Rec. Offer for Meconic - Pt 1
Johnson,Matthey PLC
21 June 2001
PART 1
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR INTO
THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN
Recommended Cash Offer
by Schroder Salomon Smith Barney
on behalf of
Johnson Matthey plc
to acquire
Meconic plc
Summary
- The Boards of Johnson Matthey and Meconic announce that they have
reached agreement on the terms of a recommended cash offer of 405 pence
per ordinary share for the whole of the issued and to be issued share
capital of Meconic valuing the whole of the issued share capital of
Meconic at approximately £147.1 million. The Offer will include a Loan
Note Alternative.
- The Offer represents a premium of approximately 42 per cent. to the
Closing Price of 285 pence per Meconic Share on 20 June 2001, the last
business day prior to the date of this announcement.
- The Meconic Directors, who have been so advised by Close Brothers,
consider the terms of the Offer to be fair and reasonable and will
unanimously recommend Meconic Shareholders to accept the Offer as they
have irrevocably undertaken to do with respect to their own beneficial
holdings.
- For many years Johnson Matthey has operated a pharmaceutical materials
business from a facility in West Deptford, New Jersey. This business
is similar to that of Meconic in a number of ways including
complementary product ranges, and a focus on high value, low volume
products, particularly controlled substances.
- Meconic also offers an attractive opportunity for the geographic
expansion of Johnson Matthey's current pharmaceutical fine chemicals
business into the United Kingdom and Europe. This broader base will
provide opportunities to sell existing products in new markets and for
the more effective deployment of research and development,
manufacturing and marketing resources.
- The Johnson Matthey Directors believe that the acquisition of Meconic
will be earnings enhancing after goodwill amortisation during Johnson
Matthey's first full financial year of ownership, commencing 1 April
2002*.
Commenting on the Offer, Peter Savage, Chairman of Meconic, said:
'The board has every confidence in the Company's future and last year's
results again demonstrated the strong earnings growth in Meconic's
business. However, even with such growth, in the view of the board, it
would probably take several years for Meconic's share price to match
that currently represented by the Offer and the board has therefore
concluded that the Offer represents fair value for Meconic
shareholders.'
Commenting on the Offer, Chris Clark, Chief Executive of Johnson Matthey,
said:
'The combination of Meconic with our pharmaceutical materials business
makes great commercial sense on a variety of levels. It will expand
our product portfolio while extending our geographic reach and
presenting broader market opportunities. The acquisition of Meconic is
firmly in line with our strategy of developing our business both
organically and by targeted acquisition.'
Enquiries
Johnson Matthey plc
John Sheldrick 020 7269 8403
David Morgan 020 7269 8454
Schroder Salomon Smith Barney 020 7986 4000
(financial adviser to Johnson Matthey)
James Steel
Jan Skarbek
Credit Suisse First Boston de Zoete & Bevan Limited 020 7888 8888
(brokers to Johnson Matthey)
Chris Chambers
Chris Sim
Gavin Anderson 020 7457 2345
(PR Consultants to Johnson Matthey)
Howard Lee
Laura Hickman
Meconic plc 07768 502 896
Peter Savage
Close Brothers 020 7655 3100
(financial adviser to Meconic)
Martin Gudgeon
Mark Barrow
*This statement should not be interpreted to mean that future earnings per
share of Johnson Matthey following the acquisition of Meconic will be higher
than historical earnings per share.
This summary should be read in conjunction with the full text of the
following announcement.
Salomon Brothers International Limited (trading as 'Schroder Salomon Smith
Barney') and Credit Suisse First Boston de Zoete & Bevan Limited ('CSFB'),
which are regulated in the United Kingdom by The Securities and Futures
Authority Limited, are acting exclusively for Johnson Matthey and no one else
in connection with the Offer and will not be responsible to anyone other than
Johnson Matthey for providing the protections afforded to its customers nor
for providing advice in relation to the Offer. Salomon Smith Barney is a
service mark of Salomon Smith Barney Inc. Schroder is a trademark of
Schroders Holdings plc and is used under licence by Salomon Brothers
International Limited.
Close Brothers Corporate Finance Limited, which is regulated in the United
Kingdom by The Securities and Futures Authority Limited, is acting
exclusively for Meconic and no one else in connection with the Offer and will
not be responsible to anyone other than Meconic for providing the protections
afforded to its customers or for providing advice in relation to the Offer.
The Offer will not be made, directly or indirectly, in or into or by the use
of the mails or any means of instrumentality of interstate or foreign
commerce of, or any facilities of a national securities exchange of, the USA,
or in or into Canada, Australia or Japan. Accordingly, copies of this
announcement are not being, and must not be, mailed or otherwise distributed
or sent in or into or from the USA, Canada, Australia or Japan.
The Loan Notes to be issued pursuant to the Loan Note Alternative have not
been, and will not be, registered under the United States Securities Act of
1933 (as amended) or under any relevant securities laws of any state or other
jurisdiction of the United States, nor have clearances been, nor will they
be, obtained from the securities commission or similar authority of any
province or territory of Canada and no prospectus has been or will be filed,
or registration made, under any securities law of any province or territory
of Canada, nor has a prospectus in relation to the Loan Notes been, nor will
one be, lodged with or registered by the Australian Securities and
Investments Commission nor have any steps been taken, nor will any steps be
taken, to enable the Loan Notes to be offered in compliance with applicable
securities laws of Japan. Accordingly, unless an exemption under such Act or
securities laws is available, Loan Notes may not be offered, sold, re-sold or
delivered, directly or indirectly, in, into or from the United States,
Canada, Australia or Japan or any other jurisdiction in which an offer of
Loan Notes would constitute a violation of relevant laws or require
registration thereof, or to or for the account or benefit of any US Person or
resident of Canada, Australia or Japan.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR INTO
THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN
Recommended Cash Offer
by Schroder Salomon Smith Barney
on behalf of
Johnson Matthey plc
to acquire
Meconic plc
1. Introduction
The Boards of Johnson Matthey and Meconic announce the terms of a
recommended cash offer, to be made by Schroder Salomon Smith Barney on
behalf of Johnson Matthey, to acquire the whole of the issued and to be
issued share capital of Meconic.
2. The Offer
The Offer, which will be on the terms and subject to the conditions set
out or referred to in Appendix I to this announcement and the further
terms and conditions to be set out in the Offer Document and the Form
of Acceptance, will be made on the basis set out below:
for each Meconic Share 405 pence in cash
The Offer values the entire existing issued ordinary share capital of
Meconic at approximately £147.1 million.
The Offer represents a premium of approximately 42 per cent. to the
Closing Price of 285 pence per Meconic Share on 20 June 2001, the last
business day prior to the date of this announcement.
The Meconic Shares which are the subject of the Offer will be acquired
under the Offer fully paid and free from liens, equities, charges,
encumbrances, rights of pre-emption and other third party rights or
interest of any nature whatsoever and together with all rights now or
hereafter attaching thereto, including the right to receive and retain
in full all dividends and other distributions declared, made or paid
after the date of this announcement. Accordingly, as set out in
Meconic's preliminary results announced today, subject to the Offer
being declared unconditional in all respects, no final dividend will be
declared or paid by Meconic.
The Directors of Meconic, who have been so advised by Close Brothers,
consider the terms of the Offer to be fair and reasonable and will
unanimously recommend Meconic Shareholders to accept the Offer as they
have irrevocably undertaken to do with respect to their own beneficial
holdings. In providing advice to the Directors, Close Brothers has
taken into account the commercial assessments of the Directors of
Meconic.
3. The Loan Note Alternative
Meconic Shareholders, other than certain overseas shareholders, who
validly accept the Offer may elect to receive Loan Notes to be issued
by Johnson Matthey instead of some or all of the cash consideration to
which they will otherwise be entitled under the Offer. The Loan Note
Alternative will be made available on the following basis:
for every £1 of cash consideration £1 nominal of Loan Notes
The issue of the Loan Notes will be conditional on the Offer becoming
or being declared wholly unconditional and valid elections having been
received by such time for at least £3 million in nominal value of Loan
Notes.
The Loan Notes will be issued credited as fully paid in amounts and
integral multiples of £1 nominal value. Any fractional entitlements
will be disregarded and not paid. The Loan Notes will be freely
transferable.
The Loan Notes will bear interest, payable in arrears, up to but
excluding the date of payment (less any applicable tax) in semi-annual
instalments on 15 April and 15 October in each year at a rate per annum
calculated by Johnson Matthey as being equal to 0.5 per cent. below
LIBOR for six month sterling deposits. The first interest payment will
be made on 15 April 2002 in respect of the period from and including
the first date of issue of the Loan Notes up to but excluding 15 April
2002.
The Loan Notes will be redeemable in whole or in part at par (together
with accrued interest (after deduction of tax)) at the option of the
holder of the Loan Notes on 15 October 2002 and on any subsequent
interest payment date.
On any interest payment date falling on or after 15 October 2002, if 20
per cent. or less in nominal value of the Loan Notes issued or £3
million or less in nominal value of Loan Notes remains outstanding,
Johnson Matthey shall have the right on giving to the remaining holders
of Loan Notes not less than 30 days' prior notice in writing to redeem
all (but not part only) of the outstanding Loan Notes by payment of the
nominal amount thereof together with accrued interest (after deduction
of tax) up to but excluding the date of redemption.
Any Loan Notes not previously redeemed or purchased will be redeemed at
their principal amount on 15 October 2006 together with accrued
interest (after deduction of tax) up to but excluding the date of
redemption.
4. Irrevocable undertakings
Johnson Matthey has received irrevocable undertakings to accept the
Offer from Directors of Meconic in respect of an aggregate of 206,000
Meconic Shares, representing approximately 0.57 per cent. of the
current issued share capital of Meconic. In addition, Johnson Matthey
has received irrevocable undertakings from Peter Savage, Ken Green and
Sandy Macrae to use their best endeavours to procure the acceptance of
the Offer in respect of an aggregate of 47,806 Meconic Shares in which
certain of their connected persons hold an interest, representing
approximately 0.13 per cent. of the current issued share capital of
Meconic. Together the Meconic Shares subject to such irrevocable
undertakings represent approximately 0.70 per cent. of the current
issued share capital of Meconic. The irrevocable undertakings from the
Directors of Meconic in respect of such shareholdings will be binding
in the event of a competing offer being made for Meconic.
5. Reasons for the Offer
For many years Johnson Matthey has operated a pharmaceutical materials
business from a facility in West Deptford, New Jersey. This business
is similar to that of Meconic in a number of ways including
complementary product ranges, and a focus on high value, low volume
products, particularly controlled substances.
Meconic also offers an attractive opportunity for the geographic
expansion of Johnson Matthey's current pharmaceutical fine chemicals
business into the United Kingdom and Europe. This broader base will
provide opportunities to sell existing products in new markets and for
the more effective deployment of research and development,
manufacturing and marketing resources.
Furthermore, on 23 April 2001, Johnson Matthey announced the
acquisition of Pharm-Eco Laboratories, a US-based operation that
provides contract research, process development and small scale
synthesis services to the pharmaceutical industry. This operation will
enable Johnson Matthey to offer a wide range of services to customers
of Meconic.
The Johnson Matthey Directors believe that the acquisition of Meconic
will be earnings enhancing after goodwill amortisation during Johnson
Matthey's first full financial year of ownership, commencing 1 April
2002*.
* This statement should not be interpreted to mean that future earnings
per share of Johnson Matthey following the acquisition of Meconic will
be higher than historical earnings per share.
6. Background to the recommendation of the Offer
In early 2001, Meconic received approaches from a number of parties
interested in making a recommended offer for the Company. These were
at a level which prompted the Directors of Meconic to formally test the
market for potential purchasers. Close Brothers was engaged, in March
2001, to run a process and establish the level of interest from a
number of trade purchasers. The ensuing negotiations have resulted in
the agreement of the terms of the Offer.
The Directors of Meconic have reviewed the strategic options open to
Meconic. The Company has been demonstrating strong earnings growth in
the recent past and the Meconic Board has every confidence in the
future, as the business is very well placed in a market with strong
organic growth. However, it would probably take several years of such
performance to create the value in Meconic's share price equivalent to
the Offer. Therefore the Directors of Meconic have decided to
recommend the Offer as they believe it represents fair value for
Meconic Shareholders.
7. Conditions
The Offer will be subject to, amongst other things, certain terms and
conditions, as detailed in Appendix I to this announcement.
8. Information on the Meconic Group
Meconic is the parent company of Macfarlan Smith - a long established
manufacturer of active pharmaceutical ingredients and fine chemicals
and a world leader in the production of alkaloid opiates and other
controlled drugs. The Group, based in Edinburgh, was formed in August
1990 when the management acquired Macfarlan Smith from Glaxo.
The Group's activities are divided into three broad areas: active
pharmaceutical ingredients; specialty fine chemicals; and contract
manufacture.
The active pharmaceutical ingredients business is the world's leading
supplier of opiates, a controlled drug. Opiates are active
pharmaceutical ingredients based on the extraction of morphine (the key
opiate building block) from opium poppies. Examples of opiates
include codeine, dihydrocodeine, morphine, pholcodine, diamorphine,
oxycodone and hydromorphone. Macfarlan Smith also produces other
controlled drugs: of the twenty principal synthetic narcotics,
Macfarlan Smith manufactures four. Macfarlan Smith also sells cocaine.
Macfarlan Smith also produces other non-controlled drugs including
apomorphine used as an emetic and in the control of Parkinson's
Disease.
The fine chemicals business produces aversives which are used to deter
the ingestion of hazardous materials. Macfarlan Smith's largest non-
pharmaceutical product is BitrexT, the brand name for a bitter tasting
substance now sold in 41 countries. The group also manufactures
intermediates from raw materials which are used to serve as starting
materials for other pharmaceutical products.
The group manufactures other active pharmaceutical ingredients produced
on contract for third parties through its contract manufacturing
business.
Meconic today issued its preliminary results for the year ended 30
April 2001. Meconic reported earnings before interest, taxation,
depreciation and amortisation of £13.3 million (2000: £11.0 million)
and profit on ordinary activities before taxation of £9.8 million
(2000: £8.1 million) for the year ended 30 April 2001. Shareholders'
funds as at 30 April 2001 were £29.9 million (2000: £23.6 million) and
net borrowings as at 30 April 2001 were £15.5 million. Subject to the
Offer being declared unconditional in all respects no final dividend
will be declared or paid.
9. Information on the Johnson Matthey Group
Johnson Matthey is a speciality chemicals company focused on precious
metals, catalysts and other fine chemicals. It is organised into three
operating divisions: Catalysts & Chemicals, Precious Metals and Colours
& Coatings.
The Johnson Matthey Group's principal activities are: the manufacture
of catalysts and pollution control systems, pharmaceutical compounds,
process catalysts and speciality chemicals; the refining, fabrication
and marketing of precious metals; and the manufacture of colours and
coatings for the ceramic, glass, paint and plastics industries.
Johnson Matthey has operations in 34 countries and employs around 6,600
people. Its products are sold across the world to a wide range of
advanced technology industries.
For the year ended 31 March 2001, the Johnson Matthey Group reported an
operating profit from continuing operations of £175.0 million before
exceptional items and goodwill amortisation (2000: £146.5 million) and
a profit on ordinary activities before taxation, exceptional items and
goodwill amortisation of £180.3 million (2000: £143.8 million).
Shareholders' funds before equity minority interests as at 31 March
2001 were £851.0 million (31 March 2000: £755.4 million).
10. Directors and employees
Johnson Matthey attaches great importance to the skills and experience
of the management and employees of the Meconic Group, and believes that
they will benefit from the wider opportunities in the enlarged Johnson
Matthey Group. The Board of Johnson Matthey has given assurances to
Meconic that the employment rights of the Meconic Group's employees,
including pension entitlements, will be fully safeguarded.
Ken Green has indicated his willingness to remain with the enlarged
group. The non-executive Directors of Meconic have agreed to resign
from the Board of Meconic as soon as the Offer becomes or is declared
wholly unconditional.
11. Meconic Share Option Schemes
The Offer will extend to any Meconic Shares which are unconditionally
allotted or issued while the Offer remains open for acceptance (or such
earlier period as Johnson Matthey may, subject to the City Code,
decide), including any Meconic Shares which are allotted or issued as a
result of the exercise of options granted under the Meconic Share
Option Schemes.
In the event that the Offer becomes or is declared unconditional in all
respects, Johnson Matthey will write to participants in the Meconic
Share Option Schemes, to inform them of the effect of the Offer on
their rights under the Meconic Share Option Schemes and to set out
appropriate proposals to be made in respect of their options.
12. Compulsory acquisition, de-listing and cancellation of trading
If Johnson Matthey receives acceptances under the Offer in respect of,
and/or otherwise acquires, an aggregate of 90 per cent. or more of the
Meconic Shares to which the Offer relates, Johnson Matthey intends to
exercise its rights pursuant to the provisions of sections 428 to 430F
of the Act to compulsorily acquire the remaining Meconic Shares to
which the Offer relates.
Furthermore, once the Offer becomes or is declared unconditional in all
respects, Johnson Matthey intends to procure the making of an
application by Meconic to the UKLA for the cancellation of the listing
of Meconic Shares on the Official List and to the London Stock Exchange
for the cancellation of trading of Meconic Shares. It is anticipated
that such cancellations will take effect no earlier than 20 business
days after the date on which the Offer becomes or is declared
unconditional in all respects.
13. Inducement fee
Meconic has agreed to pay to Johnson Matthey the sum of £1,470,000 if
prior to the Offer lapsing or being withdrawn the Board of Meconic
recommends an offer by a third party which subsequently becomes or is
declared wholly unconditional.
14. General
The Offer Document will be posted to Meconic Shareholders and (for
information only) to participants in the Meconic Share Option Schemes
as soon as is practicable.
The definitions of certain expressions used in this announcement are
contained in Appendix II.
The availability of the Offer to persons not resident in the UK may be
affected by the laws of the relevant jurisdiction. Persons who are not
resident in the UK should inform themselves about and observe any
applicable laws.
Save for the irrevocable undertakings summarised in paragraph 4 above,
neither Johnson Matthey nor any person acting in concert with it owns
or controls any Meconic Shares or any securities convertible or
exchangeable into Meconic Shares or any rights to subscribe for or
purchase, or options (including traded options) in respect of, or
derivatives referenced to, any such shares ('Relevant Meconic
Securities') nor does any such person have any arrangement in relation
to Relevant Meconic Securities. For these purposes, 'arrangement'
includes any indemnity or option arrangement, any agreement or
understanding, formal or informal, of whatever nature, relating to
Relevant Meconic Securities which may be an inducement to deal or
refrain from dealing in such securities.
Enquiries
Johnson Matthey plc
John Sheldrick 020 7269 8403
David Morgan 020 7269 8454
Schroder Salomon Smith Barney 020 7986 4000
(financial adviser to Johnson Matthey)
James Steel
Jan Skarbek
Credit Suisse First Boston de Zoete & Bevan Limited 020 7888 8888
(brokers to Johnson Matthey)
Chris Chambers
Chris Sim
Gavin Anderson 020 7457 2345
(PR Consultants to Johnson Matthey)
Howard Lee
Laura Hickman
Meconic plc 07768 502 896
Peter Savage
Close Brothers 020 7655 3100
(financial adviser to Meconic)
Martin Gudgeon
Mark Barrow
Salomon Brothers International Limited (trading as 'Schroder Salomon
Smith Barney') and Credit Suisse First Boston de Zoete & Bevan Limited
('CSFB'), which are regulated in the United Kingdom by The Securities
and Futures Authority Limited, are acting exclusively for Johnson
Matthey and no one else in connection with the Offer and will not be
responsible to anyone other than Johnson Matthey for providing the
protections afforded to its customers nor for providing advice in
relation to the Offer. Salomon Smith Barney is a service mark of
Salomon Smith Barney Inc. Schroder is a trademark of Schroders
Holdings plc and is used under licence by Salomon Brothers
International Limited.
Close Brothers Corporate Finance Limited, which is regulated in the
United Kingdom by The Securities and Futures Authority Limited, is
acting exclusively for Meconic and no one else in connection with the
Offer and will not be responsible to anyone other than Meconic for
providing the protections afforded to its customers nor for providing
advice in relation to the Offer.
The Offer will not be made, directly or indirectly, in or into or by
the use of the mails or any means or instrumentality of interstate or
foreign commerce of, or any facilities of a national securities
exchange of, the USA, or in or into Canada, Australia or Japan.
Accordingly, copies of this announcement are not being, and must not
be, mailed or otherwise distributed or sent in or into or from the USA,
Canada, Australia or Japan and persons receiving this announcement
(including custodians, nominees and trustees) must not distribute, or
send it into or from the USA, Canada, Australia or Japan. Doing so may
invalidate any proposed acceptance.
The Loan Notes to be issued pursuant to the Loan Note Alternative have
not been, and will not be, registered under the United States
Securities Act 1933 (as amended) or under any relevant securities laws
of any state or other jurisdiction of the United States, nor have
clearances been, nor will they be, obtained from the securities
commission or similar authority of any province or territory of Canada
and no prospectus has been or will be filed, or registration made,
under any securities law of any province or territory of Canada, nor
has a prospectus in relation to the Loan Notes been, nor will one be,
lodged with or registered by the Australian Securities and Investments
Commission nor have any steps been taken, nor will any steps be taken,
to enable the Loan Notes to be offered in compliance with applicable
securities laws of Japan. Accordingly, unless an exemption under such
Act or securities laws is available, Loan Notes may not be offered,
sold, re-sold or delivered, directly or indirectly, in, into or from
the United States, Canada, Australia or Japan or any other jurisdiction
in which an offer of Loan Notes would constitute a violation of
relevant laws or require registration thereof, or to or for the account
or benefit of any US Person or resident of Canada, Australia or Japan.
MORE TO FOLLOW
Latest directors dealings
- 6 hours ago ASOS
- 7 hours ago MJ Gleeson
- 7 hours ago Rolls-Royce Holdings
- 7 hours ago Crest Nicholson Holdings
- 8 hours ago Naked Wines