Open Orphan PLC (LON:ORPH) Recommended All-Equity Offer

The Boards of Open Orphan and hVIVO have reached an agreement on the terms of a recommended Offer to be made by Open Orphan for the entire issued and to be issued share capital of hVIVO plc (the “Offer”).

The Offer is classified as a reverse takeover for Open Orphan under the AIM Rules and the Euronext Growth Rules and will therefore require the approval of the Open Orphan Shareholders at the Open Orphan General Meeting.

Under the terms of the Offer, hVIVO Shareholders will be entitled to receive:

2.47 New Open Orphan Shares for every 1 hVIVO Share

The exchange ratio of New Open Orphan Shares to hVIVO Shares has been determined by reference to the average daily volume weighted average price over the 90 days to 6 December 2019 for each of the hVIVO and Open Orphan shares, being the latest practicable date prior to the date of this announcement.

The Offer represents a value of approximately 15.56 pence per hVIVO Share and a premium of 33.8 per cent. based upon the hVIVO Closing Price on 6 December 2019, being the latest practicable date prior to the date of this announcement, valuing hVIVO at approximately £12.96 million.

The number of New Open Orphan Shares expected to be issued pursuant to the terms of the Offer is 205,489,715.

The Offer is expected to result in hVIVO Shareholders owning 44.67 per cent. of the share capital of the Enlarged Group.

If any dividend or other distribution or return of value is proposed, declared, made, paid or becomes payable to hVIVO in respect of the hVIVO Shares on or after the date of this announcement and prior to the Offer becoming unconditional, Open Orphan will have the right to reduce the value of the consideration payable for each hVIVO Share by up to the amount per hVIVO Share of such dividend, distribution or return of value.

Offer Rationale

Open Orphan and hVIVO are AIM-quoted groups that share a similar vision for the future of European Clinical Research Organisations (“CRO”) and an entrepreneurial approach to developing further their business through a focus on operational efficiency, organic growth and targeted acquisitions to expand their geographic and service capabilities.

The Open Orphan Directors and the hVIVO Directors believe that the combination of the businesses will result in synergies across the Enlarged Group with each business providing complimentary services with limited overlap in existing capabilities and customers.

It is anticipated that the benefits to both hVIVO and Open Orphan of the merger will include:

· Complementary broader in-house clinical service offering;

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· Opportunity to increase margins and service revenues;

· Expanded capability offering;

· Commercialisation of hVIVO database through the Open Orphan platform; and

· Operating synergies.

hVIVO Recommendation

The Independent hVIVO Directors, who have been so advised by MCF as to the financial terms of the Offer, consider the terms of the Offer to be fair and reasonable. Accordingly, the Independent hVIVO Directors recommend unanimously that hVIVO Shareholders accept the Offer, as they intend to do in respect of their own beneficial holdings. In providing advice to the Independent hVIVO Directors, MCF has taken into account the commercial assessments of the Independent hVIVO Directors. MCF is providing independent financial advice to the Independent hVIVO Directors for the purposes of Rule 3 of the Takeover Code.

Each of the hVIVO Directors has given irrevocable undertakings to accept the Offer in respect of their registered holdings in hVIVO Shares amounting in aggregate 205,001 hVIVO Shares, representing, in aggregate, approximately 0.25 per cent. of the hVIVO Issued Share Capital.

Open Orphan Recommendation

The Open Orphan Directors intend to recommend unanimously that the Open Orphan Shareholders vote in favour of the resolutions to be proposed at the Open Orphan General Meeting to approve the Offer and related matters.

Shareholders and Irrevocable Undertakings

The hVIVO Directors have irrevocably undertaken to accept the Offer in respect of their own entire legal and beneficial holdings of hVIVO Shares (and those of connected persons) amounting to, in aggregate, 205,001 hVIVO Shares, representing approximately 0.25 per cent. of the hVIVO Shares in issue on 6 December 2019.

Open Orphan has therefore received irrevocable undertakings in respect of a total of 205,001 hVIVO Shares, representing, in aggregate approximately 0.25 per cent. of the hVIVO Shares in issue on 6 December 2019, to accept the Offer.

General

As a result of its size, the Offer constitutes a reverse takeover for Open Orphan under the AIM Rules and Euronext Growth Rules. Accordingly, Open Orphan is required to seek the approval of its shareholders for the Offer at the Open Orphan General Meeting. Open Orphan will publish the Admission Document and make application for Admission of the Enlarged Group to AIM and Euronext Growth.

The Offer Document, which will contain further information about the Offer and the Forms of Acceptance will be published today.

It is intended that the Admission Document and the Open Orphan Circular, which will contain further information about the Offer, will be published at or around the same time as the Offer Document is made available to hVIVO Shareholders.

It is expected that the Offer will become unconditional as to acceptances by no later than Day 42, being 20 January 2020, subject to the satisfaction or waiver of the conditions and certain further terms set out in Appendix 1 to this announcement.

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Preferred Partner Agreement, 11th November 2019
 

Commenting on the Offer, Cathal Friel, CEO of Open Orphan, said:

“The merger of Open Orphan and hVIVO is a key milestone in the execution of our strategy to become a larger-scale specialist pharma services business and in complementary segments where specialist skills and know-how command higher margins.

The leadership team has the skills, experience and commitment to deliver the Enlarged Group’s potential. The merger allows the combined business to maximise shareholder value through delivering cost and revenue synergies across the businesses and one that is better positioned to consistently capture greater market share as part of a properly profitable business with losses confined to the past.”

Commenting on the Offer, Dr. Trevor Philips, Executive Chairman of hVIVO, said:

“The hVIVO Board believes this transaction offers our shareholders the opportunity to participate in a larger business with greater growth potential, diversified risk and a competitive market position. Together, we share a similar vision for the future of European CROs and an entrepreneurial approach to developing further the Enlarged Group through a focus on operational efficiency, organic growth and targeted acquisitions to expand geographic and service capabilities.”

The Offer will be subject to the Conditions and certain further terms set out in Appendix 1 to this announcement and to the full terms and conditions which will be set out in the Offer Document. The bases of calculations and sources of certain financial information contained in this announcement, and certain additional financial and operational information, are set out in Appendix 2 to this announcement. Details of the irrevocable undertakings received by Open Orphan and hVIVO in relation to the Offer are set out in Appendix 4 to this announcement. Certain definitions and terms used in this announcement are set out in Appendix 4 to this announcement.

This summary should be read in conjunction with, and is subject to, the following full text of this announcement and the Appendices.


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