Recommended Offer for Trace
Microgen PLC
25 May 2007
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO
THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA OR JAPAN OR ANY JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH
JURISDICTION
FOR IMMEDIATE RELEASE
25 May 2007
Recommended Cash Offer
for
Trace Group plc ('Trace')
by
Microgen plc ('Microgen')
Summary
The Microgen Board and the Trace Independent Directors are pleased to announce
that they have agreed the terms of a recommended cash offer to be made by
Microgen for the entire issued and to be issued ordinary share capital of Trace.
• The Offer will be 155 pence in cash for each Trace Share.
• The Offer will value the existing issued ordinary share capital of Trace at
approximately £22.1 million.
• The Offer represents:
(i) a premium of approximately 73.2 per cent. to the Closing Price of 89.5
pence per Trace Share on 19 April 2007, the date immediately preceding the date
of the Tulip Announcement;
(ii) a premium of approximately 62.3 per cent. to the average daily Closing
Price of 95.5 pence per Trace Share during the six months prior to 19 April
2007, the date immediately preceding the date of the Tulip Announcement;
(iii)a premium of approximately 47.6 per cent to the highest Closing Price of
105 pence per Trace Share over the five years prior to 19 April 2007, the date
immediately preceding the date of the Tulip Announcement;
(iv)a premium of approximately 14.8 per cent. to the Tulip Proposal of 135 pence
per Trace Share in cash;
(v) a premium of approximately 8.8 per cent. to the Closing Price of 142.5 pence
per Trace Share on 24 May 2007, the last business day prior to this
Announcement; and
(vi)approximately 18.8 times reported earnings per Trace Share from continuing
operations of 8.23 pence for the year ended 31 May 2006, and on a fully diluted
basis represents approximately 18.9 times reported earnings per Trace Share from
continuing operations of 8.19 pence for the year ended 31 May 2006.
• The Independent Directors, who have been so advised by Shore Capital,
consider the terms of the Offer to be fair and reasonable. In providing advice
to the Independent Directors, Shore Capital has taken into account the
Independent Directors' commercial assessments.
• The Trace Independent Directors have unanimously recommended that all Trace
Shareholders accept the Offer.
• The Directors of Microgen believe that the acquisition of Trace will
strengthen Microgen's position as an IT services and solutions provider.
Benefits are also anticipated to be derived from the efficiencies and synergies
as a result of the combination.
Commenting on the Offer, Daniel Chapchal, Chairman of Trace, said:
'The Independent Directors believe that the Offer from Microgen represents a
significant increase over the previous offer from Tulip. As a result, the
Independent Directors have given their unanimous recommendation to the Offer
from Microgen which they believe to be in the best interests of all Trace
Shareholders.'
Martyn Ratcliffe, Chairman of Microgen, said:
'The combination of Trace and Microgen should be attractive to all stakeholders,
including customers, employees and shareholders in both organisations. The Trace
businesses will fit well within the Microgen Group, providing customers with a
stronger supplier, employees with expanded career opportunities, shareholders of
Trace with an attractive cash exit and shareholders in Microgen with greater
potential in the future, derived from the Enlarged Group.'
This summary should be read in conjunction with the full text of this
Announcement and its appendices.
Enquiries:
Microgen plc Tel: +44 (0) 1252 772 300
Martyn Ratcliffe
Philip Wood
Arbuthnot Securities Limited Tel: +44 (0) 20 7012 2000
(Financial adviser and broker to Microgen in relation to the Offer)
Ian Williams
Richard Dunn
Richard Tulloch
Financial Dynamics Tel: +44 (0) 20 7831 3113
(Public relations adviser to Microgen)
Giles Sanderson
Trace Group plc Tel: +44 (0) 20 7825 1000
Daniel Chapchal Tel: +44 (0) 7836 512 549
David Begg Tel: +44 (0) 20 7825 1000
Robin Woodall Tel: +44 (0) 7740 928 399
Shore Capital and Corporate Limited Tel: +44 (0) 20 7408 4090
(Financial adviser to Trace)
Alex Borrelli
Pascal Keane
The terms used in this summary shall have the same meaning given to them in the
full Announcement.
Arbuthnot Securities, which is authorised and regulated in the United Kingdom by
the Financial Services Authority, is acting exclusively for Microgen and no one
else in connection with the Offer and will not be responsible to anyone other
than Microgen for providing the protections afforded to clients of Arbuthnot
Securities nor for providing advice in relation to the Offer, or the contents of
this Announcement or any matter referred to herein.
Arbuthnot Securities Limited has approved this Announcement for the purposes of
section 21 of the Financial Services and Markets Act 2000. The principal place
of business of Arbuthnot Securities Limited is Arbuthnot House, 20 Ropemaker
Street, London EC2Y 9AR.
Shore Capital, which is authorised and regulated in the United Kingdom by the
Financial Services Authority, is acting exclusively for Trace and no one else in
connection with the Offer and will not be responsible to anyone other than Trace
for providing the protections afforded to clients of Shore Capital nor for
providing advice in relation to the Offer, the content of this Announcement or
any matter referred to herein.
This Announcement is not intended to and does not constitute, or form any part
of, an offer or an invitation to purchase or sell any securities or the
solicitation of any vote or approval in any jurisdiction pursuant to the Offer
or otherwise. The Offer will be made solely through the Offer Document, and, in
relation to certificated Trace Shares, the Form of Acceptance. Microgen intends
to dispatch such documents to Trace Shareholders (and, for information only, to
Trace Optionholders) and place such advertisement shortly. The Offer Document
and the Form of Acceptance will together contain the full terms and conditions
of the Offer, including details of how to accept the Offer. Any acceptance or
other response to the Offer should be made only on the basis of the information
contained in the Offer Document and the Form of Acceptance. The Offer will be
subject to English Law. The laws of relevant jurisdictions may affect the
availability of the Offer to overseas persons. Overseas persons, or persons who
are subject to the laws of any jurisdiction other than the United Kingdom,
should inform themselves about and observe any applicable legal and regulatory
requirements. The Offer Document will be available for public inspection in the
United Kingdom.
Unless otherwise determined by Microgen, the Offer will not be made, directly or
indirectly, in or into the United States or by use of the mails of, or by any
means or instrumentality (including, without limitation, facsimile, internet,
email or other electronic transmission, telex or telephone) of inter-state or
foreign commerce of, or any facility of a national, state or other securities
exchange of, the United States, nor will it be made directly or indirectly in or
into Canada, Australia, Japan or any Restricted Jurisdiction, and the Offer will
not be capable of acceptance by any such use, means, instrumentality or facility
or from within the United States, Canada, Australia, Japan or any Restricted
Jurisdiction. Accordingly, copies of this Announcement are not being, will not
be and must not be, directly or indirectly, mailed or otherwise forwarded,
transmitted, distributed or sent in, into or from the United States, Canada,
Australia, Japan or any Restricted Jurisdiction, and persons receiving this
Announcement (including, without limitation, custodians, nominees and trustees)
must not mail, forward, distribute or send it in, into or from the United
States, Canada, Australia, Japan or any Restricted Jurisdiction. Doing so may
render invalid any purported acceptance of the Offer. Any persons (including
custodians, nominees and trustees) who are overseas persons or who would, or
otherwise intend to, mail or otherwise forward, transmit, distribute or send
this Announcement, the Offer Document, the Form of Acceptance or any related
document outside the United Kingdom or to any overseas person should seek
appropriate advice before doing so. Further details in relation to Overseas
Trace Shareholders will be contained in the Offer Document.
Cautionary statement regarding forward-looking statements
This Announcement contains statements about Microgen and Trace (and their
respective groups and/or subsidiary undertakings) that are or may be
forward-looking statements. All statements other than statements of historical
facts included in this Announcement may be forward-looking statements. Without
limitation, any statements 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 negative thereof are forward-looking statements. Forward-looking statements
include statements relating to the following (i) future capital expenditures,
expenses, revenues, earnings, synergies, economic performance, indebtedness,
financial condition, dividend policy, losses and future prospects; (ii) business
and management strategies and the expansion and growth of Microgen's or Trace's
operations and potential synergies resulting from the Offer; and (iii) the
effects of government regulation on Microgen's or Trace's business. These
forward-looking statements are not guarantees of future performance. They have
not been reviewed by the auditors of Microgen or of Trace. These forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of any such
person, or industry results, to be materially different from any results,
performance or achievements expressed or implied by such forward-looking
statements. These forward-looking statements are based on numerous assumptions
regarding the present and future business strategies of such persons and the
environment in which each will operate in the future. You are cautioned not to
place undue reliance on any forward-looking statement, which speak only as of
the date they were made. All subsequent oral or written forward-looking
statements attributable to Microgen, Trace or any members of their respective
groups or any persons acting on their behalf are expressly qualified in their
entirety by the Cautionary Statement above. All forward-looking statements
included in this document are based on information available to us on the date
hereof. Investors should not place undue reliance on such forward-looking
statements, and we undertake no obligation to publicly update or revise any
forward-looking statements.
Dealing disclosure requirements
Under the provisions of Rule 8.3 of the Takeover Code (the 'Code'), if any
person is, or becomes, 'interested' (directly or indirectly) in 1% or more of
any class of 'relevant securities' of Trace, all 'dealings' in any 'relevant
securities' of that company (including by means of an option in respect of, or a
derivative referenced to, any such 'relevant securities') must be publicly
disclosed by no later than 3.30 pm (London time) on the London business day
following the date of the relevant transaction. This requirement will continue
until the date on which the Offer becomes, or is declared, unconditional as to
acceptance, lapses or is otherwise withdrawn or on which the 'offer period'
otherwise ends. If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire an 'interest' in 'relevant
securities' of Trace they will be deemed to be a single person for the purpose
of Rule 8.3.
Under the provisions of Rule 8.1 of the Code, all 'dealings' in 'relevant
securities' of Trace by Microgen or Trace or by any of their respective '
associates' must be disclosed by no later than 12.00 noon (London time) on the
London business day following the date of the relevant transaction.
A disclosure table, giving details of the companies in whose 'relevant
securities' 'dealings' should be disclosed, and the number of such securities in
issue, can be found on the Panel's website at www.thetakeoverpanel.org.uk.
'Interests in securities' arise, in summary, when a person has long economic
exposure, whether conditional or absolute, to changes in the price of
securities. In particular, a person will be treated as having an 'interest' by
virtue of the ownership or control of securities, or by virtue of any option in
respect of, or derivative reference to, securities.
Terms in quotation marks are defined in the Code, which can also be found on the
Panel's website. If you are in any doubt as to whether or not you are required
to disclose a 'dealing' under Rule 8, you should consult the Panel.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO
THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA OR JAPAN OR ANY JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH
JURISDICTION
FOR IMMEDIATE RELEASE
25 May 2007
Recommended Cash Offer
for
Trace Group plc ('Trace')
by
Microgen plc ('Microgen')
1. Introduction
The Microgen Board and the Trace Independent Directors are pleased to announce
that they have agreed the terms of a recommended cash offer to be made by
Microgen for the entire issued and to be issued ordinary share capital of Trace.
The Offer will be 155 pence in cash for each Trace Share which values the
existing issued ordinary share capital of Trace at approximately £22.1 million.
The Offer is conditional, inter alia, on the passing of the Resolutions at an
EGM of Microgen, details of which are set out in paragraph 13 below.
Background
On 20 April 2007, the Board of Tulip, a management buy-out vehicle formed for
the purposes of acquiring Trace, and the Trace Independent Directors announced
that they had reached agreement on the terms of a recommended proposal for the
acquisition of Trace by Tulip at a price of 135 pence per Trace Share in cash to
be effected by means of a scheme of arrangement between Trace and Trace
Shareholders pursuant to section 425 of the Companies Act 1985 ('Tulip Proposal
').
During the period from 14 May 2007 to 24 May 2007, Tulip announced a number of
updates regarding the level and terms of irrevocable undertakings it had
received in respect of the Tulip Proposal. In the most recent update provided by
Tulip on 24 May 2007, Tulip confirmed that it had received the following
irrevocable undertakings in favour of the Tulip Proposal:
(i) irrevocable undertakings that do not fall away in the event of a
higher offer and are for a period of 12 months from 14 May 2007 (the 'Hard
Irrevocables with Standstill') in respect of 5,485,773 Trace Shares in aggregate
representing approximately 38.50 per cent. of the Trace Shares;
(ii) irrevocable undertakings that do not fall away in the event of a
higher offer, effective for 12 months but which will lapse if (i) the Tulip
Proposal lapses or is withdrawn and within 21 days thereafter Tulip has not made
or announced it will make an offer to acquire the share capital of Trace for a
cash price of not less than 135 pence per share; or (ii) the Tulip Proposal is
not approved at the Trace Court Meeting (scheduled for 4 June 2007); or (iii)
the Scheme is not sanctioned by the Court by 19 April 2008 (the 'Hard
Irrevocables without Standstill') in respect of 1,493,939 Trace Shares in
aggregate representing approximately 10.48 per cent. of the Trace Shares; and
(iii) irrevocable undertakings that lapse in the event of a higher
offer being made at a price of not less than 150 pence (the 'Soft Irrevocables')
in respect of 3,440,000 Trace Shares in aggregate representing approximately
24.14 per cent. of the Trace Shares.
As set out in paragraph 2 below, the Offer has been recommended by the Trace
Independent Directors. The Trace Independent Directors have today obtained an
Order of the Chancery Division of the High Court in relation to Trace and the
Scheme which contains the following direction:
'THE COURT DIRECTS that in the event an offer is received to acquire the entire
issued share capital of the Company for a price of 155 pence or higher and which
the said Independent Directors propose to recommend the Chairman of the Court
Meeting is directed to adjourn the Court Meeting sine diem with the consequence
that the proposals for the Scheme will automatically lapse upon the said
Independent Directors recommending an offer for each Trace Share at 155 pence or
more.'
(Order No. 2850 of 2007 25 May 2007)
Therefore, in relation to those parties who have entered into Hard Irrevocables
without Standstill, the lapsing of the Scheme will trigger the lapsing of such
undertakings in the event that within 21 days of the lapsing of the Scheme,
Tulip has not made or announced it will make an offer to acquire the share
capital of Trace for a cash price of not less than 135 pence per Trace Share.
Further details of the irrevocable undertakings provided in relation to the
Tulip Proposal are set out in Appendix III of this Announcement.
Following the announcement of the Tulip Proposal on 20 April 2007, the Microgen
Board and the Trace Independent Directors entered into negotiations regarding a
potential offer for Trace by Microgen. On 11 May 2007, Microgen announced that
it was in preliminary discussions with the Independent Directors of Trace and
was considering a possible competing offer in cash for the share capital of
Trace at a price of not less than 150 pence per Trace Share. The Independent
Directors subsequently announced on 11 May 2007 that Trace Shareholders should
take no action in relation to the Tulip Proposal, pending further clarification
from Microgen. A further announcement was made by Microgen on 22 May 2007, which
stated that on 21 May 2007 the Board of Microgen had approached the Independent
Directors of Trace with a possible revised proposal of a competing offer at 155
pence in cash per Trace Share.
Since 22 May 2007, Microgen has concluded its due diligence, finalised its
financing arrangements and secured the recommendation of the Independent
Directors of Trace and, consequently, today announces its intention to acquire
the entire issued and to be issued share capital of Trace at 155 pence per Trace
Share.
2. Recommendation of the Offer
The Trace Independent Directors, who have been so advised by Shore Capital,
consider the terms of the Offer to be fair and reasonable. In providing advice
to the Trace Independent Directors, Shore Capital has taken into account the
Trace Independent Directors' commercial assessments. Accordingly the Trace
Independent Directors unanimously recommend that all Trace Shareholders accept
the Offer.
The Independent Directors, on behalf of themselves and their connected parties,
holding in aggregate 1,436,453 Trace Shares representing 10.08 per cent. of the
Trace Shares, have undertaken to accept the Offer upon the lapsing of their
irrevocable commitments to the Tulip Proposal which are described above and in
Appendix III of this Announcement. Such lapsing will occur in respect of 10,000
of these Trace Shares (representing 0.07 per cent. of the Trace Shares) in the
event of a higher offer being made at a price of not less than 150 pence and in
respect of 1,426,453 of these Trace Shares (representing 10.01 per cent. of the
Trace Shares) in the event that within 21 days of the Tulip scheme of
arrangement being withdrawn, Tulip has not made or announced it will make an
offer to acquire the share capital of Trace for a cash price of not less than
135p per share.
As a result of the giving of the recommendation of the Offer by the Trace
Independent Directors, the Trace Independent Directors have today sought and
obtained the Order which concerns the lapsing of the Scheme (details of which
are provided above).
3. Summary of the Offer
The Offer, which will be subject to the conditions set out in Appendix I of this
Announcement and to the full terms and conditions set out in the Offer Document
and the Form of Acceptance, will be made on the following basis:
for each Trace Share 155 pence in cash
The Offer values the whole of Trace's existing issued share capital at
approximately £22.1 million.
The Offer represents:
(i) a premium of approximately 73.2 per cent. to the Closing Price
of 89.5 pence per Trace Share on 19 April 2007, the date immediately preceding
the date of the Tulip Announcement;
(ii) a premium of approximately 62.3 per cent. to the average daily
Closing Price of 95.5 pence per Trace Share during the six months prior to 19
April 2007, the date immediately preceding the date of the Tulip Announcement;
(iii) a premium of approximately 47.6 per cent to the highest Closing
Price of 105 pence per Trace Share over the five years prior to 19 April 2007,
the date immediately preceding the date of the Tulip Announcement;
(iv) a premium of approximately 14.8 per cent. to the Tulip Proposal of
135 pence per Trace Share in cash;
(v) a premium of approximately 8.8 per cent. to the Closing Price of
142.5 pence per Trace Share on 24 May 2007, the last business day prior to this
Announcement; and
(vi) approximately 18.8 times reported earnings per Trace Share from
continuing operations of 8.23 pence for the year ended 31 May 2006, and on a
fully diluted basis represents approximately 18.9 times reported earnings per
Trace Share from continuing operations of 8.19 pence for the year ended 31 May
2006.
The Offer will extend to all Trace Shares unconditionally allotted or issued
(including pursuant to the exercise of options granted under the Trace Group
Share Schemes) after the date of this Announcement and before the time at which
the Offer ceases to be open for acceptance (or before such earlier time as
Microgen may, in accordance with the terms and conditions of the Offer and
subject to the rules of the Code, decide). Further details in relation to the
effect of the Offer on options under the Trace Group Share Schemes is set out in
paragraph 12 of this Announcement.
All Trace Shares to which the Offer relates will be acquired by Microgen fully
paid and with full title guarantee free from all liens, equitable interests,
charges, encumbrances, pre-emption rights and other interests and together with
all rights now and hereafter attaching thereto, including the right to receive
all dividends and other distributions (if any) declared, made or paid
thereafter. The Offer is conditional inter alia, on the passing of the
Resolutions at an EGM of Microgen.
4. Information on Trace
Trace was established in 1974 and is a UK provider of IT solutions. Trace
floated on the Official List of the London Stock Exchange in May 1989 and since
then, Trace has increased turnover from £9.8 million for the year ended 31 May
1989, to £14.3 million for the year ended 31 May 2006.
Trace focuses on business software solutions for three principal markets:
financial (Trace Financial), insurance and reinsurance broking (Trace Isys) and
property (Trace Solutions). In conjunction with its software-based activities,
Trace also offers imaging and workflow solutions and additionally it offers a
range of payroll and HR services including a managed payroll service to small
and medium sized enterprises (Trace Employment Services).
Trace services a broad range of clients from FTSE 100 companies to smaller
private companies and currently employs approximately 190 people. Trace's
headquarters and principal place of business is in London and Trace's growth
plans are presently to focus on broadening and improving its portfolio of
products by way of internal development.
For the year ended 31 May 2006, Trace reported turnover of £14.3 million (2005:
£14.7 million) from continuing operations on which it generated profit before
tax of £1.6 million (2005: £1.4 million). As at 31 May 2006, Trace had gross
assets of £17.1 million and net assets of £11.6 million, including cash and cash
equivalents of £2.4 million. Intangible assets (comprising capitalised
expenditure on software development) were £2.3 million as at 31 May 2006.
The interim unaudited results for the six months to 30 November 2006 were
announced on 27 February 2007. As at 30 November 2006, Trace had gross assets of
£17.0 million and net assets of £12.0 million including cash and cash
equivalents of £3.4 million. Intangible assets (comprising capitalised
expenditures on software development) were £2.5 million as at 30 November 2006.
5. Background to and reasons for the Independent Directors of Trace
recommending the Offer to Trace Shareholders
The turnover of the Trace Group has remained relatively static except for the
year ended 31 May 2002 where the turnover benefited from an acquisition. The
acquisition proved unsuccessful with the result that in the year ended 31 May
2003 the Trace Group recorded a loss of £2.5 million before tax, most of which
was attributed to the write-off of goodwill relating to the acquisition. Since
that time the Trace Group's profitability has been restored and the Trace Group
recorded a profit before tax from continuing operations of £1.6 million for the
year ended 31 May 2006 with basic earnings per share from continuing operations
of 8.23 pence.
On 20 April 2007, the Board of Tulip and the Trace Independent Directors
announced that they had reached agreement on the terms of a recommended proposal
for the acquisition of Trace by Tulip at a price of 135 pence per Trace Share in
cash to be effected by means of a scheme of arrangement between Trace and Trace
Shareholders pursuant to section 425 of the Companies Act 1985.
Following the announcement of the Tulip Proposal, the Microgen Board and the
Independent Directors of Trace entered into negotiations regarding a potential
offer for Trace by Microgen. On 11 May 2007, Microgen announced that it was in
preliminary discussions with the Independent Directors of Trace and was
considering a possible competing offer in cash for the share capital of Trace at
a price of not less than 150 pence per Trace Share. The Independent Directors
subsequently announced on 11 May 2007 that Trace Shareholders should take no
action in relation to the Tulip Proposal, pending further clarification from
Microgen. A further announcement was made by Microgen on 22 May 2007, which
stated that on 21 May 2007 the Board of Microgen had approached the Independent
Directors of Trace with a possible revised proposal of a competing offer at 155
pence in cash per Trace Share. Since 22 May 2007, Microgen has concluded its due
diligence, finalised its financing arrangements and secured the recommendation
of the Trace Independent Directors.
The Trace Independent Directors note that the Offer by Microgen represents:
(i) a premium of approximately 73.2 per cent. to the Closing Price
of 89.5 pence per Trace Share on 19 April 2007, the date immediately preceding
the date of the Tulip Announcement;
(ii) a premium of approximately 62.3 per cent. to the average daily
Closing Price of 95.5 pence per Trace Share during the six months prior to 19
April 2007, the date immediately preceding the date of the Tulip Announcement;
(iii) a premium of approximately 47.6 per cent to the highest Closing
Price of 105 pence per Trace Share over the five years prior to 19 April 2007,
the date immediately preceding the date of the Tulip Announcement;
(iv) a premium of approximately 14.8 per cent. to the Tulip Proposal of
135 pence per Trace Share in cash;
(v) a premium of approximately 8.8 per cent. to the Closing Price of
142.5 pence per Trace Share on 24 May 2007, the last business day prior to this
Announcement; and
(vi) approximately 18.8 times reported earnings per Trace Share from
continuing operations of 8.23 pence for the year ended 31 May 2006, and on a
fully diluted basis represents approximately 18.9 times reported earnings per
Trace Share from continuing operations of 8.19 pence for the year ended 31 May
2006.
The Trace Independent Directors believe that there can be no certainty that
Trace Shares will trade at a price equivalent to the price under the Offer in
the foreseeable future. Accordingly, the Trace Independent Directors believe
that, the Offer provides the best available opportunity for all Trace
Shareholders to realise their investments at a premium of 73.2 per cent. to the
Closing Price of 89.5 pence per share on 19 April 2007, being the last business
day prior to the Tulip Announcement, and a premium of 14.8 per cent. to the
Tulip Proposal. As a result, the Trace Independent Directors believe that the
Offer is in the best interests of the Trace Shareholders and are unanimously
recommending it to all Trace Shareholders as set out in paragraph 2 of this
Announcement.
6. Information on Microgen
(a) General
Microgen has been publicly listed since 1983. Over the past eight years,
Microgen has established a track record of successful acquisitions in IT
software and services, with consistent profitability and cash flow. At the
announcement of the Microgen preliminary results for the year ended 31 December
2006 in February 2007, the priorities of the Board in 2007 were defined as:
(i) focus on profitability, both short and long term, with
corresponding cash conversion;
(ii) increase the proportion of business derived from Microgen
software products;
(iii) increase recurring revenue, with an emphasis on annual licensing
of software products;
(iv) balance investment in product development and marketing with
short-term profitability, to maximise medium term shareholder value; and
(v) explore mergers and acquisitions which may enhance shareholder
value through the addition of products, services or customer base.
(b) Operations
Microgen is organised into five operating businesses, with the benefits of scale
being achieved through shared central services, (including product development,
which are fully expensed and charged into each business). The businesses are:
• Asset & Wealth Management : providing trust, fund and banking
systems into the wealth management sector and within the asset management sector
providing both back office systems and performance measurement solutions.
• Banking : providing software solutions, consultancy and services
related to transaction processing, treasury, derivatives and payments.
• Energy : providing solutions for pricing and margin management
in the Energy sector.
• Consultancy & Applications Management : providing IT consultancy
services and applications management.
• Billing & Database Management : providing multi-channel billing
and hosted document management services.
In addition, the Microgen Group expends considerable resources on product
development and support activities. These activities are mostly managed within a
single function in order to maximise efficiency and the benefits of scale,
unless there are greater operational benefits from alternative organisational
structures. The Microgen central development operations are based in three
centres in Fleet, Hampshire; the Channel Islands and Wroclaw, Poland.
(c) Financial information and current trading
In the year ended 31 December 2006, Microgen reported under International
Financial Reporting Standards ('IFRS') revenues of £37.6 million (2005: £40.8
million) and a loss before taxation of £8.8 million (2005: profit before
taxation of £5.5 million). The loss before taxation for the year ended 31
December 2006 included a goodwill and intangibles impairment charge of £14.5
million. Microgen had net assets of £59.6 million and £70.4 million as of 31
December 2006 and 31 December 2005 respectively. The market capitalisation of
Microgen based on the Closing Price of 51.5 pence per Microgen Share on 24 May
2007 (the last business day prior to the publication of this Announcement) was
£52.9 million.
Microgen's trading performance in the first part of the 2007 financial year is
in line with the Board's expectations and the organic development of the
Microgen Group as outlined in Microgen's Financial Statements for the year ended
31 December 2006 has continued to make good progress. Microgen Aptitude has
continued to gain market recognition for its transaction performance capability
and event driven architecture and a number of new customer wins have been
achieved.
7. Background to and reasons for Microgen making the Offer
Microgen has undertaken a series of successful acquisitions in the UK IT
software and solutions sector. Over the past five years, the Microgen
acquisitions have had an increasing emphasis on the financial services sector,
where the Board of Microgen considers that the regulatory environment provides a
market for potential investment in IT services and solutions.
The proposed transaction will provide Microgen with an increased presence and
expanded client base with a broader range of software and service offerings.
Certain of Trace's businesses will expand Microgen's presence in the financial
services sector, while others would open up opportunities for the Enlarged
Group. In addition, the acquisition of Trace pursuant to the Offer will provide
an opportunity to market Microgen's complementary software and services
offerings to the Trace customer base and certain of Trace's products to the
Microgen customer base.
In addition to the potential medium term revenue benefits from the combination
through an expanded product range and customer base, Microgen anticipates being
able to produce cost and efficiency synergies for the Enlarged Group as a result
of the combination, including:
(i) the elimination of duplicated head office and central
administration costs;
(ii) increased efficiency in business operations; and
(iii) increased scale of software development and support
infrastructure.
8. Finance and bank facilities
Full acceptance of the Offer would require a maximum cash payment of
approximately £22.6 million by Microgen, which will be funded out of Microgen's
existing cash reserves and from committed bank facilities from Lloyds TSB Bank
plc that have been put in place for the purposes of the transaction. The bank
facilities provide Microgen with a facility of up to £20 million in the form of
a 364 day revolving credit loan facility together with additional term loan
facilities upon which Microgen may draw as necessary. Utilising these cash
reserves and bank facilities, Microgen will be in a position to declare the
Offer unconditional as to acceptances when it has received valid acceptances of
the Offer or has acquired voting rights representing not less than 51.5 per
cent. of the voting share capital of Trace or such lesser percentage as Microgen
may decide provided that such amount is more than 50 per cent. of the voting
share capital of Trace. Further details of the bank facilities entered into by
Microgen will be set out in the Offer Document.
Arbuthnot is satisfied that sufficient financial resources are available for
Microgen to satisfy the consideration payable as a result of full acceptance of
the Offer.
9. Prospects for the Enlarged Group
The Directors of Microgen believe that the acquisition of Trace will strengthen
Microgen's position as an IT services and solutions provider. The Enlarged Group
is expected to benefit from having an increased presence and expanded client
base, with a broader range of software and service offerings which it will be
able to market to Trace's and Microgen's customer base. Benefits are also
anticipated to be derived from the efficiencies and synergies as a result of the
combination.
The benefits of the transaction are likely to be reflected in the Enlarged
Group's financial year ending 31 December 2008 and subsequent periods, with the
costs of the transaction and associated integration being reported in the second
half of 2007.
Any statement or inference that the transaction is expected to be earnings
enhancing for the Enlarged Group should not be interpreted to mean that the
earnings per share in the financial year following the transaction, or in any
subsequent period, will necessarily be greater than those for the relevant
preceding financial period.
The financial effect of the Trace acquisition on Microgen's earnings per share
is expected to be positive in 2008. This statement should not be taken to mean
that Microgen's earnings per share for 2007 or subsequent periods will be higher
than that of prior periods.
10. Microgen's future intentions regarding Trace
The proposed acquisition of Trace will provide an opportunity to market
Microgen's software and services to the Trace customer base and certain of
Trace's products to Microgen's customer base. There will be cost and efficiency
synergies on the combination of Microgen and Trace's businesses. However, the
precise future strategy for creating such efficiencies and synergies will differ
depending on the level of Microgen's shareholding in Trace and will be subject
to certain conditions. This can be explained as follows:
(a) Shareholding levels: general
Whilst Microgen will seek to acquire 100 per cent. of the issued Trace Shares,
due to the irrevocable commitments provided to Tulip as described in Appendix
III of this Announcement, Microgen cannot predict with certainty its future
level of shareholding in Trace. However, it is a condition of the Offer that
Microgen will only declare the Offer unconditional as to acceptances to the
extent it has received valid acceptances of the Offer or has acquired voting
shares representing not less than 51.5 per cent. of the voting share capital of
Trace or such lesser percentage as Microgen may decide provided that such amount
is more than 50 per cent. of the voting share capital of Trace. Further details
of this acceptance condition and the conditions of the Offer are set out in
Appendix I of this Announcement.
In the event that the acceptance condition under the Offer described above is
satisfied and upon the Offer becoming or being declared unconditional in all
respects ('Offer Completion'), Trace will become a subsidiary undertaking of
Microgen and will carry on business as determined by the then Board of Trace.
However, Trace Shares will continue to be listed on the Official List whilst
Microgen owns less than 75 per cent. of the voting share capital of Trace. It is
the intention of Microgen to hold the Offer open for acceptances from Trace
Shareholders (subject to any notice to the contrary permitted under the Code,
see below) once Offer Completion has occurred and therefore enable Trace
Shareholders to continue to accept the Offer following Offer Completion, should
they choose to do so. Under the Code, Microgen will be entitled, and may elect,
to close the Offer at any time following Offer Completion by giving not less
than 14 days' notice to this effect.
Upon Microgen acquiring 75 per cent. of the voting share capital of Trace, and
as part of the existing terms and conditions of the Offer, Microgen will make
application to the UK Listing Authority for the de-listing of Trace Shares.
However, there may be a period of time that (whilst a subsidiary undertaking of
Microgen) Trace's Shares are listed on the Official List.
The Trace Independent Directors have stated in the Scheme Document as follows:
'The Independent Directors believe that Trace Shares have traded at a lower
rating relative to companies in the 'Software and Computer Services' sector on
the Official List over the previous three years as a result of a number of
factors. These factors include:
• the relatively small market capitalisation of Trace;
• the significant size of the shareholding of the Directors, amounting to
33.06 per cent. of Trace Shares, and the limited volume of trading in Trace
Shares;
• the relatively flat financial performance of Trace Group; and
• Trace Group's recent unsuccessful acquisition.'
(Scheme Document: Part 1, paragraph 3)
In the circumstances that Trace Shares continue to be listed on the Official
List following the Offer Completion, and with Microgen's resulting substantial
shareholding in Trace, the liquidity in Trace Shares would be anticipated to
reduce further.
Various parties (as identified in Part A of Appendix III of this Announcement)
have entered into irrevocable undertakings with Tulip in respect of the Tulip
Proposal that do not fall away in the event of a higher offer and are for a
period of 12 months from 14 May 2007 ('Hard Irrevocables with Standstill') in
respect of 5,485,773 Trace Shares in aggregate representing approximately 38.50
per cent. of the Trace Shares. It should be noted that these arrangements will
remain in place even if the Offer becomes or is declared unconditional in all
respects. In this circumstance, the parties who entered into Hard Irrevocables
with Standstill would become minority shareholders in Trace (which would then be
a subsidiary of Microgen) until such time as Tulip (should Tulip choose to do
so) releases such individuals from the undertakings. In the best interests of
Trace's employees and shareholders, in due course Microgen will be requesting
Tulip to release these parties from the terms of such undertakings.
The intentions of Microgen during such period that Microgen holds, first, a
level of 51.5 per cent. to 75 per cent. of the voting share capital of Trace,
and second, a level above 75 per cent. are as follows:
(b) Trace being a subsidiary undertaking of Microgen with a
shareholding of between 51.5 per cent. and 75 per cent.
Upon Offer Completion, a new Board of Trace will be appointed and announced by
Microgen irrespective of the size of Microgen's shareholding in Trace. It is
currently anticipated that the proposed appointees to the Trace Board will be
Martyn Ratcliffe, David Sherriff, Philip Wood and up to three non-executive
directors who may or may not be current Directors of Microgen or Trace. Trace's
Shares will continue to be listed on the Official List and Trace will be subject
to the Listing Rules. However it is the intention of Microgen for Trace to
implement the following proposed strategy promptly after Offer Completion:
(i) Rationalisation of property
The Trace properties at 224-232 St John's Street, London EC1 and 55 Farringdon
Road, London EC1 will be marketed and sold to appropriate third party purchasers
selected by the then Trace Board on arm's length terms for cash. The operations
previously at each site will be moved to a new facility in London (the 'New
Facility'), although no precise location has been identified. Microgen will
consider the possibility of using the St John's Street property as the New
Facility. At 31 May 2006, Trace's premises at St John's Street and Farringdon
Road were held on the balance sheet at a value of approximately £7.0 million as
indicated in the financial information on Trace in the Scheme Document. In
relation to the St. John's Street property the following statement has been made
by the Trace Independent Directors in the Scheme Document:
'Under the terms of the Sale and Leaseback Agreement and following completion of
the Acquisition, Trace's freehold interest in the St John Street Property will
be sold to the Property Purchaser for £9.1 million in cash and the property will
then be leased back to Trace for a term of 15 years under a standard commercial
lease at an initial rent of £500,000 per annum with an option for Trace to
terminate at 10 years'. (Scheme Document; Part 1 paragraph 8).
The contents of this paragraph 10 and the statement above are not intended, nor
should be construed as a valuation of the St John's Street property. Details of
the Sale and Leaseback Agreement are disclosed and set out in the Scheme
Document.
The proceeds of the proposed sales at such market prices as can be attained (and
to the extent they realise distributable profits for Trace) will be distributed
to the then Trace Shareholders by way of a dividend as at a record date to be
announced but being after completion of the property disposals and after the
Offer has closed. The distributable profits available following any such
disposals will also take into account the revaluation reserve of £1.8 million in
the financial statements of Trace as at 30 November 2006 and provision will be
made for taxation of Trace together with other relevant provisions.
(ii) Dividend policy
The proposed Trace Directors will adopt a dividend policy that will distribute
approximately 90 per cent. of distributable reserves. At 31 May 2006, Trace had
distributable reserves of £3.3 million as indicated in the financial information
in the Scheme Document. Dividend distributions may result in some Trace
Shareholders being subject to taxation on such dividend distributions in
accordance with applicable income tax legislation (at such time). Dividend
distributions to Microgen, or any other corporate entity, are not anticipated to
be subject to taxation under current UK legislation. Dividend distributions, to
the extent they are made, will only be made after the Offer has closed.
(iii) Marketing arrangements for software products
Microgen anticipates that Trace would be appointed a distributor of Microgen
software and Microgen would be appointed a distributor of Trace software, such
arrangements to be established on an arm's length basis and subject to the
Listing Rules.
(iv) Technology arrangements
Microgen anticipates that, wherever possible, arrangements would be put in place
for sharing of technology between Trace and Microgen, such arrangements to be
established on an arm's length basis and subject to the Listing Rules.
(v) Other synergies
Microgen anticipates that, wherever possible, the Boards of Trace and Microgen
would endeavour to establish operational relationships which would provide cost
and revenue benefits to the Microgen Group and the Trace Group subject to the
Listing Rules.
The following conditions apply to the intentions expressed or described by
Microgen in this paragraph 10:
(i) the policy and strategy of Trace (in the light of Microgen being
a controlling shareholder in Trace) being set out in a relationship agreement
between Microgen and Trace ('Relationship Agreement') and these intentions
complying with such agreement;
(ii) the proposed Trace directors named above will only implement the
proposals regarding properties in Trace pursuant to the Relationship Agreement
which will include requirements for transactions by Trace to be in the interests
of Trace and its shareholders;
(iii) the market conditions to be favourable for property disposals and
suitable relocation facilities available;
(iv) the disposals of the Trace premises need to coincide with the
disposal by Microgen of its City Road premises and its operations there being
moved to the New Facility; and
(v) the Offer must have been closed and not be available for future
acceptance by Trace Shareholders.
(c) Trace being a subsidiary undertaking of Microgen with a
shareholding of over 75 per cent.
Trace's Shares will be de-listed following Microgen achieving 75 per cent. of
the voting share capital of Trace as disclosed in paragraph 14 of this
Announcement. Rule 11 of The Listing Rules (Related party transactions) will not
apply to transactions between Microgen and Trace following the completion of the
de-listing. Accordingly there will be greater scope for intra-group arrangements
between Microgen and Trace. It is Microgen's intention that in addition to the
property disposals described above, the Trace Board will consider appropriate
proposals for the integration of the Microgen and Trace operations.
11. Directors, management and employees of Trace
The Trace Independent Directors have undertaken to resign from the Board of
Trace upon the Offer becoming or being declared wholly unconditional.
Appropriate representatives of Microgen (as identified in paragraph 10, above)
will be appointed to the Board of Trace upon the Offer becoming or being
declared wholly unconditional at which point Trace will become a subsidiary
undertaking of Microgen.
As an integral part of a larger UK-based, fully-listed company, Microgen
believes that opportunities for Trace employees and management will be enhanced
by the combination with Microgen. Furthermore, the Microgen Board believes in
aligning management compensation with shareholder objectives and is to request
approval from the Microgen Shareholders to allocate new share options over
shares in Microgen specifically for Trace employees upon them becoming part of
the Enlarged Group. Subject to the approval of the Resolutions by Microgen
Shareholders at the EGM to provide capacity for such options, these options
would be in addition to any proposals made by Microgen which are related to
existing Trace Group Share Schemes (including in relation to options that are
due to be granted by Trace in respect of 379,770 Trace Shares) but could only be
issued in the event that Microgen acquires in excess of 75 per cent. of Trace
Shares and cancels Trace's listing on the Official List.
The Trace Independent Directors have consented to Microgen undertaking a limited
number of meetings with Trace employees in order for such employees to better
understand the Microgen business and its ambitions for the proposed Enlarged
Group.
The Board of Microgen has given assurances to the Trace Independent Directors
that, following the Offer becoming or being declared unconditional in all
respects, the existing contractual and statutory employment rights, including
pension rights, of the directors, management and employees of Trace will be
fully safeguarded.
In the event that Microgen acquires sufficient shares in Trace to cancel Trace's
listing on the Official List (that is to say greater than 75 per cent. of the
voting share capital of Trace), Trace employees will be given the opportunity,
should they so wish, to transfer onto Microgen's standard terms and conditions
of employment which will provide employees with salaries, profit share, bonus
schemes, share option plans and other benefits in line with existing Microgen
staff.
There will be no change to the emoluments of the Microgen directors as a result
of the Offer becoming or being declared unconditional in all respects.
In recommending the Offer, the Independent Directors have taken into account
Microgen's integration plans for the combined businesses, and Microgen's stated
intention of minimising disruption for both clients and employees of Trace.
Following consideration of the information referred to above, the Independent
Directors note and welcome the assurances given by Microgen to the Independent
Directors.
12. Trace Group Share Schemes
The Offer will extend to all Trace Shares unconditionally allotted or issued
pursuant to the exercise of options granted under the Trace Group Share Schemes
after the date of this announcement and before the time at which the Offer
ceases to be open for acceptance (or before such earlier time as Microgen may,
in accordance with the terms and conditions of the Offer and subject to the
rules of the Code, decide).
If the Offer becomes or is declared unconditional in all respects, then Microgen
intends to make proposals in due course to holders of options under the Trace
Group Share Schemes (to the extent that such holders' options have not been
exercised or lapsed) as are appropriate in the circumstances having regard to
the terms of the Trace Group Share Schemes and the level of Microgen's
shareholding in Trace.
Under the terms of the Trace Group Share Schemes, a further 379,770 options are
due to be granted under the Trace Group Share Schemes. Following the Offer
becoming or being declared unconditional in all respects, Microgen intends to
make appropriate proposals to relevant employees of Trace in recognition of the
fact that such options have not been granted, which may include replacement
options over shares in Microgen.
13. Microgen Shareholder approval
In view of the relative sizes of Microgen and Trace, the Offer is conditional,
inter alia, upon the approval of Microgen Shareholders at the EGM to be convened
at Fleet House, 3 Fleetwood Park, Barley Way, Fleet, Hampshire GU51 2QJ at a
date to be confirmed.
At the EGM, two resolutions will be proposed that can be summarised as follows:
1. a resolution to approve the Offer (or any other offer for the Trace
shares) and to grant the Microgen Directors authority to proceed, including
amending or varying the terms of the same, provided that in all cases such
matters do not amount to a material change in the terms or conditions of the
Offer and, further, to approve any purchase of Trace Shares that may be acquired
by Microgen; and
2. a resolution to approve the grant of options over up to
1,500,000 Microgen Shares as regards options to be available for use as
roll-over or replacement options or to satisfy obligations to existing Trace
employees or to issue new options (as the case may be) pursuant to Microgen's
Share Option Schemes to employees of Trace (yet to be identified) at the
discretion of the Microgen Directors and on the basis that such options shall
not be taken into account in determining the total number of Microgen Shares
that may be allocated under such Scheme at any relevant time period.
A circular convening the EGM will be posted to Microgen Shareholders in due
course.
The Microgen Board will vote in favour of the Resolutions relating to the Offer
to be proposed at the EGM in respect of their own beneficial holdings of
5,292,911 Microgen Shares representing approximately 5.2 per cent. of the
existing issued share capital of Microgen. Furthermore, Microgen intends to seek
to procure letters of intent to support the Resolutions from Microgen
Shareholders in advance of the posting of the circular to Microgen Shareholders.
14. Compulsory acquisition and cancellation of listing of Trace Shares
Following the Offer becoming or being declared unconditional in all respects,
provided that Microgen receives acceptances under the Offer of at least 90 per
cent., Microgen intends to use the procedures set out in Part 28 of the
Companies Act 2006 to acquire compulsorily any outstanding Trace Shares to which
the Offer relates. Microgen will also procure the making of an application by
Trace for the cancellation of the listing of Trace Shares on the Official List
upon acquiring 75 per cent. of the voting share capital of Trace and in the
event that there is less than 25 per cent. of the voting share capital of Trace
in public hands.
An announcement will be made following either (i) the Offer becoming or being
declared unconditional in all respects and the necessary percentage being
reached under the Listing Rules or (ii) the commencement of the compulsory
acquisition procedures under Part 28 of the Companies Act 2006 in respect of the
Trace Shares, stating the anticipated time and date when the listing and trading
in shares will be cancelled being not less than 20 business days following such
event.
The cancellation of the listing of Trace Shares will significantly reduce the
liquidity and marketability of any Trace Shares not assented to under the Offer
and their value may be affected as a consequence.
15. Disclosure of interests in Trace
Neither Microgen nor any Microgen Director nor his family has an interest in, or
has any right to subscribe for, any relevant securities of Trace, nor are they
party to any short positions (whether conditional or absolute and whether in the
money or otherwise) relating to relevant securities of Trace, including short
positions under derivatives, agreements to sell or any delivery obligations or
rights to require another person to take delivery.
Neither Microgen nor any Microgen Director has borrowed or lent any relevant
securities of Trace. Nor does any such person have any arrangement in relation
to relevant securities of Trace. For these purposes, 'arrangement' includes any
indemnity or option arrangement and any agreement or understanding, formal or
informal, of whatever nature, relating to relevant securities of Trace which may
be an inducement to deal or refrain from dealing in such securities.
16. Overseas Shareholders
Overseas Shareholders should inform themselves about and observe any applicable
legal or regulatory requirements. If you are in any doubt about your position,
you should consult your professional advisor in the relevant territory.
The implications of the Offer for persons not resident in the UK may be affected
by the laws of the relevant jurisdiction. Any persons who are subject to the
laws of any jurisdiction other than the UK should inform themselves about and
observe any applicable requirements.
17. General
Trace Shares will be acquired pursuant to the Offer fully paid and free from all
liens, charges, equitable interests, third party rights and interests and
encumbrances and together with all rights now and hereafter attaching thereto,
including the right to receive all dividends and other distributions (if any)
declared, made or paid after the date of the announcement of the Offer.
The formal Offer Document and the Form of Acceptance setting out the full terms
and conditions of the Offer is expected to be posted to Trace Shareholders on or
before 4 June 2007. In deciding whether or not to accept the Offer, Trace
Shareholders should rely on the information contained in, and procedures
described in, the Offer Document and the Form of Acceptance.
The Offer will be governed by English law and be subject to the applicable
requirements of the Code, the Panel, the London Stock Exchange and the Financial
Services Authority.
Appendix I to this Announcement contains the conditions to and a summary of
certain further terms of the Offer, Appendix II contains further details of the
sources of information and bases of calculations set out in this Announcement,
Appendix III contains details of the irrevocable undertakings provided in
relation to the Tulip Proposal and Appendix IV contains definitions of certain
expressions used in this Announcement. All times referred to are London times
unless otherwise stated.
Enquiries:
Microgen plc Tel: +44 (0) 1252 772 300
Martyn Ratcliffe
Philip Wood
Arbuthnot Securities Limited Tel: +44 (0) 20 7012 2000
(Financial adviser and broker to Microgen in relation to the Offer)
Ian Williams
Richard Dunn
Richard Tulloch
Financial Dynamics Tel: +44 (0) 20 7831 3113
(Public relations adviser to Microgen)
Giles Sanderson
Trace Group plc Tel: +44 (0) 20 7825 1000
Daniel Chapchal Tel: +44 (0) 7836 512 549
David Begg Tel: +44 (0) 20 7825 1000
Robin Woodall Tel: +44 (0) 7740 928 399
Shore Capital and Corporate Limited Tel: +44 (0) 20 7408 4090
(Financial adviser to Trace)
Alex Borrelli
Pascal Keane
Arbuthnot Securities Limited, which is authorised and regulated in the United
Kingdom by the Financial Services Authority, is acting exclusively for Microgen
and no one else in connection with the Offer and will not be responsible to
anyone other than Microgen for providing the protections afforded to clients of
Arbuthnot Securities nor for providing advice in relation to the Offer, or the
contents of this Announcement or any matter referred to herein.
Arbuthnot Securities Limited has approved this Announcement for the purposes of
section 21 of the Financial Services and Markets Act 2000. The principal place
of business of Arbuthnot Securities Limited is Arbuthnot House, 20 Ropemaker
Street, London EC2Y 9AR.
Shore Capital, which is authorised and regulated in the United Kingdom by the
Financial Services Authority, is acting exclusively for Trace and no one else in
connection with the Offer and will not be responsible to anyone other than Trace
for providing the protections afforded to clients of Shore Capital nor for
providing advice in relation to the Offer, the content of this Announcement or
any matter referred to herein.
This Announcement is not intended to and does not constitute, or form any part
of, an offer or an invitation to purchase or sell any securities or the
solicitation of any vote or approval in any jurisdiction pursuant to the Offer
or otherwise. The Offer will be made solely through the Offer Document, and, in
relation to certificated Trace Shares, the Form of Acceptance. Microgen intends
to dispatch such documents to Trace Shareholders (and, for information only, to
Trace Optionholders) and place such advertisement shortly. The Offer Document
and the Form of Acceptance will together contain the full terms and conditions
of the Offer, including details of how to accept the Offer. Any acceptance or
other response to the Offer should be made only on the basis of the information
contained in the Offer Document and the Form of Acceptance. The Offer will be
subject to English law. The laws of relevant jurisdictions may affect the
availability of the Offer to overseas persons. Overseas persons, or persons who
are subject to the laws of any jurisdiction other than the United Kingdom,
should inform themselves about and observe any applicable legal and regulatory
requirements. The Offer Document will be available for public inspection in the
United Kingdom.
Unless otherwise determined by Microgen, the Offer will not be made, directly or
indirectly, in or into the United States or by use of the mails of, or by any
means or instrumentality (including, without limitation, facsimile, internet,
email or other electronic transmission, telex or telephone) of inter-state or
foreign commerce of, or any facility of a national, state or other securities
exchange of, the United States, nor will it be made directly or indirectly in or
into Canada, Australia, Japan or any Restricted Jurisdiction, and the Offer will
not be capable of acceptance by any such use, means, instrumentality or facility
or from within the United States, Canada, Australia, Japan or any Restricted
Jurisdiction. Accordingly, copies of this Announcement are not being, will not
be and must not be, directly or indirectly, mailed or otherwise forwarded,
transmitted, distributed or sent in, into or from the United States, Canada,
Australia, Japan or any Restricted Jurisdiction, and persons receiving this
Announcement (including, without limitation, custodians, nominees and trustees)
must not mail, forward, distribute or send it in, into or from the United
States, Canada, Australia, Japan or any Restricted Jurisdiction. Doing so may
render invalid any purported acceptance of the Offer. Any persons (including
custodians, nominees and trustees) who are overseas persons or who would, or
otherwise intend to, mail or otherwise forward, transmit, distribute or send
this Announcement, the Offer Document, the Form of Acceptance or any related
document outside the United Kingdom or to any overseas person should seek
appropriate advice before doing so. Further details in relation to Overseas
Trace Shareholders will be contained in the Offer Document.
Cautionary statement regarding forward-looking statements
This Announcement contains statements about Microgen and Trace (and their
respective groups and/or subsidiary undertakings) that are or may be
forward-looking statements. All statements other than statements of historical
facts included in this Announcement may be forward-looking statements. Without
limitation, any statements 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 negative thereof are forward-looking statements. Forward-looking statements
include statements relating to the following (i) future capital expenditures,
expenses, revenues, earnings, synergies, economic performance, indebtedness,
financial condition, dividend policy, losses and future prospects; (ii) business
and management strategies and the expansion and growth of Microgen's or Trace's
operations and potential synergies resulting from the Offer; and (iii) the
effects of government regulation on Microgen's or Trace's business. These
forward-looking statements are not guarantees of future performance. They have
not been reviewed by the auditors of Microgen or of Trace. These forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of any such
person, or industry results, to be materially different from any results,
performance or achievements expressed or implied by such forward-looking
statements. These forward-looking statements are based on numerous assumptions
regarding the present and future business strategies of such persons and the
environment in which each will operate in the future. You are cautioned not to
place undue reliance on any forward-looking statement, which speak only as of
the date they were made. All subsequent oral or written forward-looking
statements attributable to Microgen, Trace or any members of their respective
groups or any persons acting on their behalf are expressly qualified in their
entirety by the Cautionary Statement above. All forward-looking statements
included in this document are based on information available to us on the date
hereof. Investors should not place undue reliance on such forward-looking
statements, and we undertake no obligation to publicly update or revise any
forward-looking statements.
Dealing disclosure requirements
Under the provisions of Rule 8.3 of the Takeover Code (the 'Code'), if any
person is, or becomes, 'interested' (directly or indirectly) in 1% or more of
any class of 'relevant securities' of Trace, all 'dealings' in any 'relevant
securities' of that company (including by means of an option in respect of, or a
derivative referenced to, any such 'relevant securities') must be publicly
disclosed by no later than 3.30 pm (London time) on the London business day
following the date of the relevant transaction. This requirement will continue
until the date on which the Offer becomes, or is declared, unconditional as to
acceptance, lapses or is otherwise withdrawn or on which the 'offer period'
otherwise ends. If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire an 'interest' in 'relevant
securities' of Trace they will be deemed to be a single person for the purpose
of Rule 8.3.
Under the provisions of Rule 8.1 of the Code, all 'dealings' in 'relevant
securities' of Trace by Microgen or Trace or by any of their respective '
associates' must be disclosed by no later than 12.00 noon (London time) on the
London business day following the date of the relevant transaction.
A disclosure table, giving details of the companies in whose 'relevant
securities' 'dealings' should be disclosed, and the number of such securities in
issue, can be found on the Panel's website at www.thetakeoverpanel.org.uk.
'Interests in securities' arise, in summary, when a person has long economic
exposure, whether conditional or absolute, to changes in the price of
securities. In particular, a person will be treated as having an 'interest' by
virtue of the ownership or control of securities, or by virtue of any option in
respect of, or derivative reference to, securities.
Terms in quotation marks are defined in the Code, which can also be found on the
Panel's website. If you are in any doubt as to whether or not you are required
to disclose a 'dealing' under Rule 8, you should consult the Panel.
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:
(a) valid acceptances of the Offer being received (and not, where
permitted, withdrawn) by not later than 1:00 p.m. (London time) on the First
Closing Date of the Offer (or such later time(s) and/or date(s) as Microgen may,
subject to the rules of the Code or with the consent of the Panel, decide) in
respect of not less than 51.5 per cent. (or such lesser percentage as Microgen
may decide) of the Trace Shares to which the Offer relates, provided that,
unless agreed by the Panel, this condition will not be satisfied unless Microgen
and/or any of its wholly-owned subsidiaries shall have acquired or agreed to
acquire (whether pursuant to the Offer or otherwise) directly or indirectly
Trace Shares carrying in aggregate more than 50 per cent. of the voting rights
then normally exercisable at a general meeting of Trace, including for this
purpose (except to the extent, if any, required by the Panel) any such voting
rights attaching to any Trace Shares that are unconditionally allotted or issued
before the Offer becomes or is declared unconditional as to acceptances, whether
pursuant to the exercise of any outstanding subscription or conversion rights or
otherwise and, for this purpose:
(i) the expression 'Trace Shares to which the Offer relates'
shall be construed in accordance with sections 974 to 991 of the Companies Act
2006; and
(ii) Trace Shares which have been unconditionally allotted but not
issued shall be deemed to carry the voting rights which they will carry upon
issue;
(b) the passing at an extraordinary general meeting of Microgen
Shareholders (or any adjournment thereof) of a resolution or resolutions which
are necessary or in the opinion of Microgen desirable to approve, effect and
implement the Offer and the acquisition of Trace and of any Trace Shares for the
approval and implementation of the Offer;
(c) insofar as the merger provisions of the Enterprise Act 2002
may be applicable to any aspect of the proposed acquisition of Trace by
Microgen, the Office of Fair Trading not indicating that it intends to refer the
proposed acquisition of Trace by Microgen (its implementation or any matter or
matters arising therefrom) to the Competition Commission;
(d) no Relevant Authority having intervened in any way and there
not continuing to be outstanding any statute, regulation or order of any
Relevant Authority in each case which would or might reasonably be expected (in
any case to an extent which is material in the context of the Wider Microgen
Group or to the Wider Trace Group, as the case may be, in each case, taken as a
whole) to:
(i) make the Offer or the acquisition or proposed acquisition
by Microgen or any other member of the Wider Microgen Group of any shares or
control of Trace or any other member of the Wider Trace Group, void,
unenforceable and/or illegal in any relevant jurisdiction or otherwise directly
or indirectly restrain, restrict, prohibit, prevent, delay or otherwise
interfere with the implementation thereof, or impose material additional
conditions or obligations with respect to the Offer or such acquisition, or
otherwise challenge, or prevent the Offer or its implementation, or require
material amendment to the terms of the Offer or the acquisition or proposed
acquisition of any Trace Shares, or the acquisition of control of Trace by
Microgen;
(ii) require, prevent or delay the divestiture or alter the
terms of any proposed divestiture by Microgen or any other member of the Wider
Microgen Group or by Trace or any other member of the Wider Trace Group of all
or any material part of their respective businesses, assets or properties or
impose any limitation on the ability of any of them to conduct any of their
respective businesses or to own or control any of their respective assets or
properties or any material part thereof;
(iii) limit or delay the ability of any member of the Wider
Microgen Group to acquire or to hold or to exercise effectively, directly or
indirectly, all or any rights of ownership in respect of the Trace Shares; or
(iv) except pursuant to Part 28 of the Companies Act 2006,
require any member of the Wider Microgen Group or of the Wider Trace Group to
acquire, or to offer to acquire, any shares or other securities (or the
equivalent) in any member of the Wider Trace Group owned by any Relevant
Authority;
and all applicable waiting and other time periods during which any Relevant
Authority could intervene in such a way under the laws of any relevant
jurisdiction having expired, lapsed or been terminated;
(e) all necessary notifications and filings having been made,
all regulatory and statutory obligations in any relevant jurisdiction having
been complied with, all appropriate waiting and other time periods (including
any extensions of such waiting and other time periods) under any applicable
legislation or regulations of any relevant jurisdiction having expired, lapsed
or been terminated, in each case in respect of the Offer or the acquisition or
proposed acquisition of any Trace Shares or control of Trace or any other member
of the Wider Trace Group by any member of the Wider Microgen Group except where
the failure to make any such notification or filing, or comply with any such
obligation, or the fact that any such period has not expired, lapsed or been
terminated, individually or in the aggregate, is not likely to have a materially
adverse effect on the Wider Microgen Group taken as a whole;
(f) all authorisations and determinations necessary or
appropriate in any relevant jurisdiction for or in respect of the Offer or the
acquisition or proposed acquisition of any Trace Shares or control of Trace or
any other member of the Wider Trace Group by any member of the Wider Microgen
Group having been obtained from all and any Relevant Authority or (without
prejudice to the generality of the foregoing) from any person or bodies with
whom any member of the Wider Trace Group has entered into contractual
arrangements that are material in the context of the Wider Trace Group taken as
a whole and such authorisations and determinations remaining in full force and
effect and there being no notice of any intention to revoke or not renew or
materially suspend, restrict or modify any of the same in any such case insofar
as is material in the context of the Wider Microgen Group or Wider Trace Group,
as the case may be, in each case, taken as a whole;
(g) except as publicly announced by Trace, or as disclosed to
Microgen or its advisers by or on behalf of Trace in connection with the Offer
prior to the date of this Announcement, there being no provision of any
agreement, arrangement, license or other instrument to which any member of the
Wider Trace Group is a party, or by or to which any such member or any of its
assets is or are or may be bound, entitled or subject or any circumstance which,
in each case as a consequence of the Offer or the acquisition or proposed
acquisition of any Trace Shares or control of Trace or any other member of the
Wider Trace Group by any member of the Wider Microgen Group or otherwise, would
or might reasonably be expected to result in (in any case to an extent that is
or would be material in the context of the Wider Trace Group taken as a whole):
(i) any monies borrowed by or any other indebtedness or
liabilities (actual or contingent) of, or any grant available to, any such
member being or becoming repayable or being capable of being declared repayable
immediately or prior to its stated maturity, or the ability of any such member
to borrow moneys or incur any indebtedness being withdrawn or inhibited; or
(ii) the creation or enforcement of any mortgage, charge or
other security interest over the whole or any material part of the business,
property or assets of any such member of the Wider Trace Group or any such
mortgage, charge or other security interest (whenever created arising or having
arisen), becoming enforceable;
(h) since 30 November 2006, save as publicly announced or as
disclosed to Microgen or its advisers by or on behalf of Trace in connection
with the Offer prior to the date of this Announcement no member of the Wider
Trace Group having:
(i) (save as between Trace and, on a pre-emptive basis, any
member of the Wider Trace Group or upon the exercise of rights to subscribe for
Trace Shares pursuant to the exercise of options granted under any of the Trace
Share Option Schemes on or prior to 30 November 2006 or details of which have
been disclosed to Microgen or its advisers in connection with the Offer prior to
the date of this announcement) issued or agreed to issue or authorised the issue
of additional shares of any class, or of securities convertible into, or rights,
warrants or options to subscribe for or acquire, any such shares or convertible
securities or redeemed, purchased or repaid any of its own shares or other
securities or reduced or made any other change to any part of its share capital;
(ii) save for transactions between members of the Trace Group,
acquired or disposed of or transferred, mortgaged or charged or created any
security interest over (in each case other than in the ordinary course of
business) any assets or any rights, title or interest in any asset (including
shares and trade investments), which, in each case, is material in the context
of the Wider Trace Group taken as a whole, or merged with or demerged any body
corporate or authorised or announced any intention to propose any such merger,
demerger, acquisition, disposal, transfer, mortgage, charge or security interest
(other than in the ordinary course of business);
(iii) made or authorised or announced an intention to propose any
material change in its loan capital or issued, authorised or proposed the issue
of any material debentures;
(iv) (save in the ordinary course of business and/or for
transactions between members of the Trace Group) incurred or increased any
indebtedness or liability (actual or contingent) which is material in the
context of the Wider Trace Group taken as a whole; or
(v) taken any corporate action or had any legal proceedings
instituted or threatened against it, or petition presented or order made, in
each case for its winding-up (voluntarily or otherwise), dissolution or
reorganisation or for the appointment of a receiver, administrator,
administrative receiver, trustee or similar officer of all or any material part
of its assets or revenues which in any case is material in the context of the
Wider Trace Group taken as a whole;
and for the purpose of this condition 'material' shall mean material in the
context of the Wider Trace Group taken as a whole;
(i) since 30 November 2006, save as publicly announced or as
disclosed to Microgen or its advisers by or on behalf of Trace in connection
with the Offer prior to the date of this Announcement:
(i) no adverse change or deterioration having occurred in the business,
assets, financial or trading position or profits or prospects of Trace or any
other member of the Wider Trace Group that is material in the context of the
Wider Trace Group taken as a whole; and
(ii) no litigation or arbitration proceedings, prosecution or other
legal proceedings having been instituted, announced, implemented or threatened
in writing by or against or remaining outstanding against or in respect of any
member of the Wider Trace Group or to which any member of the Wider Trace Group
is a party (whether as claimant, defendant or otherwise) the effect of which is
adverse to any member of the Wider Trace Group to an extent that in any case is
material in the context of the Wider Trace Group taken as a whole;
(j) save as disclosed to Microgen or its advisers by or on
behalf of Trace in connection with the Offer prior to the date of this
Announcement, Microgen not having discovered:
(i) that any financial, business or other information concerning Trace
or the Wider Trace Group that has been disclosed at any time by or on behalf of
any member of the Wider Trace Group whether publicly, or to any member of the
Wider Microgen Group, is misleading, contains any misrepresentation of fact or
omits to state a fact necessary to make the information contained therein not
misleading and which was not subsequently corrected before the date of this
Announcement by disclosure either publicly or otherwise to Microgen, which in
any case itself or together with other factors is material and adverse to the
financial or trading position of the Wider Trace Group taken as a whole; or
(ii) that any member of the Wider Trace Group is subject to any
liability (actual or contingent) that has not been disclosed to any member of
the Wider Microgen Group or publicly announced prior to the date of this
announcement, and which in any case is material in the context of the Wider
Trace Group taken as a whole.
For the purposes of these conditions:
(a) 'Relevant Authority' means any government, government department or
governmental, quasi-governmental, supranational, statutory, regulatory or
investigative body, authority (including any national anti-trust or merger
control authority), court, trade agency, association; institution or
professional or environmental body or any other person or body whatsoever in any
relevant jurisdiction (including the London Stock Exchange, the Panel and the
Inland Revenue;
(b) a Relevant Authority shall be regarded as having 'intervened' if it
has publicly decided to take, institute, implement, or threaten any action,
proceeding, suit, investigation or enquiry or reference, or made, enacted or
proposed any statute, regulation, decision or order, and 'intervene' shall be
construed accordingly;
(c) 'authorisations' means authorisations, orders, grants, recognitions,
confirmations, consents, licences, clearances, permissions, exemptions and
approvals;
(d) 'publicly announced' means disclosed in the interim results of Trace
for the six month period ended 30 November 2006 (issued on 27 February 2007) or
otherwise announced on or before the date of this Announcement by or on behalf
of Trace by the delivery of an announcement to a Regulatory Information Service
in accordance with the Listing Rules; and
(e) 'the Wider Trace Group' means Trace and its subsidiary undertakings,
associated undertakings and any other undertakings in which Trace and such
undertakings (aggregating their interests) have a substantial interest and 'the
Wider Microgen Group' means Microgen and its subsidiary undertakings, associated
undertakings and any other undertaking in which Microgen and such undertakings
(aggregating their interests) have a substantial interest.
Subject to the requirements of the Panel, Microgen reserves the right to waive
all or any of the above conditions, in whole or in part, except conditions (a)
and (b). The Offer will lapse if it does not become or is not declared
unconditional as to acceptances. Further, the Offer will lapse unless conditions
(c) to (j) have been fulfilled or (if capable of waiver) waived, or, where
appropriate, have been determined by Microgen to be or remain satisfied, by
midnight on the later of (i) the day which is 21 days after the First Closing
Date of the Offer; and (ii) the date which is 21 days after the date on which
condition (a) is fulfilled (the acceptance condition) or in each case such later
date as Microgen may, with the consent of the Panel, decide, provided that
Microgen shall be under no obligation to waive or treat as fulfilled or
satisfied any of conditions (c) to (j) inclusive by a date earlier than the
latest date specified above for the fulfillment thereof notwithstanding that any
such condition or the other conditions of the Offer may at such earlier date
have been fulfilled or satisfied and that there are at such earlier date no
circumstances indicating that any of such conditions may not be capable of
fulfilment or satisfaction.
The Offer will lapse if in relation to the acquisition of Trace by Microgen or
any matters arising therefrom there is a referral to the Competition Commission
before the later of (i) 1.00 p.m. (London time) on the First Closing Date of the
Offer and (ii) the date on which the Offer becomes or is declared unconditional
as to acceptances.
If the Offer lapses it will cease to be capable of further acceptance and
Microgen and accepting Trace Shareholders shall thereupon cease to be bound by
Forms of Acceptance submitted at or before the time when the Offer so lapses.
If Microgen is required by the Panel to make an offer for Trace Shares under the
provisions of Rule 9 of the Code, Microgen may make such alterations to the
terms and conditions of the Offer (including condition (a) above) as are
necessary to comply with the provisions of that Rule.
PART B: CERTAIN FURTHER TERMS OF THE OFFER
(a) If sufficient acceptances are received and/or sufficient Trace Shares
are otherwise acquired, Microgen intends to apply the provisions of sections 974
to 991 of the Companies Act 2006 ('2006 Act') to acquire compulsorily any
outstanding Trace Shares to which the Offer relates. Microgen also intends
either, on the date that acceptances under the Offer attain the required
percentage for the purposes of Rule 5.2.10R(1) of the Listing Rules or on the
first date of issue of compulsory acquisition notices under section 979 of the
2006 Act ('Cancellation Commencement Date') to procure the making of an
application by Trace to the UK Listing Authority for the cancellation of the
listing of Trace Shares on the Official List and for the cancellation of trading
of the Trace Shares on the market for listed securities of the London Stock
Exchange, in respect of a date not less than 20 business days after the
Cancellation Commencement Date which shall constitute the notice period for such
purposes under Rule 5.2.10R(2) of the Listing Rules.
(b) If the Panel requires Microgen to make an offer for Trace Shares
under the provisions of Rule 9 of the Code, Microgen may make such alterations
to the conditions of the Offer, including condition (a) (set out in Part A
above), as are necessary to comply with the provisions of that Rule.
(c) The Trace Shares which are the subject of the Offer will be acquired
by Microgen fully paid and free from all liens, charges, equitable interests,
encumbrances and other interests of any nature whatsoever and together with all
rights now or hereafter attaching thereto, including the right to receive and
retain all dividends, interest and other distributions declared, made or payable
after the date of this document.
(d) Overseas Shareholders should inform themselves about and observe any
applicable legal or regulatory requirements. If you are in any doubt about your
position, you should consult your professional advisor in the relevant
territory.
Appendix II
Sources of information and bases of calculation
(a) The value of the Offer by reference to the existing issued
and voting ordinary share capital of Trace is based on the 14,248,815 Trace
Shares in issue on 24 May 2007 (the last business day prior to the date of this
Announcement).
(b) The market capitalisation of Microgen is based on the
102,651,776 Microgen Shares in issue on 24 May 2007 (the last business day prior
to the date of this Announcement). There are no Microgen Shares held in
treasury.
(c) Unless otherwise stated, financial information concerning
Trace has been extracted from the Financial Statements of Trace for the year
ended 31 May 2006.
(d) Unless otherwise stated, financial information concerning
Microgen has been extracted from the Financial Statements of Microgen for the
year ended 31 December 2006.
(e) The Closing Prices of Trace Shares and Microgen Shares are
derived from the Daily Official List.
Appendix III
Details of Irrevocable Undertakings in relation to the Tulip Proposal
Part A: Hard Irrevocables with Standstill
Shareholder Position Number of Trace Percentage of Trace
Shares Shares
Richard Wolfe Trace Non- 3,265,771* 22.92%
Independent Director
Chief Executive
Officer of Trace
(Director and
shareholder of Tulip)
Peter Stolerman Trace Non- 8,000 0.06%
Independent Director
Finance Director of
Trace
(Director of Tulip)
John Murphy Managing Director of a 134,562 0.94%
Trace Subsidiary
(Director of Tulip)
Michael Flynn Managing Director of 115,614 0.81%
a Trace Subsidiary
Connel Torley Managing Director of 81,956 0.58%
a Trace Subsidiary
Zigmond Levy Director of a Trace 590,187 4.14%
Subsidiary
Doug Eastabrook - 330,469 2.32%
Ann Claxton - 223,141 1.57%
Roger Claxton - 180,788 1.27%
Ian Winchester - 100,000 0.70%
Carole Moore - 54,647 0.38%
Peter Carabott - 52,438 0.37%
Julian Mancell-Smith - 33,303 0.23%
Nick Tonge - 30,169 0.21%
Patricia Matheson - 24,131 0.17%
Tony Davis - 21,634 0.15%
Julia Mancell-Smith - 17,890 0.13%
James Ebel - 17,043 0.12%
Marilyn Lawless - 15,891 0.11%
Adam Levy - 15,175 0.11%
David Bacon - 14,907 0.10%
Paul Mortimer - 13,637 0.10%
Richard Fok-Seang - 12,478 0.09%
Bianca Levy - 12,000 0.08%
Chrispin Levy - 12,000 0.08%
Ruth Wolfe -
Charitable Trust 10,000 0.07%
Paul Donnelly - 9,456 0.07%
Julian Penfold - 8,573 0.06%
John Davis - 8,498 0.06%
Kathy Donnelly - 6,513 0.05%
Phil Pearson - 6,397 0.04%
Trudy Pearson - 6,250 0.04%
Garreth O'Neill - 6,112 0.04%
Xenia McGrane - 5,172 0.04%
Aisha Hussain - 4,838 0.03%
Ian Treadgold - 4,475 0.03%
Sheila Bow - 4,000 0.03%
Hermine King - 3,648 0.03%
Kathy Tong - 3,131 0.02%
Andrew Booth - 3,000 0.02%
Linda Letch - 2,738 0.02%
Eamonn Brown - 2,375 0.02%
Mary Davis - 2,237 0.02%
Terry Hooper - 2,198 0.02%
Pete Geraghty - 2,029 0.01%
Graham Pointer - 1,748 0.01%
Tony Abbott - 1,536 0.01%
Sid Chekhar - 1,107 0.01%
Dave Marchant - 1,000 0.01%
Jerry Baker - 900 0.01%
Kevin Grice - 11 0.00%
Total 5,485,773 38.50%
* Note: of these Shares, 369,264 are held in Richard Wolfe's SIPP.
Part B: Hard Irrevocables without Standstill
Shareholder Position Number of Trace Percentage of
Shares Trace Shares
Colin Clarke Trace Independent 1,426,453 10.01%
Director
Debbie Able - 28,266 0.20%
Clare Garretty - 15,757 0.11%
Mark Holden - 3,160 0.02%
Gladys Flynn - 2,724 0.02%
Emmy Golding - 2,614 0.02%
William Muir - 2,540 0.02%
Alan Beck - 2,297 0.02%
Sharon Thompson - 2,294 0.02%
Anne Marie Taylor - 1,936 0.01%
Robert Wolf - 1,918 0.01%
Elizabeth Kaufmann - 938 0.01%
Elizabeth Higgins - 768 0.01%
Charlotte Burr - 664 0.00%
Katrina Hopkins - 573 0.00%
Nick Kaufmann - 476 0.00%
Phillippa Kaufmann - 461 0.00%
Mike Taylor - 100 0.00%
Total 1,493,939 10.48%
Part C: Soft Irrevocables
Shareholder Position Number of Trace Percentage of
Shares Trace Shares
Daniel Chapchal Trace Independent 10,000* 0.07%
Director and
Chairman of Trace
Mark Dixon - 3,430,000 24.07%
Total 3,440,000 24.14%
* Note: the shares are held in Daniel Chapchal's SIPP.
Appendix IV
Definitions
The following definitions apply throughout this Announcement, unless the context
requires otherwise:
Act means the Companies Act 1985 as amended by the
Companies Act 2006;
Announcement this announcement by Microgen;
Arbuthnot Arbuthnot Securities Limited;
Australia the Commonwealth of Australia, its states and its
dependent territories;
Board as the context requires, the board of directors of
Microgen or the board of directors of Trace;
business day a day (excluding Saturdays, Sundays and public
holidays) on which banks are generally open for
business in the City of London;
Canada Canada, its provinces and territories and all areas
subject to its jurisdiction and any political
subdivision thereof;
certificated or in certificated form a share or other security which is not in
uncertificated form (that is, not in CREST);
Closing Price the middle market price of the relevant share at the
close of business on the day to which such price
relates, derived from the Daily Official List for
that day;
Code The City Code on Takeovers and Mergers;
CREST the relevant system (as defined in the CREST
Regulations) for the paperless settlement of trades
and holding of securities in respect of which
CRESTCo is the Operator (as defined in the CREST
Regulations);
CRESTCo CRESTCo Limited;
CREST Regulations the Uncertificated Securities Regulations 2001 (SI
2001 No.3755);
Daily Official List the Daily Official List of the London Stock
Exchange;
EGM the extraordinary general meeting of Microgen
Shareholders to be convened at Fleet House, 3
Fleetwood Park, Barley Way, Fleet, Hampshire GU51
2QJ at a date to be confirmed;
Enlarged Group the Microgen Group as enlarged by the acquisition of
the Trace Group pursuant to the Offer;
First Closing Date of the Offer means the date set as the first closing date of the
Offer in the Offer Document;
Form of Acceptance the form of acceptance and authority for use by
Trace Shareholders in connection with the Offer;
Japan Japan, its cities and prefectures, territories and
possessions;
Listing Rules the listing rules published by the UK Listing
Authority;
London Stock Exchange London Stock Exchange plc;
Microgen Microgen plc a company incorporated in England and
Wales with number 1602662;
Microgen Group Microgen and its subsidiaries;
Microgen Aptitude the product owned by Microgen supplying technical
architecture for full transaction process management
to customers;
Microgen Shareholder holders of Microgen Shares
Microgen Shares ordinary shares of 5 pence in Microgen
Offer the recommended offer to be made by Microgen to
acquire all of the Trace Shares (other than Trace
Shares which at the date of such offer are already
held by Microgen within the meaning of Part 28 of
the Companies Act 2006) on the terms and subject to
the conditions described in this Announcement and to
be set out in the Offer Document and the Form of
Acceptance (including, where the context requires,
any subsequent revision, variation, extension or
renewal of such offer);
Offer Document the formal offer document setting out the terms and
conditions of the Offer which is expected to be
posted to Trace Shareholders (other than those in a
Restricted Jurisdiction) on or before 4 June 2007;
Offer Period the period commencing on 20 April 2007 and ending on
whichever of the following dates shall be the
latest: (i) at 1.00 p.m. on the First Closing Date
of the Offer; (ii) the date on which the Offer
lapses; and (iii) the date on which the Offer
becomes or is declared unconditional as to
acceptances;
Official List the Official List of the UK Listing Authority;
Order the order of the Chancery Division of the High Court
of Justice by Mr Registrar Rawson dated 25 May 2007
(no. 2850 of 2007)
Overseas Shareholders Trace Shareholders resident in, or nationals or
citizens of, or who are subject to jurisdictions
outside, the UK or who are nominees of, or
custodians, trustees or guardians for, citizens or
nationals of or persons subject to such
jurisdictions;
Panel the Panel on Takeovers and Mergers;
Regulatory Information Service a regulatory information service for the purposes of
and as defined in the Listing Rules;
Resolutions means the resolutions of Microgen in respect of the
Offer to be proposed at the EGM;
Restricted Jurisdiction any jurisdiction where local laws 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
Trace Shareholders in that jurisdiction;
Scheme the scheme of arrangement in relation to the Tulip
Proposal
Scheme Document the document dated 26 April 2007 containing
recommended proposals for the acquisition of the
ordinary share capital of Trace by Tulip to be
effected by way of a scheme of arrangement pursuant
to the Act;
Share Option Schemes the share option schemes of Microgen;
Shore Capital Shore Capital and Corporate Limited;
subsidiary a subsidiary as defined in section 736 of the Act;
Trace Trace Group plc;
Trace Group Trace and its subsidiaries;
Trace Independent Directors or Independent Directors means Mr Daniel Chapchal, Prof David Begg, Mr Colin
Clarke and Mr Robin Woodall;
Trace Group Share Schemes means the share option and other share schemes of
Trace;
Trace Shareholders holders of Trace Shares;
Trace Shares the existing unconditionally allotted or issued and
fully paid ordinary shares of 5 pence each in the
capital of Trace and any further such shares which
are unconditionally allotted or issued prior to the
time at which the Offer ceases to be open for
acceptance (or prior to such earlier time as
Microgen may, in accordance with the terms and
conditions of the Offer, and subject to the Code,
decide), as Microgen may determine, but excluding in
both cases any such shares held or which become held
as Treasury Shares;
Treasury Shares the ordinary shares of 5 pence each in the capital
of Trace which are held by Trace as treasury shares
(within the meaning of section 162A of the Act);
Tulip Tulip Holdings Limited a company incorporated in
England and Wales with number 06046342;
Tulip Announcement the announcement of the Tulip Proposal by Tulip on
20 April 2007;
Tulip Proposal the offer of 135 pence for each Trace Share to be
effected by way of a scheme of arrangement pursuant
to section 425 of the Act, the terms of which are
set out in the Scheme Document;
UK or United Kingdom the United Kingdom of Great Britain and Northern
Ireland;
UK Listing Authority the Financial Services Authority acting in its
capacity as the competent authority for listing
purposes under Part VI of the Financial Services and
Markets Act 2000;
uncertificated or in uncertificated form recorded on the relevant register of Trace 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 States or US the United States of America, its territories and
possessions, any State of the United States and the
District of Colombia, and all other areas subject to
its jurisdiction; and
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