9 Jun 2011 16:11
MWB Business Exchange plc
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
9 June 2011
MWB Business Exchange plc ("Business Exchange")
INDEPENDENT BUSINESS EXCHANGE DIRECTORS RESTATE SUPPORT FOR RECOMMENDED ACQUISITION BY MWB
There is no Regus Offer
Further to the announcement by Regus plc ("Regus") of 7 June 2011 confirming, inter alia, its plans to withdraw its indicative offer (the "Conditional Regus Proposal") at 17.00 (BST) on 13 June 2011, in the absence of fulfilment of certain conditions set out in that announcement, the Independent Business Exchange Directors restate their support for the recommended Acquisition by MWB and their rationale for so doing.
There is no Regus Offer
The Conditional Regus Proposal is referred to in Regus' announcement of 7 June 2011 (and subsequent press) as an "Offer". It was and is nothing more than an indicative proposal which was subject to certain pre-conditions and does not constitute an offer which is capable of being put to, or accepted by, Business Exchange Minority Shareholders. Among other pre-conditions, Regus confirmed that the support of MWB would be required before any offer would be made. MWB has confirmed that it does not support the Conditional Regus Proposal.
Formal Scheme documents in relation to the recommended Acquisition by MWB were posted on 27 May 2011 and shareholder and court meetings to approve the Acquisition have been convened for 22 June 2011. Proxy forms should be completed and returned by 20 June 2011.
There is material price uncertainty around the Conditional Regus Proposal
The Conditional Regus Proposal as originally communicated on 8 May 2011 was expressed to be subject to only two pre-conditions. In its announcement of 27 May 2011 Regus introduced a new pre-condition relating to due diligence, and reserved its right to reduce its indicative offer price by reference to a number of issues. This qualifies the extent to which any weight can be attached to statements by Regus that it is committed to the Conditional Regus Proposal at the price communicated by Regus within its announcement of 27 May 2011. Regus also stated within its announcement on 27 May 2011 that there could be no certainty that any offer would ultimately be made by Regus for Business Exchange.
Business Exchange has engaged with Regus and met with Mark Dixon on 11 May 2011
In order to consider fully the Conditional Regus Proposal, the Independent Business Exchange Directors also engaged in dialogue with both Regus and its advisers. This dialogue included a face-to-face meeting between Independent Business Exchange Directors and Mark Dixon of Regus on 11 May 2011.
The Independent Business Exchange Directors invite Regus to table an unconditional offer
In light of the detailed and commercially sensitive financial and other information made available by Business Exchange to Regus as recently as March 2011 (which is why the NDA referred to in previous Regus announcements exists) and Regus' pre-existing knowledge of the UK serviced office market as a major participant in that market, the Independent Business Exchange Directors are surprised at the level of conditionality surrounding the Conditional Regus Proposal, although they note that this is consistent with Business Exchange's prior experience in its informal dealings with Regus over many years. In order to clarify further Regus' position for Business Exchange Minority Shareholders, they invite Regus to confirm the price at which it would be willing to table an offer, conditional only upon the support of MWB Group, to acquire Business Exchange. In the absence of any change in position by MWB or Regus within the timeframe now stipulated by Regus the Independent Business Exchange Directors see no benefit in allowing a trade competitor of Business Exchange to undertake further confirmatory due diligence, which may include the release of additional commercially sensitive information.
As set out in the formal Scheme document, MWB provides active support for Business Exchange in the form, inter alia, of short term working capital facilities as and when required and indirectly in the form of rental guarantees to landlords in respect of a significant number of Business Exchange business centres. As the representations received by the Independent Business Exchange Directors from MWB described within the formal Scheme document have made clear, the terms upon which such support is made available in the future in the event that the Scheme does not become effective may impact adversely upon the value of Business Exchange Shares. There is no obligation under the Takeover Code upon MWB as the controlling shareholder to make an offer to Business Exchange Minority Shareholders to acquire their shares, either now or at any time in the future in order to further consolidate its controlling position. The recommended Acquisition by MWB, because it is available to all Business Exchange Minority Shareholders, is a transparently fair mechanism.
The Independent Business Exchange Directors emphasise that they remain willing to consider any further proposal (whether from Regus or from any other party) on its merits, including its conditionality, recognising that any proposal which does not carry MWB's support cannot lead to an offer which is capable of acceptance by Business Exchange Minority Shareholders.
Recommended Acquisition by MWB provides Business Exchange Minority Shareholders with opportunity to participate in any future value creation
As noted within the formal Scheme document, the Independent Business Exchange Directors have serious reservations about the merits of a cash sale of Business Exchange in current market conditions (noting also that the maximum price under the Conditional Regus Proposal represents a multiple of only 3.1 times peak EBITDA of Business Exchange). They also stated within the Scheme document their judgment that the maximisation of Business Exchange's future value is most likely to come from running it for the medium term under full ownership by MWB. The Business Exchange second interim report for the period ended 31 December 2010 stated, inter alia, that any significant improvement (in profitability of Business Exchange) may be deferred into 2012. By contrast, MWB (whose stated intention is to realise its assets for the benefit of its shareholders in the medium term under the Cash Distribution Programme) confirmed, in its second interim report for the period ended 31 December 2010, its intention to reduce its debt significantly over the next twelve months and to facilitate the planned expansion of MWB's hotel brands both within the UK and, in appropriate circumstances, abroad. In reaching their decision to recommend the Acquisition by MWB, the Independent Business Exchange Directors took account of the fact that the Acquisition terms comprised substantially a securities exchange offer into a main market listed company with a more liquid market and a more diversified investment profile than Business Exchange. The Independent Business Exchange Directors remain of the view (subject of course to the risk factors identified in the Scheme document) that the recommended Acquisition by MWB, if implemented, would provide Business Exchange Minority Shareholders with the opportunity to participate in any future upside from the wider MWB Group, in addition to the potential upside from any future realisation of Business Exchange under the terms of the Cash Distribution Programme.
No proposal can succeed without MWB support
Between announcing recommended terms for the Acquisition and the posting of formal Scheme documents, the Independent Business Exchange Directors received the Conditional Regus Proposal. Following consultation with MWB, it became clear that MWB did not then support the Conditional Regus Proposal and MWB has since reconfirmed both that it does not support the Conditional Regus Proposal and that it intends to retain its shareholding in Business Exchange in the medium term in order to build the value of Business Exchange as the economy improves. The Independent Business Exchange Directors therefore concluded that the Conditional Regus Proposal was not deliverable (irrespective of the availability of funds to Regus). They now welcome Regus' acknowledgement that the Conditional Regus Proposal cannot succeed without the support of MWB. In other words, in the absence of any indication from MWB that it would consider favourably any offer which might be made, it is certain that the Conditional Regus Proposal can never lead to a formal offer which is capable of acceptance by Business Exchange Minority Shareholders.
Further details of developments subsequent to the announcement of recommended terms for the Acquisition, including certain representations made by MWB, are set out in the formal Scheme document.
ENQUIRIES:
MWB Business Exchange Plc
Malcolm Murray, Independent Non-Executive Director
Keval Pankhania, Finance Director
Tel: 020 7868 7255
Brewin Dolphin Limited (Financial Adviser to Business Exchange)
Sandy Fraser
Tel: 0845 213 2072
Baron Phillips Associates (Financial PR Adviser)
Baron Phillips
Tel: 0207 920 3161 / 07767 444 193
Brewin Dolphin Limited, which is authorised and regulated in the United Kingdom by the FSA, is acting exclusively for Business Exchange in connection with the Acquisition and for no-one else and will not be responsible to anyone other than Business Exchange for providing the protections afforded to its clients nor for providing any advice in relation to the Acquisition or the contents of this announcement or any transaction, arrangement or matter referred to in this announcement.
This announcement is not intended to, and does not constitute, or form part of, an offer to sell or an invitation to purchase or subscribe for any securities or a solicitation of any vote or approval in any jurisdiction. This announcement does not constitute a prospectus or a prospectus equivalent document. Shareholders are advised to read carefully the formal documentation in relation to the Acquisition once it has been despatched. The proposals for the Acquisition will be made solely through the Scheme Document, which will contain the full terms and conditions of the Scheme, including details of how to vote with respect to the Scheme. Any response to the proposals should be made only on the basis of the information in the Scheme Document.
Overseas Shareholders
The release, publication or distribution of this announcement in jurisdictions other than the United Kingdom may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the United Kingdom should inform themselves about, and observe, any applicable requirements. This announcement has been prepared for the purposes of complying with English law and the City 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 and regulations of any jurisdiction outside of England.
No offer is being made, directly or indirectly, in or into any Restricted Jurisdiction. Accordingly, unless otherwise determined by Business Exchange, copies of this announcement are not being and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any Restricted Jurisdiction and persons receiving copies of this announcement (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send any such copies in or into or from any such Restricted Jurisdiction.
The New MWB Units may not be offered, sold, or delivered, directly or indirectly, in, into or from the United States absent registration under the US Securities Act or an exemption from registration. The New MWB Units to be issued under the Scheme will be issued in reliance upon the exemption from the registration requirements of the US Securities Act provided by Section 3(a)(10) thereof. Under applicable US securities laws, persons (whether or not US persons) who are or will be "affiliates" (within the meaning of the US Securities Act) of MWB after the Effective Date will be subject to certain transfer restrictions relating to the New MWB Units received in connection with the Scheme.
Forward-Looking Statements
This announcement and the information incorporated by reference into this announcement may include forward-looking statements. All statements other than statements of historical facts included in this announcement and the information incorporated by reference into this announcement, including, without limitation, those regarding the Business Exchange Group's and the MWB Group's financial position, business strategy, plans and objectives of management for future operations, are forward-looking statements. In some cases, these forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "prepares", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology. Investors should specifically consider the factors identified in this announcement which could cause actual results to differ before making an investment decision. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Business Exchange Group and the MWB Group to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Business Exchange Group's and the MWB Group's present and future business strategies and the environment in which the Business Exchange Group and the MWB Group will operate in the future. These forward-looking statements speak only as of the date on which they are made. Save as required by the Takeover Panel, the FSA, the London Stock Exchange or applicable law, including, without limitation, the City Code, the Prospectus Rules, the Disclosure and Transparency Rules, the Listing Rules and the AIM Rules, Business Exchange and MWB expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in Business Exchange's or the Business Exchange Group's and the MWB Group's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
Not a profit forecast
No statement in this announcement is intended as a profit forecast or profit estimate and no statement in this announcement should be interpreted to mean that the future earnings per share of the MWB Group, MWB and/or Business Exchange for current or future financial years will necessarily match or exceed the historical or published earnings per share of MWB and/or Business Exchange.
Dealing Disclosure Requirements
Under Rule 8.3(a) of the City Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any paper 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 paper 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 paper offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) of the City Code applies must be made by no later than 3.30 p.m. on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 p.m. on the 10th business day following the announcement in which any paper offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a paper offeror prior to the deadline for making an Opening Position Disclosure must instead make a "Dealing Disclosure".
Under Rule 8.3(b) of the City Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any paper offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any paper 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 paper offeror, save to the extent that these details have previously been disclosed under Rule 8 of the City Code. A Dealing Disclosure by a person to whom Rule 8.3(b) of the City Code 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 paper offeror, they will be deemed to be a single person for the purpose of Rule 8.3 of the City 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 City 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 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. If you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure, you should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129.
Online availability of this announcement
In accordance with Rule 19.11 of the City Code, a copy of this announcement will be available on Business Exchange's website (www.mwbex.com).