changes in circumstances. Forward-looking statements often use words such as "anticipate", "target", "expect", "estimate", "intend", "plan", "budget", "schedule", "forecast", "project", "goal", "believe", "hope", "aims", "continue", "will", "may", "should", "would", "could", "subject to", or other words of similar meaning. By their nature, forward-looking statements involve known and unknown risks and uncertainties, because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results, outcomes and developments to differ materially from those expressed in, or implied by, such forward-looking statements and such statements are therefore qualified in their entirety by the risks and uncertainties surrounding these future expectations. Many of these risks and uncertainties relate to factors that are beyond the entities' ability to control or estimate precisely, such as, but not limited to, general business and market conditions both globally and locally, political, economic and regulatory forces, industry trends and competition, future exchange and interest rates, changes in government and regulation including in relation to health and safety, the environment, labour relations and tax rates and future business combinations or dispositions. Although it is believed that the expectations reflected in such forward-looking statements are reasonable, Bond cannot give any assurance, representation or guarantee that such expectations will prove to have been correct and such forward-looking statements should be construed in light of such factors and you are therefore cautioned not to place reliance on these forward-looking statements which speak only as at the date of this announcement. Bond does not assume any obligation to update or correct the information contained in this announcement (whether as a result of new information, future events or otherwise), except as required by applicable law or regulation.
No Profit Forecasts
No statement in this announcement is intended as a profit forecast or estimate for any period and no statement in this announcement should be interpreted to mean that earnings or earnings per share for Bond for the current or future financial years would necessarily match or exceed the historical published earnings or earnings per share for Bond.
Disclosure requirements of the City Code
Under Rule 8.3(a) of the City 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) Bond 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 3.30pm (London time) on the 10th Business Day following the commencement of the Offer Period and, if appropriate, by no later than 3.30pm (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 Bond 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 City Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of Bond or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of Bond 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) Bond 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 3.30pm (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 of the City Code.
Opening Position Disclosures must also be made by Bond and by any offeror and Dealing Disclosures must also be made by Bond, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4 of the City Code).
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 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.
Publication on Website
A copy of this announcement and the Circular are and will be available free of charge, subject to certain restrictions relating to persons in any jurisdiction where release, publication or distribution of this announcement would constitute a violation of the securities law of such jurisdiction, for inspection on Bond's website at www.bondinternationalsoftware.com/investor-info/ while the Final Increased Offer remains open for acceptance.
Bond Share Capital
References to the existing issued share capital of Bond are references to Bond Shares in issue on 18 October 2016 (being the last practicable Business Day prior to the release of this announcement) being 42,358,403 Bond Shares.