MCS.L Regulatory News (MCS)

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 CONTAINS INSIDE INFORMATION

FOR IMMEDIATE RELEASE

7 December 2020

INCREASED AND FINAL RECOMMENDED CASH OFFER

for

MCCARTHY & STONE PLC

(McCarthy & Stone)

by

MASTIFF BIDCO LIMITED

(Bidco)

which is a company indirectly wholly-owned by Lone Star Real Estate Fund VI

to be effected by means of a scheme of arrangement

under Part 26 of the Companies Act 2006

Increased and Final Offer Price

Introduction

On 23 October 2020, the board of directors of Bidco and McCarthy & Stone announced they had reached agreement on the terms of a recommended cash offer by Bidco for the entire issued and to be issued share capital of McCarthy & Stone (the Acquisition). The Acquisition is to be effected by means of a scheme of arrangement under Part 26 of the Companies Act 2006.

The scheme document in respect of the Acquisition (the Scheme Document) was published and made available to McCarthy & Stone Shareholders on 16 November 2020. Capitalised terms used but not defined in this announcement have the meanings given to them in the Scheme Document.

Final Offer Price

The boards of directors of Bidco and McCarthy & Stone are pleased to announce that they have reached agreement on the terms of an increased and final recommended cash offer by Bidco to acquire the entire issued and to be issued share capital of McCarthy & Stone (the Final Offer).

Under the terms of the Final Offer, Scheme Shareholders will be entitled to receive:

for each Scheme Share 120 pence in cash

The Final Offer values the entire existing issued and to be issued share capital of McCarthy & Stone at approximately £647 million, and represents a premium of approximately:

· 44.6 per cent. to the closing price per McCarthy & Stone Share of 83.0 pence on 22 October 2020 (being the last business day before the commencement of the Offer Period);

· 64.1 per cent. to the three-month volume weighted average price per McCarthy & Stone Share of 73.1 pence per McCarthy & Stone Share to 22 October 2020 (being the last business day before the commencement of the Offer Period); and

· 64.7 per cent. to the six-month volume weighted average price per McCarthy & Stone Share of 72.8 pence per McCarthy & Stone Share to 22 October 2020 (being the last business day before the commencement of the Offer Period).

The financial terms of the Final Offer are final and will not be increased, except that Bidco reserves the right to increase the amount of the offer price if there is an announcement on or after the date of this announcement of an offer or a possible offer for McCarthy & Stone by a third party offeror or potential offeror.

The Scheme will be modified to reflect the terms of the Final Offer. Save as disclosed in this announcement, the Final Offer is subject to the terms and conditions set out in the Scheme Document.

Recommendation

The McCarthy & Stone Directors, who have been so advised by Rothschild & Co and Deutsche Bank as to the financial terms of the Final Offer, consider the terms of the Final Offer to be fair and reasonable. In providing advice to the McCarthy & Stone Directors, Rothschild & Co and Deutsche Bank have taken into account the commercial assessments of the McCarthy & Stone Directors. Rothschild & Co and Deutsche Bank are providing independent financial advice to the McCarthy & Stone Directors for the purposes of Rule 3 of the Code.

Accordingly, the McCarthy & Stone Directors unanimously recommend that Scheme Shareholders vote in favour of the Scheme at the Court Meeting and that McCarthy & Stone Shareholders vote in favour of the Resolution at the General Meeting as the McCarthy & Stone Directors who hold McCarthy & Stone Shares have irrevocably undertaken to do in respect of their own beneficial holdings, amounting in aggregate to 903,094 McCarthy & Stone Shares, representing approximately 0.2 per cent. of the issued share capital of McCarthy & Stone.

McCarthy & Stone Shareholder Meetings

The boards of Bidco and McCarthy & Stone remind McCarthy & Stone Shareholders that the Court Meeting and the General Meeting in connection with the Final Offer will both be held through the Virtual Meeting Platform later today. The Court Meeting will start at 4.00 p.m. and the General Meeting will start at 4.15 p.m. (or as soon thereafter as the Court Meeting has concluded or been adjourned).

Information about how to attend the Meetings through the Virtual Meeting Platform is set out in the Scheme Document.

Financing the Final Offer

The cash consideration payable by Bidco pursuant to the Final Offer will be funded through a revised equity commitment letter from equity financing drawn down by Lone Star Real Estate Fund VI.

Moelis & Company, in its capacity as lead financial adviser to Bidco, is satisfied that sufficient financial resources are available to Bidco to enable Bidco to satisfy in full the cash consideration payable to McCarthy & Stone Shareholders under the terms of the Final Offer.

General

The expected timetable of principal events for the implementation of the Scheme remains as set out on page 13 of the Scheme Document. If any of the dates and / or times in the expected timetable change, the revised dates and / or times will be notified by announcement through a Regulatory Information Service.

The Final Offer does not change Bidco's intentions as regards the business of McCarthy & Stone (including locations of its operations), the management and employees of McCarthy & Stone and the proposals in respect of the McCarthy & Stone Share Plans, as set out in the Scheme Document and in the letters already sent to the participants in the McCarthy & Stone Share Plans informing them of the effect of the Scheme on their rights under the McCarthy & Stone Share Plans and, where applicable, containing appropriate proposals in respect of such rights.

Appendix I contains the sources and bases of certain information contained in this announcement.

Documents available on website

Copies of the following documents will be made available on McCarthy & Stone's and Bidco's websites at www.mccarthyandstonegroup.co.uk and http://www.lsrefvimastiff.com (subject to any applicable restrictions relating to persons resident in Restricted Jurisdictions) by no later than 12 noon on the business day following the date of this announcement up to and including the Effective Date or the date the Scheme lapses or is withdrawn, whichever is earlier:

· this announcement;

· the equity commitment letter described above; and

· the written consents provided by each of Moelis & Company, Goldman Sachs International, Rothschild & Co, Deutsche Bank and Peel Hunt to the inclusion of their names in this announcement in the form and context in which they appear.

Enquiries

Important notices

Moelis & Company, which is authorised and regulated by the FCA in the United Kingdom, is acting exclusively for Lone Star and Bidco and for no one else in connection with the matters described in this announcement and will not be responsible to anyone other than Lone Star and Bidco for providing the protections afforded to clients of Moelis & Company nor for providing advice in connection with the matters referred to herein. Neither Moelis & Company nor any of its 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 Moelis & Company in connection with this announcement, any statement contained herein or otherwise.

Goldman Sachs International, which is authorised by the PRA and regulated by the FCA and the PRA in the United Kingdom, is acting exclusively for Lone Star and Bidco and no one else in connection with the matters referred to in this announcement and will not be responsible to anyone other than Lone Star and Bidco for providing the protections afforded to clients of Goldman Sachs International, or for providing advice in relation to the matters referred to in this announcement.

Rothschild & Co, which is authorised and regulated in the United Kingdom by the FCA, is acting exclusively for McCarthy & Stone and for no one else in connection with the matters set out in this announcement and will not regard any other person as its client in relation to the matters referred to in this announcement and will not be responsible to anyone other than McCarthy & Stone for providing the protections afforded to its clients or for providing advice in relation to the Acquisition or any other matter or arrangement referred to in this announcement.

Deutsche Bank AG is authorised under German Banking Law (competent authority: European Central Bank) and, in the United Kingdom, by the PRA. 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 PRA and the FCA. Details about the extent of its authorisation and regulation by the PRA, and regulation by the FCA, are available on request. Deutsche Bank, acting through its London branch ("Deutsche Bank"), is acting as financial adviser and joint broker to McCarthy & Stone and no other person in connection with the contents of this announcement. Neither Deutsche Bank, nor any of its subsidiaries, branches or affiliates will be responsible to any person other than McCarthy & Stone for providing any of the protections afforded to clients of Deutsche Bank nor for providing advice in relation to any matters referred to in this announcement. Neither Deutsche Bank, nor any of its subsidiaries, branches or affiliates, nor any of its or their respective directors, officers or employees 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.

Peel Hunt LLP, which is authorised and regulated in the United Kingdom by the FCA, is acting exclusively for McCarthy & Stone and for no-one else in connection with the matters described in this announcement and will not regard any other person as its client in relation to the matters referred to in this announcement and will not be responsible to anyone other than McCarthy & Stone for providing the protections afforded to clients of Peel Hunt LLP nor for providing advice in relation to matters described in this announcement.

Further information

This announcement is for information purposes only and is not intended to and does not constitute, or form part of, an offer, invitation, inducement or the solicitation of an offer to buy, otherwise acquire, subscribe for, exchange, sell or otherwise dispose of or exercise rights in respect of any securities, or the solicitation of any vote or approval of an offer to buy securities in any jurisdiction, pursuant to the Acquisition or otherwise, nor shall there be any purchase, sale, issuance or transfer of securities or such solicitation in any jurisdiction in contravention of the laws of such jurisdiction. The Acquisition will be made implemented solely pursuant to the terms set out in the Scheme Document (or, in the event that the Acquisition is to be implemented by means of a Takeover Offer, the Offer Document), which, together with the Forms of Proxy, will contain the full terms and conditions of the Acquisition, including details of how to vote in respect of the Acquisition.

This announcement has been prepared for the purpose of complying with English law and the 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 the United Kingdom.

Overseas jurisdictions

The release, publication or distribution of this announcement in jurisdictions other than the United Kingdom may be restricted by law. Persons who are not resident in the United Kingdom or who are subject to the laws of other jurisdictions should inform themselves of, and observe, any applicable requirements. In particular, the ability of persons who are not resident in the United Kingdom or who are subject to the laws of another jurisdiction to participate in the Acquisition or to vote their McCarthy & Stone Shares in respect of the Scheme at the Court Meeting, or to execute and deliver Forms of Proxy appointing another to vote at the Court Meeting on their behalf, may be affected by the laws of the relevant jurisdictions in which they are located or to which they are subject. Further details in relation to Overseas Shareholders are contained in the Scheme Document. Any failure to comply with the applicable restrictions 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 relates to shares of a UK company and is proposed to be effected by means of a scheme of arrangement under the laws of England and Wales. Neither the US proxy solicitation rules nor the tender offer rules under the US Exchange Act apply to the Acquisition. Accordingly, the Acquisition is subject to the disclosure requirements, rules and practices applicable in the United Kingdom to schemes of arrangement, which differ from the requirements of US proxy solicitation or tender offer rules. However, if Bidco were to elect to implement the Acquisition by means of a Takeover Offer, such Takeover Offer would be made in compliance with all applicable 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. In addition to any such Takeover Offer, Lone Star, certain affiliated companies and the nominees or brokers (acting as agents) may make certain purchases of, or arrangements to purchase, shares in McCarthy & Stone outside such Takeover Offer before or during the period in which such Takeover Offer would remain open for acceptance. In accordance with normal United Kingdom practice and pursuant to Rule 14e-5(b) of the US Exchange Act, if such purchases or arrangements to purchase were to be made, they would be made outside the United States and would comply with applicable law, including the US Exchange Act. These purchases may occur either in the open market at prevailing prices or in private transactions at negotiated prices. Any information about such purchases will be disclosed as required in the United Kingdom and will be reported to the Regulatory News Service of the London Stock Exchange.

In addition, any such Takeover Offer would be subject to UK disclosure requirements, which are different from certain United States disclosure requirements. Furthermore, the payment and settlement procedure with respect to any Takeover Offer will comply with the relevant United Kingdom rules, which differ from US payment and settlement procedures, particularly with regard to the date of payment of consideration.

None of the securities referred to in this announcement have been approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the United States or any other US regulatory authority, nor have such authorities passed upon or determined the adequacy or accuracy of the information contained in this announcement or disapproved or passed judgment upon the fairness or the merits of the Acquisition. Any representation to the contrary is a criminal offence in the United States.

McCarthy & Stone's financial statements, and all financial information included in the Scheme Document, has been prepared in accordance with international financial reporting standards and may not be comparable to financial statements of companies in the United States or other companies whose financial statements are prepared in accordance with US generally accepted accounting principles.

Unless otherwise determined by Bidco or required by the Code and permitted by applicable law and regulation, the Acquisition will 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 observe these restrictions and 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.

The Acquisition is subject to the applicable requirements of the Code, the Panel, the London Stock Exchange and the FCA.

Dealing and Opening Position 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 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 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 offerors, 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 of the Code.

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 of the 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. 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 or a Dealing Disclosure.

Publication on website

In addition to the documents which are already available for inspection, as set out in the Rule 2.7 Announcement and the Scheme Document, a copy of this announcement and the documents required to be published pursuant to Rule 26.1 of the Code will be available free of charge, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on Bidco's website at http://www.lsrefvimastiff.com/ and on McCarthy & Stone's website at www.mccarthyandstonegroup.co.uk by no later than 12 noon on Business Day following the date of this announcement. The content of the websites referred to in this announcement are not incorporated into and do not form part of this announcement.

McCarthy & Stone Shareholders may request a hard copy of this announcement (and any information incorporated by reference in this announcement) by writing to Link Group, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU or by calling Link Group on +44 (0)371 664 0321. Calls are charged at the standard geographic rate and will vary by provider. Calls from outside the United Kingdom will be charged at the applicable international rate. The helpline is open between 9.00 a.m. and 5.30 p.m., Monday to Friday (excluding public holidays in England and Wales). Please note that Link Group cannot provide any financial, legal or tax advice and calls may be recorded and monitored for security and training purposes. It is important that you note that unless you make such a request, a hard copy of this announcement and any such information incorporated by reference in it will not be sent to you. You may also request that all future documents, announcements and information to be sent to you in relation to the Acquisition should be in hard copy form. If a McCarthy & Stone Shareholder has received this announcement in electronic form, hard copies of this announcement and any document or information incorporated by reference into this announcement will not be provided unless such a request is made.

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 the Financial Services and Markets Act 2000 if you are resident in the United Kingdom or, if not, from another appropriately authorised independent financial adviser.

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.

APPENDIX I

SOURCES OF INFORMATION AND BASES OF CALCULATION

1. Each of: (i) the value placed by the Acquisition on the existing issued share capital of McCarthy & Stone; and (ii) any stated percentages of the issued share capital of McCarthy & Stone, is based on 537,766,920 McCarthy & Stone Shares in issue on 4 December 2020, being the last business day prior to the date of this announcement.

2. The value of the Acquisition on a fully diluted basis has been calculated on the basis of a fully diluted issued share capital of 539,381,066 McCarthy & Stone Shares, which is calculated by reference to 537,766,920 McCarthy & Stone Shares in issue on 4 December 2020, being the last business day prior to the date of this announcement, and a further 1,614,146 McCarthy & Stone Shares which may be issued on or after the date of this document on the exercise of options or vesting of awards under the McCarthy & Stone Share Plans. This additional number of McCarthy & Stone Shares has been calculated on the basis of the maximum number of McCarthy & Stone Shares that may be issued under the McCarthy & Stone Share Plans.

3. Unless otherwise stated, all prices and closing prices for McCarthy & Stone Shares are closing middle market quotations derived from the Daily Official List of the London Stock Exchange

4. Volume-weighted average prices have been derived from Bloomberg.

5. Certain figures included in this announcement have been rounded to the nearest single decimal place.