Increased Final Offer and Adjournment of Meetings
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.
FOR IMMEDIATE RELEASE.
6 December 2023
INCREASED AND FINAL RECOMMENDED CASH OFFER
for
KIN AND CARTA PLC ("KIN AND CARTA")
by
KELVIN UK BIDCO LIMITED
("Bidco")
(a newly formed company owned indirectly by funds advised by Apax Partners LLP ("Apax"))
INCREASED AND FINAL RECOMMENDED CASH OFFER AND ADJOURNMENT OF THE COURT MEETING AND GENERAL MEETING
On 18 October 2023, the boards of Bidco and Kin and Carta announced that they had reached agreement on the terms and conditions of a recommended cash offer, pursuant to which Bidco would acquire the entire issued and to be issued ordinary share capital of Kin and Carta for an offer price of 110 pence per Kin and Carta Share pursuant to Rule 2.7 of the Code (the "Rule 2.7 Announcement"), to be implemented by means of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act 2006 (the "Scheme") (the "Acquisition").
The scheme document in respect of the Acquisition (the "Scheme Document") was published and made available to Kin and Carta Shareholders on 9 November 2023. Capitalised terms used but not defined in this announcement have the same meanings as given to them in the Scheme Document. This announcement should be read in conjunction with the Scheme Document and the full text of the Rule 2.7 Announcement.
Increased and Final Cash Offer
The boards of directors of Bidco and Kin and Carta are pleased to announce that they have reached agreement on the terms of an increased and final recommended cash offer by Bidco for the entire issued and to be issued share capital of Kin and Carta (the "Increased and Final Offer").
Under the terms of the Increased and Final Offer, Scheme Shareholders will be entitled to receive:
for each Scheme Share 120 pence in cash
The Increased and Final Offer values the entire issued and to be issued share capital of Kin and Carta at approximately £220.3 million on a fully diluted basis, implying an enterprise value of £258 million, equivalent to a multiple of 13.7x enterprise value to Kin and Carta's adjusted EBITDA for the twelve months ended 31 July 2023.
The Increased and Final Offer represents a premium of approximately:
• 54 per cent. to the Closing Price of 78 pence per Kin and Carta Share on 17 October 2023 (being the last Business Day before the commencement of the Offer Period);
• 53 per cent. to the volume-weighted average Closing Price of 78 pence per Kin and Carta Share for the three-month period ended 17 October 2023 (being the last Business Day before the commencement of the Offer Period); and
• 65 per cent. to the volume-weighted average Closing Price of 73 pence per Kin and Carta Share for the six-month period ended 17 October 2023 (being the last Business Day before the commencement of the Offer Period).
The Increased and Final Offer represents an increase of 10 pence (or 9 per cent.) in cash per Scheme Share as compared to the original offer price of 110 pence in cash per Scheme Share as set out in the Rule 2.7 Announcement.
The Increased and Final Offer of 120 pence in cash per Scheme Share is final and will not be further increased, except that Bidco reserves the right to increase the offer price and/or otherwise improve the terms of the Acquisition (i) if there is an announcement on or after the date of this announcement of an offer or possible offer for Kin and Carta by a third party offeror or potential offeror or (ii) the Takeover Panel otherwise provides its consent.
Save as set out in this announcement, the terms and conditions applicable to the Increased and Final Offer remain unchanged from those set out in the Scheme Document.
Dividends
If, on or after the date of this announcement and on or prior to the Effective Date, any dividend and/or distribution and/or other return of capital or value is announced, declared, made or paid or becomes payable in respect of the Kin and Carta Shares, Bidco will reduce the consideration payable under the terms of the Increased and Final Offer for the Kin and Carta Shares by an amount up to the aggregate amount of such dividend and/or distribution and/or other return of capital or value, in which case any reference in this announcement to the consideration payable under the terms of the Increased and Final Offer will be deemed to be a reference to the consideration as so reduced. In such circumstances, Kin and Carta Shareholders will be entitled to retain any such dividend, distribution, and/or other return of capital or value declared, made, or paid.
Irrevocable undertakings
As described in the Scheme Document, Bidco has received irrevocable undertakings (which remain binding in relation to the Increased and Final Offer and which extend to the Kin and Carta Shares that have been acquired since the Latest Practicable Date by certain Kin and Carta Directors as a result of the vesting of awards and/or the exercise of options under certain Kin and Carta Share Plans) from Kin and Carta Directors who hold Kin and Carta Shares totalling 1,401,112 Kin and Carta Shares in aggregate (representing approximately 0.8 per cent. of the issued ordinary share capital of Kin and Carta as at 30 November 2023).
Recommendation
The Kin and Carta Directors, who have been so advised by Citi as to the financial terms of the Increased and Final Offer, consider the terms of the Increased and Final Offer to be fair and reasonable. In providing its financial advice to the Kin and Carta Directors, Citi has taken into account the commercial assessments of the Kin and Carta Directors. Citi is providing independent financial advice to the Kin and Carta Directors for the purposes of Rule 3 of the Code.
The Kin and Carta Directors consider that the terms of the Increased and Final Offer are in the best interests of Kin and Carta Shareholders as a whole. Accordingly, the Kin and Carta Directors continue to recommend unanimously that Kin and Carta Shareholders vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the General Meeting as the Kin and Carta Directors who hold Kin and Carta Shares have irrevocably undertaken to do in respect of their own beneficial holdings totalling 1,401,112 Kin and Carta Shares in aggregate (representing approximately 0.8 per cent. of the issued ordinary share capital of Kin and Carta as at 30 November 2023).
The background to and reasons for the recommendation remain unchanged and are set out in paragraph 3 of Part I of the Scheme Document. In particular, in considering the terms of the Increased and Final Offer, the Kin and Carta Directors have given due consideration to a number of factors, including:
• the opportunity for Kin and Carta Shareholders to realise their investment in Kin and Carta for cash at a fair and reasonable value, in particular given the low levels of liquidity in the trading volumes and the significant volatility in the price of Kin and Carta's Shares; and
• the context of the DX competitor landscape, of which Kin and Carta is a relatively small-scale player. In order to compete successfully in the future, the Kin and Carta Board believes that Kin and Carta will need to expand its capabilities, resources and access to capital in a way which is challenging to achieve on a standalone basis. Additionally, as seen over the last 12 months, there continue to be significant market headwinds across the DX industry driven by hesitance among enterprise clients to commit to large programmes of work in the current macro environment, which impacts Kin and Carta's future new business growth. This in turn has resulted in significant volatility in the Company's financial performance, share price, and ability to execute on its strategy.
Financing of the Increased and Final Offer
The Apax Funds have entered into a revised equity commitment letter in favour of Bidco in relation to the financing of the Increased and Final Offer. The equity commitment letter from the Apax Funds in favour of Bidco entered into in connection with the Rule 2.7 Announcement has been terminated with immediate effect.
Prior to the Effective Date, Bidco also expects to raise debt financing in connection with the Acquisition. If such debt financing is raised, details of any such debt financing and the agreements entered into by Bidco and its subsidiaries will be disclosed in accordance with the requirements of the Code.
BofA Securities, in its capacity as lead financial adviser to Apax and Bidco, is satisfied that sufficient resources are available to Bidco to satisfy in full the cash consideration payable to Kin and Carta Shareholders under the terms of the Increased and Final Offer.
Adjournment of the Court Meeting and General Meeting
Notices of the Court Meeting and the General Meeting are contained in Part X and Part XI respectively of the Scheme Document.
In order to allow all Kin and Carta Shareholders the opportunity to consider the Increased and Final Offer properly, and with the support of the Kin and Carta Directors and Bidco, the chair of the Meetings will exercise his power to adjourn the Court Meeting and the General Meeting, both of which were originally convened for 7 December 2023. Accordingly, the Kin and Carta Directors recommend that Kin and Carta Shareholders do not attend the Court Meeting and the General Meeting on 7 December 2023.
For the avoidance of doubt the Annual General Meeting of Kin and Carta will proceed as planned commencing at 2.30 p.m. on 7 December 2023 at The Spitfire Building, 71 Collier Street, London, N1 9BE.
The chair of the Meetings will adjourn the Court Meeting and the General Meeting so as to instead be held on 21 December 2023 at 2:00 p.m. and 2:15 p.m. (or as soon thereafter as the Court Meeting shall have concluded or adjourned), respectively, at The Spitfire Building, 71 Collier Street, London, N1 9BE. Forms of Proxy in respect of the adjourned Court Meeting and the General Meeting should therefore now be returned so as soon as possible and in any event not later than the relevant times set out below:
· 2:00 p.m. on 21 December 2023 in respect of the Court Meeting; and
· 2:15 p.m. on 21 December 2023 in respect of the General Meeting.
Action to be taken by Kin and Carta Shareholders
As further detailed in the Scheme Document, to become Effective, the Scheme will require, among other things, the approval of Scheme Shareholders at the Court Meeting and the passing of the Special Resolution at the General Meeting. It is important, that, for the Court Meeting in particular, as many votes as possible are cast, so that the Court may be satisfied that there is a fair representation of the opinion of Scheme Shareholders.
Kin and Carta Shareholders who have not yet done so are therefore requested to sign and return their Forms of Proxy, or appoint a proxy electronically using CREST (or any other procedure described in pages 12 to 15 of the Scheme Document), whether or not they intend to attend the Court Meeting and/or the General Meeting in person, as soon as possible and in any event by the revised deadlines set out above and in the revised indicative timetable set out below.
· If the BLUE Form of Proxy for the Court Meeting is not lodged by the relevant time, it may be presented in person to the chair of the meeting or a Link Group representative who will be present at the Court Meeting, any time prior to the commencement of the Court Meeting (or any adjournment thereof).
· If the YELLOW Form of Proxy for the General Meeting is not lodged by the relevant time, it will be invalid.
Kin and Carta Shareholders are reminded that completion and return of a Form of Proxy, or the appointment of a proxy electronically using CREST (or any other procedure described in the Scheme Document), will not prevent them from attending, speaking and voting in person at either the Court Meeting or the General Meeting, or any adjournment thereof, if they wish and are entitled to do so.
Kin and Carta Shareholders who do NOT wish to change their voting instructions
Kin and Carta Shareholders who have already submitted Forms of Proxy, or who have appointed a proxy electronically using CREST (or any other procedure described in pages 12 to 15 of the Scheme Document), for the Court Meeting and/or the General Meeting and do not wish to change their voting instructions, do not need to take any further action as their Forms of Proxy (or proxy appointment by such other procedure described in pages 12 to 15 of the Scheme Document) will continue to be valid in respect of the Court Meeting and the General Meeting.
Kin and Carta Shareholders who DO wish to change their voting instructions
Kin and Carta Shareholders who have already submitted Forms of Proxy for the Court Meeting and the General Meeting and who now wish to change their voting instructions, should contact Kin and Carta's registrars, Link Group, by calling the Shareholder Helpline between 9:00 a.m. and 5:30 p.m. (London time) Monday to Friday (except public holidays in England and Wales) on 0371 664 0321 (if calling from within the UK) or +44 (0) 371 664 0321 (if calling from overseas). Calls from outside the UK will be charged at the applicable international rate. Please note that calls may be monitored or recorded and Link Group cannot provide advice on the merits of the Acquisition, the Increased and Final Offer or the Scheme or give any financial, legal or tax advice.
Kin and Carta Shareholders who have already appointed a proxy electronically using CREST (or any other procedure described in pages 12 to 15 of the Scheme Document), for the Court Meeting and/or the General Meeting and who now wish to change their voting instructions are able to do so via CREST or using such other procedure as was used in respect of the original appointment.
Kin and Carta Shareholders should note that Kin and Carta does not intend to publish a revised Scheme Document for the adjourned Court Meeting and adjourned General Meeting. No business may be transacted at the adjourned Court Meeting or the adjourned General Meeting other than the business which might properly have been transacted at the Court Meeting and General Meeting had such adjournments not taken place.
Update to Expected Timetable of Principal Events
An updated indicative timetable for the Acquisition is set out below. All times shown are London times unless otherwise stated. All dates and times are based on Kin and Carta's and Bidco's current expected dates for the implementation of the Scheme and are subject to change. If any of the dates and/or times in this expected timetable change, the revised dates and/or times will be notified to Kin and Carta Shareholders by announcement through a Regulatory Information Service, with such announcement being made available on Kin and Carta's website at https://investors.kinandcarta.com and Bidco's website at http://www.kelvinoffer.com.
|
Event |
Time and/or date(1) |
|
Latest time for lodging Forms of Proxy for the: |
|
|
Court Meeting ((BLUE) Form of Proxy) |
2:00 p.m. on 19 December 2023 (2) |
|
General Meeting ((YELLOW) Form of Proxy) |
2:15 p.m. on 19 December 2023 (3) |
|
Voting Record Time |
6:00 p.m. on 19 December 2023 (4) |
|
Court Meeting |
2:00 p.m. on 21 December 2023 |
|
General Meeting |
2:15 p.m. on 21 December 2023(5) |
|
The following dates and times associated with the Scheme are subject to change and will depend on, among other things, the date on which: (i) the Conditions to the Scheme are satisfied or, if capable of waiver, waived, (ii) the Court sanctions the Scheme and (iii) the Court Order(s) sanctioning the Scheme are delivered to the Registrar of Companies. Kin and Carta will give adequate notice of any changes to these dates and times, when known, by issuing an announcement through a Regulatory Information Service, with such announcement being made available on Kin and Carta's website at https://investors.kinandcarta.com. Further updates and changes to these times will be notified in the same way. See also note (1). |
|
|
Court Sanction Hearing |
As soon as reasonably practicable after Bidco confirms the satisfaction or waiver of the Conditions and in any event prior to the Long Stop Date ("D") |
|
Last day for dealings in, and for the registration of transfers of, Kin and Carta Shares |
D+1 Business Day |
|
Scheme Record Time |
6:00 p.m. on D+1 Business Day |
|
Disablement of CREST in respect of Kin and Carta Shares |
6:00 p.m. on D+1 Business Day |
|
Suspension of listing of, and dealings in, Kin and Carta Shares |
by 7:30 a.m. on D+2 Business Days |
|
Effective Date of the Scheme(6) |
D+2 Business Days |
|
Cancellation of listing and admission to trading of Kin and Carta Shares |
by 7:30 a.m. on D+3 Business Days |
|
Latest date for despatch of cheques and crediting of CREST accounts and processing electronic transfers for cash consideration due under the Scheme |
within 14 days of the Effective Date |
|
Long Stop Date(7) |
19 August 2024 |
Notes:
(1) The dates and times given are indicative only and are based on current expectations and are subject to change (including as a result of changes to the regulatory timetable). References to times are to London, United Kingdom time unless otherwise stated. If any of the times and/or dates above change, the revised times and/or dates will be notified to Kin and Carta Shareholders by announcement through a Regulatory Information Service and, if required by the Panel, notice of the change(s) will be sent to Kin and Carta Shareholders and other persons with information rights.
Participants in the Kin and Carta Share Plans will be contacted separately to inform them of the effect of the Scheme on their rights under the Kin and Carta Share Plans, including details of any appropriate proposals being made and dates and times relevant to them.
(2) It is requested that the BLUE Form of Proxy for the Court Meeting be lodged not later than 48 hours prior to the time appointed for the Court Meeting or, if the Court Meeting is adjourned, 48 hours prior to the time fixed for any adjourned Court Meeting (excluding any part of such 48 hour period falling on a day that is not a working day). If the BLUE Form of Proxy for the Court Meeting is not lodged by 2:00 p.m. on 19 December 2023, it may be presented in person to the chair of the meeting or to a Link Group representative who will be present at the Court Meeting, any time prior to the commencement of the Court Meeting (or any adjournment thereof).
(3) In order to be valid, the YELLOW Form of Proxy for the General Meeting must be lodged not later than 2:15 p.m. on 19 December 2023 or, if the General Meeting is adjourned, 48 hours prior to the time fixed for the adjourned General Meeting (excluding any part of such 48 hour period falling on a day that is not a working day). The YELLOW Form of Proxy cannot be handed to the chair of the General Meeting or to the Link Group representative at the General Meeting and will be invalid if submitted after the deadline.
(4) If either the Court Meeting or the General Meeting is adjourned, the Voting Record Time for the relevant adjourned meeting will be 6:00 p.m. on the day which is two Business Days prior to the date of the adjourned Meeting.
(5) To commence at 2:15 p.m. or as soon thereafter as the Court Meeting concludes or is adjourned.
(6) Kin and Carta expects that, subject to the satisfaction (or, where applicable, waiver) of the Conditions in Part III (Conditions to the Implementation of the Scheme and to the Acquisition) of the Scheme Document, the Scheme will become Effective during the first quarter of 2024.
(7) This is the latest date by which the Scheme may become Effective. However, the Long Stop Date may be extended to such later date as may be agreed by Kin and Carta and Bidco (with the Panel's consent and as the Court may approve (if such consent and/or approval is required)) or if the Panel requires an extension to the Long Stop Date pending final determination of an issue under section 3(g) of Appendix 7 of the Takeover Code.
Conditions
The Conditions to the Acquisition are set out in full in Part III (Conditions to the Implementation of the Scheme and to the Acquisition) of the Scheme Document. The Scheme will be modified to reflect the terms of the Increased and Final Offer. Save as disclosed in this announcement, the Increased and Final Offer is subject to the same terms and conditions set out in the Scheme Document.
Bidco and Kin and Carta are pleased to confirm that the CMA has responded to a briefing paper in writing confirming that it has no further questions in relation to the Acquisition (and has not otherwise opened an inquiry, or indicated that it is still deciding whether to open an enquiry).
General
The Increased and Final Offer does not change Bidco's intentions as regards the business of Kin and Carta (including locations of its operations), the management and employees of Kin and Carta, the Retention Awards, the DB Scheme and Kin and Carta's B Corp status as set out in the Scheme Document.
Kin and Carta confirms that there have been no changes to the information disclosed in the Scheme Document that are material in the context of the Scheme Document, including in relation to any of the matters referred to in Rule 27.2(c) of the Code, other than the following:
· Paragraph 3.2 of Part VIII of the Scheme Document sets out the interests in, or rights to subscribe in respect of, relevant Kin and Carta securities held by the Kin and Carta Directors (and their close relatives, related trusts and connected persons) as at the Latest Practicable Date. Since the Latest Practicable Date, Chris Kutsor and Kelly Manthey have acquired additional Kin and Carta Shares pursuant to the vesting of an award granted under the Company's Long Term Incentive Plan 2010. Accordingly, as at 30 November 2023), the Kin and Carta Directors (and their close relatives, related trusts and connected persons) held the following interests in, or rights to subscribe in respect of, relevant Kin and Carta securities:
|
Kin and Carta Director (1) |
Number of Kin and Carta Shares |
Percentage of Kin and Carta's total issued share capital |
|
Chris Kutsor (2) |
894,099 (3) |
0.502% |
|
Kelly Manthey |
333,444 (4) |
0.187% |
|
David Bell |
84,486 |
0.047% |
|
John Kerr |
112,359 |
0.063% |
|
Nigel Pocklington |
21,235 |
0.012% |
|
Michele Maher |
28,089 |
0.016% |
|
(1) As at the Latest Practicable Date, neither Maria Gordian nor her close relatives, related trusts and connected persons held any interests in, or rights to subscribe in respect of, relevant Kin and Carta securities. (2) Includes interests held by Chris Kutsor's close relatives. (3) Since the Latest Practicable Date, Chris Kutsor has acquired 87,566 Kin and Carta Shares. (4) Since the Latest Practicable Date, Kelly Manthey has acquired 38,690 Kin and Carta Shares. |
||
· Paragraph 3.3 of Part VIII of the Scheme Document sets out the outstanding awards and options over relevant Kin and Carta securities the Kin and Carta Directors held under the Kin and Carta Share Plans as at the Latest Practicable. Since the Latest Practicable Date, certain Kin and Carta Share Plans have lapsed. Therefore, as at 30 November 2023), the Kin and Carta Directors hold the following outstanding awards and options over relevant Kin and Carta securities under the Kin and Carta Share Plans:
|
(1) |
(2) |
(3) |
(4) |
(5) |
(6) |
|
Name |
Share Plan |
Date of award |
No. of ordinary shares of 10 pence in Kin and Carta under option |
Exercise price per share (GBP) |
Normal vesting date / exercise period |
|
Chris Kutsor |
CK Market Value Option |
17/06/2019 |
358,803 |
1.105 |
14/03/2022 - 17/06/2029 |
|
|
|
|
|
|
|
|
RSU Plan |
01/11/2022 |
65,689 |
Nil |
01/11/2024 |
|
|
2020 LTIP |
07/12/2021 |
179,513 |
Nil |
07/12/2024 |
|
|
|
|
|
|
|
|
|
ESPP |
02/12/2022 |
2,449 |
$2.45 |
02/12/2023 |
|
|
2020 LTIP |
19/12/2022 |
314,304 |
Nil |
19/12/2025 |
|
|
|
|
|
|
|
|
|
Kelly Manthey |
2010 LTIP |
04/09/2020 |
85,000 |
0.669 |
04/09/2023 - 03/09/2030 |
|
2020 LTIP |
07/12/2021 |
72,836 |
Nil |
07/12/2024 |
|
|
2020 LTIP |
19/12/2022 |
407,431 |
Nil |
19/12/2025 |
|
|
All awards vest subject to continued employment to the normal vesting date. The extent to which awards under the LTIPs vest is also subject to the achievement of performance targets. |
|||||
· Paragraph 9.2 of Part VIII of the Scheme Document sets out an estimate of the aggregate fees and expenses expected to be incurred by Kin and Carta in connection with the Acquisition. Such fees and expenses (excluding any applicable VAT and other taxes) are now expected to be approximately as follows:
|
Category |
Amount (GBP) |
|
|
Financial and corporate broking advice (1) |
5,800,000 (2) |
|
|
Legal advice |
1,435,000 |
|
|
Accounting advice |
Nil |
|
|
Public relations advice(1) |
25,000 |
|
|
Other professional services |
Nil |
|
|
Other costs and expenses |
310,857 |
|
|
Total |
6,670,857 |
|
|
Notes: (1) A proportion of such fees are success-based and payable depending on the outcome of the Acquisition. (2) Fees estimated to be incurred in relation to financial and corporate broking advice have increased by £900,000 |
|
|
Bidco confirms that there have been no changes to the information disclosed in the Scheme Document relating to Bidco, the Bidco Group, the Bidco Directors, Apax and the Apax Responsible Persons, their related trusts and other persons connected with them, and any persons deemed to be acting in concert with Bidco, in each case, that are material in the context of the Scheme Document, including in relation to any of the matters referred to in Rule 27.2(b) of the Code.
The sources of information and bases of calculation of certain information contained in this announcement are set out in the Appendix to this announcement.
Consents
Each of BofA Securities (as lead financial adviser to Apax and Bidco) and Citi (as financial adviser to Kin and Carta) have given and not withdrawn its written consent to the publication of this announcement with the inclusion herein of the references to their names in the form and context in which they appear.
Documents available on website
Copies of the following documents will, by no later than 12 noon (London time) on 7 December 2023, be published on Kin and Carta's website at www.kinandcarta.com and Bidco's website at http://www.kelvinoffer.com (as applicable) until the Effective Date:
• this announcement;
• the amended and restated equity commitment letter described above; and
• the consent letters from Citi and BofA Securities referred to above.
For the avoidance of doubt, neither the contents of those websites nor the contents of any website accessible from hyperlinks on those websites (or any other websites referred to in this announcement) are incorporated into, or form part of, this announcement.
The Appendix contains sources and bases of certain information contained in this announcement.
Enquiries:
Apax
Luke Charalambous +44 79 1828 6640
BofA Securities (Lead Financial Adviser to Apax and Bidco)
James Robertson +44 20 7628 1000
Eish Dhillon
Antonia Rowan
Charles Pitt Ford
Equiteq Corporate Finance Limited (Financial Adviser to Apax and Bidco)
Jerome Glynn-Smith +44 (0) 203 651 0600
Emmanuel Kostucki
Headland Consultancy Limited (PR Adviser to Apax and Bidco)
Emma Nyman +44 (0)74713 50848
Kin and Carta
Kelly Manthey, Chief Executive Officer +44 20 7928 8844
Chris Kutsor, Chief Financial Officer and Chief Operating Officer
Citigroup Global Markets Limited (Financial Adviser to Kin and Carta)
Robert Farrington +44 20 7986 4000
David Fudge
Avinash Patel
Deutsche Numis (Joint Corporate Broker to Kin and Carta)
Nick Westlake +44 20 7260 1000
Tejas Padalkar
Peel Hunt LLP (Joint Corporate Broker to Kin and Carta)
John Welch +44 20 7418 8900
Paul Gillam
Powerscourt (PR Adviser to Kin and Carta)
Elly Williamson +44 (0) 7841 658 163
Pete Lambie
Kirkland & Ellis International LLP is acting as legal adviser to Apax and Bidco.
Herbert Smith Freehills LLP is acting as legal adviser to Kin and Carta.
Further information
Merrill Lynch International ("BofA Securities"), which is authorised by the Prudential Regulation Authority ("PRA") and regulated by the Financial Conduct Authority ("FCA") and the PRA in the United Kingdom, is acting exclusively for Apax and Bidco and for no one else in connection with the Acquisition and will not be responsible to anyone other than Apax and Bidco for providing the protections afforded to its clients or for providing advice in connection with the Acquisition. Neither BofA Securities, nor any of its affiliates, owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of BofA Securities in connection with the Acquisition, this announcement, any statement contained herein or otherwise.
Equiteq Corporate Finance Limited ("Equiteq"), an appointed representative of Frank Investments Limited, who is authorised and regulated by the FCA in the United Kingdom, is acting exclusively for Apax and Bidco and for no one else in connection with this announcement and any other matters in connection with it. Equiteq will not be responsible to anyone other than Apax and Bidco for providing the protections afforded to its clients or for providing advice in connection with any matters in connection with this announcement. Neither Equiteq, nor any of its affiliates, directors or employees, owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Equiteq in connection with this announcement or any statement contained herein or otherwise.
Citigroup Global Markets Limited ("Citi"), which is authorised by the PRA and regulated in the UK by the FCA and the PRA, is acting as financial adviser for Kin and Carta and for no one else in connection with the matters described in this announcement and will not be responsible to anyone other than Kin and Carta for providing the protections afforded to clients of Citi nor for providing advice in connection with the contents of this announcement, or any other matters referred to in this announcement. Neither Citi nor any of its affiliates, directors or employees owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, consequential, whether in contract, in tort, in delict, under statute or otherwise) to any person who is not a client of Citi in connection with this announcement, any statement contained herein or otherwise.
Numis Securities Limited ("Deutsche Numis") which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively for Kin and Carta and no one else in connection with the matters set out in this announcement and will not regard any other person as its client in relation to the matters in this announcement and will not be responsible to anyone other than Kin and Carta for providing the protections afforded to clients of Deutsche Numis nor for providing advice in relation to any matter referred to in this announcement or any transaction or arrangement referred to herein. Deutsche Numis is not responsible for the contents of this announcement. Neither Deutsche Numis nor any of its affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Deutsche Numis in connection with this announcement, any statement contained herein, any transaction or arrangement referred to herein, or otherwise.
Peel Hunt LLP ("Peel Hunt") which is authorised and regulated by the FCA in the United Kingdom, is acting exclusively for Kin and Carta and no one else in connection with the matters set out in this announcement and will not regard any other person as its client in relation to the matters in this announcement and will not be responsible to anyone other than Kin and Carta for providing the protections afforded to clients of Peel Hunt nor for providing advice in relation to any matter referred to in this announcement or any transaction or arrangement referred to herein. Peel Hunt is not responsible for the contents of this announcement. Neither Peel Hunt nor any of its affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Peel Hunt in connection with this announcement, any statement contained herein, any transaction or arrangement referred to herein, or otherwise.
This announcement is for information purposes only and is not intended to, and does not, constitute or form part of an offer, invitation or the solicitation of an offer to purchase or subscribe, otherwise acquire, subscribe for, sell or otherwise dispose of any securities, or the solicitation of any vote or approval in any jurisdiction, pursuant to the Acquisition or otherwise, nor shall there be any sale, issuance or transfer of securities in Kin and Carta in any jurisdiction in contravention of applicable law. The Acquisition will be made solely pursuant to the terms of the Scheme Document as modified by this announcement, (or, in the event that the Acquisition is to be implemented by way of a Takeover Offer, the Offer Document) which, together with the Forms of Proxy, contains the full terms and conditions of the Acquisition, including details of how to vote in respect of the Acquisition. Any vote or other decision in respect of, or other response to, the Acquisition, should be made only on the basis of information contained in the Scheme Document (or, in the event that the Acquisition is to be implemented by way of a Takeover Offer, the Offer Document).
This announcement does not constitute a prospectus, prospectus equivalent document or exempted document.
This announcement contains inside information in relation to Kin and Carta for the purposes of Article 7 of the Market Abuse Regulation. The person responsible for arranging the release of this announcement on behalf of Kin and Carta is Lucy Maxwell, Company Secretary. Kin and Carta's Legal Entity Identifier is 213800B32KQM8CENCR16.
If you are in any doubt about the contents of this announcement or the action you should take, you are recommended to seek your own independent financial advice immediately from your stockbroker, bank manager, solicitor, accountant or independent financial adviser duly authorised under FSMA if you are resident in the United Kingdom or, if not, from another appropriately authorised independent financial adviser.
Overseas Shareholders
The release, publication or distribution of this announcement in or into jurisdictions other than the UK may be restricted by law and therefore any persons who are subject to the law of any jurisdiction other than the UK should inform themselves of, and observe, any applicable legal or regulatory requirements. Any failure to comply with such requirements may constitute a violation of the securities laws of any such jurisdiction. To the fullest extent permitted by applicable law, the companies and persons involved in the Acquisition disclaim any responsibility or liability for the violation of such restrictions by any person. This announcement has been prepared in accordance with and for the purpose of complying with English and Welsh law, the Code, the Market Abuse Regulation, the Disclosure Guidance and Transparency Rules and the Listing Rules and 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 England and Wales.
The availability of the Acquisition to Kin and Carta Shareholders who are not resident in and citizens of the United Kingdom may be affected by the laws of the relevant jurisdictions in which they are located or of which they are citizens. Persons who are not resident in the United Kingdom should inform themselves of, and observe, any applicable legal or regulatory requirements of their jurisdictions. In particular, the ability of persons who are not resident in the United Kingdom to vote their Kin and Carta Shares with respect to the Scheme at the Court Meeting, or to appoint another person as proxy to vote at the Court Meeting on their behalf, may be affected by the laws of the relevant jurisdictions in which they are located. Any failure to comply with the applicable restrictions may constitute a violation of the securities laws of any such jurisdiction. To the fullest extent permitted by applicable law, the companies and persons involved in the Acquisition disclaim any responsibility or liability for the violation of such restrictions by any person.
Unless otherwise determined by Bidco or required by the Code, and permitted by applicable law and regulation, the Acquisition will not be made available, directly or indirectly, in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction and no person may vote in favour of the Scheme by any such use, means, instrumentality or from within a Restricted Jurisdiction or any other jurisdiction if to do so would constitute a violation of the laws of that jurisdiction. Accordingly, copies of this announcement and any formal documentation relating to the Acquisition are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any Restricted Jurisdiction where to do so would violate the laws in that jurisdiction, and persons receiving this announcement and all such documents relating to the Acquisition (including, without limitation, agents, custodians, nominees and trustees) must not mail or otherwise forward, distribute or send them in or into or from such jurisdictions where to do so would violate the laws in that jurisdiction. Doing so may render invalid any related purported vote in respect of the Acquisition. If the Acquisition is implemented (with the consent of the Panel and subject to and in accordance with the terms of the Co-operation Agreement) by way of a Takeover Offer (unless otherwise permitted by applicable law and regulation), the Takeover Offer may not be made directly or indirectly, in or into, or by the use of mails or any means or instrumentality (including, but not limited to, facsimile, e-mail or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or of any facility of a national, state or other securities exchange of any Restricted Jurisdiction and the Takeover Offer may not be capable of acceptance by any such use, means, instrumentality or facilities.
The Acquisition shall be subject to, among other things, the applicable requirements of the Code, the Panel, the London Stock Exchange and the FCA.
The statements contained in this announcement are not to be construed as legal, business, financial or tax advice.
Notice to U.S. Kin and Carta Shareholders
The Acquisition relates to the shares of an English company and is being made by means of a scheme of arrangement provided for under the laws of England and Wales. A transaction effected by means of a scheme of arrangement is not subject to the tender offer or proxy solicitation rules under the U.S. Securities Exchange Act of 1934 (the "U.S. Exchange Act"). Accordingly, the Acquisition is subject to the disclosure requirements and practices applicable in the UK to schemes of arrangement which differ from the disclosure requirements of the U.S. tender offer and proxy solicitation rules.
The financial information included in this announcement has been prepared in accordance with generally accepted accounting principles of the UK and thus may not be comparable to financial information of U.S. companies or companies whose financial statements are prepared in accordance with generally accepted accounting principles in the U.S.
If, in the future, Bidco exercises its right to implement the Acquisition by way of a Takeover Offer, which is to be made into the U.S., such Offer will be made in compliance with the applicable U.S. laws and regulations.
It may be difficult for U.S. holders of Kin and Carta Shares to enforce their rights and any claim arising out of the U.S. federal laws, since Bidco and Kin and Carta are located in a non U.S. jurisdiction, and some or all of their officers and directors may be residents of a non-U.S. jurisdiction. U.S. holders of Kin and Carta Shares may not be able to sue a non-U.S. company or its officers or directors in a non-U.S. court for violations of the U.S.securities laws. Further, it may be difficult to compel a non-U.S. company and its affiliates to subject themselves to a U.S. court's judgement.
In accordance with normal UK practice and, in the event of a Takeover Offer, pursuant to Rule 14e-5(b) of the U.S. Exchange Act, Apax or its nominees, or its brokers (acting as agents), may from time to time make certain purchases of, or arrangements to purchase, Kin and Carta Shares outside of the U.S., other than pursuant to the Acquisition, until the date on which the Acquisition becomes Effective, lapses or is otherwise withdrawn. Also, in accordance with Rule 14e-5(b) of the U.S. Exchange Act, BofA Securities will continue to act as exempt principal trader in Kin and Carta Shares on the London Stock Exchange. These purchases may occur either in the open market at prevailing prices or in private transactions at negotiated prices. Any information about such purchases will be disclosed as required in England, will be reported to a Regulatory Information Service and will be available on the London Stock Exchange website, http://www.londonstockexchange.com.
U.S. Kin and Carta Shareholders also should be aware that the transaction contemplated herein may have tax consequences in the U.S. and, that such consequences, if any, are not described herein. U.S. Kin and Carta Shareholders are urged to consult with legal, tax and financial advisers in connection with making a decision regarding this transaction.
Forward looking statements
This announcement (including information incorporated by reference in this announcement), oral statements made regarding the Acquisition, and other information published by Bidco and Kin and Carta contain statements which are, or may be deemed to be, "forward-looking statements". Forward-looking statements are prospective in nature and are not based on historical facts, but rather on current expectations and projections of the management of Bidco and Kin and Carta about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements.
The forward-looking statements contained in this announcement include statements relating to the expected effects of the Acquisition on Bidco and Kin and Carta (including their future prospects, developments and strategies), the expected timing and scope of the Acquisition and other statements other than historical facts. Often, but not always, forward-looking statements can be identified by the use of forward-looking words such as "prepares", "plans", "expects" or "does not expect", "is expected", "is subject to", "budget", "projects", "synergy", "strategy", "scheduled", "goal", "estimates", "forecasts", "cost-saving", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "should", "would", "might" or "will" be taken, occur or be achieved. Forward looking statements may 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 Bidco's, Kin and Carta's, any member of the Bidco Group's or any member of the Kin and Carta Group's operations and potential synergies resulting from the Acquisition; and (iii) the effects of global economic conditions and governmental regulation on Bidco's, Kin and Carta's, any member of the Bidco Group's or any member of the Kin and Carta Group's business.
Although Bidco and Kin and Carta believe that the expectations reflected in such forward-looking statements are reasonable, Bidco and Kin and Carta can give no assurance that such expectations will prove to be correct. 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. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements.
These factors include, but are not limited to: the ability to complete the Acquisition; the ability to obtain requisite regulatory and shareholder approvals and the satisfaction of other Conditions on the proposed terms and schedule; changes in the global political, economic, business and competitive environments and in market and regulatory forces; changes in future exchange and interest rates; changes in tax rates; future business combinations or disposals; changes in general economic and business conditions; changes in the behaviour of other market participants; changes in the anticipated benefits from the Acquisition not being realised as a result of changes in general economic and market conditions in the countries in which Bidco and Kin and Carta operate, weak, volatile or illiquid capital and/or credit markets, changes in tax rates, interest rate and currency value fluctuations, the degree of competition in the geographic and business areas in which Bidco and Kin and Carta operate and changes in laws or in supervisory expectations or requirements. Other unknown or unpredictable factors could cause actual results to differ materially from those expected, estimated or projected in the forward-looking statements. If any one or more of these risks or uncertainties materialises or if any one or more of the assumptions proves incorrect, actual results may differ materially from those expected, estimated or projected. Such forward-looking statements should therefore be construed in the light of such factors. Neither Bidco nor Kin and Carta, nor any of their respective associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this announcement will actually occur. You are cautioned not to place any reliance on these forward-looking statements.
Other than in accordance with their legal or regulatory obligations, neither Bidco nor Kin and Carta is under any obligation, and Bidco and Kin and Carta expressly disclaim any intention or obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
No profit forecasts, estimates or quantified benefits statements
No statement in this announcement is intended as a profit forecast, profit estimate or quantified benefits statement for any period and no statement in this announcement should be interpreted to mean that earnings or earnings per share for Kin and Carta for the current or future financial years would necessarily match or exceed the historical published earnings or earnings per share for Kin and Carta.
Dealing and Opening Position Disclosure requirements
Under Rule 8.3(a) of the Takeover Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the Offer Period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) of the Takeover Code applies must be made by no later than 3.30 pm (London time) on the 10th Business Day following the commencement of the Offer Period and, if appropriate, by no later than 3.30 pm (London time) on the 10th Business Day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Takeover Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the Business Day following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at http://www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the Offer Period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.
Publication on a website
In accordance with Rule 26.1 of the Takeover Code, a copy of this announcement will be made available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on Kin and Carta's website at http://www.kinandcarta.com and on Bidco's website at http://www.kelvinoffer.com by no later than 12 noon (London time) on the Business Day following this announcement.
For the avoidance of doubt, neither the content of these websites nor of any website accessible from hyperlinks is incorporated by reference or forms part of this announcement.
Requesting hard copy documents
In accordance with Rule 30.3 of the Takeover Code, Kin and Carta Shareholders, persons with information rights and participants in Kin and Carta Share Plans may request a hard copy of this announcement by contacting Kin and Carta's receiving agents, Link Group, between 9:00 a.m. and 5:30 p.m. (London time) Monday to Friday (except UK public holidays) on 0371 664 0321 from within the UK or on +44 371 664 0321 if calling from outside the UK or by submitting a request in writing to Link Group, Corporate Actions, Central Square, 29 Wellington Street, Leeds, LS1 4DL. Calls are charged at the standard geographical rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Please note that Link Group cannot provide any financial, legal or tax advice and calls may be recorded and monitored for security and training purposes.
For persons who receive a copy of this announcement in electronic form or via a website notification, a hard copy of this announcement and any such information incorporated in it by reference to another source will not be sent unless so requested. Such persons may also request that all future documents, announcements and information in relation to the Acquisition be sent to them in hard copy form.
Electronic communications
Please be aware that addresses, electronic addresses and certain other information provided by Kin and Carta Shareholders, persons with information rights and other relevant persons for the receipt of communications from Kin and Carta may be provided to Bidco during the Offer Period as required under Section 4 of Appendix 4 of the Takeover Code to comply with Rule 2.11(c) of the Takeover Code.
Rounding
Certain figures included in this announcement have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of figures that precede them.
General
If the Acquisition is effected by way of a Takeover Offer, and such Takeover Offer becomes or is declared unconditional in all respects and sufficient acceptances are received, Bidco intends to exercise its rights to apply the provisions of Chapter 3 of Part 28 of the 2006 Act so as to acquire compulsorily the remaining Kin and Carta Shares in respect of which the Offer has not been accepted.
Investors should be aware that Bidco may purchase Kin and Carta Shares otherwise than under any Offer or the Scheme, including pursuant to privately negotiated purchases.
APPENDIX
SOURCES OF INFORMATION AND BASES OF CALCULATION
1. The fully diluted issued ordinary share capital of 183,554,195 Kin and Carta Shares is based on:
(a) 177,931,360 Kin and Carta Shares in issue as at 30 November 2023; plus
(b) 5,622,835 Kin and Carta Shares which may be issued on or after the date of this announcement pursuant to the Kin and Carta Share Plans and share awards as at 30 November 2023.
2. A value of approximately £220.3 million for the entire issued and to be issued share capital of Kin and Carta is based on:
(a) an offer price of 120 pence per Kin and Carta Share; and
(b) Kin and Carta's fully diluted issued ordinary share capital of 183,554,195 Kin and Carta Shares, as set out in paragraph 1 above.
3. Kin and Carta's adjusted EBITDA for the twelve months ended 31 July 2023 of £22.8 million is based on Kin and Carta's annual report as of 31 July 2023, published 2 November 2023.
4. The implied enterprise value for Kin and Carta of £258 million is calculated by reference to the valuation of the Acquisition plus reported net debt of £37.7 million as at 31 July 2023, with reported net debt comprising the below from the audited consolidated balance sheet of Kin and Carta as of that date and Kin and Carta public filings:
(a) pension adjustments of £2.6 million;
(b) term loan of £29.8 million;
(c) deferred consideration payable of £15.1 million; and
(d) cash and cash equivalents of £(9.8) million.
5. 13.7x multiple of Kin and Carta's adjusted EBITDA for the twelve months ended 31 July 2023 calculated on a lease liability adjusted basis per below:
(a) £258 million enterprise value: Calculated excluding lease liabilities of £10.8 million (as stated in Kin and Carta's Consolidated Balance Sheet for the financial year ended 31 July 2023) divided by;
(b) £18.8 million EBITDA: Kin and Carta's post IFRS-16, adjusted FY23 EBITDA of £22.8 million less operating lease cash outflow of £4.0 million (as stated in Kin and Carta's Consolidated Statement of Cash Flows for the financial year ended 31 July 2023).
6. Unless otherwise stated, the financial information relating to Kin and Carta is extracted (without material adjustment) from:
(a) the annual report and audited accounts of the Kin and Carta Group for the 12 months ended 31 July 2022; and
(b) the annual report and audited accounts of the Kin and Carta Group for the 12 months ended 31 July 2023.
7. The Closing Prices are taken from the Official List.
8. The volume-weighted average prices have been derived from Bloomberg and have been rounded to the nearest one decimal place.
9. Certain figures included in this announcement have been subject to rounding adjustments.
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