RECOMMENDED CASH OFFER
for
LIDCO GROUP PLC (“LIDCO”)
by
MASIMO LHC LIMITED (“MASIMO”)
(a newly incorporated company indirectly and wholly-owned by Masimo Corporation)
Summary
· The Boards of LiDCO and Masimo are pleased to announce that they have reached agreement on the terms of a recommended cash offer to be made by Masimo for the entire issued and to be issued share capital of LiDCO.
· Masimo is a private company established by Masimo Corporation as an indirect, wholly-owned subsidiary specifically for the purpose of making the Offer. Masimo Corporation (NASDAQ: MASI), is a global medical technology company that develops, manufactures, distributes, and licenses innovative patient monitoring technologies, medical devices, and a wide array of sensors. Over the past three decades, Masimo Corporation has established a track record and reputation for developing innovative technologies that improve patient outcomes and today it has a market capitalisation of approximately $12 billion.
· LiDCO develops, manufactures and sells advanced hemodynamic monitoring devices primarily for critical care and high-risk surgical patients. LiDCO’s primary markets are the United Kingdom, the US and certain markets in continental Europe, China and Japan. LiDCO’s equipment measures crucial physiological parameters such as cardiac output, stroke volume and systematic vascular resistance, monitoring the amount of blood flowing around the body, the requirement for intravenous fluids, and vasoactive support to help ensure that the body’s tissues and organs are adequately oxygenated. In addition, LiDCO distributes a number of complementary third-party products.
· Under the terms of the Offer, which is subject to the Conditions and further terms set out in Appendix I of this Announcement, and to the full terms and conditions to be set out in the Offer Document, LiDCO Shareholders will be entitled to receive:
for each LiDCO Share: 12 pence in cash
· The Offer values the total issued share capital of LiDCO at approximately £31.1 million on a fully diluted basis.
· The Offer Price of 12 pence per LiDCO Share represents a premium of approximately:
– 77.8 percent to the Closing Price per LiDCO Share of 6.75 pence on 30 October 2020 (being the last Business Day prior to the commencement of the Offer Period); and
– 87.0 percent to the average Closing Price per LiDCO Share of 6.42 pence in the twelve months to 30 October 2020 (being the last Business Day prior to the commencement of the Offer Period).
· The LiDCO Directors, who have been so advised by Smith Square Partners as to the financial terms of the Offer, consider the terms of the Offer to be fair and reasonable. In providing its advice to the LiDCO Directors, Smith Square Partners has taken into account the commercial assessments of the LiDCO Directors. Smith Square Partners is providing independent financial advice to the LiDCO Directors for the purposes of Rule 3 of the Code.
· Accordingly, the LiDCO Directors are unanimously recommending that LiDCO Shareholders accept the Offer, as they, other than James Wetrich, have irrevocably undertaken so to do (or procure to be done) in respect of their own beneficial shareholdings (or the shareholdings they control), such holdings amounting to 3,960,830 LiDCO Shares representing approximately 1.6 percent of LiDCO’s issued share capital. James Wetrich is both a resident in, and citizen of, the United States (a Restricted Jurisdiction) and as such he is not permitted to participate in the Offer in respect of his own beneficial shareholding of 19,900 LiDCO Shares representing approximately 0.01 percent of LiDCO’s issued share capital and has therefore not been able to provide an irrevocable undertaking.
· Including the irrevocable undertakings received from the LiDCO Directors, Masimo has received irrevocable undertakings to accept the Offer in respect of a total of 92,062,341 LiDCO Shares representing approximately 37.7 percent of LiDCO’s issued share capital. Further details of irrevocable undertakings are set out in paragraph 4 below and in Appendix II.
· Masimo Corporation is a global leader in developing and commercialising patient monitors that improve clinical outcomes and reduce the cost of patient care. It believes that LiDCO’s continuous cardiac output (“CCO”) technology will complement its existing technologies. LiDCO competes with much larger global companies that hold significant shares of the advanced hemodynamic monitoring market, and hospital decisions concerning advanced technologies such as CCO are increasingly based upon factors other than performance and cost, such as an interest in integrated solutions which offer a range of innovative measurements in one device to facilitate more informed decision making. Masimo Corporation is a leading developer of many such innovative measurements and it also has an established global distribution capability. Consequently, both LiDCO and Masimo Corporation believe that the prospects for and speed of adoption of LiDCO’s technology, particularly in the important US market, will be materially enhanced by it becoming part of Masimo Corporation.
· The Offer is being effected by means of a contractual takeover offer pursuant to Part 28 of the Companies Act although Masimo reserves the right to elect to implement the Offer by way of a Scheme of Arrangement, as an alternative to the Offer.
· The Offer is conditional upon, amongst other things, Masimo receiving valid acceptances (which have not been withdrawn) in respect of LiDCO Shares which will result in Masimo holding LiDCO shares carrying, in aggregate, not less than 90 percent (or such lower percentage as Masimo may, subject to the Code, decide) in nominal value of the LiDCO Shares to which the Offer relates.
· Masimo intends, upon the Offer becoming or being declared unconditional in all respects, and subject to Masimo then controlling not less than 75 percent of the voting rights of LiDCO, to take the necessary actions to cancel the admission to trading of LiDCO Shares on AIM and re-register LiDCO as a private limited company.
· The Offer triggers a right for the LiDCO Option Holders to exercise certain options granted under the Share Option Schemes, which have not yet vested, to acquire LiDCO Shares. The extent to which such unvested options are exercisable is subject to the rules of the Share Option Schemes, which allow for accelerated vesting in a change of control situation, and the degree to which the target share price conditions established by the remuneration committee of LiDCO have been met. Appropriate proposals under Rule 15 of the Code will made in due course to LiDCO Option Holders. Options granted under the Share Option Schemes which have already vested shall remain exercisable in accordance with their terms.
Commenting on the Offer, Peter Grant, Chairman of LiDCO, said:
“The LiDCO Board continues to believe that the implementation of LiDCO’s existing strategy as an independent company has the potential to generate significant value for LiDCO Shareholders in the long-term. However, the Board also recognises the challenges faced by LiDCO as a relatively small business competing against significantly larger players. The Offer of 12 pence per LiDCO Share provides certainty to the LiDCO Shareholders enabling them to realise, in cash in the near term, the entire value of their holdings at a significant premium to the price at which LiDCO Shares have traded in the market over the past few years.”
Commenting on the Offer, Joe Kiani, Chief Executive Officer and Chairman of Masimo Corporation said:
“Masimo shares LiDCO’s commitment to providing innovative, best-in-class monitoring solutions to support evidence-based clinical decisions to enhance patient safety and outcomes. I believe the complementary strategic fit between our respective technologies and businesses will enhance the prospects for LiDCO’s customers as part of Masimo Corporation’s global operations.”
This summary should be read in conjunction with the full text of the following Announcement, including the 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 that will be set out in the Offer Document and, in respect of LiDCO Shares held in certificated form, the Form of Acceptance.
It is intended that the Offer Document and the Form of Acceptance containing further details of the Offer will be despatched to LiDCO Shareholders (other than to persons in a Restricted Jurisdiction) as soon as practicable and, in any event, not later than 28 days after the date of this Announcement (unless agreed otherwise with the Panel).
Appendix II sets out details of irrevocable undertakings which have been received by Masimo. Appendix III sets out the sources and bases of certain financial and other information contained in this Announcement. Appendix IV contains the definitions of certain terms used in this Announcement.
