Cash offer by Science Group plc for Frontier Smart Technologies Group Limited
It was announced on 1 July 2019 that Science Group would make an offer (the Offer) to acquire the entire issued and to be issued share capital of Frontier at a price of 35 pence per Frontier Share. On 2 July 2019, Science Group published an offer document setting out the full terms and conditions of the Offer (the Offer Document).
Science Group made its first formal approach, which included an indicative offer, to the board of Frontier (the Frontier Board) on 8 May 2019. Despite repeated attempts by Science Group to engage with the Frontier Board over the past ten weeks, the Frontier Board has consistently elected not to cooperate with Science Group.
2. Level of acceptances
As at 5.00 p.m. (London time) on 16 July 2019, Science Group had acquired 15,349,754 Frontier Shares through on market purchases, including through the Panmure Gordon Trading Facility, representing approximately 37.7 per cent. of the voting rights of Frontier.
As at 1.00 p.m. (London time) on 16 July 2019, Science Group had received valid acceptances of the Offer in respect of 1,269,399 Frontier Shares, representing approximately 3.1 per cent. of the voting rights of Frontier.
Therefore as at 5.00 p.m. (London time) on 16 July 2019, Science Group was interested in, in aggregate, 16,619,153 Frontier Shares representing approximately 40.8 per cent. of the voting rights of Frontier.
3. Offer unconditional as to acceptances
As the largest shareholder in Frontier with a shareholding of 40.8 per cent., Science Group considers that there is a high probability that Science Group would succeed in effecting change through a vote on an ordinary resolution, or opposing change through a vote on either an ordinary or special resolution, at a General Meeting of Frontier Shareholders, should that be required.
(Science Group notes that the Memorandum and Articles of Association on the Investor Pages of the Frontier website are not the current Articles, as approved on 14 May 2019 at the Annual General Meeting of Frontier.)
As a result, the board of Science Group is pleased to announce that it has decided to waive the Acceptance Condition, in accordance with the Offer Document and to declare the Offer unconditional as to acceptances.
Further details are set out below.
4. Extension of Offer
The Offer, which remains subject to the terms and conditions set out in the Offer Document (save for condition (a)), will remain open for acceptances until 1.00 p.m. (London time) on 19 July 2019 (the Extended Closing Date).
The Panmure Gordon Trading Facility will also remain open until 1.00 p.m. (London time) on the Extended Closing Date.
Both the Offer and the Panmure Gordon Trading Facility will close at 1.00 p.m. on the Extended Closing Date and will not be further extended. Thereafter, Frontier Shareholders should note that the Offer will not be open for acceptance and, whilst Science Group may at its discretion make purchases of Frontier Shares in the market, it is not required to make purchases at the Offer Price.
Science Group reminds Frontier Shareholders that since Science Group’s interest was first announced on 20 May 2019, no other offer for Frontier has been made publicly by any party. The only offer made for Frontier is Science Group’s Offer at 35 pence per Frontier Share which represents:
(a) a premium of 137.3 per cent. to the closing mid-market share price of Frontier on 17 May 2019 of 14.75 pence per share, being the last trading day prior to the announcement of Science Group's approach to Frontier; and
(b) a premium of 161.6 per cent. to the closing mid-market share price of Frontier on 9 May 2019 of 13.4 pence per share, being the date of the trading update issued by the board of directors of Frontier.
Frontier Shareholders who have yet to accept the Offer should be aware that if they fail to do so by the Extended Closing Date, the Offer will be closed and they will not be entitled to receive any consideration for their Frontier Shares in respect of the Offer.
5. Action to be taken
Science Group encourages Frontier Shareholders to accept the Offer, or sell their Frontier Shares through the Panmure Gordon Trading Facility, as soon as possible and in any event prior to 19 July 2019.
6. Next steps
Science Group reminds Frontier Shareholders that Frontier is incorporated in the Cayman Islands and therefore the UK City Code on Takeovers and Mergers (the City Code) does not apply to Frontier. Although the Frontier Board (in its various forms) has had ample opportunity over the past 14 years (including the current board at the most recent Annual General Meeting in May 2019) to change the jurisdiction of incorporation of Frontier, it has consistently elected not to do so. As a consequence, Science Group is not restricted from buying further Frontier Shares at any price following the Extended Closing Date, nor do any other provisions or constraints of the City Code apply.
The Offer Document sets out the intentions of Science Group following the Offer becoming wholly unconditional, which includes the possible execution of a statutory merger in accordance with Cayman Islands Companies Law (the Statutory Merger) and cancellation of the admission to trading of Frontier Shares on AIM (the Delisting). Science Group does not, at the present time, support changing the jurisdiction of incorporation of Frontier except through the Statutory Merger proposed in the Offer.
In the event that Science Group does not acquire sufficient Frontier Shares or voting rights of Frontier, or sufficient support from other Frontier Shareholders, to enable the Statutory Merger and Delisting to proceed, Frontier Shareholders should understand that share trading liquidity in Frontier may be severely limited. Science Group may provide some exit liquidity after the Extended Closing Date for Frontier Shareholders by buying further Frontier Shares but such purchases are not required to be made at the Offer Price.
According to reported Frontier shareholding information, with 40.8% of the voting shares, Science Group is the largest shareholder in Frontier. Science Group will be seeking changes to the Frontier Board to reflect the transformation of the Frontier shareholder base resulting from Science Group’s substantial shareholding. Thereafter, the strategy of Frontier will be evaluated. Science Group continues to believe in the fundamental opportunities and capabilities within Frontier and considers the Frontier employees to be a key strength of the company. This strategy review may or may not include the possibility of arm’s-length cooperation with parts of Science Group.
Unless otherwise stated, terms used in this announcement have the same meanings as given to them in the Offer Document.