DJ IFG Group plc: Recommended Cash Offer
Dow Jones received a payment from EQS/DGAP to publish this press release.
IFG Group plc (IFP)
IFG Group plc: Recommended Cash Offer
25-March-2019 / 07:00 GMT/BST
Dissemination of a Regulatory Announcement that contains inside information
according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR
FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE
RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION
THIS ANNOUNCEMENT IS BEING MADE PURSUANT TO RULE 2.5 OF THE IRISH TAKEOVER
RULES
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
FOR IMMEDIATE RELEASE
25 March 2019
RECOMMENDED CASH OFFER
for
IFG group PLC
by
Saintmichelco limited
A WHOLLY-OWNED INDIRECT SUBSIDIARY OF FUNDS Advised BY EPIRIS LLP
TO BE IMPLEMENTED BY WAY OF A SCHEME OF ARRANGEMENT
UNDER CHAPTER 1 OF PART 9 OF THE COMPANIES ACT 2014
Summary
· Epiris GP Limited ("Epiris GP"), as General Partner of the Epiris Funds
advised by Epiris LLP ("Epiris"), and IFG Group plc ("IFG") are pleased to
announce that they have reached agreement on the terms of a recommended
cash offer pursuant to which SaintMichelCo Limited ("Bidco"), a wholly
owned indirect subsidiary of the Epiris Funds, will acquire the entire
issued and to be issued share capital of IFG.
· Under the terms of the Acquisition, IFG Shareholders will be entitled to
receive:
for each IFG Ordinary Share GBP1.93 in cash
· The Acquisition values the entire issued and to be issued ordinary share
capital of IFG at approximately GBP206 million.
· The Acquisition represents:
· a premium of approximately 46 per cent. to IFG's closing share price
of GBP1.325 on 22 March 2019 (being the last practicable date prior to the
publication of this Announcement);
· a premium of approximately 44 per cent. to IFG's volume weighted
average share price of approximately GBP1.34 over the one month period
ended on 22 March 2019;
· a premium of approximately 42 per cent. to IFG's volume weighted
average share price of approximately GBP1.36 over the three month period
ended on 22 March 2019; and
· a multiple of approximately 21.4 times IFG's adjusted after tax
earnings for the year ended 31 December 2018.
· If any dividend or other distribution is authorised, declared, made or
paid in respect of the IFG Ordinary Shares on or after the date of this
Announcement, Bidco reserves the right to reduce the Consideration by the
aggregate amount of such dividend or other distribution.
· Commenting on the Acquisition, Kathryn Purves, CEO of IFG, said:
"We are pleased to be announcing this transaction today and believe it is an
excellent outcome for shareholders, for the company, and for our clients.
The offer by Epiris represents a compelling opportunity for shareholders to
realise an immediate and attractive cash value for their shareholding in IFG
today. In addition, our employees and clients will benefit under the
ownership of Epiris which should help accelerate the delivery of IFG's
strategic objectives and the underlying strategies of James Hay and
Saunderson House."
· Commenting on the Acquisition, Owen Wilson of Epiris said:
"We are delighted that the Board of IFG has recommended our offer and we are
excited to work with management to realise the growth potential of James Hay
and of Saunderson House and to further enhance their position in their
respective markets. James Hay, a trusted provider in the SIPP market, and
Saunderson House, a differentiated independent wealth manager, both have
strong reputations across their broad range of clients".
· It is intended that the Acquisition will be implemented by means of a
High Court sanctioned scheme of arrangement under Chapter 1 of Part 9 of
the Act (or, if Bidco elects, subject to the terms of the Transaction
Agreement and with the consent of the Panel, a Takeover Offer). The
Acquisition is conditional on, among other things, (i) the approval by IFG
Shareholders of the Scheme Meeting Resolution and the EGM Resolutions;
(ii) the sanction of the Scheme and the confirmation of the Reduction of
Capital, by the High Court; and (iii) receipt of required regulatory and
other necessary approvals.
· Having taken into account the relevant factors and applicable risks, the
IFG Board, who has been so advised by Evercore and Goodbody, financial
advisers to IFG, consider the terms of the Acquisition as set out in this
Announcement to be fair and reasonable. In providing such advice, Evercore
and Goodbody have taken into account the commercial assessments of the IFG
Directors. Evercore and Goodbody are providing independent financial
advice to the IFG Directors for the purposes of Rule 3 of the Takeover
Rules.
· Accordingly the IFG Board unanimously recommends that IFG Shareholders
vote in favour of the Acquisition and all of the Resolutions, as they
intend to do in respect of their own beneficial holdings of, in aggregate,
874,879 IFG Ordinary Shares which represent, in aggregate, approximately
0.83 per cent. of the existing issued share capital of IFG as at the last
practicable date before this Announcement being 22 March 2019.
· In addition, Bidco has received an irrevocable undertaking to vote in
favour of the Acquisition from Crownway Capital ULC, a company owned and
controlled by John Gallagher and his Connected Persons, in respect of
10,166,816 IFG Ordinary Shares representing approximately 9.65 per cent.
of the issued share capital of IFG.
· In aggregate therefore, irrevocable undertakings and other commitments
to vote in favour of each of the Resolutions required to implement the
Scheme have been received by Bidco over 11,041,695 IFG Ordinary Shares,
representing approximately 10.48 per cent. of the issued share capital of
IFG. Further details of the irrevocable undertakings are set out below in
paragraph 4 of this Announcement, including the circumstances in which the
irrevocable undertakings cease to be binding.
· The Scheme Document, which will contain, amongst other things, further
information about the Acquisition, notices convening the Scheme Meeting
and the Extraordinary General Meeting, the expected timetable for
Completion and action to be taken by IFG Shareholders, will be published
as soon as practicable and, in any event, within 28 days of this
Announcement. It is anticipated that the Scheme will, subject to obtaining
the necessary regulatory and other necessary approvals, be declared
effective in the second half of 2019.
About Epiris LLP
· Epiris is one of the longest-established private equity firms in the UK.
Formerly known as Electra Partners, Epiris managed the FTSE 250-listed
investment trust Electra Private Equity PLC until 2017, and in 2018 Epiris
announced the final close of Epiris Fund II, an institutional private
equity fund that attracted capital commitments totalling GBP821 million from
some of the world's leading investors.
· Epiris invests in UK-headquartered businesses with an enterprise value
of between GBP75 million and GBP500 million. It has a strong track record of
transforming businesses in partnership with exceptional management teams.
Its approach is to focus on strategic clarity, operational excellence,
growth acceleration and M&A.
About IFG plc
· IFG is a financial services holding company with full market listings in
London and Dublin. IFG's businesses provide financial solutions to end
customers and financial advisers. James Hay provides pensions
administration and investment platform services and Saunderson House is an
independent wealth manager and financial adviser.
· As at 31 December 2018, IFG had GBP30.2 billion of assets under
administration or advice across James Hay (GBP25.3 billion of assets under
administration) and Saunderson House (GBP4.9 billion of assets under
advice). In the year ended 31 December 2018, IFG reported an adjusted
operating profit of GBP12.4 million and, on a statutory basis, a post tax
loss of GBP1.0 million. IFG generated operating free cash flow of GBP6.6
million and net cash flow (after interest, retention payments and head
office restructuring costs) of GBP3.1 million for the year ended 31 December
2018.
This summary should be read in conjunction with the full text of the
following Announcement and its appendices.
The Conditions to, and certain further terms of, the Acquisition are set out
in Appendix C to this Announcement and the Acquisition is subject to further
terms to be set out in the Scheme Document. Appendix A to this Announcement
contains certain sources of information and bases of calculation contained
in this Announcement. Certain terms used in this Announcement are defined in
Appendix B to this Announcement.
This Announcement contains inside information and has been issued pursuant
to Article 2.1(b) of Commission Implementing Regulation (EU) 2016/1055. The
date and time of this Announcement is the same as the date and time that it
has been communicated to the media.
Enquiries:
Houlihan Lokey (Financial Adviser to Epiris)
Lawrence Guthrie / Christian +44 20 7907 4200
Kent / Yashin Mody / Sam Ward
Greenbrook (media enquiries for Epiris)
Matthew Goodman / Katarina +44 20 7952 2000
Sallerfors / Daniel Oliver
IFG
Kathryn Purves / Gavin Howard +44 20 3887 6181
(MORE TO FOLLOW) Dow Jones Newswires
March 25, 2019 03:01 ET (07:01 GMT)
DJ IFG Group plc: Recommended Cash Offer -2-
Evercore (Joint Lead Financial Adviser and Rule 3 Adviser to
IFG)
Ollie Clayton / Nick Chapman / +44 20 7653 6000
Demetris Efthymiou
Goodbody (Joint Lead Financial Adviser, Rule 3 Adviser and
Corporate Broker to IFG)
Stephen Kane / Charlotte +353 (0)1 667 0400 +44 203 841
Craigie 6220
Macquarie Capital (Europe)
Limited (Financial Adviser and
Corporate Broker to IFG)
Jonny Allison / Alex Reynolds +44 20 3037 2000
Powerscourt (media enquiries
for IFG)
Justin Griffiths / Jack Hickey + 44 20 7250 1446 +353 1536
0683
Statements required by the Takeover Rules
The Epiris Responsible Persons and the Bidco Directors accept responsibility
for the information contained in this Announcement other than that relating
to IFG, the IFG Group and the IFG Directors and members of their immediate
families, related trusts and persons connected with them. To the best of the
knowledge and belief of the Epiris Responsible Persons and the Bidco
Directors (who, in each case, have taken all reasonable care to ensure that
such is the case), the information contained in this Announcement for which
they accept responsibility is in accordance with the facts and does not omit
anything likely to affect the import of such information.
The IFG Directors accept responsibility for the information contained in
this Announcement relating to IFG, the IFG Group and the IFG Directors and
members of their immediate families, related trusts and persons connected
with them. To the best of the knowledge and belief of the IFG Directors (who
have taken all reasonable care to ensure such is the case), the information
contained in this Announcement for which they accept responsibility is in
accordance with the facts and does not omit anything likely to affect the
import of such information.
Houlihan Lokey (Corporate Finance) Limited ("Houlihan Lokey"), which is
authorised and regulated by the Financial Conduct Authority in the UK, is
acting exclusively as financial adviser to Epiris and no one else in
connection with the matters described in this Announcement and will not be
responsible to anyone other than Epiris for providing the protections
afforded to clients of Houlihan Lokey, or for providing advice in connection
with the matters referred to herein. Neither Houlihan Lokey 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 in connection with this Announcement or any matter referred
to herein.
Evercore Partners International LLP ("Evercore"), which is authorised and
regulated by the Financial Conduct Authority in the UK, is acting
exclusively as financial adviser to IFG and no one else in connection with
the matters described in this announcement and will not be responsible to
anyone other than IFG for providing the protections afforded to clients of
Evercore, or for providing advice in connection with the matters referred to
herein. Neither Evercore nor any of its subsidiaries, branches 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 Evercore in connection with
this announcement or any matter referred to herein.
Goodbody Stockbrokers UC, trading as Goodbody ("Goodbody"), which is
regulated by the Central Bank of Ireland and in the UK, Goodbody is
authorised and subject to limited regulation by the Financial Conduct
Authority, is acting exclusively for IFG and no one else in connection with
the matters referred to in this announcement and will not be responsible to
anyone other than IFG for providing the protections afforded to clients of
Goodbody, or for providing advice in connection with the matters referred to
herein. Neither Goodbody 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 Goodbody in connection with this announcement
or any matter referred to herein.
Macquarie Capital (Europe) Limited ("Macquarie"), which is authorised and
regulated in the United Kingdom by the Financial Conduct Authority, is
acting exclusively for IFG and no one else in connection with the matters
referred to in this announcement and will not be responsible to anyone other
than IFG for providing the protections afforded to clients of Macquarie, or
for providing advice in connection with the matters referred to herein.
Neither Macquarie 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 Macquarie in connection with this announcement
or any matter referred to herein.
This Announcement is for information purposes only and is not intended to,
and does not, constitute or form any part of any offer or invitation, or the
solicitation of an offer, to purchase or otherwise acquire, subscribe for,
sell or otherwise dispose of any securities or the solicitation of any vote
or approval in any jurisdiction pursuant to the Acquisition or otherwise,
nor shall there be any sale, issuance or transfer of securities in any
jurisdiction in contravention of applicable law. The Acquisition will be
made solely by means of the Scheme Document (or, if applicable, the Takeover
Offer Document), which will contain the full terms and conditions of the
Acquisition, including details of how to vote in respect of the Acquisition.
Any decision in respect of, or other response to, the Acquisition, should be
made only on the basis of the information contained in the Scheme Document
(or, if applicable, the Takeover Offer Document).
This Announcement does not constitute a prospectus or a prospectus
equivalent document.
This Announcement has been prepared for the purpose of complying with the
laws of Ireland and the Takeover Rules 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 of
Ireland.
Cautionary Statement Regarding Forward-Looking Statements
This Announcement contains certain forward-looking statements with respect
to Epiris, Bidco and IFG. These forward-looking statements can be identified
by the fact that they do not relate only to historical or current facts.
Forward-looking statements often use words such as "anticipate", "target",
"expect", "estimate", "intend", "plan", "believe", "will", "may", "would",
"could" or "should" or other words of similar meaning or the negative
thereof. Forward-looking statements include statements relating to the
following: (i) future capital expenditures, expenses, revenues, economic
performance, financial conditions, dividend policy, losses and future
prospects; (ii) business and management strategies and the expansion and
growth of the operations of the Epiris Group or the IFG Group; and (iii) the
effects of government regulation on the business of the Epiris Group or the
IFG Group.
These forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of any such person, or industry results, to be
materially different from any results, performance or achievements expressed
or implied by such forward-looking statements. These forward-looking
statements are based on numerous assumptions regarding the present and
future business strategies of such persons and the environment in which each
will operate in the future. You are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date hereof.
All subsequent oral or written forward-looking statements attributable to
Epiris, Bidco or IFG or any persons acting on their behalf are expressly
qualified in their entirety by the cautionary statement above. Neither
Epiris, Bidco nor IFG undertake any obligation to update publicly or revise
forward-looking or other statements contained in this Announcement, whether
as a result of new information, future events or otherwise, except to the
extent legally required.
Disclosure requirements of the Takeover Rules
Under the provisions of Rule 8.3 of the Takeover Rules, if any person is, or
becomes, "interested" (directly or indirectly) in, 1% or more of any class
of "relevant securities" of IFG, all "dealings" in any "relevant securities"
of IFG (including by means of an option in respect of, or a derivative
referenced to, any such "relevant securities") must be publicly disclosed by
not later than 3:30 pm (Irish time) on the "business" day in Dublin
following the date of the relevant transaction. This requirement will
continue until the date on which the "offer period" ends. If two or more
persons co-operate on the basis of any agreement, either express or tacit,
either oral or written, to acquire an "interest" in "relevant securities" of
IFG, they will be deemed to be a single person for the purpose of Rule 8.3
of the Takeover Rules.
(MORE TO FOLLOW) Dow Jones Newswires
March 25, 2019 03:01 ET (07:01 GMT)
DJ IFG Group plc: Recommended Cash Offer -3-
Under the provisions of Rule 8.1 of the Takeover Rules, all "dealings" in
"relevant securities"' of IFG by Epiris GP or Bidco, or by any party Acting
in Concert with either of them, must also be disclosed by no later than 12
noon (Irish time) on the business day in Dublin following the date of the
relevant transaction.
A disclosure table, giving details of the companies in whose "relevant
securities" "dealings" should be disclosed, can be found on the Irish
Takeover Panel's website at www.irishtakeoverpanel.ie.
"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 Takeover Rules, which can also
be found on the Irish Takeover Panel's website. If you are in any doubt as
to whether or not you are required to disclose a dealing under Rule 8,
please consult the Irish Takeover Panel's website at
www.irishtakeoverpanel.ie or contact the Irish Takeover Panel on telephone
number +353 1 678 9020 or fax number +353 1 678 9289.
No profit forecasts, estimates or asset valuations
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 Epiris, Bidco
or IFG, respectively for the current or future financial years would
necessarily match or exceed the historical published earnings or earnings
per share for Epiris, Bidco or IFG, respectively. No statement in this
Announcement constitutes an asset valuation.
Right to switch to a Takeover Offer
Bidco reserves the right to elect, subject to the terms of the Transaction
Agreement and with the consent of the Panel, to implement the Acquisition by
way of a Takeover Offer for the entire issued and to be issued share capital
of IFG as an alternative to the Scheme. In such an event, the Takeover Offer
will be implemented on the same terms (subject to appropriate amendments),
so far as applicable, as those which would apply to the Scheme and subject
to the amendments referred to in Appendix C to this Announcement and in the
Transaction Agreement.
Publication on website
Pursuant to Rule 2.6(c) of the Takeover Rules, this Announcement will be
made available to Epiris' employees on Epiris' website (www.epiris.co.uk)
and to IFG employees on IFG's website (www.ifggroup.com).
Neither the content of this website nor the content of any other website
accessible from hyperlinks on such website is incorporated into, or forms
part of, this Announcement.
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.
General
The laws of the relevant jurisdictions may affect the availability of the
Acquisition to persons who are not resident in Ireland or the United
Kingdom. Persons who are not resident in Ireland or the United Kingdom, or
who are subject to laws of any jurisdiction other than Ireland or the United
Kingdom, should inform themselves about, and observe, any applicable legal
or regulatory requirements. Any failure to comply with the applicable legal
or regulatory requirements may constitute a violation of the laws and/or
regulations of any such jurisdiction. To the fullest extent permitted by
applicable law, the companies and persons involved in the Acquisition
disclaim any responsibility and liability for the violation of such
restrictions by any person.
The Acquisition will not be made available, directly or indirectly, in a
Restricted Jurisdiction, and the Acquisition will not be capable of
acceptance from within a Restricted Jurisdiction.
The release, publication or distribution of this Announcement in or into
certain jurisdictions may be restricted by the laws of those jurisdictions.
Accordingly, copies of this Announcement and all other documents relating to
the Acquisition are not being, and must not be, released, published, mailed
or otherwise forwarded, distributed or sent in, into or from any Restricted
Jurisdiction. Persons receiving such documents (including, without
limitation, nominees, trustees and custodians) should observe these
restrictions. Failure to do so may constitute a violation of the securities
laws of any such jurisdiction. To the fullest extent permitted by applicable
law, the Epiris Group, Bidco and IFG disclaim any responsibility or
liability for the violations of any such restrictions by any person.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR
FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE
RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION
THIS ANNOUNCEMENT IS BEING MADE PURSUANT TO RULE 2.5 OF THE TAKEOVER RULES
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
FOR IMMEDIATE RELEASE
25 March 2019
RECOMMENDED CASH OFFER
for
IFG GROUP PLC
by
Saintmichelco limited
A WHOLLY-OWNED indirect SUBSIDIARY OF
funds Advised by Epiris llp
TO BE IMPLEMENTED BY MEANS OF A SCHEME OF ARRANGEMENT
UNDER CHAPTER 1 OF PART 9 OF THE COMPANIES ACT 2014
1 Introduction
The boards of directors of Bidco and IFG are pleased to announce that they
have reached agreement on the terms of a recommended cash offer, pursuant to
which Bidco will acquire the entire issued and to be issued share capital of
IFG, which is being implemented by means of a scheme of arrangement under
Chapter 1 of Part 9 of the Act.
2 Summary Terms of the Acquisition
2.1 The Acquisition is subject to the Conditions set out in Appendix C to
this Announcement and to be set out in the Scheme Document.
2.2 Under the terms of the Acquisition, IFG Shareholders will be entitled to
receive:
for each IFG Ordinary Share GBP1.93 in cash
2.3 The Acquisition values the entire issued and to be issued ordinary share
capital of IFG at approximately GBP206 million. The Acquisition represents:
2.3.1 a premium of approximately 46 per cent. to IFG's closing share price
of GBP1.325 on 22 March 2019 (being the last practicable date prior to the
publication of this Announcement);
2.3.2 a premium of approximately 44 per cent. to IFG's volume weighted
average share price of approximately GBP1.34 over the one month period ended
on 22 March 2019;
2.3.3 a premium of approximately 42 per cent. to IFG's volume weighted
average share price of approximately GBP1.36 over the three month period ended
on 22 March 2019; and
2.3.4 a multiple of approximately 21.4 times of IFG's adjusted after tax
earnings for the year ended 31 December 2018.
2.4 In consideration of these payments, the IFG Ordinary Shares will be
cancelled and IFG will issue new IFG Ordinary Shares to Bidco.
2.5 If any dividend or other distribution is authorised, declared, made or
paid in respect of the IFG Ordinary Shares on or after the date of this
Announcement, Bidco reserves the right to reduce the Consideration by the
aggregate amount of such dividend or other distribution.
2.6 The sources and bases of information contained in this Announcement to
calculate the implied value of the Acquisition, are set out in Appendix A.
3 IFG Recommendation
3.1 Having taken into account the relevant factors and applicable risks, the
IFG Board who have been so advised by Evercore and Goodbody, financial
advisers to IFG, consider the terms of the Acquisition as set out in this
Announcement to be fair and reasonable. In providing such advice, Evercore
and Goodbody have taken into account the commercial assessments of the IFG
Directors. Evercore and Goodbody are providing independent financial advice
to the IFG Directors for the purposes of Rule 3 of the Takeover Rules.
3.2 Accordingly, the IFG Board unanimously recommends that IFG Shareholders
vote in favour of the Acquisition and all of the Resolutions, as they intend
to do in respect of their own beneficial holdings of, in aggregate, 874,879
IFG Ordinary Shares, which represent, in aggregate, approximately 0.83 per
cent. of the existing issued share capital of IFG as at 22 March 2019 (being
the last practicable date prior to the release of this Announcement).
4 Irrevocable Commitments
4.1 Bidco has received irrevocable undertakings from each of the IFG
Directors to vote in favour of the Scheme at the Scheme Meeting and each of
the EGM Resolutions to be proposed at the Extraordinary General Meeting in
respect of their own beneficial holdings of, in aggregate, 874,879 IFG
Ordinary Shares, which represent, in aggregate, approximately 0.83 per cent.
of the issued share capital of IFG as at 22 March 2019 (being the last
practicable date prior to the release of this Announcement).
4.2 In addition, Bidco has received an irrevocable undertaking to vote in
favour of the Scheme at the Scheme Meeting and each of the EGM Resolutions
(MORE TO FOLLOW) Dow Jones Newswires
March 25, 2019 03:01 ET (07:01 GMT)
to be proposed at the Extraordinary General Meeting from the following IFG
Shareholder:
Holder (as at Number of IFG % of IFG Issued
22 March 2019) Ordinary Shares Ordinary Shares in
Issue (Excl.
Treasury Shares)
Crownway Capital ULC (a 10,166,816 9.65
company owned and
controlled by John
Gallagher and his
Connected Persons)
4.3 Therefore, in aggregate with the irrevocable undertakings received from
the IFG Directors, Bidco has received irrevocable undertakings and other
commitments of 11,041,695 IFG Ordinary Shares that represent approximately
10.48 per cent. of the issued share capital of IFG on 22 March 2019 (being
the last practicable date prior to the release of this Announcement).
4.4 The irrevocable undertakings received from each of the IFG Directors
will cease to have effect on the earlier to occur of (i) this Announcement
not being released on 25 March 2019 or such later date as Bidco and IFG may
agree; or (ii) the Transaction Agreement being terminated in accordance with
its terms;
4.5 The irrevocable undertaking received from Crownway Capital ULC will
cease to have effect on the earlier to occur of (i) this Announcement not
being released on or by 25 March 2019; or (ii) any third party announcing a
firm intention to make a general offer to acquire the entire issued and to
be issued share capital of IFG (not already owned by such third party) with
a value per share in cash (or equivalent to cash) of GBP2.12 or more; or (iii)
the Transaction Agreement being terminated in accordance with its terms.
5 IFG Background to and Reasons for Recommending the Acquisition
5.1 In recommending the Acquisition, the Directors, who have been advised by
Evercore and Goodbody, have considered, inter alia, the following factors
set out below.
Recent Period
5.2 During the past 5 years, IFG has evolved from being a diversified Irish
and UK financial services business to a more focused group, comprising two
largely self-reliant businesses (James Hay and Saunderson House). The IFG
Directors believe that both James Hay and Saunderson House are well
positioned standalone businesses and operate in attractive markets.
5.3 Whilst the IFG Group recorded good growth in adjusted operating profits
in 2018, it has faced a number of challenges and change during the last
twelve months including significant legacy matters, a cancelled sales
process for Saunderson House and a change of IFG Group leadership.
5.4 The legacy matters to which the IFG Group is exposed include the
potential sanction charge relating to Elysian Fuels, where the maximum
charge would be approximately GBP20 million plus interest, as well as other
issues such as the dual trustee SIPP/SSAS book, where the Group has
announced today a GBP4.9 million provision. Resolution of these items has also
added further exceptional costs.
5.5 In December 2018, in order to provide greater clarity to investors on
the outlook and strategy for the IFG Group and its subsidiaries, IFG
released a strategy and trading update announcement. IFG outlined its focus
on developing two attractively positioned and self-reliant businesses while
at the same time delivering operational and cost efficiencies within the
group function. Both businesses put in place comprehensive business plans,
with clear growth targets, and IFG stated that it would continue to focus on
the resolution of legacy matters within James Hay as a priority.
5.6 As announced in the preliminary results, for the year ended 31 December
2018, the IFG Group reported revenue of GBP87.6 million (2017: GBP78.4 million),
adjusted operating profit of GBP12.4 million (2017: GBP10.5 million), profit
before tax of GBP0.5 million (2017: GBP(0.4) million) and a post tax loss of
GBP1.0 million (2017: post tax loss of GBP0.4 million).
Outlook
5.7 The IFG Directors considered the current trading and outlook for IFG as
outlined in the preliminary results for the year ended 31 December 2018 and
the growth targets set out in the strategy and trading Update in December
2018.
5.8 The IFG Directors remain confident that the Group's existing strategy
would deliver future value for IFG Shareholders. However, they also believe
that the terms of the Acquisition acknowledge the quality of IFG's business
and the strength of its future prospects and that the Consideration
represents an attractive opportunity for shareholders to realise an
immediate and attractive cash value, at a significant premium, for their
shareholding in IFG today.
5.9 In addition, while the IFG Directors believe IFG is well positioned
going forward, the Directors are mindful of potential industry challenges
including an evolving regulatory environment, the requirement for ongoing
investment in technology and infrastructure and the need for further
economies of scale to improve profit margins.
The Consideration
5.10 The Acquisition values the entire issued and to be issued ordinary
share capital of IFG at approximately GBP206 million. The Acquisition
represents:
5.10.1 a premium of approximately 46 per cent. to IFG's closing share price
of GBP1.325 on 22 March 2019 (being the last practicable date prior to the
publication of this Announcement);
5.10.2 a premium of approximately 44 per cent. to IFG's volume weighted
average share price of approximately GBP1.34 over the one month period ended
on 22 March 2019;
5.10.3 a premium of approximately 42 per cent. to IFG's volume weighted
average share price of approximately GBP1.36 over the three month period ended
on 22 March 2019; and
5.10.4 a multiple of approximately 21.4 times IFG's adjusted after tax
earnings for the year ended 31 December 2018.
Alternative options
5.11 The IFG Directors, in conjunction with IFG's financial advisers,
Evercore and Goodbody, conducted a comprehensive review of the options
available to IFG. The review considered, amongst other options, a Demerger
of IFG and the sale of James Hay and / or Saunderson House. Taking into
account the options available to IFG, the feasibility and execution risks
arising and the time-frame to achieve such alternative options (including
the prolonged time-frame for a Demerger), the IFG Directors have concluded
that the terms of the Acquisition are in the best interests of IFG
Shareholders.
Additional factors
5.12 Additional factors that have also been taken into consideration by the
IFG Directors include:
5.12.1 they believe that the Acquisition provides liquidity at a fair and
reasonable price for IFG Shareholders;
5.12.2 they believe the Acquisition provides value certainty for
shareholders at a significant premium and removes the uncertainty for
shareholders arising from James Hay's legacy matters, including Elysian
Fuels and its dual trustee SIPP / SSAS book, which may otherwise take
significant time to resolve;
5.12.3 they believe that due to the uncertainty arising from James Hay's
legacy matters, it would be unlikely that the Board would recommence
dividend payments until such uncertainty has been resolved and IFG has
sufficient capital resources and cash in place, taking account of such
legacy matters;
5.12.4 they have considered IFG's current and projected capital position and
believe that the Acquisition provides IFG, James Hay and Saunderson House
with increased access to capital to support growth; and
5.12.5 they believe the Acquisition provides James Hay and Saunderson House
with enhanced financial and operational flexibility as the businesses seek
to execute their respective strategies.
Summary
5.13 The foregoing summary of the factors considered by the IFG Board is not
intended to be exhaustive but does set forth the principal factors
considered by the IFG Board. The IFG Board collectively reached the
unanimous conclusion to recommend the Acquisition in the light of the
various factors described above. In view of the wide variety of factors
considered by the IFG Board in connection with its evaluation of the
Acquisition and the complexity of these matters, the IFG Board did not
consider it practical and did not attempt to quantify, rank or otherwise
assign relative weights to the specific factors it considered in reaching
its decision. Rather, the IFG Board makes its recommendation based on the
totality of information presented to, and the investigation conducted by, it
with the assistance of its advisers.
6 Epiris LLP's Background to and Rationale for the Acquisition
6.1 Epiris has actively tracked the UK wealth management sector and believes
that IFG represents an exciting opportunity to invest in well-established
businesses positioned in attractive markets, with strong underlying
cashflow. Epiris has successfully transformed a number of businesses and
believes that under private ownership and supported by Epiris' expertise in
the sector, James Hay and Saunderson House will be better able to capitalise
on potential opportunities within their core markets.
7 Information on Epiris and Bidco
7.1 Epiris is one of the longest-established private equity firms in the UK.
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