Capita Regulatory News (CPI)

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

THIS ANNOUNCEMENT IS NOT AN ANNOUNCEMENT OF A FIRM INTENTION TO MAKE AN OFFER UNDER RULE 2.7 OF THE CITY CODE ON TAKEOVERS AND MERGERS (THE "CODE") AND THERE CAN BE NO CERTAINTY THAT AN OFFER WILL BE MADE.

FOR IMMEDIATE RELEASE

5 October 2015

Statement regarding Xchanging plc

The Board of Capita plc ("Capita") notes the recent announcement by Xchanging plc ("Xchanging") (the "Xchanging Announcement") and today confirms that it has been in discussions with the Board of Xchanging since early August 2015 regarding a possible cash offer for the entire issued and to be issued share capital of Xchanging.

On 24 September 2015, Capita made a final proposal (the "Final Proposal") in relation to a possible cash offer of 160 pence per Xchanging share (the "Offer"), which represents a premium of 58 per cent to the closing price per Xchanging share on 24 September 2015, the day the Final Proposal was made, and a premium of 45 per cent to the closing price per Xchanging share on 2 October 2015, the last trading day before the date of the Xchanging Announcement.

On 29 September 2015, the Board of Xchanging confirmed that it would be willing to recommend Capita's Final Proposal of 160 pence per Xchanging share and Capita was granted due diligence access.

The Board of Capita believes the acquisition of Xchanging would be consistent with Capita's stated strategy of acquiring businesses that build capability in existing operations, allow Capita to enter new attractive industry segments and enhance its future organic growth potential. The Board believes that the acquisition would:

a) position Capita as one of the leading providers of technology enabled business process services in the attractive international insurance and asset administration industries;

b) provide a stronger platform for Xchanging to accelerate sales growth and to develop its software, technology and procurement solutions under Capita's stewardship; and

c) enable Capita to secure at least £35m in cost synergy benefits driven by head office, shared services and IT efficiencies.

The Offer (if made) is expected to be immediately earnings accretive for Capita and to deliver returns significantly in excess of Capita's cost of capital.

The Offer (if made) is likely to be funded substantially from the net proceeds of a placing of new Capita shares.

The Offer (if made) will be final and will not be capable of being increased, save that Capita reserves the right to increase the price of any such Offer if a third party announces a firm intention to make an offer for Xchanging. There can, however, be no certainty that the Offer will be made.

In accordance with Rule 2.6(a) of the Code, Capita has until 5.00pm on 2 November 2015 (or such later time and/or date to which this date may be extended by the UK Takeover Panel in accordance with Rule 2.6(c) of the Code and Note 1 on Rule 2.6) to announce either a firm intention to make an offer for Xchanging in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies.

The Offer (if made) will be made solely by certain offer documentation which will contain the full terms and conditions of the Offer (if made). This announcement has been prepared in accordance with English law and the Code and information disclosed may not be the same as that which would have been prepared in accordance with laws outside of the United Kingdom.

The release, distribution or publication of this announcement in jurisdictions outside of the United Kingdom may be restricted by law, and therefore persons into whose possession this announcement comes should inform themselves about, and observe, any such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities law of any such jurisdiction.

A further announcement will be made as and when appropriate.

Enquiries:Capita Tel: +44 (0) 20 7799 1525Shona Nichols, Corporate Communications DirectorAndrew Ripper, Head of Investor Relations

FTI Consulting Tel: +44 (0) 20 3727 1340 /Andrew Lorenz +44 (0) 7775 641 807Nick Hasell

Citi (Financial Adviser and Joint Corporate Broker to Capita) Tel: +44 (0) 20 7986 4000David WormsleyCharles LytleEdward McBride

Deutsche Bank (Joint Corporate Broker to Capita) Tel: +44 (0) 20 7545 8000Charles Wilkinson 

Citigroup Global Markets Limited ("Citi"), which is authorised by the Prudential Regulation Authority and regulated in the United Kingdom by the Financial Conduct Authority and the Prudential Regulation Authority, is acting exclusively for Capita and no one else in connection with the possible transaction described in this announcement and will not be responsible to anyone other than Capita for providing the protections afforded to its clients or for providing advice in relation to the matters described in this announcement.

Deutsche Bank AG is authorised under German Banking Law (competent authority: European Central Bank) and, in the United Kingdom, by the Prudential Regulation Authority. It is subject to supervision by the European Central Bank and by BaFin, Germany's Federal Financial Supervisory Authority, and is subject to limited regulation in the United Kingdom by the Prudential Regulation Authority and Financial Conduct Authority.

Deutsche Bank AG is a joint stock corporation with limited liability incorporated in the Federal Republic of Germany, Local Court of Frankfurt am Main, HRB No. 30 000; Branch Registration in England and Wales BR000005 and Registered Address: Winchester House, 1 Great Winchester Street, London EC2N 2DB. Deutsche Bank AG, London Branch is a member of the London Stock Exchange. (Details about the extent of our authorisation and regulation by the Prudential Regulation Authority, and regulation by the Financial Conduct Authority are available on request or from www.db.com/en/content/eu_disclosures.htm.)

Deutsche Bank AG, acting through its London branch ("Deutsche Bank"), is acting as a corporate broker to Capita and no other person in connection with this announcement or its contents. Deutsche Bank will not be responsible to any person other than Capita for providing any of the protections afforded to clients of Deutsche Bank, nor for providing any advice in relation to any matter referred to herein. Without limiting a person's liability for fraud, neither Deutsche Bank nor any of its subsidiary undertakings, branches or affiliates nor any of its or their respective directors, officers, representatives, employees, advisers or agents 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 Deutsche Bank in connection with this announcement, any statement contained herein or otherwise.

Forward-looking statements:

This announcement contains "forward-looking statements" concerning Capita, Xchanging and a possible offer. These statements include the possibility of a transaction and the likely form and consideration for any such transaction. Generally, the words "will", "may", "should", "continue", "believes", "expects", "intends", "anticipates" or similar expressions identify forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Many of these risks and uncertainties relate to factors that are beyond the Capita's ability to control or estimate precisely, such as future market conditions and the behaviour of other market participants. Capita can give no assurance that such expectations will prove to have been correct. The reader is cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this announcement and, except as otherwise required by law, Capita does not undertake to update any of the forward-looking statements set out herein.

Disclosure requirements of the Code:

Under Rule 8.3(a) of the Code, any person who is interested in 1% 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 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (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 Code, any person who is, or becomes, interested in 1% 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 pm (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 Takeover 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. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure.

Publication on website:

A copy of this announcement will be available free of charge, subject to certain restrictions relating to persons resident in jurisdictions other than the United Kingdom (the "Restricted Jurisdictions"), on Capita's website at www.capita.co.uk by no later than noon (London time) on the day following this announcement. For the avoidance of doubt, the contents of that website is not incorporated into and does not form part of this announcement.