PMR.L Regulatory News (PMR)

20 Feb 2007 07:01

Panmure Gordon & Co. plc20 February 2007 Panmure Gordon & Co. plc ("Panmure Gordon") Acquisition of ThinkEquity Partners LLC Panmure Gordon, the corporate and institutional stockbroker, announces that ithas entered into a definitive agreement to acquire ThinkEquity Partners LLC("ThinkEquity"), a US based investment bank. Highlights •Creation of a trans-Atlantic firm with the capability to service investors and issuers across London and New York capital markets •The enlarged group will have an international footprint through its principal offices in London and San Francisco and further offices in New York, Boston, Chicago, Minneapolis, Liverpool and Chennai. It will continue to do business as Panmure Gordon in the UK and Europe and as ThinkEquity, a Panmure Gordon Company in the US •The combined business will employ approximately 320 people, provide research on approximately 500 companies, make markets in approximately 800 companies and service over 800 institutional accounts •Founded in 2001 by former Merrill Lynch Managing Directors, Michael Moe and Deborah Quazzo, ThinkEquity has grown revenues from $12.2 million in 2002 to $64 million in 2006, an increase of 44% on 2005 •ThinkEquity currently advises more than $835 million through its wealth management operation •Consideration of US$62.3 million (£31.9 million), of which approximately US$35.3 million (£18.1 million) will be paid for the equity of ThinkEquity and approximately US$27 million (£13.8 million) for the assumption and repayment of debt and liabilities and the recapitalisation of the company. The consideration will be funded by the issue of 8.9 million new Ordinary shares in Panmure Gordon and by £15.7 million of cash from Panmure Gordon's own resources •On completion of the acquisition Michael Moe, Co-Founder, Chairman and CEO of ThinkEquity and Deborah Quazzo, Co-Founder, President and Head of Investment Banking at ThinkEquity will be invited to join the Board of Panmure Gordon in addition to continuing to fulfil their current roles within ThinkEquity •The acquisition is subject to certain regulatory clearances and is expected to complete by the end of March Tim Linacre, CEO of Panmure Gordon said: "I am delighted we have reached agreement to acquire ThinkEquity. This is asignificant acquisition for Panmure Gordon and is a logical step building on thestrong performance of the last two years. The combined business will be wellplaced to address increasingly international capital markets. I have beengreatly impressed by the way ThinkEquity have grown their business, and bycombining ThinkEquity with Panmure Gordon we can create a very powerful offeringfor clients. Michael and Deborah will make a major contribution to the furtherdevelopment of Panmure Gordon, and I look forward to working with them and theircolleagues." Michael Moe, Co-Founder, Chairman and CEO of ThinkEquity said: "The combination of Panmure Gordon and ThinkEquity will create a market leading,well-capitalised, forward-looking firm with a proprietary offering for growthinvestors and companies. We see a unique opportunity to create the new "Londonbridge" bringing access to the London marketplace for US and Asia-based clientsand access to the US marketplace for European based clients. Today's marketplacefor growth capital and investments is global with only time zones separatingotherwise integrated investors, corporate clients and capital markets. Thistransaction is well timed as ThinkEquity is at a point in its development wherethe strong revenue performance of recent years should continue and translateinto strong profit generation. I look forward to working with my new colleaguesat Panmure Gordon to build an exceptional, profitable and powerful firm." - ends - Enquiries Panmure GordonCharles Stonehill Chairman +44 (20) 7459 3600Tim Linacre CEODavid Liddell Finance Director ThinkEquityMichael Moe Chairman and Co-Founder +1 (415) 249 2900 Bell Pottinger Corporate & FinancialDavid Rydell / Nick Lambert / Christopher Hamilton +44 (20) 7861 3232 Panmure Gordon & Co. plc ("Panmure Gordon") Acquisition of ThinkEquity Partners LLC The Board of Panmure Gordon is delighted to announce that it has reached adefinitive agreement to acquire ThinkEquity Partners LLC, a US-based researchled growth investment bank with its primary office in San Francisco and furtheroffices in New York, Boston, Chicago, Minneapolis and Chennai, India. Theacquisition is subject to regulatory approvals and is anticipated to completebefore the end of March. Information on ThinkEquity Partners LLC ("ThinkEquity") The business was founded in 2001 by Michael Moe (previously a Managing Directorand the Director of Growth Research at Merrill Lynch) and Deborah Quazzo(previously a Managing Director and founder of the Global Growth Group atMerrill Lynch). ThinkEquity has particular expertise in: • Technology • Healthcare • Consumer & Business Services • Media & Communications • Greentech & Emerging Technologies ThinkEquity provides a broad range of services to its corporate andinstitutional clients including Research, Institutional Brokerage, InvestmentBanking and Wealth Management. Since founding in 2001, revenue has grown from $12.2 million in its first fullyear to $64 million in 2006, up 44% from 2005, and the business now employsapproximately 190 people. ThinkEquity has been involved in raising over $8.5 billion in 90 equitytransactions and completed 28 M&A transactions. ThinkEquity makes markets inover 350 companies, has over 250 companies under research coverage and has over$835 million under advisement in wealth management. A key feature of ThinkEquity is the strength of the relationship with premierVenture Capitalists in Silicon Valley and beyond, as evidenced by the AdvisoryBoard which includes the following individuals: •Bill Campbell, Intuit Chairman and Apple and Opsware board member; •Ron Conway, founder of Angel Investors and ranked number 6 on Forbes magazine 2007 list of most influential venture capitalists; •John Denniston, COO/Partner of Kleiner, Perkins, Caulfield & Byers; •Edward Mathias, a Co-Founder and Managing Director of the Carlyle Group; and •Ram Shriram, a venture investor ranked number 4 on Forbes magazine 2007 list of most influential venture capitalists. ThinkEquity has developed a well known and respected brand in the growth economyin the United States. One of the manifestations of this has been the creation ofindustry leading conferences and events including their Global Growth Conferenceheld each year in San Francisco in September. For the fourth such Conference in2006 over 2,000 institutional investors attended to hear presentations from 200growth company CEOs and keynote industry speakers. For 2007 this will expand toinclude the global corporate and institutional clients of the combined group. Financial Information on ThinkEquity In 2006 ThinkEquity produced revenue of $64 million (before settlement costs).An approximate split of that revenue by division is: $000 % of total revenue Investment Banking 23,712 37%Institutional Brokerage 32,451 50%Wealth and Asset Management 7,458 12%Other 393 1% 64,014 100% ThinkEquity has grown following significant investment in personnel, premisesand systems funded out of cash flow, personal investment by the founders andcertain employees and external investors. ThinkEquity made a profit in 2006 of $2.8 million before interest expense of$2.0 million and before discretionary bonuses. Discretionary and retentionbonuses of $13.8 million, of which $3.45 million will be paid for by the issueof 0.97 million Panmure Gordon shares, will be paid in March. The structure ofthe transaction allows for the majority of the total potential equity to beissued to the management of ThinkEquity in relation to this transaction to bealigned to the future financial performance of ThinkEquity. This incentivestructure taken together with the discussions which have taken place withmanagement of ThinkEquity over the past few months, and the plans for thebusiness over the next year, gives the Board confidence that ThinkEquity islikely to be profitable in 2007 after bonuses. Information on the Transaction Consideration for the acquisition will be US$62.3 million (£31.9 million). Ofthis approximately US$35.3 million (£18.1 million) will be paid for the equityof ThinkEquity and approximately US$27 million (£13.8 million) for theassumption and repayment of debt and all net current liabilities, (including thepayment of the bonuses mentioned above), and the recapitalisation of thebusiness. ThinkEquity had some $3 million of fixed assets at 31 December 2006.The consideration will be funded by the issue of 8.9 million new shares inPanmure Gordon and by £15.7 million of cash from Panmure Gordon's own resources.The new Ordinary shares issued by way of consideration to the employee equityholders will be subject to an 18 month lock-in. The new Ordinary shares issuedin part settlement of bonuses will vest in equal instalments over 3 years. In respect of the number of shares to be issued, the share price and theexchange rate have been fixed at 181.5p and $1.962 to £1 respectively, being theaverage for the preceding 20 trading days. A contingent performance pool has been established over an additional 16.85million shares available for award over the next three years dependent on anumber of conditions including financial performance targets. At all levels ofvesting, the transaction would be earnings enhancing for Panmure Gordon. Anyshares issued by way of the contingent performance pool will vest over theperiod 2009 to 2013. The Board has been advised on the transaction by Freeman & Co. Reasons for the acquisition The Board of Panmure Gordon believes that the combination of Panmure Gordon andThinkEquity will create a market leading firm which will be well placed to takeadvantage of the growing internationalisation of capital markets. The business will continue to trade as Panmure Gordon in the UK and Europe, andwill trade as ThinkEquity, a Panmure Gordon Company in the USA. The Board believes that the acquisition of ThinkEquity will bring a number ofbenefits, including: 1) Following significant investment in recruiting high calibre employees focusedon key growth verticals, ThinkEquity is at a point in its development where thestrong revenue growth of recent years should continue and should translate intostrong profit growth. Panmure Gordon operated in 2006 on a revenue-to-staffcompensation ratio of 57%. In 2006 the comparable ratio for ThinkEquity wassignificantly in excess of this. Both the Board of Panmure Gordon and themanagement team of ThinkEquity believe that this ratio can, over the next threeyears, be reduced substantially without slowing the development of ThinkEquity. 2)The combined business will be better able to serveinternational clients, be they North American institutions wanting to trade inUK listed equities, corporate clients looking for transatlantic investmentbanking advice, or US companies looking to access the European and UK equitycapital markets. In particular the Board has identified the opportunity forPanmure Gordon to increase the commission it receives from US institutions, andfor ThinkEquity to provide its corporate clients with access to London. 3)ThinkEquity has been restricted in growing revenue through alack of capital. Combining with Panmure Gordon, and having an appropriatecapital base, will give an immediate impetus to the brokerage, investmentbanking and wealth advisory operations. 4)ThinkEquity has begun to build a private client wealthmanagement business and currently has in excess of $835 million under advisement. The Board believes this has the potential to show substantial growth. Financial Information on Panmure Gordon For the six months ended 30 June 2006 Panmure Gordon announced revenue of £18.3million and adjusted profit before tax of £5 million resulting in adjustedearnings per share of 7.54p. At 30 June 2006, equity shareholders' funds were£52.1 million. In a trading update released on 15 December 2006, the PanmureGordon Board announced expectations for full year revenues for the year to 31December 2006 of not less than £41 million and adjusted earnings per share ofnot less than 15p. The Board of Panmure Gordon will be announcing the resultsfor the year ended 31 December 2006 on 13 March 2007. Board On completion of the acquisition, Michael Moe and Deborah Quazzo will be invitedto join the Board of Panmure Gordon. Michael and Deborah will both enter intoservice agreements with ThinkEquity Holdings LLC for an initial period of 40months at a basic salary of $250,000 per annum and will be eligible to receivean annual discretionary bonus. Timetable The acquisition is subject to certain regulatory clearances which areanticipated to be received by the end of March 2007. -ends- Notes to Editors: About Panmure Gordon •Panmure Gordon is a corporate and institutional stockbroker which provides corporate finance advice, distributes and trades securities and publishes investment research on behalf of a wide range of clients. •The firm is one of the oldest established stockbrokers in the City, having been founded in 1876 by Harry Panmure Gordon. •Panmure Gordon is quoted on AIM (PMR.L). As at 16 February 2007 its market capitalisation was £116 million. •Panmure Gordon currently advises or is stockbroker to approximately 85 companies. •Panmure Gordon operates out of offices in the City of London. InJanuary 2007 it announced plans to open an office in Liverpool in the North of England, and this office will be open in April 2007. •For more information on Panmure Gordon please visit http://www.panmure.com. ThinkEquity •For more information on ThinkEquity please visit http://www.thinkequity.com. This information is provided by RNS The company news service from the London Stock Exchange