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Kindred Group PLC (KIND)

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Thursday 23 February, 2017

Kindred Group PLC

RECOMMENDED CASH OFFER for 32Red by Kindred Group

RNS Number : 6176X
Kindred Group PLC
23 February 2017
 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

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.

EMBARGOED UNTIL 7.00 A.M.

Thursday 23 February 2017

RECOMMENDED CASH OFFER (the "Offer")
for
32Red plc ("32Red")
by
Kindred Group plc ("Kindred")

Summary

·          The boards of Kindred and 32Red are pleased to announce that they have reached agreement on the terms of a recommended cash offer pursuant to which Kindred will offer to acquire the entire issued and to be issued share capital of 32Red. The Offer is intended to be implemented by means of a Takeover Offer, further details of which are contained in the full text of this announcement.

·          Under the terms of the Offer, 32Red Shareholders will be entitled to receive:

for each 32Red Share             196 pence.

·          32Red Shareholders as at the record date of 3 March 2017 will also be entitled to receive and retain a second interim dividend per 32Red Share of 4 pence (the "Approved Dividend"), to be paid to 32Red Shareholders on 23 March 2017.

·          The Offer provides an attractive opportunity for 32Red Shareholders to realise their holding of 32Red Shares at a premium in cash. The Offer values the entire issued and to be issued share capital of 32Red on a fully diluted basis at approximately £175.6 million.

·          The Offer, together with the Approved Dividend, represents a premium of approximately:

-    16.3 per cent. to the closing price per 32Red Share of 172.0 pence on 22 February 2017 (being the last Business Day before the date of this announcement);

-    32.4 per cent. to the volume weighted average closing price per 32Red Share of 151.1 pence in the one month prior to the date of this announcement;

-    39.5 per cent. to the volume weighted average closing price per 32Red Share of 143.4 pence in the three months prior to the date of this announcement; and

-    42.5 per cent. to the volume weighted average closing price per 32Red Share of 140.3 pence in the six months prior to the date of this announcement.

·          The cash consideration payable under the Offer (which for the avoidance of doubt does not include the Approved Dividend which is payable by 32Red) will be funded by new senior debt acquisition facilities, specifically for the purposes of the Transaction, provided by Swedbank.

·          The 32Red Directors, who have been so advised by Numis as to the financial terms of the Offer, consider the terms of the Offer to be fair and reasonable. In providing advice to the 32Red Directors, Numis has taken into account the commercial assessments of the 32Red Directors.

·          Accordingly, the 32Red Directors intend unanimously to recommend that 32Red Shareholders accept or procure acceptance of the Offer (or, in the event that the Offer is implemented by way of a Scheme, vote in favour of the resolutions relating to such Scheme), as the 32Red Directors have irrevocably undertaken to do in respect of their own beneficial holdings of 36,993,281 32Red Shares representing, in aggregate, approximately 43.3 per cent. of the share capital of 32Red in issue on 22 February 2017 (being the latest practicable date prior to the publication of this announcement).

·          Furthermore, Kindred has received irrevocable undertakings from other 32Red Shareholders in respect of an aggregate of 23,707,951 32Red Shares, representing approximately 27.8 per cent. of the share capital of 32Red in issue on 22 February 2017 (being the latest practicable date prior to the publication of this announcement) to accept (or procure the acceptance of) the Offer (or, in the event that the Offer is implemented by way of a Scheme, vote in favour of the resolutions relating to such Scheme).

·          Accordingly, Kindred has received irrevocable undertakings to accept (or procure acceptance of) the Offer in relation to an aggregate of 60,701,232 32Red Shares, representing approximately 71.1 per cent. of the share capital of 32Red in issue on 22 February 2017 (being the latest practicable date prior to the publication of this announcement). With the exception of the undertaking given by Miton Asset Management, each of the irrevocable undertakings are given in terms such that they will continue to be binding (and will not lapse) even in the event of a new offer for 32Red being made or announced by a third party. The undertaking given by Miton Asset Management will lapse if (i) the Offer is withdrawn or lapses and no new, revised or replacement Offer is announced at the same time; or (ii) a third party makes a competing offer for the entire issued share capital of 32Red at a value which (in 32Red's reasonable opinion on the advice of Numis) exceeds the value of the consideration offered under the terms of the Offer by 10% or more per 32Red Share. Further details of these irrevocable undertakings are set out in Appendix III to this announcement.

·          Kindred is one of the world's largest online gaming and sports betting companies with over 15 million customers across 100 markets. Kindred's core B2C offerings are in Europe and Australia, with customers in most global markets. The acquisitions of the Stan James online business and iGame in 2015 have made Kindred one of Europe's leading online gambling providers.

·          The Offer will be subject to the Conditions and further terms set out in Appendix I to this announcement, including the receipt by Kindred of valid acceptances in respect of, or otherwise acquiring or agreeing to acquire (whether pursuant to the Offer or otherwise), shares which constitute not less than 75 per cent. (or such lesser percentage as Kindred may decide, but such percentage not being less than 50 per cent. plus one share) in nominal value of the 32Red Shares.

·          The Offer Document and Form of Acceptance, containing further information about the Offer, will be sent to 32Red Shareholders as soon as practicable (and, in any event, within 28 days of the date of this announcement or such later date as Kindred and 32Red may agree otherwise) and will be made available by Kindred on its website at www.kindredplc.com/ and by 32Red on its website at www.32Redplc.com/.

Commenting on the Offer, Ed Ware of 32Red, said:

"We have consistently and profitably grown 32Red's market share in the regulated markets of the UK and more recently, Italy. The management team at Kindred have a similar business philosophy to our own and we look forward to joining forces with Kindred and continuing our successful growth within the Kindred Group."

Commenting on the Offer, Henrik Tjärnström of Kindred, said:

"The acquisition of 32Red is consistent with our multi-brand strategy and stated desire to grow our business in regulated and soon to be regulated markets. 32Red is a high quality, customer-focused business with a similar culture to Kindred's and we are delighted to welcome 32Red and its team into the Kindred Group and look forward to further developing the brand going forward."

 

Analyst and investor call

Kindred will host a conference call on 23 February 2017 to discuss the acquisition of 32Red. The call will begin at 09:30 a.m. CET and the numbers to use are as follows:

+44 20 3008 9813
+46 8 5664 2690

Subject to certain restrictions, the recorded call will be available to all interested parties on the "Investors" section of the Kindred website at www.kindredplc.com/.

This summary should be read in conjunction with, and is subject to, the full text of this announcement (including its Appendices). The Offer will be subject to the Conditions and further terms set out in Appendix I to this announcement and to the full terms and conditions to be set out in the Offer Document and the Form of Acceptance.

Appendix II to this announcement contains further details of the sources of information and bases of calculations set out in this announcement. Appendix III contains a summary of the irrevocable undertakings received in relation to the Offer. Appendix IV contains definitions of certain expressions used in this summary and this announcement.

 

Enquiries:


Kindred Group plc


Henrik Tjärnström

+46 (0) 723 878 059

Inga Lundberg

+44 (0) 788 799 6116



Houlihan Lokey (Financial adviser to Kindred)


George Fleet

+44 (0) 20 7839 3355



Panmure Gordon (Broker to Kindred)


Ben Thorne

+44 (0) 20 7886 2500

Erik Anderson




32Red plc

+00 350 200 49396

Ed Ware


Jon Hale




Numis (Financial adviser, nominated adviser and broker to 32Red)

+44 (0) 20 7260 1000

Michael Meade


Richard Thomas


Michael Burke


Important Notices

Houlihan Lokey EMEA, LLP which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for Kindred and no-one else in connection with the subject matter of this announcement, and will not be responsible to anyone other than Kindred for providing the protections afforded to clients of Houlihan Lokey EMEA, LLP, nor for giving advice in relation to the subject matter of this announcement.  Neither Houlihan Lokey EMEA, LLP, nor any of its subsidiaries or 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 Houlihan Lokey EMEA, LLP, in connection with this announcement, any statement contained herein or otherwise.

Panmure Gordon (UK) Limited, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively for Kindred and no-one else in connection with the matters set out in this announcement, and will not be responsible to anyone other than Kindred for providing the protections afforded to clients of Panmure Gordon (UK) Limited nor for giving advice in relation to the subject matter of this announcement.

Numis Securities Limited, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively for 32Red and no-one else in connection with the subject matter of this announcement, and will not be responsible to anyone other than 32Red for providing the protections afforded to clients of Numis Securities Limited, nor for giving advice in relation to the subject matter of this announcement.

The City Code on Takeovers and Mergers

By virtue of its status as a Gibraltar incorporated company, the Code does not apply to 32Red. Accordingly, 32Red Shareholders are reminded that the Panel does not have responsibility, in relation to 32Red, for ensuring compliance with the Code and is not able to answer 32Red Shareholders' queries. In accordance with 32Red's articles of association, 32Red and Kindred confirm in this announcement that, to implement the Offer, they will observe and comply with the provisions of the Code as if 32Red (and therefore the Offer) were subject to the Code. Further details are set out in the full text of this announcement.

In particular, public disclosures consistent with the provisions of Rule 8 of the Code (as if it applied to 32Red) should not be emailed to the Panel, but, as described below, released directly through a Regulatory Information Service.

Further Information

This announcement is for information purposes only and is not intended to, and does not, constitute or form part of any offer, invitation or solicitation of any offer to purchase, 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 Offer or otherwise, nor shall there be any sale, issuance, or transfer of securities in any jurisdiction in contravention of applicable law.

The Offer will be made solely by means of the Offer Document and, in respect of the 32Red Shares held in certificated form, the Form of Acceptance, which will contain the full terms and Conditions of the Offer, including details of how the Offer may be accepted. Any decision in respect of, or other response to, the Offer should be made only on the basis of the information contained in those documents. 32Red Shareholders are advised to read the formal documentation in relation to the Offer carefully once it has been dispatched.

This announcement has been prepared for the purpose of complying with applicable English and Gibraltar law and applicable securities laws 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 and Gibraltar.

Overseas Shareholders

The release, publication or distribution of this announcement in certain jurisdictions may be restricted by law. Persons who are not resident in the United Kingdom or Gibraltar or who are subject to other jurisdictions should inform themselves of, and observe, any applicable requirements. Any failure to comply with these 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 Offer disclaim any responsibility or liability for the violation of such requirements by any person.

US 32Red Shareholders should note that the Offer relates to the securities of a Gibraltar company which are admitted to trading on AIM, is subject to applicable Gibraltar and UK procedural and disclosure requirements (which are different from those of the US) and is proposed to be implemented under a takeover offer under applicable Gibraltar law and in accordance with the Code (as if it applied to 32Red, and therefore the Offer). Accordingly, the Offer will be subject to any applicable Gibraltar procedural and disclosure requirements and practices, which are different from the procedural and disclosure requirements of the US tender offer rules under the United States Exchange Act. The financial information with respect to 32Red included in this announcement and the Offer documentation has been or will have been prepared in accordance with IFRS and thus 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 US.

Unless otherwise determined by Kindred and permitted by applicable law and regulation, the Offer 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 accept the Offer 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 all documents relating to the Offer are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction, and persons receiving this announcement and all documents relating to the Offer (including custodians, nominees and trustees) must not mail or otherwise distribute or send them in, into or from such jurisdictions where to do so would violate the laws in that jurisdiction.

The availability of the Offer to 32Red Shareholders who are not resident in the United Kingdom or Gibraltar may be affected by the laws of the relevant jurisdictions in which they are resident. Persons who are not resident in the United Kingdom or Gibraltar should inform themselves of, and observe, any applicable requirements.

Forward Looking Statements

This announcement contains statements about Kindred and 32Red that are or may be forward looking statements. All statements other than statements of historical facts included in this announcement may be forward looking statements. Without limitation, any statements preceded or followed by or that include the words "targets", "plans", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "estimates", "projects" or words or terms of similar substance or the negative thereof, are forward looking statements. Forward looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of Kindred's or 32Red's operations and potential synergies resulting from the Offer; and (iii) the effects of government regulation on Kindred's or 32Red's business.

Such forward looking statements involve risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results to differ materially from those projected or implied in any forward looking statements. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward looking statements, which speak only as of the date hereof. Each of Kindred and 32Red disclaims any obligation to update any forward looking or other statements contained herein, except as required by applicable law.

No profit forecasts or estimates

No statement in this announcement 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 for Kindred or 32Red, as appropriate, for the current or future financial years would necessarily match or exceed the historical published earnings or earnings per share for Kindred or 32Red, as appropriate.

Disclosure requirements

32Red is a Gibraltar company and is therefore not subject to the Code. Accordingly, shareholders of 32Red and others dealing in 32Red Shares are not obliged to disclose any of their dealings under the provisions of the Code. However, market participants are requested to make disclosure of dealings as if the Code applied and as if 32Red were in an "offer period" under the Code. 32Red Shareholders and persons considering the acquisition or disposal of any interest in 32Red Shares are reminded that they are subject to the Disclosure Guidance and Transparency Rules made by the UKLA and other applicable regulatory rules regarding transactions in 32Red Shares.

If you are in any doubt as whether or not you should disclose dealings, you should contact an independent financial adviser authorised by the Financial Conduct Authority under the FSMA (or, if you are resident in a jurisdiction other than the United Kingdom, a financial adviser authorised under the laws of such jurisdiction).

In light of the foregoing, as provided in Rule 8.3(a) of the Code, any person who is "interested" in one per cent. or more of any class of "relevant securities" of 32Red 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") is requested to make an Opening Position Disclosure following the commencement of the "offer period" which begins upon the release of this announcement.

An Opening Position Disclosure should contain details of the person's interests and short positions in, and rights to subscribe for, any "relevant securities" of each of (i) 32Red and (ii) Kindred. Persons to whom Rule 8.3(a) would have applied had the Code been applicable are requested to make an Opening Position Disclosure by no later than 3:30 p.m. (London time) on the tenth Business Day following the commencement of the "offer period" which begins upon the release of this announcement. Relevant persons who undertake "dealings" in the relevant securities of 32Red or a "securities exchange offeror" prior to the deadline for making an Opening Position Disclosure are requested instead to make a Dealing Disclosure.

Rule 8.3(b) of the Code provides that if any person is, or becomes "interested" (directly or indirectly) in one per cent. or more of any class of "relevant securities" of an offeree or of any "securities exchange offeror", all "dealings" in any "relevant securities" of that offeree or of any "securities exchange offeror" (including by means of an option in respect of, or a derivative referenced to, any such "relevant securities") should be publicly disclosed in a Dealing Disclosure by no later than 3:30 p.m. (London time) on the Business Day following the date of the relevant transaction. In a situation where the Code applies, this requirement would continue until the date on which any "offer" becomes, or is declared, unconditional as to acceptances, lapses or is otherwise withdrawn or on which the "offer period" otherwise ends. Under Rule 8 of the Code, a Dealing Disclosure would 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 (i) 32Red and (ii) any "securities exchange offeror", save to the extent that these details have previously been disclosed under Rule 8.

Accordingly, in the case of both an Opening Position Disclosure and Dealing Disclosure (if any), disclosures of interests in the shares of 32Red are requested to be made.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire an "interest" in "relevant securities" of 32Red or a "securities exchange offeror", they would, if the Code were applicable, be deemed to be a single person for the purpose of Rule 8.3 of the Code.

Consistent with the provisions of Rule 8.1 of the Code, Opening Position Disclosures should be made by 32Red and by any "offeror", and all "dealings" in "relevant securities" of 32Red by 32Red, by any "offeror" or by any persons "acting in concert" with any of them, should be disclosed in a Dealing Disclosure by no later than 12 noon (London time) on the Business Day following the date of the relevant transaction.

"Interests in securities" arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in the price of "securities". In particular, a person will be treated as having an "interest" by virtue of the ownership or control of "securities", or by virtue of any option in respect of, or derivative referenced to, "securities".

Terms in quotation marks are defined in the Code, which can be found on the Panel's website. If you are in any doubt as to whether not you should disclose a "dealing" by reference to the above, you should contact an independent financial adviser authorised by the FCA under the FSMA.

It should be noted that, for the purposes of the above summary of Rule 8 of the Code, Kindred is not treated as a "securities exchange offeror" and therefore there is no requirement to disclose interests or dealings in shares of Kindred.

Electronic Communications

Please be aware that addresses, electronic addresses and certain information provided by 32Red Shareholders, persons with information rights and other relevant persons for the receipt of communications from 32Red may be provided to Kindred during the Offer Period as requested under Section 4 of Appendix 4 of the Code to comply with Rule 2.12(c) of the Code.

 

Publication on Website and Availability of Hard Copies

A copy of this announcement will be made available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on Kindred's and 32Red's websites at www.kindredplc.com/ and www.32Redplc.com/ respectively by no later than 12 noon (London time) on the Business Day following this announcement. For the avoidance of doubt, the contents of those websites are not incorporated and do not form part of this announcement.

A hard copy of this announcement will be sent by 32Red to 32Red Shareholders and persons with information rights (other than such 32Red Shareholders or persons with information rights who have elected to receive electronic communications) in accordance with the requirements of the Code.

You may request a hard copy of this announcement by contacting the Company Secretary of 32Red by submitting a request in writing to the Company Secretary at 32 Red plc, 741 Europort, Gibraltar. You may also request that all future documents, announcements and information to be sent to you in relation to the Offer should be in hard copy form.

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 the figures that precede them.

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY IN, INTO OR FROM THE UNITED STATES OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.

EMBARGOED UNTIL 7.00 A.M.

Thursday 23 February 2017

RECOMMENDED CASH OFFER (the "Offer")
for
32Red plc ("32Red")
by
Kindred Group plc ("Kindred")

1.         Introduction

The boards of Kindred and 32Red are pleased to announce that they have reached agreement on the terms of a recommended cash offer pursuant to which Kindred will offer to acquire the entire issued and to be issued ordinary share capital of 32Red. It is intended that the Offer be implemented by means of a Takeover Offer, further details of which are set out below.

2.         The Offer

Under the terms of the Offer, which will be subject to the Conditions and further terms set out in Appendix I to this announcement and to be set out in the Offer Document, 32Red Shareholders will be entitled to receive:

for each 32Red Share             196 pence.

32Red Shareholders as at the record date of 3 March 2017 will also be entitled to receive and retain a second interim dividend per 32Red Share of 4 pence (the "Approved Dividend"), to be paid to 32Red Shareholders on 23 March 2017.

The Offer values the entire issued and to be issued share capital of 32Red on a fully diluted basis at approximately £175.6 million.

The Offer, together with the Approved Dividend, represents a premium of approximately:

-    16.3 per cent. to the closing price per 32Red Share of 172.0 pence on 22 February 2017 (being the last Business Day before the date of this announcement);

-    32.4 per cent. to the volume weighted average closing price per 32Red Share of 151.1 pence in the one month prior to the date of this announcement;

-    39.5 per cent. to the volume weighted average closing price per 32Red Share of 143.4 pence in the three months prior to the date of this announcement; and

-    42.5 per cent. to the volume weighted average closing price per 32Red Share of 140.3 pence in the six months prior to the date of this announcement.

The Offer will be subject to the Conditions and further terms set out in Appendix I to this announcement, including the receipt by Kindred of valid acceptances in respect of, or otherwise acquiring or agreeing to acquire (whether pursuant to the Offer or otherwise), shares which constitute not less than 75 per cent. (or such lesser percentage as Kindred may decide, but such percentage not being less than 50 per cent. plus one share) in nominal value of the 32Red Shares and represent not less than 75 per cent. (or such lesser percentage as Kindred may decide, but such percentage not being less than 50 per cent. plus one share) of the voting rights carried by the 32Red Shares.

The Offer Document and Form of Acceptance, containing further information about the Offer, will be sent to 32Red Shareholders as soon as practicable (and, in any event, within 28 days of the date of this announcement or such later date as Kindred and 32Red may agree) and will be made available by Kindred on its website at www.kindredplc.com/ and by 32Red on its website at www.32Redplc.com/.

3.         Background to and reasons for the Offer

Kindred has a track record of making careful acquisition choices and successfully integrating these into the group, with eight companies having been acquired since 2005, extending the Kindred Group's geographic coverage and increasing its potential for long-term profitability. As part of Kindred's multi-brand strategy, Kindred uses acquisitions to complement its strong organic growth and to strengthen its position in locally-regulated or soon-to-be regulated countries.

32Red represents a strong strategic and cultural fit for Kindred and is consistent with its key areas of focus, namely:

Providing the best customer experience

32Red has a heritage in pure online gaming and has established a strong reputation by innovating for the improvement of its customers' experience as well as protecting them. This is consistent with Kindred's ambition to provide customers with the best experience possible. Both companies believe such an approach strengthens their trusted brands in the marketplace, in turn driving more customers to their businesses and retaining them for longer.

Creating industry leading brands

In December 2016, Kindred changed its group name from Unibet Group plc reflecting the fact that the group was growing and changing, with 13 consumer-facing brands in its portfolio, many of them acquired. In a competitive market such as online gaming, a strong brand is a key differentiator. Since its inception in 2002, 32Red has developed what Kindred believes to be a distinct, trusted and leading brand in the market. As an established online gaming brand in the UK, 32Red will sit extremely well within the Kindred's multi-brand strategy.

Building market share

The large, regulated and fast-growing UK market is a key territory for Kindred as demonstrated by the acquisition of the online business of Stan James plc in 2015. With a significant proportion of 32Red's revenue being generated in the UK, the acquisition of 32Red will considerably strengthen Kindred's position in the strategic UK market.

There are expected to be both cost and revenue synergies arising from the integration of 32Red into Kindred with the future migration of 32Red onto the Kindred platform providing 32Red's customers access to Kindred's extended range of content. It is expected that the transaction will be earnings enhancing in the first full financial year following acquisition.

4.         Information on Kindred

Founded in 1997, Kindred is one of the largest online gambling companies in the world with over 15 million customers across more than 100 countries. Kindred is home to 13 consumer-facing brands, and is licensed in Australia and 11 EU member states. Kindred offers pre-game and live sports betting, poker, casino and games through several subsidiaries and brands including Unibet, Stan James, Maria Casino, iGame and Bingo.com, each with distinctive market positions. Kindred is headquartered in Malta and has over 1,100 employees across its various locations.

Kindred is listed on Nasdaq Stockholm Large Cap List and as of the close of trading on 22 February 2017, the latest practicable date prior to the date of this announcement, had a market capitalisation of approximately £1,719 million. In its most recent reported financial year ended 31 December 2016, Kindred generated gross win revenues of £544.1 million and EBITDA of £123.7 million.

For more information about Kindred, visit www.kindredplc.com.

5.         Information on 32Red

Founded in 2002, 32Red is an award-winning online gaming company, operating an online casino, 32Red.com, as well as a poker room, 32RedPoker.com, online bingo destination, 32RedBingo.com, and a sports betting brand, 32RedSport.com. In 2015, 32Red acquired the Roxy Palace online casino business. 32Red is principally licensed and regulated in Gibraltar, the United Kingdom and Italy. 32Red is located in Gibraltar and has approximately 125 employees.

In its most recent reported financial year ended 31 December 2015, 32Red generated revenues of £48.7 million and EBITDA (before share option costs and exceptional items) of £5.2 million.

6.         Current trading and prospects of 32Red

On 1 February 2017, 32Red provided an update on its trading performance for the year ended 31 December 2016.

32Red delivered a record annual net gaming revenue, up 28 per cent. to £62.3m (2015: £48.7m). This strong performance was driven by a combination of healthy organic growth in 32Red Casino, (up 19 per cent. on 2015), and a full financial year contribution from the Roxy Place business (acquired in July 2015).

In 2015 and 2016, 32Red's net gaming revenue by segment was: 

 


Total net gaming revenue


2016


2015


Variance

32Red Casino - net gaming revenue

£58.5m

£46.3m

+26%

32Red Bingo, 32Red Poker and 32Red Sports - net gaming revenue

£3.8m

£2.4m

+60%

Total Net Gaming Revenue

£62.3m

£48.7m

+28%

32Red Casino's net gaming revenue increased by 26 per cent. to £58.5m in 2016 (2015: £48.7m), representing 94 per cent. of 32Red's total net gaming revenue for the 2016 financial year (2015: 95 per cent.). This strong growth reflected (i) the increased marketing investment in the 32Red Casino brand, (ii) a full financial year's contribution from Roxy Place Casino, and (iii) healthy growth from 32Red Casino in Italy. In addition, revenue from 32Red Bingo, 32Red Poker and 32Red Sport continued to grow strongly in 2016, primarily driven by 32Red Sport which continues to develop as an increasingly important customer acquisition and retention channel for 32Red.

32Red will announce its 2016 preliminary results on 9 March 2017. The results are expected to be in line with the 32Red Board's previous expectations. Early trading in 2017 has been strong across the Wider 32Red Group with revenues for the first 30 days in January 2017 up 21 per cent. on the corresponding period in 2016.

7.         Recommendation by the 32Red Directors

The 32Red Directors, who have been so advised by Numis as to the financial terms of the Offer, consider the terms of the Offer to be fair and reasonable. In providing advice to the 32Red Directors, Numis has taken into account the commercial assessments of the 32Red Directors.

Accordingly, the 32Red Directors intend unanimously to recommend that 32Red Shareholders accept (or procure the acceptance of) the Offer (or, in the event that the Offer is implemented by way of a Scheme, vote in favour of the resolutions relating to such Scheme), as the 32Red Directors have irrevocably undertaken to do in respect of their own beneficial holdings of 36,993,281 32Red Shares representing, in aggregate, approximately 43.3 per cent. of the ordinary share capital of 32Red in issue on 22 February 2017 (being the latest practicable date prior to the publication of this announcement). These irrevocable undertakings are given in terms such that they will continue to be binding (and will not lapse) even in the event of a new offer for 32Red being made or announced by a third party.

8.         Background to and reasons for the recommendation by 32Red

Since listing on AIM in 2005, 32Red has successfully pursued its clear and focused strategy to exploit both organic and selective M&A opportunities and deliver sustainable long-term growth for all its stakeholders. This strategy has been focused, primarily, upon growing its brands in its core UK market and expansion in new regulated markets where 32Red could exploit its marketing strength. This strategy has delivered strong net gaming revenue growth and increased profitability for shareholders, most recently illustrated by 32Red's 2016 year-end update.

However, whilst the 32Red Directors continue to believe in its stated growth strategy and the strength of the 32Red brand, they also believe that 32Red would now be better placed as part of a larger group. Kindred represents a strong strategic fit for 32Red and the 32Red Directors believe a combination will build on 32Red's long-standing presence and well-established brand in the UK casino market.

In making its assessment of the merits of the Offer, the 32Red Board has taken into account:

-    the level of the cash consideration payable under the Offer, being at a level above 32Red's all-time high closing share price and (including the Approved Dividend) at a premium of 39.5 per cent. to the volume weighted average closing price per 32Red Share of 143.4 pence in the three months prior to the date of this announcement;

-    the Offer representing an attractive valuation when considered against 32Red's historic earnings and prospects;

-    the relative lack of liquidity in 32Red Shares and the fact that the Offer provides 32Red Shareholders with a certain opportunity to realise their investment in 32Red wholly for cash; and

-    the level of irrevocable undertakings to accept (or procure the acceptance of) the Offer, representing, in aggregate 71.1 per cent. of the 32Red Shares.

Following this assessment and for the reasons set out above, the 32Red Board is unanimously recommending that 32Red Shareholders accept the Offer.

9.         Irrevocable undertakings in relation to the Offer

Kindred has received irrevocable undertakings to accept (or procure acceptance of) the Offer representing an aggregate of 60,701,232 32Red Shares, representing approximately 71.1 per cent. of the share capital of 32Red in issue on 22 February 2017 (being the latest practicable date prior to the publication of this announcement).

With the exception of the undertaking given by Miton Asset Management, each of the irrevocable undertakings are given in terms such that they will continue to be binding (and will not lapse) even in the event of a new offer for 32Red being made or announced by a third party. The undertaking given by Miton Asset Management will lapse if (i) the Offer is withdrawn or lapses and no new, revised or replacement Offer is announced at the same time; or (ii) a third party makes a competing offer for the entire issued share capital of 32Red at a value which (in 32Red's reasonable opinion on the advice of Numis) exceeds the value of the consideration offered under the terms of the Offer by 10% or more per 32Red Share. Further details of these irrevocable undertakings are set out in Appendix III to this announcement.

10.       Management, employees and locations

Kindred believes that 32Red's management and employees are an important part of the opportunity to develop Kindred, particularly in the strategic UK market.

Kindred believes that, if the Offer is declared wholly unconditional, it will offer good career opportunities to 32Red employees.

11.       Financing

The consideration payable under the Offer will be funded by new term and revolving facilities (the "Facilities") provided to Kindred by Swedbank, pursuant to a facilities agreement entered into between Kindred as borrower and Swedbank as lender (the "Swedbank Facility").

The Facilities comprise of: (i) a £110,000,000 term loan to be applied towards, amongst other things, financing the Offer; (ii) a EUR 112,000,000 revolving facility "A" to be applied towards, amongst other things, financing the Offer, refinancing Kindred's existing revolving facility dated 31 August 2015 and towards any market purchases of 32Red Shares, and (iii) a £68,000,000 revolving facility "B" to be applied towards, amongst other things, financing the Offer and any market purchases of 32Red Shares.

In respect of the Swedbank Facility, Kindred has agreed that, subject to certain limited exceptions, it will not waive or amend certain conditions and certain further terms of the Offer without the consent of Swedbank.

Houlihan Lokey is satisfied that sufficient resources are available to Kindred to satisfy in full the consideration payable to 32Red Shareholders under the terms of the Offer (which for the avoidance of doubt, does not include the Approved Dividend which is payable by 32Red).

12.       32Red Share Plans

Participants in the 32Red Share Plans will be contacted in due course regarding the effect of the Offer under those plans and provided with further details concerning proposals which will be made to them. Details of the proposals will be set out in the Offer Document and in separate letters to be sent to the participants in the 32Red Share Plans.

Kindred intends to provide incentive arrangements for 32Red employees consistent with Kindred's compensation schemes and having regard to 32Red's current incentive arrangements and its desire to attract and retain talent at 32Red.

13.       Compulsory acquisition, delisting and cancellation of trading

If the Offer becomes or is declared unconditional in all respects and Kindred receives valid acceptances in respect of 32Red Shares which, together with the 32Red Shares acquired, or agreed to be acquired, before or during the Offer by Kindred, represent not less than 75 per cent. of the voting rights attaching to the 32Red Shares, Kindred intends to procure that 32Red will make an application to the London Stock Exchange for the cancellation of the admission to trading on AIM of 32Red Shares and Kindred will seek to re-register 32Red as a private company.

A notice period of not less than 20 Business Days (at the expiry of which, cancellation will become effective) will commence on the date on which the Offer becomes or is declared unconditional in all respects provided that Kindred has attained 75 per cent. or more of the voting rights as described above.

Delisting would significantly reduce the liquidity and marketability of any 32Red Shares not assented to the Offer.

If Kindred receives acceptances to the Offer in respect of, and/or otherwise acquires not less than 90 per cent. of the 32Red Shares to which the Offer relates by nominal value and voting rights attaching to such shares, Kindred intends to exercise its rights pursuant to section 352A of the Companies Act 2014 of Gibraltar, and section 208 of the Companies Act 1930 of Gibraltar, to acquire compulsorily, on the same terms as the Offer, the remaining 32Red Shares not assented to the Offer.

14.       Conditions to the Offer

The Offer will be conditional upon the satisfaction or waiver of the Conditions, as set out in Appendix I. In particular, the Offer will be conditional upon:

(a)        valid acceptances being received by no later than 1:00 p.m. on the first closing date of the Offer (or such later time(s) and/or date(s) as Kindred may decide) in respect of 32Red Shares which, together with all other 32Red Shares which Kindred acquires or agrees to acquire (whether pursuant to the Offer or otherwise), constitute no less than 75 per cent. (or such lesser percentage as Kindred may decide, but such percentage not being less than 50 per cent. plus one share) in nominal value of 32Red Shares and represents not less than 75 per cent. (or such lesser percentage as Kindred may decide, but such percentage not being less than 50 per cent. plus one share) of the voting rights attached to such shares; and

(b)        the Gaming Regulators having approved the acquisition by Kindred of 32Red Shares representing more than 50 per cent. of the voting rights carried by the 32Red Shares.

If Kindred has not received acceptances in respect of 32Red Shares which, together with the 32Red Shares acquired, or agreed to be acquired, before or during the Offer by Kindred, represent not less than 75 per cent. (or such lesser percentage as Kindred may decide, but such percentage not being less than 50 per cent. plus one share) of the voting rights attaching to the 32Red Shares, by 1:00 p.m. (London time) on the first closing date of the Offer (or such later time(s) and/or date(s) as Kindred may decide), the Offer will lapse.

The full Conditions of the Offer are set out in Appendix I.

15.       Overseas Shareholders

The release, publication or distribution of this announcement and the availability of the Offer to persons not resident in the United Kingdom or Gibraltar may be affected by the laws of other jurisdictions in relation to the Offer. Overseas Shareholders should inform themselves about and observe all applicable legal requirements.

This announcement has been prepared for the purposes of complying with applicable English and Gibraltar law and applicable securities laws, 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 and Gibraltar.

16.       Offer-related arrangements and documents available on a website

Offer-related arrangements

Confidentiality Agreement

Kindred and 32Red entered into a confidentiality agreement on 22 December 2016 pursuant to which Kindred and 32Red have undertaken to each other to keep information relating to the other confidential and not to disclose it to third parties (other than to permitted recipients) unless required by law or regulation.

Application of certain aspects of the Code

As 32Red is incorporated and has its registered office in Gibraltar, the Code does not apply to Kindred or 32Red in relation to the Offer. However, in accordance with 32Red's articles of association and in order to ensure the most transparent and orderly procedure, Kindred and 32Red confirm that, to implement the Offer, they will observe and comply with the provisions of the Code (including the provisions of Appendix 7 of the Code if the Offer is implemented by way of a Scheme), as if 32Red (and therefore the Offer) were subject to the Code.

Documents available on website

Copies of the following documents will be made available on Kindred's and 32Red's websites at www.kindredplc.com and www.32Redplc.com respectively by no later than 12 noon (London time) on the Business Day following this announcement until the end of the Offer:

·          the Confidentiality Agreement;

·          the irrevocable undertakings referred to in paragraphs 7 and 9 above; and

·          documents relating to the financing of the Offer referred to in paragraph 11 above.

17.       Opening Position Disclosures and Interests

Except for the irrevocable undertakings referred to in paragraph 9 above, as at close of business on 22 February 2017 (being the latest practicable date prior to the date of this announcement), neither Kindred, nor any of the directors of Kindred or any member of the Kindred Group, nor, so far as the directors of Kindred are aware, any person acting in concert with Kindred for the purposes of the Offer, had any interest in, right to subscribe for, or had borrowed or lent any 32Red Shares or securities convertible or exchangeable into 32Red Shares, nor did any such person have any short position (whether conditional or absolute and whether in the money or otherwise), including any short position under a derivative, any agreement to sell or any delivery obligation or right to require another person to take delivery, or any dealing arrangement of the kind referred to in Note 11 of the definition of acting in concert in the Code, in relation to 32Red Shares or in relation to any securities convertible or exchangeable into 32Red Shares.

However, in the interests of maintaining secrecy prior to the publication of this announcement, Kindred has not yet completed enquiries in respect of the matters referred to in this paragraph of certain parties who would be deemed by the Code to be acting in concert with it for the purposes of the Offer. Enquiries of such parties will be completed as soon as practicable following the making of this announcement and, in accordance with Note 2(a)(i) to Rule 8 of the Code (as if it applied), further disclosures, if any, required in respect of such parties will be made as soon as possible and in any event by no later than 12 noon (London time) on 9 March 2017.

18.       Issued share capital

In accordance with 2.9 of the Code, 32Red confirms that, as at the date of this announcement, it has 85,347,528 ordinary shares of 0.2 pence each in issue. The ISIN for 32Red Shares is GI000A0F56M0.

19.       General

Kindred reserves the right to elect to implement the acquisition of the 32Red Shares by way of a Scheme as an alternative to a Takeover Offer. In such event, the Scheme will be implemented on the same terms (subject to appropriate amendments), so far as applicable, as those which could apply to the Offer.

The bases and sources of certain financial information contained in this announcement are set out in Appendix II to this announcement. A summary of the irrevocable undertakings is contained in Appendix III to this announcement. Appendix IV contains definitions of certain expressions used in this announcement.

 

Enquiries:


Kindred Group plc


Henrik Tjärnström

+46 (0) 723 878 059

Inga Lundberg

+44 (0) 788 799 6116



Houlihan Lokey (Financial adviser to Kindred)


George Fleet

+44 (0) 20 7839 3355



Panmure Gordon (Broker to Kindred)


Ben Thorne

+44 (0) 20 7886 2500

Erik Anderson




32Red plc

+00 350 200 49396

Ed Ware


Jon Hale




Numis (Financial adviser, nominated adviser and broker to 32Red)

+44 (0) 20 7260 1000

Michael Meade


Richard Thomas


Michael Burke


Important Notices

Houlihan Lokey EMEA, LLP which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for Kindred and no-one else in connection with the subject matter of this announcement, and will not be responsible to anyone other than Kindred for providing the protections afforded to clients of Houlihan Lokey EMEA, LLP, nor for giving advice in relation to the subject matter of this announcement. Neither Houlihan Lokey EMEA, LLP, nor any of its subsidiaries or 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 Houlihan Lokey EMEA, LLP, in connection with this announcement, any statement contained herein or otherwise.

Panmure Gordon (UK) Limited, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively for Kindred and no-one else in connection with the matters set out in this announcement, and will not be responsible to anyone other than Kindred for providing the protections afforded to clients of Panmure Gordon (UK) Limited nor for giving advice in relation to the subject matter of this announcement.

Numis Securities Limited, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively for 32Red and no-one else in connection with the subject matter of this announcement, and will not be responsible to anyone other than 32Red for providing the protections afforded to clients of Numis Securities Limited, nor for giving advice in relation to the subject matter of this announcement.

The City Code on Takeovers and Mergers

By virtue of its status as a Gibraltar incorporated company, the Code does not apply to 32Red. Accordingly, 32Red Shareholders are reminded that the Panel does not have responsibility, in relation to 32Red, for ensuring compliance with the Code and is not able to answer 32Red Shareholders' queries. In accordance with 32Red's articles of association, 32Red and Kindred have agreed in this announcement that, to implement the Offer, they will observe and comply with the provisions of the Code as if 32Red (and therefore the Offer) were subject to the Code. Further details of this agreement are set out at paragraph 16 in this announcement.

In particular, public disclosures consistent with the provisions of Rule 8 of the Code (as if it applied to 32Red) should not be emailed to the Panel, but, as described below, released directly through a Regulatory Information Service.

Further Information

This announcement is for information purposes only and is not intended to, and does not, constitute or form part of any offer, invitation or solicitation of any offer to purchase, 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 Offer or otherwise, nor shall there be any sale, issuance, or transfer of securities in any jurisdiction in contravention of applicable law.

The Offer will be made solely by means of the Offer Document and, in respect of the 32Red Shares held in certificated form, the Form of Acceptance, which will contain the full terms and Conditions of the Offer, including details of how the Offer may be accepted. Any decision in respect of, or other response to, the Offer should be made only on the basis of the information contained in those documents. 32Red Shareholders are advised to read the formal documentation in relation to the Offer carefully once it has been despatched.

This announcement has been prepared for the purpose of complying with applicable English and Gibraltar law and applicable securities laws 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 and Gibraltar.

 

 

Overseas Shareholders

The release, publication or distribution of this announcement in certain jurisdictions may be restricted by law. Persons who are not resident in the United Kingdom or Gibraltar or who are subject to other jurisdictions should inform themselves of, and observe, any applicable requirements. Any failure to comply with these 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 Offer disclaim any responsibility or liability for the violation of such requirements by any person.

US 32Red Shareholders should note that the Offer relates to the securities of a Gibraltar company which are admitted to trading on AIM, is subject to Gibraltar and UK procedural and disclosure requirements (which are different from those of the US) and is proposed to be implemented under a takeover offer under applicable Gibraltar law and in accordance with the Code (as if it applied to 32Red, and therefore the Offer). Accordingly, the Offer will be subject to Gibraltar procedural and disclosure requirements and practices, which are different from the procedural and disclosure requirements of the US tender offer rules under the United States Exchange Act. The financial information with respect to 32Red included in this announcement and the Offer documentation has been or will have been prepared in accordance with IFRS and thus 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 US.

Unless otherwise determined by Kindred and permitted by applicable law and regulation, the Offer 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 accept the Offer 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 all documents relating to the Offer are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction, and persons receiving this announcement and all documents relating to the Offer (including custodians, nominees and trustees) must not mail or otherwise distribute or send them in, into or from such jurisdictions where to do so would violate the laws in that jurisdiction.

The availability of the Offer to 32Red Shareholders who are not resident in the United Kingdom or Gibraltar may be affected by the laws of the relevant jurisdictions in which they are resident. Persons who are not resident in the United Kingdom or Gibraltar should inform themselves of, and observe, any applicable requirements.

 

Forward Looking Statements

This announcement contains statements about Kindred and 32Red that are or may be forward looking statements. All statements other than statements of historical facts included in this announcement may be forward looking statements. Without limitation, any statements preceded or followed by or that include the words "targets", "plans", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "estimates", "projects" or words or terms of similar substance or the negative thereof, are forward looking statements. Forward looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of Kindred's or 32Red's operations and potential synergies resulting from the Offer; and (iii) the effects of government regulation on Kindred's or 32Red's business.

Such forward looking statements involve risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results to differ materially from those projected or implied in any forward looking statements. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward looking statements, which speak only as of the date hereof. Each of Kindred and 32Red disclaims any obligation to update any forward looking or other statements contained herein, except as required by applicable law.

No profit forecasts or estimates

No statement in this announcement 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 for Kindred or 32Red, as appropriate, for the current or future financial years would necessarily match or exceed the historical published earnings or earnings per share for Kindred or 32Red, as appropriate.

Disclosure requirements

32Red is a Gibraltar company and is therefore not subject to the Code. Accordingly, shareholders of 32Red and others dealing in 32Red Shares are not obliged to disclose any of their dealings under the provisions of the Code. However, market participants are requested to make disclosure of dealings as if the Code applied and as if 32Red were in an "offer period" under the Code. 32Red Shareholders and persons considering the acquisition or disposal of any interest in 32Red Shares are reminded that they are subject to the Disclosure Guidance and Transparency Rules made by the UKLA and other applicable regulatory rules regarding transactions in 32Red Shares.

If you are in any doubt as whether or not you should disclose dealings, you should contact an independent financial adviser authorised by the Financial Conduct Authority under the FSMA (or, if you are resident in a jurisdiction other than the United Kingdom, a financial adviser authorised under the laws of such jurisdiction).

In light of the foregoing, as provided in Rule 8.3(a) of the Code, any person who is "interested" in one per cent. or more of any class of "relevant securities" of 32Red 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") is requested to make an Opening Position Disclosure following the commencement of the "offer period" which begins upon the release of this announcement.

An Opening Position Disclosure should contain details of the person's interests and short positions in, and rights to subscribe for, any "relevant securities" of each of (i) 32Red and (ii) Kindred. Persons to whom Rule 8.3(a) would have applied had the Code been applicable are requested to make an Opening Position Disclosure by no later than 3:30 p.m. (London time) on the tenth Business Day following the commencement of the "offer period" which begins upon the release of this announcement. Relevant persons who undertake "dealings" in the relevant securities of 32Red or a "securities exchange offeror" prior to the deadline for making an Opening Position Disclosure are requested instead to make a Dealing Disclosure.

Rule 8.3(b) of the Code provides that if any person is, or becomes "interested" (directly or indirectly) in one per cent. or more of any class of "relevant securities" of an offeree or of any "securities exchange offeror", all "dealings" in any "relevant securities" of that offeree or of any "securities exchange offeror" (including by means of an option in respect of, or a derivative referenced to, any such "relevant securities") should be publicly disclosed in a Dealing Disclosure by no later than 3:30 p.m. (London time) on the Business Day following the date of the relevant transaction. In a situation where the Code applies, this requirement would continue until the date on which any "offer" becomes, or is declared, unconditional as to acceptances, lapses or is otherwise withdrawn or on which the "offer period" otherwise ends. Under Rule 8 of the Code, a Dealing Disclosure would 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 (i) 32Red and (ii) any "securities exchange offeror", save to the extent that these details have previously been disclosed under Rule 8.

Accordingly, in the case of both an Opening Position Disclosure and Dealing Disclosure (if any), disclosures of interests in the shares of 32Red are requested to be made.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire an "interest" in "relevant securities" of 32Red or a "securities exchange offeror", they would, if the Code were applicable, be deemed to be a single person for the purpose of Rule 8.3 of the Code.

Consistent with the provisions of Rule 8.1 of the Code, Opening Position Disclosures should be made by 32Red and by any "offeror", and all "dealings" in "relevant securities" of 32Red by 32Red, by any "offeror" or by any persons "acting in concert" with any of them, should be disclosed in a Dealing Disclosure by no later than 12:00 p.m. (London time) on the Business Day following the date of the relevant transaction.

"Interests in securities" arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in the price of "securities". In particular, a person will be treated as having an "interest" by virtue of the ownership or control of "securities", or by virtue of any option in respect of, or derivative referenced to, "securities".

Terms in quotation marks are defined in the Code, which can be found on the Panel's website. If you are in any doubt as to whether not you should disclose a "dealing" by reference to the above, you should contact an independent financial adviser authorised by the FCA under the FSMA.

It should be noted that, for the purposes of the above summary of Rule 8 of the Code, Kindred is not treated as a "securities exchange offeror" and therefore there is no requirement to disclose interests or dealings in shares of Kindred.

Electronic Communications

Please be aware that addresses, electronic addresses and certain information provided by 32Red Shareholders, persons with information rights and other relevant persons for the receipt of communications from 32Red may be provided to Kindred during the Offer Period as requested under Section 4 of Appendix 4 of the Code to comply with Rule 2.12(c) of the Code.

Publication on Website and Availability of Hard Copies

A copy of this announcement will be made available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on Kindred's and 32Red's websites at www.kindredplc.com/ and www.32Redplc.com/ respectively by no later than 12 noon (London time) on the Business Day following this announcement. For the avoidance of doubt, the contents of those websites are not incorporated and do not form part of this announcement.

You may request a hard copy of this announcement by contacting the Company Secretary of 32Red by submitting a request in writing to the Company Secretary at 32 Red plc, 741 Europort, Gibraltar. You may also request that all future documents, announcements and information to be sent to you in relation to the Offer should be in hard copy form.

 

 

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 the figures that precede them.

APPENDIX I
CONDITIONS AND FURTHER TERMS OF THE OFFER

Part A: Conditions of the Offer

The Offer will be subject to the following Conditions:

1.         valid acceptances being received (and not, where permitted, withdrawn) by no later than 1.00 p.m. (London time) on the first closing date of the Offer (or such later time(s) and/or dates(s) as Kindred may, in accordance with the Code, decide) in respect of 32Red Shares which, together with all other 32Red Shares acquired by Kindred (whether pursuant to the Offer or otherwise) constitute not less than 75 per cent. (or such lower percentage as Kindred may decide) in nominal value of 32Red Shares and represent not less than 75 per cent. (or such lower percentage as Kindred may decide) of the voting rights carried by the 32Red Shares, provided that this condition will not be satisfied unless Kindred and/or any of its wholly-owned subsidiaries shall have acquired, or agreed to acquire, pursuant to the Offer or otherwise, 32Red Shares carrying more than 50 per cent. of the voting rights normally exercisable at general meetings of 32Red, including for this purpose any such voting rights attaching to any 32Red Shares that are unconditionally allotted fully paid or issued before the Offer becomes or is declared unconditional as to acceptances whether pursuant to the exercise of outstanding subscription or conversion rights or otherwise and for the purposes of this condition:

(a)        32Red Shares which have been unconditionally allotted but not issued shall be deemed to carry the voting rights which they will carry upon issue; and

(b)        valid acceptances shall be deemed to have been received in respect of 32Red Shares which are treated as having been acquired or contracted to be acquired by Kindred by virtue of acceptances of the Offer.

2.         Subject as stated in Part B below, the Offer will be conditional upon satisfaction of the following Conditions and, accordingly, the Offer will not be declared or become unconditional in all respects unless such Conditions (as amended if appropriate) have been satisfied or, where relevant, waived:

Licensing authority of Gibraltar change of control approval

(a)        the approval by the Licensing Authority (Gambling Division) of HM Government of Gibraltar of the acquisition by Kindred of 32Red Shares representing more than 50 per cent. of the voting rights carried by the 32Red Shares and any matters pursuant to such acquisition which relate to the control, management and operation of 32Red;

 

UK Gambling Commission change of control approval

(b)        the making of a determination by the UKGC pursuant to section 102(4)(a) of the UK Gambling Act in respect of all operating licences (as such term is defined in the UK Gambling Act) held by members of the Wider 32Red Group that all such operating licences shall continue to have effect following the acquisition by Kindred of 32Red Shares representing more than 50 per cent. of the voting rights carried by the 32Red Shares, such determination to be made following an application in respect of the same submitted by 32Red to the UKGC pursuant to section 102(2)(b) of the UK Gambling Act;

Cessation of 32Red's operations in Australia

(c)        the cessation by 32Red of all of its online gambling services (other than services required to return funds to players following such cessation as soon as reasonably practicable) to, and the acceptance of bets from, residents of Australia;

Other notifications, waiting periods and authorisations

(d)        other than in respect of Conditions 2(a) and 2(b):

(i)         all material notifications, filings or applications which are necessary or are considered appropriate or desirable by Kindred (acting reasonably) having been made in connection with the Offer and all appropriate waiting periods (including any extensions thereof) under any applicable legislation or regulation of any relevant jurisdiction having expired, lapsed or been terminated (as appropriate);
(ii)        all statutory and regulatory obligations in any jurisdiction having been complied with in each case in respect of the Offer and all Authorisations which are necessary or are reasonably considered appropriate in any relevant jurisdiction for or in respect of the Offer and the acquisition or the proposed acquisition of any shares or other securities in, or control or management of, 32Red or any other member of the Wider 32Red Group by any member of the Wider Kindred Group having been obtained in terms and in a form reasonably satisfactory to Kindred from all appropriate Third Parties and (without prejudice to the generality of the foregoing) from any persons or bodies with whom any member of the Wider 32Red Group or the Wider Kindred Group has entered into contractual arrangements in each case where the absence of such Authorisation would have a material adverse effect on the Wider 32Red Group taken as a whole; and
(iii)       all such Authorisations remaining in full force and effect at the time at which the Offer becomes or is declared unconditional in all respects and there being no notice or intimation of an intention to revoke, suspend, restrict, modify or not to renew any of such Authorisations;

General antitrust and regulatory

(e)        other than in respect of Conditions 2(a) and (b), no antitrust regulator or Third Party having announced or given notice of a decision to take, institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference (and in each case, not having withdrawn the same), or having required any action to be taken or otherwise having done anything, or having enacted, made or proposed any statute, regulation, decision, order or change to published practice (and in each case, not having withdrawn the same) and there not continuing to be outstanding any statute, regulation, decision or order which would or might reasonably be expected to:

(i)         require, prevent or materially delay the divestiture or materially alter the terms envisaged for such divestiture by any member of the Wider Kindred Group or by any member of the Wider 32Red Group of all or any material part of its businesses, assets or property or impose any material limitation on the ability of all or any of them to conduct their respective businesses (or any part thereof) or to own, control or manage any of their assets or properties (or any material part thereof);
(ii)        except pursuant to Part VIII of the Companies Act 2014 of Gibraltar, require any member of the Wider Kindred Group or the Wider 32Red Group to acquire or offer to acquire any shares, other securities (or the equivalent) or interest in any member of the Wider 32Red Group or any member of the Wider Kindred Group or any asset owned by any Third Party (other than in the implementation of the Offer);
(iii)       impose any material limitation on, or result in a material delay in, the ability of any member of the Wider Kindred Group directly or indirectly to acquire, hold or to exercise effectively all or any rights of ownership in respect of shares or other securities in 32Red or on the ability of any member of the Wider 32Red Group or any member of the Wider Kindred Group directly or indirectly to hold or exercise effectively all or any rights of ownership in respect of shares or other securities (or the equivalent) in, or to exercise voting or management control over, any member of the Wider 32Red Group;
(iv)       otherwise adversely affect (in any material respect) any or all of the business, assets, profits or prospects of the Wider 32Red Group or the Wider Kindred Group;
(v)        result in any member of the Wider 32Red Group or any member of the Wider Kindred Group ceasing to be able to carry on business under any name under which, or in any jurisdiction in which it presently carries on business;
(vi)       make the Offer, its implementation or the acquisition or proposed acquisition of any shares or other securities in, or control or management of, 32Red or any member of the Wider 32Red Group by any member of the Wider Kindred Group void, unenforceable and/or illegal under the laws of any relevant jurisdiction, or otherwise, directly or indirectly, materially prevent or prohibit, restrict, restrain, or delay or otherwise materially interfere with the implementation of, or impose material additional conditions or obligations with respect to, or otherwise materially challenge, impede, interfere with or require material amendment of, the Offer or the acquisition or proposed acquisition of any shares or other securities in, or control or management of, 32Red or any member of the Wider 32Red Group by any member of the Wider Kindred Group;
(vii)      require, prevent or materially delay a divestiture, or materially alter the terms envisaged for such divestiture by any member of the Wider Kindred Group or any member of the Wider 32Red Group of any shares or other securities (or the equivalent) in any member of the Wider 32Red Group or any member of the Wider Kindred Group; or
(viii)      impose any material limitation on the ability of any member of the Wider Kindred Group or any member of the Wider 32Red Group to conduct its business or to integrate or co-ordinate all or any part of its business with all or any part of the business of any other member of the Wider Kindred Group and/or the Wider 32Red Group,

and all applicable waiting and other time periods (including any extensions thereof) during which any such antitrust regulator or Third Party could decide to take, institute, implement or threaten any such action, proceeding, suit, investigation, enquiry or reference or take any other step under the laws of any jurisdiction in respect of, or otherwise intervene in the Offer or the acquisition or proposed acquisition of any 32Red Shares having expired, lapsed or been terminated;

Certain matters arising as a result of any arrangement, agreement, etc.

(f)         except as Disclosed, there being no provision of any arrangement, agreement, lease, licence, franchise, permit or other instrument to which any member of the Wider 32Red Group is a party or by or to which any such member or any of its assets is or may be bound, entitled or be subject, or any event or circumstance, which, as a consequence of the Offer or the acquisition or the proposed acquisition by any member of the Wider Kindred Group of any shares or other securities (or the equivalent) in 32Red or any member of the Wider 32Red Group or because of a change in the control or management of any member of the Wider 32Red Group or otherwise, could or might reasonably be expected to result in (in any case to an extent which is or would be material in the context of the Wider 32Red Group or the Wider Kindred Group taken as a whole):

(i)         any material borrowings by, or any other material indebtedness, actual or contingent, of, or any grant available to, any member of the Wider 32Red Group being or becoming repayable, or capable of being declared repayable, immediately or prior to its or their stated maturity date or repayment date, or the ability of any such member to borrow monies or incur any indebtedness being withdrawn or inhibited or becoming capable of being withdrawn or inhibited;
(ii)        the creation, save in the ordinary and usual course of business, or enforcement of any mortgage, charge or other security interest over the whole or any material part of the business, property or assets of any member of the Wider 32Red Group or any such mortgage, charge or other security interest (whenever created, arising or having arisen) becoming enforceable;
(iii)       any liability of any member of the Wider 32Red to make any material severance, termination, bonus or other payment to any of its directors, other officers or employees;
(iv)       any such arrangement, agreement, lease, licence, franchise, permit or other instrument being terminated or the rights, liabilities, obligations, interests or business of any member of the Wider 32Red Group under any such arrangement, agreement, licence, permit, lease or instrument or the interests or business of any member of the Wider 32Red Group in or with any other person or body or firm or company (or any arrangement or arrangement relating to any such interests or business) being or becoming capable of being terminated, or adversely modified or affected or any onerous obligation or liability arising or any adverse action being taken thereunder;
(v)        any member of the Wider 32Red Group ceasing to be able to carry on business under any name under which it presently carries on business;
(vi)       the value of, or the financial or trading position or prospects of, any member of the Wider 32Red Group being prejudiced or adversely affected, in each case, in a material respect;
(vii)      the creation or acceleration of any material liability (actual or contingent) by any member of the Wider 32Red Group other than the creation of liabilities incurred in the ordinary course of business;
(viii)      any material assets owned or used by any member of the Wider 32Red Group or any interest in any such material asset, being or falling to be disposed of or charged or ceasing to be available to such member or any right arising under which any such material asset or interest could be required to be disposed of or charged or could cease to be available to such member; or
(ix)       any requirement on any member of the Wider 32Red Group to acquire, subscribe, pay up or repay any shares or other securities (other than as contemplated by the terms of the Offer),

and no event having occurred which, under any provision of any arrangement, agreement, licence, permit, franchise, lease or other instrument to which any member of the Wider 32Red Group is a party or by or to which any such member or any of its assets is or will become bound, entitled or subject, would or might reasonably be expected to result in any of the events or circumstances as are referred to in Conditions 2(f)(i) to (ix) (inclusive);

Certain events occurring since 31 December 2016

(g)        except as Disclosed and except, where relevant, as between 32Red and wholly owned subsidiaries of 32Red or as between wholly owned subsidiaries of 32Red, no member of the Wider 32Red Group having since, 31 December 2016:

(i)         issued or agreed to issue, or authorised or proposed or announced its intention to authorise or propose the issue of, additional shares of any class, or securities or securities convertible into, or exchangeable for, or rights, warrants or options to subscribe for or acquire, any such shares, securities or convertible securities or transferred or sold or agreed to transfer or sell or authorised or proposed the transfer or sale of 32Red Shares out of treasury (except for the issue or transfer out of treasury of 32Red Shares on the exercise of employee share options or vesting of employee share awards in the ordinary course under the 32Red Share Plans);
(ii)        recommended, declared, paid or made or proposed to recommend, declare, pay or make any bonus, dividend or other distribution (whether payable in cash or otherwise) other than the Approved Dividend;
(iii)       other than pursuant to the Offer implemented, effected, authorised or proposed or announced its intention to implement, effect, authorise or propose any merger, demerger, reconstruction, amalgamation, scheme, commitment or acquisition or disposal of assets (in each case otherwise than in the ordinary course of business) or shares or loan capital (or the equivalent thereof) in any undertaking or undertakings in any such case to an extent which is material in the context of the Wider 32Red Group taken as a whole;
(iv)       disposed of, or transferred, mortgaged or created any security interest over any material asset or any right, title or interest in any material asset or authorised, proposed or announced any intention to do so in any such case to an extent which is material in the context of the Wider 32Red Group taken as a whole;
(v)        issued or authorised or proposed or announced an intention to authorise or propose the issue of, or made any change in or to the terms of, any debentures or become subject to any contingent liability or incurred or increased any indebtedness which in any such case is material in the context of the Wider 32Red Group taken as a whole;
(vi)       entered into or varied or authorised, proposed or announced its intention to enter into or vary any material contract, arrangement, agreement, transaction or commitment (whether in respect of capital expenditure or otherwise) which is of a long term, unusual or onerous nature or magnitude or which is or which involves or which might reasonably be likely to involve an obligation of a nature or magnitude which is reasonably likely to be materially onerous on the business of any member of the Wider 32Red Group and which, in any such case, when taken together with any other such material transaction, arrangement, agreement, contract or commitment, is material in the context of the Wider 32Red Group taken as a whole;
(vii)      entered into or varied to a material extent the terms of, or made any offer (which remains open for acceptance) to enter into or vary to a material extent the terms of any contract, service agreement, commitment or arrangement with any director or, except for salary increases, bonuses or variations of terms, in the ordinary course of business, senior executive of any member of the Wider 32Red Group;
(viii)      proposed, agreed to provide or modified the terms of any share option scheme, incentive scheme or other benefit relating to the employment or termination of employment of any employee of the Wider 32Red Group which are material in the context of the Wider 32Red Group taken as a whole, save as agreed in writing between 32Red and Kindred;
(ix)       purchased, redeemed or repaid or announced any proposal to purchase, redeem or repay any of its own shares or other securities or reduced or, except in respect of the matters mentioned in sub-paragraph (i) above, made any other change to any part of its share capital;
(x)        waived, compromised or settled any claim which is material in the context of the Wider 32Red Group taken as a whole;
(xi)       terminated or varied the terms of any agreement or arrangement between any member of the Wider 32Red Group and any other person in a manner which would or might reasonably be expected to have a material adverse effect on the financial position of the Wider 32Red Group taken as a whole;
(xii)      made any material alteration to its memorandum or articles of association or other incorporation documents which in any such case is material in the context of the Offer as a whole;
(xiii)      except in relation to changes made as required by legislation or changes to legislation, made or agreed or consented to any change to:

(a)        the terms of the trust deeds and rules constituting the pension scheme(s) established by any member of the Wider 32Red Group for its directors or employees or their dependents;

(b)        the contributions payable to any such scheme(s) or to the benefits which accrue, or to the pensions which are payable, thereunder;

(c)        the basis on which qualification for, or accrual or entitlement to, such benefits or pensions are calculated or determined; or

(d)        the basis upon which the liabilities (including pensions) of such pension schemes are funded, valued, made, agreed or consented to,

to an extent which is in any such case material in the context of the Wider 32Red Group;

(xiv)     been unable, or admitted in writing that it is unable, to pay its debts or commenced negotiations with one or more of its creditors with a view to rescheduling or restructuring any of its indebtedness, or having stopped or suspended (or threatened to stop or suspend) payment of its debts generally or ceased or threatened to cease carrying on all or a substantial part of its business in any such case where such is material in the context of the Wider 32Red Group taken as a whole;
(xv)      (other than in respect of any member of the Wider 32Red Group which is dormant and was solvent at the relevant time) taken or proposed any steps or corporate action or had any legal proceedings instituted or threatened against it in relation to the suspension of payments, a moratorium of any indebtedness, its winding-up (voluntary or otherwise), dissolution, reorganisation or for the appointment of a receiver, administrator, manager, administrative receiver, trustee or similar officer of all or any material part of its assets or revenues or any analogous or equivalent steps or proceedings in any jurisdiction or appointed any analogous person in any jurisdiction or had any such person appointed which in any such case is material in the context of the Wider 32Red Group taken as a whole;
(xvi)     made, authorised, proposed or announced an intention to propose any change in its loan capital which in any such case is material in the context of the Wider 32Red Group taken as a whole;
(xvii)     entered into, implemented or authorised the entry into, any joint venture, asset or profit sharing arrangement, partnership or merger of business or corporate entities; or
(xviii)    entered into any agreement, arrangement, commitment or contract or passed any resolution or made any offer (which remains open for acceptance) with respect to or announced an intention to, or to propose to, effect any of the transactions, matters or events referred to in this Condition 2(g);

No adverse change, litigation, regulatory enquiry or similar

(h)        except as Disclosed, since 31 December 2016:

(i)         no adverse change having occurred in, and no circumstance having arisen which would or might reasonably be expected to result in any adverse change in, the business, assets, financial or trading position or profits or prospects or operational performance of any member of the Wider 32Red Group which in any such case is material in the context of the Wider 32Red Group taken as a whole;
(ii)        no litigation, arbitration proceedings, prosecution or other legal proceedings by or against any member of the Wider 32Red Group or to which any member of the Wider 32Red Group is or may become a party (whether as claimant, defendant or otherwise) having been threatened, announced or instituted or remaining outstanding by, against or in respect of, any member of the Wider 32Red Group, in each case, in circumstances which might reasonably be expected to have a material adverse effect on the Wider 32Red Group taken as a whole;
(iii)       no enquiry, review or investigation by, or complaint or reference to, any Third Party against or in respect of any member of the Wider 32Red Group having been threatened, announced or instituted or remaining outstanding by, against or in respect of any member of the Wider 32Red Group, in each case, in circumstances which might reasonably be expected to have a material adverse effect on the Wider 32Red Group taken as a whole;
(iv)       no contingent or other liability having arisen or become apparent to 32Red or other than in the ordinary course of business increased which is reasonably likely to affect adversely the business, assets, financial or trading position or profits or prospects of any member of the Wider 32Red Group to an extent which is material in the context of the Wider 32Red Group taken as a whole;
(v)        no steps having been taken and no omissions having occurred which are reasonably likely to result in the withdrawal (without replacement), cancellation, termination or modification of any licence held by any member of the Wider 32Red Group which is necessary for the proper carrying on of its business and the withdrawal, cancellation, termination or modification of which might reasonably be expected to have a material adverse effect on the Wider 32Red Group taken as a whole;

No discovery of certain matters regarding information and liabilities

(i)         except as Disclosed, Kindred not having discovered in relation to the Wider 32Red Group:

(i)         that any financial, business or other information concerning the Wider 32Red Group publicly announced prior to the date of this announcement or disclosed to any member of the Wider Kindred Group by or on behalf of any member of the Wider 32Red Group at any time prior to the date of this announcement is misleading, contains a misrepresentation of any fact, or omits to state a fact necessary to make that information not misleading, and which was not subsequently corrected before the date of this announcement by disclosure either publically via a Regulatory Information Service or in writing to Kindred, and, in any such case, to an extent which is material in the context of the Wider 32Red Group taken as a whole;
(ii)        that any member of the Wider 32Red Group or any partnership, company or other entity in which any member of the Wider 32Red Group has a significant economic interest and which is not a subsidiary undertaking of 32Red is, otherwise than in the ordinary course of business, subject to any liability, contingent or otherwise which is material in the context of the Wider 32Red Group taken as a whole; or
(iii)       that any past or present member of the Wider 32Red Group has not complied in any respect with all applicable legislation, regulations or other requirements of any jurisdiction, or any Authorisations, relating to the use, treatment, storage, carriage, disposal, discharge, spillage, release, leak or emission of any waste or hazardous substance or any substance likely to impair the environment (including property) or harm human health or otherwise relating to environmental matters or the health and safety of humans, which non-compliance would be likely to give rise to any liability including any penalty for non-compliance (whether actual or contingent) on the part of any member of the Wider 32Red Group which in any such case is material in the context of the Wider 32Red Group taken as a whole;

Anti-corruption

(iv)       that any member of the Wider 32Red Group or any person that performs or has performed services for or on behalf of any such member is or has engaged in any activity, practice or conduct which would constitute an offence under the Bribery Act 2010 or any other applicable anti-corruption legislation; or

No criminal property

(v)        that any asset of any member of the Wider 32Red Group constitutes criminal property as defined by section 340(3) of the Proceeds of Crime Act 2002 (but disregarding paragraph (b) of that definition).

Part B: Certain further terms of the Offer

1.         Kindred reserves the right to waive, in whole or in part, Conditions 2(a) to (i) (inclusive), so far as they relate to 32Red, the Wider 32Red Group or any part thereof. Condition 1 shall not be capable of being waived.

2.         Kindred and 32Red have agreed, in accordance with 32Red's articles of association, to observe and comply with the Code in relation to the conduct and execution of the Offer (including where the acquisition of the 32Red Shares by Kindred is to be implemented by way of a Scheme pursuant to paragraph 7 of this Part B) as though 32Red, Kindred and the Offer were subject to the Code.

3.         The Offer will lapse if the acquisition of 32Red by Kindred is referred to the Chair of the Competition and Markets Authority for the constitution of a group under Schedule 4 to the Enterprise and Reform Act 2013 before 1:00 p.m. (London time) on the first closing date or the time and date on which the Offer becomes or is declared unconditional as to acceptances (whichever is the later).

4.         If the Offer lapses, it will cease to be capable of further acceptances, and persons accepting the Offer and Kindred shall thereupon cease to be bound by acceptances submitted at or prior to the time the Offer lapses.

5.         The Offer will lapse, and will not proceed, unless all of the Conditions relating to the Offer have been fulfilled or (if capable of waiver) waived by, or where appropriate, have been determined by Kindred to be and remain satisfied by, midnight on the twenty-first day after the later of:

(a)        the first closing date of the Offer; and

(b)        the date on which the Offer becomes unconditional as to acceptances,

or such later date as Kindred and 32Red may agree. Kindred shall not be under any obligation to waive (if capable of waiver), to determine to be or remain satisfied or to treat as fulfilled any of Conditions 2(a) to (i) (inclusive) by a date earlier than the latest date for the fulfilment of that Condition notwithstanding that the other Conditions of the Offer may at such earlier date have been waived or fulfilled and that there are at such earlier date no circumstances indicating that any of such Conditions may not be capable of fulfilment.

6.         The 32Red Shares acquired under the Offer shall be acquired fully paid and free from all liens, equities, charges, encumbrances, options, rights of pre-emption and any other third party rights and interests of any nature and together with all rights attaching or accruing to them, including voting rights and the right to receive and retain in full all dividends and other distributions (if any) declared, made, paid or payable on or after the date of this announcement, save in respect of the Approved Dividend). Accordingly, insofar as a dividend or other distribution (other than the Approved Dividend) is declared, made, paid or payable by 32Red on or after the date of this announcement, Kindred reserves the right (without prejudice to any right of Kindred to invoke Condition 2(g)(ii) above) to reduce the consideration payable under the Offer in respect of a 32Red Share by the aggregate amount of such dividend or distribution (excluding associated tax credit).

If any such dividend or distribution (other than the Approved Dividend) is paid or made before the Offer is declared or becomes wholly unconditional, if Kindred exercises its rights described in this paragraph, any reference in this announcement to the consideration payable under the Offer shall be deemed to be a reference to the consideration as so reduced.

To the extent that such a dividend or distribution has been declared but not paid prior to the Offer being declared or becoming wholly unconditional and such dividend or distribution is cancelled, then the consideration payable under the Offer shall not be subject to change in accordance with this paragraph. If the Offer is declared or becomes wholly unconditional before the payment date for the Approved Dividend (being 23 March 2017), Kindred agrees that in no circumstances will it procure or permit 32Red to cancel, revoke, reduce or delay the payment of the Approved Dividend on 23 March 2017.

Any exercise by Kindred of its rights referred to in this paragraph shall be the subject of an announcement and, for the avoidance of doubt, shall not be regarded as constituting any revision or variation of the Offer.

7.         Kindred reserves the right to elect to implement the acquisition of the 32Red Shares by way of a Scheme as an alternative to a Takeover Offer. In such event, the Scheme will be implemented on the same terms (subject to appropriate amendments), so far as applicable, as those which could apply to the Offer.

8.         The availability of the Offer to persons not resident in the United Kingdom or Gibraltar may be affected by the laws and regulations of the relevant jurisdictions. Persons who are not resident in the United Kingdom or Gibraltar should inform themselves about and observe any applicable requirements.

9.         The Offer is not being made, directly or indirectly, in, into or from, or by use of the mails of, or by any means of 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 jurisdiction where to do so would violate the laws and regulations of that jurisdiction.

10.       Save as provided in the following sentence, the Offer will be governed by the laws of England and Wales and will be subject to the exclusive jurisdiction of the English courts and to the Conditions and further terms set out in this Appendix I and to be set out in the Offer Document and the Code (in all substantive respects, unless otherwise agreed by or on behalf of Kindred and 32Red). The Offer will be a Takeover Offer (unless Kindred elects to implement the Offer by way of a Scheme).

APPENDIX II
SOURCES OF INFORMATION AND BASES OF CALCULATION

(a)          The aggregate Offer value of approximately £175.6 million is based on the Offer price of 196 pence per 32Red Share on the basis of the fully-diluted number of 32Red Shares in issue referred to in paragraph (c) below.

(b)          At the close of business on 22 February 2017 (being the last Business Day prior to the date of this announcement), 32Red had in issue 85,347,528 ordinary shares.

(c)          Any reference to the fully-diluted share capital of 32Red is based on:

i.          the 85,347,528 32Red Shares referred to in paragraph (b) above; and

ii.          the 4,237,008 32Red Shares which may be issued on or after the date of this announcement on the exercise of options or vesting of awards under the 32Red Share Plans.

(d)          Any reference to the value of the fully-diluted share capital of 32Red is based on the price of 196 pence per 32Red Share and the number of 32Red Shares referred to in paragraph (c) above.

(e)          Closing prices for 32Red Shares are taken from Bloomberg.com. Unless otherwise stated, all closing prices for 32Red Shares are closing middle market prices derived from this sources.

(f)           Volume weighted average closing prices are derived from Bloomberg.com.

(g)          Unless otherwise stated, the financial information relating to 32Red is extracted or derived (without any adjustment) from the annual results of the 32Red Group for the financial year ended 31 December 2015, prepared in accordance with IFRS.

(h)          Unless otherwise stated, the financial information relating to Kindred is extracted or derived (without any adjustment) from the 2016 unaudited year-end report for Kindred released on 14 February 2017.

(i)           The market capitalisation of Kindred has been translated from Swedish Krona into pounds sterling using an exchange rate of £1.00 to 11.183 SEK which was derived from Bloomberg.com as at 5.00 p.m. on 22 February 2017 (being the last date prior to the date of this announcement).

APPENDIX III IRREVOCABLE UNDERTAKINGS

All of the irrevocable undertakings referred to below include undertakings to accept (or procure acceptance of) the Offer and, if Kindred exercises its right to implement the Offer by way of a Scheme, to vote in favour of the Scheme and any resolution(s) proposed in order to implement such Scheme:

32Red Directors' Hard Irrevocable Undertakings

 

Name of 32Red Director

Number of 32Red Shares in respect of which undertaking is given

Percentage of 32Red issued share capital

Edward Ware

19,463,419

22.8%

John Hodgson

5,440,000

6.4%

Jonathan Hale

1,634,225

1.9%

David Fish

9,125,000

10.7%

Patrick Harrison

843,479

1.0%

Matthew Booth

366,958

0.4%

David Bowen

120,200

0.1%

32Red Shareholders' Hard Irrevocable Undertakings

 

Name of 32Red Shareholder

Number of 32Red Shares in respect of which undertaking is given

Percentage of 32Red issued share capital

32Red plc Employee Benefit Trust

385,009

0.5%

Bonneville Investment Holdings

10,000,000

11.7%

Bruno Callaghan

4,788,054

5.6%

Paul Crowther

2,250,000

2.6%

Jonathan Richard Binns

2,000,000

2.3%

Campbell family trust

1,854,632

2.2%

The irrevocable undertakings referred to above will only cease to be binding if:

(a)        this announcement has not been issued on or before 5:00 p.m. (London time) on 24 February 2017 (or such later date as Kindred and 32Red may agree); or

(b)        the Offer lapses or is withdrawn and no new, revised or replacement Offer (which is no less favourable to the 32Red Shareholders than the offer set out in this announcement) has been announced in its place or is announced at the same time; or

(c)        if the Offer is implemented by way of a Scheme, the Scheme terminates or lapses in accordance with its terms or otherwise becomes incapable of becoming effective; or

(d)        the Offer becomes or is declared wholly unconditional (or, if the Offer is implemented by way of a Scheme, the Scheme becomes effective).

32Red Shareholders' Soft Irrevocable Undertakings

 

Name of 32Red Shareholder

Number of 32Red Shares in respect of which undertaking is given

Percentage of 32Red issued share capital

Miton Asset Management

2,430,256

2.8%

The above irrevocable undertaking will only cease to be binding if:

(a)        this announcement has not been issued on or before 5:00 p.m. (London time) on 24 February 2017 (or such later date as Kindred and 32Red may agree); or

(b)        the Offer lapses or is withdrawn and no new, revised or replacement Offer is announced at the same time; or

(c)        a third party makes a competing offer for the entire issued share capital of 32Red at a value which (in 32Red's reasonable opinion on the advice of Numis) exceeds the value of the consideration offered under the terms of the Offer by 10% or more per 32Red Share; or

(d)        in the event that the Offer is implemented by way of a Scheme, the Scheme terminates or lapses in accordance with its terms or otherwise becomes incapable of becoming effective; or

(e)        the Offer becomes or is declared wholly unconditional (or, if the Offer is implemented by way of a Scheme, the Scheme becomes effective).

              


APPENDIX IV
DEFINITIONS

The following definitions apply throughout this announcement unless the context requires otherwise:

 

"32Red"

32Red plc;

"32Red Board"

the board of 32Red Directors;

"32Red Directors"

the directors of 32Red;

"32Red Group"

32Red and its subsidiary undertakings and, where the context permits, each of them;

"32Red Share Plans"

the 32Red plc Employee Share Option Plan and the 32Red plc Long-Term Incentive Plan;

"32Red Shareholders"

the holders of 32Red Shares;

"32Red Shares"

the ordinary shares of 0.2 pence each in the capital of 32Red;

"AIM"

the AIM Market operated by the London Stock Exchange

"AIM Rules"

the AIM Rules for Companies (July 2016) as published by the London Stock Exchange which set out the rules and responsibilities in relation to a company with a class of securities admitted to AIM, as amended from time to time

"Approved Dividend"

the second interim dividend of 4 pence per 32Red Share announced by 32Red on 23 February 2017;

"Australia"

the Commonwealth of Australia, its states, territories and possessions and all areas subject to its jurisdiction and any political sub-division thereof;

"Authorisations"

regulatory authorisations, orders, recognitions, grants, consents, clearances, confirmations, certificates, licences, permissions or approvals;

"Business Day"

a day (other than Saturdays, Sundays and public holidays in the UK) on which banks are open for business in the City of London and Gibraltar;

"CET"

Central European Time;

"Code"

the City Code on Takeovers and Mergers;

"Companies Act"

the UK Companies Act 2006;

"Conditions"

the conditions to the implementation of the Offer, as set out Appendix I to this announcement and to be set out in the Offer Document;

"Confidentiality Agreement"

the confidentiality agreement entered into between 32Red and Kindred dated 22 December 2016;

"Data Room"

means the information made available for inspection in the virtual data room under the project name Silver Data hosted via DropBox;

"Dealing Disclosure"

has the same meaning as in Rule 8 of the Code;

"Disclosed"

any information disclosed by, or on behalf of, 32Red: (i) in any other announcement to a Regulatory Information Service by or on behalf of 32Red prior to the publication of this announcement; or (ii) as otherwise fairly disclosed in writing (including, without limitation, in the Data Room made available to Kindred and its professional advisers) by or on behalf of 32Red or any of its advisers to Kindred (or any of its officers, employees, agents or advisers) prior to the date of this announcement;

"EBITDA"

earnings before interest, tax, depreciation and amortisation;

"EU"

the European Union;

"Euroclear"

Euroclear UK and Ireland Limited;

"FCA" or "Financial Conduct Authority"

the Financial Conduct Authority acting in its capacity as the competent authority for the purposes of Part VI of the FSMA, and any successor body having the same or similar functions;

"Form of Acceptance"

the form of acceptance and authority relating to the Offer which will accompany the Offer Document for use by 32Red Shareholders;

"FSMA"

the UK Financial Services and Markets Act 2000, as amended from time to time and any subordinate legislation thereto;

"Gaming Regulators"

means the Licensing Authority (Gambling Division) of HM Government of Gibraltar and the UKGC;

"Gibraltar Companies Act"

the Gibraltar Companies Act 2014;

"Houlihan Lokey"

Houlihan Lokey EMEA, LLP;

"IFRS"

International Financial Reporting Standard;

"ISIN"

International Securities Identification Number;

"Kindred"

Kindred Group plc;

"Kindred Group"

Kindred and its subsidiary undertakings and, where the context permits, each of them;

"London Stock Exchange"

London Stock Exchange plc or its successor from time to time;

"Numis"

Numis Securities Limited;

"Offer"

the recommended cash offer being made by Kindred to acquire the entire issued and to be issued ordinary share capital of 32Red to be effected by means of a Takeover Offer (or, if Kindred so elects, by means of a Scheme) on the terms and subject to the Conditions set out in this announcement and, where the context admits, any subsequent revision, variation, extension or renewal thereof;

"Offer Document"

the document to be sent to 32Red Shareholders which will contain the terms and conditions of the Offer and certain information about 32Red and Kindred;

"Offer Period"

the period commencing on the date of this announcement and ending on the date on which the "offer period" (as defined in the Code) in respect of the Offer ends;

"Opening Position Disclosure"

has the same meaning as in Rule 8 of the Code;

"Overseas Shareholders"

32Red Shareholders (or nominees of, or custodians or trustees for, 32Red Shareholders) not resident in, or nationals or citizens of, the United Kingdom or Gibraltar;

"Panel"

The Panel on Takeovers and Mergers;

"Panmure Gordon"

Panmure Gordon (UK) Limited;

"Regulatory Information Service"

any of the services set out in Appendix III to the UK Listing Rules;

"Restricted Jurisdiction"

any jurisdiction where the extension or availability of the Offer would breach any applicable law;

"Scheme"

a scheme of arrangement under Part VIII of the Gibraltar Companies Act;

"Significant Interest"

in relation to an undertaking, a direct or indirect interest of over 20 per cent. of the total voting rights conferred by the equity share capital (as defined in section 548 of the Companies Act) of such undertaking;

"Swedbank"

Swedbank AB (publ);

"Takeover Offer"

a takeover offer pursuant to, and in accordance with, relevant Gibraltar law, which 32Red and Kindred have agreed shall be subject to the Code (in all substantive respects) as described in paragraph 16 of this announcement;

"Third Party"

each of a central bank, government or governmental, quasi-governmental, suprana-tional, statutory, regulatory, environmental, administrative, fiscal or investigative body, court, trade agency, association, institution, environmental body, employee representative body or any other body or person whatsoever in any jurisdiction;

"UK Gambling Act"

the Gambling Act 2005;

"UK Listing Rules"

the rules and regulations made by the Financial Conduct Authority in its capacity as the UKLA under the Financial Services and Markets Act 2000, and contained in the UKLA's publication of the same name;

"UKGC"

the UK Gambling Commission;

"UKLA"

the UK Listing Authority, being the Financial Conduct Authority;

"United Kingdom" or "UK"

the United Kingdom of Great Britain and Northern Ireland;

"United States" or "US"

the United States of America, its territories and possessions, any state of the United States of America, the District of Columbia and all other areas subject to its jurisdiction and any political sub-division thereof;

"US 32Red Shareholders"

32Red Shareholders (or nominees of, or custodians or trustees for 32Red Shareholders) resident in the US;

"Wider 32Red Group"

32Red and associated undertakings and any other body corporate, partnership, joint venture or person in which 32Red and such undertakings (aggregating their interests) have a Significant Interest; and

"Wider Kindred Group"

Kindred and its associated undertakings and any other body corporate, partnership, joint venture or person in which Kindred and all such undertakings (aggregating their interests) have a Significant Interest.

 

For the purposes of this announcement, "subsidiary", "associated undertaking", "subsidiary undertaking" and "undertaking" have the respective meanings given thereto by the Companies Act.

All references to "£", "pence", and "p" are to the lawful currency of the United Kingdom.

All the times referred to in this announcement are London times unless otherwise stated.

References to the singular include the plural and vice versa.

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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