Newmark Technology Group PLC
16 August 2002
Newmark Technology Group PLC ('Newmark' or 'the Company')
Proposed Acquisitions of Vema N.V and Grosvenor Technology Limited, Capital
Reorganisation, Change of Name and Admission of Enlarged Share Capital to the
Alternative Investment Market ('AIM')
• Newmark, a specialist integrated security provider, is to acquire
Grosvenor Technology Limited ('Grosvenor') for a maximum consideration of up to
£6.787 million in cash. The initial consideration will be a maximum of £3.287
million with a maximum balance of £3.5 million being paid over the next 48
months subject to an earn out.
• Grosvenor was founded in 1989 and is involved in the design and
manufacture of access control and security management systems. Its products are
installed in over 1000 locations world-wide with such prestigious organisations
as BAA, British Aerospace, the Hong Kong Police, Metropolitan Police Service and
The Inland Revenue.
• In the financial year ended 31 October 2001 Grosvenor's pre-tax profit
was £547,000, more than double the figure for the year 2000. Turnover in 2001
was £3.016 million compared with a 2000 figure of £2.820 million. Grosvenor
currently has assets of approximately £2 million which includes £1.2 million in
cash. Current trading remains strong with a growing world-wide market.
• Immediately following the acquisition of Grosvenor the Company will sell
its wholly owned subsidiary Newmark Technology Limited to Grosvenor for £1.25
million. The directors of Grosvenor will run the combined businesses on a day
to day basis. The amalgamation of Newmark and Grosvenor is expected to result in
cost savings of £0.5 million per annum.
• Newmark is also proposing to acquire the remaining 49% of Netherlands
based company, Vema N.V, that it does not already own. This will be in the form
of an offer for the Global Depository Receipts ('the GDRs') which are traded on
AIM ('the Offer').
• Each of these acquisitions is dependent on the successful completion of
• Capital reorganisation to split each ordinary share of 5p into one
ordinary share of 1p and one deferred share of 4p
• On completion of the transactions, the enlarged Company is proposing to
rename itself Newmark Security PLC. This change reflects the security focus and
established nature of the enlarged group's underlying businesses.
Maurice Dwek, Newmark Chairman, commented:
'We believe that the proposal we have set out represents an exciting opportunity
for the enlarged group and will strengthen our position in the worldwide
security market. The proposed transactions should create a high added-value
security company offering its customers both electronic and physical solutions
which we expect will deliver enhanced shareholder value.'
For further details please contact:
Maurice Dwek, Chairman Tel: 01279 658 000
Sassie Rajwan, CEO
Newmark Technology Group Plc
Adam Reynolds/Takki Sulaiman Tel: 020 7735 9415
Hansard Communications firstname.lastname@example.org
Joanne Lake Tel: 0113 243 1619
Williams de Broe Plc - adviser to Newmark
Lindsay Mair Tel: 0207 626 2244
Corporate Synergy - adviser to Vema
NEWMARK TECHNOLOGY GROUP PLC ('NEWMARK' OR 'THE COMPANY')- ACQUISITIONS OF
GROSVENOR TECHNOLOGY LIMITED AND VEMA N.V.
Newmark announces the proposed acquisitions of Grosvenor Technology Limited ('
Grosvenor') and Vema N.V. ('Vema'). Newmark has entered into a conditional
agreement to acquire the share capital of Grosvenor for a maximum consideration
of £6.787 million of which up to £3.287 million is payable in cash on
completion. Newmark also proposes to acquire Vema by way of an offer for the
global depository receipts ('GDRs') representing issued shares in Vema not
already controlled by Newmark. The Offer is 1.5 Newmark shares for every GDR
and values the GDRs in aggregate at £1.89 million. The acquisitions constitute
a reverse takeover and are conditional, inter alia, on shareholder approval.
Newmark's Annual General Meeting ('AGM') is to be held on 10 September 2002 and
this year will, in addition to the business customarily transacted, ask
shareholders to approve the acquisitions and will also approve, inter alia, a
capital reorganisation and change of the Company's name to Newmark Security PLC.
INFORMATION ON GROSVENOR
Grosvenor is involved in the design and manufacture of access control and
security management systems.
Grosvenor was founded in 1989 by three of its current directors, (Derek Blethyn,
Alan Burgess and Peter Brooks) who had previously been involved in the
installation of third-party-manufactured security systems.
Grosvenor has a track record in product innovation and introduction. Grosvenor
produced an access control system with true distributed intelligence in 1990 and
a Windows access control system in 1993. In 2000, it produced a Palm based
access control system. The company's propriety range of products, JANUS, is sold
to major installers and also security service companies including Tyco
Electronic Product Group, one of the largest security companies in the world,
who have re-badged and marketed the product as their own since 1995.
The JANUS product primarily works in conjunction with the Windows operating
system and its modular format provides access control, graphical alarm
monitoring, video imaging, ID card production, asset protection, plant control
and integration with other safety and building management systems such as
intruder, fire, CCTV, time and attendance and visitor monitoring. A more
restricted functionality is available with the Palm operating system.
Core products are designed by an in-house research and development team which
currently comprises 10 staff. Manufacturing of the product is sub-contracted to
a number of key suppliers.
Grosvenor's range of products has been installed in more than 1,000 sites
including: British Aerospace, BP plc, China Light and Power Co. Ltd., Hong Kong
Immigration Department, Hong Kong Police, The Inland Revenue, Metropolitan
Police Service, London Underground Ltd., Marks & Spencer Group PLC, Merrill
Lynch PLC, Ministry of Defence, National Air Traffic Services Ltd, National
Power PLC, Royal Bank of Scotland Group PLC, Safeway PLC and various museums,
galleries and universities.
In the financial year ended 31 October 2001 Grosvenor achieved profit before
taxation of £547,000 (2000: £255,000) on turnover of £3.016 million (2000:
£2.820 million). Net assets at 31 October 2001 were £1.587 million (2000:
£1.191 million). Unaudited interim accounts for the seven months ended 31 May
2002 showed profit before taxation of £298,000 on turnover of £1.760 million and
net assets of £1.841 million.
INFORMATION ON VEMA
Vema's share capital is comprised of A shares of a0.02 each (of which 51 per
cent. are owned by Vema B.V., a wholly owned subsidiary of Newmark and the
remaining 49 per cent. are represented by GDRs) and B shares of a0.02 each
(owned by Vema B.V.). In May 2001, Vema raised net proceeds of £2.1 million by
way of a placing and offer for subscription of the GDRs. The GDRs were admitted
to trading on AIM as part of this process.
Until April 2002, Vema was a specialist distributor of security products using a
consultancy based approach to advise customers on the best solution to their
installed security locking needs. Based in the Netherlands, Vema supplied an
extensive range of sophisticated electronic and electromechanical locking
systems, with a high degree of sales and service support. Vema sold these
products to a wide range of customers for use in low to high security
installations, including banks, prisons, hospitals, museums and government
Vema also has a UK subsidiary, Vema UK, which was incorporated on 24 January
2001. The only business carried on by Vema UK is the provision of a loan of
£2,880,000 to Newmark.
Vema sold its business and trading assets to a member of the Assa Abloy group
for approximately a9.8 million (approximately £6 million) cash on 29 April 2002.
In the light of increasing competitive pressures and reducing margins, the Vema
directors believed that it was prudent to dispose of the business for what they
considered to be a good price. Vema is responsible for a potential tax liability
arising on the transfer of approximately a2.7 million (approximately £1.6
million) and its own expenses of the disposal.
DETAILS OF THE ACQUISITIONS
Newmark has agreed to acquire Grosvenor from the Grosvenor directors (Derek
Blethyn, Alan Burgess, Eric Dew and Peter Brooks) for a maximum consideration of
£6.787 million conditional upon Newmark shareholders' approving the Offer, the
Grosvenor acquisition and the capital reorganisation, the Offer becoming
unconditional and Newmark having satisfactory funding in place to make the
Grosvenor acquisition in the form of a loan from Vema. A maximum £3.287 million
is payable as initial consideration, with a further payment (of up to £3.5
million) due when the accounts for Grosvenor and Newmark Technology Limited
(which will be managed by the Grosvenor directors) have been agreed or
determined for the 48 month period ending 31 October 2006 (the 'deferred
The initial consideration will be paid in cash and will be calculated by
reference to Grosvenor's net asset value and cash value as at completion. If the
net asset value is greater than or equal to £1.587 million and the cash held by
Grosvenor is greater than or equal to £0.7 million, the initial consideration
will be £3.287 million.
If the cash held by Grosvenor on completion is less than £0.7 million, the
initial consideration will be reduced by the amount by which the cash value is
less than £0.7 million. If the net asset value of Grosvenor on completion is
less than £1.587 million, the initial consideration will be reduced by the
amount by which the net asset value of Grosvenor on completion is less than
Newmark will make an initial payment of £2.5 million to the vendors on
completion. If, when the net asset value and cash value of Grosvenor as at
completion have been calculated, the initial consideration should be less than
£2.5 million, the vendors will repay the difference to Newmark. If, when the net
asset value and cash value of Grosvenor as at completion has been calculated,
the initial consideration should be more than £2.5 million, Newmark will pay the
balance to the vendors. The maximum balance payable will be £787,000.
The deferred consideration will be wholly satisfied in loan notes denominated in
Euros issued by Newmark. These will bear interest at 0.5 per cent. per annum
below the base rate from time to time of Lloyds TSB Bank plc. The deferred
consideration will be calculated by reference to the average annual profit
before tax of Grosvenor and Newmark Technology Limited for the four years ending
31 October 2006, subject to certain adjustments.
On completion of the Grosvenor acquisition, Derek Blethyn, Alan Burgess, Peter
Brooks and Eric Dew, the directors and vendors of Grosvenor, will enter into
service agreements with Grosvenor and will also be appointed directors of
Newmark Technology Limited. Further details of the arrangements with the
vendors are set out in the prospectus.
Immediately after completion of the Grosvenor Acquisition, Newmark will sell its
shareholding in Newmark Technology Limited to Grosvenor. This sale is to
reflect the fact that the Grosvenor directors will run both businesses. Both
companies will remain members of the enlarged group. The initial consideration
for the transfer of Newmark Technology Limited to Grosvenor is £625,000, payable
in cash on completion. Deferred consideration of a further £625,000 will be
payable on 2 November 2006 or such earlier date as the board of Grosvenor
Newmark is proposing to acquire Vema by making an offer to the Vema GDR holders
for the GDRs representing the 49 per cent. of the issued share capital of Vema
that Newmark does not already control. The consideration payable under the Offer
will comprise the allotment of Newmark shares to the Vema GDR holders who will
receive 1.5 Newmark shares for each GDR they own. Fractional entitlements will
not be allotted. The Offer values each Vema GDR at 2.625p based on the closing
middle market share price of Newmark's existing ordinary shares on 15 August
2002 of 1.75p. This values the total issued share capital of Vema at £3.857
million, representing a premium of 75.0 per cent. over the middle market price
per GDR of 1.5p on 15 August 2002 and a discount of 8.2 per cent. to the net
asset value per GDR.
In view of their involvement with Newmark either as directors or significant
shareholders, the Vema board is unable to provide advice on the terms of the
Offer and recommend an appropriate course of action to GDR holders.
Accordingly, the independent financial adviser to Vema, Corporate Synergy, has
written to the Vema directors with its advice in relation to the Offer.
Corporate Synergy has advised the Vema directors that in its view the Offer is
fair and reasonable so far as GDR holders are concerned and, in the absence of a
higher offer being made for the GDRs, GDR holders should accept the Offer.
Application has been made to the London Stock Exchange for Newmark and its
issued ordinary share capital (as enlarged by the issue of shares to GDR
holders) to be admitted to AIM. It is expected that admission will become
effective and that dealings for normal settlement will commence on 11 September
The Offer is conditional, inter alia, on (i) Newmark shareholders resolving to
approve the offer and to take the other steps necessary to implement the Offer;
and (ii) admission of the enlarged share capital to trading on AIM. In addition,
the offer is subject to the conditions set out in Appendix I to the offer
Irrevocable undertakings to accept the Offer
Newmark has received irrevocable undertakings to accept the Offer from GDR
holders in respect of 9,550,000 GDRs representing approximately 13.26 per cent.
of the GDRs and of the issued share capital of Vema not already controlled by
Newmark on 15 August 2002. Newmark already controls 51 per cent. of Vema's
shares through its wholly-owned subsidiary, Vema B.V. and therefore owns or has
received irrevocable undertakings in respect of a total of 57.5 per cent. of the
current issued share capital of Vema.
Reasons for the Acquisitions
The Board believes that the Grosvenor acquisition is in line with their strategy
of creating an integrated high value security solutions group in both mechanical
and electronic products.
Grosvenor is an established access control and security management systems
company with a strong and experienced management team. It sells a sophisticated
range of proprietary products through a network of dealers and installers who
supply a predominantly blue chip customer base.
Grosvenor has a high quality research and development team which is responsive
to market demand and has a proven track record of product innovation and
introduction. It also has a technical support team. The businesses of Grosvenor
and Newmark Technology will be amalgamated and run by Grosvenor's management,
creating economies of scale and reducing the combined total overhead.
Newmark currently controls 51 per cent. of Vema's shares. Vema no longer trades
following the sale of its business and trading assets in April 2002. Therefore,
in order to realise value for GDR holders, a number of whom are also Newmark
shareholders, Newmark is making the Offer for the GDRs representing the
remaining 49 per cent. of the Vema share capital that it does not already
control. Newmark intends to use Vema's net cash to finance the initial
consideration for the Grosvenor acquisition.
BOARD OF DIRECTORS
The Board of Newmark will remain as currently constituted. Following the Offer
becoming or being declared unconditional in all respects, the management
agreements of Maurice Dwek and Alex Reid with Vema will be terminated with
immediate effect. Maurice Dwek and Alex Reid will remain directors of Vema and
will receive compensation for the termination of their management agreements in
accordance with the terms of those agreements.
In order to be able to issue shares in the Company to GDR holders on the basis
set out above, Newmark has been advised that it must re-organise its share
capital. Accordingly it is proposed that each existing ordinary share in issue
with a nominal value of 5p will be sub-divided into one ordinary share with a
nominal value of 1p and one deferred share with a nominal value of 4p. The
resulting ordinary shares will have all the rights of the existing ordinary
shares while the deferred shares will be of little or no value. The capital
reorganisation is subject to shareholder approval at the AGM and further details
are set out in the Prospectus.
CHANGE OF NAME
Newmark is proposing to change its name to 'Newmark Security PLC'. The
Directors believe that the proposed new name better reflects the security focus
and established nature of the enlarged group's underlying businesses.
CURRENT TRADING AND PROSPECTS
Newmark and Vema have today announced their audited results for the year ended
30 April 2002.
Newmark reported a profit before taxation of £2.26 million (2001: £620,000 loss)
on turnover of £12.027 million (2001: £12.049 million). Net assets at 30 April
2002 amounted to £6.534 million (2001: £2.069 million). Vema reported a profit
before taxation of a233,000 (2001: a1.102 million profit) on turnover of a9.034
million (2001: a8.734 million). Net assets at 30 April 2002 were a11.421
million (2001: a1.699 million.
The enlarged group is experiencing steady overall growth in demand for its
products across the electronic security, asset protection and secure locking
The Directors believe that ever increasing levels of crime and also violence in
the workplace will continue to increase demand for the enlarged group's
products. In addition, legislative forces such as the Disability Discrimination
Act 1985 are expected to create demand for certain recently developed products
in future years.
The Grosvenor acquisition is part of the Board's long term strategy to focus on
higher value added systems solutions. The Directors believe that this will
enhance the enlarged group's quality of earnings and provide the opportunity for
additional recurring revenue streams generated from maintenance and support
The Directors' strategy is to create a high value security solutions group in
both mechanical and electronic products. The Directors intend that this strategy
will be achieved by the following:
• Acquisition of Grosvenor: Following completion of the Grosvenor
acquisition, the management of Newmark Technology Limited will be combined with
that of Grosvenor resulting in annual cost savings in the region of £0.5
• Continuous new product development: The Grosvenor acquisition will further
enhances the enlarged group's research and development team, reflecting the
Directors' commitment to continuous product development.
• Diversification in the asset protection division: Safetell and Drion are
further diversifying away from the banking sector and will increasingly target
local authorities, petrol retailers, hospitals, museums and train stations.
• Expansion into new geographical markets: Asset protection sales
opportunities are being pursued in Spain and Australia.
• Secure locking division: The Directors intend to continue to expand
the sale of third party security products to wholesalers and distributors.
ANNUAL GENERAL MEETING
In addition to the ordinary business customarily transacted at the AGM,
resolutions will be proposed as special business at this year's AGM as follows:
(i) to approve the Offer;
(ii) to approve the Grosvenor acquisition;
(iii) to implement the capital reorganisation, amend the Company's
articles of association, authorise the Directors to allot new shares pursuant to
the offer and disapply pre-emption rights in relation to certain future issues
of ordinary shares; and
(iv) change the Company's name to Newmark Security PLC.
The Directors, who have been advised by Williams de Broe, believe that the terms
of the Offer, the Grosvenor acquisition and the related sale, capital
reorganisation and the change of name are in the best interests of shareholders
and unanimously recommend shareholders to vote in favour of these resolutions.
Maurice Dwek, Michel Rapoport and Alexander Reid, directors of Newmark, have
irrevocably undertaken to vote their beneficial shareholdings amounting, in
aggregate, to 41,888,238 ordinary shares (representing approximately 35 per
cent. of the issued share capital as at the date of the prospectus) in favour of
the resolutions to be proposed at the AGM.
EXPECTED TIMETABLE OF EVENTS
Publication of prospectus 16 August 2002
Annual General Meeting 10 September 2002
Record date for capital reorganisation 10 September 2002
Capital reorganisation effective 11 September 2002
Admission effective and dealings commence
in Newmark's ordinary shares 11 September 2002
This announcement does not constitute an offer or an invitation to purchase any
The closing middle market prices or quotations of Newmark shares and Vema GDRs
are derived from the London Stock Exchange Daily Official List.
Copies of the prospectus will be available from the offices of Travers Smith
Braithwaite at 10 Snow Hill, London EC1A 2AL during normal business hours
(Saturdays, Sundays and Bank Holidays excluded) for one month from admission.
Maurice Dwek, Chairman 01279 658 000
Adam Reynolds/Takki Sulaiman 0207 735 9415
Williams de Broe Plc - adviser to Newmark
Joanne Lake 0113 243 1619
Corporate Synergy - adviser to Vema
Lindsay Mair 0207 626 2244
This announcement has been approved solely for the purposes of Section 21 of the
Financial Services and Markets Act 2000 by Williams de Broe Plc of 4 Park Place,
Leeds LS1 2RU.
Williams de Broe is acting for Newmark and no-one else in connection with the
offer and will not be responsible to anyone other than Newmark for providing the
protections afforded to clients of Williams de Broe or for providing advice in
relation to the offer.
Corporate Synergy is acting for Vema and no-one else in connection with the
offer and will not be responsible to anyone other than Vema for providing the
protections afforded to clients of Corporate Synergy or for providing advice in
relation to the offer.
The Offer will not be made, directly or indirectly, in or into the USA, Canada,
Australia or Japan and this announcement is not being and must not be, mailed,
forwarded, transmitted or otherwise distributed or sent into the USA, Canada,
Australia or Japan and persons (including custodians, nominees and trustees)
receiving this announcement must not distribute or send it, into or from the
USA, Canada, Australia or Japan.
FURTHER TERMS OF THE OFFER
The Offer, which will be made by Williams de Broe on behalf of Newmark, which is
not subject to the City Code on Takeovers and Mergers nor the Dutch equivalent
will be governed by English law and be subject to the jurisdiction of the courts
of England. The Offer will be made on the terms set out in the offer document.
Terms of the Offer
(a) GDRs and/or Vema shares acquired by Newmark pursuant to the Offer will be
acquired free from all liens, charges, equitable interests, encumbrances, other
interests and third party rights together with all rights now or hereafter
attaching thereto, including (in the case of GDRs) all rights attaching to the
GDRs under the terms of the trust deed by which they were created.
(b) The new Newmark shares to be issued pursuant to the Offer will be issued
credited as fully paid and free from all liens, charges, encumbrances, rights of
pre-emption and other third party rights or interests of any nature whatsoever
and will rank pari passu in all respects with the Newmark shares resulting from
the capital reorganisation.
(c) Fractions of Newmark shares will not be allotted or issued to persons
accepting the Offer and entitlements to Newmark shares under the Offer will be
rounded down to the nearest whole number of shares.
(d) The full terms of the Offer will be set out in the offer document and
the accompanying form of acceptance.
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