Escher Group Holdings Regulatory News (ESCH)

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 OR REGULATIONS OF THAT JURISDICTION.

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.

8 February 2018

This announcement contains inside information

Recommended Cash Offer for

Escher Group Holdings plc ("Escher") by

Exeter Acquisition Limited ("Hanover BidCo")

(an investment vehicle ultimately wholly-owned by Hanover Active Equity Fund LP)

Further to the announcement made earlier (the "Announcement") by Harrow Bidco and Escher plc (AIM: ESCH), a summary of the Announcement is below with the full text available on Escher's website.

Summary

· The Boards of Hanover BidCo and Escher are pleased to announce that they have reached agreement on the terms of a recommended cash offer to be made by Hanover BidCo for the entire issued and to be issued share capital of Escher. Hanover BidCo is an investment vehicle ultimately wholly-owned by Hanover Active Equity Fund LP. As at the date of this announcement Hanover ShareholderCo owns 4,803,114 Escher Shares, representing 25.53 per cent. of the Issued Share Capital of Escher.

· Under the terms of the Offer, each Escher Shareholder will be entitled to receive 185 pence in cash per Escher Share.

· The Offer values the entire issued share capital of Escher at approximately £34.80 million and £35.32 million on a fully diluted basis (assuming that all rights in respect of the in-the-money options under the Escher Share Scheme are exercised on the basis set out in this announcement) and represents:

- a premium of 32.14 per cent. over the closing middle market price of 140 pence per Escher Share on 12 December 2017, being the Business Day prior to Hanover BidCo's approach to the Escher Directors regarding the Offer; and

- a premium of 23.33 per cent. over the closing middle market price of 150 pence per Escher Share on 7 February 2018, being the Business Day prior to the release of this announcement.

· The Offer is conditional upon, amongst other things, Hanover BidCo receiving valid acceptances (which have not been withdrawn) in respect of and/or having otherwise acquired or agreed to acquire Escher Shares which constitute more than 50 per cent. of the voting rights attached to the Escher Shares.

· The Escher Directors, who have been so advised by Panmure Gordon, consider the terms of the Offer to be fair and reasonable. In providing its advice to the Escher Directors, Panmure Gordon has taken into account the commercial assessments of the Escher Board. Panmure Gordon is providing independent financial advice to the Escher Directors for the purposes of Rule 3 of the Irish Takeover Rules.

· Accordingly, the Escher Directors intend to unanimously recommend that the Escher Shareholders accept the Offer.

· Hanover BidCo has received irrevocable undertakings to accept or procure acceptance of the Offer from those Escher Directors who hold Escher Shares, in respect of a total of 1,790,320 Escher Shares, representing approximately 9.52 per cent. of the Issued Share Capital of Escher.

· In addition, Hanover BidCo has received irrevocable undertakings to accept or procure acceptance of the Offer from certain Escher Shareholders, in respect of a total of 1,943,669 Escher Shares representing approximately 10.33 per cent. of the Issued Share Capital of Escher.

· Furthermore, Hanover ShareholderCo has signed an irrevocable undertaking to accept or procure acceptance of the Offer in respect of its holding of 4,803,114 Escher Shares, representing 25.53 per cent. of the Issued Share Capital of Escher.

· In aggregate, Hanover BidCo has received irrevocable undertakings in respect of a total of 8,537,103 Escher Shares, representing approximately 45.38 per cent. of the Issued Share Capital of Escher.

Commenting on the Offer, Matthew Peacock, founding partner of Hanover Investors and a director of Hanover BidCo said:

"We are delighted to be announcing this recommended cash offer for Escher. Our proposal provides Escher Shareholders with an opportunity to realise a significant premium over the value of their shares prior to Hanover's interest in the business, and will allow Escher to grow outside of the constraints of the public market"

Commenting on the Offer Nick Winks, Chairman of Escher, commented:

"This cash offer with its substantial premium is a good outcome for our shareholders - given the uncertainty inherent in our customers' spending patterns and traditional one-off licence based business model, as well as the need to invest further in the business. The board is unanimous in recommending this offer as good for shareholders and employees"

Commenting on the Offer Liam Church, CEO of Escher, commented:

"The acquisition is being made by a strategic shareholder who has got to know the business over almost a year. Hanover has stated that they intend to continue to invest in Escher, particularly in its Riposte® platform, so that the group remains a market leading, global software business, with best in class technology.

"We have made substantial progress since the restructuring we began in 2016. The business now has a platform for sustainable growth as a private company. The management team, backed by Hanover, will be able to focus solely on growing the business, providing greater stability and significant opportunities for our employees."

This summary should be read in conjunction with the full text of the following announcement including the Appendices. The Conditions and certain further terms of the Offer are set out in Appendix I. Appendix II contains bases and sources of certain information. Appendix III contains details of the irrevocable undertakings given to Hanover BidCo. Appendix IV contains the definitions of certain terms used in this announcement.

This announcement is being made pursuant to Rule 2.5 of the Irish Takeover Rules.

The Group now expects to publish its year end results during the week commencing 12 March 2018.

 Enquiries:

Escher Group Holdings plc

Panmure Gordon (Financial adviser, Rule 3 adviser, nominated adviser and broker to Escher)

Instinctif Partners (PR adviser to Escher)

Responsibility statement

The Hanover BidCo Directors and the Hanover HoldCo Directors accept responsibility for the information contained in this Announcement relating to Hanover BidCo, the Hanover BidCo Group and the Hanover BidCo Directors and members of their immediate families, related trusts and persons connected with them. To the best of the knowledge and belief of the Hanover BidCo Directors and the Hanover HoldCo Directors (who have taken all reasonable care to ensure such is the case), the information contained in this Announcement for which they accept responsibility is in accordance with the facts and does not omit anything likely to affect the import of such information.

The Escher Directors accept responsibility for the information contained in this Announcement relating to Escher, the Escher Group and the Escher Directors and members of their immediate families, related trusts and persons connected with them. To the best of the knowledge and belief of the Escher Directors (who have taken all reasonable care to ensure such is the case), the information contained in this Announcement for which they accept responsibility is in accordance with the facts and does not omit anything likely to affect the import of such information.

Further information

This announcement is not intended to and does not constitute, or form part of, any offer to sell or subscribe for or an invitation to purchase or subscribe for any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the Offer or otherwise, nor shall there be any sale, issuance or transfer of securities of Escher in any jurisdiction in contravention of applicable law. This announcement does not constitute a prospectus or equivalent document.

Any acceptance or other response to the Offer should only be made on the basis of the information contained in the Offer Document (which will contain the full terms and conditions of the Offer) and the Form of Acceptance. Escher Shareholders are advised to read the formal documentation in relation to the Offer carefully once it has been dispatched.

Please be aware that addresses, electronic addresses and certain other information provided by Escher Shareholders, persons with information rights and other relevant persons in connection with the receipt of communications from Escher may be provided to Hanover BidCo during the Offer Period as required under Section 3 of Appendix 1 of the Irish Takeover Rules.

N+1 Singer, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively as financial adviser to Hanover BidCo and no-one else in connection with the Offer and will not be responsible to anyone other than Hanover BidCo for providing the protections afforded to clients of N+1 Singer, nor for providing advice in relation to the Offer or any matters referred to in this announcement.

Panmure Gordon, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively as financial adviser to Escher and no-one else in connection with the Offer and will not be responsible to anyone other than Escher for providing the protections afforded to clients of Panmure Gordon, nor for providing advice in relation to the Offer or any matters referred to in this announcement.

Overseas jurisdictions

The availability of the Offer in, and the release, publication or distribution of this announcement in or into, jurisdictions other than Ireland may be restricted by law. Therefore persons into whose possession this announcement comes who are not resident in Ireland should inform themselves about, and observe, any applicable restrictions. Escher Shareholders who are in any doubt regarding such matters should consult an appropriate independent adviser in the relevant jurisdiction without delay. Any failure to comply with such restrictions may constitute a violation of the securities laws of any such jurisdiction.

This announcement has been prepared for the purposes of complying with Irish law and the Irish Takeover Rules 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 Ireland.

US shareholders

The Offer will be for the securities of a corporation organised under the laws of Ireland and is subject to the procedure and disclosure requirements of the United Kingdom and Ireland, which are different from those of the United States. The Offer will be made in the United States pursuant to the applicable provisions of Section 14(e) of, and Regulation 14E under, the US Securities Exchange Act of 1934 (the "Exchange Act"), and otherwise in accordance with the requirements of the Irish Takeover Rules. Accordingly, the Offer will be subject to disclosure and other procedural requirements, including with respect to withdrawal rights, the offer timetable, settlement procedures and timing of payments that are different from those applicable under US domestic tender offer procedures and laws. Neither the US Securities and Exchange Commission nor any US state securities commission has approved or disapproved the Offer or passed upon the adequacy or completeness of this announcement. It may be difficult for US holders of Escher Shares to enforce their rights under any claim arising out of the US federal securities laws, since Hanover BidCo and Escher are located outside of the United States, and their officers and directors are resident outside of the United States.

The receipt of cash pursuant to the Offer by a US holder of Escher Shares may be a taxable transaction for US federal income tax purposes and under applicable US state and local, as well as foreign and other, tax laws. Each US shareholder of Escher is urged to consult with his, her or its independent professional adviser regarding any acceptance of the Offer including, without limitation, to consider the tax consequences associated with such holder's acceptance of the Offer.

To the extent permitted by applicable law, in accordance with, and to the extent permitted by, the Irish Takeover Rules and normal market practice in Ireland and the UK and Rule 14e-5 under the Exchange Act, Hanover BidCo or its nominees or brokers (acting as agents) or their respective affiliates may from time to time make certain purchases of, or arrangements to purchase, Escher Shares outside the United States, other than pursuant to the Offer, before or during the period in which the Offer remains open for acceptance. These purchases may occur either in the open market at prevailing prices or in private transactions at negotiated prices. Such purchases, or arrangements to purchase, will comply with all applicable UK and Irish laws and regulations, including the Irish Takeover Rules, the AIM Rules, and Rule 14e-5 under the Exchange Act to the extent applicable. Any information about any such purchases will be disclosed in accordance with applicable UK and Irish laws and regulations, on the Regulatory News Service on the London Stock Exchange website, www.londonstockexchange.com. To the extent that such information is made public in the United Kingdom and Ireland, this information will also be publicly disclosed in the United States.

Disclosure requirements

Under Rule 8.3(a) of the Irish Takeover Rules, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company during an offer period must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company. 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) the offeror company 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(a) 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 purposes of Rule 8.3.

Details of the offeree and offeror companies in respect of whose relevant securities Dealing Disclosures must be made can be found in the Disclosure Table on the Irish Takeover Panel's website at www.irishtakeoverpanel.ie, 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 Irish Takeover Panel at www.irishtakeoverpanel.ie or on +353 (0)1 678 9020 if you are in any doubt as to whether you are required to make a Dealing Disclosure.

Forward-looking statements

This announcement contains certain forward-looking statements, including statements regarding Hanover BidCo's and Escher's plans, objectives and expected performance. Such statements relate to events and depend on circumstances that will occur in the future and are subject to risks, uncertainties and assumptions. There are a number of factors which could cause actual results and developments to differ materially from those expressed or implied by such forward looking statements, including, among others, the enactment of legislation or regulation that may impose costs or restrict activities; the re-negotiation of contracts or licences; fluctuations in demand and pricing in the industry in which Escher is active; fluctuations in exchange controls; changes in government policy and taxations; industrial disputes; war and terrorism. These forward-looking statements speak only as at the date of this announcement.

Rule 2.10 disclosure

In accordance with Rule 2.10 of the Irish Takeover Rules, Escher confirms that, as at the date of this announcement, it has 18,810,422 ordinary shares of €0.005 each in issue. Escher Shares trade on AIM under the ISIN reference IE00B6SKRB38.

Publication of this announcement

A copy of this announcement will be available subject to certain restrictions relating to persons resident in Restricted Jurisdictions on www.hanoverinvestors.com and www.eschergroup.com by no later than 12 noon on the Business Day following the date of this announcement.

The contents of Hanover Investors' website and Escher's website are not incorporated into and do not form part of this announcement.

Inside information and Market Abuse Regulation (Regulation 596/2014) ("MAR")

Certain Escher Shareholders were, with the consent of the Irish Takeover Panel, formally brought inside in order to discuss giving irrevocable commitments or letters of intent to accept or procure acceptance of the Offer. That inside information is set out in this announcement. Therefore, those persons that received inside information relating to the Offer in a market sounding are no longer considered to be in possession of inside information relating to Escher and its securities; however under MAR such persons are required to form their own opinion as to whether or not they are cleansed.