12 Mar 2008 07:01
Covidien UK Holding Ltd12 March 2008 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 OF SUCH JURISDICTION For immediate release 12 March 2008 Recommended Cash Offer by Covidien UK Holding Ltd ("Covidien UK Holding") (an indirect wholly-owned subsidiary of Covidien Ltd ("Covidien")) for the whole of the issued and to be issued ordinary share capital of Tissue Science Laboratories plc ("Tissue Science Laboratories") Summary The Boards of Covidien and Tissue Science Laboratories are pleased to announcethat they have reached agreement on the terms of a recommended cash offer to bemade by Covidien UK Holding to acquire the entire issued and to be issuedordinary share capital of Tissue Science Laboratories. The Tissue ScienceLaboratories Directors will unanimously recommend Tissue Science LaboratoriesShareholders to accept the Offer. The Offer will be made on the basis of 103.5 pence in cash for each TissueScience Laboratories Share and values the entire issued and to be issuedordinary share capital of Tissue Science Laboratories at approximately £38.0million. The Offer Price represents: • a premium of approximately 88.2 per cent. over the Closing Price of55.0 pence per Tissue Science Laboratories Share on 11 March 2008, being thelast Business Day prior to the date of this announcement; and • a premium of approximately 71.8 per cent. over the average ClosingPrice of approximately 60.2 pence per Tissue Science Laboratories Share over thesix months prior to the date of this announcement. The Tissue Science Laboratories Directors, who have been so advised by NomuraCode, consider the terms of the Offer to be fair and reasonable. In providingadvice on the Offer to the Tissue Science Laboratories Directors, Nomura Codehas taken into account the commercial assessments of the Tissue ScienceLaboratories Directors. Accordingly, the Tissue Science Laboratories Directors will unanimouslyrecommend Tissue Science Laboratories Shareholders to accept the Offer. Those Tissue Science Laboratories Directors, together with certain personsconnected with them, who are interested in Tissue Science Laboratories Shareshave given irrevocable undertakings to Covidien UK Holding to accept the Offerin respect of, in aggregate, 8,030,932 Tissue Science Laboratories Sharesrepresenting approximately 23.2 per cent. of the existing issued ordinary sharecapital of Tissue Science Laboratories, and in relation to any further TissueScience Laboratories Shares issued to them, including Tissue ScienceLaboratories Shares issued pursuant to the exercise of options over TissueScience Laboratories Shares. These irrevocable undertakings remain binding inthe event of a competing offer being made for the entire issued and to be issuedordinary share capital of Tissue Science Laboratories. In addition, Covidien UK Holding has also received, from certain other TissueScience Laboratories Shareholders, irrevocable undertakings and letters ofintent to accept the Offer in respect of a total of 13,880,534 Tissue ScienceLaboratories Shares, representing approximately 40.1 per cent. of the existingissued ordinary share capital of Tissue Science Laboratories. Therefore,Covidien UK Holding has secured, in aggregate, irrevocable undertakings andletters of intent in respect of 21,911,466 Tissue Science Laboratories Sharesrepresenting approximately 63.3 per cent. of the existing issued share capitalof Tissue Science Laboratories. Further details of these irrevocableundertakings and letters of intent are set out in Appendix III to thisannouncement. Commenting on the Offer, Scott Flora, President, Surgical Devices, of Covidiensaid: "The acquisition of Tissue Science Laboratories will provide Covidien with aleading tissue repair technology and accelerate our entry into the rapidlygrowing biologic hernia repair market. The Permacol(R) product will complementour current soft tissue product offerings and will allow us to offer a full lineof differentiated hernia repair products designed to improve patient outcomes." Commenting on the Offer, Patrick Paul, Chairman of Tissue Science Laboratories,said: "Having successfully established Permacol(R) as a class-leading material in therapidly developing biologic implant market, we are delighted to have now found acompany in Covidien which shares our vision for the future potential of ourtechnology platform. We believe that the Offer represents both excellent valuefor shareholders and an outstanding opportunity for our employees andstakeholders." Rothschild is acting as financial adviser to Covidien UK Holding and Covidien.Nomura Code is acting as financial adviser to Tissue Science Laboratories. This summary should be read in conjunction with, and is subject to, the fulltext of the following announcement, including the appendices. Appendix I tothis announcement contains the conditions and certain terms of the Offer.Appendix II to this announcement contains further details of the bases ofcalculations and sources of information set out in this announcement. AppendixIII to this announcement contains further details of the irrevocableundertakings and Appendix IV to this announcement contains definitions ofcertain expressions used in this summary and in this announcement. Enquiries: Covidien LtdEric Kraus +1 508 261 8305Senior Vice President, Corporate Communications eric.kraus@covidien.com Coleman Lannum, CFA +1 508 452 4343Vice President, Investor Relations cole.lannum@covidien.com Bruce Farmer +1 508 452 4372Director , Financial Communications bruce.farmer@covidien.com Wayde McMillan +1 508 452 4387Director, Investor Relations wayde.mcmillan@covidien.com Rothschild (Financial Adviser to Covidien UK Holding and Covidien) 0207 280 5000Lynn Drummond Hanson Westhouse (Broker to Covidien UK Holding) 0207 601 6100Tim MetcalfeSanjiv Pandya Tissue Science Laboratories plc 01252 369603Martin Hunt, Chief ExecutiveDavid Jennings, Finance Director Nomura Code (Financial Adviser to Tissue Science Laboratories) 0207 776 1200Juliet ThompsonPhil Walker Hogarth Partnership (PR Adviser to Tissue Science Laboratories) 0207 357 9477Melanie Toyne-SewellSarah Richardson N M Rothschild & Sons Limited, which is authorised and regulated by theFinancial Services Authority in the United Kingdom, is acting exclusively forCovidien UK Holding and Covidien and no one else in relation to the Offer andwill not be responsible to anyone other than Covidien UK Holding and Covidienfor providing the protections afforded to clients of N M Rothschild & SonsLimited nor for providing advice in relation to the Offer or any other mattersreferred to in this announcement. Nomura Code Securities Limited, which is authorised and regulated by theFinancial Services Authority in the United Kingdom, is acting exclusively forTissue Science Laboratories and no one else in relation to the Offer and willnot be responsible to anyone other than Tissue Science Laboratories forproviding the protections afforded to clients of Nomura Code Securities Limitednor for providing advice in relation to the Offer or any other matters referredto in this announcement. This announcement does not constitute an offer to sell or an invitation orsolicitation to purchase or subscribe for any securities. The Offer will bemade solely by the Offer Document and, in the case of Tissue ScienceLaboratories Shares held in certificated form, the Form of Acceptance, whichwill contain the full terms and conditions of the Offer, including details ofhow the Offer may be accepted. Any acceptance or other response in relation tothe Offer should be made only on the basis of the information contained in theOffer Document and, in the case of Tissue Science Laboratories Shares held incertificated form, the Form of Acceptance. The Offer Document and the Form of Acceptance will be distributed shortly toTissue Science Laboratories Shareholders and, for information purposes only, toTissue Science Laboratories Optionholders. The Offer Document and the Form ofAcceptance will, in any event, be posted within 28 days of this announcement,unless otherwise agreed with the Panel. Tissue Science Laboratories andCovidien urge Tissue Science Laboratories Shareholders to read the OfferDocument and, in respect of Tissue Science Laboratories Shares held incertificated form, the Form of Acceptance carefully when they become availablebecause they will contain important information relating to the Offer. The making of the Offer in jurisdictions outside the United Kingdom or toOverseas Shareholders or to nominees of or trustees for Overseas Shareholdersmay be prohibited or affected by the laws or regulatory requirements of therelevant overseas jurisdictions. Such Overseas Shareholders should informthemselves about and observe any applicable legal requirements of suchjurisdictions. It is the responsibility of any Overseas Shareholder wishing toaccept the Offer to satisfy himself as to the full observance of the laws andregulatory requirements of the relevant jurisdiction in connection therewith,including the obtaining of any governmental, exchange control or other consentswhich may be required, compliance with other formalities needing to be observedand the payment of any issue, transfer or other taxes or duties or requisitepayments due in such jurisdiction. Any such Overseas Shareholder will beresponsible for payment of any such issue, transfer or other taxes, duties orother requisite payments due in such jurisdiction by whomsoever payable, andCovidien UK Holding and Covidien (and any person acting on the behalf of either)shall be entitled to be fully indemnified and held harmless by such OverseasShareholder for any such issue, transfer or other taxes or duties or otherrequisite payments as Covidien UK Holding and Covidien (and any person acting onthe behalf of either) may be required to pay. This announcement is not an offer of securities for sale or purchase in theUnited States, Canada, Australia, Japan or any Restricted Jurisdiction. TheOffer will not be made, directly or indirectly, in or into, or by use of themails of, or by any means or instrumentality (including, but not limited to,facsimile transmission or other electronic transmission, telex or telephone) ofinterstate or foreign commerce of, or any facilities of a national, local orother securities exchange of, the United States, Canada, Australia, Japan or anyRestricted Jurisdiction, and the Offer cannot be accepted and will not becapable of acceptance by any such use, means, instrumentality or facilities fromor within the United States, Canada, Australia, Japan or any RestrictedJurisdiction. Accordingly, copies of this announcement are not being, and mustnot be, mailed or otherwise distributed or sent in or into or from the UnitedStates, Canada, Australia, Japan or any Restricted Jurisdiction. Any person (including, without limitation, nominees, trustees or custodians) whois an overseas person or who would, or otherwise intends to, forward thisdocument, the Offer Document, the Form of Acceptance or any related document toany jurisdiction outside the United Kingdom or to any overseas person shouldseek appropriate advice before taking any action. The Covidien Offer Committee Officers and the Directors of Covidien UK Holdingaccept responsibility for the information contained in this announcement savefor the information for which responsibility is taken by the Tissue ScienceLaboratories Directors set out in the following paragraph. To the best of theknowledge and belief of the Covidien Offer Committee Officers and the Directorsof Covidien UK Holding (who have taken all reasonable care to ensure that suchis the case), the information contained in this announcement for which theyaccept responsibility is in accordance with the facts and does not omit anythinglikely to affect the import of such information. The Tissue Science Laboratories Directors accept responsibility for theinformation contained in this announcement relating to Tissue ScienceLaboratories, the Tissue Science Laboratories Group, the Tissue ScienceLaboratories Directors and the members of their immediate families and personsconnected with them (save in each case for information on Covidien's futureplans for Tissue Science Laboratories, the Tissue Science Laboratories Group andits management and employees). To the best of the knowledge and belief of theTissue Science Laboratories Directors (who have taken all reasonable care toensure that such is the case), the information contained in this announcementfor which they accept responsibility is in accordance with the facts and doesnot omit anything likely to affect the import of such information. Dealing Disclosure Requirements Under the provisions of Rule 8.3 of the City Code, if any person is, or becomes,"interested" (directly or indirectly) in 1 per cent. or more of any class of "relevant securities" of Tissue Science Laboratories, all "dealings" in any "relevant securities" of Tissue Science Laboratories (including by means of anoption in respect of, or a derivative referenced to, any such "relevantsecurities") must be publicly disclosed by no later than 3.30 pm on the Londonbusiness day following the date of the relevant transaction. This requirementwill continue until the date on which the Offer becomes, or is declared,unconditional as to acceptances, lapses or is otherwise withdrawn or on whichthe "offer period" otherwise ends. If two or more persons act together pursuantto an agreement or understanding, whether formal or informal, to acquire an "interest" in "relevant securities" of Tissue Science Laboratories, they will bedeemed to be a single person for the purpose of Rule 8.3. Under the provisions of Rule 8.1 of the City Code, all "dealings" in "relevantsecurities" of Tissue Science Laboratories by Covidien UK Holding or TissueScience Laboratories, or by any of their respective "associates", must bedisclosed by no later than 12.00 noon on the London business day following thedate of the relevant transaction. A disclosure table, giving details of the companies in whose "relevantsecurities" "dealings" should be disclosed, and the number of such securities inissue, can be found on the Panel's website at www.thetakeoverpanel.org.uk. "Interests in securities" arise, in summary, when a person has long economicexposure, whether conditional or absolute, to changes in the price ofsecurities. In particular, a person will be treated as having an "interest" byvirtue of the ownership or control of securities, or by virtue of any option inrespect of, or derivative referenced to, securities. Terms in quotation marks are defined in the City Code, which can also be foundon the Panel's website. If you are in any doubt as to whether or not you arerequired to disclose a "dealing" under Rule 8, you should consult the Panel. For the purposes of Rule 2.10 of the City Code, Tissue Science Laboratories'current issued share capital at the close of business on 11 March 2008 consistedof 34,609,157 ordinary shares of 10 pence each (Tissue Science Laboratories doesnot hold any shares in treasury). Tissue Science Laboratories' shares areadmitted to trading on the AIM market of the London Stock Exchange with the ISINCode GB0030978380. Forward-looking Statements This announcement, including information included or incorporated by referencein this announcement, contains statements about Tissue Science Laboratories, theOffer and Covidien and Covidien UK Holding that are or may be forward-lookingstatements. All statements other than statements of historical facts includedin this announcement may be forward looking statements. Without limitation, anystatements preceded or followed by or that include the words 'targets', 'plans','believes', 'expects', 'aims', 'intends', 'will', 'may', 'anticipates','estimates', 'projects', or words or terms of similar substance or the negativethereof identify forward-looking statements. Forward-looking statements includestatements relating to the following: (i) future capital expenditures, expenses,revenues, earnings, synergies, economic performance, indebtedness, financialcondition, dividend policy, losses and future prospects; (ii) business andmanagement strategies and the expansion and growth of Tissue ScienceLaboratories' and Covidien's operations; and (iii) the effects of governmentregulation on Tissue Science Laboratories' or Covidien's business. These forward-looking statements are not guarantees of future performance. Theyhave not been reviewed by the auditors of Tissue Science Laboratories orCovidien. These forward-looking statements involve known and unknown risks,uncertainties and other factors which may cause the actual results, performanceor achievements of any such person, or industry results, to be materiallydifferent from any results, performance or achievements expressed or implied bysuch forward-looking statements. These forward-looking statements are based onnumerous assumptions regarding the present and future business strategies ofsuch persons and the environment in which each will operate in the future. Youare cautioned not to place undue reliance on the forward-looking statements,which speak only as of the date they were made. All subsequent oral or writtenforward-looking statements attributable to Tissue Science Laboratories orCovidien or any of their members or any persons acting on their behalf areexpressly qualified in their entirety by the cautionary statement above. Allforward-looking statements included in this announcement are based oninformation available to the relevant parties on the date hereof. Investorsshould not place undue reliance on such forward-looking statements, and neitherTissue Science Laboratories, Covidien UK Holding, Covidien nor their directorsundertakes any obligation in respect of, and do not intend to update or reviseany forward-looking statements except as required by the City Code or pursuantto applicable law. 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 OF SUCH JURISDICTION For immediate release 12 March 2008 Recommended Cash Offer by Covidien UK Holding Ltd ("Covidien UK Holding") (an indirect wholly-owned subsidiary of Covidien Ltd ("Covidien")) for the whole of the issued and to be issued ordinary share capital of Tissue Science Laboratories plc ("Tissue Science Laboratories") 1. Introduction The Boards of Covidien and Tissue Science Laboratories are pleased to announcethat they have reached agreement on the terms of a recommended cash offer to bemade by Covidien UK Holding to acquire the entire issued and to be issuedordinary share capital of Tissue Science Laboratories. The Tissue ScienceLaboratories Directors will unanimously recommend Tissue Science LaboratoriesShareholders to accept the Offer. 2. Summary of the terms of the Offer Under the terms of the Offer, which will be subject to the conditions set out inAppendix I to this announcement and to the full terms and conditions to be setout in the Offer Document and - in the case of Tissue Science LaboratoriesShares held in certificated form - the Form of Acceptance, Tissue ScienceLaboratories Shareholders will be entitled to receive: for each Tissue Science Laboratories Share 103.5 pence in cash The Offer values the entire issued and to be issued ordinary share capital ofTissue Science Laboratories at approximately £38.0 million. The Offer Pricerepresents: • a premium of approximately 88.2 per cent. over the Closing Price of55.0 pence per Tissue Science Laboratories Share on 11 March 2008, being thelast Business Day prior to the date of this announcement; and • a premium of approximately 71.8 per cent. over the average ClosingPrice of approximately 60.2 pence per Tissue Science Laboratories Share over thesix months prior to the date of this announcement. 3. Background to and reasons for the Offer The proposed acquisition of Tissue Science Laboratories is a continuation of thestrategy that Covidien outlined at the time it became an independent publiccompany to pursue, create and deliver innovative healthcare solutions with thegoal of becoming one of the leading global healthcare products companies.Covidien is keen to enhance further its product range and capabilities in thesurgical implant market and Tissue Science Laboratories offers considerableopportunities to enhance this objective both in the USA and Europe. The Boardof Covidien views the proposed acquisition as a beneficial opportunity tocombine Covidien's resources and expertise as a global healthcare productsbusiness with the specialist research and development skills and productknowledge of Tissue Science Laboratories' existing management team andemployees. The Offer provides Tissue Science Laboratories' skilled management and employeeswith the benefits of operating within the context of a major multinational withaccess to a global sales and distribution network, economies of scale, transferof best practice and innovation and a strong focus on research and developmentto develop further the Tissue Science Laboratories products that will allowTissue Science Laboratories to realise its full potential. The Offer brings newspecialised expertise to Covidien and provides Tissue Science Laboratories'management and employees with a supportive environment to develop the TissueScience Laboratories business further. 4. Recommendation The Tissue Science Laboratories Directors, who have been so advised by NomuraCode, consider the terms of the Offer to be fair and reasonable. In providingadvice on the Offer to the Tissue Science Laboratories Directors, Nomura Codehas taken into account the commercial assessments of the Tissue ScienceLaboratories Directors. Accordingly, the Tissue Science Laboratories Directors will unanimouslyrecommend Tissue Science Laboratories Shareholders to accept the Offer, as theywill do, together with certain persons connected with them, in respect of theirrespective beneficial holdings comprising, in aggregate, 8,030,932 TissueScience Laboratories Shares representing approximately 23.2 per cent. of theexisting issued ordinary share capital of Tissue Science Laboratories. 5. Background to and reasons for the recommendation Tissue Science Laboratories initially approached the market through marketingpartnerships with large medical device corporations and distributors with thenecessary sales and marketing infrastructure required for successful marketpenetration. Through these partners, Tissue Science Laboratories hasdemonstrated both the commercial potential and scalability of the coretechnology. More recently, Tissue Science Laboratories has reduced dependence onsuch partners through the development of a direct sales team in the US generalsurgery market. The substantial investment made to develop a direct sales teamhas enabled Tissue Science Laboratories to create an appropriately trained,directed and supported sales team in the field addressing surgeons' needsdirectly. In turn, Permacol(R) has become a significant product in the field ofcomplex and recurrent hernia repair, with growing key opinion leader endorsementand increasing annual sales revenues. Tissue Science Laboratories has increased its sales and marketing group to 46people, and has achieved considerable growth. However, Tissue ScienceLaboratories recognises that in order to achieve greater penetration in light ofgreater competition from the launch of competitive porcine dermis productsfurther investment in the sales and marketing function is required, particularlyas some of the new entrants to the market are currently able to deploysignificantly greater sales and marketing resource than Tissue ScienceLaboratories. Future product opportunities are being developed by Tissue Science Laboratoriesby applying proprietary manufacturing technology to porcine tissues for bone,ligament and blood vessel applications. Pre-clinical proof of principle has beenpublished in respect of all three product areas and Tissue Science Laboratorieshas identified the initial potential markets and product development pathwaysfor each. Whilst the Tissue Science Laboratories Directors believe that there isa broad consensus among investors and the wider financial and scientificcommunities that there is potential value for the new non-dermal tissues (bone,ligament, vascular) in the rapidly developing biologic sector, the investmentrequired to bring these products through the next stages of development andultimately to commercialisation is substantial. The Tissue Science LaboratoriesDirectors believe that these products may be better developed and commercialisedin the hands of a larger, more highly resourced company in the health caresector. Following an R&D strategy review, Tissue Science Laboratories announced on 28September 2007 that it was proposing to spin out non-dermal tissue productdevelopment into a separate, independently managed and financed company. Anacquisition of the whole of Tissue Science Laboratories pursuant to the Offeravoids the costs and complication of spinning out the R&D facility and raisingnew funds to finance the ongoing costs of the R&D facility. The Tissue Science Laboratories Directors believe that success of Tissue ScienceLaboratories' business will be enhanced as part of a larger entity. Covidien'ssubstantial size and strength in the surgical repair market should be a greatadvantage for improving adoption and brand awareness for Tissue ScienceLaboratories' products. The Tissue Science Laboratories Directors have thereforeconcluded that the Offer represents the best route available to shareholders tooptimise shareholder value both in the current market and for the foreseeablefuture. The Tissue Science Laboratories Directors believe that if Tissue ScienceLaboratories were to remain independent, it is unlikely that its share pricewould achieve the level of the Offer Price in the foreseeable future. The Offer values the existing issued ordinary share capital of Tissue ScienceLaboratories at approximately £35.8 million as compared to Tissue ScienceLaboratories' current market value of approximately £19.0 million based on theClosing Price of 55.0 pence for Tissue Science Laboratories Shares on 11 March2008, being the last Business Day prior to the date of announcement of theOffer. Accordingly, the Board of Tissue Science Laboratories unanimously recommends theOffer. 6. Irrevocable undertakings Those Tissue Science Laboratories Directors, together with certain personsconnected with them, who are interested in Tissue Science Laboratories Shareshave given irrevocable undertakings to Covidien UK Holding to accept the Offerin respect of, in aggregate, 8,030,932 Tissue Science Laboratories Sharesrepresenting approximately 23.2 per cent. of the existing issued ordinary sharecapital of Tissue Science Laboratories, and in relation to any further TissueScience Laboratories Shares issued to them, including Tissue ScienceLaboratories Shares issued pursuant to the exercise of options over TissueScience Laboratories Shares. Such persons hold options with an exercise price ofless than the Offer Price over 1,414,333 Tissue Science Laboratories Shares.These irrevocable undertakings remain binding in the event of a competing offerbeing made for Tissue Science Laboratories unless the Offer lapses or iswithdrawn. Further irrevocable undertakings to accept the Offer have been received byCovidien UK Holding in respect of 10,078,917 Tissue Science Laboratories Sharesrepresenting approximately 29.1 per cent. of the existing issued ordinary sharecapital of Tissue Science Laboratories. These irrevocable undertakings willcease to remain binding if the Offer lapses or is withdrawn or if a competingoffer at least 5 per cent. (in the case of 7,062,445 shares) or greater than 10per cent. (in the case of 3,016,472 shares) higher than the Offer Price isannounced for Tissue Science Laboratories in accordance with Rule 2.5 of theCity Code. In addition, Covidien UK Holding has also received letters of intent to acceptthe Offer in respect of a total of 3,801,617 Tissue Science Laboratories Sharesrepresenting approximately 10.9 per cent. of the existing issued ordinary sharecapital. Therefore, Covidien UK Holding has secured in aggregate irrevocable undertakingsand letters of intent in respect of a total of 21,911,466 Tissue ScienceLaboratories Shares representing approximately 63.3 per cent. of the existingissued ordinary share capital of Tissue Science Laboratories. Further detailsof these irrevocable undertakings and letters of intent are set out in AppendixIII to this announcement. 7. Information on Tissue Science Laboratories Tissue Science Laboratories was formed in 1995 and is a medical device companydedicated to the research, development and commercialisation of tissue implantproducts for surgical and wound care therapies. Tissue Science Laboratories'core technology, Permacol(R) surgical implant, is based on collagen derived fromporcine dermis which, when implanted in the human body, is designed to benon-allergenic and long-lasting, addressing clearly identified clinical needs inthe surgical reconstruction, recontouring and repair of human tissue. Tissue Science Laboratories concentrates on three principal business areas: • General Surgery; • Urology/Gynaecology; and • Orthopaedics. Tissue Science Laboratories' headquarters are in Aldershot, Hampshire, and themanufacturing facility is in Leeds, Yorkshire. Tissue Science Laboratories alsohas a dedicated office in Andover, Massachusetts in the USA. Tissue ScienceLaboratories has built a network of distributors to service a number of othercountries. 8. Information on Covidien UK Holding and Covidien Covidien UK Holding is an indirect wholly-owned subsidiary of Covidien formedfor the purpose of the Offer and has not conducted any activities since itsincorporation other than in connection with the Offer. Covidien, a large global healthcare company and a leading manufacturer ofmedical devices and supplies, diagnostic imaging agents and pharmaceuticals, islisted on the New York Stock Exchange with a market capitalisation ofapproximately $20.7 billion as at 11 March 2008, being the last Business Dayprior to the posting of this document. Covidien employs over 43,000 people in57 countries and its products are sold in over 130 countries, and for the yearended 28 September 2007 it recorded revenues of $8.9 billion. Covidien iscommitted to its programme of continuous research and development and in 2007spent over $250 million on research and development activities. Covidien concentrates on four core business areas: Medical Devices The Medical Device segment develops, manufactures and sells an array of productswhich are categorised as follows: • Endomechanical Instruments - includes laparoscopic instrumentsand surgical staplers; • Soft Tissue Repair - includes suture, mesh and biosurgeryproducts; • Energy Devices - includes vessel sealing, electrosurgical andablation products along with related capital equipment; • Oximetry and Monitoring - includes sensors, monitors andtemperature management products; • Airway and Ventilation - includes airway and ventilatorproducts, breathing systems, sleep and inhalation therapy products; • Vascular Devices - includes compression and vascular therapyproducts; • SharpSafety - includes needle and syringe products and sharpsdisposal; and • Clinical Care - includes urology, enteral feeding, and advancedwoundcare products. The Medical Devices segment generated net sales for the year ended 28 September2007 of $6.0 billion, which accounted for 68 per cent. of consolidated netsales. Imaging Solutions The Imaging Solutions segment develops, manufactures and markets the followingproducts: • Radiopharmaceuticals - includes radioactive isotopes andassociated pharmaceutical products used for the diagnosis and treatment ofdisease; and • Contrast Products - includes contrast delivery systems andcontrast agents. The Imaging Solutions segment generated net sales for the year ended 28September 2007 of $1.1 billion, which accounted for 12 per cent. of consolidatednet sales. Pharmaceutical Products The Pharmaceutical Products segment develops, manufactures and distributes thefollowing products: • Dosage Pharmaceuticals - includes prescriptions of finishedproducts which include brand pharmaceuticals, generic pharmaceuticals andaddiction treatment products; and • Active Pharmaceutical Ingredients - includes both medicinalnarcotics and acetaminophen as well as other active pharmaceutical ingredients,including peptides, generic APIs, stearates and phosphates for thepharmaceutical industry. The Pharmaceutical Products segment generated net sales for the year ended 28September 2007 of $0.91 billion, which accounted for 10 per cent. ofconsolidated net sales. Medical Supplies The Medical Supplies segment develops, manufactures and markets the followingproducts: • Nursing Care Products - includes traditional woundcare products,incontinence products sold within the United States and suction products; • Medical Surgical Products - includes operating room supplyproducts and related accessories, electrodes and chart paper product lineswithin the United States; and • Original Equipment Manufacturer Products - includes variousmedical supplies, such as needles and syringes, for a number of leading medicaldevice companies. The Medical Supplies segment generated net sales for the year ended 28 September2007 of $0.89 billion, which accounted for 10 per cent. of consolidated netsales. During the 3-month period ended 28 December 2007, Covidien's management andBoard of Directors approved plans to sell its Retail Products segment, SpecialtyChemicals business within the Pharmaceutical Products segment and its EuropeanIncontinence Products business within the Medical Supplies segment. Each ofthese businesses has been reclassified as a discontinued operation for allperiods. Covidien also realigned two of its operating segments such thatoperations relating to the sale and production of radiopharmaceuticals andcontrast products are now managed by the Imaging Solutions segment rather thanthe Medical Devices segment. Unless otherwise indicated, all financial resultsfor the year ended 28 September 2007 take into account the reclassificationsdiscussed above. Before taking into account the reclassification noted above, the split of salesby geography for Covidien for the year ended 28 September 2007 is set out below: 2007 2006 $ billion $ billionUnited States 6.1 6.0Other Americas 0.5 0.4Europe 2.5 2.2Japan 0.6 0.6Asia-Pacific 0.5 0.4 10.2 9.6 Covidien provides products under a number of brands, including: Kendall,Autosuture, Syneture, Valleylab, Mallinckrodt, Nellcor and Puritan Bennett to arange of customers including: hospitals, acute care facilities, nursing homes,rehabilitation centres, ambulatory surgery centres, physician offices andradiopharmacies. For the year ended 28 September 2007, after taking account of thereclassification outlined above Covidien reported revenues of $8.9 billion,(pre-reclassification $10.2 billion, 2006: $9.6 billion) and income fromcontinuing operations before income taxes of $297 million, (pre-reclassification$151 million, 2006: $1.9 billion). As at 28 September 2007, Covidien,pre-reclassification, had total assets of $18.3 billion and net assets of $6.7billion (2006: total assets $14.1 billion, net assets $8.6 billion). On 11 February 2008 Covidien published its first quarter results for the 3-monthperiod ended 28 December 2007. In these quarterly results, Covidien reportedrevenues of $2.3 billion (2006: $2.1 billion) and profit before tax of $587million (2006: $445 million). As at 28 December 2007 Covidien had total assetsof $18.8 billion (2006: $18.3 billion) and net assets of $7.0 billion (2006:$6.7 billion). The results for the 3-month period ended 28 December 2007 arepost-reclassification whilst the comparable 2006 results arepre-reclassification. In the first quarter results, Covidien updated its outlook for 2008. Covidiennow estimates that sales growth for the year ending 26 September 2008 will be inthe 6-9 per cent. range, including foreign exchange at current rates. Net salesare expected to grow 7-10 per cent. (over the previous financial year) in theMedical Devices segment, 8-11 per cent. in Imaging Solutions and 3-6 per cent.in Pharmaceutical Products. Covidien expects sales in Medical Supplies to beapproximately the same as in the previous financial year. Excluding the impactof non-recurring items, the operating margin is now expected to be in the 20-21per cent. range and the effective tax rate in the 31-33 per cent. range for theyear. Further information regarding Covidien's business and operations,published audited accounts and recent announcements can be accessed via itswebsite at www.covidien.com within the Investor Relations area. 9. Management and employees Covidien UK Holding attaches great importance to the specialised skills,knowledge and experience of the management and employees of Tissue ScienceLaboratories. Covidien UK Holding has indicated that the Offer is unlikely tohave any material adverse repercussions on Tissue Science Laboratories'employees or management and should provide for continuity of employment forstaff, save that it is intended that all of the non-executive directors ofTissue Science Laboratories will resign from the Tissue Science LaboratoriesBoard when the Offer becomes or is declared unconditional in all respects. It isintended that Steve Bloor (Technical Director) will remain with Tissue ScienceLaboratories following the Offer becoming or being declared whollyunconditional. Martin Hunt (Chief Executive Officer) and David Jennings (FinanceDirector) will leave Tissue Science Laboratories upon the earlier of (i)Covidien UK Holding obtaining 90 per cent. of the issued shares to which theOffer relates; (ii) 90 days after Covidien UK Holding obtains 75 per cent. ofthe issued shares to which the Offer relates; and (iii) the relevant directorbeing given notice to terminate his service contract. They have entered intocompromise agreements and will receive compensation packages in accordance withtheir contractual entitlements, and have entered into consultancy agreements tosupport the transition of Tissue Science Laboratories to Covidien. In addition,the Chairman and executive directors of Tissue Science Laboratories have enteredinto restrictive covenants to protect the business to be acquired under theOffer. Furthermore, Covidien UK Holding does not currently intend to change thelocations of Tissue Science Laboratories' places of business, or effect materialadverse changes in any terms and conditions of employment, including pensionrights, of Tissue Science Laboratories employees, upon the Offer becoming orbeing declared wholly unconditional. 10. Financing the Offer The consideration payable under the Offer will be financed by funds madeavailable to Covidien UK Holding from Covidien's existing cash resources. Thefunds required to satisfy the consideration payable under the Offer have beendeposited with Rothschild. Rothschild, financial adviser to Covidien UK Holding and Covidien, has confirmedthat it is satisfied that sufficient cash resources are available to Covidien UKHolding to satisfy the consideration payable as a result of full acceptance ofthe Offer including by Tissue Science Laboratories Optionholders in relation tooptions which have an exercise price of less than the Offer Price. 11. Disclosure of interests in Tissue Science Laboratories Neither Covidien nor Covidien UK Holding, nor any director of Covidien orCovidien UK Holding, nor, so far as Covidien and Covidien UK Holding are aware,any person acting, or presumed to be acting, in concert with Covidien orCovidien UK Holding is interested in or has any rights to subscribe for anyTissue Science Laboratories Shares, nor does any such person have any shortposition (whether conditional or absolute and whether in the money orotherwise), including any short position under a derivative, any agreement tosell or any delivery obligation or right to require another person to purchaseor take delivery or any arrangement in relation to Tissue Science LaboratoriesShares. For these purposes, "arrangement" includes any agreement to sell or anydelivery obligation or right to require another person to purchase or takedelivery and borrowing or lending of Tissue Science Laboratories Shares. An "arrangement" also includes any indemnity or option arrangement and any agreementor understanding, formal or informal, of whatever nature relating to TissueScience Laboratories Shares which may be an inducement to deal or refrain fromdealing in such securities. "Interest" includes any long economic exposure,whether conditional or absolute, to changes in the price of securities and aperson is treated as having an "interest" by virtue of the ownership or controlof securities, or by virtue of any option in respect of, or derivative referenceto, securities. Neither Covidien or Covidien UK Holding, nor, so far as Covidien and Covidien UKHolding are aware, any person acting, or presumed to be acting, in concert withCovidien or Covidien UK Holding has borrowed or lent any Tissue ScienceLaboratories Shares (save for any borrowed shares which have either been on-lentor sold). 12. Tissue Science Laboratories Share Option Schemes The Offer will extend to any Tissue Science Laboratories Shares which areunconditionally allotted or issued fully paid (or credited as fully paid)pursuant to the exercise of options granted under the Tissue ScienceLaboratories Share Option Schemes or otherwise while the Offer remains open foracceptance. Options granted under the Tissue Science Laboratories Share Option Schemes will,to the extent not already exercisable, become exercisable following the Offerbecoming wholly unconditional. Covidien UK Holding has undertaken to Tissue Science Laboratories, thatfollowing the date that the Offer becomes or is declared unconditional in allrespects (if at all) it will extend the same terms as those of the Offer to allholders of Tissue Science Laboratories Shares allotted or issued pursuant to theexercise of options granted under the Tissue Science Laboratories Share OptionSchemes. It is intended that if the Offer becomes unconditional in allrespects, Covidien UK Holding will make appropriate proposals to holders ofoptions. Participants in the Tissue Science Laboratories Share Option Schemeswill be contacted separately regarding the effect of the Offer on their rightsunder these schemes and, where applicable, the actions they can take in respectof these options. 13. Compulsory acquisition, cancellation of admission to trading on AIM andre-registration Covidien UK Holding intends, assuming that it receives sufficient acceptancesunder the Offer to entitle it to do so and that all of the other conditions ofthe Offer have been satisfied or waived (if capable of being waived), to use theprocedures set out in sections 979 to 982 (inclusive) of the Companies Act 2006to acquire compulsorily, on the same terms as the Offer, any Tissue ScienceLaboratories Shares in respect of which the Offer has not been accepted. It is also intended that, upon the Offer becoming or being declaredunconditional in all respects and sufficient acceptances being received,Covidien UK Holding will procure an application by Tissue Science Laboratoriesto the London Stock Exchange for the cancellation of admission to trading ofTissue Science Laboratories Shares on AIM. If this cancellation occurs, itwould significantly reduce the liquidity and marketability of any Tissue ScienceLaboratories Shares in respect of which the Offer has not been accepted. It is anticipated that cancellation of admission to trading on AIM will takeeffect no earlier than 20 Business Days after (a) the date on which Covidien UKHolding has, by virtue of its shareholdings and acceptances of the Offer,acquired or agreed to acquire issued ordinary share capital carrying 75 percent. of the voting rights of Tissue Science Laboratories or (b) the first dateof issue of compulsory acquisition notices under section 979 of the CompaniesAct 2006. It is also intended that, following the Offer becoming or being declaredunconditional in all respects and after the cancellation referred to above hasbecome effective, Tissue Science Laboratories will be re-registered as a privatecompany under the relevant provisions of the Companies Act 1985. 14. Inducement Agreement On 11 March 2008, Tissue Science Laboratories and Covidien entered into aninducement agreement in connection with the Offer, pursuant to which TissueScience Laboratories has undertaken to pay an inducement fee equivalent to 1 percent. of its value calculated by reference to the Offer Price, based on thefully diluted equity share capital of Tissue Science Laboratories (taking intoaccount the "see through" value of only those share options which have anexercise price of less than the Offer Price) and any VAT chargeable in respectof the fee to the extent recoverable. Tissue Science Laboratories will become obliged to pay the inducement fee in thefollowing circumstances: a) following announcement of the Offer any member of the Board of TissueScience Laboratories withdraws, or adversely modifies, or makes subject toconditions or qualification their unanimous recommendation; or b) the Offer, having been announced, lapses or is withdrawn and beforethe lapse or withdrawal of the Offer an independent competing offer for TissueScience Laboratories is announced (whether under Rule 2.4 or Rule 2.5 of theCity Code or otherwise) and such independent competing offer or otherindependent competing offer subsequently becomes or is declared unconditional inall respects or is otherwise completed or implemented. 15. General The Offer Document and the Form of Acceptance will be distributed shortly toTissue Science Laboratories Shareholders and, for information purposes only, toTissue Science Laboratories Optionholders. The Offer Document and - in respectof Tissue Science Laboratories Shares held in certificated form - the Form ofAcceptance will, in any event, be posted within 28 days of the date of thisannouncement, unless otherwise agreed with the Panel. The Offer and acceptances thereof will be governed by English Law. The Offerwill be subject to the applicable requirements of the City Code, the Panel, theLondon Stock Exchange and other legal and regulatory requirements. The Offer will be subject to the conditions set out in Appendix I of thisannouncement and to the full terms and conditions to be set out in the OfferDocument and, in the case of Tissue Science Laboratories Shares held incertificated form, the Form of Acceptance. The bases and sources of certain financial information contained in thisannouncement are set out in Appendix II to this announcement. Certain terms usedin this announcement are defined in Appendix IV to this announcement. APPENDIX I Conditions and certain further terms of the Offer Part A: Conditions of the Offer The Offer will be subject to the following conditions: 1. valid acceptances being received (and not, where permitted, withdrawn)by not later than 1.00 p.m. on the first closing date of the Offer (or suchlater time(s) and/or date(s) as Covidien UK Holding may, subject to the rules ofthe City Code or with the consent of the Panel, decide) in respect of not lessthan 90 per cent. (or such lesser percentage as Covidien UK Holding may decide)of the Tissue Science Laboratories Shares to which the Offer relates, providedthat this condition will not be satisfied unless Covidien UK Holding and/or anymember of the Covidien Group shall have acquired or agreed to acquire (whetherpursuant to the Offer or otherwise), directly or indirectly, Tissue ScienceLaboratories Shares carrying, in aggregate, over 50 per cent. of the votingrights then exercisable at general meetings of Tissue Science Laboratories(including for this purpose, to the extent (if any) required by the Panel, anyvoting rights attaching to any Tissue Science Laboratories Shares which areunconditionally allotted or issued before the Offer becomes or is declaredunconditional as to acceptances, whether pursuant to the exercise of conversionor subscription rights or otherwise). For the purposes of this condition: (i) the expression "Tissue Science Laboratories Shares to which theOffer relates" shall be construed in accordance with section 974 to 991 of theCompanies Act 2006; (ii) "valid acceptances" shall be deemed to have been received inrespect of Tissue Science Laboratories Shares which are treated for the purposesof Section 977(1) or Sections 979(8) to 979(10) of the Companies Act 2006 ashaving been acquired by Covidien by virtue of acceptances of the Offer; and (iii) Tissue Science Laboratories Shares which have beenunconditionally allotted but not issued before the Offer becomes or is declaredunconditional as to acceptances, whether pursuant to the exercise of anyoutstanding subscription or conversion rights, shall be deemed to carry thevoting rights which they will carry on issue; 2. it being established to the satisfaction of Covidien UK Holding that: 2.1. neither the proposed acquisition of Tissue Science Laboratories byCovidien UK Holding nor any matters or arrangements arising therefrom or relatedthereto will be referred to the Competition Commission; 2.2. it is not and will not be necessary, in order to avoid such reference tothe Competition Commission, for any member of Covidien or any member of TissueScience Laboratories to give undertakings to the Office of Fair Trading exceptwhere any such undertakings are on terms which Covidien in its entire discretionconsiders satisfactory; and 2.3. there has been no statement or intervention by the Office of FairTrading or the Secretary for Business, Enterprise and Regulatory Reformindicating that it is necessary or desirable for any aspect of the proposedacquisition of Tissue Science Laboratories or any matters or arrangementsarising therefrom or related thereto to be altered, amended or modified excepton terms which Covidien UK Holding in its entire discretion considerssatisfactory; 3. no Relevant Authority having decided to take, institute, implement orthreaten any action, proceeding, suit, investigation, reference or enquiry orenacted, made or proposed any statute, regulation, rule, decision or order orrequired any action to be taken or information to be provided or otherwise takenor refrained from having taken any other step or action or done any thing, andthere not being outstanding any statute, regulation, rule, decision or order,that, in any such case, would or might reasonably be expected to: 3.1. make the Offer or its implementation or the acquisition or proposedacquisition by Covidien UK Holding (or any other member of the wider CovidienGroup) of any Tissue Science Laboratories Shares or control or management ofTissue Science Laboratories or any member of the wider Tissue ScienceLaboratories Group void, voidable, unenforceable or illegal in or under the lawsof any jurisdiction or otherwise, directly or indirectly, restrain, restrict,prohibit or delay, or impose additional or amended conditions or obligationswith respect to, or otherwise challenge or interfere with, any of the foregoing; 3.2. require, prevent, delay, restrict or affect the divestiture (or alterthe terms of any proposed divestiture) by any member of the wider Covidien Groupor any member of the wider Tissue Science Laboratories Group of all or any partof their respective businesses, assets or properties or impose any limitation onthe ability of any of them to conduct or to own, use or operate all or any partof their respective businesses, assets or properties owned by, or the use oroperation of which is enjoyed by any of them, in each case would result in anyof them ceasing to be able to carry on business; a material adverse effect onthe wider Covidien Group or the wider Tissue Science Laboratories Group as thecase may be; or any of them being restricted in the carrying on of its business,under any name under which it currently does so to an extent that is material inthe context of the Tissue Science Laboratories Group or the Covidien Group asthe case may be; 3.3. impose any limitation on, or result in any delay in, the ability of anymember of the wider Covidien Group or any member of the wider Tissue ScienceLaboratories Group to acquire or hold or exercise effectively, directly orindirectly, all or any rights of ownership of shares or other securities (or theequivalent) in any member of the wider Tissue Science Laboratories Group or anymember of the wider Covidien Group or to exercise management or voting controlover any member of the wider Tissue Science Laboratories Group or any member ofthe wider Covidien Group; 3.4. require any member of the wider Covidien Group or any member of thewider Tissue Science Laboratories Group to acquire, or to offer to acquire, anyshares or other securities or indebtedness (or the equivalent) in or of anymember of the wider Covidien Group or any member of the wider Tissue ScienceLaboratories Group or any shares or other securities or indebtedness (or theequivalent) in or of, or any asset owned by, any other person, or to dispose ofor repay, or to offer to dispose of or repay, any shares or other securities orindebtedness (or the equivalent) in or of, or any asset owned by, any member ofthe wider Covidien Group or any member of the wider Tissue Science LaboratoriesGroup; 3.5. impose any material limitation on the ability of any member of the widerCovidien Group or any member of the wider Tissue Science Laboratories Group tointegrate or co-ordinate its business, or any part of it, with any business ofany member of the wider Covidien Group or any member of the wider Tissue ScienceLaboratories Group; 3.6. result in a material delay in the ability of any member of the widerCovidien Group, or render any member of the wider Covidien Group unable, toacquire all or some of the Tissue Science Laboratories Shares or require orprevent a divestiture by any member of the wider Covidien Group of any suchshares; or 3.7. otherwise adversely affect materially any or all of the businesses,assets, financial or trading position or profits, prospects or value of anymember of the wider Tissue Science Laboratories Group or any member of the widerCovidien Group or the exercise of rights over shares of any company in the widerTissue Science Laboratories Group in a manner which is adverse to and materialin the context of the wider Tissue Science Laboratories Group as a whole, and all applicable waiting and other time periods during which any RelevantAuthority could decide to take, institute, implement or threaten any suchaction, proceeding, suit, investigation, reference or enquiry or otherwiseintervene having expired, lapsed or been terminated; 4. all necessary filings and applications having been made and allstatutory or regulatory obligations in any jurisdiction having been compliedwith, and all appropriate waiting or other time periods (including anyextensions of such periods) under any applicable legislation or regulations ofany jurisdiction having expired, lapsed or been terminated, in each case inconnection with the Offer or the acquisition or proposed acquisition of anyTissue Science Laboratories Shares, or of control or management of TissueScience Laboratories (or any other member of the wider Tissue ScienceLaboratories Group) by Covidien UK Holding (or any other member of the widerCovidien Group), and all Relevant Authorisations reasonably deemed by CovidienUK Holding (or any other member of the wider Covidien Group) to be necessary orappropriate for, or in respect of, the Offer or any acquisition or proposedacquisition of any Tissue Science Laboratories Shares, or of control ormanagement of Tissue Science Laboratories (or any other member of the widerTissue Science Laboratories Group), by Covidien UK Holding (or any other memberof the wider Covidien Group) or to permit or enable Covidien UK Holding (or anyother member of the wider Covidien Group) to carry on the business of any memberof the wider Tissue Science Laboratories Group having been obtained in terms andin a form satisfactory to Covidien UK Holding from all appropriate RelevantAuthorities and from all appropriate persons, authorities or bodies with whomany member of the wider Covidien Group or any member of the wider Tissue ScienceLaboratories Group has entered into contractual arrangements, and all suchRelevant Authorisations remaining in full force and effect, and there being nonotice or intimation of any intention to revoke, modify, restrict, suspend ornot to renew any of them and there being no indication that the renewal costs ofany Relevant Authorisation might be materially higher than the renewal costs forthe current Relevant Authorisation; 5. save as Disclosed, there being no provision of any Relevant Instrumentwhich, in consequence of the making or implementation of the Offer, theacquisition or proposed acquisition by any member of the wider Covidien Group ofany shares in, or any change in the control or management of, Tissue ScienceLaboratories or any other member of the wider Tissue Science Laboratories Group,or otherwise, provides for, or will or might reasonably be expected to resultin, to an extent which is material in the context of the wider Tissue ScienceLaboratories Group in each case, any of the following: 5.1. any monies borrowed by, or other indebtedness, actual or contingent, of,or grant available to, any member of the wider Tissue Science Laboratories Groupbeing or becoming or is capable of being declared repayable immediately orearlier than its stated maturity date or the ability of any member of the widerTissue Science Laboratories Group to borrow monies or incur indebtedness beingwithdrawn, inhibited or adversely affected or is capable of being withdrawn,inhibited or adversely affected to the extent that it is material; 5.2. the creation or enforcement of any mortgage, charge or other securityinterest over the whole or any part of the business, property, assets orinterests of any member of the wider Tissue Science Laboratories Group or anysuch security (whenever created, arising or having arisen) becoming enforceableor being enforced; 5.3. any right, interest, liability, obligation or business of any member ofthe wider Tissue Science Laboratories Group under such Relevant Instrument (orany related arrangement) being terminated or adversely modified or affected, orany onerous action being taken or obligation arising under such RelevantInstrument to an extent that it is material; 5.4. the value of any member of the wider Tissue Science Laboratories Group,or the business, assets, financial or trading position or prospects of anymember of the wider Tissue Science Laboratories Group being prejudiced oradversely affected; 5.5. any asset or right (including, without limitation, intellectual propertyrights) or interest of, or any asset or right the use or operation of which isenjoyed by, any member of the wider Tissue Science Laboratories Group being orfalling to be disposed of other than in the ordinary course of business, orcharged, or ceasing to be available to any such member, or any right arisingunder which any such asset or interest or such right will or could reasonablyexpected to be required to be disposed of or charged, or will or could cease tobe so available; 5.6. the interest or business of any member of the wider Tissue ScienceLaboratories Group in or with any company, firm, body or person, or anyarrangements relating to any such interest or business, being terminated oradversely modified or affected; 5.7. any change or effect on ownership or use of any intellectual propertyrights owned or used by any member of the wider Tissue Science LaboratoriesGroup; 5.8. any member of the wider Tissue Science Laboratories Group or any memberof the wider Covidien Group being required to acquire, or to offer to acquire,any shares or other securities or indebtedness (or the equivalent) in or of anymember of the wider Tissue Science Laboratories Group or any member of the widerCovidien Group or any shares or other securities or indebtedness (or theequivalent) in or of, or any asset owned by, any other person or to dispose ofor repay, or to offer to dispose of or repay, any shares or other securities orindebtedness (or the equivalent) in or of, or any asset owned by, any member ofthe wider Tissue Science Laboratories Group or any member of the wider CovidienGroup, and no event having occurred which, under any provision of any RelevantInstrument, would or could reasonably be expected to result in any of the eventsor circumstances referred to in sub-paragraphs 5.1 to 5.8 (inclusive); 6. save as Disclosed, since 31 December 2006 (being the date to which thelatest published audited report and accounts of Tissue Science Laboratories weremade up), no member of the wider Tissue Science Laboratories Group having: 6.1. made any alteration to its memorandum or articles of association orother constitutional document which is or could reasonably be considered to bematerial; 6.2. recommended, declared, paid or made, or proposed the recommendation,declaration, paying or making of, any dividend, bonus issue or otherdistribution, whether in cash or otherwise (other than to Tissue ScienceLaboratories or a wholly-owned subsidiary of Tissue Science Laboratories); 6.3. issued or agreed to issue, or authorised or proposed the issue of,additional shares of any class, or of securities convertible into orexchangeable for shares, or rights, warrants or options to subscribe for oracquire, any such shares or securities or any loan capital (other than issues toTissue Science Laboratories or a wholly-owned subsidiary of Tissue ScienceLaboratories, and save for Tissue Science Laboratories Shares allotted on theexercise of any options granted under the Tissue Science Laboratories ShareOption Scheme) or redeemed, purchased, repaid or reduced, or authorised orproposed the redemption, purchase, repayment or reduction of, or other materialchange to, any part of its share capital or any other securities; 6.4. (other than to Tissue Science Laboratories or a wholly-owned subsidiaryof Tissue Science Laboratories) issued, authorised or proposed the issue of anydebentures or securities or incurred or, save in the ordinary course ofbusiness, incurred or increased any indebtedness or liability, actual orcontingent; 6.5. entered into, varied, implemented, or authorised, proposed or announcedits intention to enter into, vary or implement, any contract, scheme,transaction, commitment or other arrangement which is, will or would reasonablybe expected to be restrictive on the business of any member of the widerCovidien Group or any member of the wider Tissue Science Laboratories Group orwhich involves or will or would reasonably be expected to involve an obligationof a loss making, long term, onerous or unusual nature or magnitude; 6.6. authorised, proposed or effected or announced its intention to proposeany merger, demerger, reconstruction or amalgamation, or any acquisition ordisposal or transfer of, or the creation of any mortgage, charge or securityinterest or other encumbrance in respect of, any asset or any right, title orinterest in any share or asset (other than in the ordinary course of trading); 6.7. entered into, or varied (other than in respect of increases inremuneration required under the terms of the relevant agreement) the terms of,any service contract or agreement or other arrangement with any of thedirectors, senior executives or senior employees of any member of the widerTissue Science Laboratories Group; 6.8. entered into, varied or terminated, or authorised the entry into,variation or termination of, any contract, commitment or arrangement (whether inrespect of capital expenditure or otherwise) which is outside the ordinarycourse of business or which is of a long term, onerous or unusual nature ormagnitude which is, in any said case, material in the context of the widerTissue Science Laboratories Group; 6.9. been unable, or threatened in writing that it is unable, to pay itsdebts or having stopped or suspended (or threatened to stop or suspend) paymentof its debts generally or a substantial part thereof or ceased or threatened tocease carrying on all or a substantial part of its business; 6.10.taken or proposed any action or had any proceedings instituted, threatenedor proposed for its winding-up (voluntarily or otherwise), dissolution, strikingoff or reorganisation (or for any analogous proceedings or steps in anyjurisdiction) (save for any such winding-up or dissolution whilst solvent) orfor the appointment of a receiver, administrator, administrative receiver,trustee or similar or analogous officer of all or any of its assets or revenuesor for any similar or analogous matters in any jurisdiction; 6.11.waived or compromised any claim or authorised any such waiver orcompromise, (other than in the ordinary course of business) which in any case ismaterial in the context of the wider Tissue Science Laboratories Group taken asa whole; 6.12.(other than in the ordinary course of business) granted any lease or thirdparty rights in respect of any of the leasehold property or freehold propertyowned or occupied by it or otherwise disposed of any such property to an extentwhich is material in the context of the Offer or the wider Tissue ScienceLaboratories Group taken as a whole; or 6.13.agreed to enter into or entered into any commitment, agreement orarrangement, or passed any resolution or made any offer (which remains open foracceptances), with respect to, or announced an intention to effect or topropose, any of the transactions, matters or events referred to in thisparagraph 6; 7. save as Disclosed, since 31 December 2006 (being the date to which thelatest published audited report and accounts of Tissue Science Laboratories weremade up): 7.1. no adverse change or deterioration having occurred in the business,assets, financial or trading position or profits, prospects or value of anymember of the wider Tissue Science Laboratories Group which is material in thecontext of the wider Tissue Science Laboratories Group taken as a whole; 7.2. no litigation, arbitration proceedings, prosecution or other legalproceedings having been threatened, announced, instituted or remainingoutstanding by, against or in respect of any member of the wider Tissue ScienceLaboratories Group or to which any member of the wider Tissue ScienceLaboratories Group is a party (whether as a claimant, defendant or otherwise),and no investigation or enquiry by, or complaint or reference to, any RelevantAuthority against or in respect of any member of the wider Tissue ScienceLaboratories Group, having been instituted, announced or threatened or remainingoutstanding by, against or in respect of any member of the wider Tissue ScienceLaboratories Group which is or would reasonably be expected to be material andadverse in the context of the wider Tissue Science Laboratories Group taken as awhole; 7.3. no steps having been taken which will result in, or would reasonably beexpected to result in, the withdrawal, cancellation, termination or adversemodification of any licence or permit held by any member of the wider TissueScience Laboratories Group which is or would reasonably be expected to bematerial in the context of the wider Tissue Science Laboratories Group taken asa whole; 7.4. no contingent or other liability having arisen or increased or becomeapparent to Covidien UK Holding which would be likely adversely to affect anymember of the wider Tissue Science Laboratories Group which is material in thecontext of the wider Tissue Science Laboratories Group taken as a whole; and 7.5. there having been no material adverse change or deterioration in thebusiness, operation, assets, financial or trading position or profits of anymember of the wider Tissue Science Laboratories Group or any event orcircumstance that would reasonably be expected to result in any such adversechange, in each case to an extent which is material in the context of the widerTissue Science Laboratories Group taken as a whole. 8. save as Disclosed, Covidien UK Holding not having discovered: 8.1. that any financial, business or other information concerning the widerTissue Science Laboratories Group which is material in the context of theacquisition of Tissue Science Laboratories as contained in the informationpublicly disclosed at any time by or on behalf of any member of the wider TissueScience Laboratories Group, or disclosed at any time by or on behalf of anymember of the wider Tissue Science Laboratories Group in writing in connectionwith the Offer to any member of the wider Covidien Group or its agents oradvisers, is misleading in any material respect or contains a materialmisrepresentation of fact or omits to state a fact necessary to make theinformation contained therein not materially misleading in each case to anextent which is material in the context of the Offer; 8.2. any information which materially affects the import of any suchinformation as is mentioned in sub-paragraph 8.1; 9. save as Disclosed, Covidien UK Holding not having discovered any of thefollowing matters: 9.1. that there has been any release, emission, disposal, spillage or leak ofany hazardous substance or any substance likely to impair the environment orharm human health on or about or from any property or water now or previouslyowned, occupied, used or controlled by any past or present member of the widerTissue Science Laboratories Group and, in any such case, will or would be likelyto give rise to any liability (whether actual or contingent) or cost on the partof any member of the wider Tissue Science Laboratories Group which is or isreasonably likely to be material in the context of the wider Tissue ScienceLaboratories Group taken as a whole; or 9.2. that there is, or is likely to be, any obligation or liability (actualor contingent) on any member of the wider Tissue Science Laboratories Group tomake good, repair, reinstate or clean up any property or water now or previouslyowned, occupied, operated or used or controlled by any past or present member ofthe wider Tissue Science Laboratories Group under any environmental legislation,regulation, notice, circular, order or requirement of any Relevant Authority ata cost which is reasonably likely to be material in the context of the widerTissue Science Laboratories Group as a whole. In the foregoing conditions the following definitions shall apply: (i) "Disclosed" means either: (a) expressly contained in Tissue Science Laboratories' published reportand accounts for the financial year ended 31 December 2006, or its interimannouncement of its results for the financial period ended 30 June 2007, or itspreliminary announcement of its results for the financial year ended 31 December2007; or (b) expressly disclosed in any other public announcement made by TissueScience Laboratories via a Regulatory Information Service in the periodcommencing on 31 December 2006 and ending on the Business Day immediatelypreceding the date of the Announcement; or (c) fairly disclosed in writing to Covidien UK Holding by or on behalf ofTissue Science Laboratories in connection with the Offer prior to the date ofthe Announcement; (ii) "Relevant Authority" means any government, governmentdepartment or governmental, quasi-governmental, supranational, statutory orregulatory body, agency or authority, or any court, tribunal, institution,investigative body, association, trade agency or professional or environmentalbody or (without prejudice to the generality of the foregoing) any other personor body, in each case in any jurisdiction; (iii) "Relevant Authorisation" means an authorisation, order,grant, recognition, confirmation, determination, consent, licence, clearance,permission, allowance or approval; (iv) "Relevant Instrument" means any agreement, arrangement,licence, permit, lease or other instrument or obligation to which any member ofthe wider Tissue Science Laboratories Group is a party or by or to which anysuch member or any of its assets is or may be bound, entitled or subject; (v) "substantial interest" means, in relation to anundertaking, an interest, direct or indirect, in 20 per cent. or more of thevoting rights exercisable in relation to the undertaking or in the capital or ofany class of capital of such undertaking; (vi) "wider Tissue Science Laboratories Group" means togetherTissue Science Laboratories and all of its subsidiary undertakings, associatedundertakings and any other undertakings in which Tissue Science Laboratories andsuch undertakings (aggregating their interests) have a substantial interest; and (vii) "wider Covidien Group" means together Covidien, Covidien UKHolding and all of their subsidiary undertakings, associated undertakings andany other undertakings in which Covidien and such undertakings (aggregatingtheir interests) have a substantial interest. Subject to the requirements of the Panel, Covidien UK Holding will reserve theright to waive all or any of the above conditions in whole or in part, exceptthe condition set out in paragraph 1 above. Covidien UK Holding shall be underno obligation to waive or treat as satisfied any of the other conditions by adate earlier than the latest date specified below for the satisfaction thereof(or, if no such date is specified, the date when the Offer, if such be the case,shall become or be declared unconditional in all respects) notwithstanding thatthe other conditions of the Offer may, at an earlier date, have been waived orfulfilled and that there are, at such earlier date, no circumstances indicatingthat any of such conditions may not be capable of fulfilment. The Offer will lapse unless the conditions set out above (other than thecondition set out in paragraph 1 above) are fulfilled or (if capable of waiver)waived or, where appropriate, have been determined by Covidien UK Holding to beor to remain satisfied no later than midnight on the twenty first day after thelater of the first closing date of the Offer and the date on which the Offerbecomes or is declared unconditional as to acceptances, or such later date asthe Panel may agree. The Offer will lapse if the proposed acquisition of Tissue Science Laboratoriesis referred to the Competition Commission or if the European Commission eitherinitiates proceedings under Article 6(1)(c) of the ECMR or makes referral to acompetent authority of the United Kingdom under Article 9(1) of the ECMR before1.00pm on the first closing date or the time and date on which the Offer becomesor is declared unconditional as to acceptances (whichever is the later). If Covidien UK Holding is required by the Panel to make an offer for TissueScience Laboratories Shares under the provisions of Rule 9 of the City Code,Covidien UK Holding may make such alterations to any of the conditions(including, without limitation, the condition set out in paragraph 1 above) orany of the terms of the Offer as are necessary to comply with the provisions ofthat Rule. It is anticipated that the Offer will be initially open for acceptance until1.00pm on 2 April 2008. Covidien UK Holding will reserve the right (but willnot be obliged, other than as required by the Panel) at any time and from timeto time to extend the Offer after such time. The Offer will be on terms and will be subject, inter alia, to the conditionswhich are set out in this Appendix and those terms which will be set out in theformal Offer Document and Form of Acceptance and such further terms as may berequired to comply with the Listing Rules and the provisions of the Code. TheOffer and any acceptances thereunder will be governed by the laws of England. APPENDIX II BASES AND SOURCES OF INFORMATION (a) References to existing issued ordinary share capital are references toTissue Science Laboratories Shares in issue on 11 March 2008 (being the lastpracticable business date prior to the date of this announcement), being34,609,157 Tissue Science Laboratories Shares. (b) The maximum value placed by the Offer on the entire issued and to beissued ordinary share capital of Tissue Science Laboratories is based upon34,609,157 Tissue Science Laboratories Shares being in issue on 11 March 2008and the 2,121,226 Tissue Science Laboratories Shares that may be issued onexercise of, or pursuant to, options under the Tissue Science Laboratories ShareOption Schemes where the exercise price (if any) is below the Offer Price. (c) Tissue Science Laboratories Share prices have been derived from the AIMAppendix to the Daily Official List of the London Stock Exchange and representthe Closing Price on the relevant date. (d) The Offer premium of 71.8 per cent. over the average Closing Price of60.2 pence over the 6-month period prior to the date of this announcement, asstated in this announcement, has been calculated using Closing Prices on eachBusiness Day over the relevant period. APPENDIX III IRREVOCABLE UNDERTAKINGS Irrevocable undertakings to accept, or procure acceptance of, the Offer havebeen given by the Tissue Science Laboratories Directors and certain personsconnected with them in respect of the following holdings of Tissue ScienceLaboratories Shares and in respect of any Tissue Science Laboratories Shareswhich are issued to them, including pursuant to the exercise of options underthe Tissue Science Laboratories Share Option Schemes: Name of Director Number of Tissue Options over Tissue Science Science Laboratories Laboratories Shares Shares* Martin Braddock Hunt 33,587 1,102,000David John Gregory Jennings 23,193 147,000Stephen Bloor 7,966 107,833Patrick Robin David Paul 7,717,058 30,000Dr. Roger William Brimblecombe - 27,500Andrew Edward Sealey 230,947 -David John Lindop 18,181 - Total 8,030,932 1,414,333* Only options with an exercise price of less than the Offer Price are included The 7,717,058 Tissue Science Laboratories Shares in respect of which P R D Paulentered into irrevocable undertakings include 6,039,058 Tissue ScienceLaboratories Shares in his own name, 858,000 Tissue Science Laboratories Sharesheld by Vertical Asset Management Limited (of which P R D Paul is the indirectsole shareholder), and, a further 820,000 Tissue Science Laboratories Shareswhich are held by the Paul Foundation. P R D Paul is a trustee of the PaulFoundation, and, in this capacity, he is able to enter into an irrevocableundertaking. These undertakings remain binding in the event of a competing offer being madefor Tissue Science Laboratories unless the Offer lapses or is withdrawn. Further irrevocable undertakings to accept, or procure the acceptance of, theOffer have been given to Covidien UK Holding as follows: Name Number of Tissue Science Laboratories Shares Morley Fund Management 3,545,666AXA Framlington Investment Managers 3,516,779Cavendish Asset Management 1,799,080Noble Fund Managers 1,217,392 Total 10,078,917 These undertakings will cease to be binding in the event of (i) a competingoffer being made for the entire issued or to be issued ordinary share capital ofTissue Science Laboratories at a price at least 5 per cent. (in the case ofMorley Fund Management and AXA Framlington Investment Managers) or greater than10 per cent. (in the case of Cavendish Asset Management and Noble Fund Managers)higher than the Offer Price as at the date on which such competing offer isannounced or (ii) the Offer lapsing or being withdrawn. In addition, Covidien UK Holding has also received letters of intent under whichthe following Tissue Science Laboratories Shareholders have confirmed that it istheir current intention to accept the Offer: Name Number of Tissue Science Laboratories Shares Hermes Pension Management 2,685,026Invesco Perpetual 1,116,591 Total 3,801,617 Appendix IV Definitions "acting in concert" has the meaning given by the City Code;"AIM" or "Alternative the market of that name operated by London Stock Exchange;Investment Market""AIM Rules" the rules of AIM published by the London Stock Exchange from time to time;"Announcement" this announcement made under Rule 2.5 of the City Code on 12 March 2008 regarding the proposed acquisition by Covidien UK Holding of Tissue Science Laboratories by means of the Offer;"Board" or "Boards" as the context requires, the board of directors of Tissue Science Laboratories and/or the board of directors of Covidien and the terms " Tissue Science Laboratories Board" and "Covidien Board" shall be construed accordingly;"Business Day" a day, not being a public holiday, Saturday or Sunday, on which clearing banks in the City of London are open for normal business;"Canada" Canada, its provinces and territories and all areas subject to its jurisdiction and any political sub-division thereof;"certificated" or "in a share or other security title to which is recorded in the relevantcertificated form" register of the share or other security as being held in certificated form and which is not uncertificated form (that is not in CREST);"Closing Price" the closing middle market quotation of a Tissue Science Laboratories Share on a particular day, as derived from the the AIM Appendix to the Daily Official List;"Code" or "City Code" the City Code on Takeovers and Mergers;"Covidien" Covidien;"Covidien Group" Covidien and its subsidiary undertakings;"Covidien Offer Committee Richard J. Meelia, Charles Dockendorff, John Masterson and Amy Wendell,Officers" each being an executive officer of Covidien;"Covidien UK Holding" Covidien UK Holding Ltd, an indirect wholly-owned subsidiary of Covidien, registered in England & Wales with number 6524642;"Daily Official List" the Daily Official List published by the London Stock Exchange;"ECMR" European Community Merger Regulation Council Regulation No. 139/2004;"Form of Acceptance" the form of acceptance and authority relating to the Offer which, in relation to Tissue Science Laboratories Shares, held in certificated form, will accompany the Offer Document;"Japan" Japan, its cities and prefectures, its possessions and territories and all areas subject to its jurisdiction and any political sub-division thereof;"London Stock Exchange" London Stock Exchange plc, or its successor;"Nomura Code" Nomura Code Securities Limited, financial adviser to Tissue Science Laboratories;"Offer" the recommended cash offer proposed to be made by Covidien UK Holding to acquire all of the issued and to be issued Tissue Science Laboratories Shares on the terms and subject to the conditions set out in the Offer Document and, in relation to Tissue Science Laboratories Shares held in certificated form, the Form of Acceptance (including, where the context so requires, any subsequent revision, variation, extension or renewal of such offer);"Offer Document" the formal document to be despatched to Tissue Science Laboratories Shareholders containing and setting out the terms and conditions of the Offer;"Offer Period" the period commencing on 12 March 2008 until whichever of the following dates shall be the latest (i) the first closing date of the Offer; and (ii) the earlier of (a) the date and time at which the Offer becomes or is declared unconditional as to acceptances; or (b) the date and time at which the Offer lapses or is withdrawn;"Offer Price" 103.5 pence per Tissue Science Laboratories Share;"overseas person" any person who is not resident in the United Kingdom, or who is a citizen, resident or national of a jurisdiction outside the United Kingdom, or who is a nominee of, or custodian or trustee for, any citizen(s), resident(s) or national(s) of any country other than the United Kingdom;"Overseas Shareholder" a Tissue Science Laboratories Shareholder who is an overseas person;"Panel" the Panel on Takeovers and Mergers;"R&D" research and development;"Regulatory Information as defined in the AIM Rules;Service""relevant securities" as defined by the City Code;"Restricted Jurisdiction" any jurisdiction where local law or regulations may result in a significant risk of civil, regulatory or criminal exposure or prosecution if information concerning the Offer is sent or made available to Tissue Science Laboratories Shareholders in that jurisdiction;"Rothschild" N M Rothschild & Sons Limited, a private company incorporated in England and Wales with registered number 925279, financial adviser to Covidien and Covidien UK Holding;"subsidiary", "subsidiary shall be construed in accordance with the Companies Act 1985;undertaking", "associatedundertaking" or "undertaking""Tissue Science Laboratories" Tissue Science Laboratories plc;"Tissue Science Laboratories the directors of Tissue Science Laboratories;Directors""the Tissue Science Tissue Science Laboratories plc and its subsidiary undertakings;Laboratories Group""Tissue Science Laboratories holders of options or awards under the Tissue Science Laboratories ShareOptionholders" Option Schemes;"Tissue Science Laboratories the Tissue Science Laboratories Enterprise Management Incentive SchemeShare Option Schemes" 2001, the Tissue Science Laboratories Save As You Earn Scheme 2002 and certain Subscription Option Agreements entered into by Tissue Science Laboratories;"Tissue Science Laboratories the holders of Tissue Science Laboratories Shares;Shareholder(s)""Tissue Science Laboratories the existing issued or unconditionally allotted and fully paid (or creditedShares" as fully paid) ordinary shares of 10 pence each in the capital of Tissue Science Laboratories and any further ordinary shares which are unconditionally allotted or issued fully paid (or credited as fully paid) (including pursuant to the exercise of options granted under the Tissue Science Laboratories Share Option Schemes) before the date on which the Offer ceases to be open for acceptance (or, subject to the City Code or with the consent of the Panel, by such other date as Covidien UK Holding may decide);"uncertificated" or "in a share or other security title to which is recorded on the relevantuncertificated form" register of the share or security concerned as being held in uncertificated form in CREST, and title to which, by virtue of the CREST Regulations, may be transferred by means of CREST;"United Kingdom" or the "UK" the United Kingdom of Great Britain and Northern Ireland and its dependent territories; and"United States of America" or the United States of America, its possessions and territories, all areas"United States" or "US" subject to its jurisdiction or any political sub-division thereof, any state of the United States of America and the District of Columbia. In this announcement: a. references to £ or pounds and p or pence are to poundssterling and pence being the lawful currency of the United Kingdom; b. references to $ or dollars are to US dollars being thelawful currency of the United States of America; c. references to time are to London time; and d. all references to statutes or other forms of legislationare, unless otherwise stated, to statutes or forms of legislation of the UnitedKingdom and any reference to any provision of any legislation includes anyamendment, modification, re-enactment or extension thereof. This information is provided by RNS The company news service from the London Stock Exchange
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