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FDM Group Acquisition Update

FDM Group Acquisition Update

Recommended cash offer by ASTRA 5.0 LIMITED a company controlled by investment partnerships advised by INFLEXION PRIVATE EQUITY PARTNERS LLP for FDM GROUP plc at 141 pence per FDM Share

Summary
The Independent Director of FDM and the board of Astra announce that they have reached agreement on the terms of a recommended cash offer by Astra for the entire issued and to be issued share capital of FDM. Astra is a newly incorporated company which has been formed for the purposes of making the Offer and is ultimately controlled by investment partnerships advised by Inflexion.

Under the terms of the Offer, FDM Shareholders will be entitled to receive 141 pence per FDM Share in cash. The Offer values the entire issued and to be issued share capital of FDM at approximately 33.3 million.

The Offer Price represents a premium of approximately:
42.4 per cent. to the Closing Price of 99.0 pence per FDM Share on 3 June 2009, the last business day prior to the announcement by FDM that it had received an approach from the Executive Management Team and Ivan Martin regarding a possible offer for FDM

64.9 per cent. to the average Closing Price of 85.5 pence per FDM Share for the six month period ending on 3 June 2009 and
72.1 per cent. to the Closing Price of 99.0 pence per FDM Share on 3 June 2009, as adjusted for cash on the balance sheet as at 30 June 2009, which equates to 40.7 pence per FDM Share. The cash adjusted Offer Price is 100.3 pence (being 141.0 pence less 40.7 pence). The cash adjusted Closing Price on 3 June 2009 was 58.3 pence (being 99.0 pence less 40.7 pence).

FDM is an international IT services company with sales offices in London, New York, Frankfurt, Zurich and Luxembourg which specialises in the provision of outsourced IT solutions predominantly to large blue chip organisations. As of 31 October 2009, the business employed 322 full time IT consultants (known as Mounties) and had a further 131 in training at its Brighton, London and Manchester training academies specialising in application development (java and .net), support, project management and testing. FDM also operates an IT staffing business which had over 340 contractors on assignment as of 31 October 2009.

Astra has entered into arrangements with the Management Team under which they will, in aggregate, through a rollover of their Management FDM Shares and Management Option Shares, additional cash investment or a mixture of the two, invest in Astra and Astra Topco an amount equal to approximately 3.42 million at the Offer Price. Further details of the proposed arrangements between Astra and the Management Team are set out in paragraph 4 of this announcement.

Under the Code, the Panel requires the proposed arrangements with the Management Team to be approved by ordinary resolution of the Independent Shareholders and the Offer is conditional on, inter alia, such approval being obtained.

A committee of the board of FDM, comprising the Independent Director, has been established for the purposes of considering the Offer and making recommendations to FDM Shareholders in relation to the Offer.

The Independent Director of FDM, who has been so advised by Brewin Dolphin, considers the terms of the Offer to be fair and reasonable. In providing its advice to the Independent Director, Brewin Dolphin has taken into account the commercial assessments of the Independent Director.

Accordingly, on the basis of the information contained in the paragraph in this announcement headed "Background to and reasons for recommending the Offer", the Independent Director intends to recommend that FDM Shareholders accept the Offer and that Independent Shareholders vote in favour of the Resolution, as he has irrevocably undertaken to do in respect of his entire beneficial holding of 15,000 FDM Shares, representing approximately 0.06 per cent. of the existing issued share capital of FDM.

The Offer will be subject to the Conditions and certain further terms referred to in Appendix 1 to this announcement and to be set out in the Offer Document. To become effective, the Offer will require, amongst other things, the passing, on a poll, of an ordinary resolution approving the arrangements between Astra and the Management Team.

Under the Share Exchange Agreements, the Management Team have agreed, conditional on the Offer becoming or being declared wholly unconditional, to sell to Astra (i) the Management FDM Shares amounting to, in aggregate, 1,565,946 FDM Shares, representing approximately 6.74 per cent. of the existing issued share capital of FDM and (ii) the Management Option Shares, amounting to, in aggregate, 189,750 FDM Shares which certain members of the Management Team will acquire when they exercise certain options granted to them pursuant to the EMI Scheme.

Astra has received an irrevocable undertaking from Rod Flavell to accept the Offer in respect of a total of 780,142 FDM Shares (such FDM Shares being, together with the FDM Shares which he has agreed to sell pursuant to the Share Exchange Agreement, his entire legal and beneficial holding of FDM Shares).

Astra has received an irrevocable undertaking from AXA Framlington, the equity division of AXA Investment Managers UK Limited to accept the Offer and vote in favour of the Resolution in respect of 2,578,217 FDM Shares.

Astra has received an irrevocable undertaking from Hargreave Hale Limited to accept the Offer and vote in favour of the Resolution in respect of 320,000 FDM Shares.

Astra has also received irrevocable undertakings from certain other parties who are beneficially interested in or otherwise able to control FDM Shares to accept the Offer and vote in favour of the Resolution or to procure that any other person accepts the Offer and votes in favour of the Resolution in respect of a total of 6,874,000 FDM Shares.

In addition, Astra has received a non-binding letter of intent from Henderson Global Investors Limited to accept the Offer and vote in favour of the Resolution in respect of 317,916 FDM Shares.

In aggregate, Astra has therefore:
received irrevocable undertakings and a non-binding letter of intent to accept the Offer or to procure that any other person accepts the Offer, and has an agreement to acquire FDM Shares under the Share Exchange Agreements in respect of a total of 12,436,221 FDM Shares (excluding Management Option Shares), representing approximately 53.56 per cent. of the existing issued share capital of FDM and received irrevocable undertakings and a non-binding letter of intent to vote in favour of the Resolution or to procure that any other person votes in favour of the Resolution in respect of a total of 10,090,133 FDM Shares representing approximately 48.54 per cent. of the FDM Shares held by Independent Shareholders.

Full details of the undertakings referred to above and the conditions under which they lapse are set out in paragraph 5 of this announcement.

Commenting on the Offer, Karl Monaghan, the Independent Director of FDM, said: "I am recommending the Offer Price of 141 pence per share as it allows shareholders the opportunity to accept the Offer at a significant premium to the pre announcement price. In my opinion, given the historic share price performance, share register structure and trading environment, in the absence of an offer for the Company, there can be no guarantee that shareholders (especially those with a significant holding) will be able to sell their shares in the market at a price of 141 pence or better in the short to medium term. The Offer Price is only 9.1 per cent. below the all time high share price of 155p which was achieved over a period of three days more than two years ago."

Commenting on the Offer, Rod Flavell, Chief Executive Officer of FDM and member of the Management Team, said: "Inflexion has a long track record of successful investing in the IT services space and I am delighted to be forming this partnership with them in order to support FDM in the next phase of its development.

Against the backdrop of current economic conditions and the challenging trading conditions that we face, the Offer provides FDM Shareholders, a number of whom have held their shares for many years, with the certainty of cash consideration at an attractive premium."

Commenting on the Offer, John Hartz, Managing Partner of Inflexion, said:
"Whilst the management team of FDM have successfully guided the business through difficult trading conditions, we believe that FDM Shareholders have suffered from the valuation and liquidity issues common to many small, closely-held, AIM stocks.

In financing our offer, we intend to utilise debt finance at a level materially above that which would be normal for a quoted company. This enables us to deliver an offer value to FDM Shareholders that is significantly in excess of where the Company's share price has traded since mid 2007. We believe that a certain cash offer at this level should be highly attractive against the backdrop of a fragile economic, trading and stock market environment."
This summary should be read in conjunction with the full text of the following announcement (including its Appendices). Appendix III to the following announcement contains definitions of certain terms used in this summary and the following announcement.

In accordance with Rule 19.11 of the City Code, a copy of this announcement will be published on the following websites: www.fdmgroup.com and www.inflexion.com.

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