Offer Update: Recommended Final Offer
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.
FOR IMMEDIATE RELEASE.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.
9 June 2022
RECOMMENDED FINAL[i] CASH AND SHARE ACQUISITION
OF
M&C SAATCHI PLC
BY
NEXT FIFTEEN COMMUNICATIONS GROUP PLC
No Increase Statement
On 20 May 2022, the board of Next Fifteen Communications Group plc ("Next Fifteen") and the M&C Saatchi Independent Directors announced the terms of a recommended cash and share acquisition by which the entire issued and to be issued ordinary share capital of M&C Saatchi plc ("M&C Saatchi") will be acquired by Next Fifteen, to be effected by means of a court sanctioned scheme of arrangement between M&C Saatchi and the M&C Saatchi Shareholders under Part 26 of the Companies Act 2006 (the "Acquisition") (the "2.7 Announcement"). Capitalised terms used but not defined in this announcement shall have the meanings given to them in the 2.7 Announcement.
The board of Next Fifteen announces that the terms of the Acquisition, as set out in the 2.7 Announcement, are final[ii] and will not be increased, except that Next Fifteen reserves the right to increase the offer price if there is an announcement on or after the date of this announcement of an offer or a possible offer for M&C Saatchi by a third party offeror or potential offeror, other than ADV.
Based on the Closing Price per Next Fifteen Share on the Last Practicable Date prior to the announcement of the Acquisition of 1266.0 pence, the Acquisition values each M&C Saatchi Share at 247.2 pence, comprising 0.1637 of a New Next Fifteen Share and 40 pence in cash.
Based on the Closing Price of a Next Fifteen Share on 8 June 2022, being the last practicable date prior to release of this announcement, of 1086.0 pence, the Acquisition values each M&C Saatchi Share at 217.8 pence.
The Acquisition Price of 247.2 pence per M&C Saatchi Share represents a premium of approximately:
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49.8 per cent. to the Closing Price of 165.0 pence per M&C Saatchi Share on the Last Practicable Date; |
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47.6 per cent. to the Closing Price of 167.5 pence per M&C Saatchi Share on 4 January 2022, being the last Business Day prior to ADV's announcement of its acquisition of a minority stake in M&C Saatchi; |
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41.1 per cent. to the average Closing Price per M&C Saatchi Share of 175.2 pence in the 3 months prior to and including the Last Practicable Date; and |
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53.6 per cent. to the average Closing Price per M&C Saatchi Share of 160.9 pence in the 3 months prior to and including 4 January 2022. |
The Acquisition Value represents:
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a multiple of 10.0 times M&C Saatchi's forecast headline profit before tax for the 12 months to 31 December 2022, expected to be in the region of £31.0 million; and |
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a multiple of 7.6 times M&C Saatchi's forecast headline profit before tax for the 12 months to 31 December 2023, expected to be in the region of £41.0 million. |
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Commenting on the Acquisition, Tim Dyson, CEO of Next Fifteen said: |
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"We remain firmly of the belief that this is an exciting opportunity to bring together two highly complementary businesses, creating a truly global and diversified group with exceptional capabilities, clients and talent; it is a great combination where we are confident we can accelerate the ambitions of both businesses, creating significant value for our clients, our people and all the shareholders in the Enlarged Group.
We reached agreement with the board and executive team of M&C Saatchi after extensive negotiation and believe our offer is full and fair; we do not believe that the recent market volatility undermines the fundamental proposition of this transaction.
Next 15 has built a reputation for being financially disciplined in the acquisitions it makes and this transaction is no exception; we always listen carefully to the feedback we get from our shareholders who we believe value that discipline. We have concluded we should not change the terms of the acquisition and are therefore declaring our offer final".[iii] |
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Irrevocable undertakings
The M&C Saatchi Independent Directors have irrevocably undertaken to vote in favour of the Scheme in respect of their own beneficial holdings totalling 752,627 M&C Saatchi Shares, representing in aggregate approximately 0.6 per cent. of M&C Saatchi's issued share capital as at the Last Practicable Date. Further details of the irrevocable undertakings are set out in Appendix 3 to the 2.7 Announcement.
Transaction structure and timetable
The Acquisition will be subject to the Conditions and further terms set out in Appendix 1 to the 2.7 Announcement and to the full terms and conditions which will be set out in the Scheme Document. The Conditions include, inter alia, regulatory approvals in Australia, the UK and the US. Next Fifteen currently expects that the Regulatory Condition that will take longest to satisfy is the FIRB Condition (set out in paragraph 3(c)(iii) of Part A of Appendix 1 to the 2.7 Announcement). Next Fifteen included the FIRB Condition as its confirmatory due diligence identified that M&C Saatchi undertakes activities in Australia which require regulatory approval under the FATA before control over M&C Saatchi can be acquired. Failure to comply with the FATA can expose the bidder to potential investigation, infringement notices, civil and criminal liability.
The Scheme Document will include full details of the Scheme, together with notices of the M&C Saatchi Court Meeting and the M&C Saatchi General Meeting and the expected timetable, and will specify the action to be taken by Scheme Shareholders. It is expected that the Scheme Document will be despatched to M&C Saatchi Shareholders on or around 17 June 2022 and, in any event, within 28 days of the 2.7 Announcement, unless otherwise agreed by the Panel.
Appendix 2 of the 2.7 Announcement contains the sources and bases of certain information used in this announcement, save in relation to the Acquisition value per M&C Saatchi Share of 217.8 pence as at 8 June 2022, which is based upon (i) the Closing Price per Next Fifteen Share on 8 June 2022 of 1086.0 pence; (ii) the exchange ratio of 0.1637 of a New Next Fifteen Share per M&C Saatchi Share; and (iii) the cash component of the Acquisition of 40 pence in cash for each M&C Saatchi Share.
Enquiries:
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Next Fifteen |
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Tim Dyson (Chief Executive Officer) |
+1 415 350 2801 |
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Peter Harris (Chief Financial Officer) |
+44 20 7908 6444 |
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Smith Square Partners (Financial adviser to Next Fifteen) |
+44 20 3696 7260 |
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John Craven |
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Jonathan Coddington |
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Douglas Gilmour |
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Numis (Broker and NOMAD to Next Fifteen) |
+44 20 7260 1000 |
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Mark Lander |
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Hugo Rubinstein |
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Berenberg (Broker to Next Fifteen) |
+44 20 3207 7800 |
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Ben Wright |
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Mark Whitmore |
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Richard Andrews |
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MHP (PR adviser to Next Fifteen) |
+44 20 3128 8100 |
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Reg Hoare |
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Robert Collett-Creedy |
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Eleni Menikou |
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Important Information
Smith Square Partners LLP, which is authorised and regulated by the FCA in the United Kingdom, is acting exclusively for Next Fifteen and no one else in connection with the Acquisition and other matters set out in this announcement and will not be responsible to anyone other than Next Fifteen for providing the protections afforded to clients of Smith Square Partners, or for providing advice in connection with the Acquisition or any matter referred to herein. Neither Smith Square Partners 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 Smith Square Partners in connection with this announcement, any statement contained herein or otherwise.
Numis Securities, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively for Next Fifteen as nominated adviser and broker and no one else in connection with the Acquisition and will not be responsible to anyone other than Next Fifteen for providing the protections afforded to clients of Numis nor for providing advice in relation to the Acquisition or any other matters referred to in this announcement. Neither 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 Numis in connection with this announcement, any statement contained herein or otherwise.
Joh. Berenberg, Gossler & Co. KG, London Branch ("Berenberg"), which is authorised and regulated by the German Federal Financial Supervisory Authority (BaFin) and is deemed authorised and regulated by the FCA in the United Kingdom, is acting exclusively for Next Fifteen and no one else in connection with the Acquisition and other matters set out in this Announcement and will not be responsible to anyone other than Next Fifteen for providing the protections afforded to clients of Berenberg, or for providing advice in connection with the Acquisition or any matter referred to herein. Neither Berenberg 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 Berenberg in connection with this Announcement, any statement contained herein or otherwise.
Further information
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 or invitation to purchase, or 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 of Next Fifteen or M&C Saatchi pursuant to the Acquisition in any jurisdiction in contravention of applicable laws. The Acquisition will be implemented solely pursuant to the terms of the Scheme Document (or, in the event that the Acquisition is to be implemented by means of an Offer, the Offer Document), which will contain the full terms and conditions of the Acquisition, including details of how to vote in respect of the Acquisition. Any decision in respect of, or other response to, the Acquisition should be made on the basis of the information contained in the Scheme Document.
Next Fifteen will prepare the Next Fifteen Circular to be distributed to Next Fifteen Shareholders. M&C Saatchi and Next Fifteen urge M&C Saatchi Shareholders to read the Scheme Document carefully when it becomes available because it will contain important information in relation to the Acquisition, the New Next Fifteen Shares and the Enlarged Group. Next Fifteen urges Next Fifteen Shareholders to read the Next Fifteen Circular carefully when it becomes available. Any vote in respect of resolutions to be proposed at the M&C Saatchi Meetings or the Next Fifteen General Meeting to approve the Acquisition, the Scheme or related matters, should be made only on the basis of the information contained in the Scheme Document (in the case of the M&C Saatchi Shareholders), and the Next Fifteen Circular (in the case of Next Fifteen Shareholders).
This announcement does not constitute a prospectus or prospectus equivalent document.
Overseas jurisdictions
The release, publication or distribution of this announcement in or into jurisdictions other than the United Kingdom may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the United Kingdom should inform themselves about, and observe any applicable legal or regulatory requirements. In particular, the ability of persons who are not resident in the United Kingdom to vote their M&C Saatchi Shares with respect to the Scheme at the M&C Saatchi Court Meeting, or to execute and deliver forms of proxy appointing another to vote at the M&C Saatchi 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. This announcement has been prepared for the purpose of complying with English law and the Takeover 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.
Unless otherwise determined by Next Fifteen or required by the Takeover Code, and permitted by applicable law and regulation, the availability of New Next Fifteen Shares to be issued pursuant to the Acquisition to M&C Saatchi Shareholders 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 Acquisition by any such use, means, instrumentality or form 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 or any other jurisdiction where to do so would constitute a violation of the laws of that jurisdiction, and persons receiving such documents (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send such documents in or into or from any Restricted Jurisdiction. Doing so may render invalid any related purported vote in respect of the Acquisition. If the Acquisition is implemented by way of an Offer (unless otherwise permitted by applicable law and regulation), the 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 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 Offer may not be capable of acceptance by any such use, means, instrumentality or facilities or from within any Restricted Jurisdiction.
The availability of New Next Fifteen Shares pursuant to the Acquisition to M&C Saatchi Shareholders who are not resident in the United Kingdom or the ability of those persons to hold such shares may be affected by the laws or regulatory requirements of the relevant jurisdictions in which they are resident. Persons who are not resident in the United Kingdom should inform themselves of, and observe, any applicable legal or regulatory requirements. M&C Saatchi Shareholders who are in doubt about such matters should consult an appropriate independent professional adviser in the relevant jurisdiction without delay.
Further details in relation to M&C Saatchi Shareholders in overseas jurisdictions will be contained in the Scheme Document.
The Acquisition will be subject to the applicable requirements of the Takeover Code, the Panel, the London Stock Exchange and the FCA.
Additional information for US Investors
The Acquisition relates to the shares of a company incorporated in England and Wales and is proposed to be effected by means of a scheme of arrangement under Part 26 of the Companies Act 2006 that will be governed by the laws of England and Wales. A transaction effected by means of a scheme of arrangement is not subject to the tender offer rules or the proxy solicitation rules under the US Exchange Act. Accordingly, the Acquisition is subject to the disclosure requirements and practices applicable in the United Kingdom to schemes of arrangement which differ from the disclosure requirements of United States tender offer and proxy solicitation rules. If, in the future, Next Fifteen exercises the right to implement the Acquisition by way of an Offer and determines to extend the Offer into the United States, the Acquisition will be made in compliance with applicable United States laws and regulations.
Financial information included in this announcement and the Scheme Documentation has been or will have been prepared in accordance with accounting standards applicable in the United Kingdom that may not be comparable to financial information of US companies or companies whose financial statements are prepared in accordance with generally accepted accounting principles in the United States.
It may be difficult for US holders of M&C Saatchi Shares to enforce their rights and any claim arising out of the US federal laws, since M&C Saatchi and Next Fifteen are located in a non-US jurisdiction, and some or all of their officers and directors may be residents of a non-US jurisdiction. US holders of M&C Saatchi Shares may not be able to sue a non-US company or its officers or directors in a non-US court for violations of the US securities laws. Further, it may be difficult to compel a non-US company and its affiliates to subject themselves to a US court's judgement.
The New Next Fifteen Shares to be issued pursuant to the Scheme have not been and will not be registered under the US Securities Act or the securities laws of any state or other jurisdiction of the United States and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the US Securities Act and such other laws. The Acquisition is intended to be carried out under a scheme of arrangement under Part 26 of the Companies Act 2006 (which requires the approval of the Scheme Shareholders). If so, it is expected that any New Next Fifteen Shares to be issued pursuant to the Scheme to M&C Saatchi Shareholders will be issued in reliance upon the exemption from the registration requirements of the US Securities Act, provided by Section 3(a)(10) thereof. The New Next Fifteen Shares issued pursuant to the Scheme will not be registered under any US state securities laws and may only be issued to persons resident in a state pursuant to an exemption from the registration requirements of the securities laws of such state.
Publication on website and availability of hard copies
A copy of this announcement is and will be available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, for inspection on Next Fifteen's website www.next15.com/investors/ and on M&C Saatchi's website www.mcsaatchiplc.com by no later than 12 noon (London time) on the Business Day following this announcement. For the avoidance of doubt, the contents of the websites referred to in this announcement are not incorporated into and do not form part of this announcement.
Next Fifteen Shareholders may request a hard copy of this announcement by contacting Next Fifteen's registrars, Link Group, 0371 664 0300. Calls are charged at the standard geographic rate and will vary by provider. From overseas please call +44 (0)371 664 0300. Calls from outside the United Kingdom will be charged at the applicable international rate. Lines are open between 9.00 a.m. and 5.30 p.m. Monday to Friday excluding public holidays in England and Wales.
Cautionary note regarding forward looking statements
This announcement (including information incorporated by reference into this announcement), oral statements regarding the Acquisition and other information published by Next Fifteen contain certain forward looking statements with respect to the financial condition, strategies, objectives, results of operations and businesses of Next Fifteen and its group and certain plans and objectives with respect to the Enlarged Group. These forward looking statements can be identified by the fact that they do not relate only to historical or current facts. 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 Next Fifteen 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 may include statements relating to the expected effects of the Acquisition on Next Fifteen and M&C Saatchi, the expected timing and scope of the Acquisition and other statements other than historical facts. Forward looking statements often use words such as "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "hope", "aims", "continue", "will", "may", "should", "would", "could", or other words of similar meaning. These statements are based on assumptions and assessments made by Next Fifteen in light of its experience and its perception of historical trends, current conditions, 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 it is believed that the expectations reflected in such forward looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct and readers are therefore cautioned not to place undue reliance on these forward looking statements.
There are several factors which could cause actual results to differ materially from those expressed or implied in forward looking statements. Among the factors that could cause actual results to differ materially from those described in the forward looking statements are changes in the global, political, e conomic, business, competitive, market and regulatory forces, future exchange and interest rates, changes in tax rates and future business acquisitions or dispositions. For a discussion of important factors which could cause actual results to differ from forward looking statements in relation to the Next Fifteen Group or the M&C Saatchi Group, refer to the annual report and accounts of the Next Fifteen Group for the financial year ended 31 January 2022 and of the M&C Saatchi Group for the financial year ended 31 December 2021, respectively.
Each forward looking statement speaks only as at the date of this Announcement. Neither Next Fifteen nor its group assumes any obligation to update or correct the information contained in this announcement (whether as a result of new information, future events or otherwise), except as required by applicable law.
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 the figures that precede them.
No profit forecasts or estimates
No statement in this announcement (including any statement of estimated synergies) is intended as a profit forecast or estimate for any period and no statement in this announcement should be interpreted to mean that earnings or earnings per share or dividend per share for Next Fifteen, M&C Saatchi or the Enlarged Group, as appropriate, for the current or future financial years would necessarily match or exceed the historical published earnings or earnings per share or dividend per share for Next Fifteen, M&C Saatchi or the Enlarged Group as appropriate.
Dealing and Opening Position Disclosure requirements
Under Rule 8.3(a) of the Takeover Code, any person who is interested in one 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) 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 one 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 Panel's website at 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 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.
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