The Board of Stadium notes the announcement (the “Announcement”) made earlier today by TT Electronics plc of its recommended cash offer for the entire issued share capital of the Company. The Company refers you to the Announcement for the full details. The full text of the Announcement is set out below.
RECOMMENDED CASH OFFER
for
STADIUM GROUP PLC
by
TT ELECTRONICS PLC
Summary
· The Boards of Stadium Group plc (Stadium) and TT Electronics plc (TT) are pleased to announce that they have reached agreement on the terms of a recommended cash offer for Stadium by TT pursuant to which TT will acquire the entire issued and to be issued share capital of Stadium (the Transaction). It is intended that the Transaction will be effected by means of a Court-sanctioned scheme of arrangement between Stadium and the Stadium Shareholders under Part 26 of the Companies Act 2006.
· Under the terms of the Transaction, Stadium Shareholders will be entitled to receive:
120 pence in cash for each Stadium Share
which values the entire issued share capital of Stadium at approximately £45.8 million.
· In addition, the Stadium Board has declared a special dividend of 2.1 pence per Stadium Share (the Dividend). The Dividend, which is conditional on completion of the Transaction and in lieu of any final dividend for the financial year ended 31 December 2017, will be paid within 14 days of the Effective Date and will be paid by Stadium to Stadium Shareholders on the register of members of Stadium at the Scheme Record Time (irrespective of whether or not they attended or voted at the Court Meeting or the Stadium General Meeting (and, if they attended and voted, whether or not they voted in favour of the Transaction)). No other dividend is currently contemplated by Stadium to be declared, approved, made or paid from the date of this announcement and before the Effective Date.
· The Transaction represents a premium of approximately:
· 43.7 per cent. to the Closing Price of 83.50 pence per Stadium Share on 14 February 2018, being the latest practicable date before the date of this announcement;
· approximately 35.8 per cent. to the volume weighted average price of approximately 88.39 pence per Stadium Share for the 30 days ended 14 February 2018, being the latest practicable date before the date of this announcement; and
· 39.8 per cent. to the volume weighted average price of 85.84 pence per Stadium Share for the three months ended 14 February 2018, being the latest practicable date before the date of this announcement.
· The Transaction is the first acquisition by TT following the disposal of TT’s Transportation Sensing and Control Division in 2017, and follows TT’s stated strategy to focus on areas of structural growth where there is increased electronic content and greater product differentiation.
· TT’s strong portfolio of products and capabilities will be enhanced by the Transaction, strengthening the position of the enlarged business in sectors where demand for electronics is growing quickly.
· Benefits to TT of the combination will include:
· a greater presence in attractive segments of the industrial, medical, aerospace and defence and transportation sectors;
· enhanced product capabilities in power electronics and connectivity, adding more scale to the respective businesses of both TT and Stadium;
· extended research and development (R&D) capabilities, building on Stadium’s R&D resources to leverage new product innovation and accelerating new product launches to market; and
· a complementary customer base, providing cross selling opportunities for both businesses.
· The Transaction will be funded entirely from TT’s existing cash resources and committed bank facilities.
· TT expects the Transaction to be immediately earnings enhancing, and to meet its targeted return on capital hurdle rate in the year ending 31 December 2020.
· The Stadium Directors, who have been so advised by N+1 Singer as to the financial terms of the Transaction, consider the terms of the Transaction to be fair and reasonable. N+1 Singer is providing independent financial advice to the Stadium Directors for the purposes of Rule 3 of the Code. In providing its financial advice to the Stadium Directors, N+1 Singer has taken into account the commercial assessments of the Stadium Directors.
· Accordingly, the Stadium Directors intend to recommend unanimously that Stadium Shareholders vote in favour of the Scheme at the Court Meeting and the resolutions relating to the Transaction at the Stadium General Meeting (or, in the event that the Transaction is implemented by way of a Takeover Offer, to accept or procure the acceptance of such Takeover Offer). Each of Charlie Peppiatt, Nick Brayshaw and Christopher Gill have irrevocably undertaken to vote in favour of the Scheme at the Court Meeting and in favour of the resolutions relating to the Transaction at the Stadium General Meeting in respect of their own beneficial holdings of Stadium Shares, amounting to, in aggregate, 402,110 Stadium Shares representing approximately 1.1 per cent. of Stadium’s share capital in issue on 14 February 2018 (being the latest practicable date before the release of this announcement). Further details are set out in Appendix 3 to this announcement.
· In addition to the irrevocable undertakings received from each of Charlie Peppiatt, Nick Brayshaw and Christopher Gill, TT has received irrevocable undertakings from certain Stadium Shareholders representing, in aggregate, approximately 24.2 per cent. of Stadium’s share capital in issue on 14 February 2018 (being the latest practicable date before the release of this announcement) to vote in favour of the Scheme at the Court Meeting and in favour of the resolutions relating to the Transaction at the Stadium General Meeting, or in the event that the Transaction is implemented by way of a Takeover Offer, to accept or procure the acceptance of such Takeover Offer. Further details are set out in Appendix 3 to this announcement.
· The Transaction is subject to a number of Conditions and further terms, including the approval of the Scheme by the Stadium Shareholders by the requisite majorities and the sanctioning of the Scheme by the Court. The Conditions are set out in full at Appendix 1 to this announcement.
· The Scheme Document, containing further information about the Transaction and notices of the Court Meeting and the Stadium General Meeting, together with the Forms of Proxy, will be published as soon as practicable and, in any event, within 28 days of this announcement.
· Commenting on the Transaction, Richard Tyson, CEO of TT, said:
“The acquisition of Stadium is an important step to accelerate our strategy of building leading positions in sectors where increasing electrification is fuelling demand for our highly engineered electronic solutions.
We look forward to welcoming Stadium’s employees and combining power electronics capabilities and R&D expertise to drive growth for the combined business. Stadium will add complementary technologies including connectivity offerings, in industries we already know well. We remain committed to deploying our resources to accelerate growth through capital investments and acquisitions to enhance TT’s potential and create value for our shareholders.”
· Commenting on the Transaction, Nick Brayshaw, Chairman of Stadium, said:
“On behalf of the Stadium Board, I can confirm the recommendation of the Stadium Directors in favour of TT’s cash offer for Stadium. The Stadium Board’s strategy in transitioning the company to a design-led technology business with a focus on wireless connectivity, power and interface and displays has been successful and is now entering the next phase of growth. We believe that the offer from TT represents an attractive and certain value in cash today for Stadium Shareholders, reflecting the high quality of the business, its people and future prospects. The strategic fit with TT is strong and the Stadium Board believes that the combined business provides considerable scope for accelerating the development of Stadium’s strategy, strengthening the foundations to grow significant shareholder value whilst continuing to broaden the opportunities for our people, our customers and our products.”
· Rothschild is acting as financial adviser to TT in respect of the Transaction. Numis is acting as corporate broker to TT in respect of the Transaction. Allen & Overy LLP is acting as legal adviser to TT.
· N+1 Singer is acting as financial adviser and broker to Stadium in respect of the Transaction. Pinsent Masons LLP is acting as legal adviser to Stadium.
· TT will hold a conference call and webinar for analysts and investors at 8:30 a.m. GMT today which will be webcast at http://webcasting.brrmedia.co.uk/broadcast/5a82d8c3cb5fd9447f49dff5 with a dial-in facility available on +44 (0)330 336 9411. The access code and title is 6448056 “Company Announcement”. For further details, please contact MHP on +44 (0)20 3128 8100. A copy of the analyst and investor presentation will be available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, for inspection on TT’s website at http://www.ttelectronics.com/ promptly and in any event by no later than 12 noon (London time) on the Business Day following the date of this announcement. For the avoidance of doubt the content of the website is not incorporated into, and does not form part of, this announcement.
This summary should be read in conjunction with, and is subject to, the full text of this announcement (including the Appendices). The Transaction 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 Scheme Document. Appendix 2 contains the bases and sources of certain information used in this summary and this announcement. Appendix 3 contains details of the irrevocable undertakings received in relation to the Transaction that are referred to in this announcement. Appendix 4 contains details of a profit estimate for the year ended 31 December 2017 and a profit forecast for the year ending 31 December 2018 made by Stadium in its trading update announcement released on 8 November 2017. Appendix 5 contains definitions of certain terms used in this summary and this announcement.
Market Soundings
Market soundings, as defined in the Market Abuse Regulation, were taken in respect of the Transaction with the result that certain persons became aware of inside information, as permitted by the Market Abuse Regulation. That inside information is set out in this announcement. Therefore, those persons that received inside information in a market sounding are no longer in possession of inside information relating to Stadium and TT and their respective securities.
