Offer for INS
Babcock International Group PLC
19 June 2007
EMBARGOED UNTIL 7:00 AM
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO OR
FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE
RELEVANT LAWS OF SUCH JURISDICTION
19 June 2007
BABCOCK INTERNATIONAL GROUP PLC
FINAL RECOMMENDED
MANDATORY CASH OFFER
BY BABCOCK INTERNATIONAL GROUP PLC FOR
INTERNATIONAL NUCLEAR SOLUTIONS PLC
Summary
- Babcock has today entered into option agreements with major shareholders of
INS to acquire 18.8 per cent. of the existing issued share capital of INS
at 63 pence per INS Share. As a result, together with the 24.5 per cent.
stake in INS acquired on 26 January 2007, Babcock has acquired or has
the option to acquire 43.3 per cent. of the existing issued share capital
of INS.
- Babcock has, in addition, received irrevocable commitments to accept the
Final Cash Offer from the directors of INS in respect of a further 0.4 per
cent. of the existing issued share capital of INS.
- Accordingly, the Board of Babcock hereby makes a final recommended
mandatory cash offer under the provisions of Rule 9 of the City Code of 63
pence per INS Share to acquire the existing issued share capital of INS not
already owned by the Babcock Group.
- The Final Cash Offer is final and will not be increased.
- The Final Cash Offer replaces the Scheme announced on 4 April 2007, which
will lapse.
- The background to the Final Cash Offer is as follows:
- On 4 April 2007, Babcock announced a recommended proposal to acquire,
for 63 pence per INS Share in cash, the existing issued share capital
of INS not already owned by the Babcock Group by means of the Scheme.
The circular containing the Scheme was posted to INS Shareholders on
20 April 2007.
- The Court Meeting and the INS EGM were convened on 14 May 2007. A
majority of those shareholders voting supported an acquisition of INS
by the Babcock Group; however, based on the proxy votes received at
that time, the Scheme would not have been approved. This was
principally due to the stance taken by a small number of shareholders
who had acquired material voting interests (following the announcement
of the Scheme) and the indications by a number of other large
shareholders that they did not intend to participate in the vote.
- Given the importance of ensuring that the outcome of the Court Meeting
and the INS EGM fairly reflected the wishes of INS Shareholders, the
INS Directors agreed to propose motions at the Court Meeting and the
INS EGM for their respective adjournments. Such motions were duly
passed.
- In order to allow all INS Shareholders the opportunity for a cash exit
at 63 pence per INS Share, Babcock has determined to offer to acquire
for cash the existing issued share capital of INS not already owned by
the Babcock Group at 63 pence per INS Share. In view of this, the
Board of INS intends not to reconvene the Court Meeting and the INS
EGM and accordingly the Scheme will lapse.
- The Final Cash Offer values the existing issued share capital of INS at
approximately £39.3 million and represents a premium of approximately 46.6
per cent. to the average Closing Price of 43.0 pence per INS Share over the
six month period from 18 July 2006 to 17 January 2007, the last Business
Day prior to the announcement of an approach regarding a possible offer for
INS.
- The INS Directors, who have been so advised by Rothschild and Grant
Thornton, consider the terms of the Final Cash Offer to be fair and
reasonable. Grant Thornton is acting as the independent financial adviser
to INS in relation to Rule 3 of the City Code. Rothschild is acting as
financial adviser to INS. Rothschild has a corporate debt advisory
relationship with Babcock and, as a consequence, with respect to the Final
Cash Offer, is not an independent adviser in accordance with Rule 3 of the
City Code. In providing their advice to the directors of INS, Rothschild
and Grant Thornton have taken into account the commercial assessments of
the INS Directors. Accordingly, the INS Directors unanimously recommend
that INS Shareholders accept the Final Cash Offer, as they have irrevocably
undertaken to do in respect of their own beneficial holdings, amounting to,
in aggregate, 253,904 INS Shares, representing approximately 0.4 per cent.
of the existing issued share capital of INS.
- Babcock has acquired or has the option to acquire 43.3 per cent. of the
existing issued share capital of INS, comprising approximately 24.5 per
cent. of the existing issued share capital of INS that it acquired on 26
January 2007 and approximately 18.8 per cent. of the existing issued share
capital of INS over which it has a call option and a put obligation.
- Babcock has also received irrevocable undertakings to accept the Final Cash
Offer from the INS Directors in respect of 0.4 per cent. of the existing
issued share capital of INS.
Commenting on the Final Cash Offer, Gordon Campbell, Chairman of Babcock, said:
'Given that a majority of shareholders who voted for the Scheme supported an
acquisition of INS by the Babcock Group, we are pleased to be able to put
forward our 63 pence per share offer to allow all INS Shareholders a cash exit
at a significant premium to the average share price over the six month period
prior to the announcement of an approach.'
Appendix I sets out the Condition and further terms of the Final Cash Offer.
Appendix II sets out the bases and sources of information from which the
financial calculations used in this Announcement have been derived.
Appendix III contains the definitions of terms used in this Announcement
(including this summary).
This summary should be read in conjunction with the full text of this
Announcement.
Enquiries:
Babcock Telephone: +44 (0) 20 7291 5000
Gordon Campbell
Peter Rogers
Bill Tame
Hawkpoint (financial adviser to Babcock) Telephone: +44 (0) 20 7665 4500
Paul Baines
JPMorgan Cazenove (broker to Babcock) Telephone: +44 (0) 20 7588 2828
Dermot McKechnie
Financial Dynamics (Babcock PR enquiries) Telephone: +44 (0) 020 7269 7121
Susanne Walker
INS Telephone: +44 (0) 161 222 5500
Chris Brown
Tony Moore
Rothschild (financial adviser to INS) Telephone: +44 (0) 161 827 3800
Greg Cant
Grant Thornton (Rule 3 adviser to INS) Telephone: +44 (0) 161 834 5414
Ali Sharifi
College Hill (INS PR enquiries) Telephone: +44 (0) 20 7457 2020
Matthew Smallwood
The availability of the Final Cash Offer and the release, publication or
distribution of this Announcement to persons who are not resident in the United
Kingdom may be affected by the laws of the relevant jurisdictions in which they
are located. Persons who are not resident in the United Kingdom should inform
themselves of, and observe, any applicable requirements. Any failure to comply
with such applicable requirements may constitute a violation of the securities
laws of any such jurisdictions. This Announcement has been prepared for the
purposes of complying with English law and the City Code and the information
disclosed may not be the same as that which would have been disclosed if this
Announcement had been prepared in accordance with the laws of jurisdictions
outside the United Kingdom.
The Final Cash Offer is not being made, directly or indirectly, in or into, or
by the use of the mails of, or by any means or instrumentality (including,
without limitation, telephonically or electronically) of interstate or foreign
commerce of, or any facilities of a national state or other securities exchange
of, a Restricted Jurisdiction and the Final Cash Offer is not capable of
acceptance by any such use, means, instrumentality or facilities, or from within
a Restricted Jurisdiction subject to certain exceptions. Accordingly, copies of
this Announcement, the Offer Document and the Form of Acceptance and any other
related document are not being, and must not be, directly or indirectly, mailed
or otherwise forwarded, distributed, transmitted or sent in or into or from a
Restricted Jurisdiction and persons receiving this Announcement, the Offer
Document, the Form of Acceptance and any other related document (including
custodians, nominees and trustees) must not mail or otherwise distribute or send
them in, into or from such jurisdictions as doing so may invalidate any
purported acceptance of the Final Cash Offer. The availability of the Final Cash
Offer to persons who are not resident in the United Kingdom may be affected by
the laws of their relevant jurisdiction. Such persons should inform themselves
about and observe any applicable legal or regulatory requirements of their
jurisdiction.
Hawkpoint, which is authorised and regulated in the United Kingdom by the
Financial Services Authority, is acting exclusively for Babcock and no one else
in connection with the Final Cash Offer and will not be responsible to anyone
other than Babcock for providing the protections afforded to clients of
Hawkpoint nor for providing advice in relation to the Final Cash Offer, the
content of this Announcement or any matter referred to herein.
JPMorgan Cazenove, which is authorised and regulated in the United Kingdom by
the Financial Services Authority, is acting exclusively for Babcock and no one
else in connection with the Final Cash Offer and will not be responsible to
anyone other than Babcock for providing the protections afforded to clients of
JPMorgan Cazenove nor for providing advice in relation to the Final Cash Offer,
the content of this Announcement or any matter referred to herein.
Rothschild, which is authorised and regulated in the United Kingdom by the
Financial Services Authority, is acting exclusively for INS and no one else in
connection with the Final Cash Offer and will not be responsible to anyone other
than INS for providing the protections afforded to clients of Rothschild nor for
providing advice in relation to the Final Cash Offer, the content of this
Announcement or any matter referred to herein.
Grant Thornton, which is authorised and regulated in the United Kingdom by the
Financial Services Authority, is acting exclusively for INS and no one else in
connection with the Final Cash Offer and will not be responsible to anyone other
than INS for providing the protections afforded to clients of Grant Thornton nor
for providing advice in relation to the Final Cash Offer, the content of this
Announcement or any matter referred to herein.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Announcement contains certain forward-looking statements with respect to
the financial condition, results of operations and business of INS and certain
plans and objectives of the boards of INS and Babcock with respect thereto.
These forward-looking statements can be identified by the fact that they do not
relate only to historical or current facts. Forward-looking statements often use
words such as 'anticipate', 'target', 'expect', 'estimate', 'intend', 'plan',
'goal', 'believe', 'will', 'may', 'should', 'would', 'could', or other words of
similar meaning. These statements are based on assumptions and assessments made
by the boards of INS and Babcock in light of their experience and their
perception of historical trends, current conditions, expected future
developments and other factors they believe appropriate. By their nature,
forward-looking statements involve risk and uncertainty, because they relate to
events and depend on circumstances that will occur in the future and the factors
described in the context of such forward-looking statements in this Announcement
could cause actual results and developments to differ materially from those
expressed in or implied by such forward-looking statements. Although INS and
Babcock believe that the expectations reflected in such forward-looking
statements are reasonable, INS and Babcock can give no assurance that such
expectations will prove to have been correct and INS and Babcock therefore
caution you not to place undue reliance on these forward-looking statements
which speak only as at the date of this Announcement.
DEALING DISCLOSURE REQUIREMENTS
Under the provisions of Rule 8.3 of the Code, if any person is, or becomes,
'interested' (directly or indirectly) in one per cent. or more of any class of
'relevant securities' of INS, 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 p.m. (London time) on the London business day following the date
of the relevant transaction. This requirement will continue until the date on
which the Final Cash Offer becomes or is declared unconditional in all respects
or 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 INS, 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 INS by Babcock or INS, 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 referenced 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.
If you are in any doubt as to the application of Rule 8 to you, please contact
an independent financial adviser authorised under the Financial Services and
Markets Act 2000, consult the Panel's website at www.thetakeoverpanel.org.uk or
contact the Panel on telephone number +44 (0) 20 7638 0129; fax number +44 (0)
20 7236 7013.
EMBARGOED UNTIL 7:00 AM
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO OR
FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE
RELEVANT LAWS OF SUCH JURISDICTION
19 June 2007
BABCOCK INTERNATIONAL GROUP PLC
FINAL RECOMMENDED
MANDATORY CASH OFFER
BY BABCOCK INTERNATIONAL GROUP PLC FOR
INTERNATIONAL NUCLEAR SOLUTIONS PLC
1. Introduction
Babcock has today entered into option agreements with major shareholders of INS
to acquire 18.8 per cent. of the existing issued share capital of INS at 63
pence per INS Share. As a result, together with the 24.5 per cent. stake in INS
acquired on 26 January 2007, Babcock has acquired or has an option to acquire
43.3 per cent. of the existing issued share capital of INS. Babcock has, in
addition, received irrevocable commitments to accept the Final Cash Offer from
the directors of INS in respect of a further 0.4 per cent. of the existing
issued share capital of INS.
Accordingly, the Board of Babcock hereby makes a final recommended mandatory
cash offer under the provisions of Rule 9 of the City Code of 63 pence per INS
Share to acquire the existing issued share capital of INS not already owned by
the Babcock Group.
The Final Cash Offer is final and will not be increased.
The Final Cash Offer replaces the Scheme announced on 4 April 2007, which will
lapse.
2. Background to the Final Cash Offer
On 4 April 2007, Babcock announced a recommended proposal to acquire, for 63
pence per INS Share in cash, the existing issued share capital of INS not
already owned by the Babcock Group to be implemented by means of the Scheme. The
circular containing the Scheme was posted to INS Shareholders on 20 April 2007.
The Court Meeting and the INS EGM were convened on 14 May 2007. A majority of
those shareholders voting supported an acquisition of INS by the Babcock Group;
however, based on the proxy votes received at that time, the Scheme would not
have been approved. This was principally due to the stance taken by a small
number of shareholders who had acquired material voting interests (following the
announcement of the Scheme) and the indications by a number of other large
shareholders that they did not intend to participate in the vote.
Given the importance of ensuring that the outcome of the Court Meeting and the
INS EGM fairly reflected the wishes of INS Shareholders, the INS Directors
agreed to propose motions at the Court Meeting and the INS EGM for their
respective adjournments. Such motions were duly passed.
In order to allow all INS Shareholders the opportunity for a cash exit at 63
pence per INS Share, Babcock has determined to offer to acquire for cash the
existing issued share capital of INS not already owned by the Babcock Group at
63 pence per INS Share. In view of this, the Board of INS intends not to
reconvene the Court Meeting and the INS EGM and accordingly the Scheme will
lapse.
3. Terms of the Final Cash Offer
Babcock hereby offers to acquire, on the terms contained in the Offer Document
and, in respect of certificated shares, the Form of Acceptance, the INS Shares,
issued and to be issued, not already owned by Babcock on the following basis:
for each INS Share 63.0 pence in cash
The Final Cash Offer values each INS Share at 63.0 pence and the existing issued
share capital of INS at approximately £39.3 million and represents a premium of
approximately 46.6 per cent. to the average Closing Price of 43.0 pence per INS
Share over the six month period from 18 July 2006 to 17 January 2007, the last
Business Day prior to the announcement of an approach regarding a possible offer
for INS.
4. Recommendation
When the Scheme was announced on 4 April 2007, the INS Directors, who had been
so advised by Rothschild and Grant Thornton, considered the terms of the Scheme
to be fair and reasonable and accordingly recommended INS Shareholders to vote
in favour of the Scheme. The INS Directors, who have been so advised by
Rothschild and Grant Thornton, continue to believe the terms of the Final Cash
Offer to be fair and reasonable for the reasons set out in the announcement
dated 4 April 2007 and the Scheme Document. Grant Thornton is acting as the
independent financial adviser to INS in relation to Rule 3 of the City Code.
Rothschild is acting as financial adviser to INS. Rothschild has a corporate
debt advisory relationship with Babcock and, as a consequence, with respect to
the Final Cash Offer, is not an independent adviser in accordance with Rule 3 of
the City Code. In providing their advice to the directors of INS, Rothschild and
Grant Thornton have taken into account the commercial assessments of the INS
Directors. Accordingly, the INS Directors unanimously recommend that INS
Shareholders accept the Final Cash Offer, as they have irrevocably undertaken to
do in respect of their own beneficial holdings, amounting to, in aggregate,
253,904 INS Shares, representing approximately 0.4 per cent. of the existing
issued share capital of INS.
5. Disclosure of interests in INS relevant securities
As at the date of this Announcement Babcock has acquired or has the option to
acquire 26,996,901 INS Shares, representing approximately 43.3 per cent. of the
existing issued share capital of INS.
This interest is comprised of 15,273,875 INS Shares (representing approximately
24.5 per cent. of the existing issued share capital of INS) acquired on 26
January 2007 and 11,723,026 INS Shares (representing approximately 18.8 per
cent. of the existing issued share capital of INS) in respect of which it has
entered into option arrangements. Under the option arrangements, conditional
upon service of a notice following this Announcement, Babcock has the right to
require the holders of such shares to sell and the holders of such shares have
the right to require Babcock to purchase the shares subject to these
arrangements at the price of 63 pence per INS Share.
Save for these interests and the interest arising by virtue of the irrevocable
undertakings referred to below, neither Babcock, nor any of the directors of
Babcock, nor so far as Babcock is aware, any person acting in concert with
Babcock, has any interest in or right to subscribe for INS relevant securities.
6. Irrevocable undertakings
Babcock has received irrevocable undertakings to accept the Final Cash Offer
from the directors of INS in respect of, in aggregate, 253,904 INS Shares
(representing approximately 0.4 per cent. of the existing issued share capital
of INS).
These undertakings will remain binding even if a higher competing offer for INS
is made. They will cease to be binding only if the Final Cash Offer lapses.
7. Information on Babcock
The Babcock Group is an asset management business, managing fixed infrastructure
and mobile assets. Babcock integrates labour, technical capabilities, systems
and supply chain partners to meet the outsourcing needs of customers.
The company has five operating divisions which are technical services, defence,
networks, engineering and plant services, and rail. Overseas operations are
based in Africa and North America.
For the year ended 31 March 2007, Babcock reported revenue of £988.3 million
(2006: £836.7 million), operating profit (pre amortisation of acquired
intangibles and exceptionals) of £68.3 million (2006: £49.9 million) and profit
before tax (pre amortisation of acquired intangibles and exceptionals) of £62.5
million (2006: £44.6 million).
Babcock's shares are quoted on the London Stock Exchange in the support services
sector.
8. Current trading and prospects for Babcock
On 10 May 2007, Babcock announced its preliminary results for the financial year
ended 31 March 2007. In those results, Peter Rogers, Chief Executive of Babcock,
made the following comments on current trading:
'Our financial results were pleasing, with continued double-digit sales growth,
underlying profit before tax up by 40 per cent. and underlying earnings per
share increasing by 36 per cent. This is the fifth successive year of
double-digit growth. This has been another good year for Babcock with continuing
growth in core businesses and the successful integration of Alstec and ABB
Powerlines, each of which has performed better than our planning assumptions.
The potential addition of INS to our nuclear portfolio will further strengthen
our position in the nuclear and nuclear decommissioning areas.
We believe the combined strength of Babcock and DML will yield significant
strategic and financial benefits to the Ministry of Defence in line with the
objectives set out in the Defence Industrial Strategy, whilst creating
significant value for Babcock's shareholders. The outlook for Babcock remains
positive with our markets remaining good and our ability to deliver to
customers' requirements will continue to ensure that we benefit from the
strength of these markets.'
9. Reasons for the Final Cash Offer and future plans for INS
The Babcock Group has identified the civil nuclear decommissioning market as
both a growth opportunity and an industry consistent with the Babcock Group's
skills, capabilities and experience and signalled its intention of developing
its core capabilities with the acquisition of Alstec in May 2006.
The acquisition of INS continues, broadens and deepens this strategy by bringing
to the Babcock Group an important new set of customers and capabilities which
will allow the Babcock Group to bid for a wider range of opportunities in an
expanding market. Babcock intends to utilise the skills and capabilities of INS
employees as an integral part of the wider Babcock Group in bidding for more
significant roles on contracts and framework agreements.
10. Financing the Final Cash Offer
The consideration payable under the Final Cash Offer will be funded from
Babcock's existing banking facilities.
Hawkpoint, financial adviser to Babcock, has confirmed that it is satisfied that
the necessary financial resources are available to Babcock to satisfy the cash
consideration due under the Final Cash Offer in full. The maximum cash
consideration payable by Babcock to INS Shareholders (assuming all options are
exercised in full) under the terms of the Final Cash Offer is approximately
£30.4 million.
11. Information on INS
INS successfully completed the demerger of INS Innovation Limited from Robotic
Technology Systems PLC and was admitted to trading on AIM on 31 May 2006.
INS is a specialist provider of nuclear engineering and consultancy services in
the UK and is focused on providing services and solutions to the nuclear
industry from the initial front end design and development to eventual
commissioning and providing support to the customers' ongoing operations.
INS operates throughout all stages of the project life cycle, providing
professional engineering services for design and project implementation. These
services include procurement inspection and project management enabling the
Company to take projects from inception through all phases of project
implementation to site installation and commissioning.
The Company's main areas of expertise include:
- support to the commercial operating facilities associated with fuel
fabrication and spent fuel reprocessing activities;
- waste and nuclear materials handling;
- plant asset care and maintenance of redundant facilities;
- new build activities covering existing facilities as well as new build
required to support accelerated clean-up;
- decommissioning; and
- supply and integration of special purpose plant and equipment.
For the year ended 31 December 2006, INS reported turnover of £31.7 million
(2005: £24.6 million), operating profit before exceptional items of £2.5 million
(2005: £2.2 million) and profit before tax of £1.7 million (2005: £2.3 million).
12. Current trading and prospects for INS
On 27 March 2007, INS issued the following announcement:
'Following the successful admission of International Nuclear Solutions plc
('INS') to the AIM market on 31st May 2006, I am pleased to be able to present
the Group's first set of annual accounts as an independent public company.
Turnover at £31.7 million increased by 29 per cent. in 2006 compared with the
previous year, with the commencement of several significant new contracts,
notably the SPRS and B29 projects at Sellafield. Operating profit before
exceptional items was 11.9 per cent. higher than 2005 at £2.5 million, before
exceptional administrative costs of £0.8 million (2005 - £nil) relating to the
demerger from Robotic Technology Systems PLC (RTS) and subsequent admission to
AIM. Profit after tax and exceptional items was £1.0m, compared with £1.9
million in 2005.
INS produced a strong cash performance in 2006, with £5.9 million cash inflow
from operating activities, an increase in net funds of £2.4 million, and closing
cash balances of £2.7 million.
Our order book, which stood at £11.4 million at the end of June, grew to £12.7
million by the end of 2006, and currently stands at £12.9 million. Our total
headcount at the end of 2006 stood at 274. This is an increase of 23 per cent.
in permanent staff, and 21 per cent. in total from the position at the start of
the year. A new project office has been opened at Birchwood in Warrington, and
we have also relocated our Greengarth office to new premises at the West Lakes
Science Park at Sellafield.
Outlook
Our strong opening order book, and the increasing activity levels in the nuclear
industry, give us confidence that the Group will continue to progress in 2007.
The NDA has announced that there is a small increase in funding in its 2007
budget. We are aware that there will be a reduction in operating revenues to the
NDA in future years as a result of the closure of two Magnox stations at the end
of 2006. This may in the course of time affect the funding available to the NDA
in future years. However, we view the future with confidence given the
increasing overall demand for nuclear decommissioning expertise.'
Since 27 March 2007, trading has generally been in line with INS Directors'
expectations.
13. The effect of the Final Cash Offer on INS Directors, management and
employees
Babcock has confirmed to the INS Directors that, following the Final Cash Offer
becoming or being declared unconditional in all respects, the existing
employment rights, terms and conditions of all the employees of the INS Group
will be safeguarded.
The Non-executive Directors of INS expect to resign from the Board of INS upon
the Final Cash Offer becoming or being declared unconditional in all respects.
14. INS Share Schemes
Upon the Final Cash Offer becoming or being declared unconditional in all
respects, Babcock has agreed to make the following proposals to holders of
options under the INS Share Schemes:
(a) options granted under the INS 2006 Enterprise Management Incentive Scheme
will become exercisable in full for a limited period when the Final Cash
Offer becomes unconditional and holders of options will be able to accept
the Final Cash Offer in respect of the resulting shares; and
(b) option holders under the INS 2006 Savings-Related Share Option Scheme may
exercise their options to the extent of their savings at the time of
exercise, together with any accrued interest due, for a limited period when
the Final Cash Offer becomes unconditional and will be able to accept the
Final Cash Offer in respect of the resulting shares.
Upon the Final Cash Offer becoming or being declared unconditional in all
respects, Babcock will write to all participants in the INS Share Schemes to
provide them with further details of these arrangements.
15. Overseas Shareholders
The availability of the Final Cash Offer to persons resident in, or citizens of,
jurisdictions outside the United Kingdom may be affected by the laws of the
relevant jurisdictions. Persons who are not resident in the United Kingdom
should inform themselves about and observe any applicable requirements. It is
the responsibility of each Overseas Shareholder to satisfy themselves as to the
full observance of the laws of the relevant jurisdiction in connection
therewith, including the obtaining of any governmental exchange control or other
consents which may be required or compliance with other necessary formalities
which are required to be observed and the payment of any issue, transfer or
other taxes due in such jurisdiction. Any failure to comply with such applicable
requirements may constitute a violation of the securities laws of any such
jurisdictions.
This Announcement has been prepared for the purposes of complying with English
law and the City Code and the information disclosed may be different from that
which would have been disclosed if this Announcement had been prepared in
accordance with the laws of jurisdictions outside England and Wales.
16. Implementation Agreement
INS and Babcock entered into an Implementation Agreement dated 3 April 2007,
under the terms of which the parties agreed, amongst other things, to co-operate
on certain matters relating to the Final Cash Offer. Details of the
Implementation Agreement are set out in the Scheme Document.
Included in the Implementation Agreement is an inducement fee agreement. The
inducement fee, which amounts to circa £0.4 million, representing one per cent.
of the value of the Final Cash Offer, is payable to Babcock if following this
Announcement:
(a) the INS Directors withdraw or modify their approval or recommendation of the
Final Cash Offer, or approve the announcement of or recommend any Competing
Proposal; or
(b) the Final Cash Offer lapses in accordance with its terms and prior thereto a
Competing Proposal for the Company has been announced,
and in either case such Competing Proposal or any other Competing Proposal
subsequently becomes or is declared unconditional in all respects.
17. Compulsory acquisition, de-listing and re-registration
If Babcock receives acceptances of the Final Cash Offer in respect of, and/or
otherwise acquires, 90 per cent. or more of the INS Shares to which the Final
Cash Offer relates, Babcock intends to exercise its rights pursuant to the
provisions of the Companies Act to acquire compulsorily the remaining INS Shares
to which the Final Cash Offer relates on the same terms as the Final Cash Offer.
Assuming the Final Cash Offer becomes or is declared unconditional in all
respects and subject to any applicable requirements of the London Stock
Exchange, Babcock intends to procure the making of an application by INS to the
London Stock Exchange for the cancellation of admission of the INS Shares from
AIM. If this cancellation occurs, it will significantly reduce the liquidity and
marketability of any INS Shares not assented to the Final Cash Offer. It is
anticipated that the cancellation of admission to trading on AIM will take
effect no earlier than the expiry of 20 Business Days after the date upon which
the Final Cash Offer becomes or is declared unconditional in all respects.
The AIM Rules normally require the consent of at least 75 per cent. of the votes
cast by a company's shareholders at an extraordinary general meeting for the
cancellation of admission of its shares to trading on AIM. However, the London
Stock Exchange has indicated that, provided Babcock is the owner of not less
than 75 per cent. of the existing issued ordinary share capital of INS before
the proposed date of cancellation, and provided that INS formally seeks
derogation from this requirement, the passing of such a resolution will not be
required. In connection with the cancellation of listing, Babcock intends that
INS withdraw from CREST.
It is currently intended that, following the Final Cash Offer becoming or being
declared unconditional in all respects and after the cancellation of admission
of the INS Shares from AIM, INS will be re-registered as a private company under
the relevant provisions of the Companies Act.
18. Dealing disclosure requirements
Under the provisions of Rule 8.3 of the Code, if any person is, or becomes,
'interested' (directly or indirectly) in one per cent. or more of any class of
'relevant securities' of INS, 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 p.m. (London time) on the London business day following the date
of the relevant transaction. This requirement will continue until the date on
which the Final Cash Offer becomes or is declared unconditional in all respects
or 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 INS, 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 INS by Babcock or INS, 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 referenced 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.
If you are in any doubt as to the application of Rule 8 to you, please contact
an independent financial adviser authorised under the Financial Services and
Markets Act 2000, consult the Panel's website at www.thetakeoverpanel.org.uk or
contact the Panel on telephone number +44 (0) 20 7638 0129; fax number +44 (0)
20 7236 7013.
19. The Final Cash Offer and posting of documents to INS Shareholders
The Final Cash Offer is being made, by means of this Announcement and the Offer
Document, on the terms contained in the Offer Document and, in respect of
certificated INS Shares, the accompanying Form of Acceptance (including the
Condition and the further terms set out in Appendix I of the Offer Document and
this Announcement). Copies of the Offer Document and the Form of Acceptance will
be available for inspection at the offices of Ashurst, 5 Appold Street, London,
EC2A 2HA from the time of this Announcement. The Final Cash Offer (on the terms
set out in the Offer Document) is open for acceptance from that time. INS
Shareholders are advised to read the Offer Document and, as appropriate, to seek
financial advice before accepting the Final Cash Offer.
The Offer Document containing the Condition and the further terms of the Final
Cash Offer and the Form of Acceptance will be despatched to INS Shareholders
later today.
20. General
As at 7.00 a.m. (London time) on 18 June 2007 (the last business day prior to
the date of this Announcement), INS had 62,335,374 shares of one pence in issue
(ISIN number GB00B12QZ964).
Enquiries
Babcock Telephone: +44 (0) 20 7291 5000
Gordon Campbell
Peter Rogers
Bill Tame
Hawkpoint (financial adviser to Babcock) Telephone: +44 (0) 20 7665 4500
Paul Baines
JPMorgan Cazenove (broker to Babcock) Telephone: +44 (0) 20 7588 2828
Dermot McKechnie
Financial Dynamics (Babcock PR enquiries) Telephone: +44 (0) 020 7269 7121
Susanne Walker
INS Telephone: +44 (0) 161 222 5500
Chris Brown
Tony Moore
Rothschild (financial adviser to INS) Telephone: +44 (0) 161 827 3800
Greg Cant
Grant Thornton (Rule 3 financial adviser to Telephone: +44 (0) 161 834 5414
INS)
Ali Sharifi
College Hill (INS PR enquiries) Telephone: +44 (0) 20 7457 2020
Matthew Smallwood
The availability of the Final Cash Offer and the release, publication or
distribution of this Announcement to persons who are not resident in the United
Kingdom may be affected by the laws of the relevant jurisdictions in which they
are located. Persons who are not resident in the United Kingdom should inform
themselves of, and observe, any applicable requirements. Any failure to comply
with such applicable requirements may constitute a violation of the securities
laws of any such jurisdictions. This Announcement has been prepared for the
purposes of complying with English law and the City Code and the information
disclosed may not be the same as that which would have been disclosed if this
Announcement had been prepared in accordance with the laws of jurisdictions
outside the United Kingdom.
The Final Cash Offer is not being made, directly or indirectly, in or into, or
by the use of the mails of, or by any means or instrumentality (including,
without limitation, telephonically or electronically) of interstate or foreign
commerce of, or any facilities of a national state or other securities exchange
of, a Restricted Jurisdiction and the Final Cash Offer is not capable of
acceptance by any such use, means, instrumentality or facilities, or from within
a Restricted Jurisdiction subject to certain exceptions. Accordingly, copies of
this Announcement, the Offer Document and the Form of Acceptance and any other
related document are not being, and must not be, directly or indirectly, mailed
or otherwise forwarded, distributed, transmitted or sent in or into or from a
Restricted Jurisdiction and persons receiving this Announcement, the Offer
Document, the Form of Acceptance and any other related document (including
custodians, nominees and trustees) must not mail or otherwise distribute or send
them in, into or from such jurisdictions as doing so may invalidate any
purported acceptance of the Final Cash Offer. The availability of the Final Cash
Offer to persons who are not resident in the United Kingdom may be affected by
the laws of their relevant jurisdiction. Such persons should inform themselves
about and observe any applicable legal or regulatory requirements of their
jurisdiction.
Hawkpoint, which is authorised and regulated in the United Kingdom by the
Financial Services Authority, is acting exclusively for Babcock and no one else
in connection with the Final Cash Offer and will not be responsible to anyone
other than Babcock for providing the protections afforded to clients of
Hawkpoint nor for providing advice in relation to the Final Cash Offer, the
content of this Announcement or any matter referred to herein.
JPMorgan Cazenove, which is authorised and regulated in the United Kingdom by
the Financial Services Authority, is acting exclusively for Babcock and no one
else in connection with the Final Cash Offer and will not be responsible to
anyone other than Babcock for providing the protections afforded to clients of
JPMorgan Cazenove nor for providing advice in relation to the Final Cash Offer,
the content of this Announcement or any matter referred to herein.
Rothschild, which is authorised and regulated in the United Kingdom by the
Financial Services Authority, is acting exclusively for INS and no one else in
connection with the Final Cash Offer and will not be responsible to anyone other
than INS for providing the protections afforded to clients of Rothschild nor for
providing advice in relation to the Final Cash Offer, the content of this
Announcement or any matter referred to herein.
Grant Thornton, which is authorised and regulated in the United Kingdom by the
Financial Services Authority, is acting exclusively for INS and no one else in
connection with the Final Cash Offer and will not be responsible to anyone other
than INS for providing the protections afforded to clients of Grant Thornton nor
for providing advice in relation to the Final Cash Offer, the content of this
Announcement or any matter referred to herein.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Announcement contains certain forward-looking statements with respect to
the financial condition, results of operations and business of INS and certain
plans and objectives of the boards of INS and Babcock with respect thereto.
These forward-looking statements can be identified by the fact that they do not
relate only to historical or current facts. Forward-looking statements often use
words such as 'anticipate', 'target', 'expect', 'estimate', 'intend', 'plan',
'goal', 'believe', 'will', 'may', 'should', 'would', 'could', or other words of
similar meaning. These statements are based on assumptions and assessments made
by the boards of INS and Babcock in light of their experience and their
perception of historical trends, current conditions, expected future
developments and other factors they believe appropriate. By their nature,
forward-looking statements involve risk and uncertainty, because they relate to
events and depend on circumstances that will occur in the future and the factors
described in the context of such forward-looking statements in this Announcement
could cause actual results and developments to differ materially from those
expressed in or implied by such forward-looking statements. Although INS and
Babcock believe that the expectations reflected in such forward-looking
statements are reasonable, INS and Babcock can give no assurance that such
expectations will prove to have been correct and INS and Babcock therefore
caution you not to place undue reliance on these forward-looking statements
which speak only as at the date of this Announcement.
21. Appendices
Appendix I sets out the Condition and further terms of the Final Cash Offer.
Appendix II sets out the bases and sources of information from which the
financial calculations used in this Announcement have been derived.
Appendix III contains the definitions of terms used in this Announcement.
Appendix I
THE CONDITION AND FURTHER TERMS OF THE FINAL CASH OFFER
1. ACCEPTANCE CONDITION
1.1 The Final Cash Offer is subject to valid acceptances being received (and
not, where permitted, withdrawn) by 3.00 p.m. on 10 July 2007 (or such later
time(s) and/or date(s) as Babcock and INS may, subject to the Code, decide) in
respect of such number of INS Shares which, together with the INS Shares
acquired or agreed to be acquired by Babcock or parties acting in concert with
it, will result in Babcock and any party acting in concert with it holding INS
Shares which together carry more than 50 per cent. of the voting rights normally
exercisable at general meetings of INS including for this purpose, to the extent
(if any) required by the Panel, any voting rights attaching to INS Shares which
are unconditionally allotted or issued before the Final Cash Offer becomes or is
declared unconditional whether pursuant to the exercise of conversion or
subscription rights or otherwise. This is the only condition of the Final Cash
Offer.
1.2 If the Final Cash Offer lapses, the Final Cash Offer will cease to be
capable of further acceptance and INS Shareholders accepting the Final Cash
Offer and Babcock will cease to be bound by forms of acceptance submitted on or
before the time when the Final Cash Offer lapses.
2. CERTAIN TERMS OF THE FINAL CASH OFFER
2.1 The Final Cash Offer extends to all INS Shares other than the INS Shares
already held by Babcock.
2.2 The Final Cash Offer is made on the terms set out in this Announcement and
the Offer Document and, in respect of certificated INS Shares, in the Form of
Acceptance.
2.3 The attention of the holders of INS Shares not resident in the United
Kingdom is drawn to the relevant provisions of the Offer Document which will be
despatched on behalf of Babcock later today.
The Final Cash Offer and any acceptances under it are governed by English law
and are subject to the jurisdiction of the Courts of England.
Appendix II
BASES AND SOURCES OF INFORMATION
Save as otherwise stated, the following constitute the bases and sources of
certain information referred to in this Announcement:
1. Information relating to INS has been extracted from the AIM admission
document, dated 5 May 2006, and from INS's annual report and accounts for the
year ended 31 December 2006; information relating to Babcock has been extracted
from the relevant published audited reports and accounts of Babcock.
2. The value of the existing issued share capital of INS is based on 62,335,374
INS Shares in issue at 18 June 2007 being the latest practicable day prior to
this Announcement.
3. The maximum cash consideration payable under the Final Cash Offer is based on
47,061,499 INS Shares (being those INS Shares in issue not already owned by
Babcock) and no more than 1,250,826 'in the money' employee share options
outstanding over INS Shares at the date of this Announcement and which are
expected to become exercisable as a consequence of the Final Cash Offer.
4. Unless otherwise stated, all prices quoted for shares are closing mid-market
prices and are derived from the Daily Official List of the London Stock
Exchange.
Appendix III
DEFINITIONS
The following definitions apply throughout this Announcement unless the context
requires otherwise.
'ABB ABB South Africa (Pty) (acquired by Babcock in June 2006);
Powerlines'
'AIM' AIM, a market operated by the London Stock Exchange;
'AIM Rules' the rules for companies published by the London Stock Exchange
relating to AIM;
'Alstec' Alstec Group (acquired by Babcock in May 2006);
'Announcement' this announcement;
'Babcock' Babcock International Group PLC, a public limited company
incorporated in England and Wales with registered number
02342138;
'Babcock Group' Babcock and its subsidiary undertakings and, where the context
permits, each of them;
'Board of the full board of directors of Babcock as of the date of this
Babcock' Announcement;
'Board of INS' the full board of directors of INS as of the date of this
Announcement;
'Business Day' a day (excluding Saturdays, Sundays and UK public holidays) on
which banks in London are generally open for business in the
City of London;
'the Code' or the City Code on Takeovers and Mergers;
'City Code'
'Closing Price' the closing middle market quotation of an INS Share as derived
from the Daily Official List;
'Companies Act' the Companies Act 1985, as amended or replaced in whole or in
part by any corresponding provisions in the Companies Act 2006
(where such provisions have come into effect at the date of this
Announcement);
'Competing a proposed offer, tender offer, merger, acquisition, scheme of
Proposal' arrangement, recapitalisation or other combination (including a
transaction involving a dual listed company structure) relating
to any direct or indirect acquisition or purchase of 50 per
cent. or more of the INS Shares or a material amount (as defined
in note 2 of Rule 21.1 of the City Code) of the business and
assets of INS and its subsidiaries proposed by any third party;
'Condition' the condition to the Final Cash Offer which is set out in
Appendix I to this Announcement;
'connected has the meaning given to it in section 346 of the Companies Act;
person'
'Court' the High Court of Justice in England and Wales;
'Court Meeting' the meeting of the INS Shareholders convened pursuant to an
order of the Court pursuant to section 425 of the Companies Act
for the purpose of considering and, if thought fit, approving
the Scheme (with or without modification), and any adjustment
thereof;
'CREST' the system for the paperless settlement of trades in securities
and the holding of uncertificated securities generated by
CRESTCo in accordance with the Uncertificated Securities
Regulations 2001 (SI 2001 No.3755);
'CRESTCo' CRESTCo Limited;
'Daily Official the Daily Official List of the London Stock Exchange;
List'
'DML' Devonport Management Limited (conditionally acquired by Babcock
in May 2007);
'Final Cash the final recommended mandatory cash offer of 63 pence per INS
Offer' Share by Babcock for the entire issued and to be issued share
capital of INS not already owned by Babcock on the terms and
Condition set out in this Announcement and in the Offer Document
and, in respect of certificated INS Shares, in the Form of
Acceptance including, where the context permits, any subsequent
revision, variation, extension or renewal thereof;
'Form of the form of acceptance and authority for use by INS Shareholders
Acceptance' in connection with the Final Cash Offer;
'Grant Grant Thornton Corporate Finance, the corporate finance division
Thornton' of Grant Thornton UK LLP;
'Hawkpoint' Hawkpoint Partners Limited;
'holder' a registered holder, including any person entitled by
transmission;
'INS' or 'the International Nuclear Solutions PLC, a public limited company
Company' incorporated in England and Wales with registered number 5738079
or, where the context requires, INS Innovation Limited;
'INS Directors' Christopher John Brown, Anthony Moore, Geoffrey John Mellor,
Stephen Joseph McGowan and John Gordon Ridings, who are
directors of INS;
'INS EGM' the extraordinary general meeting of INS Shareholders (and any
adjournment thereof) convened in connection with the Scheme;
'INS Group' INS and its subsidiary undertakings and, where the context
permits, each of them;
'INS the holders of INS Shares;
Shareholders'
'INS Share the INS 2006 Enterprise Management Incentive Scheme and the INS
Schemes' 2006 Savings-Related Share Option Scheme;
'INS Shares' the shares of one pence each in the capital of INS and 'INS
Share' means any one of them;
'Implementation the Implementation Agreement dated 3 April 2007 between INS and
Agreement' Babcock pursuant to which the parties have agreed to co-operate
on certain matters relating to the Final Cash Offer;
'JPMorgan JPMorgan Cazenove Limited;
Cazenove'
'London Stock London Stock Exchange plc;
Exchange'
'Meetings' the Court Meeting and/or the INS EGM as the case may be;
'NDA' the Nuclear Decommissioning Authority;
'Non-executive each of Christopher John Brown and John Gordon Ridings;
Directors'
'Offer the document to be posted to shareholders setting out the terms
Document' and Condition of the Final Cash Offer;
'Overseas INS Shareholders (or nominees of, or custodians or trustees for
Shareholders' INS Shareholders) not resident in or citizens of the United
Kingdom;
'Panel' the Panel on Takeovers and Mergers;
'Restricted the United States of America, Canada, Japan or Australia;
Jurisdiction'
'RTS' Robotic Technology Systems PLC;
'Rothschild' NM Rothschild & Sons Limited;
'Scheme' or the proposed scheme of arrangement under section 425 of the
'scheme of Companies Act between INS and INS Shareholders, with or subject
arrangement' to any modification, addition thereto or condition approved or
imposed by the Court and agreed to by INS and Babcock;
'Scheme the document, posted to INS Shareholders and others on 20 April
Document' 2007, containing, inter alia, the Scheme and the notices of the
Meetings;
'subsidiary' have the meaning given to them in the Companies Act; and
and 'subsidiary
undertaking'
'UK' or 'United the United Kingdom of Great Britain and Northern Ireland.
Kingdom'
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