Monitise Regulatory News (MONI)

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 OF SUCH JURISDICTION.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

FOR IMMEDIATE RELEASE

7 August 2017

INCREASED AND FINAL RECOMMENDED CASH ACQUISITION

of

MONITISE PLC

by

FISERV UK LIMITED

an indirect wholly-owned subsidiary of Fiserv, Inc.

On 13 June 2017, the boards of Fiserv, Inc. ("Fiserv") and Monitise plc ("Monitise") announced that they had reached agreement on the terms of a recommended cash offer by Fiserv UK Limited ("Bidco") (an indirect wholly-owned subsidiary of Fiserv), for the entire issued and to be issued share capital of Monitise (the "Acquisition") at a price of 2.9 pence in cash for each Monitise Share, to be effected by means of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act (the "Initial Offer Announcement"). The Scheme Document was posted to Monitise Shareholders on 3 July 2017. On 24 July 2017, the Court Meeting and the General Meeting to approve the Acquisition were postponed on Fiserv's request, in light of feedback received from certain Monitise Shareholders.

Increased and Final Offer 

The boards of Fiserv and Monitise are today pleased to announce that they have agreed the terms of an increased and final recommended cash offer for Monitise to be made by Bidco, to be effected by means of a scheme of arrangement under Part 26 of the Companies Act (the "Increased and Final Offer").

Under the terms of the Increased and Final Offer, each Monitise Shareholder will be entitled to receive:

3.1 pence in cash per Monitise Share (the "Increased and Final Offer Price")

The Increased and Final Offer Price values the entire issued and to be issued share capital of Monitise at approximately £75 million and represents a premium of approximately:

· 34.8 per cent. to the Closing Price of 2.30 pence per Monitise Share on 12 June 2017 (being the last Business Day prior to the Initial Offer Announcement);

· 32.8 per cent. to the volume-weighted average Closing Price of 2.34 pence per Monitise Share for the three month period ended 12 June 2017 (being the last Business Day prior to the Initial Offer Announcement); and

· 59.6 per cent. on a cash adjusted basis to the Closing Price of 2.30 pence per Monitise Share on 12 June 2017 (being the last Business Day prior to the Initial Offer Announcement), adjusted for reported 30 June 2017 cash balances of £22.2 million.

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

As set out above, the Increased and Final Offer represents a substantial premium to the undisturbed share price of Monitise, and Fiserv firmly believes that the Increased and Final Offer constitutes full and fair value for Monitise given the financial outlook for the Group and the structural challenges that the Group faces. In particular, and further to feedback received from certain Monitise Shareholders, the board of Fiserv would like to make the following points clear with regard to its Increased and Final Offer:

· Monitise outlined in their trading update released on 27 July 2017 that revenue for the Group continues to decline and outstrip cost-cutting initiatives, and that in the absence of material FINkit® revenues, Monitise expects revenue for the year ending 30 June 2018 to be lower than the year ended 30 June 2017 with a consequent effect on operating results. Furthermore, on a divisional basis, all business units (excluding Content) experienced revenue declines for the financial year ended 30 June 2017 as compared to the prior year period and there were no FINkit® contracts signed in the period;

· As a result of the challenges facing Monitise and continued investment in the business, Monitise's cash balance continued to decline during the period to 30 June 2017. The Monitise board have stated that, with further investment still required in the business, were the Acquisition not to take place, the board will need to consider raising further capital, the divestment of businesses, and the overall strategy of the Group;

· Whilst Monitise's UK business has a significant amount of existing tax losses potentially available to mitigate future UK corporation tax, there are substantial uncertainties around when, how and whether they may be used. Use of the tax losses would require the generation of future taxable income profits in the UK from the same business currently carried on by Monitise, and recently announced changes in the law will likely curtail the manner in which existing and future carried forward losses can be used. Generally, once these changes in the law are enacted, if UK group profits are more than £5 million in any year, losses can only be used against 50% of any UK taxable profits above £5 million. Accordingly, given the current operating performance of Monitise and the uncertainties as to whether, when and how much taxable profit may be relieved by Monitise tax losses, this significantly restricts the value attributable to such losses; and

· Monitise has now been in a public offer period since 13 June 2017 without a third party offeror or potential offeror emerging.

Recommendation

The Monitise Directors, who have been so advised by Canaccord Genuity as to the terms of the Increased and Final Offer, consider the terms of the Increased and Final Offer to be fair and reasonable. Consequently, the Monitise Directors unanimously recommend the Increased and Final Offer.

The Monitise Directors reiterate their belief that the strategic alternatives to a takeover of Monitise are accompanied by significant execution risk and are unlikely to yield superior value to the Acquisition.

Action to be taken by Monitise Shareholders

The Scheme will be amended to reflect the terms of the Increased and Final Offer. A supplementary scheme document will be posted to Monitise Shareholders shortly, subject to the approval of the Court, setting out, inter alia, notices of the reconvened Court Meeting and the reconvened General Meeting, a revised timetable for the Scheme and full details of the voting procedures Monitise Shareholders should follow (the "Supplementary Circular").

· Monitise Shareholders who have submitted Forms of Proxy for the Court Meeting and/or the General Meeting but who wish to change their voting instructions will be advised how to do this in the Supplementary Circular.

· Monitise Shareholders who have already submitted Forms of Proxy for the Court Meeting and/or the General Meeting and who do not wish to change their voting instructions will not need to take any further action as their Forms of Proxy will continue to be valid in respect of the reconvened Court Meeting and reconvened General Meeting.

Irrevocable undertakings and letters of intent

Fiserv and Monitise have received irrevocable undertakings to vote or procure votes in favour of the Scheme at the Court Meeting and the resolution necessary to implement the Scheme to be proposed at the General Meeting (or, in the event that the Acquisition is implemented by way of a Takeover Offer, accept or procure acceptance of that offer, subject to the conditions set out in Appendix II) from the directors of Monitise and Fatih Isbecer.

In addition, Fiserv and Monitise have received letters of intent to vote or procure votes in favour of the Scheme at the Court Meeting and the resolution necessary to implement the Scheme to be proposed at the General Meeting (or, in the event that the Acquisition is implemented by way of a Takeover Offer, accept or procure acceptance of that offer, subject to the conditions set out in Appendix II) from Visa, Inc. and Banco Santander SA.

Therefore, in aggregate, Bidco has received irrevocable undertakings and letters of intent to vote or procure votes in favour of the Scheme at the Court Meeting and the resolution necessary to implement the Scheme to be proposed at the General Meeting (or, in the event that the Acquisition is implemented by way of a Takeover Offer, accept or procure acceptance of that offer, subject to the conditions set out in Appendix II) in respect of 229,577,466 Monitise Shares, representing approximately 9.90 per cent. of the existing issued share capital of Monitise.

Monitise current trading

On 27 July 2017, Monitise announced an unaudited trading update for its financial year ended 30 June 2017, stating that revenue for the year declined to £50.9 million (FY 2016: £67.6 million). In addition, within this total, on a divisional basis, all business units (excluding Content) experienced revenue declines and there were no FINkit® contracts signed in the period. Monitise Content revenues grew 30 per cent. for the year to 30 June 2017 to £13.0 million (FY 2016: £9.9 million). In the absence of material FINkit® revenues, Monitise expects revenue for the year ending 30 June 2018 to be lower than the year ended 30 June 2017 with a consequent effect on operating results.

Whilst the business continues to focus on cost management, the cost reduction activity has not mitigated either the anticipated revenue decline or the absence of any FINkit® contracts.

As previously stated, gross cash at 30 June 2017 was £22.2 million.

Financing 

The consideration payable under the Increased and Final Offer will be funded through debt funding from bank facilities provided to the Fiserv Group. Details of the Credit Agreement are set out in the Scheme Document.

J.P. Morgan, financial adviser to Fiserv and Bidco, is satisfied that sufficient resources are available to Bidco to satisfy in full the cash consideration payable to Monitise Shareholders in connection with the Acquisition.

De-listing and re-registration

It is intended that an application will be made to the London Stock Exchange to cancel trading of the Monitise Shares on AIM to take effect shortly after the effective date. The last day of dealings in Monitise Shares on AIM is expected to be the date of the court hearing and no transfers will be registered after 6.00 p.m. (London time) on that date.

On the effective date, Monitise will become a wholly-owned subsidiary of Bidco and share certificates in respect of the Monitise Shares will cease to be valid and should be destroyed. In addition, entitlements to Monitise Shares held within the CREST system will be cancelled on the effective date. As soon as practicable after the effective date and after the Monitise Shares are delisted, it is intended that Monitise will be re-registered as a private limited company under the relevant provisions of the Companies Act.

The full timetable will be set out in the Supplementary Circular which will be posted to Monitise Shareholders shortly.

General

Save as set out above and as will be set out in the Supplementary Circular, the Increased and Final Offer remains subject to the terms and conditions set out in the original Scheme Document.

In addition to the documents which are already available for inspection, as set out in the Initial Offer Announcement and the Scheme Document, the written consents provided by each of J.P. Morgan and Canaccord Genuity to the publication of this announcement with the inclusion herein of the references to their names in the form and context in which they appear will be made available on Fiserv's website at www.fiserv.com/offer_for_monitise_plc and on Monitise's website at www.monitise.com by no later than 12:00 noon (London time) on the Business Day following the date of this announcement. The contents of these websites is not incorporated into and does not form part of this announcement.

Capitalised terms used but not defined in this announcement have the same meaning as set out in the Scheme Document.

Appendix I contains sources and bases of certain information contained in this announcement. Appendix II contains further details of the irrevocable undertakings and letters of intent received.

Important notices

J.P. Morgan Securities LLC, together with its affiliate J.P. Morgan Limited (which conducts its UK investment banking business as J.P. Morgan Cazenove and which is authorised and regulated in the United Kingdom by the Financial Conduct Authority) ("J.P. Morgan"), is acting as financial adviser exclusively for Fiserv and Bidco and 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 set out in this announcement and will not be responsible to anyone other than Fiserv and Bidco for providing the protections afforded to clients of J.P. Morgan or its affiliates, nor for providing advice in relation to any matter referred to herein.

Canaccord Genuity Limited, which is authorised and regulated in the United Kingdom by the FCA, is acting exclusively for Monitise in connection with the matters set out in this announcement and for no one else and will not be responsible to anyone other than Monitise for providing the protections afforded to its clients or for providing advice in relation to the matters set out in this announcement.

This announcement is for information purposes only and is not intended to and does not constitute, or form any part of, an offer to sell or an invitation to purchase or subscribe for any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the Increased and Final Offer or otherwise. The Increased and Final Offer will be made solely by means of the Scheme Document (or, if applicable, a Takeover Offer) which will contain the full terms and conditions of the Increased and Final Offer, including details of how to vote in respect of the Increased and Final Offer. Any decision in respect of, or other response to, the Increased and Final Offer should be made only on the basis of the information contained in the Scheme Document (or, if applicable, a Takeover Offer).

Overseas shareholders

The release, publication or distribution of this announcement in certain jurisdictions may be restricted by law. The laws of certain jurisdictions may affect the availability of the Increased and Final Offer to persons who are not resident in the United Kingdom. Persons who are not resident in the United Kingdom, or who are subject to laws of any jurisdiction other than the United Kingdom, should inform themselves about, and observe, any applicable requirements. Any person (including, without limitation, nominees, trustees and custodians) who would, or otherwise intends to, forward this announcement, the Scheme Document or any accompanying document to any jurisdiction outside the United Kingdom should refrain from doing so and seek appropriate professional advice before taking any action. In particular, the ability of persons who are not resident in the United Kingdom to vote their Monitise Shares at the Court Meeting or the General Meeting or to execute and deliver Forms of Proxy appointing another to vote their Monitise Shares in respect of the Court Meeting or the General Meeting on their behalf, may be affected by the laws of the relevant jurisdiction in which they are located.

Any failure to comply with the applicable legal or regulatory requirements may constitute a violation of the laws and/or regulations of any such jurisdiction. To the fullest extent permitted by applicable law, the companies and persons involved in the Increased and Final Offer disclaim any responsibility and liability for the violation of such restrictions by any person.

Unless otherwise determined by Bidco or required by the Code, and permitted by applicable law and regulation, the Increased and Final Offer will not be made, directly or indirectly, in or into or by use of the mails or any other means or instrumentality (including, without limitation, telephonic or electronic) of interstate or foreign commerce of, or any facility of a national, state or other securities exchange of, a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction, and no person may vote in favour of the Increased and Final Offer 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 formal documentation relating to the Increased and Final Offer are not being, and must not be, directly or indirectly, mailed or otherwise forwarded or distributed in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction and persons receiving this announcement (including custodians, nominees and trustees) must not distribute or send it into or from a Restricted Jurisdiction.

The Increased and Final Offer relates to the shares of a UK company and it is proposed to be made by means of a scheme of arrangement provided for under the laws of England and Wales. The Scheme will relate to the shares of a UK company that is a ''foreign private issuer'' as defined under Rule 3b-4 under the US Securities Exchange Act of 1934, as amended (the "Exchange Act"). A transaction effected by means of a scheme of arrangement is not subject to the proxy solicitation or tender offer rules under the Exchange Act. Accordingly, the Increased and Final Offer is subject to the disclosure requirements and practices applicable in the UK to schemes of arrangement, which differ from the disclosure requirements and practices of US proxy solicitation and tender offer rules. Financial information included in the relevant documentation will have been prepared in accordance with accounting standards applicable in the UK and may not be comparable to the financial statements of US companies. However, if Bidco were to elect to implement the Increased and Final Offer by means of a Takeover Offer, such Takeover Offer shall be made in compliance with all applicable laws and regulations, including Section 14(e) of the Exchange Act and Regulation 14E thereunder. Such Takeover Offer would be made in the United States by Bidco and no one else. In addition to any such Takeover Offer, Bidco, certain affiliated companies and the nominees or brokers (acting as agents) may make certain purchases of, or arrangements to purchase, shares in Monitise outside such Takeover Offer during the period in which such Takeover Offer would remain open for acceptance. If such purchases or arrangements to purchase are made they would be made outside the United States in compliance with applicable law, including the Exchange Act.

Forward looking statements

This announcement, the Initial Offer Announcement and the Scheme Document contain statements with respect to Fiserv, Bidco and Monitise that are or may be forward looking statements. All statements other than statements of historical facts included in this announcement, the Announcement and the Scheme Document may be forward looking statements. Forward looking statements often use words such as ''anticipate'', ''target'', ''expect'', ''estimate'', ''intend'', ''plan'', ''goal'', ''believe'', ''aim'', ''will'', ''may'', ''would'', ''could'' or ''should'' or other words of similar meaning or the negative thereof. Forward looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial conditions, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of the operations of the Monitise Group and potential synergies resulting from the Increased and Final Offer; and (iii) the effects of government regulation on the business of the Monitise Group.

These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of any such person, or industry results, to be materially different from any results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements are based on numerous assumptions regarding the present and future business strategies of such persons and the environment in which each will operate in the future. You are cautioned not to place undue reliance on these forward- looking statements, which speak only as of the date hereof. All subsequent oral or written forward-looking statements attributable to Fiserv, Bidco or Monitise or any persons acting on their behalf are expressly qualified in their entirety by the cautionary statement above. None of Fiserv, Bidco or Monitise undertake any obligation to update publicly or revise forward-looking or other statements contained in this announcement, the Initial Offer Announcement or the Scheme Document whether as a result of new information, future events or otherwise, except to the extent legally required.

No profit forecasts or estimates

No statement in this announcement, the Initial Offer Announcement or the Scheme Document is intended as a profit forecast or estimate for any period and no statement in this announcement, the Initial Offer Announcement or the Scheme Document should be interpreted to mean that earnings or earnings per ordinary share for Monitise for the current or future financial years would necessarily match or exceed the historical published earnings or earnings per ordinary share for Monitise.

Right to switch to a Takeover Offer

Bidco reserves the right to elect, with the consent of the Panel, to implement the Increased and Final Offer by way of a Takeover Offer for the entire issued and to be issued share capital of Monitise as an alternative to the Scheme. In such an event, the Takeover Offer will be implemented on substantially the same terms as those which would apply to the Scheme (subject to appropriate amendments), so far as applicable.

Publication on a website

A copy of this announcement will be made available (subject to certain restrictions relating to persons resident in Restricted Jurisdictions) on Fiserv's website at www.fiserv.com/offer_for_monitise_plc and on Monitise's website at www.monitise.com by no later than 12 noon (London time) the day following this announcement.

Neither the contents of these websites nor the content of any other website accessible from hyperlinks on such websites is incorporated into, or forms part of, this announcement.

Information relating to Monitise Shareholders

Please be aware that addresses, electronic addresses and certain other information provided by Monitise Shareholders, persons with information rights and other relevant persons for the receipt of communications from Monitise may be provided to Bidco during the Offer Period as required under Section 4 of Appendix 4 of the Code to comply with Rule 2.12(c) of the Code.

Disclosure requirements of the Code

Under Rule 8.3(a) of the Code, any person who is interested in one 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) 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 one per cent. 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(s), 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 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.

APPENDIX I

SOURCES OF INFORMATION AND BASES OF CALCULATION

In this announcement:

(i) Unless otherwise stated, financial information relating to Monitise has been extracted from the audited consolidated financial statements of Monitise for the financial year ended 30 June 2016, Monitise's unaudited half-year report for the six months ended 31 December 2016 or Monitise's trading update announcement for the year ended 30 June 2017, dated 27 July 2017 and in addition, business unit information from Monitise's management accounts for the year ended 30 June 2017.

(ii) Unless otherwise stated, financial information relating to Fiserv has been extracted from the audited consolidated financial statements of Fiserv for the financial year ended 31 December 2016 or Fiserv's unaudited second quarter results for the six months ended 30 June 2017.

(iii) The value of the Increased and Final Offer is based upon the following:

(i) 2,317,865,290 Monitise Shares in issue on 4 August 2017 (being the last Business Day prior to this announcement);

(ii) up to 1,276,650 Monitise Shares which will be newly issued to satisfy options that are exercisable under the Monitise Share Schemes as at 4 August 2017 (being the last Business Day prior to this announcement) and have an Exercise Price lower than the Increased and Final Offer Price;

(iii) up to 88,856,282 Monitise Shares which will be newly issued to satisfy options that will become exercisable in connection with the Acquisition as at 4 August 2017 (being the last Business Day prior to this announcement) and have an Exercise Price lower than the Increased and Final Offer Price; and

(iv) all other options or awards outstanding under the Monitise Share Schemes will lapse because the relevant performance conditions have not been met and/or the Exercise Price is greater than the Increased and Final Offer Price.

(iv) The market prices of the Monitise Shares are derived from data provided by the Daily Official List and represent Closing Prices of the relevant date(s).

(v) Volume weighted average closing prices are derived from data provided by Factset.

(vi) EBITDA is defined as operating profit/loss before exceptional items, depreciation, amortisation, impairments and share-based payments charge.

(vii) As at 30 June 2017, Monitise held £22.2 million of cash on its balance sheet, which represents 0.96 pence of cash per Monitise Share. Adjusting the Increased and Final Offer Price for this cash implies a cash adjusted offer price of 2.14 pence for each Monitise Share. Adjusting Monitise's Closing Price of 2.30 pence as of 12 June 2017 for this cash implies a cash adjusted closing price of 1.34 pence for each Monitise Share. Accordingly, on a cash adjusted basis, the implied premium is 59.6 per cent.

APPENDIX II

IRREVOCABLE UNDERTAKINGS

Bidco has received irrevocable undertakings from the following holders or controllers of Monitise Shares to vote in favour of the Scheme at the Court Meeting and the resolution necessary to implement the Scheme at the General Meeting:

Therefore, in aggregate, Bidco has now received undertakings and letters of intent to vote or procure votes in favour of the Scheme at the Court Meeting and the resolution necessary to implement the Scheme to be proposed at the General Meeting (or, in the event that the Acquisition is implemented by way of a Takeover Offer, accept or procure acceptance of that offer, subject to the conditions below) in respect of 229,577,466 Monitise Shares, representing approximately 9.90 per cent. of the existing issued share capital of Monitise.

The irrevocable undertakings will only cease to be binding if:

a) the Scheme or a Takeover Offer announced in implementation of the Acquisition has not become Effective or been declared unconditional in all respects in accordance with the requirements of the Code (as the case may be) prior to the Long Stop Date; or

b) the Scheme or a Takeover Offer (as the case may be) has lapsed or been withdrawn in accordance with its terms (for the avoidance of doubt, this shall not apply where the Scheme lapses or is withdrawn solely as a result of Fiserv exercising its right to implement the Acquisition by way of a Takeover Offer rather than a Scheme) and no new, revised or replacement Scheme or Takeover Offer has been announced by Bidco or its affiliates in accordance with Rule 2.7 of the Code at the same time.

The letters of intent are not legally binding.